JRL #7076

Plain Text - Entire Issue

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1. Moscow Times: Natalia Yefimova, Court Back in Zorkin's Hands.
2. BBC Monitoring: New Russian Constitutional Court chairman vows support of presidential rule.
3. Moscow Times editorial: Are Court and Kremlin at Odds?
4. Moscow Times: Boris Kagarlitsky, A Constitutional Cakewalk.
5. Rosbalt: LUKoil Chief: BP's Arrival Signals End of Political Risks in Russia.
6. AFP: US envoy presses Russia on Iranian nuclear program.
7. AFP: Chechens Mark 'Day of Mourning' on Russia's Army Day.
8. Asia Times: Ehsan Ahrari, Putin and the growing trans-Atlantic rift.
9. BBC: Leonida Krushelnycky, The mystery of Stalin's death.
10. Washington Profile: The Russians Emerge: An Interview with Heidi Hollinger.
11. www.heidihollinger.com: THE RUSSIANS EMERGE.
12. Trud: Cases of Human Trafficking in Russia Recounted.
13. Foreign Affairs: David G. Victor and Nadejda M. Victor, Axis of Oil?
14. BBC: Russian fat cat creams the rest.

*******

#1
Moscow Times
February 25, 2003
Court Back in Zorkin's Hands
By Natalia Yefimova
Staff Writer

A controversial former chief judge of the Constitutional Court, who quit in
1993 after unsuccessfully opposing President Boris Yeltsin in his violent
stand-off with rebellious lawmakers, was elected to the post once again on
Friday.

In a surprising decision, 10 of the court's 19 judges cast their ballots
for Valery Zorkin, who served as the court's first chairman for nearly two
years after its creation in October 1991 and has remained a judge on the
court ever since. Zorkin, 60, replaces Marat Baglai, whose second
three-year term had come to an end, forcing the vote. Baglai got the nine
other votes.

The mild-mannered but fiery-eyed Zorkin, whose professional qualities won
praise from across the political spectrum, took the decision in stride,
saying it came as something of a surprise.

"I hope this isn't perceived as the advent of a person who fought for this
job. This happened by chance," Zorkin told the Kommersant newspaper. "The
Constitutional Court is a truly collective body with 19 equal judges."

Nearly a decade ago, Zorkin stepped down from his post as court chairman on
Oct. 6, 1993 -- two days after troops loyal to Yeltsin opened fire on the
parliament building where the president's armed opponents had been holed up
for several days -- saying he could not stay on "under the current
circumstances."

In the months leading up to the bloody stand-off, as the conflict between
Yeltsin and conservative lawmakers escalated, Zorkin had tried repeatedly
to mediate between the president and parliament, headed at the time by
Speaker Ruslan Khasbulatov.

As attempts at reconciliation failed, Yeltsin issued his infamous decree
No. 1400, disbanding the Supreme Soviet and calling for new parliamentary
elections. On Sept. 21, 1993, the Constitutional Court, with Zorkin
presiding, declared the decree unconstitutional and said it gave legal
grounds for stripping Yeltsin of his powers.

The ruling immediately became a battle cry for Yeltsin's foes, including
Khasbulatov and Vice President Alexander Rutskoi.

Two weeks later, with more than 100 dead, the president prevailed.

Zorkin's first stint as court chairman came at a time when Russia was
trying to redefine itself -- a time when legal and political changes were
intimately intertwined -- and his critics, including Yeltsin, scorned him
for getting too involved in politics.

Before he became court chairman, during the coup d'etat against Mikhail
Gorbachev in August 1991, Zorkin joined a group of legal experts in
condemning the revolt as unconstitutional. More than a year later, in
November 1992, the Constitutional Court stymied Yeltsin's attempts to
disband local Communist Party cells and to confiscate the party's property.

Now, Zorkin says, the court is resolute about keeping its nose out of
politics, as it has since 1994.

"This will be the court's unwavering line. Nobody should bother hoping that
we can be pulled to the left or the right or to the political center. We
are in the legal center," Zorkin said in an interview with Rossiiskaya Gazeta.

"History never repeats itself," he told Kommersant. "Sound-minded people
must learn their lessons from those events [of 1993]. If they don't, they
should quietly leave the scene and write memoirs. I don't intend to write
any memoirs; I'm a working judge."

Legal experts and politicians of all stripes welcomed Zorkin's appointment.

"I personally hope that under its new chairman the Constitutional Court
will be more independent," State Duma Deputy Vladimir Lukin of the liberal
Yabloko party told Interfax. "[These hopes] significantly outweigh any
fears that Mr. Zorkin will display the overly strong political prejudices
that he showed in the early 1990s."

Communist leader Gennady Zyuganov praised Zorkin as "honest, courageous and
a man of dignity."

"The choice is perfectly understandable. No one doubts his professional
qualities," Sergei Vitsin, who authored some of the first post-perestroika
legal reforms under Yeltsin and now serves as deputy chairman of the
presidential advisory council on improving the court system, said in phone
interview Friday.

Zorkin said there may be some small changes to the court's work, but there
would be no revolutions.

Asked whether he believed changes should be made to the Constitution,
Zorkin replied: "If you don't learn to live by one Constitution, you will
never learn. Although, perhaps, there are certain things in our
Constitution that need greater balancing, but that is an issue of political
expediency."

While most observers saw Zorkin's election as a "natural rotation,"
especially considering that Baglai had managed to ruffle plenty of feathers
in the judicial community, Kommersant interpreted the appointment as a
signal that the court wants to free itself from Kremlin pressure.

"Over the course of Marat Baglai's chairmanship the Constitutional Court
did not make a single decision unsuitable for the Kremlin," the paper said
Saturday. "By electing Valery Zorkin the judges have shown that they want
greater independence from the Kremlin ... and the presidential
administration will have to take that into account."

One test of that thesis could come as early as this spring, the paper said,
when the court is due to consider a Communist challenge to a recently
passed law banning nationwide referendums in the year preceding
parliamentary or presidential elections.

*******

#2
BBC Monitoring
New Russian Constitutional Court chairman vows support of presidential rule
Source: RTR Russia TV, Moscow, in Russian 0725 gmt 24 Feb 03

The newly-elected chairman of the Russian Constitutional Court, Valeriy
Zorkin, was the guest of the Russia TV "Morning Talk" programme at 0725 gmt
24 Feb 03 hosted by Dmitriy Kiselev.

Zorkin headed the Constitutional Court in 1991-93. He was defending the
Soviet-era constitution in the conflict between the Communist-dominated
Congress of People's Deputies of Russia and President Boris Yeltsin and lost
his post after the October 1993 armed clash in Moscow that ended with
Yeltsin's victory.

Having regained his post after a 10-year break, Zorkin is demonstrating a
spectacular change in views - now speaks in favour of a presidential republic.

"In our political and natural conditions, experimenting with a
half-presidential republic inevitably leads to the establishment of an
irresponsible super-presidential dictatorship. A real presidential republic
provides balance, while a super-presidential regime leads to tragedies. When
the president is there as a political figure but can't act because he is
permanently constrained by a body which is too strong politically, a crisis
eventually emerges. What happened 10 years ago is a typical example," Zorkin
said.

Zorkin expressed the hope for cooperation and good understanding with
President Vladimir Putin.

Asked whether Putin congratulated him on his election, Zorkin said: " I hope
that the president wouldn't object if I say - yes, he did. I expect a good
partnership. The president is the guarantor of the constitution, and I am the
keeper of the constitution. The Constitutional Court helps the government to
stay within the legal framework and to observe people's rights," he said.

*******

#3
Moscow Times
February 25, 2003
Editorial
Are Court and Kremlin at Odds?

There can be little doubt that the election of Valery Zorkin as chairman of
the Constitutional Court on Friday -- with 10 votes to the incumbent Marat
Baglai's nine -- was, at minimum, a mildly unpleasant surprise for the
Kremlin.

Moskovsky Komsomolets newspaper this weekend described the court as turning
into a branch of the presidential administration under Baglai's six-year
chairmanship.

This is perhaps a little harsh, but the court has certainly come in for
increasing criticism in the past few years, being accused of loyally toeing
the Kremlin line. In particular, it drew fire for a ruling in July that
granted many incumbent regional leaders the right to run for a third and in
some cases even a fourth term, despite a law limiting them to two terms.

President Vladimir Putin, for his part, did not shy away from revealing his
sympathies for Baglai two years ago, when he pushed a bill through the
State Duma abolishing the retirement age of 70 and lengthening judges'
terms from 12 to 15 years. The bill was tailor-made to prolong the tenure
of Baglai, then 69. And the new rules only applied to judges appointed
after 1994, which included Baglai, appointed in February 1995, but not
Zorkin and other court veterans.

Having gone to all this trouble to win Baglai's loyalty, it is hard to
believe that Zorkin's election is part of some complicated intrigue
orchestrated by the Kremlin. All the more so given Zorkin's history as
first Constitutional Court chairman and the fast approaching national
elections.

Is this move by the court an attempt to re-assert its independence?

It's too early to tell. Despite the position adopted by Zorkin vis-a-vis
the Kremlin in 1993, there's no real reason to expect him to become an
opponent of the Kremlin now. He has, after all, quietly served as a
Constitutional Court judge ever since his run-in with Yeltsin. Moreover,
each of the 19 judges' votes carries equal weight, so the chairman's
influence over the court is limited and the actual composition of the court
has changed little. Of the original 13 judges selected in 1991, nine
remain. Of the other 10 current judges, four were appointed in 1994; one
(Baglai) in 1995; and one each in 1997, 1998, 1999, 2000 and 2002.

While on the face of it, Zorkin's re-election looks like a snub to the
Kremlin, the proof of the pudding is in the eating. And we won't have to
wait long for the court to undergo a test of some political sensitivity: In
May the court is due to rule on the constitutionality of Kremlin-backed and
Communist-opposed amendments to the law on referendums forbidding national
referendums within a year of parliamentary or presidential elections.

*******

#4
Moscow Times
February 25, 2003
A Constitutional Cakewalk
By Boris Kagarlitsky

When Boris Yeltsin forced Valery Zorkin to resign as chairman of the
Constitutional Court on Oct. 6, 1993, few could have imagined that 10 years
later the judge would return to favor and resume his post without a change of
regime or a revision of the official line on the power struggle between
Yeltsin and parliament in the fall of 1993. When Yeltsin dissolved parliament
and rejected the existing Constitution, Zorkin said the decree constituted a
coup d'etat. From the moral and legal point of view, he was absolutely right.
The problem was that Yeltsin's actions were applauded by Western leaders and
a significant portion of Russia's "liberal intelligentsia."

Yeltsin's backers would realize only later that the regime they had helped to
triumph was corrupt and had little respect for human rights; that elections
were decided by putting the government machine to work for selected
candidates; and that the president wielded unlimited power. The new
Constitution, for which Yeltsin ordered tanks to fire on parliament, made all
of this possible. The Russian press blasted criticism of the Yeltsin regime
as "anti-democratic propaganda" back in 1993. But such criticism had become
commonplace before the decade was out. In fact, the flaws were no more
glaring in the late 1990s than they were at the outset. And no one ever
apologized for lying to the Russian people.

Unlike most of the key players in the 1993 power struggle, Zorkin emerged
with his dignity intact. Vice President Alexander Rutskoi and the leaders of
the dissolved Supreme Soviet committed too many mistakes. They accepted
support wherever they could find it, not realizing that rallying the
nationalists to their side would prove a moral and political catastrophe for
the supporters of parliament. At the height of the crisis on Oct. 3 and 4,
they sent a mostly unarmed mob to storm the television complex at Ostankino,
exposing hundreds of civilians to gunfire and irreparably harming their
cause.

The leaders of parliament in 1993 have tried to return to big-time politics
on numerous occasions, but never with much success. Some sit on the State
Duma's "back benches" to this day. Others are writing memoirs or selling
chocolates. Rutskoi alone managed to buck this trend; he served one term as
governor of the Kursk region. The results of his tenure there were disastrous.

Ten years later, only Zorkin has managed to get his old job back. The stance
he took during the 1993 crisis was morally impeccable. He took no part in the
political decisions made in the Supreme Soviet. He merely defended the
Constitution, as he was bound to do. No more, no less. In the years that
followed he never created a political party or tried to get his hands on the
keys to the governor's mansion.

Zorkin's return as chairman of the Constitutional Court could therefore be
viewed as the triumph of historical justice. Unfortunately, this triumph is
little more than symbolic. Zorkin has once again been charged with defending
the Constitution, but the current Constitution has little in common with the
document for which people took to the streets back in 1993. The Constitution
of the early 1990s was the product of perestroika and "Soviet
democratization." It was imperfect, contradictory, and resembled a car that
left the line with a few parts missing. It was also the most democratic state
structure that Russia has ever known. It really did restrict the "freedom" of
the new "elite" that had seized power and property in Russia. The October
crisis was induced not by the old Constitution's contradictions, but because
of what the Kremlin saw as its excessively democratic nature.

They say that the new Constitution was written "with Yeltsin in mind." This
isn't true. It was written in such a way as to allow whoever emerged from the
Kremlin's backroom deals as the president of Russia to govern without checks
on his power or regard for the consequences of his actions. The Constitution
turns representative government into a farce and democratic freedoms into a
facade concealing the same old Russian autocracy. Defending such a
Constitution amounts to ensuring that Russia's citizens never again exercise
real control over their leaders.

Then again, no one is planning to replace the current Constitution. It suits
the Kremlin to a tee. If anyone is unhappy with it, they are keeping their
mouths shut, content with the rights and freedoms they still enjoy.

Zorkin's second stint as Russia's top defender of the Constitution will be a
cakewalk compared to his first.

Boris Kagarlitsky is director of the Institute of Globalization Studies.

*******

#5
Rosbalt
February 23, 2003
LUKoil Chief: BP's Arrival Signals End of Political Risks in Russia

SAINT PETERSBURG, February 23. 'British Petroleum's arrival in Russian
business means that the era of political risks is over in Russia,' said
LUKoil president Vagit Alekperov yesterday at a press conference in St.
Petersburg. He added that BP's arrival 'has lifted share prices in Russia in
general.'

Last week British oil company BP announced that it was buying a 50% stake in
the merged TNK-Sidanko oil company for USD 3 billion in cash and USD 3.75
billion in shares. BP management said that the deal with its Russian partners
was 'strategic.' According to analysts, BP's decision to begin making direct
investments in Russia could be a signal for other leading international
investors to reassess risks in Russia and increase investment limits in
Russian assets.

Alekperov also announced that LUKoil does not intend to issue any new shares
in the near future.

*******

#6
US envoy presses Russia on Iranian nuclear program

MOSCOW, Feb 24 (AFP) - A top US arms control official on Monday
launched three days of talks in Moscow to press Russia on the dangers posed
by its nuclear cooperation with Iran.
Under Secretary of State for Arms Control and International Security John
Bolton met with Russian Deputy Foreign Minister Georgy Mamedov for talks on
global strategic security and non-proliferation, the Interfax news agency
reported.

Bolton and Mamedov were to discuss a multi-billion-dollar G8-financed
programme to destroy and safeguard Russia's weapons of mass destruction as
well as proposals for US-Russian cooperation on missile defence, diplomatic
sources told Interfax.

US officials said last week that while Bolton's trip had been previously
arranged, the focus of his visit would be increasing US concerns about Iran's
nuclear programs and Russia's continued cooperation with Tehran in that area,
especially with its help on a reactor at Bushehr.

"We want the Russians to realize the nature of our concerns and hopefully act
on them," one official told AFP on condition of anonymity.

The United States has long pressed Russia to curtail or eliminate its nuclear
cooperation with Iran which is one-third of President George W. Bush's "axis
of evil" and is designated by Washington a "state sponsor of terrorism."

However, earlier this month, US fears that Iran is using its nuclear energy
programs to hide atomic weapons development jumped when Tehran admitted that
it was mining uranium.

During his three-day stay in Moscow, Bolton is also due to meet Atomic Energy
Minister Alexander Rumyantsev, Russian space agency chief Yury Koptev and
other officials.

*******

#7
Chechens Mark 'Day of Mourning' on Russia's Army Day

SLEPTSOVSK, Russia, Feb 23 (AFP) -- Unlike the
rest of Russia celebrating Russian army day, Sunday [23 February] is not
a day of happiness in Chechnya.
Here, in a camp on the edge of Russia's border with the separatist
Muslim republic -- where journalists are rarely allowed -- refugees tell
the story and remember the deportation of an entire people ordered by
Joseph Stalin in the dying days of World War II.
Around 80,000 Russian troops are now based around Chechnya, where
schools are keeping their doors closed on February 24 -- Defenders of the
Fatherland Day -- the same as elsewhere in Russia's sprawling regions.
Instead, Chechens mark a day of mourning and remember February 23,
1944, when the entire Chechen-Ingush people were swept away to Central
Asia, thousands perishing along the way.
Chechens and Ingushetians were part of the "punished people," as they
tragically became known, along with Crimean Tatars and Kalmyks on the
Caspian Sea, who stood accused of collaborating with the Nazi invaders in
World War II.
"My grandfather described to me what Chechen people suffered.
Russian authorities should have decreed this day as a day of mourning.
Perhaps then we could forgive the Russians," Salambek, 17-year-old
student from the ruined Chechen capital Groznyy, said.
"Neither I nor my pupils have any plans to views this day as a
holiday," agreed Malika, who works in Groznyy's school number seven as a
teacher.
It was not until 1956, when Nikita Khruschev began to demolish
Stalin's terror machine, that Chechens were allowed to return to the
Caucasus region.
A more recent flight of Chechens -- from a second Russian incursion
in the rebel republic began in October 1999 -- might see fewer return
home.
Last November, some 300 refugees sheltering in the neighboring
Ingushetia appealed to Kazakhstan's President Nursultan Nazarbayev to let
them live "where Stalin had deported our ancestors," arguing that the
current situation in Chechnya was "worse than deportation."
"Numerous families had already sent their relatives to Kazakhstan,"
according to a report by the Russian rights group Memorial, even if
Kazakhstan made it clear that it would be "unrealistic" to expect the
Central Asian republic to shelter all.
Ingush authorities regularly urge the refugees to return to their
homeland, but daily outbreaks of violence, civilian disappearances and
what are now commonly called "cleansing sweeps" conducted by federal
troops reduce Moscow's arguments.
Meanwhile, Russian army takes special precautions each year on
February 23, fearing rebel attacks, which occur on a nearly-daily basis.
Russia is keen to establish some semblance of security in Chechnya
ahead of the March 23 constitutional referendum, which would be closely
followed by presidential and legislative elections.

*******

#8
Asia Times
February 24, 2003
Putin and the growing trans-Atlantic rift
By Ehsan Ahrari

As the rift between countries of "old Europe" and the United States over the
latter's impending invasion of Iraq continues to widen, President Vladimir
Putin of Russia is in the process of determining his courses of action. In a
dispatch from Moscow, New York Times reporter Michael Wines describes an
interesting dilemma facing Putin. Wines writes, "For Mr Putin, the question
is now whether he can keep the Atlantic rift from swallowing his dream of a
Russia anchored in the West - or, better yet, exploit the schism to speed up
the process." At least for now, one of the choices for Russia is not about
exploiting the trans-Atlantic schism, for it has definitely decided to become
an integral part of the West. At the same time, Russia also enjoys the luxury
of siding either with Europe or the US and still come out a winner.

It has taken two presidents - Boris Yeltsin and now Putin - for Russians to
realize that the aspirations of their country to re-emerge as a superpower
are not likely to materialize any time soon. It was a bitter pill for Yeltsin
to swallow, for he belonged to an earlier generation that could not imagine
any role for his homeland other than that of a superpower. The younger Putin
is more of a pragmatist. He seems to have accepted, for now, the role of
Russia as a "second banana", or, worse yet, "one of the many second bananas".
More to the point, he seems to have made the choice of siding with the West,
since therein lies the promise of Russia's integration into the global
economy, a path that might enable his country to achieve its aspirations of
re-emerging as a superpower.

On this point, former US president Bill Clinton has definitely acted as a
visionary. During his two terms in office, he was always sensitive about not
leaving Russia to wallow in the misery of losing its power and prestige -
characteristics of being a superpower - and ensuring that all sorts of
economic assistance was provided for that country in its very arduous
endeavors to build, from scratch, a viable market economy.

The ultimate proof of the correctness of Clinton's approach toward Russia
stemmed from the fact that George W Bush in essence continued the same
approach. But Bush's decision not to change his predecessor's policy toward
Russia could not have been successful without Putin's resolve to continue the
sage line of his own predecessor, Yeltsin, to cooperate with the US and the
West.

The September 11, 2001, terrorists attacks on the US proved to be another
reason for further cementing that cooperation. Now, Russia could brutalize
its own homegrown Chechen militants without fear of being chastised by the
US. After all, the chief purpose of Operation Enduring Freedom was to
eradicate or capture the perpetrators of terrorist acts against the United
States. In the process of this cooperation, the US still got the better end
of the deal; it acquired a number of military basing facilities in Central
Asia, which is traditionally regarded as Russia's back yard. Even now, the US
appears to be in no hurry to pull out of its Central Asian military bases,
much to Russia's chagrin.

When Bush decided to shift the focus of his global war on terrorism from
Afghanistan to invading Iraq, Russia found itself opposing the move. For the
United States, the objective in Iraq has always been "regime change", even
though it went through a lot of zigging and zagging about it. For Russia - as
was also true for France, Germany and other countries of "old Europe" - the
main issue was ensuring that Iraq no longer possessed weapons of mass
destruction. It is only since January or so that the US has clarified its
purpose by adopting an acutely militant rhetoric and by continuing a massive
buildup of its forces around Iraq. Now it is clear more than ever before that
the real US objective all along has been to topple Saddam Hussein from power.

On the Iraq issue, as he did prior to the US military action against
Afghanistan, Putin is calculating his country's advantages in determining his
choices. This time, however, Putin is likely to adopt a more nuanced approach
than he did in the past. That approach seems to be following along the lines:
Don't jump in the fray between the US and "old" Europe regarding Iraq.
Calculate all the available options, and consider the payoffs related to each
option. Even after committing yourself to one option, leave enough hedge room
to abandon that particular option in favor of another.

The Bush administration, continuing to monitor closely the Russian
maneuvering on the Iraq issue, has initiated its own maneuvering of
"preparing to label several Chechen militant groups as terrorist
organizations", and by "pointedly" accusing Iraq "of ties to Chechen rebels
involved in terrorism". Undoubtedly, the purpose underlying such a strategic
choreography is to signal that Iraq under Saddam is not really a friend of
Russia.

The Bush administration's own estimation is that, sooner or later, Putin will
come around to the US views regarding the issue of regime change in Iraq.
Putin would not necessarily disagree with such an assessment. The most
important part of his choice is that he wants to leave the door open so that
if something happens to the United States, he can return to cooperating with
Europe. Being in a win-win position might turn out to be the best bargain for
Vladimir Putin.

Ehsan Ahrari, PhD, is an Alexandria, Virginia, US-based independent strategic
analyst.

*******

#9
BBC
February 24, 2003
The mystery of Stalin's death
By Leonida Krushelnycky

Fifty years ago, on 5 March 1953, the Soviet leader Joseph Stalin died.

His political life as a dictator who dominated millions has been minutely
dissected over the decades.

But his last days continue to provoke speculation and argument.

Did he die of natural causes following a brain haemorrhage or was Stalin
killed because he was about to plunge the Soviet Union into a war its people
were in no position to fight?

Unusual order

The night of 28 February began in the usual manner for Stalin and his closest
political circle, Lavrenty Beria, Nikita Khrushchev, Nikolai Bulganin and
Georgi Malenkov.

They watched a film in the Kremlin then retired to Stalin's country home, 10
minutes outside Moscow, for yet another night of feasting.

By the early hours of 1 March, Stalin's guests had gone back to their homes
in Moscow.

What happened next was out of the ordinary for a man as obsessed with
security as Stalin. He gave an order for his guards to retire for the night -
he was not to be disturbed.

This change to Stalin's normal behaviour intrigued Russian historian Edvard
Radzinski, and a few years ago he tracked down one of the guards on duty that
night, Pyotr Lozgachev.

Guards worried

It was Lozgachev's testimony of that night that led Radzinski to speculate
about what might really have happened.

The guard confirmed that it was not Stalin who gave the guards the order to
go to bed, rather the order was conveyed by the main guard Khrustalev.

"Stalin would taunt the guards by saying 'Want to go to bed?' and stare into
our eyes," Lozgachev said. "As if we'd dare! So of course we were glad when
we got this order, and went off to bed without thinking twice."

The guards slept late the following morning, and so, it seemed, did Stalin.
Twelve o'clock, one, two o'clock came and no Stalin.

The guards began to get worried, but no one dared to go into his rooms. They
had no right to disturb Stalin unless invited into his presence personally.

At 6.30 a light came on in Stalin's rooms, and the guards relaxed a little.
But by the time 10 o'clock had chimed they were petrified. Lozgachev was
finally sent in to check on Stalin.

"I hurried up to him and said 'Comrade Stalin, what's wrong?' He'd, you know,
wet himself while he was lying there. He made some incoherent noise, like "Dz
dz". His pocketwatch and copy of Pravda were lying on the floor. The watch
showed 6.30. That's when it must have happened to him."

'World War III'

The guards rushed to call Stalin's drinking companions, the Politburo. It was
their tardiness in responding and calling for medical help that put questions
of doubt in Radzinski's mind.

Did they already know too much and so did not need to hurry to the "old
man's" side?
Mr Radzinski says Yes. He asserts that Stalin was injected with poison by the
guard Khrustalev, under the orders of his master, KGB chief Lavrenty Beria.
And what was the reason Stalin was killed?

"All the people who surrounded Stalin understood that Stalin wanted war - the
future World War III - and he decided to prepare the country for this war,"
Mr Radzinski says.

"He said: we have the opportunity to create a communist Europe but we have to
hurry. But Beria, Khrushchev, Malenkov and every normal person understood it
was terrible to begin a war against America because the country [Russia] had
no economy.

"It wasn't a poor but a super-poor country which was destroyed by the German
invasion, a country which had no resources but only nuclear weapons.

"It was the reason for his anti-Semitic campaign, it was a provocation. He
wanted an answer from America. And Beria knew Stalin had planned on 5 March
to begin the deportation of Jewish people from Moscow."

As always in Russia, conspiracy piles on conspiracy. Some saw buses parked
all round Moscow to take away the Jews. Others glimpsed special barns erected
for the deportees in Kazakhstan.

But while the drama unfolded over the next few days in Stalin's country
house, the citizens of the Soviet Union were split in their reaction to the
imminent death of their leader.

Many openly wept for the man they called '"Father", "Teacher", "God". Others
in prison camps across the land allowed themselves to exchange secret smiles
and hope that things would be different now.

At 9.50pm on 5 March Stalin died. By the next day his body was lying in state
in the Hall of Columns, a few streets from Red Square. It is estimated that
several millions came to see him one final time. Several hundred were
rumoured to have died in the crush.

Fifty years on, the rumours of intrigues and conspiracies continue. For a
tyrant like Joseph Stalin, a simple death would be just too mundane.

The documentary The Last Mystery of Stalin - BBC Radio 4 on Monday, 24
February, 2000 GMT - charts the politics and emotions of a turbulent and
truly significant week in Soviet history, through personal recollections and
dramatic re-creations.

Presenter: Tim Whewell
Producer: Leonida Krushelnycky

*******

#10
The Russians Emerge: An Interview with Heidi Hollinger
Washington Profile News Agency
www.washprofile.org
February 24, 2003

Heidi Hollinger is a Montreal-born photographer who has spent ten years in
Russia, published five books of photographs on the subject. Her most recent
book is "The Russians Emerge."

Why did you decide to pursue your career in photography in Russia?

I studied Russian in college. I wanted to learn another language, and
Russia was opening up, so a lot of people started studying it. After I
graduated, I wanted to go practice it, because you don't learn Russian by
studying it. I loved - I planned to stay for one year and ended up staying
for ten.

How has your impression of Russia changed over those years?

I arrived in Russia in 1991. What struck the most were the generic shop
signs that said "Bread" or "Fish" - I'd never seen stores named that way.
When I first went, there was no sign of individualism - everything was
owned by the state. There was no concept of service - people were quite
rude or non-chalant, now of course the service is better. And I think in
general people are smiling more.

Russians have always had a good sense of fashion. And when you come from
somewhere like Canada or the United States, you definitely notice a
difference in dressing - I find that the Russians are very European in that
respect. And I think this is even more so now - there's better shopping
there than in Montreal - they have every boutique imaginable.

The prices are very different. When I first got there everything was still
subsidized, bread was still fourteen kopecks. Everything was really cheap,
and now it became really expensive.

Has the inflow of Western culture influenced Russian artists?

I think the Russians are very proud of their identity, and very original,
so I'm not worried that the West is going to ruin Russian culture. I find
Russians to be very creative. In my book I photographed a lot of different
artists, and a lot of these people are my friends, and I'm very happy that
I have such talented friends. They're very well-educated as well, they've
read all the classics. You can't find a Russian that hasn't read Tolstoy or
Dostoyevsky, but I'm sure you can find plenty of Americans or Canadians who
haven't read anything by English-language writers. And the fact that Russia
opened up and allowed its people to pursue their creativity more is great -
I photographed Andrei Makarevich and he told me about how they used to play
underground and get arrested all the time, and it's a far cry from that.
Right now, for example, you have a band like Tatu - they're young girls who
do a lesbian act on stage. I'm also very good friends with Nana, the
Russian boy-band.

You have pictures of ordinary people in your book. Were they suspicious
when you invited them to a studio to have their pictures taken?

Yes, they were suspicious - they wondered why I wanted their picture. Being
a female photographer is suspicious enough - the Russians think that
photography is muzhskaya rabota. Of course, there are more female
photographers, but you know how Russians are, they're very patriarchal.

Were the politicians more willing to grant access and have their pictures
taken, because you are a woman?

I think so, yes. I was non-aggressive. Female photographers are not as
threatening.

How did you get Zhirinovsky to pose in his underwear for you?

I just asked. It was at his dacha, and he was very popular at the time, and
was trying to do something to get attention. And the next day it was on the
cover of Moskovsky Komsomolets. He told me I could publish it - I asked
him. I never published things without permission, I'm very careful about
that, because I respect the rights of the people I photograph. The next day
I went to the Duma I couldn't get near him, they guards were pushing me
away. And I asked him, "Vlad, what's the matter?" and he said "Heidi, when
I become president of Russia, I'm going to cut off diplomatic ties with
Canada immediately."

Was there anything about Russian politicians that struck you as unusual,
aside from that?

Definitely. I found them very playful. I personally tried to put in an
element of fun into picture-taking, and I think they were, in the mid-90s,
were seeking a certain political image, and went along with what I was
suggesting - maybe they didn't know what they wanted, or they trusted me.
They were all searching for a new image. Look at the pictures from the
Politburo, for example - Gorbachev doesn't have his birthmark, it's so
retouched. No one is smiling. I tried to get people to look like humans.
Because in general I found Russians to be very warm and generous, and I
wanted to portray that in my pictures.

Where do you see the future of Russian culture, as an observant and a
participant?

I hate to say it, but I hope that this band Tatu is not demonstrative of
the trends in Russian culture. I read an interview with their producer who
said they are pandering to the needs of the old men in search of underage
entertainment.

*******

#11
www.heidihollinger.com
THE RUSSIANS EMERGE

A brilliant portrayal of Russians in the post-Soviet era--from ordinary
people to politicians and rock stars.

Heidi Hollinger, in a photographic tour-de-force, has captured the spirit
of the Russian people as they adjust to their new freedoms. Her
sympathetic, evocative portraits reveal how some "emerging" Russians relish
their new opportunities while others, rooted in the past, struggle to
survive in their changing world. She shows many of the people who were the
(few) big winners and many of the great losers in the most astonishing
social and political revolution of the second half of the twentieth
century. This wide-ranging collection, photographed from 1991 to 2001,
includes images of workers, entertainers, artists, military officers,
religious leaders, politicians, a cosmonaut, a Chechen warlord, Stalin's
great-grandson, and Lenin's niece, among others. Most of the portraits are
accompanied by detailed captions, providing context and perspective about
the individual's lives and aspirations, often in his or her own words as
recorded during Hollinger's studio sessions. For nearly a decade, Hollinger
has lived in Russia, at first as a visitor and gradually as an insider,
gaining access to such high-profile politicians as Mikhail Gorbachev and
Vladimir Putin, as well as other top-echelon personalities. At the same
time she explored Moscow's lower depths: on foot and mounted on in-line
skates, she invited typical Russians--street cleaners, miners, a plumber,
and a baker, for example--to her studio to pose for a portrait. Her
"working folk" images are in the tradition of pre-Revolutionary masters,
who also wandered through the streets in search of representative faces to
photograph.

The Russians Emerge also features a fascinating, illustrated text by
Russian authority Jonathan Sanders, who lived in Russia during much of this
period and earlier. He writes, " After a decade of dizzying, sometimes
dismaying radical change, a new Russia is emerging." Sanders explains how
Russian society has been traumatized by reforms that benefit some and cause
many more to struggle to survive and offers insights about how the Russians
are coping with the new post-Soviet order. He also provides a knowledgeable
history of Russian photography from its beginnings in 1839 to its rebirth
in 1990s when Heidi Hollinger arrived in Moscow. He observes that her
timing was exquisite, for just when she moved east to discover Russia, the
country was rediscovering itself, photographically, and in so many other
ways.

An illustrated section of notes in the Appendices provides more information
about the individuals portrayed. In addition, there is a list of web
addresses relating to some of the Russians shown as well as endnotes to the
text.

The Russians Emerge is an invaluable book for collectors of great
photography and a must-have for those interested in contemporary history.

Heidi Hollinger, who was born in Montreal and lives in Moscow and Montreal,
contributes her work to leading publications, including Newsweek, Time,
Esquire, and The New York Times Magazine. Her photographic books have been
published in Canada and Russia. Over the last decade she had more than
thirty one-woman shows across the world from Omsk, Siberia to Los Angeles.
Her photographic books have been published in Canada and Russia. Her
photographic books have been published in Canada and Russia. Jonathan
Sanders is a well-known historian and veteran CBS News Moscow
correspondent. He served as Ferris Professor of Journalism at Princeton
University and taught courses in Soviet and Russian history and television
at Columbia University. The former assistant director of the Russian (now
Harriman) Institute, Dr. Sanders is currently the Director of the Project
on the Russian Future. He is the author of Abbeville's critically acclaimed
book, Russia 1917: The Unpublished Revolution.

********

#12
Cases of Human Trafficking in Russia Recounted

Trud
February 19, 2003
Report by Maksim Mironov and Yuriy Dolinskiy: "Want Ads for Slaves"

The Russian parliament is trying to impede this savage phenomenon.
The Russian Government agrees with the ideas expressed in the State
Duma's draft law for the suppression of human trafficking. Aleksandr
Pochinok, the RF minister of labor and social development, announced this
at parliamentary hearings.
The general public may have thought that the slave trade was confined
to the distant past, but there are reports to the contrary. The
international convention on the suppression of trafficking in human
beings and the exploitation of prostitution by third parties was adopted
back in 1949, and the USSR signed it in 1954. After the breakup of the
Union, when the borders were opened and the process of the Russian
Federation's integration with the "rest of the world" began, a torrent of
filth rushed into our country along with the achievements of
civilization. Russia suddenly began suffering from the affliction that
has become the plague of the 21st century. "According to specialists
and experts, the income from human trafficking now exceeds the income
from drug trafficking," said Yelena Mizulina, deputy chairman of the
State Duma Committee on Legislation. According to UN estimates,
organized crime gangs are making about $3.5 billion a year just on the
traffic in human beings. The U.S. State Department published a list of
19 countries where the efforts to counteract human trafficking have been
unsatisfactory, in the Americans' opinion. Russia is one of the
countries on that list. The FBI believes that Russian organized crime
gangs--the Izmaylovo, Dagestan, Kazan, and Solntsevo gangs--are operating
even in the United States.
Our country is not alone in this misfortune. According to the State
Department report, the number of victims of the slave trade ranges from
700,000 to 4 million a year. Greece, Turkey, Saudi Arabia, Belarus,
Bosnia, Bahrain, Indonesia, Lebanon, Myanmar, Sudan, and the United Arab
Emirates are also having problems. The situation has grown worse in
Cambodia and Kyrgyzstan. Even completely civilized Germany is having
problems. German researcher Leo Keidel called human trafficking one of
the main areas of specialization of crime gangs, ranking fifth in the
hierarchy of criminal activity in that country.
According to one of the reports, the number of Slavic women taken to
Belgium, the Netherlands, Poland, and Switzerland now exceeds the
traditional "deliveries" of African, South American, and Asian "women of
easy virtue."
Pochinok believes that a mechanism for the eradication of this
shameful and dangerous phenomenon must be installed on the legislative
level in Russia. Experts feel that the ideas expressed in the law take
international experience into account and will lay the legal and
organizational foundation for the suppression of human trafficking in the
Russian Federation. The State Duma probably will approve the document
on first reading during the spring session.
Here is what some prominent politicians said to Trud about this
problem.
Yelena Mizulina, Deputy Chairman of State Duma Committee on
Legislation:
"Human trafficking is a transcontinental problem. It is one of the
major areas of organized crime along with terrorism and the drug trade.
This legislative bill is not merely an attempt to stop the oppression of
individuals. It is the first attempt at a comprehensive approach to the
problem. A working group was set up to draft the legislative bill, and
I headed the group. Experts in various fields were members of the
group. We also enlisted the help of international experts. Oddly
enough, as soon as the working group was formed, several Western news
media created a stir by suggesting that Mizulina wants to legalize
prostitution. This is absolutely false! We took a comprehensive
approach to the problem of human trafficking, proposing the counteraction
of all forms of this phenomenon, including prostitution, organ
transplants, and the slave trade."
Vladimir Zhirinovskiy, Vice Speaker of the State Duma:
"In our country, human trafficking is conducted with the help of our
press. Just look at the ads in the gutter press! All of this
culminates in shipping people abroad. For this reason, any laws setting
up obstacles on this path can only be beneficial. Unfortunately, we
have enough laws, but we do not have enough law enforcement. I want the
kind of laws that will restrict the promotion of human trafficking in the
media."
Viktor Pokhmelkin, Member of State Duma Committee on Legislation:
"I do not think the publication of this law should be a goal in
itself. Amendments and additions to existing laws might be enough to
increase the liability for these crimes. The number of crimes against
minors has risen dramatically, including their recruitment for unpaid
labor and their involvement in prostitution and drug trafficking.
Officials of juvenile affairs are known to be extremely corrupt,
including the agencies responsible for the care and protection of minors.
That is why the maximum suppression of corruption is an important part
of the elimination of the traffic in children."
While these debates are going on, the newspapers are full of almost
blatant advertisements for the services of "women of easy virtue" and for
"dancers" to work abroad....

********

#13
Foreign Affairs
March-April 2003
Axis of Oil?
By David G. Victor and Nadejda M. Victor
David G. Victor is Director of the Program on Energy
and Sustainable Development at Stanford University and
Adjunct Senior Fellow at the Council on Foreign
Relations. Nadejda M. Victor is Research Associate in
the Department of Economics at Yale University and in
the Program on the Human Environment at Rockefeller
University. This essay is based on a presentation
given to the U.S.-Russia Dialogue of the Aspen
Institute.
Copyright 2003 Council on Foreign Relations, Inc.
Foreign Affairs

THE NEW RUSSIAN-AMERICAN RELATIONSHIP

Ever since the Iron Curtain came crashing down,
American and Russian diplomats have been searching for
a special relationship between their countries to
replace Cold War animosity. Security matters have not
yielded much. On issues such as the expansion of NATO,
stabilizing Yugoslavia, and the war in Chechnya,
Washington and Moscow have sought each other's
tolerance more than cooperation. Nor have the two
nations developed much economic interaction, as a
result of Russia's weak institutions and faltering
economy. Thus, by default, "energy" has become the new
special topic in Russian-American relations.

At a Kremlin summit in May 2002, Presidents George W.
Bush and Vladimir Putin pledged to work together to
reduce volatility in global energy markets and promote
investment in Russia's oil industry. Soon after, at
the first-ever summit of U.S. and Russian oil
executives in Houston, Russia's energy minister, Igor
Yusufov, reiterated this goal. The two governments
have created a special working group on energy
cooperation, and Russia will host the next commercial
energy summit in 2003. In Moscow, especially, the
potential of new oil ties has attracted extensive
media coverage and political speculation. For
instance, Grigory Yavlinsky, head of Yabloko, one of
Russia's leading opposition parties, has suggested
that the United States and Russia could sideline the
Organization of Petroleum Exporting Countries (OPEC)
as the arbiter of world oil prices. This enthusiasm is
misplaced, however. A collapse of oil prices in the
aftermath of an invasion of Iraq may soon lay bare
Washington's and Moscow's divergent interests. Russia
needs high oil prices to keep its economy afloat,
whereas U.S. policy would be largely unaffected by
falling energy costs. Moreover, cheerleaders of a new
Russian-American oil partnership fail to understand
that there is not much that the two governments can do
to influence the global energy market or even
investment in Russia's oil sector.

The focus on oil has also eclipsed another area in
which U.S. and Russian common interests could run
deeper: nuclear power. Joint efforts to develop new
technologies for generating nuclear power and managing
nuclear waste could result in a huge payoff for both
countries. These issues, which are the keys to keeping
nuclear power viable, are formally on the
Russian-American political agenda, but little has been
done to tap the potential for cooperation. Given
Russia's scientific talent and the urgent need to
reinvigorate nuclear nonproliferation programs, a
relatively minor commitment of diplomatic and
financial resources could deliver significant
long-term benefits to the United States.

A MARRIAGE OF CONVENIENCE?

On the surface, energy cooperation seems a wise
choice. Russians are rich in hydrocarbons and
Americans want them. Oil and gas account for
two-fifths of Russian exports. In 2002 Russia
reclaimed its status, last held in the late 1980s, as
the world's top oil producer. Its oil output in 2003
will top 8 million barrels per day and is on track to
rise further. Russian oil firms also made their first
shipments to U.S. markets in 2002 -- some of it
symbolically purchased as part of the U.S.
government's effort to augment its Strategic Petroleum
Reserve (SPR). In addition, four Russian oil companies
are preparing a large new port in Murmansk as part of
a plan to supply more than 10 percent of total U.S.
oil imports within a decade.

Meanwhile, the United States remains the world's
largest consumer and importer of oil. This year the
United States will import about 60 percent of the oil
that it burns, and the U.S. Energy Information
Administration expects that foreign dependence will
rise to about 70 percent in 2010 and continue inching
upward thereafter. Although the U.S. economy is much
less sensitive to fluctuations in oil prices than it
was three decades ago, diversification and stability
in world oil markets are a constant worry. War jitters
and political divisions cast a long shadow over the
Persian Gulf, source of one-quarter of the world's
oil. In Nigeria, the largest African oil exporter,
sectarian violence periodically not only interrupts
oil operations but also sent Miss World contestants
packing in 2002. A scheme by Latin America's top
producer, Venezuela, to pump up its share of world
production helped trigger a collapse in world oil
prices in the late 1990s and ushered in the leftist
government of President Hugo Chavez. In 2002, labor
strikes aimed at unseating Chavez shut Venezuela's
ports and helped jerk prices to more than $30 per
barrel. Next to these players, Russia is a paragon of
stability.

This new groove in Russian-American relations,
however, will not run deep. Buoyant oil prices in 2002
allowed a convenient but untested partnership to
flourish. Both governments do have a durable common
interest in boosting Russia's oil exports: this
benefits the United States through a more diverse
world supply and helps Russia by creating revenue and
jobs. Intergovernmental relations, however, are not
capable of exerting much influence over the business
conditions that actually determine private investment
in Russia's oil sector. Moreover, when oil prices
drop, Washington and Moscow will discover that they
have very different interests. The United States does
have some capacity to tame wild extremes in prices
through its manipulation of the SPR and coordination
with other oil-importing governments that also manage
strategic reserves. In practice, though, the
government has -- rightly -- used the SPR only to
deter severely high prices and has allowed markets to
operate unfettered when prices are lower. In Russia,
on the other hand, state finances and the nation's
economic health are extremely sensitive to shifting
prices, making illusions about the ability to
stabilize prices particularly dangerous.

The aftermath of a war in Iraq would likely provide a
first test for the shallow new Russian-American
partnership. Most attention on Russian interests in
Iraq has focused on two issues: Iraq's lingering
Soviet-era debt, variously measured at $7 billion to
$12 billion, and the dominant position of Russian
companies in controlling leases for several Iraqi
oilfields. Both are red herrings. No firm that has
signed lease deals with Saddam Hussein's government
could believe those rights are secure. Russia's top
oil company, Lukoil, knew that when it met with Iraqi
opposition leaders in an attempt to hedge its bets for
possible regime change. (Saddam's discovery of those
contacts proved the point: he canceled, then later
reinstated, Lukoil's interests in the massive Western
Kurna field.) Russian officials have pressed the
United States to guarantee the existing contracts, but
the U.S. government has wisely demurred. There would
be no faster way to confirm Arab suspicions that
regime change is merely cover for an oil grab than by
awarding the Iraqi jewels before a new government is
known and seated.

The real issue in Iraq will be the Russian and
American responses to volatile prices. Russia laments
that Iraq has not paid its debts. In fact, war jitters
have created higher prices for Russia on world markets
-- an increase of about $5 per barrel since last
summer -- and allowed Russia to earn from world
consumers a sum equal to about half the amount it is
owed by Iraq. (Exactly who pays is an academic issue
when dealing with a rogue regime at the edge of
extinction.) Russia's real problem after a war would
be the likely, but not certain, crash in oil prices as
uncertainties ease about Persian Gulf exports and
Iraqi supply resumes. Nobody knows how war and
sabotage would take their toll on oil fields in Iraq
and its neighbors, but the United States could
neutralize those uncertainties in part by releasing
oil from the SPR, as it did in the last Gulf War. A
clear plan for indexing SPR releases to the state of
postwar Iraqi oil fields would help markets adjust
quickly to Iraq's high production potential.

It is neither wise nor effective to use strategic
reserves to manage prices, but the likely result of
these actions would be much lower prices that will
expose a rift between consuming nations and producers
such as Russia. Every $1 shift in world oil prices
translates into about $1 billion for the Russian state
budget. Russia ran a surplus of $5 billion in 2002,
and the 2003 state budget (which forecast a price for
Urals crude of $21.50 per barrel) calls for saving $17
billion of oil revenue for the future by paying down
the current external debt. Contingency plans predict
red ink if oil prices fall below about $18 per barrel.
Low prices would be a disaster for Russia. If they
also trigger disarray in OPEC, then a sustained period
of cheap oil could spread fiscal pain across the
oil-producing world. In the past, however, U.S. policy
has not changed in response to collapses in world oil
prices; U.S. energy firms generally fare poorly in
that environment, but consumers gain when they can
guzzle more at lower cost and the economy is freer to
soar when prices are low.

Of course, the impact of a war on world oil supply and
price is hard to predict. A long war and a tortuous
rebuilding process could deprive the market of Iraqi
crude (about two million barrels a day in 2002).
Damage to nearby fields in Kuwait and Saudi Arabia
could make oil even more scarce. And already tight
inventories and continued troubles in Venezuela could
deliver a "perfect storm" of soaring oil prices. The
most plausible scenario, however, is bad news for
Russia: a brief war quickly followed by increased
Iraqi exports, along with a clear policy of releasing
oil from the SPR to deter speculators.

OIL 101

The reason that the American and Russian governments
cannot exert much leverage over the price of oil is
rooted in the fundamentals of the world market. More
than half the world's total oil production is traded
openly on a single, integrated world market, and most
of the oil that does not move across an international
border is still priced in national markets that move
with world prices. Although oil is a "fungible
commodity" that responds to the beat of one global
market, the actual route traveled from wellhead to
final consumer by any particular barrel is determined
by knife-edge differences in transportation costs, as
well as by vagaries in viscosity, sulfur content, and
other factors that affect how crude oil is refined
into useful products. Thus oil from Canada, Mexico,
and Venezuela is shipped mainly to the United States,
nearly all Russian exports go to nearby Europe, and
the Middle East sends its oil to all corners of the
world, though mostly to Asia. Although prices are
essentially set by a single world market, most public
discussion of oil policy is based on the fiction that
the identity of particular barrels is relevant.
Loathing invisible hands, arbitrage, and other
abstractions, the press and politicians focus on the
proper nouns. The real measure of a Russian-American
partnership, however, is not the capacity to supplant
America's less savory suppliers but rather whether
dialogue can have any influence on the world oil
market, regardless of which countries buy Russia's
barrels.

More than half the world's oil is consumed in the
transportation sector, and the grip of petroleum on
this market is unlikely to change soon. For now, the
flexibility and efficiency of liquid fuels are hard to
beat for automobiles and airplanes -- vehicles that
must compactly carry their own power as they move.
Nearly all liquid fuels are derived from crude oil. As
fuel prices fluctuate, people and firms can adjust
their travel habits -- driving less when prices are
high, for example -- but technology, not behavior, is
the most powerful lever on oil consumption. Most
transportation technologies have long useful lifetimes
-- 15 years or more -- and so the total demand for oil
responds only slowly to changing prices. In 1974, for
instance, in the midst of the first oil shock,
American consumers started buying smaller and more
efficient automobiles. But total U.S. oil consumption
did not decline until after 1978, when these new
"gas-sippers" had wedged themselves into a large share
of the total number of vehicles on U.S. roads. Today,
the average efficiency of the U.S. automobile fleet is
headed downward as sport utility vehicles, trucks, and
minivans dominate sales.

Although oil consumption is slow to change, supply is
generally more responsive. Thus prices on the world
oil market are mainly a function of swing suppliers --
for three decades, a role dominated by OPEC. Russia's
rising exports have rekindled talk of a twilight for
OPEC and its leader, Saudi Arabia, but any
"Saudifreude" is premature. Opec's production has
varied, as shown in the figure opposite, but its
influence in setting oil prices is much greater than
implied by market presence alone. The identity of the
top suppliers has much less influence on price than
does the ability to swing a few million barrels per
day of production (only a few percent of the global
total of about 76 million barrels per day). Indeed,
when OPEC first made effective use of the oil weapon
in 1973, the United States itself was the world's
largest oil supplier.

What holds OPEC together is not merely an ideology of
market manipulation but also the facts that production
in OPEC fields is generally inexpensive -- few capital
assets are idled when a swing supplier cuts back --
and that OPEC member governments are generally able to
exert strong control over production decisions. In
contrast, the structure of the Russian industry favors
exporting at full capacity rather than the on-again,
off-again behavior of a swing supplier. New wells in
Russia generally require significant investment drawn
from demanding capital markets, and the tightest
bottleneck for Russian exports is not drilling but the
infrastructure of pipelines and ports needed to get
oil to markets. Unlike the seaside Saudis, the center
of today's Russian oil industry is inland in Siberia
-- more than two thousand miles by pipeline to markets
in western Europe. Slightly shorter pipes also carry
western Siberian oil to the Black Sea, but then the
journey to market continues at high cost through the
narrow and crowded Bosporus. New and expanded routes
to the Adriatic Sea and the Baltic Sea -- as well as
new fields and export pipelines from eastern Siberia
to China and ports on the Pacific Ocean -- all require
massive infusions of capital. Once spent, this
investment is immobile and thus creates a strong
incentive for firms to pump at full capacity.

Privatization and competition also make it
increasingly difficult for Russia's oil industry to
identify a single national interest or to behave, like
OPEC's members, as a coherent unit. As in any
competitive market, lucrative niches and competing
interests are arising in the Russian oil industry.
Thus the oil sector's grip on Russian policy is much
weaker than that of other energy sectors -- such as
gas and eleCTRicity -- where single firms still
dominate. When Petroleum Intelligence Weekly finished
its latest survey of the world's largest oil
companies, ten of the top fifty were in Russia, and
only two of middling size had majority state ownership
(Rosneft and Slavneft -- and the latter's shares were
on the auction block). In contrast, each of the 11
OPEC countries had just one entry: a fully state-owned
enterprise. Some OPEC countries also make room for
foreign investors -- for example, Royal DutchffiShell
in Nigeria -- but production and export decisions in
OPEC's leading members are all dominated by the state.
It is easier to control production when state and
producer are one. In contrast, where ownership is
private and fragmented, the odds are higher that
market forces, rather than cartel instincts, will
determine behavior.

INDEPENDENT INVESTORS

The governmental working groups established by Bush
and Putin have little leverage over the market-driven
business decisions that now dominate the Russian oil
industry. Indeed, Russians themselves have avoided
investment at home. In 2000 alone, about $20 billion
in capital left Russia -- roughly the same amount that
Russia's oil exports earned on world markets. That
same year, which saw a peak for foreign direct
investment worldwide, the UN Conference on Trade and
Development estimated that Russia attracted only $2.7
billion in outside investment -- about one percent of
the country's GDP, or less than seven Big Macs a head.

Investors face obstacles everywhere in the Russian oil
business -- not only in developing new oil fields and
pipelines (known as "greenfield" investment), but also
for "brownfield" buyers of existing operations. In the
early 1990s, British Petroleum, one of the first major
foreign players in Russia, invested about half a
billion dollars in Sidanco and nearly lost the whole
sum when the Russian firm plunged into a Byzantine
bankruptcy. Under Putin the tide seems to be turning.
Confidence in Russian institutions is rising, and
official statistics (though notoriously unreliable on
the subject) suggest that the outflow of money from
Russia has slowed. However, suspicions of insider
dealing and other deterrents to investors remain. For
instance, when the Russian government auctioned its
stake in Slavneft in December 2002, every potential
foreign bidder was discouraged from participating in
the process. The auction itself lasted only four
minutes; one team submitted three of the four bids,
and the winning bid was barely above the reserve
price. The low values that open markets assign to
Russian oil companies measure the enormous
difficulties that lie ahead in building appropriate
corporate institutions and assuring investors of the
safety of their stakes. According to a recent study by
PricewaterhouseCoopers, Western oil assets changed
hands in the late 1990s for about $5 per barrel;
Russian assets, on the other hand, traded at less than
20 cents per barrel.

In the energy industry, the most common demand is for
Moscow to create greater certainty in its tax and
regulatory laws. In an interview with the Russian
newsmagazine Itogi, Mikhail Khodorkovsky, president of
Russia's second-largest oil producer, Yukos, counted
50 changes in Russia's energy taxes and regulations in
recent years. In Houston, potential Western investors
echoed this theme and have focused, in particular, on
the need for better "production sharing agreements"
(PSAS ). Commonly used where predictable and
transparent markets and regulation do not exist, PSAS
are designed to create an "enclave of stability"
around a project. Typical PSAS lock in tax regimes,
clarify resource ownership, and guarantee payments in
fungible exportable assets (such as oil) that are not
so vulnerable to changes in exchange rates. The need
for stability is hardly new to Russia, and in fact a
Russian PSA regime has been in place since 1996. In
practice, however, that regime has not eliminated the
uncertainties that deter investors, and legislation
for an improved PSA mechanism remains stalled in the
Duma.

The limited influence of the current PSA regime
reveals why there is little that intergovernmental
cooperation between Washington and Moscow can do to
bring about more investment in Russian oil exports. In
the broadest sense, two industries are emerging in
Russia. One, centered on the aging fields of western
Siberia, is dominated by Russia's major producers and
is geared for so-called brownfield behavior. Oil
firms, now owned mostly by Russians who bought their
stakes at fire-sale prices, have the option of using
the PSA regime but do not do so because the
transparency of PSAS is bad for them -- their profits
thrive on transfer pricing and insider deals. A regime
that was concocted to attract external investors is
not attractive to them because they do not need
outside money.

Russia's other oil industry rests on the harsh margins
of the traditional core: it develops new fields in the
Arctic and the far eastern parts of the country, such
as those off Sakhalin Island. Players in this sector
include Russia's own major firms as well as the top
multinational energy companies. In this second
industry, a viable PSA regime is more important; even
for insiders, the political environment is less
predictable in these new areas which are both
geographically and politically distant from Moscow.
For outsiders, the most lucrative opportunities are
where the fields are "green" and technological
advantages, such as the capacity to work in deep water
and icy environments, are useful. So far, major
projects on Sakhalin, slated to export oil to world
markets and gas to nearby Japan and South Korea, have
been the visible fruits of the effort to attract
outside investment. Government-to-government contacts
have played a role in this process, especially in
cases where investors have found the existing PSA
regime incapable of resolving uncertainties about tax
and regulatory treatment. Indeed, governments can
assist deals when the fundamental economic forces
align, and this function of aiding particular deals is
an important intergovernmental task, whether ad hoc or
institutionalized. No PSA really provides an enclave
of stability -- investors know that they are always
vulnerable to "renegotiation" where the law is weak
and once their investments are entrenched.

DIVERSITY, EFFICIENCY, SECURITY

A more durable energy policy requires recasting the
current effort. The Russian-American partnership needs
to be balanced by other forces. Insofar as the real
goal of this relationship, at least for the United
States, is to help temper America's exposure to
volatile oil markets, partnerships with other
potential producers could be equally advantageous.
Angola, Brazil, Canada, Mexico, Nigeria, and possibly
a postwar Iraq are among the many candidates. Each
would bring its own obstacles to raising production --
but in each case, as with Russia, intergovernmental
cooperation offers only limited leverage. Such
cooperation could have a greater impact on oil
consumption, however, because the chief barrier to
raising efficiency is often the lack of appropriate
policy models and public-sector financing. More
responsive consumer markets anywhere in the world
could help dampen volatility. In fact, policies for
promoting efficiency can have effects on the oil
market similar to those caused by a boost in
production, often at less expense.

For the United States, especially, efficiency is the
sturdiest defense against volatile energy prices. From
1930 through the early 1970s, the U.S. economy
delivered roughly $750 (in today's money) of economic
output per barrel of oil consumed; that amount has
risen to about $1,500 today -- a doubling brought
about partly through higher oil prices, which
encourage frugality, and partly through regulations
that mandate more efficient technologies. A 2002
report by the U.S. National Research Council lays out
useful ways to lift the efficiency of U.S. passenger
vehicles still further, but in recent years American
politicians have been caught in gridlock over fuel
economy.

Russian consumers also offer significant potential for
limiting demand through more efficient oil usage. This
topic, however, has attracted barely any attention in
the new Russian-American energy partnership. Russia
burns about one-third of its oil at home, but price
controls, a glutted local market, and a long history
of neglecting conservation explain why the Russian
economy produces only $300 per barrel burned. (This is
about the same level as in Iran and even worse than in
Saudi Arabia.) Russian economist Yuri Kononov at the
Energy Systems Institute of the Russian Academy of
Sciences estimates that consumer energy prices in
Russia are still only one-half to one-third the prices
in Western markets. As the Russian export
infrastructure expands, however, oil saved at home can
be sold abroad at world prices.

These two actions -- seeking diversity of supply and a
global effort to tame demand -- are the real keys to
enhancing America's energy security. The quantity of
oil that the country imports and the identity of
particular suppliers, on the other hand, are not good
indicators of U.S. vulnerability. The world's greatest
trading nation certainly should not shy away from
trade when it comes to oil, but it should augment its
open door with diversity and efficiency.

BEYOND PETROLEUM

A more lasting Russian-American energy agenda would
focus on subjects beyond the current, fleeting common
interest in oil. An obvious alternative is natural
gas. Indeed, U.S. Commerce Secretary Donald Evans
underscored Russia's potential in this area at the
Houston energy summit. But for American consumers and
policymakers, Russian gas offers little to sustain
interest. Unlike oil, gas trading is generally a
regional business because most gaseous fuel is moved
by pipeline, and long-distance pipelines are
prohibitively costly. A small but growing fraction of
gas is being compressed and cooled to liquid form,
sold at prices set by world markets, and shipped long
distances to destinations including the United States.
Only a small amount of Russia's vast gas reserves,
however, presently have the characteristics needed to
make this export option economically worthwhile. Thus,
to find an area in which governmental dialogue can
truly make a difference, Russia and the United States
should look to the subject that occupied much of their
effort in the 1990s but that both sides then neglected
too quickly: nuclear power.

With the end of the Cold War, the United States and
Russia created a multi-billion-dollar program to
sequester Russia's prodigious quantities of fissile
material and nuclear technology. The goal was to
prevent these "loose nukes" from falling into the
hands of terrorists or hostile states. The Cooperative
Threat Reduction (CTR) program also included funds to
employ Russian scientists through joint research
projects and academic exchanges. Inevitably, this
effort has failed to meet all its goals. In a country
where central control has broken down and scientific
salaries have evaporated, it is difficult to halt the
departure of every nuclear resource. Nor is it
surprising that U.S. appropriators have failed to
deliver the billions promised for this collective
endeavor. Other priorities have constantly intervened,
and Russia's uneven record in complying with arms
control agreements has made appropriation of CTR funds
a perpetual congressional battle. Various good ideas
for reinvigorating the CTR have gone without funding
and bureaucratic attention -- even in the
post-September 11 political environment, in which
practically any idea for fighting terrorism can get
money.

The civilian dimension of the CTR, however, should do
far more than simply try to occupy Russia's idle
nuclear minds. Russia has opened nuclear waste
encapsulation and storage facilities near Krasnoyarsk,
raising the possibility of creating an international
storage site for nuclear waste. This topic has long
been taboo, but it is an essential issue to raise if
the global nuclear power industry is to move beyond
the inefficiencies of small-scale nuclear waste
management. Russia should also be brought in to
worldwide efforts to design new nuclear reactors. The
global nuclear research community, under U.S.
leadership, has outlined comprehensive and
implementable plans for the next generation of fission
reactors. The Russian nuclear program is one of the
world's leaders in handling the materials necessary
for new reactor designs. Yet, despite this fact,
Russia currently is not a member of the U.S.
government-led Generation IV International Forum, one
of the main vehicles for international cooperation on
fission reactors and their fuel cycles. Integrating
Russia into that effort, endorsing Russia's
relationships with other key nuclear innovators (such
as Japan), and delivering on the promise made at last
summer's g-8 meeting to help Russia secure its nuclear
materials must be top U.S. priorities.

For opponents of nuclear power, no plan will be
acceptable. But the emerging recognition that global
warming is a real threat demands that nations develop
serious, environmentally friendly energy alternatives.
Of all the major options available today, only nuclear
power and hydroelectricity offer usable energy with
essentially zero emission of greenhouse gases. The era
of large dams may be ending, however, as democracy
SPReads and more communities object to flooding --
leaving nuclear power as perhaps the most attractive
future option.

To be sure, sustaining serious Russian-American
cooperation on nuclear power will not be easy. Unlike
with oil, however, most of the necessary levers for
effective nuclear cooperation are actually in
government hands. Diplomacy thus offers the potential
for major gains. To make this partnership work, Russia
must do better to overcome the same challenge that
dogged the CTR: keeping account of how money is spent
locally and ensuring that Russian scientists and
nuclear material do not move to adversary nations. The
United States, for its part, must not only sustain
financial support but also integrate a large,
cooperative effort with Russia into current domestic
programs for nuclear technology. These various
initiatives have drifted away from the task of
developing next-generation technologies and are now
focused primarily on improving the function and
longevity of existing U.S. reactors.

Neither government should be naive about the
sustainability of this endeavor. Russia is not an
ideal partner because its borders so far have been a
sieve for nuclear know-how, and because its nuclear
managers are suspected of abetting the outflow. Thus
plans for nuclear waste storage, for example, must
ensure that they render the waste a minimal threat for
proliferation (focusing perhaps on techniques for
physically immobilizing the debris, beyond merely
locks and fences, and construction of a permanent
repository). The United States must also be more
mindful of Russian sensitivity to cooperation on
matters that to date have been military secrets -- a
problem that has halted past efforts to invigorate the
CTR. Another difficult issue that both nations must
confront is Russia's relationship with Iran. A
perennial thorn in Russian-American ties, Moscow's
nuclear cooperation with Tehran owes not just to
Iranian money but also to the complex relationship
between the two countries over drilling and export
routes for Caspian oil. This link to Iran cannot be
wished away, as it is rooted in Russia's very
geography. Any sustainable nuclear partnership between
the United States and Russia must develop a political
strategy to handle this reality.

A RELATIONSHIP RECONSIDERED

Efforts to keep up constructive dialogue between
Moscow and Washington are admirable. But by focusing
on oil, the two governments have seized on a subject
in which cooperation will not much affect the real
world. Despite the fact that the United States is the
world's largest oil importer and Russia is now the
world's largest producer, intergovernmental dialogue
and grand industry conferences have little effect on
where private investors place their capital. Although
the United States depends heavily on imported oil,
ironically it is Russia, because of its economy's
sensitivity to price shifts, that has the most to lose
from this illusory joint effort to manage prices.
Without oil, the Russian-American political agenda is
short, but important subjects -- nuclear power first
among them -- are being neglected. The world,
including the United States, needs the option of
viable nuclear power. Yet Russia's talented scientists
and nuclear resources sit idle, ready for action.

********

#14
BBC
February 21, 2003
Russian fat cat creams the rest