Johnson's Russia List
23 April 2003
A CDI Project

  1. Stephan Solzhenitsyn: re
  2. AP: Zakharova follows in Markova's footsteps. (Boston marathon)
  3. Boston Globe: The Russian contingent was rushin' to the finish. 
  5. Interfax: Only 37 parties can participate in elections - official.
  6. Reuters: Russia's YUKOS, Sibneft to form world No.4 oil group.
  7. Moscow Times editorial: Oil Merger Is Driven by What? 
  8. Dow Jones: Geoffrey T. Smith, Oligarchs In Clover, The Rest Nowhere.
  9. Reuters: More Russian oil megadeals seen long way off.
  11. AFP: Papal visit to Russia possible "in near future": Russian PM.
  12. Moscow Times: Yulia Latynina, RSPP Reform, More Bang For the Buck?
  13. Reuters: Russia needs structural reform for growth -EBRD.
  14. Nezavisimaya Gazeta: THE GREF CHRONICLES. Is Economic Development 
Minister Herman Gref about to resign?
with human rights ombudsman Oleg Mironov.
  17. New Stanley Foundation and Century Foundation Essay on Chechnya.
  18. The Russia Journal Monthly Magazine: Ajay Goyal, Can Putin change 
  19. RFE/RL: Bruce Pannier, With U.S. Attention On Iraq, Moscow Wooing 
Central Asia.
  20. Transitions Online: Sveta Gaudt, Russia Wants Westward Travel Barriers 
  21. Rosbalt: EU Rolls East. Towards Russia?
  22. St. Petersburg Times: Igor Leshukov, Joining Is the Easy Part.] 


From: Stephan Solzhenitsyn (
Sent: Monday, April 21, 2003 
Subject: Re: Mass Media Hush Up Solzhenitsyn Was Informer 

Dear David:

I write regarding an article reproduced in JRL #7150 about my father,
Aleksandr Solzhenitsyn.  The article, which appeared in (Mass
Media Hush Up Solzhenitsyn Was Informer, 21 April), is nothing but a retread
of a tired old KGB smear campaign from the 1970s.  Such stories have
surfaced periodically ever since, and this is just another example.

It never occurred to the KGB to suggest that Solzhenitsyn was an informer
until he himself described in “Gulag Archipelago” (1974) how he had been
approached, while in the camps, by recruiters who hoped he would become an
informer.  The KGB immediately seized on this nugget to develop it into a
weapon to discredit Solzhenitsyn -- and thus to cast doubt on the “Gulag
Archipelago” itself.  The storyline is startlingly simple:  Solzhenitsyn the
informer condemned his friends to the camps of the Soviet gulag.

Using, when necessary, their gentle tactics of persuasion, the KGB produced
its “witnesses” and mounted a triple rollout – a brochure by Kirill Simonyan
published in Denmark; a television interview with Nikolai Vitkevich; and a
book by Solzhenitsyn’s first wife, Natalia Reshetovskaya.  The brotherly
Czechoslovak secret police chipped in as well, with a book by agent Thomas
Rezac in 1978, among other endeavors.   Perhaps the KGB’s most notorious
effort was in the field of forged letters – specifically the “Vetrov”
letter.  Solzhenitsyn responded to this as soon as it appeared (see LA
Times, 24 May 1976).  Even more brazen is the story of a 52-page letter of
denunciation:  that letter simply never existed.

A detailed defense, shredding the false accusations, appears in the author’s
literary memoirs of this period (“A Little Grain Caught Between Two
Millstones”, Chapters 4 and 5, presently available in Russian – see Novy
Mir, 1999, No. 2; also in French, “Le grain tombe entre les meules”, Paris,
Editions Fayard, 1998).  Some of this text was first published soon after
the fact, in 1979 (“Skvoz’ chad”, YMCA-Press, Paris; now Chapter 5 of
“Little Grain”).  I would direct anyone wishing to delve into the details as

(a) For KGB’s threats against Simonyan, who revealed them to a colleague,
shortly before dying in 1977 – see Novy Mir, 1999, No. 2, pp. 127-131.

(b) For the story behind Rezac’s work, told by former agent B.A. Ivanov –
see “Sovershenno sekretno”, 1992, No. 4.  Complete text reproduced in “Oak
and Calf”, Moscow, 1996 edition, pp. 675-684.

(c) For the Vetrov forgery – see Novy Mir, 1999, No. 2, pp. 71-72.

(d) For the 52 pages that never were – see Novy Mir, 1999, No. 2, pp.

When I saw a draft of the “Little Grain”, I asked my father if the
meticulous dissection of this entire outrage is beneath him.  Has not an
avalanche of discredit by now enveloped that regime and its machine of
falsehoods?  “No choice,” he answered.  And he is right:  it falls on every
man to defend himself, no matter what the allegations, no matter how base,
and no matter how often levied.

Unfortunately, lies will persevere and multiply as long as there are mouths
ready to repeat them.  I fear that a decade from now we will be clearing my
father’s name from the same smears all over again.


Zakharova follows in Markova's footsteps
April 22, 2003

BOSTON (AP) - The Kenyans have many role models to follow in the Boston
Marathon. Russia's Svetlana Zakharova had just one.

As a girl, Zakharova watched her countrywoman Olga Markova win in Boston in
1992 and '93. A day after Zakharova became the first Russian to win the
race since Markova, she said she was inspired by the two-time winner.

``When she was a young girl, she would watch Olga run in Boston,''
Zakharova's interpreter said Tuesday. ``She was dreaming that one day she
would do something like that.''

Zakharova ran away from fellow Russian Lyubov Denisova over the final five
miles to win by 91 seconds in 2 hours, 25 minutes and 20 seconds. Robert
Cheruiyot won the men's race in 2:10:11, as Kenya won for the 12th time in
13 years, sweeping the top five positions and eight of the first nine.

Russia's Fedor Ryzhov was the first non-Kenyan in the men's race. He also
finished first in the masters (over-40) division; another Russian, Firaya
Sultanova, won the women's masters.

``Long-distance running is not as popular (in Russia) as in Kenya,'' said
Zakharova's manager and interpreter, Konstantin Selinevich. ``But she will
be recognized in Russia. Everyone knows about the Boston Marathon.''

Part of the reason for that is Markova.

Before the collapse of the Soviet Union, Russian runners needed permission
from their national federation to run in Boston. Most of the top Soviet
runners were sent to the world championships and the Olympics, so the
country could express its dominance.

In 1992, Markova took advantage of her newfound freedom to run Boston as a
representative of the Commonwealth of Independent States. She became the
first champion from her homeland, whatever its name, then came back the
next year representing Russia and won again.

Selinevich said he got no fewer than 20 calls Monday night from
well-wishers back home who watched the race on satellite television.

Zakharova also ran in the 1997 Boston Marathon and finished 15th. Since
then, she has lowered the Russian record to 2:21:31, finishing fourth in
London and winning the Honolulu Marathon twice (she has also finished
second there five times).

She is one of the most prolific marathoners in the world, racing three or
four times a year instead of the usual twice. That may have helped her
Monday, when the rising temperatures and headwind slowed the rest of the

``The body type of the Kenyans, you see the difference,'' the interpreter
said. ``Her main strength is power. Her body helps her to run difficult
courses, and under difficult conditions. When you're thin, a headwind will
not help you.''

A day after the 107th Boston Marathon, organizers said that of the 20,223
runners who registered for the race, 17,567 started and 97 percent of them
- or 17,046 - finished. That last number included citizens of 70 countries
and every U.S. state.

More than 600 runners sought medical attention and 19 went to hospitals,
all in good condition.

There was one minor arrest and no public safety issues.

Race director Dave McGillivray also reported that things went smoothly with
the guide for fifth-place women's finisher Marla Runyan, who is legally
blind. A cyclist rode nearby to tell her where her water bottles were and
read off her times at the mile markers.

``Marla reported all went according to plan,'' McGillivray said.

Everything, that is, except the weather.

With temperatures unexpectedly reaching as high as 71 degrees along the
course, improperly dressed runners were challenged to avoid dehydration.
Things had cooled to 58 degrees by the Back Bay finish line, and the racers
- especially the wheelchair contestants - fought a headwind.

Cheruiyot's time was just the 57th-fastest in the history of the course.

``It was a little bit hot at the beginning, and we didn't expect 72 degrees
at the starting line,'' Zakharova said. ``The broadcast said something
about clouds. And we didn't see any clouds.''


Boston Globe
April 22, 2003
The Russian contingent was rushin' to the finish
By Susan Bickelhaupt, Globe Staff

Russian runners didn't make their mark only on the women's division of 
yesterday's Boston Marathon, they also dominated the masters races. 

Firaya Sultanova-Zhdanova, 41, and Fedor Ryzhov, 43, both of Russia, were the 
women's and men's champions, respectively, and both finished within the 
overall top 10.

Ryzhov, who won the masters race in 2001, ran a personal best last year but 
finished second behind Joshua Kipkemboi. The Kenyan wasn't in the race 
yesterday to get in the way of Ryzhov, who finished in 2:15:29, sixth overall.

Ryzhov ran with the leaders for most of the race, and even though Kipkemboi 
wasn't here, another nemesis was: Eddy Hellebuyck, of Albuquerque.

''I was surprised to run side by side with Eddy for 35 kilometers,'' said 
Ryzhov through an interpreter. ''I didn't expect that at all, because I know 
Eddy isn't always consistent.''

Hellebuyck, who had to settle for being the top American men's finisher 
(10th, 2:17:18), was jockeying with Ryzhov as they headed down Beacon Street 
in Brookline. Then the Russian surged ahead, and by Kenmore Square he was 
catching up to the leaders. He even passed defending champion and favorite 
Rodgers Rop, but said he didn't notice the No. 1 bib.

''I don't look at who's behind me,'' said Ryzhov, who now lives in Portugal. 
''I just keep an eye on who's in front of me and try to catch up. So I only 
realized it later.''

After winning Boston twice, and coming in second twice, Ryzhov was asked if 
he'd make it a mainstay on his racing schedule.

''At this age, you feel like every marathon is the last one,'' he said. ''But 
if I'm healthy at the same time next year, I'll be back.''

Sultanova-Zhdanova, who last year set a Boston course record for women's 
masters in 2:27:58, wasn't so fortunate this time, although she stayed with 
the lead pack virtually the entire race, finishing in 2:31:30 for seventh 
place overall.

''Well, that's the Marathon,'' she said through an interpreter.

''I thought I was better prepared this year than last year. But the weather 
was different. I made some tactical adjustments but they didn't work. When I 
felt better, I speeded up, and that hurt me.''

But she was pleased about her country making such a good showing.

''There was a lot of training and a lot of mileage,'' she said, ''and this is 
a good payoff.''



YEKATERINBURG, April 22, 2003. /from RIA Novosti - Ural correspondent Tatyana 
Nikolayeva/ -- The parliamentary campaigns start on September 1, 2003, and 
the presidential campaign - on December 1, 2003, Head of the Russian Central 
Elections Commission Alexander Veshnyakov said in Yekaterinburg. He added 
that the upgrade of the system allowing for on-line tallies would be 
completed before the campaigns started. 

He also mentioned that 37 political federal parties had the right to take 
part in general and regional elections. 

Over 18 months after the federal law on political parties came into force, 
more than 70 constituent and reorganisation party conferences have been held. 
As many as 51 political parties have been registered with the Justice 
Ministry. Only 37 parties with their regional branches meeting the required 
standard can take part in elections at difference levels, Veshnyakov said. 


Only 37 parties can participate in elections - official

YEKATERINBURG (Russia). April 22 (Interfax-Urals) - Only 37 political parties 
are eligible to take part in national and regional elections today. 
   This statement was made by Alexander Veshnyakov, the chief of the Central 
Elections Committee, at a regional workshop addressing preparations for 
elections in Yekaterinburg on Tuesday. 
   Veshnyakov noted that parties have held more than 70 constituent and 
reorganization congresses over the last 18 months after the federal law on 
parties took effect. At the same time, only 51 parties have submitted 
documents for registration, while 37 parties have registered offices in most 
of the country's districts, thus enabling them to run for seats in federal 
and local legislatures. 
   The committee's head did not rule out that more parties will be granted 
permission to participate in elections before the parliamentary elections' 
campaign kicks off.


Russia's YUKOS, Sibneft to form world No.4 oil group
By Dmitry Zhdannikov and Mikhail Yenukov

MOSCOW, April 22 (Reuters) - Russian oil major YUKOS said on Tuesday it would 
buy its smaller rival Sibneft in a deal creating the world's fourth largest 
oil firm which may head off a possible foreign bid.

The merger of Russia's second and fifth biggest oil firms will be the largest 
in Russian corporate history and is valued by some analysts at around $12 
billion. The transaction includes $3 billion in cash plus a complex equity 

The merged company, to be called YukosSibneft, will have a combined market 
value of some $35 billion, making it by far the largest company on Russia's 
stock exchange.

A joint statement issued by the two firms on Tuesday said the newly formed 
YukosSibneft would have YUKOS head Mikhail Khodorkovsky as chief executive 
and Sibneft head Eugene Shvidler as chairman.

The merger comes only months after international oil major BP acquired a 50 
percent stake in the nation's third largest oil firm, the Tyumen Oil Co (TNK) 
for $6.75 billion.

By swallowing Sibneft, YUKOS appears to have thwarted the ambitions of 
world's majors such as Royal Dutch Shell, ExxonMobil or TotalFinaElf, which 
were rumoured to be looking at matching BP's acquisition.

The enlarged firm would also be in a stronger position to fulfil 
Khodorkovsky's ambition to become a force to be reckoned with in the global 
oil business.

"It (the merger) creates a very large scale business in Russia, which will 
have to seek opportunities for growth in either new areas in Russia... or 
internationally," said Adam Landes, oil and gas analyst at Renaissance 
Capital in Moscow.

"It's a monster company that global majors will look at with more respect."

The two companies said they plan to complete the merger by the end of the 
year. Shares of both YUKOS and Sibneft, which shot up in recent weeks as 
market rumours swirled, jumped about two percent after the announcement but 
later pared their gains. YUKOS ended up 1.18 percent at $11.18, while Sibneft 
rose 1.27 percent to close at $2.40.


The statement said the group would have oil and gas reserves of 19.4 billion 
barrels -- greater than in the North Sea, which separates Britain and Norway, 
or Alaska's Prudhoe Bay.

The firm will have the third largest oil and gas reserves among private 
firms, behind Exxon and Shell but ahead of BP.

It will produce 2.3 million barrels per day of crude oil, putting it on a par 
with OPEC member Kuwait and giving it 29 percent of Russia's crude oil 

The statement said only BP, Exxon and Shell produced more oil among the 
world's privately owned majors, while U.S. giant ChevronTexaco and 
TotalFinaElf were behind.

Measured by oil and gas output, YukosSibneft will rank sixth in the world 
after Exxon, Shell, BP, Chevron and Total.

Industry and banking sources told Reuters last Friday that the two companies 
were poised to announce a merger that would dislodge LUKOIL from its number 
one position in the Russian market and challenge some of the world's top oil 

Sibneft's first vice-president Alexander Korsik told reporters on Tuesday the 
combined firm planned to maintain double-digit percentage growth in oil 
production for a few more years, a move helping Russia take market share from 
other producers including OPEC.


In the complex deal, Sibneft shareholders will sell 20 percent of their 
shares to YUKOS for $3 billion in cash, with the rest of the firm's shares to 
be swapped at a ratio of 0.36125 percent of the new combined firm for every 
one percent of Sibneft stock.

A group of core shareholders in Sibneft, led by Roman Abramovich -- powerful 
governor of Russia's remote eastern region of Chukotka -- would end up with a 
blocking 26 percent stake in the new firm, while Sibneft's minority 
shareholders would get around three percent in YukosSibneft.

Sources close to the deal said YUKOS will increase its charter capital by 26 
percent through a new share issue to open the way for the merger.

After the share issue and merger, YUKOS's core shareholders, including 
Khodorkovsky, will hold 71 percent of the combined group, together with 
minority shareholders.

YUKOS officials declined to say the exact stake its core shareholders would 
hold in the new firm.

YukosSibneft said it promised to make a "fair offer" to Sibneft's minority 
shareholders and would take advice on the issue from an "internationally 
recognised" investment bank.


Russia's Prime Minister Mikhail Kasyanov praised the deal, which has yet to 
be approved by the Antitrust Ministry, saying it would help Russian business 
strengthen its standing abroad.

Market analysts were generally positive about the pricing of the deal. Before 
the merger YUKOS had said it wanted to list on the New York Stock Exchange in 
the next year.

"The concern has been that YUKOS would not offer as much as the market was 
asking, but in fact they have offered a premium," said Stephen O'Sullivan, 
Head of Research at Moscow-based United Financial Group.

The two companies made an earlier abortive attempt to merge in early 1998 but 
abandoned their efforts after several months of wrangling.

The statement also said YUKOS was considering making dividend payments to 
shareholders and buying back shares, a move that would increase indebtedness.

"Prior to completing the transaction, YUKOS intends to increase its leverage 
and is considering among other things, cash distributions to its shareholders 
in the form of dividends and share buybacks," the statement said.

The combined company would have a "moderate level" of debt and strong working 
capital, the statement added.

The merged company will operate 2,500 filling stations and 10 refineries in 
Russia, Lithuania and Belarus.
(Additional reporting by Julie Tolkacheva and Oliver Bullough)


Moscow Times
April 23, 2003
Oil Merger Is Driven by What?

A bad case of deja vu or is it really happening for a second time? Five
years after they first announced a merger to form a "world-scale and
world-class" company, Yukos and Sibneft are at it again. And they have
plenty of high-level cheerleaders in the government egging them on.

No sooner had it been announced than Alexei Kudrin was calling the merger
"a very positive step" that "other Russian companies have a lot to learn
from." And Mikhail Kasyanov, not to be outdone, was talking excitedly about
the new YukosSibneft as a "flagship" of the Russian economy.

Heady talk, but without wanting to spoil the party it does seem worth
penetrating the euphoria and taking a look at what exactly is driving the

At one level, it is pretty clearly a pre-emptive strike by Yukos to prevent
another international oil major joining forces with a Russian player a la
BP-TNK. But while the BP-TNK merger earlier in the year had clear business
synergies, such synergies are far from obvious in this deal, as the two
companies' assets don't seem particularly complementary.

Also, for Yukos, which has been Russia's corporate governance poster boy
for the past few years, the merger with Sibneft surely carries reputational
risks. After all, 18 months ago Sibneft engaged in a murky insider deal
that provoked a storm of negative publicity; and less than six months ago,
the company was at the center of the scandalous Slavneft privatization

(Let's hope in this respect that the merger leads to the Yukosization of
Sibneft rather than the Sibneftization of Yukos.) 

In fact, the deal looks like a thoroughly Russian affair: driven by the
Kremlin's political agenda (no more major foreign deals in the oil sector,
at least until after March 2004); by Mikhail Khodorkovsky's dogged
determination to be the biggest kid on the block; and by the Sibneft core
shareholders' desire to cash in ($3 billion in Roman Abramovich and Co.'s
back pocket is not at all bad) and ride on Khodorkovsky's coattails.

But the commercial foundations of the deal look somewhat shaky.

For Khodorkovsky, however, this may not be uppermost in his mind. After
all, he recently announced his intention to step down as CEO in 2007, and
he has been working very hard to raise his public profile of late --
everything from countless TV appearances and lavishly funded philanthropic
activities, to publicly announcing which political parties he will be
financing in the upcoming parliamentary elections. 

Let's face it, being CEO of the gargantuan YukosSibneft could serve as an
ideal springboard for launching a political career.


THE SKEPTIC: Oligarchs In Clover, The Rest Nowhere
April 22, 2003

MOSCOW -- It's hard to exaggerate the significance of the Yukos-Sibneft deal 
for Russia.

If completed, it will create a private-sector center of unprecedented power 
and wealth in Russia . Consider the impact on just the principals of the two 

With $4 billion in his pocket ($3 billion up front from Yukos and $1 billion 
from his own 2002 dividends), there will be little that Roman Abramovich, the 
larget shareholder in OAO Sibneft (R.SBN), can't buy in Russia .

Meanwhile, OAO Yukos (R.YUK) Chief Executive Mikhail Khodorkovsky will have 
management control of $15 billion in annual revenues at the new company, 
which will be contributing more to the federal budget than anyone except 
Gazprom. Khodorkovsky will never be short of friends, even in the highest 

With incentives like that to drive the deal, who needs corroboration from 
business fundamentals?

It's hard to see how Yukos and Sibneft will get oil out of the ground any 
more cheaply or realize more dollars per barrel as a result of the 
acquisition of Sibneft by Yukos.

Oh, there may be some efficiencies around the margins, for example in 
financing new field development in eastern Siberia and new export pipelines. 
But both companies would have been smart enough to cooperate on such projects 
even without a merger.

At the end of it all, portfolio shareholders will just find themselves 
holding one perfectly good oil stock instead of two. They may get some 
benefit from the extra weighting the new company will get in global indexes 
and also from the NYSE listing that Yukos originally planned for later this 
year, although that looks like an optimistic deadline now.

In the meantime, the best that shareholders can hope for is that 
Yukos-Sibneft makes good its promises on output growth and, more importantly, 
manages to get the extra output to market.

Further down the road, the advantages for investors are no clearer. 
Yukos-Sibneft would be the only Russian oil company that an international 
major could contemplate buying, barring a miraculous mass conversion among 
the management of Lukoil or Surgutneftegaz.

But Yukos-Sibneft would probably be too big to be taken over. Russia has no 
history of allowing private Russian citizens, let alone foreign ones, to 
manage such a vast empire without considerable state interference. No major 
will be allowed to buy 51% and none will want to buy any less.

Which invites the thought that this takeover story may not have any more 
substance than it did five years ago when it was first trotted out.

Khodorkovsky and Abramovich are far and away Russia's brightest businessmen. 
They don't usually do deals like this one, coming out of nowhere, without 
either party completing due diligence, and without any convincing economic 

That suggests the Kremlin may have "invited" Khodorkovsky to stop Sibneft 
eloping with either of its recent foreign suitors, TotalFinaElf and Royal 

However, even without the Kremlin's intervention, Yukos may have been scared 
enough by the thought of more foreign competition to jump at what is 
effectively a dilutive deal for it.

Either way, the deal is essentially a defensive one, done for less than the 
best of reasons. With a willing Kremlin, either partner could still walk away 
if they got a better offer. But in election year, it wouldn't be wise to bet 
on it.


More Russian oil megadeals seen long way off
By Samantha Shields

MOSCOW, April 22 (Reuters) - Further Russian oil merger and aquisition 
activity is likely to be on a smaller scale than the megadeals seen since the 
start of the year and may be a while in the making, analysts said on Tuesday.

"We're probably done for now...we've had enough shocks for one quarter," said 
Adam Landes, oil and gas analyst at Renaissance Capital.

Russia's second and fifth biggest oil firms, YUKOS  and Sibneft 
, are to merge to create the world's number four producer, with 
bigger reserves than the North Sea and a combined market value of $35 billion.

The deal comes hot on the heels of international major BP's  February 
acquisition of half of Russia's third biggest oil firm, Tyumen Oil Company 
(TNK) for $6.75 billion.

The deal creating YukosSibneft is complex, with Sibneft shareholders selling 
20 percent of their shares to YUKOS for $3 billion in cash with the rest of 
the company's shares to be swapped at a ratio of 0.36125 percent of the new 
combined firm for every one percent of Sibneft stock.

It combines the two darlings of Russia's oil sector, effectively increasing 
their immunity to any foreign bid. Elsewhere top producer LUKOIL  
is seen by some analysts as lumbering and lacking a clear business plan, 
while number four Surgutneftez , whose shares staged a stellar 
rally on Monday amid bid hopes, has a share ownership structure that 
effectively rules out a hostile bid.

"I don't think there is much of a possibility that international companies 
will buy more, but domestically Surgut has been under attack for the past few 
days," said Stephen O'Sullivan, head of research at United Financial Group.


Huge demand for Surgut propelled its shares to an all-time high and pushed 
normally meagre turnover on the Russian Trading System to pre 1998-crisis 
levels at over $85 million.

But Landes said Surgut's prohibitive share structure, under which around 70 
percent of the firm is controlled by its management, makes a hostile takeover 
unlikely. Its shares pared recent gains to be down nine percent at $0.4370 by 
1400 GMT, still well above their $0.3042 level a week ago.

O'Sullivan said talk was focusing on Surgut as the next target because it is 
an undervalued asset and the Russian government has no significant oil assets 
left to privatise.

"At the moment there is just speculation that may turn into activity, but I 
don't think it will be short-term because you would need to turn whatever 
company it was around first," he said.

Kaha Kiknavelidze at Moscow brokerage Troika Dialog said it could make sense 
for LUKOIL to buy a smaller Russian oil producer.

"After this announcement LUKOIL clearly needs a partner, but it is not clear 
who it could be," he said.

Likely second tier candidates for takeover could be Tatneft  and 
Bashneft , medium-sized producers controlled by the regional 
authorities of semi-autonomous republics Tatarstan and Bashkortostan.

But neither possesses the qualities that made TNK, YUKOS and Sibneft 
attractive, as both are in mature regions with high production and 
replacement costs.

"I think LUKOIL is under pressure to deliver better financial performance 
first and foremost, I believe it will just focus on improving its financial 
performance," Landes said.

Both LUKOIL and Surgut declined comment on the possibility of further bid 


Nezavisimaya Gazeta
No. 82
April 22, 2003
[translation from RIA Novosti for personal use only]   
     Despite the fact that changing the date for the 
President's address to the Federal Assembly does seem to be 
improper, the meeting of the head of the Russian state with 
deputies and senators has been postponed again. NG sources on 
Staraya Square, in the State Duma and the Federation Council 
confirm that the Kremlin authorities rejected the previously 
appointed date - April 23. Piquancy to the situation is added 
by the fact that, according to NG, the working group led by 
deputy head of president's administration Dzhakhan Poliyeva has 
prepared the text of the address as early as the middle of last 
Moreover, high-ranking Kremlin officials have already read the 
document because they always receive the draft beforehand for 
     It's highly improbable that the president would deliver 
the address anytime before the end of April. On April 28, 
Vladimir Putin would be coming back from his trip to Dushanbe, 
where he is scheduled to participate in the summits of EurAsEC 
and CST. From public relations standpoint, it doesn't make any 
sense to deliver such an important speech, which is practically 
an outline of the president's election program, at this time - 
it's the start of lawn-and-garden season and traditionally a 
vacation period for many Russians, which would significantly 
reduce the potential audience. Many major newspapers have a 
break in circulation, the majority of analysts, who would 
normally comment on president's speech, will be on vacation. 
For the same reasons it's not advisable to do it in the first 
half of May, either. Besides, at the end of April, deputies are 
supposed to travel to the regions, and it would be rather 
inexpedient to deprive them of the opportunity to meet with 
electorate. In that respect, NG sources in president's 
administration mention the latest date - May 14.
During almost all 10 years of the history of the presidential 
addresses to the deputies and senators, the date has never been 
postponed till that late. Which inevitably raises a reasonable 
question - why? First of all, we shouldn't discard the 
possibility that after reading the speech prepared by 
speechwriters, Vladimir Putin was not happy with the text. 
That's what actually happened last year, when the president 
returned the draft, where whole paragraphs had been crossed 
out, to his aides.
It's possible, though, that the postponement could be caused by 
other reasons. There is a possibility that the meeting between 
Vladimir Putin and George Bush might occur before the summit in 
St. Petersburg. There are rumors saying that it had been 
planned exactly for the first part of May. Probably, the 
Kremlin authorities don't want to announce prematurely the 
document, which conceptualizes, in large part, the Russian 
foreign policy issues.
     Also, the postponement could be related to the internal 
situation in the country. The uncertainty with the future of 
the administrative reform, which was the focus of the 
presidential address last year, and, consequently, unclear 
outlines of the future governmental structure, might be forcing 
the Kremlin to delay the announcement of the document, as well. 
NG sources on Staraya Square explain the postponement simply by 
technical reasons, though. Allegedly, the date has been shifted 
because the president's agenda is extremely busy, especially 
with previously unscheduled trip to Dushanbe, plus, May 
holidays are looming on the near horizon. In any case, such an 
explanation just shows how disorganized the Kremlin bureaucrats 

Papal visit to Russia possible "in near future": Russian PM
April 22, 2003

Russian Prime Minister Mikhail Kasyanov said Tuesday he believed a visit to 
Russia by Pope John Paul II was possible "in the near future," but a 
spokesman for the Russian Orthodox church reminded him sharply that its 
approval would be necessary.

"This is not a decision to be taken at government level, but we hope to 
receive the pope in the near future," Kasyanov told reporters during a visit 
to the northern city of Rybinsk, as quoted by the Interfax news agency.

Vatican authorities have said they could include a stopover by the pope in 
the Russian city of Kazan, 800 kilometres (500 miles) east of Moscow, when he 
travels to Mongolia in August.

The visit would enable the pope to return the icon of Our Lady of Kazan, one 
of the most venerated icons of the Virgin Mary in the Orthodox Church, stolen 
from the city in 1904 and which found its way to the Vatican. 

Kasyanov has strongly backed the pope's declared wish to visit Russia and 
said during a visit to Rome last week that his government was working 
actively to heal a rift between the Vatican and the Russian Orthodox Church.

His latest comments came after a Moscow patriarchate spokesman on Monday said 
he hoped Italian Prime Minister Silvio Berlusconi would help to resolve the 
differences between the Roman Catholic and Russian Orthodox churches.

Berlusconi told Kasyanov on Friday that he had requested a meeting with 
Patriarch Alexy II with a view to preparing a possible papal visit to Russia.

The Moscow patriarchate said it had not been informed of the proposed visit 
and made clear that it would not approve of one until formal negotiations 
were held.

Spokesman Vsevolod Chaplin said on Monday he hoped Berlusconi might 
contribute to easing differences, though no request for a meeting with the 
patriarch had been received.

"The future of our relations lies with the Vatican. We hope that everyone 
interested in their positive development, including the prime minister, will 
persuade the Vatican to take concrete steps to resolve problems," Interfax 
quoted him as saying.

"If he (Berlusconi) makes an official request, the patriarch will certainly 
consider it," he said.

Reacting to Kasyanov's comments, Chaplin said he hoped the Vatican would not 
start planning a visit without prior approval from the Orthodox authorities.

"The Russian state authorities have invited the pope on a number of occasions 
but, as the Vatican itself agrees, official visits to a country have to be 
approved by both the state and the predominant church or religious 
community," he said.

However "we appreciate that the Vatican has thus far refrained from planning 
the pope's possible visit to Russia without the consent of the Russian 
Orthodox Church," Interfax quoted him as saying.

Chaplin noted that papal advisor Cardinal Walter Kasper and Metropolitan 
Kirill of Smolensk and Kaliningrad, meeting in Geneva last month, had agreed 
that a settling of differences between the two churches was "very remote."

However they also agreed to set up regular contacts to discuss their 

The heads of the two rival churches have not met since the Great Schism of 
1054, and the ailing pope has made it clear that one of his outstanding 
ambitions is to meet Alexy II.

Relations between the Roman Catholic and Russian Orthodox churches, already 
strained, deteriorated further in February last year when the pope said he 
was creating four new Catholic dioceses in Russia.

The Moscow patriarchate is angered at what it perceives as Catholic 
proselytism in its heartlands and over the situation in western Ukraine, 
where it says it has lost three bishoprics to the Uniate Catholics.

Although the Kremlin could formally invite the pope to visit Russia as a head 
of state, the Moscow patriarchate wields an effective veto.


Moscow Times
April 23, 2003
RSPP Reform, More Bang For the Buck?
By Yulia Latynina   

The Russian Union of Industrialists and Entrepreneurs, or RSPP, has put
forward an extremely liberal proposal: to radically cut the number of
ministries and government agencies.

Our government is truly amazing, when you stop to think about it. Take
Deputy Prime Minister Alexei Gordeyev, who handles agriculture policy. In
his work to better the lives of Russia's peasants, Gordeyev lobbied hard
for so-called interventions on the grain market. As it happened, the money
was allocated in November, when the peasants had already sold everything to
major dealers. As a result of Gordeyev's farm policy, the government spent
taxpayer money to boost the profits of major grain dealers.

Then there's Ilya Klebanov, head of the Industry, Science and Technology
Ministry, best known for pushing tariffs to protect Russian industry. The
ministry maintains, for instance, that in order to help the oligarchs who
bought up Russia's automobile plants, the government should make average
citizens pay more for used foreign cars. It's unclear what led Klebanov to
believe that oligarchs are the neediest group in Russian society. Probably
the same thing that gave Gordeyev the brilliant idea of lending a helping
hand to big agribusiness.

Igor Kostikov, head of the Federal Securities Commission, mercilessly
prosecutes insider-trading on the stock market -- how many firms have had
their licenses yanked by the FSC already! How wonderful that the
flourishing St. Petersburg-based company AVK has not been subjected to a
probe. Apparently Kostikov already knows that everything at AVK is in
order. After all, he was co-owner of the company before his appointment to
the FSC.

Yevgeny Nazdratenko is head of the State Fisheries Committee. He has been
questioned in connection with his committee's decision to hand out
scientific fishing quotas for nothing. Among the other players involved in
this little scandal is Vitaly Artyukhov, head of the Natural Resources
Ministry. It turns out that scientific fishing quotas cannot be granted
without his approval. 

Finally, there's Prime Minister Mikhail Kasyanov, who recently received a
proposal from Alfa Group to take over management of state-owned
Sheremetyevo Airport. In this situation, you would think an honest
bureaucrat would have thrown the letter in the trash, or told Alfa Group:
"Sorry, we don't lease public property to oligarchs without a tender."
Instead, Kasyanov ordered the Economic Development and Trade,
Transportation and Property ministries to review the proposal and report
back as soon as possible. Before they get back to him on pension and tax
reform, no doubt.

Don't think that I'm blaming everything on the bureaucrats. It takes two to
tango: Corrupt decisions don't happen without a government official on one
side and an oligarch on the other.

The RSPP is a kind of oligarchs' senate, so their proposal to trim the
government is not just some strategic arms limitation treaty. We need to
limit arms and prune the bureaucracy, of course. I'm all for it. I'm just
trying to figure out why the oligarchs came up with such an altruistic idea.

As I puzzled over this question, a seditious thought came to mind. What if
the bureaucracy has become so bloated that it's getting in the way of
corrupt policy decisions? Word is that bribes in the recent fish quota
scandal totaled as much as $10 million because so many state agencies were

It seems reasonable to assume that if there are fewer ministries, the
oligarchs will spend less on bribes and get more bang for their buck.

Yulia Latynina is host of "Yest Mneniye" on TVS.

Russia needs structural reform for growth -EBRD

MOSCOW, April 22 (Reuters) - The European Bank for Reconstruction and 
Development said on Tuesday Russia had to push forward structural reforms to 
secure much-wanted faster economic growth. 

"Slow and inconsistent reforms, rather than a decline in oil prices, are the 
main risks to Russia's outlook," the EBRD, set up to help the transition from 
central planning to market economies, said in its 2003 transitional report. 
Despite lagging investment the Russian economy grew 4.3 percent last year 
buoyed by high oil prices and strong household consumption. The EBRD 
maintained its 2003 GDP forecast at 4.3 percent, the same as last year. 

"Without increased investment and diversification, growth is unlikely to 
accelerate significantly in the near future. Strong and consistent progress 
with structural reforms is required," the bank said. 

Analysts have said Russia needs urgent reforms in public administration, 
banking and utilities and fear the government might lack the political will 
to carry them out ahead of parliamentary polls in December. 

The government says the Russian economy should diversify instead of relying 
so heavily on its energy sector. 

But the EBRD said Russia is well placed to face a significant decline in oil 
prices post-Iraq. 

"The country's reserves and wide range of policy options provide a cushion to 
the economy, although such a decline would temporarily hit growth." 

It also said continued high oil prices and the run-up to the elections could 
raise the risks of budgetary expansion and reform slowdown. 

Russia is facing parliamentary elections in December and a presidential poll 
next March. 

"Given labour market tightness, ongoing high capital inflows and the central 
bank's still limited sterilisation arsenal, Russia can expect upward pressure 
on inflation and the real exchange rate, and the further erosion of external 
competitiveness," the EBRD said. 


Nezavisimaya Gazeta
April 22, 2003 
Is Economic Development Minister Herman Gref about to resign?
Author: Natalia Melikova, Olga Tropkina, Pyotr Orekhin, Konstantin 
[from WPS Monitoring Agency,]

     Deputy Economic Development Minister Ivan Materov became acting 
minister yesterday when Economic Development Minister Herman Gref 
started his annual vacation. Numerous observers maintain that Gref 
will not return. A chronicle of recent events indicates that the 
outcome of serious conflict within the Cabinet and Gref's own poor 
health could be Gref's resignation. 
     Gref was in hospital between March 21 and April 11. The Economic 
Development Ministry refused to reveal the diagnosis. It is only known 
that Gref spent several days at the Central Clinical Hospital. One of 
Gref's acquaintances who visited him in hospital said that Gref did 
not always respond adequately in conversation. Recalling the head 
injuries Gref sustained in a 1999 car crash, the acquaintance surmised 
that it was an aftereffect.
     Gref was scheduled to meet with Pasqual Lemi in Paris on March 
29. Membership of the World Trade Organization was on the agenda; but 
the meeting never took place.
     Deputy Minister Muhamed Tsikanov stood in for Gref at the April 3 
conference chaired by Deputy Prime Minister Viktor Khristenko, on 
social and economic development of the Russian Far East and the Trans-
Baikal region.
     On April 9, Deputy Minister Materov met with Okamoto Iwao, 
General Director of the Natural Resources and Energy Agency of Japan. 
Iwao had expected a meeting with Gref.
     April 17: "We went there to get some important documents signed, 
and were told by Gref's associates not to be in such a hurry, because 
they might have a new boss by May 18," said an official from a federal 
     That same day, an expanded board meeting of the Auditing 
Commission was held in Grozny. Speaking about misuse of funds 
allocated for post-war restoration of Chechnya, Sergei Stepashin 
criticized the Economic Development Ministry as program coordinator.
     April 21: Gref started his annual vacation.
     The Economic Development and Trade Ministry is a unique entity: 
essentially an heir to the former Soviet Gosplan, Ministry of Trade, 
Ministry of Foreign Trade, and even Tourism Council. The Economic 
Development Ministry performs more functions than any other ministry. 
Gref has sixteen deputy ministers, and is associated with all of 
Russia's reforms. It is his presence in Mikhail Kasianov's Cabinet 
that has made it look a liberal government of reformers. The media has 
always kept Gref in the focus of attention. Off the record, Gref was 
reputed to be no less influential an official than any deputy prime 
     The Economic Development Ministry's last two years under Gref 
will be remembered first and foremost as the period of drafting plans, 
concepts, and programs. The piles of documents generated by the 
Economic Development Ministry have included the best work of civil 
servants, and the best of what was proposed by liberal economists, 
mostly from Yegor Gaidar's Transition Economy Institute and Yevgeny 
Yasin's Expert Institute.
     But implementation of the plans has lagged behind their drafting.
     In current political battles, the Economic Development Ministry 
voluntarily lobbies for business interests, largely due to the 
activities of the Russian Union of Industrialists and Entrepreneurs. 
The concepts the Economic Development Ministry has forwarded to the 
government clearly reflect the demands put forth by big business. It 
should also be noted that the reforms the Economic Development 
Ministry has promoted were officially the province of other ministries 
and departments: hence its frequent conflicts with other structures. 
The Economic Development Ministry clashed with the Labor Ministry over 
reorganization of the civil service; with the Pensions Fund over 
pension reforms; and with the Nuclear Energy Ministry over its 
monopoly in nuclear energy. The worst conflict so far has been with 
the Finance Ministry.
     The Finance Ministry has always had the last word on everything 
to do with state revenues. The logic of events led to the situation 
where the Finance Ministry was a conservative structure and the 
Economic Development Ministry was radically liberal. There were some 
minor conflicts - over foreign currency regulation, international 
accounting standards, and special economic zones. There was also a 
major conflict over the tax reforms. The prime minister took a more 
radical stand recently, and the Finance Ministry is being forced to 
cut VAT by 2% from 2004.
     Neither should we forget that the Economic Development Ministry 
promoted restructuring the electricity sector according to the 
proposals of Anatoly Chubais. Chubais wouldn't have stood a chance 
without Herman Gref's support.
     Everything reported by the media made up only a small segment of 
the activities of the colossal Economic Development Ministry. There 
were Gref's deputies associated with the reforms: Andrei Sharonov, 
Mikhail Dmitriyev, and Arkady Dvorkovich. There was Deputy Minister 
Maksim Medvedkov, who headed the Russian delegations at negotiations 
with the World Trade Organization (the talks that ended in a cul-de-
sac). But Gref has many more deputy ministers. The Economic 
Development Ministry has facilitated trade and tourism, convened anti-
dumping investigations, and charted development plans for the regions. 
Gref's vacation could indicate that the mega-ministry is in a terminal 
     Gref may even be called a charismatic leader, a person hard to 
replace. The political consequences of his resignation from the 
government are unpredictable. At worst, we could expect a 
deterioration in relations between the executive branch and right-wing 
liberal forces in politics and society.



MOSCOW, April 22nd, 2003. /From a RIA Novosti correspondent/. -- Russian 
Deputy Prime Minister, Russian Finance Minister Alexei Kudrin flatly refuted 
speculations about Russian Minister for Economic Development and Trade German 
Gref's possible resignation. "It is ruled out," Alexei Kudrin told 

On Tuesday, the Moscow non-governmental media reported that one of the key 
Russian Ministers had resigned for health reasons. 

According to the Russian Deputy Prime Minister, "it is an attempt to make a 
sensation in the media." The Kremlin said that German Gref had been on 
holidays to take a rehabilitation course after a disease. However, after his 
holidays the Russian Minister will resume his activities, a high official 
source in the Russian President's Administration reported. German Gref's 
holidays will last till May 10. 


Vremya MN
April 22, 2003
An interview with human rights ombudsman Oleg Mironov 
Author: Armen Urikhanjan
[from WPS Monitoring Agency,]

The term in office of Oleg Mironov, Russia's human rights ombudsman, 
expires a month from now. Other candidates for this post are being 
proposed. When the Duma was electing Mironov five years ago, numerous 
democrats protested against his candidacy, since he was nominated by 
the communist majority. Be that as it may, Mironov has frequently 
criticized the authorities - within limits, of course. For example, he 
describes the war in Chechnya as "criminal".
     Question: What would you name as the main achievements of the 
federal ombudsman's office?
     Oleg Mironov: What counts is our success in forming a state 
structure for protecting human rights and interests, the first such 
structure in the thousand-year history of Russia. We have received 
over 120,000 letters in five years. These piles of letters are not the 
major criterion of success, of course. The fewer the complaints, the 
better - since that would mean human rights are being respected. 
Unfortunately, we're seeing the reverse: the number of complaints is 
rising. We are getting over 3,000 complaints a month. Almost 10,000 
people have come to see us over the past five years, and I have 
personally met with about 9,000 people during my trips around the 
country. We have provided consulting services by phone to 56,000 
Russian citizens. Action was taken to uphold the rights of over 2 
million Russian citizens in response to letters and complaints.
     There has been international recognition as well. I was elected 
to the board of directors of the European Ombudsman Institute last 
May. But not even all residents of Russian provinces know about our 
institution. Then again, regional ombudsmen operate in 22 regions...
     Question: What prevents effective observance of human rights?
     Oleg Mironov: A federal law is needed to make the work of 
regional ombudsmen more effective. Without it, they encounter 
innumerable difficulties whenever they set out to visit prisons, labor 
camps, detention cells, borders, and so on. "You are a regional 
ombudsman, and this is a federal facility," is what they are told. We 
have drafted the necessary law and forwarded it to the Duma. 
Unfortunately, it is running into difficulties there.
     Question: Does it?
     Oleg Mironov: Of course. Thanks to the security structures, who 
are unwilling to have anyone else interfere in what they consider to 
be their own affairs.
     Question: What problems affecting large social groups have been 
solved successfully?
     Oleg Mironov: We discovered that salaries of military personnel 
were much lower than those of civil servants of equivalent rank. I 
approached the president with this information, and military salaries 
were raised. However, we did not expect the decision to abolish their 
social privileges at the same time.
     The list of medicines distributed free of charge to victims of 
the Chernobyl disaster was expanded soon after our appeal to the 
     We restored the rights of 1.3 million pensioners, veterans, and 
disabled persons. Protection of the older generation is what counts: 
the people who spent 40-50 years working for the nation, and now 
receive a pittance of a pension.
     Question: Could you please say something about the dynamics of 
the most prevalent human rights abuses?
     Oleg Mironov: The trend worries me. When I was first appointed, I 
found that 30% of appeals to our office concerned criminal matters. 
They amount to 51% nowadays. One would think that people should 
complain of wage backlogs, or power-cuts and central heating shortages 
- but no. They are prepared to tolerate hardships in housing and 
utilities. What they refuse to tolerate is humiliation, beatings, 
torture, and extortion from the law enforcement agencies. They refuse 
to tolerate situations where absolutely unnecessary criminal 
proceedings are instigated. Falsified evidence, when police plant 
drugs or ammunition on suspects. The condition of detention cells is 
horrible. Order needs to be restored within the Interior Ministry. The 
level of professional skills and conduct there is unbelievably low. 
The only thing that matters is getting suspects to confess - more 
often than not, confessions are beaten out of suspects. Are we back in 
the 1930s, or what?
     Question: What do you think is needed for the human rights 
movement to develop successfully in Russia?
     Oleg Mironov: Russia already has a powerful human rights 
movement. The almanac we issued lists over 1,500 non-government 
organizations active in the field of human rights. On the other hand, 
the movement is different from what it used to be. Human rights groups 
are now prepared to work together with the authorities - providing the 
authorities are prepared to listen.
     As for the law, the Duma should set out to systematize 
legislation. Another version of the law on civil service is currently 
being passed. I'd have adopted the Civil Servant Code. Then again, why 
wouldn't the Duma ratify the European Social Charter? Judging by the 
Constitution, we have a democratic state with the rule of law. But I 
cannot describe it in that way, as long as law enforcement agencies 
humiliate citizens, while courts pass unjust and unlawful verdicts.
     Question: You plan to be nominated for another term, don't you?
     Oleg Mironov: I don't think I've done all I can do. For the time 
being, I'm the only one around here who knows all the details and 
intricacies of the job. I have many ideas, both tactical and 
strategic. Yes, I do hope for another term in office.
     Question: There may be several candidates for the post. It takes 
a two-thirds majority in the Duma to choose an ombudsman...
     Oleg Mironov: This is a purely political matter. The idea was 
proposed in the first place to make sure that every faction and deputy 
group participates in the process. Consolidation is what is needed, 
because nobody can scale the necessary barrier all alone. By the way, 
I was the only candidate five years ago - and even so it took me three 
attempts to gather the required of votes. I received 311 votes then.


From: "James Henderson" 
Subject: New Stanley Foundation and Century Foundation Essay on Chechnya
Date: Mon, 21 Apr 2003

US Foreign Policy and Chechnya
Based on a presentation by Stanford professor Michael McFaul before the
joint Stanley Foundation and Century Foundation Task Force for the project,
Domestic Politics and America's Russia Policy, this essay offers a detailed
analysis of US policy on Chechnya during the Clinton and Bush
administrations. The Chechen wars, he writes, "rank as the most serious
scars of Russia's troubled transition." The full essay may be obtained at
the Euro-Atlantic Initiatives web site by following the link:

The Russia Journal Monthly Magazine
April 2003
Can Putin change Russia? 
By Ajay Goyal

Russia has a rare chance to turn over a new leaf. But will its president
capitalize on this golden opportunity?

It is frequently argued that President Vladimir Putin has already changed
Russia. He has rammed over 200 laws through the Duma that touch upon almost
all segments of government and society. The judicial system has been
changed, civilized business and tax regimes have been adopted, military
reform has been drafted, and tax cuts have been implemented. Almost no
sphere of life is without new and modern laws.

Constitutionally and in the letter and spirit of the law, Russia is now a
democratic, civilized, modern and capital-friendly country. 

Russia could be a country galloping toward economic growth, with enterprise
creation (with observance of the highest ethical standards) and
human-rights improvements as well as achievements in other areas – if these
laws had any effect in practice.

The truth is that Russia remains a primitively governed and economically
underdeveloped country with a million economic and social disasters left
unchecked. The laws of the land are still of less value than the paper they
are written on, and Russia remains a hostage to less than two dozen
business clans whose murky affairs account for almost all economic growth,
thanks to high energy prices worldwide. Miserly amounts have been invested
into the desperately ill social system and economic infrastructure.
Corruption, inefficiency, corporate crimes, government inefficiency and
social crises still stand in the way of any substantial change in the

The process of nation-building, as many examples from modern history can
show, does not start and finish with votes or written laws. Many failed
nations have excellent constitutions and laws, but they are trampled upon
by criminal and corrupt elites on a daily basis. 

In Russia, all that reform has achieved so far is to serve the interests
and prosperity of a small business – and political – elite because of
selective implementation and zero accountability to the public by those who
oversee the affairs of the state. Building civil institutions that are
accountable to the public and act in the best interests of the majority
seems as distant a prospect as ever, even as hopes rise once again under
Putin to higher levels of expectation.

Russian society is already in a catastrophic condition. All the warnings of
the previous 10 years about impeding social and economic disasters have
gone unheeded. One after another, those disasters have continued to unfold
in the form of accidents, loss of life and squandered opportunities while
the government has been busy passing its empty laws. The truth is that
almost none of the important social, health and demographic issues or
crises have seen any management changes imbued with with a sense of urgency.

Often, the real actions of the government contradict the president’s own
stated policies: Russia is losing people, and the government has put breaks
on immigration; the country desperately needs foreign capital and
management, and the government has made it nearly impossible for foreigners
to come and work here; it is facing AIDS and tuberculosis catastrophes, and
almost no money is going into the health system; a great number of people –
up to 40 percent – live below the poverty line and their pensions increase
by dollar a month; the educational system is in tatters – and the money is
being spent on installing computers loaded with useless software in
schools; the military still hauls young people off to a bloody war in
Chechnya or to construction sites to build generals’ villas; capital flight
from resource-rich companies continues nearly unabated; investment remains
at painfully low levels; and corporations continue their monopolistic
behavior in their Communist-era styles – albeit with an opulence worthy of
the world’s wealthiest.

It feels safe to seek comfort in superficial changes, rhetoric and the
establishment of a de jure legal framework, because an in-depth look into
any of the priority problem areas would bring the gloom to the fore.

At the same time, Russians continue to show an unprecedented amount of
trust in their president: His approval ratings remain above 65 percent on
average. The population, which, according to polls, has little or no trust
in the government and bureaucracy, seems infatuated with Putin.

Will Putin remain a paper tiger, capable of passing all the laws he wants
while his own government and bureaucracy remain immune to his thunder and
roar? If he wishes to bring about change, he has nearly the whole
population solidly behind him. The sacrifices people have already made and
continue to make with rare patriotic fervor provide him with a mass support
that democratically elected leaders elsewhere can only dream about.

Even so, his reforms over the past three years have made only nominal
changes in the lives of his people and served the interests of the coterie
that had earlier come to control Russia through fraudulent privatization
deals and buying off the national apparatus.

Putin has so far proven to be a good politician, but a less-than-average
leader in moral stature and convictions. To build and reform Russia,
Putin’s greatest battle lies with the super-rich elite that is now
comfortably established and whose tentacles reach deep into all levels of
politics and government. Bureaucracy, business and politics are all one in
this rare blend of corrupt governance, in which all state power is
rhetorical and all service to the people minimal. It is an extreme form of
robber capitalism in which the largest section of the population serves as
virtual serfs while officials of the state run amuck unchecked, extracting
benefits from the system. It is no different, really, from an extreme form
of communism, in which masses of people live in poverty, serving as slave
labor for a small elite’s whims.

So far, Putin, despite some very brave noise, has proven incapable of
taking on this true challenge. His approach has been cautious: Putin has
chosen not to pull the tree of corruption out by its roots and plant new
saplings of state institutions. He has opted, instead, simply to trim the
shrubbery of state structures in what could be termed a more impotent form
of Perestroika. He has been blessed with rare fortune, and Russia has seen
amazing economic windfalls in the past three years thanks to high oil
prices, but he has not shown any tendency to capitalize on this by taking
greater political and economic risks to bring about substantial change.

The country has a rare chance that may not come again. That chance also
rests on a young, popular president who could easily sail into a second
term next year.

Yet, it looks increasingly unlikely that he will be able to abandon the
extreme caution and velvet gloves he has used in his treatment of the
oligarchy and corrupt apparatus. He will have to enforce the laws that have
been passed and ensure that all the institutions built and defined by them
are respected in deeds.

Putin must also use the trust displayed in him to engender confidence among
the people that their destiny is a democratic one and that they should
never again submit to the designs and oppression of their own elite. That
process must start with the president himself.


Russia: With U.S. Attention On Iraq, Moscow Wooing Central Asia
By Bruce Pannier

Russia appears to be taking steps to reassert its influence in the former 
Soviet republics of Central Asia. Moscow's presence appeared to diminish 
after the U.S.-led war in Afghanistan brought Western troops and aid to the 
region. But with U.S. attention now focused on Iraq, Russia is once again 
courting the Central Asian states -- and finding a receptive audience. 

Prague, 22 April 2003 (RFE/RL) -- Russia's traditional interests in Central 
Asia suffered a setback in the months following the 11 September 2001 
terrorist attacks in the United States. With an influx of Western troops and 
financial aid to help in the antiterror campaign in Afghanistan, many 
observers suspected Russia's long-time influence in the region was finally 
fading for good. 

Since then, however, the U.S. has largely shifted its focus to Iraq, and 
Russia has stepped in to fill the gap, taking steps to woo back the Central 
Asian states. Even more notably, the countries in the region -- for the most 
part -- appear to be welcoming Russia's renewed attention. 

Saulea Mukhametrakhimova is the Central Asia project manager at the 
London-based Institute for War and Peace Reporting.

"In the last several months, there were several developments which 
demonstrated that Russia is stepping up its presence in Central Asia," 
Mukhametrakhimova said. "But I think it will be fair to say that this is 
happening not because of Russia, but because some of the countries in Central 
Asia are themselves quite keen on reviving the traditional relations with 

Mukhametrakhimova cites several examples of warming ties. There were the 
recent visits to Moscow by both Kazakh President Nursultan Nazarbaev and the 
usually reclusive Turkmen President Saparmurat Niyazov. Kyrgyzstan will soon 
mark the opening of the base for the Russian-led rapid-reaction force for the 
Commonwealth of Independent States. Russian President Vladimir Putin, who 
visited Kyrgyzstan in December and met with Nazarbaev last week in Omsk, is 
also due to travel to Tajikistan at the end of this month. 

Alex Bridau is an analyst at the New York-based Eurasia Group, a political 
risk-assessment group. Bridau says Russia is taking advantage of an 
opportunity to regain lost influence in Central Asia: "Russia maybe senses an 
opportunity at the moment, sensing that the U.S., in fact, is occupied with 
the war in Iraq and the situation there."

Bridau points to Kazakhstan's Omsk talks with Russia about forming a new 
economic bloc with Ukraine and Belarus as one example. One Russian daily 
("Moskovskii Komsomolets") took that a step further when it noted last week 
that "[Belarusian President Alyaksandr] Lukashenka is no longer the favorite. 
Will Russia unite with Kazakhstan?" The article alluded to the troubled 
Russia-Belarus Union and said "a more realistic union" would be between 
Russia and Kazakhstan.

Bridau suggests that with U.S. energy concerns now focused on Iraq, 
Kazakhstan may be interested in courting greater cooperation with Russian 
energy companies. There have been recent talks between Kazakh and Russian oil 
and natural gas companies: "With Kazakhstan, I would say certainly there 
would be some concerns about what's the energy relationship between the West 
and Kazakhstan going to look like with Iraqi oil potentially coming back on 

Part of the talks between Putin and Nazarbaev in Omsk concerned cooperation 
in the energy field, particularly in the Caspian Sea. The bulk of 
Kazakhstan's oil currently is exported via Russian pipelines.

Putin's talks earlier this month with Turkmen President Niyazov also focused 
on joint energy projects and the roles Russian companies could play in 
developing and exporting Turkmen oil and natural gas. A 25-year contract 
signed between Turkmenistan and Russia's natural gas giant Gazprom gave 
Turkmenistan far more money than had previously been offered. 

Russia, which may be anticipating its oil contracts with Saddam Hussein's 
regime will not be renewed under a new U.S.-backed Iraqi government, may 
logically be looking for new areas of opportunity in the energy field. Its 
more traditional partners in Central Asia could do much to make up for losses 
in the Persian Gulf.

Kazakhstan and Turkmenistan may also feel U.S. and Western companies have 
been less than enthusiastic lately about promoting Caspian Basin deals. Some 
Western companies have pulled out of deals, particularly pipeline projects. 
Others have complained about recent changes in local legislation that work to 
the detriment of foreign investors. 

But it may be more than simple business interests that are moving Russia and 
Central Asia closer. The U.S. push for regime change in Iraq and Afghanistan 
could be unsettling to Central Asia's own entrenched leaders. 

"Potentially another concern would have more to do with the politics," Bridau 
said. "Everybody has just seen the change in two countries -- Afghanistan and 
Iraq. And much of the emphasis with regards to U.S. goals in Iraq has been 
geared toward the installation of a new government, the removal of the 
dictatorship of Saddam Hussein. And so, I think, this may give some of the 
Central Asian leaders pause. They may be worried about whether or not they're 
going to be faced with new demands from Washington to liberalize their 
governments, to make concessions to opposition figures, to ease up on 
political repression. So really, [the Central Asian leaders] may be looking 
for some support from Moscow."

Mukhametrakhimova agrees. She says that while Central Asian governments may 
welcome U.S. financial aid, they do not necessarily support the principles 
espoused by the U.S.: "They realized that if you have to have a very close 
partnership then you will be able to get not only financial, economic aid, 
but you will also have to be perceived as paying a price for it -- improving 
the democratic situation in the country. And that's what the Central Asian 
leaders do not want."

Russia's potential superiority as a guarantor of Central Asian security is a 
factor as well. The U.S. campaign in Afghanistan scaled back the region's two 
major threats, the Taliban regime and the Islamic Movement of Uzbekistan. But 
with Washington's focus now on Iraq, Central Asia may be looking to Russia 
for protection from future security threats.

Not all Central Asian states, however, are anxious to renew ties with Russia.

Uzbekistan was the among the first of the countries in the region to offer 
its support to the U.S. in its war in Afghanistan, and it was the first to 
host U.S. forces. It has shown little sign of switching allegiances now that 
the U.S. interest in the region has receded. 

Mukhametrakhimova says Uzbekistan's reluctance to court closer ties with 
Russia may make it an appealing long-term partner for the U.S.: "There were 
some diplomatic sources in Central Asia which indicated that if you look at 
it from the United States' point of view it is particularly this attitude of 
Uzbekistan, this stance of Uzbekistan, of trying to be so independent from 
Russia, that increases its chance to stay a strategic partner for the U.S. 
for a long time."

For the U.S., influence in one out of five Central Asian states might be 
enough -- particularly if the one is Uzbekistan, the region's strongest 
military power. But Bridau says shifting alliances should not be interpreted 
as the U.S. and Russia carving up spheres of Central Asian influence. None of 
the states, he says, is interested in courting one patron entirely at the 
expense of another. 

That said, Russia is a traditional ally -- and one, furthermore, that does 
not criticize the sometimes autocratic style of the Central Asian leaders.


Transitions Online
April 22, 2003
Russia Wants Westward Travel Barriers Lifted
By Sveta Graudt

Russia would like to see closer ties with the European Union, including
visa-free travel, Foreign Minister Igor Ivanov told statesmen who gathered
in Athens for the organization's recent summit.

Ivanov suggested Russia and the EU set up a joint working group to study
the introduction of a mutual visa-free regime. Three of the countries
expected to join the EU in just over a year's time--Estonia, Latvia, and
Lithuania--are former Soviet republics. To comply with strict EU rules on
border security, these and other border states have established visa
restrictions for citizens of Russia and other countries on the EU's eastern
and southern borders. 

The problem became especially acute for Russia when residents of the
northwestern Kaliningrad exclave found themselves partially cut off from
Russia proper when Poland and Lithuania, which completely surround the
territory, introduced visa regimes for Russian citizens. Russian President
Vladimir Putin has urged EU leaders to address the problem in light of a
strategic partnership between Russia and the EU. 

Little of substance emerged from the Athens summit, however, as EU and
Russian statesmen traded complimentary remarks.

European Commission President Romano Prodi told a news conference that the
EU would not enlarge in an egoistic and exclusionist manner, but would act
to build closer ties with its new neighbors.

In his speech, Ivanov said Moscow viewed EU enlargement as a natural
process, adding that Russia shared traditional relationships and deep
historical roots with new member states. 

“Our country sees the development of relations with the EU as a priority in
our external policy,” he said. 

Ivanov went on to invite the leaders of the current and future EU members
to celebrations in Putin’s hometown next month. “Thus, the celebration of
St. Petersburg’s 300th anniversary will become, we hope, a symbol of the
unification of Europe and will give new development to the European idea,”
he said. U.S. President George W. Bush has also been invited to the
Russia-EU summit, set to begin on 31 May.

The influential political daily Kommersant quoted its sources at the
Russian Foreign Ministry as saying that “Moscow hopes to establish
visa-free travel into the EU countries as early as 2007.” The newspaper
also said that EU officials were more cautious in their forecasts, speaking
about “only a long-term perspective.” 


Russia was not the only Eastern European country talking about easing
travel restrictions at the Athens summit. Lithuanian President Rolandas
Paksas and Ukrainian President Leonid Kuchma met for talks on expanding
bilateral relations, including the possibility of visa-free travel for
citizens of both countries, the Lithuanian News Agency (ELTA) reported.

Latvian President Vaira Vike-Freiberga asked her colleagues in Athens not
to forget Belarus when talking of regional development. Baltic News Service
reported that Vike-Freiberga also said the EU's eastward expansion would
help Ukraine cooperate on regional stability and security.

As Europe gathered in Athens, the former Soviet Central Asian republic of
Kyrgyzstan announced it had issued a decree simplifying visa procedures for
citizens of countries with "predictable political and economic
regimes"--namely, Western European nations, the United States, Canada,
Australia, New Zealand, Israel, and South Korea, Deputy Prime Minister
Djoomart Otorbaev said on 17 April.

Citizens of those countries will be able to receive a one-month visa
without an invitation and will be exempt from registering with the police
on arrival, RFE/RL reported. Otorbaev said the change was intended to make
Kyrgyzstan "a paradise for investors." Kyrgyzstan's neighbors in the
Commonwealth of Independent States (CIS) and other former communist
countries have not been granted the same privileges.


April 22, 2003
EU Rolls East. Towards Russia?

Last week's EU summit in Greece is already being called historic after ten 
countries signed a treaty on EU entry. This is the largest round of expansion 
in the EU's history. On the eve of the summit people in Russia were also 
suggesting that it could have a historic effect on relations between Russia 
and the united Europe. Russian observers believe that the time is right for 

Firstly, there is a widely held belief that events in Iraq, or more 
specifically the closeness of the Russian and European positions regarding 
the Iraqi crisis, can and should play a role in this. 
Secondly, this June will mark the end of a four-year common European strategy 
for relations with Russia, which was agreed in 1999 and, in the light of 
recent events, is clearly out of date. The European Commission and the 
Russia-EU Cooperation Council, which will be responsible for deciding what to 
do with the strategy, are faced with three choices: to extend the strategy - 
which is unlikely; to make some changes to it; or to re-examine it entirely. 
Russia would like any changes to be profound and concrete. 

Russia has already made clear what particular concrete steps it would like to 
see taken. On the eve of the summit there was a meeting in Moscow between 
European Commission Chairman Romano Prodi and Russian President Vladimir 
Putin at which Mr Putin suggested moving 'to a practical examination of 
concrete issues.' Those present at the meeting said that Mr Prodi was taken 
aback by such direct pressure: 

Nevertheless, on April 15, on his arrival in Greece, Russian Foreign Minister 
Igor Ivanov stated that Russia and the EU had agreed to set up a working 
group for a step-by-step switch to a visa-free regime. The timescale 
mentioned suggested this could be done by 2007. It is clear that Moscow 
intends to do everything possible over the next four years to ensure that 
this prospect becomes a reality by the 2007 summit which will see Bulgaria 
and Romania admitted to the EU. 

Russia also wants to make immediate, serious progress in its economic 
relations with the EU. At a meeting in Luxembourg of the Russia-EU 
Cooperation Council, Russia 'drew attention to the need to ensure a quick 
resolution of a number of trade and economic issues' between Russia and the 

According to Mr Ivanov, this involves 'practical steps to support the EU's 
acknowledgment that Russia has a market economy, and effective support of 
Russia's bid to join the WTO on standard, non-discriminatory conditions.' In 
effect, the Russian Foreign Minister set out Russia's demands to the EU, and 
added weight to these demands with strong arguments: he said that during 
discussions of trade and economic issues between Russia and the EU 'the 
progress that has been made in the energy sector was noted.' 

Moscow is also clearly hoping to remove the 'Chechen question', which is a 
particularly sore point, from the EU's agenda. Mr Ivanov informed the EU of 
progress made in finding a political solution to the situation in Chechnya. 
He said that 'an important stage in the economic rebuilding of the republic 
has been reached,' which is why the Russian government is currently 'devoting 
a great deal of attention to these issues.' Mr Ivanov added that participants 
in the Russia-EU Cooperation Council had 'responded extremely positively to 
our information.' 

It is evident that Russia has set its sights on a sound relationship with the 
EU, although the union is still an overly incoherent structure in which every 
issue requires long negotiations and compromises. It is clear, though, that 
the current EU contains people who support a course of expanded cooperation 
with Russia. However, it is equally clear that it also contains people who 
want to apply the brakes to this cooperation. 

Natalia Starichkova, Rosbalt 
Translated by Robin Jones 


St. Petersburg Times
April 22, 2003
Joining Is the Easy Part 
By Igor Leshukov

LAST year, the NATO summit in Prague issued an official invitation to a 
number of eastern European countries, including the Baltic States, to become 
members of the alliance. Shortly afterward, the European Union, in 
Copenhagen, made a commitment to accept most of the former Eastern bloc 
countries. Last week, in Athens, the Baltic States and a number of Central 
European governments took the next step in realizing their chief ambition of 
joining these two Western institutions. 

The fact that these countries were able to make these moves was the result of 
the collapse of the Soviet Union, and their movement has been portrayed as 
being a "return to Europe" - the West - where they historically belong, after 
being bound by force for decades to the East. This was a politically 
motivated argument advanced to justify a pragmatic plea for membership in an 
exclusive club of wealthy countries, and to ensure safeguards against the 
possibility of the recurrence of the Soviet past. Under the present 
ratification timetable, the Baltic states will become EU and NATO members by 
2004. Since a positive outcome in the ratification process appears to be 
assured, the celebrations in Tallinn, Riga and Vilnius can begin.

But, what seems to most to be a happy ending seems to me to be the beginning 
of a long and troublesome process. Contrary to rosy expectations, the 
eastward enlargement of the two organizations in question may bring surprises.

In a fairy tale by Soviet writer Yevgeny Shvarts, the citizens of a city have 
been waging a protracted fight against a dragon. They continuously fail in 
their battle before a simple moral becomes apparent - the dragon they battle 
is actually within themselves.

The moral seems an appropriate one here, as to overcome the ugliness and 
habits of the Soviet past will be a difficult task. Such an achievement will 
require more than simply embracing Western institutions. What is required is 
a profound transformation of society. It remains to be seen whether the 
Baltic States and former Warsaw Pact and COMECON members will possess the 
determination to implement such an agenda. To date, political and social 
developments haven't provided sufficient evidence to answer this question.

During the Brezhnev era, we - Russians - would travel to the Baltic Republics 
- Pribaltika - eager to explore the only "European" place we were allowed to 
visit freely. When I visit one of the Baltic States today, it is a strange 
feeling. Even though I have to get a visa to go and pay in hard currency 
while I'm there, it's like I haven't really left my own country. Baltic 
politicians and business leaders may talk a different game than their Russian 
counterparts but, when it comes to their values and interests, they are 
essentially the same folks. The cozy renovation of medieval city centers, 
Western cars and good restaurants make life a lot more pleasant, but they 
don't necessarily mean that that society has changed. The allegedly defeated 
dragon, after some time, still reveals its face and habits.

The road to the EU is a one-way street with a strong-handed Brussels as the 
traffic cop. Joining the EU is like joining an orthodox monastery - if you 
want in, you have to comply to the norms and rules. So far, European 
integration has proved its ability to apply its template to the new 
adherents. The European Commission and some EU member states remain 
optimistic that the Central European and Baltic States will be absorbed into 
the existing Western body relatively easily, that the outcome of the process 
is predetermined. According to Western logic, they simply have no other 
choice. While the candidate countries account for about one quarter of the 
present EU population, they represent only a small portion of EU output in 
economic terms. The possibility of their accession bringing a negative impact 
on the European Union or NATO would seem to be small, if not negligible.

I see the situation differently. The human factor cannot be subordinated to 
questions of relative GDP in this case. The "dragon" is still inside, and its 
influence should not be underestimated. The societal diseases associated with 
the Soviet style and history of governance tend to be tenacious and long 

The Eastern enlargement has all the makings of a dramatic test of the 
viability and robustness of Western institutions. The European Commission has 
already weathered one extremely critical situation following Greece's 
accession, when many officials privately admitted that allowing that country 
to enter the common market was a mistake.

More analogously, after an initial phase of euphoria that accompanied German 
reunification, Germany has encountered enormous difficulties in transforming 
"Ossis" (East Germans) into "Wessis" (West Germans). This process is still 
far from being accomplished, even though Germany is a single country with a 
single people.

The integration of Eastern Europeans into the Western European community will 
be at least as difficult. The treaties of accession and prospective 
membership will certainly be deeply appreciated accessories. But more mundane 
practices and what remains of the dragon inside these new members will 
ultimately determine reality

Igor Leshukov is the head of the Institute for International Affairs, St. 
Petersburg, a private think tank. He contributed this comment to The St. 
Petersburg Times.


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