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1. Moscow News: Novy Mir in Brave New World. How is Novy mir (New World) faring after decades in the focus of the readers' attention? The literary
monthly has been issued for 76 years and, as its chief editor Andrei Vasilevsky believes, the fact itself is a cultural asset in its own right
2. Kennan Institute event summary: The Politics of U.S. Policy toward Russia. (Sarah Mendelson)
3. AFP: US threatens Russia over Iraq veto.
4. BBC Monitoring: Russian politicians react to US ambassador's veiled threats over Iraq veto.
5. Izvestia: VERSHBOW: SOMETIMES EVENTS DEVELOP CONTRARY TO THE PREDICTIONS OF PESSIMISTS. US Ambassador Alexander Vershbow discusses the issue of Iraq.
6. Moscow Times: Pavel Felgenhauer, KGB: Big, Bad and Back?
7. Moscow Times: Nikolai Petrov, Putin Reform: Round 3.
8. pravda.ru: Converting Dollars to Gold. Russian people keep losing their faith in US dollar.
9. Interfax: Prosecutor General criticizes anti-corruption measures.
10. Reuters: Russia's Putin calls for crackdown on serious crime.
11. RFE/RL Washington: INVITATION: A New Plan for Peace in Chechnya.
12. AP: Chechens Claim Russians Blow Up Corpses.
13. AP: Report: Crude Nuke Terrorism a Threat.
14. Carnegie Endowment for International Peace meeting summary: Russian Foreign Policy and Domestic Challenges. (Mikhail Margelov)
15. Moscow News: Tatyana Skorobogatko, Tip for the Doctor. Neither the state nor society is ready to abolish payoffs to the medical profession.


Moscow News
March 12-18, 2003
Novy Mir in Brave New World
How is Novy mir (New World) faring after decades in the focus of the readers'
attention? The literary monthly has been issued for 76 years and, as its
chief editor Andrei Vasilevsky believes, the fact itself is a cultural asset
in its own right

Stout literary monthlies the Soros Foundation has given up to support are now
getting help from two ministries, of Culture and of the Media. Their print
runs are modest, and each is trying to keep afloat as best it can: Some
streamline their staff to three people; others replace the outdated makeup;
still others scout around for new names. In the days of the Novy mir
legendary editor Alexander Tvardovsky the monthly did more than shape
literary careers - what the editor managed or did not manage to publish had
an immediate impact on the country's political climate. Which policies Novy
mir is pursuing at the moment, MN's OLGA DUNAEVSKAYA has learned from ANDREI

"Novy mir is not a political periodical, so we are not obliged to respond to
every tiny shift in politics. We are interested in fiction and public
thinking seen, moreover, in a very broad context. I would describe the
magazine as liberal-conservative. This sounds a bit vague, I'm afraid. Among
our contributors there are neither fascists nor communists. In artistic
terms, we are a mainstream publication, the reference line for other literary
monthlies with Znamya on the left of the axis, and Moskva on the right. This
is the way Novy mir was conceived in the mid-1920s by Vyacheslav Polonsky."

You publish works by many good writers, but are there any that refuse to let
you have their staff?

This is not a matter of ideology. Every author has a trodden path of their
own. For instance, I invited Valentin Rasputin to publish his writings in
Novy mir, but he said that he wrote little and sent everything to Nash

Then are there authors you would not touch with a ten-foot pole yourself?
Such as Sorokin whom you lambasted in your periodicals survey, contrary to
your normal practice?

It would be suicidal for the magazine. To begin with, we must take into
account our readers' interests. Also, to me Sorokin is not just a poor
writer; we are simply engaged in different areas of activity. Actually, I
have no idea what it is that he is engaged in. In the survey I simply
responded to the razzmatazz.

I also refused Prokhanov's Mister Hexogen, as did Nash sovremennik, because I
did not doubt that our readers would find the novel unsavory.

Novy mir has always been famous for its social and political journalism.
Wouldn't you agree that Renata Galtseva's article Litigation over Russia,
with its theses about Russia's salvation lying in blanket Christianization
and the need to inculcate the national idea by means of state politics, runs
counter to your motto Be Conservative, Opt for Freedom?

We publish various contributions. Although Ms. Galtseva is a regular
contributor, her article is by no means the editorial manifesto. It is one of
the viewpoints within our spectrum; there are others, too. Which works you've
recently published do you value most?

The diary of Konstantin Livanov, a doctor in Rybinsk, entitled Without God:
Notes by a Doctor. It's about the hinterland in the 1920s. Very poignantly
written; we have had lots of reader response. Oncology as a Pattern by
Tatiana Cherednichenko, an article of great courage in which she relates her
own experience. Dmitry Galkovsky's screenplay, The Ducklings' Friend - rather
unusual stuff for Novy mir. A story by young author Sergei Shargunov, Hurrah!
Boris Akunin's play Hamlet: A Version - the text may seem irreverent, I grant
you, but we thought it would be interesting to publish it. We intend to go on
springing this kind of surprise on the reader, experimentally.

What do you hope for especially this year?

I hope to finish the publication of Alexander Solzhenitsyn's book of memoirs,
A Grain Caught between Two Millstones. We will resume regular publication of
The Literary Collection by the same author. This is not literary criticism;
just one professional reading stuff by other professionals and looking at
them as an equal. Our April issue will contain a study on Yuri Nagibin.

Why is it that Znamya is printing Tvardovsky's Working Notes and not you?

This is a question for Tvardovsky's heirs. They never offered us the text.
Incidentally, it looks more original in Znamya; in Novy mir the project would
be too self-evident. I know that Tvardovsky's family were upset about the way
he came through in Solzhenitsyn's The Oak and the Calf, which we had
published. It could have influenced their decision, and they have every right
to act as they did.

But are you planning to publish anything of Tvardovsky's heritage in the


Are you now getting more or fewer offers from authors than in Soviet times?

Markedly fewer. Only those people are writing who really feel an urge to. The
title of writer no longer holds a promise of benefits. And having their stuff
published in Novy mir will change precious little in the author's life.

Will the magazine makeup undergo any changes this year?

You can't change Novy mir at will. Its archetype was formed decades ago and
it carries a powerful inertia. There's only one new section, Commentary by
Alla Latynina.

In your February issue you started publishing Anna Vasilevskaya's documentary
prose Book of Life. This is one of the most awe-inspiring, honest and
personal accounts of the Leningrad Siege I have read. It was written quite a
long time ago, but it is being published only now. Why?

There was no calculation there. The text was being prepared for publication
little by little; it was written by hand in a thick notebook, with
photographs pasted in. Originally the whole thing was meant for the family
archives. But now I have a feeling the time has come. Any more diaries in the
offing? This is a sure-fire genre.

We propose publishing notes by Alexei Mikhailov about his treatment for drug
addiction in Spain. This is newly written stuff, and likewise a genuine human

What is your vision of the outlook for literary monthlies? Will they have to
change drastically?

This is a very good question. I am confident they will continue to exist but
I am not sure how many of them. They are turning into a materialized
tradition. Novy mir has been coming out for 76 years, and this fact is a
cultural asset in its own right. To take an example, even a poorly produced
performance at the Bolshoi will still attract the public and provoke
discussion, whereas something perfectly good in another theater may well pass
unnoticed. So too with Novy mir. True, the younger generation does not have a
conditional reflex to read this kind of monthly, though our Internet
readership is relatively young.


Kennan Institute
event summary
The Politics of U.S. Policy toward Russia
March 3, 2003
Sarah Mendelson, Senior Fellow, Russia\Eurasia Program, CSIS

Mendelson explained that her presentation drew on the results of a task
force organized by the Century Foundation and the Stanley Foundation that
met in 2001-2002 to discuss factors that shape U.S. policy toward Russia.
The group was trying to identify the domestic influences that impact U.S.
policy, with a particular focus on the period since President Putin rose to
power, and the events of September 11.

The group examined several cases: the U.S. response to Russia’s war in
Chechnya; U.S. support for the development of democratic institutions in
Russia; U.S. support for the safe dismantlement and storage of weapons of
mass destruction in Russia; and U.S. responses to Russia’s relations with
Iran and Iraq. Among the conclusions that emerged from these cases was an
appreciation that Russia, in the post-Soviet period, has not been a major
focus for the American public. Mendelson contended that there is very
little policy debate on many issues even among experts who follow Russia
closely, and that powerful lobbying has mostly been absent. Also, Mendelson
stated that the group’s research found an “inconsistency” when looking at
U.S. policy toward Russia, which led on occasion to deeply problematic
policies. Finally, Mendelson noted that “there is not one office which
entirely controls U.S. policy toward Russia, but rather Russia has been
managed and directed by a multitude of forces.”

Mendelson discussed the Chechnya and democratic assistance cases more in
depth, because in her estimation, “they are under-explored.” Mendelson said
that, though Russia has waged two brutal wars in Chechnya since 1994, U.S.
policy toward these wars has largely been “rhetorical.” Also, within the
U.S. government, there hasn’t been a senior administration official who
“owned” the issue; no one had his/her “name attached to Chechnya.”
Mendelson cited the lack of media effect as another factor and attributed
the lack of coverage to editors’ skepticism that “this is a story to be

Mendelson argued that relatively weak support for democracy assistance in
Russia from the U.S. Congress and the administration is related to a “poor
understanding of what this work entails and how important it is to our
mutual interests.” There is a big discrepancy “between the amount of
rhetoric surrounding assistance, and the amount of money it actually
receives.” She posited that external funding is crucial because the
political system in Russia lacks many of the supporting institutions that
make democracies robust. “The party system, rule of law, civil society –
these are all very weak and underdeveloped,” Mendelson remarked.

Mendelson stated that U.S. budgets for democracy work in Russia have been
“flat or declining,” and expressed concern that if the U.S. support
declines, other donors “will follow.” She was critical of the U.S. and
European business communities noting that they have largely been silent on
important issues like the need for a critical media.

In conclusion, Mendelson suggested that by engaging in a public discussion
about the threats to democracy in Russia and how this is connected to U.S.
national security interests, there might be a possibility that “we can
reverse declining assistance budgets. We need to make a better match of the
needs of democracy and human rights activists -- the very real capacities
in Russia -- and our investment in Russia’s future.”


US threatens Russia over Iraq veto

MOSCOW, March 12 (AFP) - Russia could suffer serious economic and
geopolitical consequences if it vetoes a UN resolution authorising war
against Iraq, the US ambassador to Moscow warned in a newspaper interview
published on Wednesday.

Alexander Vershbow told the Izvestia daily that Moscow could put at risk
planned cooperation between the two countries in the energy sector, that
would include massive US investment in the Russian oil industry.

He also signalled that Russia's strategic partnership with the United States
forged since the September 11, 2001 attacks, as well as cooperation in
anti-missile defence could be placed in doubt.

"We could significantly widen our cooperation in the energy field, increase
US investment in the Russian energy sector, develop new forms of security
cooperation and work together in anti-missile defence. We could increase
cooperation in the fight against terrorism," he said.

The envoy pointed out that the United States wanted to work more closely with
Russia's underfunded space program since Washington grounded its shuttle
fleet in the wake of the Columbia disaster in February.

Russia-NATO ties have just started to blossom since Moscow gained a voice in
the North Atlantic Treaty Organization last May in a new council that
cooperates on issues such as terrorism, proliferation of weapons of mass
destruction, arms control, crisis management and military cooperation, he

"It will be a great pity if progress in these areas is halted, or actually
reversed because of serious disagreements over Iraq," Vershbow said.

The decision to use a Russian veto or abstain would prove critical for the
future of US-Russian relations, the ambassador warned.

"One step or the other will be interpreted entirely differently by the US
people and Congress. Russia should carefully weigh up the consequences," he

Since September 11, Russian President Vladimir Putin swung behind the US-led
war on terror and made good relations with the United States a top strategic

But in recent weeks that policy has unravelled as Moscow has joined Germany
and France in opposing a US attack on Iraq and said it would veto a new UN
resolution that would give Baghdad until next Monday to show it is disarming
or face war.

The proposed US-Russian energy partnership is critical for Russia, with US
energy companies potentially ready to pour billions of dollars into
developing the vast untapped oil and natural gas fields in northern Russia.

Washington has been seeking to reduce its reliance on Middle East oil, with
the looming war in Iraq threatening to further destabilize an already tense
region, and four Russian oil majors have floated a project to build a major
Arctic export terminal aimed at simplifying oil export to the United States.

The United States' support is also key for Russia's efforts to gain
admittance to the World Trade Organisation (WTO).

A senior Russian foreign policy analyst, Sergei Karaganov, accused the US
administration of "desperation" but conceded that threats to halt cooperation
with Russia could lead to "unpleasant and painful" consequences for Russia.

"There is unlikely to be a severe economic fallout," the head of the Council
on Foreign and Defence Policy told the RIA Novosti news agency, adding that
large-scale US investment plans in the oil sector have remained purely
theoretical so far.

"But cooperation with the United States is vital to defend and strengthen
Russian interests in a whole range of global areas, which is why Russia needs
to keep the most friendly relations possible with the United States," he


BBC Monitoring
Russian politicians react to US ambassador's veiled threats over Iraq veto
Source: Ekho Moskvy radio, Moscow, in Russian 1000 gmt 12 Mar 03

US Ambassador in Moscow Alexander Vershbow made quite a statement today.
Interviewed by Izvestiya newspaper, he warned Russia that if it vetoes the
new resolution at the UN Security Council, this may result in curtailing
[Russian-US] cooperation in many areas...

Sergey Karaganov, head of the Council for Foreign and Defence Policy,
believes that the American administration, or some of its members, are now on
the verge of panic, hence such statements.

[Karaganov] They realize that they have lost the information and propaganda
war and that support for their policies on Iraq has waned since two or three
months ago. In connection with this, desperate efforts are being made to
secure at least outward signs of support for their actions if such actions
are taken. But I still hope that the Americans will define their interests
soberly, cast emotions aside and understand that in this particular situation
postponing the operation is not a defeat but a major victory, which the whole
world will greet with applause.

As regards the statements [by Vershbow] to the effect that certain programmes
will be scrapped, there are few such programmes. The scrapping of some of
them - cooperation in space and a number of economic programmes - may be
painful for Russia. However, most of these programmes, for instance the
much-talked-about collaboration in power engineering, have been so far of a
political and virtual nature. At this stage it's a statement of intent so we
can hardly speak here about any serious economic damage.

[Presenter] Vladimir Lukin, former Russian ambassador to the USA and now
deputy speaker of the State Duma, believes that the US ambassador should have
refrained from such an interview. Lukin suggested that it would be better to
work together in all the areas.

[Lukin] I think the tone is hardly appropriate in relations between our
countries. I presume that when Ambassador Vershbow was saying this he must
have realized that he was using the future tense all the time. The future
tense has been in use in talks between Russia and the USA for a considerable
time. This conversation should be totally different. We should recall what
was promised and not done and every case when we were told it would be fine
in the future but nothing in fact happened. I think that this interview was,
therefore, a mistake. In general, I'm against any public exchange of
unpleasantnesses. I'm not very happy about the Russian Foreign Ministry
constantly repeating in public that we would use our veto. It may or may not
be be used depending on the degree to which the resolution drawn up by the
USA and Great Britain is acceptable or not. It is still being drafted, after
all. But the USA is making a mistake by publicly announcing how it's going to
punish Russia. This does nothing but whip up passions. I think that at the
moment we should work on the resolution that has been put forward. I don't
think Russia should heed any warnings of this kind but should act much more
diplomatically that it is at present while sticking to the same positions.


March 13, 2003
US Ambassador Alexander Vershbow discusses the issue of Iraq
Author: Georgy Bovt
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

The UN Security Council vote on the American-British-Spanish
resolution authorizing the use of force against Iraq is coming up in a
couple of days - and it is a real diplomatic drama. The resolution can
be passed if nine of the 15 members vote for it, and none of the five
permanent members imposes a veto. Does the US still hope for UN
approval of its military action, which now seems almost inevitable? US
Ambassador to Russia Alexander Vershbow discusses these questions.
Question: So are nine votes already secure?
Alexander Vershbow: No one can be certain of that at the moment.
Question: Why is it so important to obtain the votes of countries
like Angola and Guinea if permanent members like France, Russia, and
China are known to be opposed to the resolution? It would appear that
the US depends on the opinion of impoverished nations whose
governments are incapable of coping with their own problems.
Alexander Vershbow: Last year everyone was putting pressure on
the US to make it act through the UN, not unilaterally. President Bush
did so. We only try to carry this process to its logical conclusion.
But we repeat: we have the right for a military campaign even in
accordance with already existing UN resolution 1441. As far as the UN
is concerned, this principle to make decisions in the Security Council
was set by the UN founding fathers.
Four months expired after resolution 1441 had been passed. It is
already clear: Saddam does not cooperate with the UN, he does not
disarm. We ask the Security Council to admit that. If our resolution
fails, we will make conclusions. But for some of our partners in the
coalition - I mean both the British and the Spanish - it is very
important that the vote take place. No doubt, the vote will take place
this week. Underway are discussions concerning the possible new
amendments. We are ready to take the concerns of other countries into
account, but not to the extent sufficient to turn this into an endless
delay of decision-making.
Question: Can those amendments serve to put off the ultimatum to
Iraq supposed to be appointed for March 17 even further?
Alexander Vershbow: There are very few chances for postponement.
Only a few more days can be necessary before the vote on the
resolution takes place. I believe, the matter is about these days
exactly. If Saddam makes a strategic decision to disarm and
demonstrates this in a very short time, it would be unreasonable to
set the term of the ultimatum for more than a week after the new
resolution is passed.
Question: The other day US State Secretary Colin Powell talked
about France's position meaning that its veto on the new resolution
would have negative consequences for relations with America, at least
in a short-term outlook. No similar statements have been made
concerning Russia so far. Do you differentiate between the position of
Russia and France? Or are you sure that Russia will not set a veto on
the new resolution of the UN Security Council?
Alexander Vershbow: Right on the contrary. The latest statement
of Foreign Minister Ivanov testifies to the ever-increasing
probability that Russia will set a veto. Unfortunately, this will have
some consequences for our relations.
We will, perhaps, agree with Russian friends that we have too
many joint interests not to cope with such damage. But we should
admit: there will be damage. We have special difficulties with France,
this old ally of ours. Their objections no longer concern the absence
or presence of weapons of mass destruction in Iraq or the problem of
fulfilling decisions of the UN Security Council; they now deal with
fight about the future organization of the world security system.
Meanwhile, we believe it necessary to focus on current troubles, in
the first place on the problem of Iraq having weapons of mass
destruction. The states that voted for UN resolution 1441 should once
again carefully study what is written there. It will then be more
logical for them to vote for the new resolution as well.
Question: But if they don't, will France be the main one to blame
for the failure of the new resolution?
Alexander Vershbow: I wouldn't like presently to enter upon
debate on the topic of who should be to blame. There is still time to
avoid a big split. The only one who benefits on this discord is Saddam
Hussein. Time works for him. The greater gaps divide us, the bigger is
the threat of a new war.
Question: Is it simply a coincidence that a motion was recently
introduced to the US Senate to repeal the Jackson-Vanik amendment
discriminating against Russia in trade?
Alexander Vershbow: The time of introduction is not connected
with Iraq. President Bush has told President Putin more than once that
it was his priority to see that Congress repeals that amendment. The
Senate is controlled by the Republican party and prospects for that
have improved presently. We hoped to do that as far back as last year,
but the argument over poultry meat became an obstacle on the way to
that. We hope that this time even much more serious arguments over
more serious issues will not create such an obstacle.
Question: So consequences will still follow for Russia if it
vetoes the US-British resolution?
Alexander Vershbow: I am afraid they will, at least in the short-
term outlook. Sure enough, it's a pity. For we have a very extensive
agenda. Thus, we could considerably expand cooperation in the energy
sphere, increase American investment in the Russian energy sector,
work out new forms of interaction in the area of security, and
cooperate in the area of missile defense. We could expand cooperation
in fight with terrorism. We believe that Russian partners might be of
great importance in assisting us in outer space after the Columbia
disaster. Relations between Russia and NATO are just beginning to
yield results. It will be a great pity if progress in those spheres is
postponed or reversed at all because of serious differences on Iraq.
There is a great difference between Russia's veto and its decision to
abstain from voting. The American people and Congress would interpret
the two steps quite differently. Russia should carefully weigh up all
Question: Much is said presently about the future development of
Iraq. About certain "roundtable conferences" with the participation of
influential Arab states, Iraq's neighbors, including Saudi Arabia.
Might Russia participate in any such "roundtables"? And how specific
might the dialog be concerning Russia's future contracts in Iraq?
Alexander Vershbow: As far as the reconstruction of Iraq is
concerned: so far there are no closing agreements on the structure of
the interim government and democratization processes in Iraq. There
are not any concerning the economic reconstruction of Iraq either.
Russia's role will be predetermined by the development of the
situation in the next few days. We acknowledge that Russia has its own
interests in the area. Of course, we will consult Russia. But it is
still to determine if Russia blend with the process of reconstruction
in Iraq and in what exact way. As for oil contracts, we acknowledge
that Russia has its interests. But out fundamental position is that
Iraq's oil wealth belongs to the people of Iraq. We will encourage the
new government of Iraq to invite more foreign investors with a view to
the fast reconstruction of the oil sector. But I assume that the
position of the new government of Iraq will also depend on what
contribution different countries made to resolve the present crisis.
Question: The world is now seeing a dramatic rise in anti-
American attitudes. Not only in the Arab countries, but also in
Europe, which is usually friendly enough towards America. Is the US
administration still convinced it is right? How can you manage to
overcome the powerful negative attitudes to your policies? It seems
this is a very difficult task.
Alexander Vershbow: We hope we will manage to handle Saddam
quickly in the military sense, and to quickly restore stability in
Iraq. Then the world will be convinced that the people of Iraq
experience the same feeling of liberation as the Afghan people after
the intervention of 2001. And the rest of the world will admit that we
did the right thing after all.
Question: Let's compare Iraq with North Korea. You are certain
that Iraq is concealing weapons of mass destruction. But North Korea
does not even hide them. However, a much milder approach is being
taken to the North Korean leader - who deserves to be overthrown no
less than Saddam Hussein.
Alexander Vershbow: In the short-term outlook North Korea does
not have a large amount of weapons of mass destruction presenting a
threat to the region. But we are greatly concerned about their
provocative actions in the last few months and we are actively
involved in the search for a political solution to the problem.
Question: Let's look at Iraq in light of Islamic fundamentalism.
Iraq is a secular state. In solving the Iraq problem, you will not
solve the problem of rising Islamic fundamentalism. There is no
evidence that Iraq has supported Al Qaeda. But Saudi Arabia is known
to have supported it; funding was provided from there and other
monarchies of the Persian Gulf. They are very conservative,
undemocratic - and undoubtedly not secular states.
Alexander Vershbow: Any new regime would be better for the people
of Iraq than the present one. Thousands of people have been murdered
and tortured under it. Kurds were poisoned with gas and chemical
weapons. Prisoners were subjected to biological warfare experiments.
This must be stopped. Our experience in other places, including
Afghanistan, makes it possible, given international support, to create
functioning public institutions that can represent most diverse
groups, which will serve as a basis for the democratic process.
Besides, the experience of Afghanistan proves this: the pessimists
were mistaken in many of their predictions. We overthrew one the most
fundamentalist regimes and created a more liberal order. Democratic
reforms in Iraq can strengthen these processes in other Islamic states
and strengthen reform and democratization trends in the entire Arab
(Translated by P. Pikhnovsky)


Moscow Times
March 13, 2003
KGB: Big, Bad and Back?
By Pavel Felgenhauer

After the collapse of communism, the KGB was broken up into five separate
agencies, but it was not fully disbanded nor was the successor organizations'
mode of operation seriously reformed. Now President Vladimir Putin, a former
KGB operative, is reassembling the dreaded Soviet secret police.

The president announced that two former KGB agencies, the Federal Border
Service and Federal Agency for Government Communications and Information,
will be reintegrated with the main KGB successor agency, the FSB.

It was FAPSI's job not only to encode and secure government communications,
but also to intercept e-mails, faxes and other private communications, as
well as to record telephone and radio conversations in Russia and abroad. Now
the enlarged FSB will be able to listen to anything any Russian (including
government officials) says or sends -- without the need to involve other
government agencies or explain its actions.

Everything will be concentrated in one big secret police agency: the
authority to investigate suspected "foreign spies" and other wrongdoers the
state does not like; and the ability to intrude deeply into the private lives
of citizens using the most modern electronic means.

It is typical that while announcing the recreation of a KGB-style super
secret police, Putin did not propose the creation of any, even superficial,
public system for controlling its activities. Of course, an authoritarian
state does not envisage any such controls.

The old-time all-powerful KGB not only controlled the lives and souls of its
subjects, it also controlled the external borders of the Soviet Union. It
seemed logical to bundle all the jobs into one super agency, including the
border guards.

Now the FSB will also have its own massive armed force, the border guards --
with more than 100,000 soldiers, armor, an air force and a navy. Why would a
truly democratic country need such a hybrid super agency?

Putin's official explanation for the secret service reforms is that
"government structures are not acting efficiently enough or duly coordinating
their efforts in this very important sphere."

Putin's assessment is correct -- the lack of coordination is appalling. In
fighting in Tajikistan in the 1990s and recently in the Caucasus, Russian
border guards and the army both suffered unwarranted losses of men and
equipment due to poor coordination.

The more recent encounters occurred last August and September in the Chechen
mountains and in nearby Ingushetia when Chechen rebel groups allegedly
infiltrated across the border from Georgia. In August, border guards were
killed because they did not get sufficient heavy gun and air support from the
army and air force in time. In September, the border guards in turn
reportedly allowed a large rebel force to slip through their lines and did
not inform the army in time or in full. A unit of the 58th army was ambushed
in Ingushetia and suffered losses. It was later announced that the "bandits"
were surrounded and would be eliminated. But in fact the rebels slipped away.

It would seem logical for Putin to correct this obvious lack of coordination
by eliminating the inefficient Russian system of parallel armies that has
border guards, Defense Ministry and Interior Ministry troops often fighting
on the same battlefield under independent commands. Instead a new powerful
FSB army is being created.

In many East European countries, former officers of once all-powerful
communist secret police forces are banned from holding public office. In
Russia, a former KGB officer is reforming the country to his likes and
inserting KGB cronies in important positions.

A new drug tsar was appointed this week, Viktor Cherkesov, who will be head
of a newly formed State Committee for the Control of Narcotics. Narcotics
truly need controlling in Russia, but Cherkesov has a background of
prosecuting Soviet-era dissidents and in more recent times charged the
environmentalist Alexander Nikitin with "espionage." Who can guarantee that
in the future the new tsar will not use trumped-up narcotics charges to
imprison dissidents?

The media has been subdued, but press freedom has not yet been fully
eradicated. Putin has built a centralized system of authoritarian rule, but
major unrestricted repression has been unleashed only in Chechnya. Today only
Putin's good will keeps Russia, which is balanced on the brink, from becoming
a dictatorship. How long will this clemency last?

Pavel Felgenhauer is an independent defense analyst.


Moscow Times
March 13, 2003
Putin Reform: Round 3
By Nikolai Petrov

The rumors that President Vladimir Putin was planning to form a single
super security agency, the Federal Investigations Service, have not come
true, at least not yet. Instead, Putin abolished or broke up a number of
security agencies on Tuesday: FAPSI, the Federal Border Service and the Tax
Police. He also created one new agency, the State Committee for the Control
of Narcotics.

In the short term, the shake-up could be viewed as part of the struggle for
power and influence in the crucial security and intelligence sectors --
either as a reaction to the events of Sept. 11, 2001, or as a preemptive
strike ahead of the upcoming national elections. The changes can also be
viewed as part of Putin's long-term strategy for government reform, and in
this context Tuesday's reshuffle is the third round of these reforms.

In the Soviet era, the state's security and intelligence services were
concentrated in three agencies: the Defense Ministry, KGB and Interior
Ministry. After the collapse of the Soviet Union, the big three quickly
disintegrated, leading to a sharp increase in the number of agencies -- a
dozen or so in the early 1990s. By the end of the decade, 14 agencies
possessed armed troops. This diffusion of responsibilities and functions
led to confusion, the lack of a unified command and loss of manageability.

After the first war in Chechnya, the Russian leadership's concern about
this disintegration hardened into a resolve to make some fundamental
changes. Under a decree signed in July 1998, all agencies containing armed
forces were ordered to redraw the borders of their territorial subdivisions
to conform with Russia's military districts. However the reform, in which
Putin was involved first as a member of the Security Council and later as
its secretary, was not implemented in full at that time.

Round One of Putin's reforms took place on May 13, 2000, with the decree
creating seven federal administrative districts. One week later Viktor
Cherkesov, deputy director of the FSB, was appointed a presidential envoy
along with Deputy Interior Minister Pyotr Latyshev, Tax Police General
Georgy Poltavchenko, two army generals and two civilians. Over the next
three months the envoys assembled their staffs, assigning officials from
the so-called power agencies a leading role. All federal security and law
enforcement agencies created federal district subdivisions except for the FSB.

Round Two. In March, 2001, Sergei Ivanov, secretary of the Security
Council, took over as defense minister, while his first deputy, Mikhail
Fradkov, was installed as Russia's top tax cop. Boris Gryzlov moved into
the interior minister's office, and the former minister, Vladimir Rushailo,
became head of the Security Council. Far-reaching staff changes were soon
carried out in all four agencies.

Round One of the reform established federal district-level divisions as the
structural center of the reorganized agencies. In Round Two the so-called
chekists seized control of the main power agencies. And in Round Three,
Putin has redistributed turf and resources among the power agencies.

So, who are the winners and losers in all this?

The last round of transformations has substantially strengthened the three
traditional Soviet power agencies. Putin's St. Petersburg allies in the
power agencies -- Nikolai Patrushev at the FSB, Ivanov and Gryzlov -- are
joined by Cherkesov, whose anti-drug agency has been given the disbanded
Tax Police's buildings, funding, equipment and personnel.

The logic of giving such a powerful agency the task of policing the
narcotics trade doesn't become clear unless the new committee's purview
will be substantially broader than announced, and will include the war on
terrorism, as Putin has suggested it may.

The decision to abolish the Tax Police makes rather less sense. If the tax
police are thrown into the war on drugs, the Interior Ministry will have to
spend considerable time and resources training new ones.

The replacement of Cherkesov with Valentina Matviyenko as presidential
envoy to the Northwestern Federal District is particularly intriguing. For
starters, none of the envoys has been replaced until now, despite the fact
that several of them are obviously incompetent. What's more, the
Northwestern Federal District, which contains Kaliningrad and St.
Petersburg, is both crucial and particularly complex. It only made sense
that Putin put Cherkesov, a trusted ally, in charge of it. Has Cherkesov,
like Schiller's Moor, "done his job?"

Under his watch, many regional law enforcement officers were replaced,
particularly in St. Petersburg; criminal cases were opened against four
deputy governors of St. Petersburg and other members of the administration;
and a network of obshchestvennye priyomnye were opened across the federal
district, complete with rather nontransparent sources of funding. The task
of intimidating Governor Vladimir Yakovlev and blocking his plans to get
re-elected to a third term has effectively been achieved. However,
Cherkesov has been far less successful vis-a-vis preparations for St.
Petersburg's 300th anniversary and in his work with Kaliningrad.

Nonetheless, Cherkesov's appointment to head a new powerful law enforcement
agency is clearly a promotion (and apparently something that he lobbied for

It's still too early to say what problems and benefits Putin's sweeping
changes will produce. On the one hand, strengthening the security agencies
could improve their ability to work together and maximize their resources.
On the other hand, the lack of transparency and civilian control increases
the risk that a monster like the KGB will be resurrected. This lack of
control is already evident in the way the changes were made: by
presidential decree, in violation of existing law, and with no discussion
in parliament.

Nikolai Petrov, head of the Center for Political and Geographical Research,
contributed this comment to The Moscow Times.


March 12, 2003
Converting Dollars to Gold
Russian people keep losing their faith in US dollar

It deems that the decade of Russian people’s whole-hearted confidence in US
dollar is coming to its end. Years of reforms made people of Russia think
that everything might crush, devaluate, turn to dust in a blink of an eye,
although packs of green money would remain totally secure. However, an
American dollar stumbled on the way of its constant growth. It seems that
this will cost it a lot.

However, if a US dollar is not the most reliable way for people to save
their money, Russians will have to deal with an inevitable question – what
can serve as a substitute? Is it real estate or land, or cars? However,
only a few people in Russia can convert their money the same way as Western
common people do, taking into consideration the fact that practically every
Russian person has a certain quantity of dollars. In this case Russians pay
their attention to everlasting values.

Gold has always been the absolute universal equivalent on account of its
chemical peculiarities. In addition to that, gold is the metal that is used
in the jewelry industry. The economic boom of Western countries and the
targeted policy of American and European banks used to push gold into the
background. A dollar became much more important than gold. However, gold
managed to keep its position anyway. As it seems, the present time is just
the right moment for increasing the role of gold as the universal equivalent.

As a rule, the interest to gold as a way to save money grows little by
little. However, the situation changes completely during a crisis or an
economic disaster. Bank specialists say that the uneven growth of demand on
gold occurs for the third time in Russia. The first time it happened after
the crisis of 1998, then - in September of 2001. The third time takes place
at present moment. Gold gets more expensive today. The majority of Russian
experts think that the reason of such a sudden increase of demand on this
precious metal is the same as it is with the growth of the euro rate. The
subconscious distrust in dollar is finally finished with its quantity,
turning to quality. Yet, according to experts’ estimates, it is the rise of
prices on gold, which makes a common consumer react. Common people think
like this: if it becomes more expensive, this means that a lot of people
need it, so why not joining them? On the other hand, it stands the reason
that it is a lot better to buy something when prices go down, not up. If
something becomes more and more expensive, it is the best time to start
selling it.

Any Russian person can come to a bank and buy some gold there. Banks sell
gold in the shape of bars and coins. It is the Russian Central Bank that
produces gold coins. There are two kinds of those coins: investment and
collectible coins.

Investment coins are not taxed with value-added tax at their purchase,
which makes them rather attractive to buyers. It is possible to acquire
them in banks, paying the price of metal, as well as the commission fee of
up to five percent. If prices go up, one may sell those coins. Sometimes
gold prices might experience the fluctuation of ten or fifteen percent
within a weekend. However, gold prices might fall and grow rather
considerably at times. Gold prices have been growing since 2001 – from $250
to $375 per troy ounce. Advanced “investors” had a good opportunity to gain
a lot of profit with the help of that fluctuation. On the other hand, those
people, who purchased some gold at the price of $370 per ounce, were
deprived of any profit at the moment. They are forced to hold their
investments at the moment, hoping that gold might get more expensive in the

However, if someone does not like the idea of being worried over exchange
fluctuations, it would be better to choose collectible gold coins.
Unfortunately, they are taxed with value added tax, although their price
grows with time, covering taxation costs. Yet, one should be a good
specialists of collectible gold coins. It is possible to buy the goods of
low liquidity, which will inevitably cause a lot of troubles in the future.
Only two or three banks work with collectible coins. Selling those coins to
onsellers or numismatists can be rather risky.

Russian Federation Central Bank specialists say that the most popular
series of collectible gold coins is Zodiac Signs. The Central Bank is going
to increase the output of those coins next year. In addition to that, coins
are expected to become 2.5 times larger (they are rather small at the
moment). One gold coin of Zodiac Signs series costs 1300 rubles, which is
equal to the sum of $40. To crown it all, the Central Bank has something
unique to offer as well. There is a unique gold coin, for example, which
weighs one kilogram. The coin was issued to commemorate the 300th
anniversary of St.Petersburg.

If Russian people do not believe in the all-mighty dollar anymore, if it is
too late to buy euros, it is possible to buy some gold. This would be a
nice, even a beautiful thing to do. Furthermore, it is possible to convert
gold in rubles easily. More importantly, every sold gold coin will help the
Central Bank to increase the Russian gold reserve, which has been hidden by
Russian authorities in American and European banks right in the middle of
another coming global economic crisis.

Kira Poznakhirko
Translated by Dmitry Sudakov


Prosecutor General criticizes anti-corruption measures

MOSCOW. March 12 (Interfax) - Prosecutor General Vladimir Ustinov has
criticized the anti-corruption measures implemented in Russia.
"The achievements in eradicating corruption among bureaucrats have been
grossly exaggerated," Ustinov said at a law enforcement agencies' meeting in
Moscow on Wednesday.
"The measures, in effect, target minor bribe-takers, including doctors,
teachers, company staff and traffic police inspectors," he said.
As a result, courts are refraining from handing down prison terms to two
thirds of bribe-takers, he said.
However, international experts reported that Russian officials received a
total of $16 billion in bribes in the past year. This means that $20 billion
was diverted from investment in the economy, Ustinov said, referring to the
expert information.
"Where does the operative information disappear to? Who and what bars the
information from being turned into criminal case material?" he asked.


Russia's Putin calls for crackdown on serious crime
March 12, 2003
By Andrei Shukshin

MOSCOW, Russia (Reuters) - President Vladimir Putin told Russia's prosecutors
Wednesday that he did not believe their rosy statistics and called for a
crackdown on serious crime.

Crime rates have skyrocketed in Russia since the collapse of the well-policed
Soviet Union in 1991. Putin, who won his seat in the Kremlin because of his
reputation as a strong leader, has made the fight against crime a priority.

"Last year the total number of recorded crimes went down almost 15 percent,"
Putin told a hushed audience of uniformed officials. "Yet everybody knows
that these statistics fall far short of reflecting the real situation fully
and accurately."

The Kremlin leader quoted experts as saying police deliberately failed to
register some 40 percent of criminal offenses to improve the overall picture.

"Serious and very serious crime, including murder, continues to dominate.
Street crime is not subsiding, property protection remains a problem. All
these alarming facts offer no grounds for victorious reports," Putin said in
televised remarks. "The main task is to lower the number of crimes against

In 2002, more than 1.8 million people were victims of violent attacks, Putin
said. Russia's population is 145 million.

Russia, which had little organized crime in Soviet days, has since sunk into
a quagmire of contract killings, protection rackets and teenage violence.

Criminal groups are said to be running big business and rampant corruption
has poisoned Russia's image abroad.

Putin, who last year launched a crusade against drug-trafficking, said he was
bewildered by official reports showing some Russian regions were problem-free.

"We are all aware of the situation and it is hard to imagine that in these
republics there are no drugs-related problems. It is impossible," he said.

Russia now has more than three million drug users, about two percent of the
population. Putin last year called drug addiction in post-Soviet Russia a
social disaster, when he launched a national agency to lead a crackdown on
drug trafficking.

On Tuesday, Putin appointed a former fellow-KGB officer to run a newly
created committee on fighting drug-trafficking.

Putin also told his audience on Wednesday he had asked parliament to amend
the criminal code and soften punishment for less serious crimes, in part to
help remedy the situation in Russia's overcrowded prisons.


From: ZvanersM@rferl.org
Sent: Wednesday, March 12, 2003
Subject: INVITATION: A New Plan for Peace in Chechnya

Radio Free Europe/Radio Liberty
invites you to a briefing by
Ilyas Akhmadov
Minister of Foreign Affairs, Chechen Republic of Ichkeria

A New Plan for Peace in Chechnya

Tuesday, March 18, 2003
in Conference Room A (4th Floor) at
Radio Free Europe/Radio Liberty
1201 Connecticut Ave NW
[entrance on Rhode Island Ave NW, next to St. Matthew's Cathedral]

Armed conflict continues in the North Caucasus, as Russia's second Chechen
war marches through its fourth year. Russian authorities are preparing to
hold a referendum on March 23, 2003, seeking approval of a new,
Moscow-written Constitution for Chechnya. Ilyas Akhmadov, the top
diplomat in elected Chechen President Aslan Maskhadov's government, is in
Washington to unveil a new initiative to bring peace to his war-torn land.
Akhmadov will be accompanied at the briefing by Olivier Dupuis, a Member
of the European Parliament representing the Italian regions of Milan,
Turin and Genoa.

Ilyas Akhmadov was appointed foreign minister in mid-1999, shortly before
the Russian Federation's military launched attacks against Chechnya. Born
in Kazakhstan, Akhmadov graduated from Rostov State University in 1991
with a degree in political science. From 1994 to 1997, Akhmadov served as
a soldier and officer in the Chechen resistance, eventually becoming the
aide de camp to Chechen President Aslan Maskhadov. Following the conclusion
of the
war, he worked with Doctors Without Borders (Medecins sans Frontieres) to
delivery medical and humanitarian assistance to Chechen civilians.

Please RSVP by Monday, March 17, 2003 by email to <dc-response@rferl.org>,
by telephone to Melody Jones at
(202) 457-6949, or by fax to (202) 457-6992.


Chechens Claim Russians Blow Up Corpses
March 13, 2003

MOSCOW (AP) - Aslan Dzhabrailov says he wasn't supposed to be seen again,
dead or alive. He says Russian troops in Chechnya dragged him from his bed
last month and tortured him, then ignited explosives under him and his dead
brother, apparently to erase the evidence. Had the explosives gone off, the
men's remains would have been unrecognizable. In what would be a grisly
twist to the pattern of alleged military abuses in Chechnya's 3 1/2-year
war, residents and human rights campaigners say fragments of blown-up
bodies are being found all over the war-ruined region.

Rather than put a stop to human rights violations, the military appears to
be doing its best to hide them, critics say. Some even see signs of a
coordinated campaign of killing Chechens.

``Lately, near a pipeline not far from our village, (Chechen) policemen
have been finding people's blown-up remains,'' said Murzabek Saidulayev of
Belgatoi, about 18 miles south of Grozny, the capital. ``That's where the
federals (troops) like to blow up corpses. They drive there in armored
personnel carriers.''

Lawmaker and rights campaigner Sergei Kovalyov theorizes that the intent is
to make it difficult for independent investigators to connect the corpses
to the soldiers who allegedly arrested them. Bodies blown up beyond
recognition can more easily be blamed on the rebels, he says.

Kovalyov traveled to the United States and Britain last month to press for
action, but was told ``quiet diplomacy'' was preferable. He says that isn't

President Vladimir Putin and other officials have repeatedly called on
troops to obey the law during security sweeps that civilians say often lead
to disappearances.

Last year the military ordered arresting troops to fully identify
themselves and inform relatives of detainees' whereabouts. But rights
advocates say the order is ignored and most likely meant to appease critics

The pattern of blown-up bodies, and the fact that remains of people from
different parts of Chechnya are found in the same place, point to a
centralized system of violence, Kovalyov said.

``What comes to mind immediately are death squads. ... The question of
genocide could be raised,'' he added.

Igor Botnikov, a Kremlin spokesman on Chechnya, scoffed at the charges,
saying he would ``leave those words on Mr. Kovalyov's conscience.''

Asked if the charges were worth checking, he said all allegations of
military abuse are investigated.

Independent verification is impossible because violence and government
restrictions prevent Western journalists from working unimpeded in Chechnya.

Dzhabrailov, 23, spoke to The Associated Press on condition his location
not be revealed because he feared reprisals. The details of his story match
the patterns Kovalyov's allies at the Russian human rights group Memorial
have documented.

His head bandaged and his face covered in bruises, Dzhabrailov said masked
troops stormed his house in the village of Pobedinskoye, 9 miles west of
Grozny, at dawn on Feb. 16. They pulled him and his brother Valid, 30, from
their beds, and - ignoring the pleas of their mother and sister -
handcuffed them, put sacks over their heads and drove for about an hour
until they heard gates opening.

He said he heard helicopters and believed he was at Khankala, the
military's main base in Chechnya.

Dzhabrailov was separated from his brother and brought to a basement, where
he remained chained to a pipe for a day and a half. Masked men visited him
periodically, jabbing his kidneys with guns and breaking his nose with

They demanded Dzhabrailov confess to having fought with the rebels.
Dzhabrailov said he was never involved in fighting.

In the evening, he said, an unmasked man came, silently put a bag over
Dzhabrailov's head and led him to a vehicle.

``A cold body lay under me,'' he said.

After a long ride, the men removed the corpse from the truck and dragged
Dzhabrailov onto the ground, his head still covered. He said he heard a
shot and a bullet took off some skin above his ear.

Dzhabrailov said he heard the men put something underneath him and the
corpse and light it with a cigarette lighter.

Then the truck left, and Dzhabrailov freed himself and extinguished the lit

He looked at the corpse next to him and recognized his brother's mangled
body by his clothes.


Report: Crude Nuke Terrorism a Threat
March 12, 2003

WASHINGTON (AP) - The threat of terrorists setting off a crude nuclear bomb
in a major city is real and should be urgently addressed, concludes a
private report issued Wednesday on controlling nuclear materials.

Sen. Richard Lugar, R-Ind., chairman of the Senate Foreign Relations
Committee, called the findings critical to convincing lawmakers and the
Bush administration that more needs to be done to safeguard nuclear
materials around the world.

The report concludes that the easiest way by far to prevent such a tragedy
is to keep terrorists from obtaining material they can use for a weapon.
However, it adds, hundreds of tons of nuclear material continues to be kept
with inadequate security in hundreds of locations across the globe.

``The scope of the effort does not match the scale of the threat at a time
when these programs are more essential than ever,'' Lugar said at a news

The report, part of a project at Harvard University, is only the latest in
a string of studies on global efforts to keep nuclear materials and
warheads out of the hands of terrorists or rogue states.

Much of the Harvard study focuses on U.S. efforts to safeguard nuclear
materials in Russia.

Matthew Bunn, one of its authors, says an equally daunting task is to
develop greater safeguards at research reactors around the world where,
often, only minimal security protects reactor fuel and other material.

``There are hundreds of potential sources of weapons grade material,'' said

Among the report's findings:

The al-Qaida terrorist network has tried for more than a decade to obtain
nuclear bomb-making materials; it might have succeeded if its Afghanistan
base had not been dismantled.

At least four times in 2001 and 2002, terrorists carried out reconnaissance
at Russian nuclear warhead storage sites or transport trains.

While the United States is spending $1 billion a year on various programs
to better safeguard nuclear materials and warheads, many of them in Russia,
only a small fraction of such materials are thought to be safe and ``the
pace of progress is unacceptably slow.''

Hundreds of tons of highly enriched uranium and separated plutonium
continue to be kept in ``dangerously insecure'' locations in hundreds of
buildings in scores of countries, including research reactors with minimal

``In short, it is simply not the case that the U.S. government is doing
everything in its power to prevent a terrorist attack on the United States
from occurring,'' the report says.

``The threat that terrorists could acquire and use a nuclear weapon in a
major U.S. city is real and urgent.''

Former Sen. Sam Nunn, co-chairman of the Nuclear Threat Initiative, a
private group that sponsored the Harvard study, acknowledged in an
interview that similar warnings - and similar findings - have been produced
in other reports in recent years with no increased sense of urgency in
Congress or at the White House.

``It takes time. I'm not discouraged, but I am at times frustrated,'' said
Nunn. He said that after the Sept. 11, 2001, terrorist attacks, U.S.
intelligence agencies received a report - later found to be wrong - that a
nuclear bomb might have been smuggled into New York City.

``I'm told everyone took it seriously and believed it could be real,'' said
Nunn. ``Thank God it was not real. If that had happened and we saw
Manhattan disappear from the map, what is it that we would have asked
ourselves the next day? We'd be looking all over the place pointing fingers
in every direction.''

On the Net:

Nuclear Threat Initiative: http://www.nti.org/cnwm


Carnegie Endowment for International Peace
meeting summary
Russian Foreign Policy and Domestic Challenges
February 25, 2003

Mikhail Margelov is the Chairman of the Committee for Foreign Affairs of the
Federation Council. He gave a brief presentation and answered questions from
the audience at a lunch seminar moderated by Dmitri Trenin, Senior Associate
at the Carnegie Moscow Center.

Mr. Margelov's presentation focused on Russian foreign policy with regards to
the 'Axis of Evil' and the future of Iraq. First, Margelov cautioned against
grouping North Korea, Iran, and Iraq under the common name, 'Axis of Evil,'
for fear that such a label would effectively unite these states formally in
their opposition to the West and America in particular. Russia would prefer
to deal with these dictatorships through active engagement, by talking to
them and attempting to integrate them into the world economy, which will in
turn promote greater regime transparency. As Margelov emphasized several
times during his remarks, Russia and the United States share common goals in
their respective foreign policies, but currently see different paths towards
the achievement of these goals.

On Iraq, Margelov emphasized that his country has no love of Saddam Hussein
or desire to see his career extended. Unilateral action against Iraq,
however, would engender resentment in the Muslim world and would be perceived
as imperial aggression by the Muslim people. Margelov alluded to the Chicago
mobster Al Capone to demonstrate his point, noting that while you can reach
better results with good words and a revolver than with good words alone, you
can't reach the best results with the revolver alone. Unilateral military
action in Iraq would damage the best interests of both Russia and the United

Yet assuming that some sort of war in Iraq would occur, under whatever
auspices, Margelov laid out Russia's foreign policy objectives for the
reconstruction of Iraq. First and foremost, Russia sees itself as a bridge
between Europe and the United States, able to understand certain aspects of
both policies and thus mediate between the two. Russia views the burgeoning
anti-Americanism in Europe as "dangerous," and does not wish to provoke it
further. Margelov envisions a joint Russia-NATO council or some other
institutionalized means of working together to address possible scenarios for
reconstruction of the Middle East. As with Afghanistan, Russia expects to
provide a high level of intelligence on Iraq. Russia seeks to preserve the
territorial integrity of Iraq, ensuring that the Kurdish minorities in
Turkey, Iran and Iraq are unable to unite, and also to integrate Iraq into
the world economy. This economic integration must take into account the
interests of all the "big players," particularly with regards to oil, as well
as the interests of the other Arab nations in the region.

The discussion dealt generally with the interaction between foreign policy
and internal politics in Russia. Margelov explained former Foreign Minister
Yevgenii Primakov's visit to Baghdad as an attempt to prove to the Communist
party that Putin's government is doing all it can to avert a war. One
participant asked whether Putin's renewed use of 'multipolar' language in
recent days signified a step away from Russia's apparent acceptance of its
status as 'junior partner' to the United States. He also asked Margelov to
outline in more detail his plan for maintaining the territorial integrity of
Iraq. Margelov replied that Russia had never accepted status as a junior
partner to the US; rather it has always found the term insulting and untrue.
Over the last two years, Russia and the US achieved a new relationship, not
one of junior and senior partnership, but one in which each party learned to
disagree with the other without becoming enemies. The recent language of
multipolarity is not Primakovian, but an attempt to show the communists that
all is being done to prevent military conflict. Though closer perhaps to the
European position, Russia seeks to act as a bridge between Europe and the
United States.

To preserve the territorial integrity of Iraq, Margelov argued that national
administrative sectors not be established after the war, for fear that they
might turn into quasi-states. Contemporary Iraq is home to a complicated
mixture of nationalities, including Kurds, Sunnis, Shiites, Syrians, and
Jews. The social structure is more complicated than Afghanistan, without a
Hamid Kharzai, or any charismatic leader, to unite the Iraqi people. It is
hard to imagine who might lead Iraq in the future, lending further impetus
for the creation of a joint policy-planning group on Iraq.

Another participant suggested that many people might think that for Russia to
take part in what happens after "the plane lands in Iraq, it should be on
board when the plane takes off." Referring to Primakov's presence in Baghdad,
Margelov replied that Russia had already arrived. He disputed the necessity
of a 'brotherhood of arms' such as was undertaken by the "great allies of the
United States, Bulgaria and Estonia," saying that he did not "think it
important to show military unity in Iraq." More important is to think about
what will be done in Iraq after Saddam, particularly concerning the
humanitarian crisis that might emerge in Iraq after a war.

When asked how Russia would vote on a Security Council resolution calling for
military action, and how it might respond to unilateral US action, Margelov
replied that if Saddam Hussein fails to comply with the previous resolutions,
military action under the umbrella of the UN would be considered, so as to
preserve both the territorial integrity of Iraq and the political integrity
of the Security Council.

Another participant asked whether Putin's stand on the Security Council vote
had changed as a result of his trip to Paris. Margelov replied that Russia's
stance remained consistent in its pragmatism, seeking to disarm Saddam
Hussein and mediate between Europe and the United States.

The last questions concerned the relationship between Russia's internal
politics and its foreign policy, and the creation of a joint policy planning
council between Russia and the US. Margelov outlined domestic factors
influencing external policies, including the upcoming Duma elections in
December 2003. The President's Unity party will have to integrate a wide
range of political forces from both the Communist and the SPS [Union of Right
Forces] camps. Margelov denied that Primakov held particular sway with Putin,
but noted that to achieve success in December the President had to send
messages to the old style politicians. A new generation of political leaders
is emerging, however, to which the United States must pay careful attention.
Margelov noted that when Putin's name first surfaced, many Russia-watchers in
the US had no clue who he was or how he came to power. America should not
make such a mistake again, and should get to know the new political
generation now. The Unity party is attempting to cast itself as a new
Conservative Party, modeled on the Republican Party or a European style
Conservative Party. The Russian Communists, meanwhile-unlike those in other
former Soviet states-have not adopted Social Democratic ideas and remain true
Bolsheviks. The Communist party continues to garner 30 percent of the vote.
The only criticism Putin, who is a patriotic president and has reinstated the
red star and restored the Soviet national anthem, awaits from the Communist
party is on his foreign policy.

Margelov also explained his suggestion of a joint policy planning council,
drawing primarily on the example of a similar German-Russian council already
in existence. Putin and Schroder meet twice a year with a staff supporting
their discussions composed of representatives from parliament, government,
and the business sector. Margelov stated that a great need exists for a
similar initiative between Russia and the United States, as the many
discussions conducted by independent groups such as the Aspen Institute and
the East-West Institute have not produced concrete results. One participant
noted that Margelov's suggestions seemed to resemble a sort of joint Marshall
Plan, particularly with regards to activity in Central Asia. She agreed with
the need for such a plan, but asked how, given that neither Russia nor the
United States had done enough to support the transitions in Central Asia thus
far, the two countries would work together now in the region without anyone
pushing them to do so. Margelov replied that the Central Asian states must be
more deeply integrated into the world economy, which will in turn encourage
the Central Asian states to become more transparent. Russia should support
such an economic expansion because it would benefit from it. She noted that
Russia's recent gas deal with Turkmenistan, while economically advantageous
to both Russia and the leadership of Turkmenistan, would neither integrate
Turkmenistan into the world economy nor encourage greater transparency.
Margelov replied that President Putin is an "evolutionary, not a
revolutionary," and that immediate regime change would be inadvisable for the

Summary prepared by Anne O'Donnell, Junior Fellow with the Russian and
Eurasian Program at the Carnegie Endowment.


Moscow News
March 12-18, 2003
Tip for the Doctor
Neither the state nor society is ready to abolish payoffs to the medical
By Tatyana Skorobogatko

Doctors stage demos to demand higher salaries. The ruling authorities do not
promise large raises, but point to a way of improving the doctors' well-being
and with it the standard of medical service: Let the population pay. Legally,
not under the counter. This is what the health minister keeps talking about.
But who will translate the minister's idea into reality?'
Black and White

According to official statistics, 80 percent of medical services in Russia
are available free of charge. The state spends approximately $7 billion on
the public health system, and $1.5 billion comes to healthcare providers from
patients (a little less than one-third of this amount are voluntary medical
insurance policy premiums, the rest being the so-called paid medical
services). Independent experts believe the latter component is much higher.
Thus, a study of corruption practices, conducted by the INDEM foundation in
the late 1990s-early 2000s, puts shadow payments in the health service sector
at $600 million.

The medical "black" market is breathing down the "white" market's neck. It
cannot be described as wild: It is regulated by fairly hard-and-fast rules.
This is evident, in particular, from a study of informal healthcare payment
practices in two Russian regions, recently completed by the Independent
Social Policy Institute (ISPI).

Under the Counter

Medical services listed in the State Social Security Guarantees Program are
to be provided free of charge. Nonetheless citizens are being coerced into
"co-financing." Sometimes legally: A patient officially pays for a "higher
quality" of service legally provided by a state medical institution on a
fee-charging basis or buys a voluntary medical insurance policy. The latter
is still exotic practice in the Russian provinces. Payment through the cash
desk is the most common method, but one that is less-than-rewarding for the
doctors (who get 20 percent of the sum, the rest going to the medical
institution where they work).

Other "co-funding" channels are unlawful: Buying drugs for a course of
treatment at a state-run hospital or under-the-counter payment for medical
services. In the former instance a patient is simply left with no choice: If
you want to get treatment here, you should provide yourself with drugs,
because we have none. The latter does offer a choice, but it is a choice
between being examined today or in a month's time, between receiving
treatment at a well-equipped regional hospital or at a badly equipped rural
facility, or between being operated on by a well-known surgeon or by just
anyone. Incidentally, according to most physicians surveyed, surgery (along
with gynecology, urology, proctology, and venereology) is by far the most
commercialized sphere of medicine. In some instances doctors' unofficial
incomes are 10 times their official salaries. General practitioners and
pediatricians happen to be doing worst on the commercial market, payoffs at
best making 25 percent of their official salary.

Market Grimaces

In practice various models of informal payments are used.

Tariff-based payment is by far the harshest. A patient is told how much he is
to pay, and he decides whether he will accept the deal. As a rule, no
bargaining is allowed. Prices at same-level institutions are approximately
the same: Making them too high will make a healthcare provider uncompetitive.
According to the head of one city hospital, "everyone knows how much is
normally charged for a particular operation and will go to a place where the
charges are lowest." There are, however, "adjustment coefficients" - for the
standard of service, the reputation of a particular doctor, and so forth.

Official prices for legally provided medical services are often used as rough
guidelines for under-the-counter rates, but the latter are, as a rule,
considerably lower. ("A patient has a choice: Either to pay 100 percent
through the cash desk - say, 6,000 rubles, or to pay 3,000 rubles directly to
me.") Under-the-counter payment is good for both doctor and patient.

Means-based payment is more humane: The price is adjusted by a service
provider depending on the financial status of the patients or their kin ("Old
women, students, medical workers, and child-care providers get free service.
As for those who arrive in posh limos, why shouldn't they pay?") This model
allows for bargaining. ("Sometime a person will ask, how much? You say, so
much. And he will say, this is too high for me. Then you say, you'll pay as
much as you can afford.")

Request-based payment is unrelated to tariffs. Sometimes a patient can be
warned right away about the need to pay subsequently - without a specific
amount being mentioned. But more typically a patient will be asked, directly
or indirectly, to pay in the course of treatment. Oftentimes payment is asked
for the benefit not of a particular doctor but of the hospital as a whole:
"Here is a washing machine. We had a railways chief in for a course of
treatment and he asked what he owed us. I said, nothing, but we need a
washing machine. So they paid for one."

Gratitude payment is by far the most common. It is made on a client's own
initiative. According to doctors, in practice "the same operation can cost a
bar of chocolate, a box of sweets, a bottle of vodka, or 10,000 rubles." Some
doctors on principle object to contributions in the form of liquor. The
department chief of one hospital tells patients bluntly: "Only please do not
bring brandy: I don't want my surgeons to get accustomed to drinking. If you
can afford 200 rubles, give 200 rubles. If you can afford 500, give 500."
Patients from a rural area typically pay in kind, with farming produce. Some
of the respondents said well-to-do people happen to be the most ungrateful.

Gratitude in the form of sponsorship on behalf of an organization headed by a
patient is another common arrangement. Thus, the director of a brewery had
his company pay for the modernization of the unit where he had received
treatment. In another instance, a surgeon who operated on a patient received
$27,000 worth of instruments. Another option is provision of personal
services: "An operation costs 4,000, but I do it free of charge because I've
been using his parking lot for three years free of charge."

Extortion is a special form of under-the-counter payment that is not openly
approved of by any doctors (For instance, compelling a patient to pay for a
bed in the ward instead of in the corridor though there are beds available in
the wards).

Pros and Cons

Researchers note that while not all doctors are prepared to negotiate with
their patients on the form of payment, virtually everyone who is offered
money as a form of gratitude accepts it. There was only one doctor in the two
regions under survey who never accepted payoffs: a Class A woman surgeon,
unmarried, without children, drawing a salary of 1,800 rubles a month. She
returned the money that a patient left for her, by post, and gave a microwave
oven donated by another patient to the hospital kitchen. Her colleagues think
her odd and tease her openly.

There are not more than 15 percent to 20 percent of avowed proponents of
payoffs. But this is the most active part of the medical corps: top-notch
specialists and young physicians. The former are convinced that their
professionalism should have a real, not state-decreed, value. The latter are
guided by the Western "health-needs-to-be-paid-for" principle.

The share of "reluctant proponents," who see money coming from patients as
the only means of survival, is considerably greater. These people often have
qualms about having to breach some ethical norms, but believe that additional
compensation for their work is justified.

There are also "sympathizers," who admit: "We would gladly accept payoffs,
but none seem to be coming our way." This group includes a large proportion
of people dissatisfied with their jobs, envious people, and potential
"trouble makers."

Opponents of payoffs (in all, 15 percent to 20 percent of respondents) are a
heterogeneous group. Some do not accept payoffs out of fear of being fired.
Others are scared of damaging their reputation or losing their mental
equilibrium and self-respect (as a rule, these are doctors in the advanced
age brackets or those working in small towns and settlements). Many see a way
out of the ethical deadlock in exercising a selective approach to the
to-take-or-not-to-take dilemma. They are typically guided not by a patient's
financial status but by how a payoff is offered: "I dislike it when money is
offered with an ‘okay-if-I-have-to-pay-here-you-are' air. A patient should
know that a doctor is a creative personality who cannot be bought in a
boorish manner. You'd actually feel better giving this money back."

Despite the fact that members of the medical profession generally favor
"additional compensation under certain conditions," the majority of doctors
are convinced that in some situations payoffs must be obstructed.
Restrictions are not handed down from above but are worked out within medical
staffs. It is deemed unacceptable to receive payoffs: before an operation
that subsequently resulted in unexpected complications or death; from a
patient in need of emergency assistance (and possibly in a state of shock);
from single pensioners in serious condition; from doctors' colleagues and
relatives; from patients referred by management. Extortion, willful
deception, and undue solicitation of payoffs (only really unique specialists
are "allowed" to do this) are also frowned upon.

The role of management is often confined to regulating the flow of payoffs.
Disciplinary action is only taken in the event of high-profile scandals: Say,
if a patient has filed an official complaint with a superior authority. Only
a handful of managers take a stand and fight payoffs - in part because deep
in their hearts many of them believe that this practice is just.

Everyone Benefits

Meanwhile, the state is looking for ways of increasing the share of legal
"co-financing" schemes. Options being pondered include getting individuals to
make additional contributions to the Compulsory Medical Insurance Fund or
making small fixed payments upon applying to any healthcare provider. Another
option being considered is application of a "social" approach: The rich will
pay, the poor will not.

The ISPI survey shows that there is no consensus in society over any of the
proposed schemes (the majority of respondents in an impoverished region
believe that only the rich should pay; half of respondents in an affluent
region are convinced that everyone should pay a little). In any event, these
schemes will not ensure the same level of prosperity for "stars" of the
state-controlled public health system as they get from payoffs. So they will
continue to charge in the future, but patients will have to pay more through
official channels. Thus the existing system is far more beneficial for
patients who are ready to pay for treatment. Incidentally, in a relatively
affluent region doctors get more extra payments than in an impoverished
region. This suggests that the gratuity practice will be expanding as the
living standards increase. On the other hand, the attempts to legalize "tips"
by having the patients pay them through the cash desk and having the doctors
share them with the institution that they work for a

re most likely to fail. Doctors are adamant: They are ready to pay the state
only an income tax on the "tips" - but not a cent more.

To be sure, payoffs in the healthcare system cause a measure of tension in
society. But any attempt to legalize them could lead to even bigger problems.
Sergei Shishkin, head of the ISPI project, quotes a deputy governor in one of
the surveyed regions:

"There is no acceptable solution in this situation yet."