JRL #7103

Plain Text - Entire Issue

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1. Prime-TASS: Lehman Brothers Eurasia Group Stability index hits record Mar.
2. Reuters: Badgered by Putin, Russian PM quits smoking.
3. ITAR-TASS: Russian premier kicks the smoking habit.
4. pravda,ru: Gorby Back to Politics.
5. Luba Schwartzman: TV1 Review.
6. Dow Jones/AP: Russian Diplomat: New Blix Report A Guide For Inspections.
7. Washington Post: Igor Ivanov, A Russian Resolve for Peace and Partnership.
8. RIA Novosti: U.S. AMBASSADOR'S UTTERANCES ARE "EMOTIONAL OUTBURST" - RUSSIAN PARLIAMENTARIAN.
9. Prime-TASS: Roland Nash, The UN Veto - Much Abused Diplomacy.
10. BBC Monitoring: Russian TV says generals alarmed by foreign spy plane flights.
11. RIA Novosti: LACK OF INTERNATIONAL AID HAMPERS DESTRUCTION OF RUSSIA'S WEAPONS-GRADE PLUTONIUM.
12. AP: U.S., Russian Experts Test 'Dirty Bombs.'
13. pravda.ru: Russian Finance Ministry Suggests Taking Riches from Oligarchs. Prime Minister Kasyanov is very unhappy about Finance Ministry’s activity.
14. BBC Monitoring: "Unprecedented" public row erupts between Russian ministers - TV report.
15. RIA Novosti: Russian premier accuses economics ministry of mishandling utilities.
16. BBC Monitoring: Russian economic minister accepts criticism unleashed at his ministry by premier.
17. Interfax: Economic growth of 7%-8% possible in Russia by 2007-2008 - Gref.
18. Rossiyskaya Gazeta: Boris Savchuk, Oligarchs Can Cry, Too. (Government-Oligarchy Confrontation Viewed)
19. Carolyn Hovorka: Stats from Russia and CIS.
20. Joseph Dresen: Kennan Institute event postponement announcement.
21. IWPR'S CAUCASUS REPORTING SERVICE: Umalt Dudayev, CHECHEN REFERENDUM ROW. The war-torn republic is gearing up for a constitution that will controversially affirm its status as part of Russia.
22. PRAGUE WATCHDOG: Imran Ismailov, A Chechen Anomaly.

********

#1
Lehman Brothers Eurasia Group Stability index hits record Mar

MOSCOW, Mar 14 /Prime-TASS/ -- Russia's state stability shifted upward in
March to its highest level since the Lehman Brothers Eurasia Group
Stability Index (LEGSI) began collecting data in January 2000, Lehman
Brothers Eurasia Group said Friday.

The rating moved to 62, up from last month’s score of 60. Upward shifts in
the Security and Economy components contributed to the higher rating, while
the Government component shifted down slightly and the Society component
remained constant.

For the past year, Russia’s overall rating has fluctuated only minimally
between the high end of Moderate Stability (40-60) and the low end of High
Stability (60-80).

Newly released economic indicators boosted the Economy component
significantly. These include market capitalization as a percentage of gross
domestic product (GDP), the share of private sector assets in the economy,
and the percentage of past due loans in total outstanding loans.

Leslie Powell, senior analyst at Eurasia Group, said that BP’s announcement
of its $6.75 billion investment into the Russian energy sector contributed
to the rating shift. “Although it is unclear whether the BP deal will
encourage other multi-national oil companies to make similar investments,
investor sentiment has certainly been improved,” she said.

The State Duma’s passage of the power sector reform package also helped
increase Russia’s score, despite the fact that the package is a
watered-down version of the original plan.

“The mere fact that the Duma and government were able to agree on the main
parameters of electricity sector reform is a very positive step in the
right direction,” Powell noted.

The LEGSI is a monthly risk assessment product introduced jointly in
October 2001 by Lehman Brothers, the investment bank, and Eurasia Group, a
New York-based political research and consulting firm.

Emerging-market countries are ranked on a scale from 0 to 100, with 100
representing the highest possible stability. The index currently covers 22
countries, with Russia tying for sixth place from the top with Brazil,
China, and South Africa in March. Hungary takes first place and Nigeria is
at the bottom.

The LEGSI consists of variables clustered into four broad components:
Government, Society, Security, and Economy.

********

#2
Badgered by Putin, Russian PM quits smoking
March 14, 2003

MOSCOW, Russia (Reuters) - Russian Prime Minister Mikhail Kasyanov has kicked
his smoking habit after taking a subtle hint from his health-conscious boss,
President Vladimir Putin, his spokeswoman was quoted as saying Friday.

Putin, whose mastery of judo and downhill skiing are frequently featured on
television, has sent the country on a health kick, demanding that flabby
Russians start exercising to improve their health in a hard-drinking,
chain-smoking nation.

Itar-Tass news agency said Kasyanov was pushed to quit when Putin handed him
a pair of skis as a birthday gift with the loaded remark that the prime
minister "liked to improve his health."

Putin's presidency has seen edicts banning smoking appear in many government
buildings, sparing only the odd stairwell for smokers.

Many businesses have followed suit, and shivering executives and office
workers are a common sight on the streets as they puff away on cold winter
days.

The prime minister is a hangover from more decadent days, an appointee of
former firebrand President Boris Yeltsin who left office at the end of 1999.

Yeltsin plays tennis and does not smoke but was renowned as a heavy drinker,
a vice shared by many Russians.

Kasyanov's spokeswoman Tatyana Razbash told the news agency a bout with the
flu and the Orthodox Lenten fast had also inspired Kasyanov to kick the habit.

********

#3
Russian premier kicks the smoking habit
ITAR-TASS

Moscow, 14 March: The Russian government is not only promoting a healthy
lifestyle, but also setting its own example. None of the deputy prime
ministers smokes. And a few days ago, Prime Minister Mikhail Kasyanov decided
to drop his smoking habit.

"It would seem that the time had come" for this, the prime minister's press
secretary, Tatyana Razbash, told ITAR-TASS. She said that the prime minister
has been smoking for a long time, and heavily, although, for some time now,
his entourage has been trying to persuade him to quit. But Kasyanov carried
on smoking and, while at work, could not go without frequent breaks for a
smoke.

Speaking about why the prime minister had taken such a radical decision, his
press secretary suggested that Kasyanov's recent bout of flu and the period
of Lent had played their part. In any case, "what's important is that the
decision has been taken. And the main thing now is to hold out for as long as
possible," she believes.

However, what may have pushed Kasyanov into quitting smoking was a present
President Vladimir Putin gave him on his birthday. Presenting him with some
skis, the president noted, in a very meaningful manner, that the head of the
cabinet of ministers "likes to reinforce his health".

Whatever the case may be, "lighting up a cigarette" is becoming increasingly
trickier at Government House. In view of the fact that, in the past, all
members of staff were firmly instructed "not to smoke in the workplace under
any circumstances", it must be acknowledged that, for some time now, it has
became a great deal easier to breathe in the buildings at Government House.

*******

#4
pravda,ru
March 14, 2003
Gorby Back to Politics

Although with a delay, Russia’s social democrats have joined the final
round of the pre-election race; to be more exact, not social democrats
themselves, but their leader (which is the same by the way). There are just
few people in Russia who read parties’ programs developed especially for
election, we pay more attention to personalities. There are different
estimates of Mikhail Gorbachev’s works, but his popularity cannot be
denied, it’s for sure.

Gorbachev’s press-conference was held in Moscow yesterday. The ex-president
of the USSR, who hasn’t been in focus of the mass media for a very long
period already, presented his new book The Sides of Globalization (the book
is the result of collective work under Gorbachev’s guidance).

Mikhail Gorbachev said at the press-conference that the authors had been
working on the book for several years. “And not only Russian specialists
actively participated in discussion of the globalization problem. We
co-operated with the Harvard University, with Japanese and German
specialists.”

In Gorbachev’s words, the book is essential for today’s situation in the
world. Now intellectual centers are demanded to work persistently to supply
politics with knowledge. It is actually very important to keep on working
on the problem. “We must take up the issue of Russia in the context of the
universal globalization, we are challenged with poverty and ecological
disaster.”

The ex-president of the Soviet Union also touched upon the topic of the
day, the Iraqi crisis. Mikhail Gorbachev urged Saddam Hussein to quit the
post. He said that there was only one way out to avoid a war in Iraq:
Saddam Hussein must quit the post.

At that, Mikhail Gorbachev added that Saddam’s resignation would “clear the
way to changes, to new political leadership of the country, which will
cancel military operations in the region.” The ex-president of the Soviet
Union said at the press-conference: “If Saddam Hussein does so, he can be
pardoned for what he had done with the country over the years of his rule.”
Mikhail Gorbachev cited two historical instances of himself and of Russia’s
last tsar, Nicolas II.
As for US’s position on the Iraqi problem, Gorbachev said that in the
present-day situation it was unlikely that “the USA will go back on its
words and fall back.” He added that position supported by Russia, Germany
and France concerning the Iraqi problem was right. Gorbachev said: “We have
no facts saying that we must use force. But at the same time, it’s
necessary to make for such conditions so that no threat to the world could
originate from the territory of Iraq.”
Well, Mr. Gorbachev, congratulations on you successful start. The only
thing left to do is to persuade electorate to vote for the trio consisting
of Gorbachev-Titov-Yakovlev.

Dmitry Chirkin
PRAVDA.Ru
Translated by Maria Gousseva

*******

#5
TV1 Review
www.1tv.ru
Compiled by Luba Schwartzman (luba_sch@hotmail.com)
Research Analyst, Center for Defense Information, Moscow office

HEADLINES
Friday, March 14, 2003
- Russian Minister of Education Vladimir Filippov and UNESCO
General Secretary Koichiro Matsuura signed a memorandum on
cooperation in restoring the education system in Chechnya. The
document indicates that the main tasks at the first stage will be the
social and psychological rehabilitation of schoolchildren.
- Russian President Vladimir Putin met with Health Minister Yuri
Shevchenko to discuss the results of the national children's health
examination.
- President Putin also met with the chairman of the State
Committee for Construction and the Housing and Utilities
Complex, Nikolai Koshman, to discuss the functioning of the
housing and utilities system in the regions.
- An official declaration of the Russian Foreign Affairs Ministry
rejected the US request to expel Iraqi diplomats.
- Russian Presidential Aide Sergei Yastrzhembsky and Russian
Cultural Foundation President Nikita Mikhalkov presented the new
book, "Chechen and Ingush Folktales."
- Special Presidential Representative to Chechnya for Human
Rights Abdul-Khakim Sultygov signed an agreement establishing a
joint working group with representatives of the General
Prosecutor's Office.
- Deputy Foreign Minister Yuri Fedotov declared that Russia
rejected the British proposal on Iraq.
- Russian Foreign Minister Igor Ivanov asserted that the fight
against narcotics is no less important than the fight against
terrorism, organized crime, or weapons of mass destruction.
- Three members of Shamil Basaev's illegal band formation handed
themselves over to the Russian military near the Bachi-Yurt
settlement.
- The State Duma accepted a draft law allowing Russian citizens to
open foreign currency accounts in foreign banks.
- At the expanded meeting of the Collegium of the Ministry for
Economic Development and Trade, Prime Minister Mikhail
Kasyanov stated that the main objective of the government is the
preparation a program to achieve 7-8% economic growth by 2007-8.
- Two pilots and one passenger died when a Ka-26 helicopter
crashed in the Krasnoyarsk Krai. An investigation is underway.
The primary hypothesis for the cause of the crash is engine failure.
- Two people died and one was injured in a fire at the regional
Interior Ministry office in the Republic of Yakutia. Additionally,
many documents and 450 personnel files were destroyed.
- Deputy General Prosecutor in the Southern Federal District
Sergei Fridinsky declared that the man who organized the bombing
of the Grozny State House has been detained.
- Efforts continue to reach the area of the Karmadon Gorge where
the victims of the Kolka Glacier may have hidden.
- The "International Terrorism: Difficult Path to Peace" exhibit --
100 photographs from Chechnya -- arrived to Berlin from the US.

********

#6
Russian Diplomat: New Blix Report A Guide For Inspections
March 15, 2003
DOW JONES NEWSWIRES

MOSCOW (AP)--A top Russian diplomat on Saturday said an upcoming report by
chief U.N. weapons inspectors Hans Blix should provide a roadmap for future
inspections in Iraq.

"The report, which Hans Blix is completing work on now, is in essence a
program for the activities of international inspectors in the next stage,"
Russian Deputy Foreign Minister Yuri Fedotov told the Interfax news agency.

Blix is expected to present the U.N. Security Council with his list of top
priority questions that Iraq must answer about its chemical, biological and
missile programs as early as Tuesday.

The report should outline "the key remaining tasks in the area of
disarmament," criteria that could be used to assess Iraq's cooperation with
inspectors in the future, Fedotov said.

"If the program of the work of international inspectors and the key tasks
are confirmed by the U.N. Security Council, the activities of the
inspectors will require a more purposeful character and allow (them) to
achieve the necessary results," he said.

He said the inspections "should not have a limitless character" and pointed
to the 120-day period outlined in a joint Russian-French-German memorandum
submitted earlier to the Security Council.

Russia has repeatedly called for a diplomatic resolution of the Iraq crisis
and indicated it would vote against the U.S.-British resolution before the
Security Council that gives Iraqi President Saddam Hussein a March 17
deadline to disarm or face war.

On Friday, Fedotov rejected a British compromise proposal, saying it didn't
resolve disagreements over the use of force against Iraq.

*********

#7
Washington Post
March 15, 2003
A Russian Resolve for Peace and Partnership
By Igor Ivanov
The writer is foreign minister of Russia.

On Sept. 6, Vladimir Putin and George W. Bush had a talk over the phone.
The main topic of conversation was Iraq. The presidents agreed to jointly
seek the unconditional return of inspectors to Iraq in accordance with U.N.
Security Council resolutions mandating Iraq's disarmament.

Since then, Russia has firmly adhered to this agreement. Even though Russia
did not deem it necessary to pass another Security Council resolution
regarding inspections in Iraq, it nevertheless took a step toward
Washington and helped pass, unanimously, Resolution 1441. Russia seeks
Iraq's full cooperation and the meeting of all demands made by the U.N.
Monitoring, Verification and Inspection Commission and the International
Atomic Energy Agency.

Russia's position, which is shared by most members of the Security Council
and by other states, allowed the establishment of a reliable mechanism of
inspections that would be able to help disarm Iraq. Because of this
pressure from the international community, disarmament is underway.

In this context, the idea of an imminent war against Iraq does not appear
to be valid. Moreover, war involves serious risks to all nations. In
speaking out for a political solution to the Iraq situation, Russia is
striving not only to overcome this particular crisis but also to push for
continued joint efforts to solve other international problems that are no
less acute.

Does Russia's stance conflict with the interests of the United States, as
those who seek to drive a wedge into Russian-American relations are trying
to claim? Of course not.

The presidents of our countries have had more than one phone conversation
over the Iraq problem. The current scope of our relationship, which is
marked by growing mutual trust and the spirit of cooperation, includes an
open and honest dialogue over the most complex issues. If we believe that
the war against Iraq will lead to harsh consequences, shouldn't we talk
about it openly with our partners in Washington? If we propose to eliminate
the threat of Iraqi weapons of mass destruction -- working together with
the United States and other countries and using political means -- is that
not true partnership?

The value of partners and allies is not that they automatically agree with
one another but that they search together for solutions to solve problems
in common interests. We have irreversibly abandoned the Cold War formula:
The worse things are for the United States, the better for us. We are
convinced that striving for a political solution to the Iraqi crisis is in
the best interests of Russia, the United States and the rest of the world.

Regardless of what happens with Iraq, Russia hopes that Moscow and
Washington will allow their actions to be guided by the spirit of
Russian-American cooperation, which is defined in the joint declaration
signed in May by Presidents Putin and Bush in Moscow.

*********

#8
U.S. AMBASSADOR'S UTTERANCES ARE "EMOTIONAL OUTBURST" - RUSSIAN
PARLIAMENTARIAN

MOSCOW, MARCH 14. /FROM A RIA NOVOSTI CORRESPONDENT/. -- Dmitry Rogozin, head
of the State Duma international committee, hopes that the attempt by the
United States ambassador in Moscow to link Russian-American cooperation to
Moscow's position on Iraq at the United Nations Security Council "is not a
threat but an emotional outburst." Rogozin said this to journalists on
Friday.

Recently, American ambassador in Moscow Alexander Vershbow said that, if
Moscow and Washington fail to approximate their positions on Iraq, this will
have a negative impact on Russian-American relations. It makes a great
difference for Washington if Russia vetoes, or abstains from voting on a new
draft resolution on Iraq at the United Nations Security Council, he said.

"The American side should understand that the degree of strategic partnership
with Russia, the targets set by Moscow and Washington to be met are not a
plaything," Rogozin opined.

He stressed that Russia's position on Iraq "is not bluff" or a result of
domestic differences, he stressed. "There is a consensus on Iraq in Russian
society," said Dmitry Rogozin. Washington should understand it, he noted.

*********

#9
OPINION: The UN Veto - Much Abused Diplomacy
Contributed by Roland Nash
Head of Research, Renaissance Capital

MOSCOW, Mar 14 /Prime-TASS/ -- In international politics, the UN veto is
becoming the diplomatic equivalent of the military MAD option - Much Abused
Diplomacy. An historical hangover that allows certain countries (including
Russia) to punch well above their economic weight, but ill-advised use of
which endangers the destruction of the institutional framework it is designed
to protect. So why is Russia seemingly bent on using it?

A cornerstone of Russia's largely successful foreign policy under Putin has
been to purposefully take the initiative to improve relations with the West.
Under Yeltsin, Russia waited for the construction of Western-made bridges
that often came booby-trapped with conditionality. Putin, after a brief
period of dithering, has actively attempted to build his own. His most
ambitious project was to span the divide with the US and warming personal
relations with Bush are a testimony to his success.

With conflict in Iraq seemingly now as inevitable as elections, it appears
therefore rather odd that pragmatic Putin would risk all by exercising an
increasingly archaic right when a well-timed abstention would be all that is
required.

Perhaps the most fundamental explanation lies in what is no longer the major
driving force in Russian foreign policy. Putin is not facing up to the US
because of some misconceived notion of Russia's position in the world order
and its historic duty to defend basket case regimes simply because the US
doesn't like them. The stand is being made because Putin objectively believes
that it is in Russia's best economic and political interest to side against
the US over Iraq.

One factor pushing Putin is domestic politics in democratic Russia. According
to the latest polls, 49% of Russians think that Iraq is a nation friendly to
Russia, with 22% believing it is otherwise. Similarly 87% believe that either
containment or inaction is the best international response, with only 2%
supporting anything military. It is hardly surprising then, that 66% support
Russia's current actively uncooperative position against only 5% who are
against.

Domestic public opinion, however, is rarely decisive in determining Russian
policy, even in an election year. More important are the economics. Here, it
would appear, that the US has a stronger hand. It is now well documented that
Iraq owes Russia US$8 billion, and that Russian oil companies want Hussein
era contracts respected. Close relations with the eventual victor seem the
best way to guarantee post-conflict cooperation. Moreover, the US is Russia's
biggest and best sponsor for fast track into the WTO while timid Europe
(particularly the Old variety) are the foot draggers. Losing US support would
jeopardize early entry.

This analysis, however, risks retreating into the economic paradigm of the
nineties. Russia is no longer about carrot and stick economics between states
using finance to push politics. It repays debt and its biggest headache is
what to do with the liquidity swamping its capital markets. Russia's consumer
market, finally waking up to credit, is potentially one of the world's most
exciting, and it is as likely that international companies will be pushing
for access to Russian consumers as Russian firms will be clamouring for
entrance abroad. Russia needs foreign private capital, preferably of the
direct variety with accompanying technology and expertise. It does not need
conditionality packed institutional financing or concessions.

The US may dominate institutional finance, but it is an economic minnow when
it comes to Russia's private sphere. Of the US$126.4 billion in gross non-CIS
foreign trade in 2002, the US accounted for US$7.0 billion, roughly
equivalent to that of Holland and Belgium (US$6.5 bn), and way behind Germany
(US$14.6 billion) or China (US$9.2 billion). The EU accounted for 44% of
Russian trade outside of the CIS. Of the US$19 billion of FDI that Russia has
registered since 1996, US companies invested US$4 billion, while the EU
invested US$7 billion. 'Cyprus' provided as much as the US. It is no surprise
that it was a European company (albeit British) that made the first
mega-purchase in the oil sector, and the second is as likely to be European
as American, despite the relative dominance of the US companies in private
oil. Geography and history determine that Russia's economic future lies with
Europe and China, not the US.

Even so, Putin is playing a cautious game. Despite the relatively weak direct
economic ties with the US, the symbolism of a warm relationship is a powerful
driver of perception. No amount of big smiles from Tony Blair or
cheek-kissing with Jaques Chirac had anywhere near the impact of one firm
handshake in Texas with George Bush. Putin is therefore being very careful to
remain on the US side of the Old Europe alliance. His Foreign Minister, Igor
Ivanov, is taking the flak for the bellicose remarks. Putin is remaining
aloof and still ready to switch sides should France abrogate its role as
lightning rod for US frustration. The veto issue should absolutely not be
seen as any kind of pull-back from Russia's shift towards the West under
Putin, but rather as an attempt to play an active role in the club to which
it wants to be a member - European West or US West, but still West.

When Iraq first surfaced as a hot issue post the Evil-Axis speech, it
appeared that Putin had a horribly weak hand. Iraq was seen both domestically
and internationally as Russia's traditional ally in the Middle East. In
Russia, with elections approaching, it seemed that Putin would have to pander
to a military frustrated by US hegemony and Putin's policies in Afghanistan
and Georgia. Similarly, the oil lobby had been dropping large public hints
that it would expect Russia to defend oil contracts signed with Hussein's
Iraq in a post Saddam world. Internationally, it was expected that either
Russia would throw a tantrum that could be safely ignored, or that Putin
would quickly roll-over. Instead, Russia is finding itself carefully courted
by both sides and content to sit in the European camp where it feels most
comfortable.

We had expected Putin to abstain from using Russia's veto. Game theory would
still suggest that a last minute renege would be the optimal outcome, and we
still think there is a good chance that an excuse will be found to abstain.
However, any decision should be viewed firmly through the prism of Russia's
objective economic and political interests. A veto together with France would
be the recognition that there is a serious split between Europe and the US,
not between Russia and the West. As such, Russia does not deserve to see its
sovereign risk rising. While it is slightly irrelevant given the bigger
picture, we stick firmly to our guns that any sell-off of Russian equity
associated with the war in Iraq is a buying opportunity.

*********

#10
BBC Monitoring
Russian TV says generals alarmed by foreign spy plane flights
Source: NTV Mir, Moscow, in Russian 1600 gmt 14 Mar 03

The Russian military are, to put it mildly, alarmed by the activity of spy
planes belonging to foreign states. The air defence forces are noting
particular interest in the sector of the Russian-Georgian border next to
Chechnya. The first appearance of a U2 plane has been recorded over the
territory of the former USSR since 1 May 1960, when the U2 piloted by
[Gary] Powers was shot down over Sverdlovsk. Our correspondent Petr
Lyubimov has been studying the situation.

[Lyubimov] To use diplomatic language, the Russian military are greatly
concerned. The number of flights by spy planes along our border has greatly
increased of late. The air defence forces are registering up to 10 such
flights a day. The last straw that exhausted the patience of the Russian
air force command was the recent flight of a Russian U2 spy plane over
Georgian territory. As the Russian military HQ believes, it had very
specific objectives.

The strategic spy plane carried out its first flight on 27 February. It
probably took off from an air base on Cyprus, overflew the Black Sea and
crossed the Georgian border near Sukhumi. The Russian air force command had
prior notification of the flight. NATO warned Russia via the Ministry of
Foreign Affairs. It is common practice. NATO planes frequently fly over
Georgian territory to Afghanistan. But no-one in Russia expected that the
spy plane would follow a route like this.

[Video shows map with zigzag lines - marked towns include Sochi, Sukhumi,
Batumi, Kislovodsk, Groznyy and Tbilisi] What you are seeing is the flight
plan supplied by the Russian air force. The U2 spy plane flew practically
along the whole of the Russian-Georgian border. Just 25 km separated it
from our country's air space.

[Aleksandr Zelin, captioned as deputy commander-in-chief of the Russian air
force] Of course the relevant intelligence centres are no doubt interested,
I suspect, in the conditions on the state border and the actual performance
of the Russian Federation's air defence tasks, and perhaps the crew was
carrying out a number of other specific tasks.

[Lyubimov] Such flights are unpleasant for our country's military because
the U2 is a strategic spy plane. Its on-board equipment allows every radio
station to be seen and heard [as heard], a bearing to be taken on every
radar, and of course interesting installations within a radius of 600 km to
be photographed.

Thus the pilot of the aircraft knew what was happening, say, in Volgograd.
But in the view of certain experts, the main intelligence targets were the
Russian-Georgian sector of the border and Chechnya. Why? There is no comment.

The most surprising thing in this affair is the comments of the Georgian side.

[Tedo Japaridze, captioned as secretary of the Georgian (National) Security
Council] Regarding the U2 and the flights of this aircraft in Georgian air
space, I have no information on this today.

[Lyubimov] Let us stress this particularly: the head of the Georgian
Security Council knows nothing about flights by a spy plane over the
territory of his own country. Other officials were more forthcoming.

[Video shows running tape recorder with NTV microphone next to it, caption
saying "Zurab Chankvetadze, chairman of the Georgian Civil Aviation
Authority"]

[Unidentified voice] When were the flights of the U2 spy planes?

[Voice of Chankvetadze] As I said, there were flights yesterday and the day
before yesterday. Applications come through the Foreign Ministry, and we
give permission.

[Voice] Is it possible that national security officials know nothing about
this?

[Chankvetadze] Why should they know nothing?

[Voice] Well, they don't know. They say that -

[Chankvetadze] Why - it's possible they don't know. Why should they know in
the first place?

[Lyubimov] On the second occasion, on 7 March, the U2 followed almost the
same route. But this time it was escorted by Russian air force Su-27s,
flying a parallel course. This time, the U2 maintained a very respectful
distance from the Russian-Georgian border.

********

#11
LACK OF INTERNATIONAL AID HAMPERS DESTRUCTION OF RUSSIA'S WEAPONS-GRADE
PLUTONIUM

MOSCOW, MARCH 14, 2003 /FROM RIA NOVOSTI'S CORRESPONDENT EDUARD PUZYREV/ --
Instead of the required 2 billion dollars required for building a plant to
destroy weapons-grade plutonium in Russia, the international community has
gathered only 800 million dollars, a RIA Novosti correspondent quotes
Alexander Rumyantsev as reporting on Friday. Rumyantsev is the Russian
Nuclear Energy Minister.

Only Japan, the United States, Italy and France have allocated money for the
project, he said.

Rumyantsev recalled that, under the 2000 Russian-American intergovernmental
agreement, the two countries pledged "to destroy mutually this component of
thermonuclear weapons". "Under this agreement, each country has to destroy 34
tonnes of plutonium", he said.

For that, it was planned to build such a plant in the Urals region or
Siberia.

"As soon as the international community interested in the reduction of the
world's nuclear potential, gathers 2 billion dollars, we will get down to
construction," stressed the Russian minister for nuclear energy.

********

#12
U.S., Russian Experts Test 'Dirty Bombs'
March 14, 2003
By CHARLES J. HANLEY

VIENNA, Austria (AP) - In New Mexico's desert and Russia's Ural Mountains,
U.S. and Russian experts are experimenting with simulated ``dirty bombs''
to see how such radiation weapons and potential terrorist tools might work,
officials of the two countries say.

It's a sensitive area in which some information is withheld to keep clues
to bomb-building out of terrorists' hands. But American and Russian
specialists attending a global conference on dirty bombs disclosed some
aspects of recent testing to a reporter because, as a ranking U.S. official
said, the public should know everything is being done to deal with the threat.

These so-called ``RDDs,'' for radiological dispersal devices, haven't made
an appearance yet, but the al-Qaida terrorist network, for one, is reported
to have shown a serious interest in developing them.

Dirty bombs would combine conventional explosives with strontium, cesium or
some other highly radioactive isotope used for such purposes as cancer
radiotherapy, searching for oil deposits and sterilizing food.

They wouldn't cause the immediate mass casualties or devastation of nuclear
weapons, but they are much simpler to make and the contamination and fear
of radiation poisoning could cause general panic and shut down sections of
cities for years.

Some 600 scientists, government officials and others at the three-day
conference that ended Thursday focused on tightening protection of
radioisotopes in use worldwide, stopping illicit trafficking and planning
emergency responses to such attacks.

Others, meanwhile, are trying to learn how a dirty bomb would behave if
detonated.

For the past six months teams at the U.S. Energy Department's Sandia
National Laboratories in New Mexico have been experimenting with basic
designs of RDDs, said the U.S. official, who spoke on condition of
anonymity. Using materials that simulate the characteristics of the
radioisotopes - except for the radioactivity - they have been exploding the
devices to test the reach of the radiation effect as a result of blast and
wind, he said.

Earlier computer modeling allows the testers to assess likely levels of
radiation in various areas as a result of the blasts.

Formal results from the U.S. Defense Department tests haven't reached
Washington yet. But researchers already know some things, such as that
cesium chloride powder, used in large amounts in food irradiators and some
older medical devices, is probably the material best suited for dirty bombs.

``It's very radioactive, and the powder disperses well,'' the official said.

He said the tests will be stepped up to the level of radiothermal
generators - devices packed with large amounts of isotopes, developed by
the Soviet Union and the United States during the Cold War to power
long-life aviation beacons and other remotely installed military equipment.

Such generators often hold 40,000 curies - the basic measure of
radioactivity - in strontium or other material. Experts say even 1,000
curies might make an effective dirty bomb.

``A Russian admiral told us there have been many attempted thefts of RTGs
reported,'' the U.S. official said, adding that apparently none was
successful.

A Russian scientist, Alexander M. Agapov, told the Vienna conference it's
possible 900 such devices were deployed by the old Soviet military, many
with radio beacons or small lighthouses along Russia's Arctic fringe.
Retrieving and securing that radioactive material will be a major challenge.

In his slide presentation, Agapov, safety chief for Moscow's Atomic Energy
Ministry, described Russian computer simulations of dirty-bomb events. In a
sign of the sensitivity, however, he blocked out the amounts of TNT and
radioisotope used for simulated weapons.

He later told a reporter the Russians determined that radioactive particles
from an explosion do not disperse in an oval pattern following wind
direction, as usually theorized, but in a much more irregular pattern
affected by crosscurrents.

Agapov described a Ural Mountains field test of emergency response, based
on a computer simulation of a terrorist bazooka attack on a train carrying
cobalt-60 and cesium-137, isotopes common in Russian transport. The test
didn't involve an actual attack, but a small amount of isotope was used and
controlled fires were set beside a train car, to test detection abilities
and response.

He said the conclusion was that people within a mile or two of the attack
would have to be evacuated within five to six minutes - or at least kept
sealed indoors. ``You don't have time to check wind direction. You just
move,'' Agapov said.

*********

#13
pravda.ru
March 14, 2003
Russian Finance Ministry Suggests Taking Riches from Oligarchs
Prime Minister Kasyanov is very unhappy about Finance Ministry’s activity

Yesterday, the Russian government was going to discuss the future of the
tax reform. As PRAVDA.Ru reported before, suggestions and calculations that
were supposed to be prepared by adequate bodies according to Prime Minister
Mikhail Kasyanov's instructions, were not ready. Finance Ministry, the
Ministry for Economic Development and Trade, failed to come to consent on
the issue, so it was not possible for them to finish off with those
preparations by February 15th. Mikhail Kasyanov had to state at the session
that the government had lost any chances to run the tax reform in 2004.

Prime minister’s subordinates attempted to make some excuses about such a
failure. This resulted in a conflict between Mikhail Kasyanov and Finance
Minister Aleksey Kudrin. The discussion of the reform as it is (the
reduction of the value added tax rate in particular) was pushed into the
background. The session turned to the pretentious discussion of several
abstract issues. It is still unclear, what the Russian government is
intended to do with taxes this year.

As it turned out, the prime minister’s unhappiness was caused with
debaters’ obscure and indefinite position concerning the further reduction
of the tax burden. The Ministry for Economic Development and Trade demands
taxes should be reduced immediately, while the Finance Ministry is certain
that it is necessary to adjourn that for a while. Mikhail Kasyanov scolded
the two departments for their inclination to make statements instead of
making certain plans with certain dates. In particular, Kasyanov reproached
German Gref (the Minister for Economic Development and Trade) of the fact
that the ministry did not have the precise opinion and calculations
regarding what the tax reform might lead to in 2004. “Take a firm position,
explain it, and keep it,” Kasyanov said to Gref.

Kasyanov also criticized the Finance Ministry for unprepared tax reduction
calculations. “I am afraid of the fact that there were no forecasts and
calculations for six months, although we suddenly learn that it is possible
to reduce the value added tax rate,” Kasyanov stated about Finance
Minister’s unexpected suggestion to reduce the VAT rate by two percent
already in 2004. However, the discrepancy between the prime minister and
Finance Minister, Aleksey Kudrin, turned out to be a lot more serious.
Mikhail Kasyanov did not blur the disagreement, though.

Aleksey Kudrin had a meeting with Russian reporters yesterday. During the
briefing he offered to “ expropriate expropriators.” Aleksey Kudrin stated
that the government is supposed to take a big part of oil companies’ profit
away from them. A big part of their profit means the extra that oil
companies get over $25 dollars per barrel. “The state is supposed to be
bolder in taking away petroleum extra-income,” the finance minister told
reporters. Thus, as Aleksey Kudrin believes, it will be possible to
restrain the inflation rate within the scope of the governmental forecast.
One shall assume that there is no other way.

By the way, Mr. Kudrin is absolutely not original with such a proposition
of his. Russia’s public opinion has been rather aggressive lately. They
urge to reallocate oligarchs’ extra-income in a more decisive way, in favor
of socially unprotected Russian people. It is worth mentioning here that
such an idea has a common sense to it. Aleksey Kudrin’s suggestion is
peculiar for the fact that he suggested to do so in favor of the
government. Needless to mention that governmental officials do not have any
needs. Yet, Kudrin never mentioned anything about children, pensioners and
disabled people.

It goes without saying that a statement of that kind released from a senior
governmental official on the threshold of elections might be interpreted in
the wrong way. Mikhail Kasyanov had to correct his colleague today. The
prime minister stated that the final goal of the reform is to get rid of
excessive functions of the state. As he asserted, “the state and
law-enforcement bodies keep showing tough pressure on business, while
nothing was done last year for solving the issue.” The goal of the state is
to create more favorable conditions for the business development. Yet,
Prime Minister Mikhail Kasyanov reminded with a reference to President
Vladimir Putin that there are no untouchable fields in the country’s life.
Even small children see that there are a lot of untouchable fields in
Russia. Officials did not say anything about taxes. What are they thinking
about?

Kira Poznakhirko
PRAVDA.Ru
Translated by Dmitry Sudakov

********

#14
BBC Monitoring
"Unprecedented" public row erupts between Russian ministers - TV report
Source: NTV Mir, Moscow, in Russian 1600 gmt 14 Mar 03

It became known today [14 March] that Russian Prime Minister [Mikhail]
Kasyanov has given up smoking...

Today journalists were witnesses of a public argument between Kasyanov and
his deputy, [Finance Minister Aleksey] Kudrin, on matters to do with
administrative and tax reform. People are saying it was unprecedented. Our
observer Vladimir Kondratyev was a witness of everything that took place at
the Ministry of Economic Development [and Trade].

[Kondratyev] We have never seen Kasyanov as we saw him today. Casting to
the winds all his characteristic diplomatic caution, the prime minister
completely routed his potential rivals in the government - above all, of
course, Aleksey Kudrin. And German Gref's ministry [of Economic Development
and Trade], which was theoretically supposed to be only praised and
congratulated today, also got it in the neck. By all accounts, Kasyanov had
been stung into mounting a desperate attack in a political ring in which
the stern referee is President Putin.

[Video shows Kasyanov, Gref and Kudrin on platform at session] Having
ignored a similar meeting at the Ministry of Finance a few days ago,
Kasyanov decided to come to Gref's session. The gist of the rift, briefly,
is this. Putin wants a high rate of economic growth from Kasyanov - 7 or 8
per cent a year. Such a rate is theoretically possible if taxes on
production are reduced. Until now this has been obstructed by Kudrin out of
fear of a hole in the budget. And at a government meeting yesterday, an
unprecedented row occurred. Kasyanov did not even allow Kudrin's deputy,
[Sergey] Shatalov, to deliver his report. He said there was nothing to
listen to. Then Kudrin, whom the premier was accusing of being responsible
for spoiling all chances of growth this year or next, relented and agreed
to reduce value added tax from next year.

Today Kasyanov artificially used this gaffe against Kudrin.

[Kasyanov speaking from rostrum] At the government session yesterday we
received unexpected confirmation from the leadership of the Ministry of
Finance that taxes can be reduced as early as next year. This just
frightens me a bit, of course. In the last six months we could not get the
calculations as to whether taxes can be reduced, from your ministry among
others, and what positive impact this would have. And suddenly after six
months of not getting these data and calculations, we hear that they can be
cut.

[Kondratyev over video of unsmiling Kudrin going to rostrum] Let's see what
happened next and take a look at Kudrin's response. He, in turn, reproached
the prime minister over the fact that the so-called state non-interest
spending, i.e. spending excluding repayments of the state debt, is not
being reduced properly.

[Kudrin from rostrum] More radical and more mould-breaking proposals
regarding tax reform should lead to a greater reduction of state
liabilities and spending than what we adopted at the end of December. So
when at the conference I presented - and also sent you - the proposals to
cut taxes with an additional reduction of non-interest spending - this part
of the debate is always being put off [sentence as heard].

[Kondratyev] Kasyanov also could not forgive Kudrin's hints that he,
Kasyanov, was putting a brake on the administrative reform demanded by Putin.

[Kasyanov from rostrum] It is simply some sort of specially engineered
confusion of terms. People are absolutely indifferent about how many
federal ministries there may be - 20, 25 or 15. No-one is interested in
that, apart from two or three thousand people living in Moscow. So if
someone wants to confuse the absence of results in certain areas with some
sort of displays of emotion over changes in the number of ministries, they
won't succeed, it's not right, it's a misguided and deluded idea that this
plays some sort of role.

[Kudrin from rostrum] Mikhail Mikhaylovich, administrative reform, in my
view, does not consist in the merging or demerging of ministries and in
reducing or increasing the numbers. But its most important feature is
defining precise functions and responsibilities for decisions taken and the
abolition or elimination of the duplication of administrative levels.
Frequently, documents that arrive in the government apparatus are rewritten
and see the light of day as decisions, even after the decisions have been
adopted at government sessions, in altered form.

[Kondratyev over video of Kasyanov chatting to Gref on platform] Gref
remained on the sidelines today. As someone from St Petersburg, on many
issues he backs Kudrin against insider Kasyanov. But he too will be held to
account for an absence of economic growth. Kasyanov wants his support, and
thus at the end of his speech he made a notable appeal to Gref's ministry.

[Kasyanov from rostrum] Only a principled position and consistency, your
consistency, will allow the trump cards to be prised from the hands of the
opponents of reform...

********

#15
Russian premier accuses economics ministry of mishandling utilities
RIA Novosti

Moscow, 14 March: Russian Prime Minister Mikhail Kasyanov has sharply
criticized the Ministry of Economic Development and Trade (MEDT) over its
"superficial and fragmentary" analysis of the activities of natural
monopolies.

Opening a meeting of the MEDT board, the prime minister said regulation of
tariff policy, notably the setting of prices for the services of natural
monopolies, could not be considered without analysing the economic activities
of natural monopolies and justifying an increase in their tariffs.

"The government is doing its utmost to contain the increase in these tariffs.
However, MEDT's analysis of natural monopolies during 2002 was, at best,
fragmentary," the prime minister said.

A similar approach in 2003 would be inappropriate, Kasyanov pointed out.

"As natural monopolies, in particular the electricity industry, undergo
reform, the need for methodical analysis becomes ever more acute, since we
must keep the promise we gave to deputies (during the passage of the package
of bills on the electricity industry) to justify tariff issues," the prime
minister said.

At the same time Mikhail Kasyanov said that, in spite of all the criticism,
"MEDT is playing a key role in socioeconomic policies and state regulation of
everything that takes place in the country".

As Kasyanov put it, such criticism is constructive and aimed at rectifying
mistakes.

"I, as prime minister, rely a great deal on MEDT's conclusions, if they are
justified and well-argued. Only your consistent and well-argued stance can
snatch the trumps from the hands of those who oppose reform in Russia,"
Russian Prime Minister Mikhail Kasyanov said in conclusion.

********

#16
BBC Monitoring
Russian economic minister accepts criticism unleashed at his ministry by
premier
Source: RTR Russia TV, Moscow, in Russian 1400 gmt 14 Mar 03

[Presenter] The Russian government may undergo structural changes as soon as
in a few months' time designed to eliminate the functions of federal
departments that duplicate or are surplus to requirements, Prime Minister
[Mikhail] Kasyanov said today. He has not made up his mind regarding the
candidate for the post of his deputy for social issues which became vacant
after Valentina Matviyenko left. Mikhail Kasyanov made all the above
statements today after the sitting of the expanded collegium of the Ministry
of Economic Development and Trade at which, yet again, a tough debate on the
country's economic development strategy took place. Sergey Zenin reports from
the collegium sitting.

[Correspondent] On the occasion of the final collegium, the Ministry of
Economic Development and Trade organized a festive buffet in the foyer. It
seems the organizers had no idea that today's event would turn out to be not
a happy one for them.

In [Minister of Economic Development and Trade] German Gref's own ministry
the Russian prime minister was the first to be given the floor. Practically
straightaway Mikhail Kasyanov began with criticism.

[Kasyanov] Our work is judged not by political slogans and promises but by
concrete deeds or, to be more precise, by the results of accomplished
concrete deeds that were seen through to the end, and not by reforms or deeds
that were left unfinished half way through.

[Correspondent] The prime minister today urged the Ministry of Economic
Development and Trade to take clearer and more concrete steps. Kasyanov said
that at present it was necessary to achieve the main goal and to ensure by
2007-2008 the rate of economic growth of 7-8 per cent a year. He added that
it was time to leave slogans behind.

[Kasyanov] Just say: we undertake to ensure such and such rouble rate, to
ensure the concentration of resources to support exports next year in such
and such volume, to reduce the rate of such and such tax by such and such
amount, so that in a year's time this will produce this result or no result,
in two years' time this will produce this and that, and in three years' time
this will produce such and such general economic effect. And this should be
spelt out, calculated and justified.

[Correspondent] In the opinion of Kasyanov, the present situation in the
economy takes us back to an old model based on raw material exports. The
prime minister believes that at present the chances have already been missed
to improve the economic situation in 2004 practically in all the sectors of
the economy which are not linked with the extraction of raw materials. But
one cannot sit twiddling one's thumbs. The task number one in the sphere of
regulation of the Russian economy is to ensure a competent setting of prices.
In the federal government it is the economic ministry that is responsible for
the state policy in the field of prices setting.

[Kasyanov] This work should be taken to the required final level. We should
take decisions on the basis of a completely clear analysis and completely
clear conclusions.

[Correspondent] In Kasyanov's opinion, the analysis of the general economic
situation in the country is not specific enough. One should move from
discussion and debate to implementing outlined measures.

After the prime minister's tough speech, German Gref's report at the
ministry's collegium did not sound impressive. In general, it was clear that
the minister agreed with his boss's arguments.

[German Gref, talking to journalists] I believe that those who are criticized
should take in all the criticism. And it is up to you and experts and
everyone else to reach conclusions as to what extent this criticism is fair
or not. But it seems to me to be a very important result that this routine
bureaucratic event has acquired a rather interesting debate form.

[Correspondent] During the interval, when Prime Minister Kasyanov had already
left the ministry, German Gref admitted to journalists that he was pleased
with the debate which had taken place. Gref believes that it will be
continued and that during this debate the government will work out a new
position that will benefit the country as a whole.

********

#17
Economic growth of 7%-8% possible in Russia by 2007-2008 - Gref

MOSCOW. March 14 (Interfax) - Economic growth of 7%-8% is possible in
Russia by 2007-2008, German Gref, the economic development and trade
minister, has said.
   To achieve this sort of growth, Russia needs to reform and diversify its
economy and achieve sustainable growth, Gref said during an expanded
meeting of economic development ministry and other government officials.
"This will be extremely difficult, but within the realms of possibility,"
Gref said.
   Fewer words and more action are called for. This means changing the way
the levels of government interact, Gref added.
   Earlier at the session, Prime Minister Mikhail Kasyanov asked the
economic development ministry to come up with a program to achieve this
sort of growth.
   As for high oil prices, Gref said these had a dual effect on the Russian
economy. On the one hand, they enable the oil industry to invest and
expand, and bring in budget revenue. "But they do nothing to stimulate
reforms. They create an air of prosperity and strengthen the ruble's real
rate, and that is not good for the manufacturing industry."

********

#18
Russia: Government-Oligarchy Confrontation Viewed

Rossiyskaya Gazeta
7 March 2003
Article by Boris Savchuk: "Oligarchs Can Cry, Too"

What do the Russian cha'ebol want?
The meeting that recently took place between Vladimir Putin and
members of the Russian Union of Industrialists and Entrepreneurs
management bureau demonstrated that there were some serious differences
between the position of the state and that of the major
financial-industrial groups. The differences of opinion are not between
specific oligarchs and officials, but are rather a conflict of interests
between individual representatives of major businesses and state power.
There is nothing new or unusual about this - conflicts like these
between the authorities and major businesses have always taken place and
have happened everywhere. But in the United States and Western Europe
for example, where corporations always carefully protect their own
interests, the influence of each one of them on its own is not great
enough for it to be able to easily impose its own conditions on
governments. However, the combined might of small and medium-sized
companies put together is so considerable that both the corporations and
state power are having to take this factor into account.
But our economy is far more similar to that of South Korea, where
enormous resources are concentrated in the hands of a limited number of
highly diversified super-corporations -- the cha'ebol -- which to
some degree or other, are controlling most spheres of business and have
very powerful means for influencing the state apparatus.
There are differences, too, however. While Korean companies have
the processing industry, including high-technology processing, as their
foundation, the Russian financial-industrial groups were founded either
on the mining industry or on metallurgy, and only much later on did a
section of the profits received get invested in other sectors - first it
was invested in sectors closely linked to the main business, and then it
was just put into sectors that were promising and high in profit.
As a result, a situation has arisen whereby 15 powerful
financial-industrial groups with complex and less than transparent
internal structures own enterprises of a most diverse nature - from banks
and insurance agencies to the mass media, automobile plants, and
telecommunications companies. And the financial and material resources
being controlled by them are much greater than the combined might of all
the non-state private companies representing small and medium-sized
businesses, and they are very comparable with the resources being
controlled by the state apparatus.
What is more, the financial-industrial groups have the most
profitable assets, allowing them to mobilize considerable financial
resources. The political influence of the financial-industrial groups
is also very considerable - both on a regional and a federal level.
There is no doubt that the managers of the financial-industrial
groups as a whole are able to guarantee more effective use of the
property under their control in comparison with state officials. The
opportunity to make use of considerable financial resources allows these
groups to quickly realize major projects and go into new markets.
However, their absorption of independent companies is often leading to a
reduction in the quality of their management of the latter and, in
addition, the growth of the financial-industrial groups is destroying the
market's competition (which is not particularly developed as it is),
practically monopolizing entire sectors.
The main thing is that, in spite of their colossal proportions, these
financial-industrial groups can actually prove to be rather unstable, and
their ruin is just as much a possibility as the bankruptcy of a small
commercial stall. Everyone remembers the mighty scandal involving South
Korean Daewoo cha'ebol, the head of which, having removed $4 billion
from the group of companies under his control, simply vanished. This
actually took the financial-industrial group into bankruptcy and was a
very heavy blow for the country's economy as a whole.
Russia, fortunately, has yet to experience scandals on this kind of
scale, although the intricate structure of the financial-industrial
groups is superbly adapted to taking money abroad, and, theoretically, a
repeat of the aforementioned South Korean scenario on Russian soil is
very possible. However, a much more serious problem is the fact that
the financial-industrial groups, being first and foremost private
companies, are sometimes geared only toward making profits and are not
always worried about the development of the economy in the long-term
future, while being even less concerned about their social
responsibilities.
State officials, even if they often are incompetent and corrupt, are
nevertheless open to a certain amount of control, and they bear
responsibility if not to society (we are still a long way away from
this), then at least to their superiors. The leaders of the
financial-industrial groups, meanwhile, answer at best to their
shareholders and sometimes are even completely free in their actions.
And very often what is good for the Russian cha'ebol is certainly not
necessarily a good thing for small and medium-sized businesses, the
budget-funded sphere, and so forth.
The positions taken by the financial-industrial groups are rarely
detailed publicly in the mass media, and therefore exceptions to this are
especially interesting. In a recent interview with Ekspert magazine,
Mikhail Khodorkovskiy, Yukos Oil Company Chief Executive, very precisely
outlined his vision for state policy in the field of oil extraction. At
first glance his recommendations appear logical, but the point they are
really making is that the state should keep almost entirely out of the
oil companies' internal affairs, merely setting the general rules of the
game and issuing guidelines, while taking all the social obligations upon
itself at the same time.
The trouble, however, is that with the Russian economy totally
dependent on oil and gas exports, it would be extremely rash to rely
entirely on the preferences of the leaders of the financial-industrial
groups. A recent example of this is the merger of Tyumen Oil Company,
one of the country's largest oil companies, with international
corporation British Petroleum. In the short-term this merger appears to
be wholly beneficial for our economy, but at the same time it signifies a
substantial relaxation of state control over the most important of the
strategic sectors.
It is possible that the gradual transfer of at least a section of the
oil and gas sector into the control of international companies is
inevitable, but the real question is who will get the lion's share of the
foreign investments - the state budget or the financial-industrial
groups? The story of the sale of Slavneft and the removal of the
Chinese contenders from the tender, tells us that the second scenario is
more likely.
Often Mikhail Khodorkovskiy also airs a number of other important
ideas of his that contradict the Russian government's plans. For
instance, the need to allow private companies to build pipelines, a
reduction in taxes on oil sales, or the abolition of the law on
production-sharing agreements. And although such views are inherent, it
seems, in many oil companies' owners, the mouthpiece for their
aspirations is usually the Yukos chief.
At the aforementioned meeting between the president and the heads of
the Russian financial-industrial groups, the tension that had been
mounting twice exploded in disputes between Putin and Khodorkovskiy.
The first time it happened was when they were discussing state-owned
Rosneft's purchase of the Severnaya Neft company, and the second time was
during a discussion about corruption in the state apparatus, when the
president asked for specific examples of this and failed to get a reply.
The hidden agenda here is perfectly obvious: The financial-industrial
groups are involved in the corruption process to just as great an extent
(which, incidentally, even Khodorkovskiy himself admitted), and therefore
the attempt to place responsibility for corruption exclusively on the
shoulders of the state apparatus could not have failed to provoke a
critical comment from the president.
One can see that Mikhail Khodorkovskiy is protecting not only the
interests of his own company and the structures linked to it. He is
probably expressing the vision of the future of the Russian economy which
is inherent in the leaders of many Russian financial-industrial groups
and which, at times, is different from the current governmental and
presidential team's set of views. It is not out of the question that,
despite the desire and the ability of both sides to hold talks and try to
find compromises, these differences of opinion may in certain
circumstances take the form of open confrontation, including political
confrontation.
The next two years, with their numerous elections, will show us
whether or not the state is able to force the Russian
financial-industrial groups to play by its rules, or whether it will
submit to their diktat. And it is not out of the question that this
battle whichis currently proceeding on the whole surreptitiously, could
assume overt and even scandalous forms.

********

#19
Date: Fri, 14 Mar 2003
From: Carolyn Hovorka <carolyn.hovorka@eastview.com>
Subject: Stats from Russia and CIS

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*********

#20
Date: Fri, 14 Mar 2003
From: "JOSEPH DRESEN" <DRESENJO@wwic.si.edu>
Subject: Kennan Institute event postponement announcement

The Kennan Institute would like to announce that the seminar "International
Terrorism and Moscow Politics" with Dmitry Furman, Head Researcher,
Institute of Europe, Russian Academy of Sciences, Moscow that was scheduled
for Tuesday, March 18 has been postponed.

The new date for this presentation is Thursday March 27 from 12 to 1 PM.

We regret any inconvenience, and hope that you can join us for this
presentation. Please contact us with any questions at 202-691-4100.

********

#21
From: "Institute for War & Peace Reporting" <info@iwpr.net>
Subject: Caucasus Reporting Service No. 170
Date: Fri, 14 Mar 2003

WELCOME TO IWPR'S CAUCASUS REPORTING SERVICE, No. 170, March 14, 2003.

CHECHEN REFERENDUM ROW
The war-torn republic is gearing up for a constitution that will
controversially affirm its status as part of Russia.
By Umalt Dudayev in Grozny
Umalt Dudayev is the pseudonym of a freelance Chechen journalist.

Chechnya is heading for a constitutional referendum that has sharply
divided opinion in the shattered republic.

Voters will be asked on March 23 to approve a new constitution, which
regards Chechnya is an "integral and inseparable part" of the Russian
Federation and, in contrast to any other constitution of an autonomous
region, declares the republic's president may be dismissed at any time by
Moscow.

Also controversial is the constitution's reference to Chechnya as a
secular state, pointedly rejecting the Shariah Law introduced by the
republic's pro-independence government in 1998.

Human rights activists and non-governmental organisations have been
calling for a boycott of the vote, saying that Chechnya is not ready for a
constitution that categorically defines the status of the republic, when
it is so politically divided and still wracked by conflict.

In this they have received the backing of Lord Judd, special rapporteur to
the Council of Europe on Chechnya, who is stepping down from his post,
because of his opposition to the vote.

Even some anti-independence Chechen politicians have condemned the
plebiscite. Salambek Khajiev, who headed a pro-Moscow government in
Chechnya in 1994-5, called it a deception, while prominent businessman
Abubakar Arsamakov, said it was a desperate attempt of those who have
"degraded Chechnya to its current state, to remain in control".

A conference of Chechen rights groups and NGOs held in Nazran, Ingushetia,
earlier this month called on President Putin to cancel the poll. In their
final statement, the participants concluded that, "In the current
environment, Chechens will not be able to express their true opinion. The
referendum will, therefore, prolong and aggravate the disastrous military
standoff."

Former Russian deputy Lev Ponomaryov of the NGO For Human Rights drew a
parallel with Algeria, where France held a plebiscite in the late 1950s
affirming that it was part of the French state, only to allow another vote
in 1962, which gave Algeria independence.

In the last ten years, Chechnya has held two votes in 1991 and 1997 in
which its citizens supported the idea of independence. Although the first
was widely disputed, the second, bringing Aslan Maskhadov to power, was
recognised by the Organization for Security and Cooperation in Europe and
Russia itself. On February 3, 1997, the newly-elected parliament in
Chechnya proclaimed the republic an independent state.

Not surprisingly, Maskhadov, who is still leading armed resistance to
Russian forces in the mountains of Chechnya, has furiously condemned the
vote and threatened to step up military action.

In radio and television message, Maskhadov and his supporters have urged
Chechens to "boycott the referendum imposed by Russian authorities and a
group of traitors led by (Moscow's current leader in Chechnya) Akhmad
Kadyrov".

Colonel Ilya Shabalkin of the Russian military command has warned that
Chechen guerrillas are "preparing a series of major terror attacks aiming
to disrupt the referendum and ignite the situation".

This month has already seen a series of armed clashes across Chechnya.
According to local villagers, last week more than 20 Russian marines were
killed and several were captured by Chechen guerrillas near the mountain
village of Sharo-Argun in the east of the republic. Caspian Fleet
Commander, Rear Admiral Yuri Startsev, told ITAR-TASS six marines had died
and 10 wounded in the skirmish.

A random poll on the streets of Grozny revealed widespread scepticism
about the March 23 poll.

"They've been exterminating us as citizens of independent Ichkeria. Now
they will start killing us as their fellow countrymen," said Alikhan
Khasanov, a student at the Chechen State University. "I would gladly vote
if this referendum were meant to bring peace to Chechnya, but I just don't
believe the war is going to end in the foreseeable future."

"If they hold a referendum on a new constitution for Chechnya without
ending the war and achieving national accord, it probably means more
terror and violence and maybe even a civil war," said 56-year-old Apti
Arsakayev.

Putin has given his strong backing to the March 23 vote ever since it was
first suggested in June 2002. "We must back the initiative of the Chechen
people," Putin told an extended meeting of the leadership of the Russian
intelligence service, or FSB, on January 31, declaring that Chechnya
itself had come up with the idea for the referendum, which, he said, would
bring stability to the region.

Kadyrov, the strongest advocate of the vote, told ITAR-TASS news agency in
January, "People need peace. The referendum and ensuing election will be
the cornerstones of the peace process."

Preparations for the vote on the "Kadyrov constitution", as many have
already named it, are proceeding at full speed. All Chechen newspapers
have published the draft in both the Russian and Chechen languages.

Khasan Taimaskhanov, one of the main organisers, told IWPR that some
500,000 brochures of the draft constitution and its laws for both
presidential and parliamentary elections (expected to take place later in
the year) have been handed out to people in Chechnya and that 414 polling
stations have been set up around the republic.

Controversially, around 40,000 Russian soldiers stationed in Chechnya are
being allowed to take part in the vote.

A series of Chechen newspaper articles give no room for doubt that the
result will be a resounding yes vote. In phrases, heavily redolent of
Soviet times, the headlines proclaim "Everyone, to the Referendum!" and
"The Referendum is Our Future!"

Speaking at a press conference in Grozny on February 21, Kadyrov said,
"The people have spoken in favour of the referendum. Those who resist it
are enemies of the people, and we must get rid of them."

The draft constitution defines Chechnya as a presidential republic. The
legislative branch will be represented by a two-house parliament: the
Republic Council (Senate) and the Popular Assembly, consisting of 21 and
40 deputies respectively. The president and parliament deputies will be
elected for a four-year term.

*******

#22
From: "Prague Watchdog" <mail@watchdog.cz>
Subject: article on referendum in Chechnya
Date: Sat, 15 Mar 2003

PRAGUE WATCHDOG
observing the conflict in Chechnya
Visit us at: www.watchdog.cz

A Chechen Anomaly
By Imran Ismailov
Imran Ismailov is a free-lance journalist and frequent contributor to
Prague Watchdog.
Special to Prague Watchdog

The referendum on the constitution of the Chechen Republic, slated for
March 23, has been presented as a panacea, a remedy for all ills ----
primarily war. Moscow assumes that Chechnya will finally be embodied within
the Russian legal system; officials in Grozny hope they will finally cease
to be considered as mere stooges of Moscow and be recognized as a national
government; Chechens wish that by voting for the constitution they would
finally achieve a long-awaited peace. However, there is one major drawback
to these hopes and dreams ---- the rebels have never been consulted about
this longed for armistice. Thus it is doubtful that peace will ever be
realized; the war that began long before the referendum was planned will
unlikely be terminated by it.

"Everyone For the Referendum! Time to End the war!"

These are but two of the slogans circulating throughout Grozny these days.
Against the backdrop of a ruined city, they appear garish----like promising
paradise in times of plague. Yet this promotional hype about peace
returning has not been successful. Citizens pay little heed to such
attempts; they simply don't care. In a land where there are few, if any,
jobs to be found, it is a daily struggle not only to feed their families,
but to dodge a constant barrage of bullets.

Life is tough in Grozny----people continue disappearing without a trace. At
any given time, heavily armed, masked men jump out of darkened cars, snatch
someone and speed off to unknown destinations. And the majority of these
people are never seen again.

Chechens are sick and tired of this senseless and brutal war; yet they have
little faith that a peaceful life will follow after the referendum. They
have no confidence in the Kadyrov government, or the federal one either,
which is too distant from Caucasian reality.
By promising peace in exchange for approving the constitution, the
republic's leadership have avoided realistic issues that have accumulated
over the years; namely, human rights violations, rampant unemployment,
demolished homes, and embezzlement of funds sent to aid Chechnya.

Sovereign Chechnya Within Russia?

This is another absurdity in the constitution. It is quite possible that
through Moscow's silent consent, Chechnya's position within Russia will be
attained. After years of fighting for independence, let the people rejoice.
Ignore the fact that Chechens paid for their sovereignty with rivers of
blood and utter devastation; the important thing is that they swallow the
bait.

There is nothing unexpected in the manner in which Chechen leadership
trifles with the nation. It is just one way of deceiving and coaxing people
to take part in the referendum. Yet, unwittingly, Chechens are being
dragged into a new war----a political one.

In Akhmad Kadyrov's opinion, the words about sovereignty are specifically
intended to unite a fragmented society. Yet it is also specifically clear
that he expects to be the future president of the republic. However, he
doesn't realize that sovereignty may turn people against him----people who
understand the political ambitions that drive this man.

Relying on the electorate may turn out to be folly for Kadyrov.
Nevertheless, he wouldn't be head of the current administration if he
hadn't considered all his moves in advance. Being confident that the
referendum would be held, he publicly declared that Chechnya will make its
choice and that's all that matters. He knows the constitution will pass for
even in warring Chechnya the process is democratic.

This prognosis is not baseless. All heads of district, municipal and
village administrations have already received instructions on how to
organize the referendum. And there are indications that these leaders have
been instructed to exert pressure on residents, and to report that 100 % of
the electorate voted for the constitution. In addition, it is expected that
retirement and child support benefits will be paid on the eve of the
referendum. According to some people, though, a proportion of ballots have
already been filled out in support of the constitution and are stored in a
secluded place, ready to surface at the appropriate time.

Concerns of the OSCE and EU, regarding the ill-timed and hastily planned
referendum, are legitimate. Within such a short period, its text could not
have reached every citizen in time to grasp its essence and understand all
positive and negative aspects. Under such circumstances, it is impossible
to verify the referendum's legality.

Neither Peace Nor War

The current campaign in Chechnya has entered a new phase. Because of the
vast number of federal troops sent there, the rebels were forced to go
underground. Their main activities now are diversionary and subversive.
This has turned out to be quite effective as demonstrated by the "Nord-Ost"
tragedy in Moscow, and blowing up the building of the Moscow-backed
government in Grozny. The war has now become a slow, drawn-out process.

For the people, though, this change is no improvement. Federal units
continue to shell various regions of the republic, especially in the
mountains. And so-called "targeted special operations" are still carried
out, during which innocent citizens disappear and perish. This January,
during some routine check in Argun and in the Mesker-Yurt village, 19 young
people disappeared; only sometime later, friends and relatives found their
badly mutilated bodies

Almost daily, various villages are blockaded, and residents forbidden to
step out of their homes, not even to get food or water. Periodically roads
to Grozny are shut down, preventing people from going to work and students
to school.

But despite the security checks and mop-up operations, rebels still descend
on the villages and create mayhem. Last autumn, they came into the village
of Avtury and took control of it for several hours; upon leaving, they took
with them one of the villagers who had collaborated with the federal
authorities.

This, along with other facts, makes one wonder about the safety of the
people who plan on taking part in the referendum; it is well known that the
rebels are planning to launch combat operations during that time.
Therefore, security measures by federal forces and the police will be
extremely tight, which, ironically may end up obstructing the election.

Unlike Grozny, which is literally surrounded by the military and thus
provides some safety for the voters, other areas are much less protected.
Some villagers may well think twice before heading out to the voting booths.

The Silent Minority

The upcoming referendum on the Constitution has another
peculiarity----nearly a third of the population will not take part in it,
certainly not those who left the country during the first or second war.
They are the so-called temporarily displaced persons who settled in various
regions of the Russian Federation, and by so doing, will not be able to
evaluate the constitution or even take part in the referendum. Federal law
does not allow citizens residing outside of Chechyna to vote. This
violation of constitutional rights has been accepted in silence, for
obvious reasons. Were Moscow to organize a referendum outside the republic,
it would cause enormous problems and a huge expense. For Kadyrov's
administration to raise the issue would not help either, as holding the
referendum in areas not under his control could lead to unwelcome results.
Moreover, Kadyrov has openly criticized his fellowmen who now live outside
the republic, accusing them of not being patriotic.

In Mari El, where about 300 Chechens live, no information has circulated
about the constitution or the referendum. As the Immigration Department of
the local Interior Ministry stated, no such instructions have come from
above. However, law enforcement agencies did receive orders from Moscow to
stiffen control over Chechen immigrants. Special OMON units were instructed
to meet all trains arriving from Moscow to Yoshkar-Ola; and any Chechens
disembarking were to be taken to the police station to be interrogated,
searched, registered and videotaped.

The referendum on "Kadyrov's constitution", as it is called here, is
perceived in different ways by local Chechens. Following are some random
opinions:

Aslan, 27 years:
No new constitution will end the war. The whole thing is just fiction and a
deceit. Somebody needs this war to continue, which is why it won't end for
a long time. Taking part in such a referendum is absurd.

Ruslan, 32 years:
I neither care for President Maskhadov, nor for President Kadyrov. Neither
one has brought anything good to the Chechen people. Each is concerned only
with himself and not about the people, who have lost everything in this
war. The referendum or its results make no difference to me whatsoever.
People keep dying in Chechnya and someone comes up with these fairytales
about a constitution and a soon-to-be-ended war.

Magomed, 55 years:
What new Constitution are they talking about? We already have one. And
according to it, only parliament can declare a referendum and decide what
questions to ask. The present referendum is simply illegal.

Chechens living in Mari El concur on one point: approving a new
constitution and electing a new president of Chechnya will not stop the war.

The Day War Ends

Everyone in Chechnya hopes the war will end; so does Moscow, as they have
spent millions of roubles on the war in Chechnya while scores of other
problems are neglected. Nobody needs or wants this war. Is there really
nothing that can be done about it?

Moscow is betting that Kadyrov can do something; but he thinks only about
how to increase his personal power, which will hardly bring peace to
Chechnya. He is not popular among the populace and even less so among the
rebels, who consider him a traitor.

The referendum is deceiving as its goal is to create an illusion of the
republic's rebirth. A new constitution and Akhmad Kadyrov will hardly
resolve an issue that the federal army has been unable to do in three and
half years.

Will Moscow be able to overcome its ambitions and form a policy that might
end the war? So far, no such steps have been taken. But if international
organizations got involved in mediation, this could yield positive results,
as this approach would have no negative effects on Russia's image. Quite
the contrary, its prestige would increase in the eyes of the world.

Although it is feared the referendum will not bring peace, one of the
answers to a key question may stop the bloodshed: Do Chechens want to live
as part of Russia, or do they not? The Chechen people alone should decide
the future of the republic, not the seats of power.