Johnson's Russia List
26 April 2003
A CDI Project

  1. Rosbalt: Russian Society in Critical Condition.
  2. ITAR-TASS: Census Shows Russia Ranks Seventh in World in Population.
  3. AFP: 50,000 ghost towns draining Russia's budget.
  4. AP: [US] Russia Trade Restrictions Not Lifted Yet.
  5. Igor Gotlib: Mikhail Mikhailovich Molostvov died.
  6. AP: Ukrainians Mark Chernobyl Anniversary.
  7. Boston Globe obituary: Tom Long, Abram Bergson; top theorist uncloaked 
economy of Soviets.
  8. UPI: Sam Vaknin, Russia synergies in YukosSibneft.
  9. Barron's Online: Michael Wang, A Gusher in Russia.
  10. Russian Senior Politicians Struggle for Prime Minister's
The Iraq problem is implicated in it too.
  11. BBC Monitoring: Putin displeased with military cooperation, Russian
PM to 
get a new deputy.
  12. ITAR-TASS: Russian parliamentary hearing calls for national security 
working group.
  13. BBC Monitoring: Deputies dubious about army reform, generals impressed 
with war in Iraq.
  14. ITAR-TASS: Putin aide warns Estonia not to expect any favours if it
Chechen website.
  15. RFE/RL: Jeffrey Donovan, U.S. Congressional Panel Criticizes Putin Over 
  16. Washington Post: Sharon LaFraniere, How Jihad Made Its Way to Chechnya. 
Secular Separatist Movement Transformed by Militant Vanguard. 
  17. Rossiyskaya Gazeta: Scientists Bemoan State of Russian Science.
  18. Trud: Russia's Nuclear 'Suitcase' Emergency Response System


April 25, 2003
Russian Society in Critical Condition

For several years it has been a popular joke that the only ministry the
Russian government needs is the Emergency Situations Ministry as the
government is forced to deal with life-saving operations and natural
disasters (as well as 'unnatural' disasters) in all spheres of Russian
life. Unfortunately, there is a great deal of truth in this joke. 

According to the Centre of Strategic Research of the Emergency Situations
Ministry, the main threats to Russian security are currently: unreasonable
decisions on what is best for the Russian economy; corruption and
incompetence of the authorities; greater US influence in the world and
their striving for world dominance; lower production capabilities and less

This was announced by First Deputy Minister Yuri Vorobiev at the conference
Strategic risks of emergency situations: evaluation and prognosis. 
Natural and man-made disasters did not even appear in the list of the top
ten threats to Russian security. However, for most people, it is exactly
these kinds of disasters which we associate with 'emergency situations.' 

According to Director of the newspaper Managing Risks Rustem Yuldashev, the
main cause of emergency situations in Russia is the poverty of the Russian
government and the population as a whole. Looking at the ministry's list of
security threats, it seems difficult not to agree. As somebody pointed out
at the conference, the average level of accumulated depreciation in Russia
is as much as 80% and this is the main cause of man-made disasters. 

According to the ministry's records, there were 1,139 emergency situations
in Russia in 2002, a year-on-year increase of 26%. 343,886 people were
victims of these emergency situations, including 2,151 killed. What is
more, the number of man-made disasters rose by 32%. 3,492 people were
victims of industrial accidents and 1,433 were killed. The number of
natural disasters rose by 20% and there were 336,460 victims, of which 332
people were killed. 

The ministry's forecast for 2003 is not good either. The risk of man-made
disasters will continue to grow at the same rate. According to the
ministry, these kinds of disasters are usually caused by tardy and
ineffective repairs to equipment, slow technical re-equipment of dangerous
facilities as well as poor quality control of equipment and pipes and
breaches of fire safety regulations. 

According to the Russian Academy of Sciences, most of the latest statistics
on the economic and sociological state of the country show that most areas
of Russian life are in an alarming state. This data has been arranged in
the following way: the first figure shows the critical level; the second
figure shows the actual level; the words in brackets show the implications
of the statistics. 

1. Rate at which production level is falling - 30% / 47%
(de-industrialization of the country) 
2. Share of advanced technology production in overall production - 15% / 1%
(technological lag)
3. Share of GDP allocated to science and scientific research - 2% / 0.4%
(destruction of scientific potential)
4. Difference in income level between richest and poorest - 10:1 / 20:1
(social crisis)
5. Share of population living below subsistence level - 10% / 30%
(degradation of population)
6. Rate of depopulation - 1.00 / 1.65 (complete depopulation)
7. Life expectancy - 75 / 65.9 (lowering national viability)
8. Average annual consumption of alcohol in liters - 8 / 15.5 (degradation
of population)
9. Level of trust among population for government - 25% / 15% (crisis of

As a result of the current situation, old age now only accounts for 15% of
all deaths in Russia. The other 85% of deaths are premature. What is more,
66% are a result of socio-economic causes (military conflicts, poverty,
starvation, lack of medicines in hospitals, neglected illnesses, late
ambulances etc:), 23% of deaths are caused by pollution, 5.8% of people are
killed in accidents or other disasters, 2.9% commit suicide and 1.5% are
victims of crime. 

Oleg Kuzin, Rosbalt, Moscow 
Translated by Nick Chesters 


Census Shows Russia Ranks Seventh in World in Population  

MOSCOW, April 24 (Itar-Tass) - The Russian 
Federation is the seventh in the world in the number of population, 
trailing only China, India, Indonesia, the United States, Brazil and 
Pakistan. These data are contained in materials of the Russian State 
Statistics Committee, submitted to a government meeting which will 
examine on Thursday preliminary results of the 2002 All-Russian Census. 
   According to the statistics committee, around 145,290,000 people live 
in Russia now. The number of male population is 67,620,000, female - over 
77,600,000. The average expectation of life of Russian men is 58.5 years. 
Women live, on average, 72 years. 
   Female population predominates in 84 regions. Areas where women 
predominate men by far, include the Ivanovo, Vladimir, Tver, Tula, 
Yaroslavl, Novgorod regions as well as St. Petersburg, Chechnya and 
Ingushetia. Men predominate in northern areas of the country, including 
the Chukchi and Kamchatka peninsulas: they go there as a rule to earn 
   All in all, Russian population dwindled down by 1,840,000 since 1989 
or by 1.3 percent. The statistics committee explained that this decrease 
was caused mostly by natural decrease of population (excess of mortality 
incidence over birth rate) and emigration. The natural loss of population 
totaled 7.4 million people over the past 13 years, while immigration 
inflow topped 5.5 million. 
   Russia has 13 cities with a population of over one million. Big cities 
include Moscow (10.4 million people), St. Petersburg (4.7 million) as 
well as Novosibirsk, Yekaterinburg, Nizhny Novgorod and others. While the 
number of Muscovites rose by 17 percent since 1989 when the previous 
census was conducted, the number of Petersburg residents declined by 6.4 
   State committee materials show that 73.3 percent of population lives 
in cities. 
   According to the 2002 census, nearly a third of all villages in Russia 
are deserted. Deputy chairman of the State Statistics Committee Sergei 
Koresnikov told Tass that eight percent out of 155,000 villages are fully 
deserted. According to documents, people were supposed to live there, but 
in actual fact, all houses are boarded up, while people went to 
neighbouring areas. The number of villages where under ten people live, 
make up 22 percent of all countryside settlements. 
   According to Koresnikov, outlying northern settlements also turned 
into "host cities". The past decade witnessed an exodus of population 
from the Chukchi Peninsula whose population dropped by 67 percent. People 
also leave the Kamchatka Peninsula and the Magadan Region. Many deserted 
villages were recorded in the North-West and central areas of Russia, 
including the Vologda and Yaroslavl regions. 
   The number of population declined in 66 subjects of the Russian 
Federation, while population in southern regions is on the rise. 


50,000 ghost towns draining Russia's budget 
The villages get electricity and gas but 17,000 of them are deserted; the
rest have 10 or fewer residents 
April 25, 2003

MOSCOW - Russia's first post-Soviet census has revealed that more than
50,000 villages dotting the map are actually ghost towns supplied with gas
and electricity at the expense of places where people actually live. 

The nation's chief statistician, Mr Vladimir Sokolin, said on Thursday that
preliminary results of the 2002 census showed a population drop of 1.8
million people compared to one taken in 1989. 
Latest figures indicate a total of 145.2 million Russians living
permanently in the country. 

Mr Sokolin said Russia's actual population was dropping by about one
million people a year but that the census figure had been boosted by a
massive inflow of Russians from former Soviet republics over the past decade. 

'Our population will continue to drop like this for decades to come while
the number of migrants coming to Russia is falling,' he told reporters. 

He urged the government to take a pragmatic approach. 

'We should not panic. We should just come to terms with this and structure
our government policies accordingly,' he said. 

Census figures presented to the Cabinet on Thursday also showed that 17,000
settlements which appear on the Russian map 'have a population of zero'.

Another 38,000 have 10 or fewer people living in them and are also likely
to disappear within the coming months or - at best - years. 

But they remain officially registered entities which must be supplied

Most are located in far-flung regions of Siberia and the Far East where the
supply of natural gas and electricity is a costly affair. 

'Prime Minister Mikhail Kasyanov was infuriated because we are sending
supplies to these places but there is nobody there and this is a burden on
the budget,' Mr Sokolin said. 

A deteriorating health-care system strained by tight budget constraints
along with drug and alcohol abuse, especially among men, had fuelled the
dramatic population decline. 

Russian men's life expectancy last year was registered at just above 58
while that for women stood at more than 71. 

Statistics showed the 1990s marked the first time since World War II - when
tens of millions of Soviet soldiers died - that the ratio of men to women
living in Russia actually decreased compared to previous years. 

Russian President Vladimir Putin identified a fall in Russia's population
as a threat to national security in his very first state of the nation
address and suggested that the country should take in more migrants.

A census map showed that the entire eastern half of Russia suffered a
population drop of at least 5 - and often more than 15 - per cent in the
past decade. 

Meanwhile, the number of migrants entering Russia has been dropping since
the mid-1990s. -- AFP 


Russia Trade Restrictions Not Lifted Yet
April 25, 2003

WASHINGTON (AP) - Congressional resentment over Russia's opposition to the 
U.S. invasion of Iraq has stalled President Bush's push to lift Cold War-era 
trade restrictions.

The administration wants Congress to repeal the 1974 Jackson-Vanik trade 
restrictions, long a source of tension between the two countries. But the 
dispute over Iraq has added to previous congressional concerns about Russian 
trade policies.

``Every time we take one step forward in Congress, Russia takes two steps 
back,'' said Sen. Charles Grassley, R-Iowa, chairman of the Finance 
Committee, which would consider lifting the restrictions.

The trade limits were imposed to protest the Soviet Union's treatment of 
Jewish dissidents. They require the administration to send semiannual reports 
to Congress on Russian emigration and human rights policies for Russia to 
qualify for lower tariffs.

Russia views Jackson-Vanik as outdated and a hindrance to improved economic 
and political ties. It is also an obstacle to Russia's admission to the World 
Trade Organization.

President Bush has urged Congress to remove Russia from Jackson-Vanik 
requirements. A Commerce Department spokesman, Trevor Francis, said Friday 
that position hasn't changed, despite differences about Iraq. ``The 
administration has always been supportive and will always be supportive,'' of 
ending the restrictions, he said.

A bill introduced this year by Senate Foreign Relations Committee Chairman 
Richard Lugar, R-Ind., would end the Jackson-Vanik restrictions and give 
Russia permanent normal trade relations.

Democrats have offered a similar bill that would also include provisions to 
ensure that Russia makes progress on trade liberalization, religious freedom, 
human rights and democratic reforms. That bill was sponsored by Sen. Max 
Baucus of Montana, top Democrat on the Finance Committee, and Reps. Charles 
Rangel of New York and Sander Levin of Michigan, two senior Democrats on the 
Ways and Means Committee.

The administration had once hoped Congress would act before a summit next 
month between Bush and Russian President Vladimir Putin in St. Petersburg, 
Russia. But Congress is unlikely to begin debating the bills by then - or 
anytime soon.

``We don't see this moving anywhere in the foreseeable future given 
everything that happened with Iraq,'' said Laura Hayes, spokeswoman for 
Democrats on the Finance Committee, led by Baucus.

Russia, along with France and Germany, was one of the biggest obstacles to 
the Bush administration's failed efforts to win U.N. support for the war 
against Iraq.

A poultry issue remains a bigger concern for many Democrats. Disputes over 
U.S. health and safety conditions have hurt U.S. poultry exports to Russia. 
That has contributed to a decline in prices of other meats, because freezers 
usually used for pork and beef have been stuffed with poultry.

Though Russia and the United States have been working out their differences, 
some lawmakers won't be satisfied until the dispute is resolved.

Lugar continues to hope his bill will pass soon but doesn't know its 
prospects, said his spokesman, Andy Fisher. ``It is really in the 
jurisdiction of (Grassley's) Finance Committee,'' he said.

Grassley said in a statement he would support removing Russia from 
Jackson-Vanik ``under the right circumstances.''

``I'd like to see the United States and Russia develop a closer economic and 
political relationship,'' he said. ``But both countries need to be committed 
to get it done.''


From: "Igor Yu. Gotlib" 
Date: Sat, 26 Apr 2003
Subject: Mikhail Mikhailovich Molostvov died

Dear David,

Let me draw your attention to recent sad news that haven't been
reported in the Johnson's Russia List yet.

In the shadow of Sergey Yushenkov's murder, almost unnoticed went
the death of another man, who, in my opinion, embodied
the idealistic hopes and disillusionments of late-Soviet and
post-Soviet "liberal/democratic" utopianism with much more strength
and consistency than the former military instructor in
"Marxism-Leninism" Yushenkov.

On April 22, Mikhail Mikhailovich Molostvov, 69, a former Soviet dissident
and former Russian Supreme Soviet and State Duma deputy,
died in St.Petersburg after a long illness.

He was born in 1934 in Leningrad; soon after that, his family was
expelled to Saratov. In 1956-58, Molostvov began his dissident
activities by publicly advocating broad democratization in USSR
and other "socialist countries". In 1958, he was arrested, charged
with anti-Soviet activities and sentenced to seven years in
a labor camp. After release, he worked as a postman and teacher in
the countryside. In 1990, Molostvov was elected to the Congress
of people's deputies of Russia and became a member of the Supreme
Soviet. In 1993-95, he was a State Duma deputy. He staunchly opposed
both Chechen wars, was in Grozny during the assault in the end of
1994 - beginning of 1995, and supported protests against Putin's
Chechen policy up to his last days.

Molostvov sometimes called himself a social democrat; I would describe
his views as left-liberal. Being an anti-liberal leftist myself,
I consider many his basic ideas wrong; but he undoubtedly was a very
decent, honest, sincere and courageous man, who was not influenced
by the dominant trend of moral, political and ideological corruption,
and his death is a great loss for all those who understand the value
of ideas and firm convictions.

Maybe other JRL authors will add some words about this unordinary


Ukrainians Mark Chernobyl Anniversary
April 26, 2003

KIEV, Ukraine (AP) - Ukrainians laid flowers and lit candles near the small
Chernobyl victims' chapel in the capital Kiev early Saturday, on the 17th
anniversary of the world's worst nuclear disaster.

Hundreds of people came to honor the memory of their relatives, friends and
colleagues at 1:23 a.m., the time of the explosion at reactor No. 4 at the
Chernobyl nuclear power plant.

They gathered at a small hill with marble plates inscribed with victims'
names. A bell tolled 17 times for each year since the April 26, 1986,
disaster that sent a radioactive cloud across Europe.

People silently gulped voda from small glasses, forgoing the usual clinking
of glasses in a sign of mourning.

Some 4,400 people in Ukraine alone were killed in the aftermath of the
explosion and subsequent fire, succumbing to radiation-related diseases
contracted after taking part in the cleanup effort.

In all, about 650,000 so-called liquidators traveled to Chernobyl from all
over the Soviet Union to try to eliminate the consequences of the disaster.

``My hair turned gray overnight,'' said Oleksandr Tymchenko, who had worked
in the plant for 22 years. ``My shift started at 4 a.m. on April 26, and
the ambulance was taking my friends to the hospital before my eyes.

``They were the first to take part in the cleanup operations when it
exploded, and died soon after.''

Ukraine's security service recently declassified secret files documenting
malfunctions and safety violations at the plant long before the 1986

The 121 documents, dating from 1971 to 1988, included information on a 1982
accident that caused the release of small doses of radiation.

More than 2.45 million people have been hospitalized in Ukraine as of early
2002 with illnesses sparked by the disaster, including 473,400 children,
according to the Health Ministry.

The most frequently noted Chernobyl-related diseases include thyroid and
blood cancer, mental disorders and cancerous growths.

In all, 7 million people in Belarus, Russia and Ukraine are estimated to
suffer physical or psychological effects of radiation related to the
Chernobyl catastrophe.

Ukraine shut down Chernobyl's last reactor in December 2000, but many
problems remain. Russian Atomic Energy Minister Alexander Rumyantsev warned
this week that the hastily constructed concrete shelter over the destroyed
fourth reactor could collapse and alleged that Ukrainian officials were
negligent in monitoring the facility.

``Work is under way to prevent this danger,'' the plant responded in a
statement. Western governments and Ukraine have pledged $767 million to
replace the sarcophagus.


Boston Globe
April 25, 2003
Abram Bergson; top theorist uncloaked economy of Soviets
By Tom Long, Globe Staff

Dr. Abram Bergson, 89, a Harvard economist whose research on the Soviet
economy had broad US policy implications during the Cold War, died
Wednesday in Youville Hospital in Cambridge. 

Dr. Bergson was a scrupulous researcher who went to great lengths to make
sure his assessments were not tainted by right- or left wing-ideology. At
the Russian Research Center at Harvard, which he directed for many years,
they called him ''Honest Abe'' behind his back, but never to his face. He
was much too serious a scholar for that.

''He was the first American economist to become an expert on the economy of
the Soviet Union,'' economist Robert Solow, a Nobel laureate, said
yesterday. ''He scrupulously avoided ideology. You never quite knew where
he stood. It was a big help in his dealings with the Soviet Union.''

Dr. Bergson pioneered methods to estimate the superpower's income and
industrial production that became standard usage for the CIA and academia.
''He and his students were the people who learned how to decode information
on the Soviet economy and gave American policy makers some notion of what
was going on in there,'' said Solow.

It was an inexact science. ''The basic fact you have to keep in mind is
that the calculations must proceed on very meager material,'' Dr. Bergson
said in a story published in Business Week in 1977.

Dr. Bergson was born Abram Burk in Baltimore. His father was a Russian
immigrant whose name was ''Americanized'' when he passed through Ellis
Island. In 1940, the year he earned his doctorate, Dr. Bergson and his
brother Gus legally changed their names to Bergson to more accurately
reflect their Jewish heritage.

Dr. Bergson graduated from Johns Hopkins University and earned a master's
degree and doctorate at Harvard.

While still a student at Harvard, he did groundbreaking work in economic
welfare assessment.

''He had two strings to his bow,'' Paul Samuelson, another Nobel laureate,
said yesterday. ''He was an economic theorist as well as the foremost
authority on the Soviet GNP.

''He was an exceptionally straight-shooting kid of a guy,'' said Samuelson,
who first met Dr. Bergson in line at Harvard's financial aid office.
Samuelson was a freshman; Dr. Bergson was trying to arrange to pay for his
brother's tuition with his meager assistant professor's salary, a task that
called for the skills of a magician, not an economist.

''He looked like a preppie to me,'' said Samuelson, of the man who would
become his lifelong friend.

During World War II, Dr. Bergson was director of the Soviet desk at the
Office of Strategic Services, the forerunner of the CIA.

After the war, he directed Soviet studies at Columbia University until
1956, when he became director of the Russian Research Center at Harvard.

Marshall Goldman, his former student and associate director of what is now
called the Davis Center for Russian and Eurasian Studies at Harvard, said
Dr. Bergson was a good listener who liked to get his students to talk. He
never interjected himself into a conversation, Goldman said, to the point
that after the dialogue ended, you never knew what he thought about the

''He was very upright and could be very intimidating,'' said Goldman, who
admitted that he had known Dr. Bergson for about 20 years before he could
comfortably call himself his colleague.

''He was a man of deep integrity and enormous energy who embarked on a
program to recalculate the gross national product of the Soviet Union and
began the task at a time when he had very little help,'' said Goldman. ''It
was an enormous undertaking. I think he should have been awarded a Nobel

Dr. Bergson leaves his wife, Rita (Macht); three daughters, Judith of
Somerville, Mimi Bergson White of Wellesley, and Lucy Bergson LaFarge of
New York City; a sister, Rosalie Berman of Glyndon, Md.; and three

A funeral will be held at 11 a.m. today in Levine Chapel in Brookline.


Analysis: Russia synergies in YukosSibneft 
By Sam Vaknin
UPI Senior Business Correspondent

SKOPJE, Macedonia, April 24 (UPI) -- YukosSibneft Oil -- the outcome of the
announced merger of Yukos Oil and Sibneft, two of Russia's prominent energy
behemoths -- will pump 2.06 to 2.3 million barrels per day of crude. That's
more than the current output of Kuwait, Canada or Iraq.

With 19.3 billion to 20.7 billion barrels in known reserves (excluding
Slavneft's), 150,000 workers, $15 billion in annual revenues and market
valuation of about $36 billion, YukosSibneft is, by some measures, the
fourth-largest oil company in the world behind only ExxonMobil, Royal
Dutch/Shell and British Petroleum.

Its production cost -- about $1.70 per barrel -- is half the average of its
competitors. The merger offers no synergies -- but, in oil, size does matter.

The listing of Yukos stock on the New York Stock Exchange, set for
end-2003, will have to be delayed. But its American Depositary Receipts
shot up by 10 percent on the news. In contrast, Sibneft's barely budged, up
3 percent.

Having been shelved in 1998, the annus horribilis of the Russian economy,
the deal was successfully struck earlier this week. Yukos will pay $3
billion and dole out 26 percent of the combined group to Sibneft's "core"
shareholders -- namely, the oligarchs Roman Abramovich and Boris Berezovsky.

Minority shareholders are to be made a "fair offer" backed by a valuation
produced by "an internationally recognized bank."

This would be Citigroup. Citibank placed $900 million worth of Sibneft's
corporate debt over the past five quarters. It also advised Sibneft in its
controversial acquisition, with Tyumen, of the government's stake in
Slavneft. The purchase of Lithuanian oil company Mazeiku Nafta by Yukos was
virtually designed by Citibank.

Yukos, owned 36 percent by Mikhail Khodorkovsky, might also distribute a
chunk of its $4 billion cash trove either in the form of a dividend or
through a share buyback. Whatever the future of this merger, the
magnate-shareholders seem to be eager to cash in prior to the expected
plunge in oil prices.

Such mergers have become a staple of the sector in recent years. Spurred to
consolidate by dropping oil prices and wild competition from Latin America,
Central Asia and the Middle East, the giants of the industry mate
fervently. Khodorkovsky, who will become the chief executive officer of
YukosSibneft, is already eyeing acquisition targets to expand retail
operations abroad.

Yukos has recently acquired refineries and pipelines in Lithuania and the
Czech Republic, for instance. The combined outfit owns, in Lithuania,
Belarus and Russia, 10 refineries with a total capacity of about 2 million
barrels per day and more than 2,500 filling stations.

The merger -- coupled with British Petroleum's takeover of Tyumen Oil in
February -- depletes the pool of Russian oil investments available to
Western corporate suitors. It also cements Russia's dependence on energy.

Oil accounts for close to one third of the vast country's gross domestic
product and one half of its exports.

Production in the oil segment has been growing by annual leaps of 20
percent to 30 percent -- compared with a standstill in the rest of Russian
industry excluding energy. Reflecting this disparity, YukosSibneft's market
value amounts to one half that of all other listed Russian firms combined.

Contrary to congratulatory noises made by self-interested Western bankers
and securities analysts, the merger is not good news. It rewards rapacious
oligarchs for the unabashed robbery of state assets in the 1990s, keeps
much-needed foreign competition, management and capital out and reinforces
Russia's addiction to extracted wealth.

It spells another orgy of asset-stripping and colossal self-enrichment by
the junta of former spooks and their business allies.

This is the first time that the Putin administration has approved of
cooperation between oligarchs. The Kremlin also permitted Yukos to build
the first private pipeline to the northern port of Murmansk, export gateway
to the lucrative U.S. market. The avaricious elite sees no reason to share
this bonanza with foreigners.

Vladimir Katrenko, chairman of the State Duma's Committee on Energy,
Transport and Communications, confirmed that "by uniting their capital,
leading Russian oil and energy companies are trying to stand up to
international corporations which exploit every opportunity to squeeze out

Furthermore, with a parliamentary vote by year-end and presidential
elections looming next March, Putin -- like president Boris Yeltsin before
him -- might be discovering the charms of abundant campaign finance and
mogul sponsorship in the provinces. Yukos contributes heavily to political
outfits, such as the Communist Party, the Union of the Right Forces, and
the Yabloko Party.

Kohodorkovsky even announced his presidential ambitions in the 2008
campaign. Should he team up with the "Family" -- the inner core of the
Yeltsin-era crony machine -- the Kremlin would justly feel besieged.

In a thinly-veiled allusion to Khodorkovsky's political aspirations, Deputy
Chairman of the State Duma Budget Committee Sergei Shtogrin mused that
"certain people in Russia have a great deal of influence in national
politics and economics. At the moment it is still unclear what the policy
of the new management will be and whether or not it will support the
government in developing the economy or not."

So not surprisingly, Kremlin involvement in the oil business is ubiquitous.
It virtually micro-manages the sector. Putin leaned heavily on Sibneft not
to conclude a deal with foreign suitors such as TotalFinaElf, ExxonMobil
and Shell and to favor Yukos. Abramovich is said to be impotently seething
at the loss of control over Sibneft. The merger was also a way to denude
the outspoken Berezovsky, much-hated by the Kremlin, of his last assets in

The disgraced tycoon -- whose extradition from the United Kingdom on fraud
charges was officially requested by Russian authorities last month --
bought Sibneft for a mere $100 million in the heyday of Yeltsin the
corrupt, in 1995-96. The Asia Times reported, based on Moscow "banking
sources," that Yukos has hitherto refrained from going public in New York
due to Kremlin pressure.

The firms have been hitherto closely held with the free floats of Yukos and
Sibneft equal to less than one quarter and one seventh of their capital,

While it maintained Yukos' rating, Moody's Investors Service kept Sibneft
under review for a possible downgrade: "Moody's sees significant benefits
of the transaction in terms of scale, the limited cash financing of the
merger, and the good underlying reserve quality and operational efficiency
of the two companies ... The enlarged group's intention (is) to maintain a
moderate level of leverage and a strong working capital position.

"(But) the new entity's activities will remain wholly concentrated in
Russia ... (and) while positive changes are being promised, corporate
governance is also likely to persist as a constraining rating issue. This
reflects the ongoing discussions with TNK regarding the split of the assets
of Slavneft acquired in late 2002 by the two companies and Sibneft's
practice of making high dividend payments."

These civil understatements disguise an unsettling opaqueness as to who
exactly owns Sibneft. Nor are its frequent dealings more transparent. It
recently sold its stakes in oil company Onaco and its chief production
subsidiary, Orenburgneft, to Tyumen Oil -- yet, no one knows for how much.

Another imponderable is Gazprom, now a formidable and superbly connected
direct competitor -- with state-owned partner Rosneft -- for energy
reserves in eastern Siberia.

The YukosSibneft merger is in the worst of Russian traditions:
self-dealing, self-serving and murky. This offspring of political meddling,
egregious profit taking, insider trading, backstabbing and xenophobia is
unlikely to produce another Shell or BP. It is the venomous fruit of a
poisoned tree.


Barron's Online
April 28, 2003
A Gusher in Russia
Michael Wang is an assistant news editor with Dow Jones Newswires in London.

THE ROUGHLY $13 BILLION TAKEOVER of Sibneft by Yukos, announced last week,
has almost certainly brought the curtain down on one of the most
spectacular returns in the Russian equity market.

Since December 2000, investors in Yukos -- Russia's biggest oil producer --
and Sibneft -- ranked No. 5 -- have enjoyed a 1000% return on their

Don't put away the champagne, or vodka, just yet. YukosSibneft, the moniker
of the merged company, is now the world's fourth-largest publicly traded
oil producer and the biggest in terms of oil reserves. Yet its combined
market capital of $35 billion is only one-third of France's TotalFinaElf,
its closest rival in terms of oil and gas production.

That discount seems set to narrow as more investors tune in to this
extraordinary Russian-oil growth story.

"You will be hard pressed, and probably foolish, to ignore Yukos now,"
avers Harvey Sawikian, a principal at fund managers Firebird Management in
New York. "Yukos is going to be a world-class company."

And if the integrated Russian oil company goes ahead with plans to list
American depositary receipts in New York later this year, a whole new slice
of shareholders could be added to its roster. Its ADRs already trade in
London and Frankfurt, in addition to its listing in Moscow.

Investor appetite shows few signs of drying up. Since confirmation of the
deal on Tuesday -- after leaks burst out all over Moscow over the Easter
weekend -- Yukos' London ADRs rallied about 10% to $171.50 late Friday.

But, compared with its new peers -- ExxonMobil, Royal Dutch/Shell Group and
BP, the oil world's supergiants -- Yukos' price/earnings ratio lags badly.
The company trades at 6.5 times 2004 forecast earnings, compared with BP's
19 times and Shell's 13 times.

That gap should also narrow as Yukos' nascent international aspirations grow.

"Yukos now becomes a global energy company, not just a European one,"
argues Vadim Degtiarev, a fund manager with Brunswick Asset Management in
Moscow. Brunswick operates two Russian funds with $150 million under

Of course, the deal, easily the biggest in Russian corporate history, could
still unravel. Due diligence hasn't been completed. And Yukos has said it
needs the rest of the year to figure out such issues as how much minority
shareholders will get, among others.

But, what's inescapable is that Russia's most lucrative industry -- oil and
gas -- is accelerating a badly needed consolidation phase begun with BP's
merger with Sidanco and TNK in February.

"It's a smaller investment universe, which is not so positive," worries
Andy Wiles, co-manager of the Charlemagne Capital Russia fund, which
manages about $100 million in the country.

If he's depressed by these two joining forces, he's buoyed by assurances
that a fresh batch of non-energy initial public offers is on its way. Fully
80% of total market capitalization of Moscow's RTS stock exchange is
derived from oil and gas shares.

Nevertheless, Wiles hasn't made up his mind about YukosSibneft. "We're not
committing any incremental investment at this stage until we get more from
Yukos on what its value assumptions are from the deal." As an investor in
Sibneft, he also wants to know what offer will be made to minorities (an
oversight in Yukos' initial announcement of the deal).

Firebird's Sawikian, who has three Russia funds with combined investments
of $200 million, is more sanguine. He points to Yukos' decision to hire
Citigroup to determine a "fair" compensation for Sibneft's outside
shareholders as enough reassurance.

Compare that to BP, he grumbles: It's been almost three months since BP
struck its groundbreaking $6.75 billion Russian merger deal, and he still
hasn't received guidance on the treatment of minorities in TNK and Sidanco.
"I feel safer with the corporate governance of Yukos than with BP," he

Predictably, takeover fever has hit some of Russia's remaining independent
oil stocks. Sawikian is betting Surgutneftegas, a million-barrel-a-day oil
producer, will be the next independent to be swallowed up. He's not the
only one. Surgut's ADRs in London have been rising faster than an oil-well
gusher -- up more than 50% in the past two weeks.

And the most likely predators? Lukoil, YukosSibneft and TNK-BP, says
Sawikian, although none of them are revealing their hand.

"Surgut is probably the upside of choice of any of the other oil
companies... because the value has to be unlocked," he says.

What sort of value? Its stock rose only 2% last year amid the stampede of
other Russian oil shares moving higher. While this has attracted the
attention of speculators and potential predators for months, none have
found a way through the defenses set up by the management that give it
effective control over 65% of the voting stock. Most of that -- just under
47% -- is held on the balance sheet in the form of treasury stock.

With a market capitalization of $7.2 billion and a cash pile of just under
$6 billion, "You could buy the cash and get the oil company pretty much for
free," says Eric Kraus, chief strategist with Moscow brokerage Sovlink.

Ahead of the Sibneft deal, Surgut was trading at a 60% discount to Yukos in
terms of enterprise value to cash flow, Sawikian notes, and "that can't
last for long."

Lukoil and Gazprom, the monolithic gas producer, present other targets, but
their charms have been dented by a combination of unfulfilled
restructuring, state interference (if not control) in activities, and stock
illiquidity -- something only a good takeover would partly resolve.

Other unpalatable risks abound.

Rating agencies still rank Russia as non-investment grade, and the recent
conversion by oil companies to correct corporate governance too often
smacks of window-dressing. The oil companies themselves appear to be driven
too much by the personalities of their top executives.

Throw into that the hurly-burly of parliamentary and presidential elections
over the next 12 months, and only the hardiest investor would be expected
to stick around. Just last week, a Moscow street was the scene of another
political assassination.

But Western oil companies, no slouches in operating in the world's
less-than-salubrious environments, are seizing on Russia not so much as if
it were the last frontier for their ambition, but certainly as if it were
the next one. Although crude-oil prices have fallen below $30 per barrel
recently, they remain healthy, and that also helps.

February's TNK-BNP deal certainly helped spur the merger mindset, drawing
TotalFinaElf and Shell to begin talks with Sibneft. That was until Yukos
got wind of the situation and in a matter of three weeks elbowed the pair
out with its own bid.

And almost lost in the hubbub of the Yukos-Sibneft tie-up Tuesday was the
$275 million acquisition by Marathon Oil, the U.S. midtier oil company, of
New York-headquartered Siberian oil junior Khanty Mansiysk Oil.

Firebird's Sawikian sums up the mindset: "Russia is like any other country
-- the weak [companies] will be taken over by the strong."


April 25, 2003
Russian Senior Politicians Struggle for Prime Minister's Office 
The Iraq problem is implicated in it too 

A source from the administration of the Russian president said that the
opposition within this structure has entered a new qualitative level. 

The head of the presidential administration, Alexander Voloshin, and his
deputy, the main Kremlin political-intrigue "genius" Vyacheslav Surkov,
have been in a conflict with each other for a long time. This conflict can
not result in one of them having to go. The two statesmen are destined to
be in one boat, but not treating each other in a very decent way. If
Alexander Voloshin becomes the prime minister, such an appointment would
allow easing the tension between them. They would get considerable
advantages - Voloshin as the prime minister and Surkov as a person, who is
capable of manipulating anyone, who will become the head of the
presidential administration. 

This situation in the presidential administration explains the United
Russia party's strange attacks against the government. If the party wins
the parliamentary elections, it will have an opportunity to form the new
cabinet of ministers, and the incumbent government will have to resign
after the presidential election, as the Constitution stipulates. This makes
it clear that Alexander Voloshin's possible claims for the position of
prime minister may come true. 

It seems that there are no other candidates for this prime governmental
position. Vice Prime Minister Aleksey Kudrin is not good: He is close to
the president, but his appointment would be very good for Anatoly Chubais
(the head of Russian giant RAO UES of Russia), which Putin does not want.
The new political intrigue already has its proponents (oligarchs) and
adversaries (the president). As they say, Vladimir Putin does not see
Alexander Voloshin in the position of the prime minister.
The Iraq problem was supposed to become an additional resource for United
Russia to strengthen its positions. Russian generals convinced the
president and his administration that Baghdad would become another
Stalingrad and that a powerful anti-military action was capable of becoming
the driving force for United Russia's popularity. However, the story ended
up in confusion: The first anti-war action of the party coincided with the
virtual capitulation of Baghdad.

As a matter of fact, Russian military intelligence was perfectly aware of
the true situation in Iraq. In a an agreement with the USA, Russian special
services acted as mediators in the "mysterious" disappearance of both the
Iraqi defense and the top of Saddam's administration. They say that Russian
special services executed that function on the basis of the prime
minister's verbal order. 

As a result, the reaction of the American administration to Russia's
official stance regarding Iraq was much more favorable, as opposed to
France or Germany. This support from the USA allows the Russian prime
minister to further his selfish opposition with the head of the state. 

Nevertheless, tense relations between the president and the prime minister
are artificially exaggerated by the sides that are interested in taking the
prime minister's office. For example, Vladimir Putin ordered Voloshin to
settle a scandalous issue with the head of the Russian State Fishing
Committee, Yevgeny Nazdratenko. They tried to dismiss Nazdratenko from that
position, but the attempt eventually failed. This event was simply a farce
and mockery of the supreme power.


BBC Monitoring
Putin displeased with military cooperation, Russian PM to get a new deputy 
Source: TVS, Moscow, in Russian 1300 gmt 24 Apr 03
[Presenter] Russian President [Vladimir ] Putin is speaking about possible
changes in Russian Prime Minister Mikhail Kasyanov's cabinet. Kasyanov will
receive yet another deputy in the near future. he will be responsible for
military and technical liaisons with other states. Putin spoke about it at
today's session of the commission on military and technical cooperation. A
presidential adviser, responsible for this, has recently appeared in the
[presidential] administration. Now a deputy prime minister will appear to
help the adviser.

[Putin] Another deputy prime minister who will be working in their field
[military and technical cooperation] will appear in the near future. I do
hope it will do good as regards cooperation in the field because - we have
discussed it more than once - many enterprises have been given the right to
provide maintenance and supply spare parts but I am not sure whether this
work is always carried out at a high quality level.

[Presenter] Putin is displeased with the fact that many defence companies
have failed to fulfil 50 per cent of the military cooperation they
themselves have planned. Putin said that a lack of coordination in the
activities of federal authorities and enterprises not only hinders the
progress of some projects, but makes a negative impact on the country's


Russian parliamentary hearing calls for national security working group 
Moscow, 24 April: Participants in the closed-door parliamentary hearings
"Russia's national security: state and problems of legislative support" in
the Federation Council, the upper house, on Thursday [24 April] suggested
setting up an interdepartmental working group to prepare a new edition of
the plan for Russia's national security.

More than ten senators and representatives of various agencies, including
power-wielding agencies, participated in the hearings. They suggest to the
Russian president that such a group be formed by Russia's Security Council.

Laws on the protection of national security need renewal, Viktor Ozerov,
the chairman of the defence and security committee of the upper house, told
a news conference.

The legislative base includes some 70 federal laws and over 500 by-laws
that are quite often contradictory and do not respond to present-day
challenges, he said. There are also blank spots in legislation, he said.
Ozerov said it is necessary to set up a special working group to sort out
laws and establish priorities.

The chairman of the committee said the Security Council had formed a
working group drafting proposals to work out new laws and amendments to the
plan of national security endorsed over 12 months ago. These proposals will
be referred to the Russian president.

Ozerov also noted that the upper house will insist that the drafting of
laws on a wide-range of security matters be a priority at the autumn
session of the State Duma, the lower house.

He said national security is connected "not with military security alone.
It has at least nine aspects, including those of the economy, food,
ecology, and the threats connected with the spread of arms and drugs and
with low living standards".

He also noted that in drafting the plan for national security it is
necessary to envisage "the possibility of local conflicts and ponder on how
to deal with them. Mobile well-trained forces should, specifically, be


BBC Monitoring
Deputies dubious about army reform, generals impressed with war in Iraq 
Source: TVS, Moscow, in Russian 1100 gmt 24 Apr 03
[Presenter] The Russian Defence Ministry is ready to reduce the length of
compulsory military service from two years to one...

[Correspondent Aleksandr Lyakin] According to the plan that Russian Defence
Minister Sergey Ivanov presented at today's government session, about
200,000 soldiers will be serving in the armed forces on a voluntary
contract basis in two years from now. The rest will be called up, as earlier\

[Ivanov] Like nobody else, top generals are interested in enhancing the
quality of people who serve as soldiers and - especially - sergeants.

[Correspondent] Ivanov claims that his programme has been confirmed in
principle. As for details, they have to be worked out.

[Union of Right Forces co-leader] Boris Nemtsov begs to differ with Ivanov.
He proposed an alternative programme today. He believes that the army
reform put forward by the military does not change the essence.

[Nemtsov] We believe that in the next four or five years the whole Russian
army can be transformed to a contract basis. We - I mean the institute of
transitional economy together with the Finance Ministry - have carried out
detailed calculations. The cost of such a reform is R90bn. This would
enable a contract-based army to be formed, while young men would be called
up to do a six-month training course, not compulsory service, after which
they would either fulfil their civilian duties or sign a contract with the
armed forces.

[Correspondent] The Ministry of Defence wants the programme to be adopted
before 1 June, to coordinate it with the budget for 2004.

Meanwhile, State Duma deputies have received yet another topical issue for
discussion before the general election.

[Lyubov Sliska, deputy State Duma chairwoman] I do not support those who
are against conscription altogether. I believe compulsory military service
should exist.

[Nikolay Bezborodov, deputy chairman of the defence committee, from
Russia's Regions deputies group] We believe that a transfer to a
contract-based army is possible and feasible. However, we absolutely rule
out the possibility of doing it over a short period of time. It will take
several years.

[Aleksey Mitrofanov, State Duma deputy from the Liberal Democratic faction]
We do not support either of the options. The reform is following the wrong
path. They should be thinking about new military systems, and not only
about flats for generals.

[Nikolay Kolomeytsev, State Duma deputy from the Communist faction] I do
not want to offend Ivanov, but he is as far from the army as both of us.
Second. I do not want to offend Boris Yefimovich [Nemtsov] but he should go
and do the compulsory military service first and then make proposals.

[Correspondent] Deputies are unanimous in one thing - one cannot delay the
transfer to a contract-based service any longer. The military campaign in
Iraq won by a professional army has made an indelible impression on Russian


Putin aide warns Estonia not to expect any favours if it hosts Chechen
Moscow, 24 April: Countries which aspire to partnership and mutually
advantageous relations with the Russian Federation should bear in mind
Russia's categorical objection to the hosting of information resources on
behalf of the Chechen separatists.

The Russian president's aide, Sergey Yastrzhembskiy, said this today in an
interview with an ITAR-TASS correspondent during which he commented on
reports that the Chechen separatists' website Kavkaz-Tsentr has moved from
Lithuania to Estonia.

"I don't know what the specific reasons were for the site's move from
Lithuania to Estonia, but I think this was a correct decision [by the
Lithuanian authorities]," he stressed.

The president's aide recalled that Russia works through diplomatic channels
in all countries where there are information resources which provide a
screen for the terrorism and separatism of the Chechen ringleaders.

"We have never made any secret of it. We regard such a practice as not
entirely friendly. Not so long ago talks were held on this subject with the
Vilnius and Warsaw authorities through Russian Foreign Ministry channels,"
Sergey Yastrzhembskiy stressed.

In February of this year the Russian Foreign Ministry conveyed its
bewilderment to the Vilnius authorities over the hosting of the Chechen
site on a Lithuanian server. Kavkaz-Tsentr has since moved to Estonia,
where it is now hosted by a server operated by a local firm, AS Starman


Russia: U.S. Congressional Panel Criticizes Putin Over Chechnya
By Jeffrey Donovan

Washington may be focused on Iraq, but a congressional agency found time 
yesterday to criticize Russian President Vladmir Putin over what it called 
Moscow's "egregious violations of humanitarian law" in Chechnya. 

Washington, 25 April 2003 (RFE/RL) -- Human rights advocates told a U.S. 
congressional panel yesterday that Russia is increasing its human rights 
violations in Chechnya and urged the world community to put pressure on 

Their remarks came in testimony at a briefing held yesterday by the U.S. 
Helsinki Commission, an independent agency of the federal government which 
monitors the respect and abuses of human rights among countries agreeing to 
the provisions of the 1975 Helsinki Accords. The commission, created in 1976, 
is composed of nine senators, nine representatives, and one official each 
from the State, Defense, and Commerce Departments.

Ron McNamara, the commission's deputy chief of staff, opened the hearing in 
Washington by criticizing Russian President Vladimir Putin.

McNamara said it was "ironic" that Putin recently criticized the conduct of 
U.S. troops in Iraq despite the fact that Russian forces regularly conduct 
sweeps that result in the detention, torture, and disappearance of innocent 
Chechen civilians.

"From the reports of credible and courageous human rights activists, such as 
our panelists, it is clear that the most egregious violations of 
international humanitarian law anywhere in the OSCE region are occurring in 
Chechnya today," McNamara said.

The OSCE, the world's largest regional security organization, focuses on 
human rights and democracy. It is comprised of 55 states in Europe, Central 
Asia, and North America.

McNamara also urged Russia to allow the OSCE to resume operations in the 
breakaway Russian republic of Chechnya, where Moscow has been battling 
separatists for nearly a decade. Moscow has shut the organization's Chechen 
office, saying its critical view of human rights abuses was politically 
motivated. The hearing took place as OSCE representatives met with Russian 
officials in Moscow yesterday to discuss the issue.

Eliza Moussaeva is the director of the Ingushetia branch of Russian human 
rights group Memorial. She told the panel that Russian forces have recently 
changed their tactics in Chechnya from daytime sweeps of civilian homes in 
towns and villages to armed night raids.

The result, Moussaeva said, is that it has become much harder to track down 
those civilians that disappear after the sweeps. She said relatives cannot 
identify the Russian troops behind them since they are now masked and working 
at night.

Moussaeva, a psychologist who was given the Sakharov Freedom Award by the 
Norwegian Helsinki Committee last year, said that the number of Chechen 
civilians abducted by Russian forces in the first three months of 2003 had 
risen to 119, compared to 82 in the same period in 2002.

"Paradoxically, after the [previous] 'cleansing' operations, it was somehow 
easier to trace the relatives who had been abducted. But now after the night 
raids, it's becoming impossible to do so," she said.

Yesterday, a recently appointed top Chechen official called for a halt to 
kidnappings of citizens by Russian troops and pro-Russian police. Alu 
Alkhanov, the interior minister for the pro-Russian administration, said that 
46 people had been abducted, two of them in the previous 24 hours, since the 
23 March constitutional referendum presented by Moscow as proof that security 
had been restored to the republic.

Moussaeva said that Russian media reporting of the kidnappings has been 
inaccurate. She said that in January, a mass grave was found near a town 
called Petropalavska. But although Russian television reported the bodies 
found there had been abducted by Chechen rebels, she said several 
eyewitnesses said they had in fact been killed by Russian forces.

Bela Tsugaeva, the information manager for the charity group World Vision, 
also works in Ingushetia near the Chechen border, primarily with displaced 
Chechen civilians. She told the hearing that Russian forces have been 
applying heavy pressure on the refugees, who number some 92,000, to return to 
Chechnya despite the fact that they lack security and homes there.

Tsugaeva said the pressure included psychological forms, such as the 
stationing of Russian troops near refugee camps and telling refugees that if 
they don't go back, they will be accused of having ties to rebels, and thus 
will be dealt with as rebels.

But Amnesty International's Maureen Greenwood said that Russia had withdrawn 
some of that pressure at the end of last year only because of international 
pressure to do so. But now, things may be changing, she said. "Particularly 
now that it's spring, we're concerned that they may close the five remaining 
tent camps and force those people to go back to Chechnya."

Greenwood urged the international community to keep up the pressure on 
Moscow, adding: "First, as far as we are aware, there is not adequate 
infrastructure in Chechnya for those persons to be forced back, in terms of 
housing, electricity, heat. But secondly, they lack security guarantees. And 
as long as the ongoing extra-judicial executions, disappearances, night 
raids, torture, and impunity continue, they lack adequate security guarantees 
in order to be pushed back."

She added that Amnesty International is concerned about the targeting of 
innocent people by Chechen rebels as well, and said both sides appeared to be 
operating with impunity.

Many refugees in Ingushetia have already returned to Chechnya. But the United 
Nations office for Russia said in January that 19,000 Chechen refugees were 
still living in tent camps in Ingushetia. Thousands of others are believed to 
be living with local hosts, renting rooms or sheltering in abandoned 

The panelists deplored the recent defeat of a U.S.-sponsored resolution at 
the United Nations Commission on Human Rights that would have demanded that 
Russia account for reports of disappearances, torture, and executions in 

Greenwood urged Washington to keep up its pressure on Russia over Chechnya, 
and to continue current funding levels for Russian nongovernmental 
organizations (NGOs). And she urged Moscow to open up Chechnya to NGOs, as 
well as to the UN's representative for Chechnya and the OSCE.


Washington Post
April 26, 2003
How Jihad Made Its Way to Chechnya 
Secular Separatist Movement Transformed by Militant Vanguard 
By Sharon LaFraniere
Washington Post Foreign Service

KARAMAKHI, Dagestan -- This isolated southwest Russian village of dirt
roads and one-story clay brick houses was profoundly peaceful, its
residents say, until a Jordanian cleric named Khabib Abdurrakhman arrived
in the early 1990s with a seemingly irresistible deal.

To a hamlet made destitute by the collapse of the Soviet Union,
Abdurrakhman brought a slaughtered cow and a free feast every week. In a
place where many people were left jobless by the demise of the local
collective farm, he handed out $30 to every convert who came to his simple
mosque. And to those adrift in the social chaos of the Soviet breakdown, he
offered a new purpose in life -- a form of their traditional Islam rooted
in fundamentalism and militancy.

Few questioned where his money came from, or who were the other Arabs who
began to drift into the community. By the time questions did arise, it was
too late.

By 1999, Abdurrakhman's growing band of followers had transformed the
little settlement into an armed enclave, crisscrossed by tunnels and
trenches and stockpiled with weapons for Abdurrakhman's true mission:
severing Dagestan from Russian control and merging it into an Islamic state
with neighboring Chechnya.

"They tried to lure people in a friendly way at first," according to
Magomed Makhdiyev, the village imam, who says he tried to withstand the
fundamentalists' influence. "But by 1999, they were saying, 'Join us or
we'll cut your head off.' "

Abdurrakhman was part of a militant vanguard that deeply influenced what
was then a secular separatist movement in Chechnya, recasting it in part as
an international jihad that spilled over from the republic to neighboring
Dagestan. Today the Russian government insists that it is impossible to
understand the Chechen conflict without understanding the role of people
like Abdurrakhman.

Russian intelligence officials say he is just one of hundreds of Arab
radicals whose fervor and funds fueled fighting that has cost the lives of
more than 4,500 Russian soldiers and thousands of rebels, plus many
civilians, over the past 31/2 years.

Interviews with Chechen exiles, villagers in Chechnya and Dagestan, Western
diplomats and terrorism experts confirm that Arab militants have played a
significant role in the conflict. The full story has yet to emerge,
however. Arab and Chechen commanders waging war in the republic are in
hiding and could not be interviewed.

In the Russian government's view, Chechnya's war is nothing more or less
than a terrorist enterprise, paid for by a combination of al Qaeda money
and fraudulent charitable donations, commanded by Arabs trained in
Afghanistan and fomented by outsider clerics such as Abdurrakhman preaching
armed revolution under the theological justification of an Islamic strain
known as Wahhabism.

"There are no more al Qaeda camps" in Chechnya, Russian President Vladimir
Putin said in February. "But there is still al Qaeda money. . . . There are
instructors who are working, there are mercenaries from a number of Muslim
countries recruited by radicals. Unfortunately, all that still exists there."

A Change of View 

Until the Sept. 11, 2001, terrorist attacks in the United States, the
Russian argument got little hearing in the West, where officials suspected
that Russia was mainly trying to deflect criticism of human rights abuses
by Russian troops.

But in recent months, U.S. officials have increasingly subscribed to the
Russian view that Arab militants have helped Chechen rebels with money and
weapons, although the Americans say the guerrilla war still has its roots
in Chechens' decades-old resentment of Soviet, and later Russian, dominance.

"Obviously there is still a strong internal impulse behind the Chechen
insurgency," said a senior U.S. diplomat. "But it has become commingled
with the broader international agenda of the Arab fighters."

Bush administration officials say the United States has helped cut off
outside support of the conflict by routing the Taliban in Afghanistan,
helping drive Islamic fighters from the nearby Fergana Valley in Uzbekistan
and forcing Georgia to police the Pankisi Gorge on the Chechen border.
After denying for years that the valley was a rebel sanctuary, Georgian
officials now say that until last summer, it was home to 800 rebels,
including 80 to 100 Arabs in a unit that received funds from al Qaeda.

Some terrorism experts say the West erred by dismissing Russia's claims for
so long.

"Chechnya and the Pankisi Gorge in Georgia partially replaced Afghanistan
as a center for terrorist training," said Rohan Gunaratna, a terrorism
expert and the author of "Inside Al Qaeda." "The initial wave of terrorists
who are now coming to Europe trained in Chechnya or Algeria," he said.

Col. Ilya Shabalkin, a spokesman for Russian forces in Chechnya, said Arabs
still make up about one-fifth of Chechnya's roughly 1,000 active armed
militants, who are increasingly confined to the republic's forests and
mountains. "The Arabs are the specialists, they are the experts in mines
and communications," Shabalkin said. He identified their leader as Abu
Walid, a Saudi who showed up in Chechnya in the late 1990s.

The money, Russians say, comes from known terrorist groups such as al Qaeda
and from some 40 organizations masquerading as charities in the Middle
East, Europe and elsewhere. The flow of funds has diminished since U.S. and
Russian intelligence began jointly clamping down on terrorist financing
after the Sept. 11 attacks. Even so, the Russians say, $500,000 to $1
million a month still reaches Chechnya, delivered in small sums by couriers
who travel Georgia's rugged mountain paths.

One source is a Saudi charity, al Haramain, according to Russia's Federal
Security Service. In an internal memo provided by the agency, the FSB
accused the charity of wiring $1 million to Chechen rebels in 1999 and of
arranging to buy 500 heavy weapons for them from Taliban units.

The memo quotes what it calls messages exchanged between Arab commanders in
Chechnya and al Haramain's director in Saudi Arabia. "Today, al Haramain
has $50 million for the needs of the mujaheddin," one message from the
charity read. 

"The reason al Haramain provides assistance a little bit at a time is
because it is afraid of the accusations it is assisting the jihad," said

Russia forced al Haramain to close its offices in Georgia and neighboring
Azerbaijan in 2001, but its workers dispersed to similar groups that
continue to work freely in Azerbaijan, Sergei Ignatchenko, the FSB
spokesman, said in an interview.

A year ago, the United States and Saudi Arabia shut down al Haramain
branches in Somalia and Bosnia after U.S. officials asserted those offices
used charitable donations to finance terrorist activities.

Al Haramain says it distributed blankets, clothing and food in Chechnya but
stopped its work there 14 months ago. "We do not have any relationship with
any terrorist activities," said Shaykh Aqeel Aqeel, the charity's director.
"We work under the supervision of the Saudi government." 

Money From Bin Laden 

Russian intelligence officials assert that Osama bin Laden donated at least
$25 million and dispatched numerous fighters to Chechnya, including Ibn
Khattab, a Saudi who led one of the best-trained contingents. The United
States now agrees that Khattab had al Qaeda ties, and cited those links
when it added three Chechen rebel units to its list of terrorist
organizations earlier this year. 

American officials said that several hundred Chechen fighters were trained
at al Qaeda camps in Afghanistan and that bin Laden sent "substantial
amounts of money" to equip Chechen rebels in 1999. Some reports suggest al
Qaeda urgently requested that Islamic organizations in Kuwait provide $2
million to the Chechen fighters as recently as last May, the U.S.
government said in a five-page explanation of its decision to add Chechen
groups to the list.

Gunaratna, the author, said Russia is exaggerating al Qaeda's contribution
but not bin Laden's interest in the Chechen rebel cause. According to
Gunaratna, the terrorist leader used a Persian Gulf bank to help finance
the militants, at one point ordering an investigation into whether some
Chechen leaders had siphoned off funds for themselves.

U.S. officials said they uncovered one source of support for Chechen rebels
close to home: a Chicago-based charity called the Benevolence International
Foundation, which investigators said funneled $300,000 to rebels in
Chechnya and Bosnia. The foundation's director, Enaam Arnaout, denied any
connections with al Qaeda.

But U.S. investigators said they found handwritten correspondence to and
from bin Laden in the group's office in Bosnia. In one letter, according to
court records, bin Laden declared: "The time has come for an attack on

Ayman Zawahiri, who is the United States' most-wanted terror fugitive after
bin Laden, also saw potential in Chechnya as a sanctuary for his Egyptian
militant followers before he merged his organization with al Qaeda in early
1998, Russian officials have said. Zawahiri's plans for Chechnya fell apart
after Russian authorities arrested him in Dagestan in 1997, jailed him for
six months and then freed him before learning his true identity, according
to FSB spokesman Ignatchenko.

Arab influence in the first war between Chechen separatists and Russian
soldiers, from 1994 to 1996, was minimal. Independence-minded Chechens
considered themselves able to handle their own affairs, said Shamil Beno,
who served as Chechnya's foreign minister in 1992 and as the republic's
representative in Moscow in 2000-2001.

Dzhokhar Dudayev, Chechnya's president from 1991 until his death in 1996,
was afraid of terrorist funds, Beno said in an interview: "He wanted checks
done to see if it was terrorist money or not." 

Those scruples faded in the mid-1990s, as more and more Arab missionaries
and fighters flocked to the republic, proclaiming Islamic law, or sharia,
and promoting Wahhabist traditions. Warlords had come to dominate Chechen
society, and some of them embraced the fundamentalist cause.

The Arabs' goal went beyond preserving Chechnya's freedom: They wanted to
merge Chechnya and Dagestan to create an Islamic state. Chechnya and
Dagestan were poorer than the rest of Russia, and Dagestan, though home to
a mosaic of ethnic groups, was predominantly Muslim. Its access to the
Caspian Sea and its oil and gas reserves gave it a strategic importance to
Russia that Chechnya did not share.

One of the new leaders was Khattab, who fought with bin Laden in
Afghanistan as a teenager and who had publicly praised the al Qaeda leader
as the "main commander of the mujaheddin worldwide." Khattab's position in
the rebel movement was assured when he won over Shamil Basayev, Chechnya's
best-known militant.

Planning a Takeover 

Beno, who was once Basayev's close friend, said Basayev changed after he
met Khattab in 1995. "He started moving from freedom for Chechnya to
freedom for the whole Arab world. He changed from a Chechen patriot into an
Islamic globalist," Beno said.

Basayev has told reporters he visited training camps in Afghanistan three
times in the early 1990s to study the tactics of guerrilla warfare. In
Chechnya, he and Khattab built their own training camp in the village of
Serzhen-Yurt, complete with advanced communications equipment.

Their plans to take over Dagestan revolved partly around the village of
Karamakhi, where Abdurrakhman, the Jordanian cleric, had begun preparing
for jihad years earlier. By mid-1999, the village had been turned into a
fortified base for rebels and religious fundamentalists.

Residents recall the sign that stood on the dirt road that led off the main
highway: "This territory is under the jurisdiction of sharia law." A green
Muslim flag was posted on a hill.

The hamlet's 14 policemen had been kicked out, and the Russian constitution
declared invalid. Those caught drinking alcohol were beaten with sticks.
Religious edicts were announced over a new broadcasting system, residents

Two rocket launchers, machine guns and explosives were hauled in and
hidden. "There were so many Chechens and Arabs here we couldn't count
them," said Makhdiyev, the imam. "They would come in carloads, 10 or 15
cars at a time."

Khattab visited the village, solidifying his ties by marrying a local
17-year-old girl. But the settlement remained divided between opponents and
supporters of the Wahhabis. "Some people joined because they believed it
was the right way," said Makhdiyev. "Others were just in dire straits. They
went for these kopecks," or coins.

In August 1999, Chechen rebels launched incursions into Dagestan, but the
operation failed miserably. Within a few weeks, Russian troops had driven
hundreds of rebels under Khattab and Basayev back across the border into
Chechnya. Russian troops announced the capture of Karamakhi in September.

That month, Moscow apartment houses were hit by a series of bombings that
killed close to 300 people and were blamed by Russian authorities on
Chechen rebels. Russian warplanes began hitting their positions and by
October, 80,000 Russian troops were marching into Chechnya to reclaim the
republic. Khattab was killed by Russian troops last year.

Villagers are still rebuilding what was destroyed by the Russian bombers. A
new beige mosque is nearly finished, the ground around it a sea of mud.

A few rebel supporters, after being released from jail, asked their
neighbors to forgive them and were accepted back into the village, said

"They say they were lost," he said. "They swore they would never do it


Scientists Bemoan State of Russian Science  

Rossiyskaya Gazeta 
26 March 2003
Article by Mikhail Alfimov, Academician of the Russian Academy of 
Sciences, and Vladimir Minin, Doctor of Physical and Mathematical 
Sciences: "Anatomy of a Half-Life:  Scientific Community is Rapidly 
Diminishing and Losing its Qualifications." 

Today in Russia, the profession of scientist is 
ranked 11th most prestigious out of the 13 listed in a survey by the 
Center for Science Research and Statistics of the Russian Ministry of 
Industry, Science, and Technology. By all appearances, our science is 
undergoing a systemic crisis. And most importantly, the scientific 
community itself is decaying. As a result, the atmosphere of 
intellectualism in the country is disappearing, evaporating. 

The "syndrome of non-necessity" is dominating scientists, which is 
particularly unhealthy for professional self-esteem. This feeling is 
intensifying because new knowledge achieved by science is not being 
accepted by the domestic economy, which strives for instant profit and is 
not oriented toward mastering the results of scientific and technical 

The "health" of our science is clearly undermined. The problem is not 
even that the number of scientists is shrinking. Science can remain vital 
if there is a reasonable relationship between educators and scientists. 
And this is where the obvious failure is. 

Arguably the clearest demonstration of the "illness" of our science comes 
from the Russian Fund for Fundamental Research [RFFI]. Every year, grant 
applications are submitted by 40,000-50,000 of the most active 
researchers. Analysis shows that the scientists moving from the age 
bracket of 30-50 years to 
the oldest age bracket are not being replaced by an influx of specialists 
less than 30 years old. 

Of course, there is one sign that should make one more optimistic. Each 
year more and more young people are participating in RFFI competitions. 
The growth is fairly stable, moreover, and one can even talk about a sort 
of "youth peak." 

However, the benefits here are imaginary. This becomes apparent if you 
analyze the reasons behind the "peak." The first is the increase in birth 
rate from 1968 to 1988. The second is the desire of some young people for 
a "shelter" from the draft. The third is the tendency for young people to 
emigrate or go into business after getting a scientific degree. This 
automatically raises a specialist's "list price". 

Thus, a significant portion of young people, having graduated from an 
institute and graduate school, having worked in scientific organizations 
and having received the necessary qualifications, leave Russian science. 

What is the result? On one hand, the situation would seem to be hopeful, 
since the height of the "youth peak" grows from year to year. The number 
of university students and graduate students is increasing. On the other 
hand, the sharp peak is not turning into a plateau, is not broadening in 
the area of older ages groups. 

This trend is extremely alarming. After all, the current positive 
influence of the demographic factor will soon reverse--due to the reduced 
birth rate in the 1990s. In sum, by 2015, the "youth peak" will disappear 
completely. At this same time, scientists who are now over 55 will leave 
their institutes. And in essence, Russian science will have only a fairly 
small group of researchers who are now 30-50 years old. 

No less alarming than the rapid aging of the scientific community is the 
loss of qualifications. The percentage of doctors and candidates of 
science among those who submit applications to RFFI has fallen over the 
past five years 1.5-fold--from 70.4 to 48%. A particularly sharp drop 
(3.5-fold) is observed in those 35 years of age or younger. And the 
situation with young doctors of science is almost catastrophic: their 
percentage dropped more than 10-fold. 

But yet according to data from Higher Certification Committee [VAK], 
between 1997-1999, the number of doctoral dissertations defended at the 
age of 35 increased by approximately 17%. Where are these inquisitive 
minds? Alas, not in science. In business and in power structures, though, 
the number of degreed 
specialists is growing steadily. This is particularly typical for the 
social and humanities sciences. For example, in 1996 the proportion of 
government and business representatives who defended doctoral 
dissertations was 14%, and 24% for candidate's dissertations. Thus the 
very concept of the scientific community is eroding. 

In 10-15 years, the country may experience a crisis in scientific 
personnel: the older generation is leaving, and there are few in the 
younger one. Science has to compete with the business sphere for young 
talent. However, Russia, with its enormous territory and wealth of 
natural resources, has a greater need than others 
for effective industrial and defense potential. This is created based on 
high technology and fundamental science. 

All this will remain only a dream if the profession of scientist does not 
once again become respected in society. If it does not feel confidence in 
tomorrow. Only then will young people enter Russian science. All this 
requires government decisions that cannot be put off. 

What should be done? First of all, in our opinion, it is necessary to 
single out institutes where major scientists work, who can become mentors 
for young talents. Naturally, there will be many wishing to claim that 
status, and the choice must be made through competition. These institutes 
must have the most advanced equipment, making it possible to conduct any 
difficult research. 

What future work do we see? 

Leading scientists should be charged with forming young research 
collectives. Young people would be accepted to them by contract lasting a 
minimum of seven years. The starting salary should be set at no less than 
10,000 to 15,000 rubles. And in addition, a real opportunity to obtain 
10-15 year discounted loans for 
housing construction should be created. 

Assessments show that for a transition to a knowledge-based economy, it 
is necessary that up to 10,000 scientists join young collectives each 
year. Expenditures on the program will increase annually by an average of 
1.8 billion rubles. In this case, in 10 years the country could gain 
about 100,000 specialists 
with the highest qualifications. 

At Press Time 

The number of higher educational institutes that have graduate programs 
will sharply decline. This was announced at the annual conference of 
representatives of institute-level science that took place in St. 
Petersburg. Beginning next year, only those institutes that win a 
competition will receive a state order for the right to train young 
scientists using budgetary financing. 

This decision was no accident. After all, the present system for training 
young scientists elicits a number of questions. Even in Moscow and St. 
Petersburg, only 25 out of 100 graduate students defend their 
dissertations. For many, graduate school is a way to avoid the army. 
Partly because of that, beginning this year, admissions into graduate 
programs have been cut by 10%. 

In addition, Deputy Minister of Education Yuriy Shlenov announced that 
starting with the new academic year, the best institutions--with support 
of federal budgetary funding--will train specialists particularly needed 
by Russia's regions. Financing has been allocated for 400,000 spots in 
327 higher education 
institutions in Russia. Both state and private institutions will compete 
for these places in a competition to be held on May 15. If one of the 
"privates" wins, its students will have a chance to study free of charge. 


Russia's Nuclear 'Suitcase' Emergency Response System Detailed  

19 April 2003
Report by Sergey Ishchenko: "Travels of 'Nuclear Button;' Only Three 
Such Suitcases In Our Country--Held By President, Minister of Defense and 
Chief of General Staff"

    In Tokyo's Narita International Airport, 
airplanes take off and land in a steady stream--with interval of 5-6 
minutes.   In this roaring, tightly-wound airport carousel, it is 
doubtful that anyone would notice our Il-62M which has landed, its entire 
fuselage painted in the colors of the Russian tri-color flag.   Yet it is 
a shame that they would not notice.   After all, the plane which has 
landed is not an ordinary one. 
    In fact, the outwardly peaceful Il-62M, whose namesakes even Aeroflot 
intends to reject, is stuffed chock-full of the most modern electronic 
equipment.   It is the airborne command center (VKP) of the Minister of 
Defense of Russia.   Its engines are the latest and most reliable, 
corresponding to the most select requirements of ICAO [International 
Civil Aviation Organization] in terms of noise level.   And the crew, 
dressed in the austere black uniform without shoulder straps which is 
usual for civil airline companies, is comprised of captains, majors and 
lieutenant colonels.   And for other flights, they keep their customary 
blue single-breasted Air Force officers' jackets in their closets at 
home, in Chkalovskiy, located in Moscow Oblast (where the special purpose 
division of the Ministry of Defense of the Russian Federation is based).  
 Then again, due to the crucial nature of the moment, the landing of the 
minister's VKP was personally performed by the deputy commander of the 
Chkalovskiy aviation division. 
    There was only one thing that made our airplane stand out from the 
ordinary ranks of the various airliners: Accompanied by the piercing 
whine of the engines, smartly-dressed Japanese employees were nimbly 
dragging a heavy roll of red carpet to the rapidly approaching descent 
ladder.   Tripping over each other, they unrolled it.   Minister of 
Defense of Russia Sergey Ivanov, who had arrived in Tokyo on an official 
visit, stepped out onto the ladder, all smiles.   In the elegant 
appearance of the head of the military department, only one thing spoke 
of his current official duty--a gold tie tack in the form of the Russian 
AK-47 automatic rifle, which is famous even in these parts.   Behind him, 
a group of generals who were accompanying the minister stepped out onto 
the red-carpet covered stairway. 
    But in the cortege of black limousines and police cars, the order of 
arrangement of members of the delegation was somewhat different.   
Following the armor-plated automobile of the minister was that in which 
two non-descript young fellows in civilian dress, carrying a "diplomat 
briefcase," were seated.   In the scheme of the cortege, which had been 
prepared ahead of time by the Russian Federation embassy in Japan, this 
car was referred to simply as "special communications."   In fact, Ivanov 
was being followed throughout Tokyo, in the accompaniment of officers of 
the special service, by that same "nuclear button," with which any 
Russian Minister of Defense cannot part night or day, as long as he is in 
office.   Even when the minister sleeps in his own bedroom, a duty 
officer stands a few feet outside his door, guarding the "button."   And 
if the chief is staying in a hotel abroad, his ever-vigilant shadows 
guard the suitcase in the next room. 
    Then again, the terms, "nuclear button," or "nuclear suitcase," are 
for the unenlightened.   Specialists refer to the device--with the aid of 
which the world can easily be sent to the nether regions from any place 
on earth, merely by performing a series of simple manipulations--as the 
portable "Cheget" terminal, a part of the "Kazbek" conference 
communications system.   There are only three such devices in our 
country.   They are held by the president, the minister of defense, and 
the chief of the General Staff of the Armed Forces.   Within just a few 
moments, the "chegets" will notify the supreme leadership of Russia about 
(God forbid such a thing should happen!) a nuclear missile attack on its 
territory.   And what can one do if the flight time to the vital Russian 
targets of the enemy's missiles, which can only be conditionally 
estimated, comprises some 8-10 minutes?   One would not have time even to 
become frightened, let alone make a political decision and give the 
orders to the Armed Forces.   But if it should happen--the order to bring 
the entire system of management of the strategic nuclear forces of Russia 
to full combat readiness may be given from the "Cheget" in just a few 
moments.   The order can be given either from Moscow, or from Tokyo.   
Then--the crushing response or response-reciprocal strike. 
    So that this apocalyptic theory never becomes a nightmarish reality, 
they carry the "Cheget" along with the minister of defense wherever he 
goes, all over the world. 
    In all other respects, everything in our strategic airliner appeared 
quite peaceful.   The friendly stewardesses--whom it would seem to be an 
encroachment on military secrecy to ask about their military rank--pushed 
carts filled with Coca-Cola and plastic boxes with on-board meals along 
the row of seats.   The officers of the Federal Guard Service--bodyguards 
of the minister of defense--on the return trip, casually took the black 
pistol holsters out from under their jackets and placed them in the 
compartment located just above my head.   Then they took out a little 
bottle of whisky.   Behind the two partitions, where the minister's work 
compartment was located, everything was also surely going well.   After 
all, according to sources in the minister's entourage, the visit was 
clearly a success. 
    Journalists who covered Sergey Ivanov's trip to Japan also snacked 
happily, recalling the recent adventure of one of their colleagues, which 
had occurred on this same Il- aircraft.   Except that it was during a 
visit to Egypt.   At that time, a prominent Channel 1 television reporter 
was late for the flight.   The minister of defense, who knew how to build 
relations with the press, held the plane at the starting gate until the 
last possible moment.   When the aircraft finally began to taxi toward 
take-off, through the porthole, Sergey Ivanov could see the poor 
unfortunate operator, running after the plane.   He gave the order to 
slow down.   In the absence of the airport staircase, which had been left 
far behind, the latecomer was thrown a rope ladder from the hatch of the 
Il- aircraft. 


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