Johnson's Russia List #7155 26 April 2003 firstname.lastname@example.org A CDI Project www.cdi.org [Contents: 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. pravda.ru: Russian Senior Politicians Struggle for Prime Minister's Office. 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 hosts Chechen website. 15. RFE/RL: Jeffrey Donovan, U.S. Congressional Panel Criticizes Putin Over Chechnya. 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 Detailed.] ******** #1 Rosbalt 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 investment. 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 power) 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 ******** #2 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 money. 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 percent. 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. ******** #3 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 AFP 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 accordingly. 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 ******* #4 Russia Trade Restrictions Not Lifted Yet April 25, 2003 By KEN GUGGENHEIM 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.'' ******* #5 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 person. ******* #6 Ukrainians Mark Chernobyl Anniversary April 26, 2003 By ANNA MELNICHUK 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 explosion. 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. ******* #7 Boston Globe April 25, 2003 obituary 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 subject. ''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 Prize.'' 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 grandchildren. A funeral will be held at 11 a.m. today in Levine Chapel in Brookline. ******* #8 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 competitors." 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 Russia. 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, respectively. 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. ******* #9 Barron's Online April 28, 2003 A Gusher in Russia By MICHAEL WANG 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 investment. 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 management. 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 harrumphs. 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." ******* #10 pravda.ru 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. Forum.MSK.Ru ******** #11 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 authority. ******** #12 Russian parliamentary hearing calls for national security working group ITAR-TASS 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 created". ******** #13 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\ý [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 generals. ******* #14 Putin aide warns Estonia not to expect any favours if it hosts Chechen website ITAR-TASS 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 Internet. ******* #15 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 Moscow. 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 buildings. 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 Chechnya. 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. ******* #16 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 another. 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 Russia." 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 said. 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 Makhdiyev. "They say they were lost," he said. "They swore they would never do it again." ******* #17 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 progress. 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. ******* #18 Russia's Nuclear 'Suitcase' Emergency Response System Detailed Trud 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. ******* Web page for CDI Russia Weekly: http://www.cdi.org/russia Archive for Johnson's Russia List: http://www.cdi.org/russia/johnson With support from the Carnegie Corporation of New York and the MacArthur Foundation A project of the Center for Defense Information (CDI) 1779 Massachusetts Ave. NW Washington DC 20036