Johnson's Russia List
30 April 2003
A CDI Project

  2. Moscow Times: Nabi Abdullaev, 2002 Census Shows Empty Villages and Empty 
  3. BBC: Russia press dwells on Iraq war splits.
  4. AFP: Russian media spares Blair over Putin snub, dubious over EU defence 
  5. The Times (UK): Rosemary Bennett and Robin Shepherd, Putin taunts Blair: 
Is Saddam sitting in a bunker ready to blow the whole place up with WMD?
  6. The Guardian (UK): Nicholas Watt and Patrick Wintour, Russia's mood 
misjudged as friends fall out.
  7. Vremya Novostei: Igor Bunin, IDEOLOGY AND ELECTIONS. Russia's elections 
will not be devoid of ideological content.
  8. Interfax: Poll: 48% of Russians trust Putin.
  9. Life Cannot be Worse in Russia! It is important to regulate 
discipline, to stop putting the blame on some external enemies. (interview
with Duma deputy Yaroslav Shvyryayev)
  10. Jamestown Foundation Russia and Eurasia Review: Tomila Lankina,  
  11. Chicago Tribune: Alex Rodriguez, Russian aid to Chechnya lost to graft.
Endemic corruption siphons millions.
  12. Business Week: Paul Starobin, From Russian Oligarch to Oil Kingpin. 
Suddenly, one tycoon is sitting atop a giant producer. (Khodorkovsky)
  13. WPS Monitoring Agency: POLITICAL FORECASTS [press summary],



Prosecutor-General's Office of Russia has completed the investigation into
the explosions of apartment blocks in Moscow and Volgodonsk in September
1999, RIA Novosti was officially told in the Prosecutor-General's Office. 

The investigation has found out that "foreign citizens Khattab and Amu Umar
who, according to secret services' information, were eliminated during the
counter-terrorist operation in Chechnya" are the organisers of the
terrorist acts, says the report by the Information and Public Relations
Department of the Prosecutor-General's Office of Russia, received by RIA
Novosti on Wednesday. 

The involvement of Achemez Gochiyayev, Khakim Abayev, Denis Saitakov,
brothers Zaur and Timur Batchayev, Yusuf Krymshamkhalov and Alam
Dekkushiyev in the crimes has been ascertained. 

The Prosecutor-General's Office says that Zaur Batchayev was killed in
Chechnya, his brother Timur in Georgia. 

Gochiyayev and Abayev are still at large and have been put on the
international wanted list. According to some information, they may be
hiding on the territory of Georgia, the Prosecutor-General Office's report

Krymshamkhalov and Dekkushiyev were arrested and are staying at the
detention centre in Moscow. They are charged with participating in an
illegal armed formation, terrorism perpetrated repeatedly as members of an
organised group, premeditated murder under aggravating circumstances, and
illegal manufacture and storage of arms. 

As a result of the explosions in Guryanov Street in Moscow, 100 people were
killed and 690 were wounded and hurt. As many as 124 people perished and
seven were wounded in the Kashirskoye Highway. In Volgodonsk 19 people
perished and 1,045 were wounded. 

The damage done by the blasts is estimated at more than 800 million roubles. 

The injured people have now started familiarising themselves with the
materials of the preliminary investigation. They number about 2,000. Then
defendants Krymshamkhalov and Dekkushiyev will begin to familiarise
themselves with the case. 

After the end of these procedural actions and the indictment, the case will
be sent to the court to be considered in detail, the Prosecutor-General
Office's report reads. 


Moscow Times
April 30, 2003
2002 Census Shows Empty Villages and Empty Nests
By Nabi Abdullaev 
Staff Writer 

More than 13,000 Russian villages are inhabited only by ghosts. Nobody
lives in them any more, according to preliminary results of the 2002 census. 

Nearly 35,000 villages have no more than 10 inhabitants, according to the
census results, which were posted on the State Statistics Committee's web
site late last week.

Between 1959 and 1989, Russia's population grew by 10 million people for
every decade, from 117 million to 147 million, despite a migration of
Russians to other Soviet republics. But in 1992, deaths began to outnumber
births so dramatically that even an influx of 11 million immigrants could
not prevent a population decline. The 2002 census, conducted in October,
counted 145.2 million people, down 1.3 percent from the last census in 1989.

The flow of immigrants, which hit its peak in 1994 with 811,000 people,
slowed to 76,000 in 2002, the census showed. 

A steadily falling birth rate among Russian women is one main cause of the
population decline. In 1962, there were an average 2.4 births per 100 women
of childbearing age, but by 2000 the rate had halved, to 1.2, according to
Moscow's Institute of General Genetics.

A birth rate of 2.2 or more is required to avoid a decrease in population,
said Yelena Pobedonostseva, a researcher at the institute. 

In 1992, for the first time since World War II, more Russians died than
were born, she said. In the years since, the gap grew from 220,000 people
in 1992 to a record 677,000 in 2000.

Pobedonostseva said the growing gap was explained not only by the falling
birth rate but by lower life expectancy due to poorer health, environmental
pollution and holes in the social safety net after the Soviet collapse.

"Speaking in numbers, Russia falls in the same pattern as West European
countries, which also have a low birth rate and high influx of migrants,"
said Valery Stepanov of the Institute of Ethnology and Anthropology. "But
Russia has a specific mortality picture: The portion of young males among
the dead is extremely high."

Women outnumbered men by 10.1 million in 2002, with males making up 46.5
percent of the total population, according to the State Statistics
Committee. However, this appears characteristic of Russia: In four previous
postwar censuses, the ratio of males oscillated near 45 percent.

The report on the preliminary results of the census showed that the
population decline was most dramatic in remote northern regions. 

In Chukotka, the population shrank to one-third of 1989 figures, and in
Magadan it was more than cut in half. The statistics committee says the
decline is due to mass migration to central Russia.

The population declined in 64 other regions, although less sharply, and
grew in 23 regions, mainly in central and southern Russia. The greatest
growth, 43 percent, was in Dagestan. 

Chechnya, taken together with Ingushetia, with which it constituted a
single republic in Soviet times, was a controversial second with 23
percent. Census takers counted 1.1 million people in Chechnya, about twice
as many as reported when the second military campaign began there in 1999.
Human rights groups have expressed skepticism about the number, and say
they suspect it was inflated by the republic's pro-Moscow authorities to
attract greater federal funds for social programs.

Of Russia's 155,290 villages, more than half are abandoned or nearly so. In
addition to the 13,032 that are empty and 34,803 with up to 10 inhabitants,
37,337 have no more than 50 people living in them. Even so, the share of
the population living in cities -- 73 percent -- has not changed since 1989.

April 30, 2003
Russia press dwells on Iraq war splits 
Leading dailies in Russia are quick to highlight the differences between
Moscow and London after British Prime Minister Tony Blair's visit for talks
with President Vladimir Putin. 

One paper contrasts the welcome Mr Blair received on his last visit to the
coolness of Tuesday's reception while others believe the visitor was acting
as a bridge between Moscow and Washington. 

For Rossiyskaya Gazeta, the Moscow summit "has a symbolic value" as the
first meeting between the two leaders since the end of the Iraq war. 

But "the beginning of yesterday's meeting did not bode well". 

"The last time Blair came to Moscow was last autumn. Then it was clear from
the very first moments that the meeting was between two friends.
Yesterday's summit opened in a distinctly restrained manner," the paper says. 

Izvestiya says Mr Blair was in town "in a dual capacity - as prime minister
of one of the belligerent states, which assumes responsibility for the
reconstruction of Iraq, and as an intermediary between Moscow and

" As far as Moscow is concerned, the nature of Blair's role changed a long
time ago, effectively when the formation of the anti-terrorist coalition
began in 2001." 

The heavyweight broadsheet Nezavisimaya Gazeta agrees that the British
prime minister was acting as a bridge between the Kremlin and the White

"This is not the first time, nor the first year that Blair has acted as a
bridge. Now he is being called on to play this role again," it says. 

The reason, a high-ranking Kremlin source told the daily, is that "the
degree of Russian-British mutual understanding is markedly higher than that
between Moscow and Washington". 

Nezavisimaya Gazeta says the message Mr Blair was bringing was that the US
was willing to "forgive Moscow for its obstinacy and its attempts to stage
a mutiny together with France and Germany". 


The business paper Kommersant saw their meeting at a private residence just
outside Moscow as "painfully reminiscent of a scene in the film Dead Season
in which two spies, one of ours and one of theirs, are exchanged on a

"The men start walking towards each other and, trying not to hurry, move in
deafening silence, looking straight at each other, not blinking. Because
they are professionals." 

"Vladimir Putin and Tony Blair reproduced this scene yesterday in amazing
detail. Starting off at the same time and trying not hurry, they began
moving. A couple of times Vladimir Putin was forced to slow down in order
to ensure that they met exactly halfway." 

The business daily Vremya Novostey feels their news conference "vividly
illustrated the different approaches, rather than the understanding". 

Gazeta focuses on the question it says Mr Putin asked Mr Blair. "Where is

"Where are those arsenals of weapons of mass destruction, if they ever
existed?", Gazeta goes on. 

"Maybe Saddam is sitting on weapons of mass destruction in some secret
bunker and planning, at the last minute, to wreck everything and threaten
thousands of human lives? These questions need answers." 

"In other words, Putin was asking the USA and Great Britain to tell the
world the whereabouts of these weapons of mass destruction, over which they
went to war." 


Russian media spares Blair over Putin snub, dubious over EU defence quartet 

MOSCOW, April 30 (AFP) - Russian media Wednesday reported in detail the
snub President Vladimir Putin administered to British Prime Minister Tony
Blair over Iraq but refrained from describing it, as their counterparts in
London did, as a "humiliation." 

Blair, whose bid to enlist Putin's support for lifting UN sanctions on Iraq
was roundly rejected at the meeting outside Moscow Tuesday, could
reasonably have "taken offence" or even "become seriously angry" at Putin's
approach, the business daily Kommersant observed. 

The Russian leader "did not pull his punches," Kommersant commented,
highlighting -- as all the Moscow media did -- Putin's jibe to Blair over
the US-led coalition's failure to locate Saddam Hussein's alleged armoury
of weapons of mass destruction, in which he asked with mocking irony,
"Where are Saddam's arsenals? Perhaps he's hiding in a bunker sitting on a
crate of them." 

Blair, "a de facto winner in the war," responded like "a man who is certain
of his strength and can allow himself a lot, including indulgence towards
the losers," the paper said.

"What got under Putin's skin?" Kommersant wondered. "Perhaps it was simply
that Blair did not offer anything sufficiently interesting for Putin to say
anything else," it concluded.

The daily Gazeta stressed that Blair, who on April 11 had turned down an
invitation to join a "peace camp" summit with Russia, France and Germany in
Putin's home city of Saint Petersburg, had come to Moscow to "make peace"
in the interest of Russo-British relations and also of Russo-American

It noted too that Putin will be visiting London in late June, so that
Blair's trip to Moscow was "a further opportunity to show that relations
between London and Moscow are improving." 

The daily Vremya Novostei picked up Putin's comment that despite their
"different approaches" there was "an understanding" on the need to work
together to resolve many issues, but noted that at their joint press
conference the differences between Putin and Blair were "a great deal more
evident" than the understanding. 

Overall, however, the tone of the Russian dailies constrasted strongly with
that heard in London where print media headlines highlighted a "double
rebuff" for Blair (the Independent), observed on his return "From Russia
with Scorn" (the Daily Mail) or remarked on a "new Cold War" (the Express). 

Separately, Russian media saw a plan announced Tuesday by four European
antiwar countries (France, Germany, Belgium and Luxembourg) to boost
Europe's self-reliance in defence matters as a source of possible division
in Europe. 

The mini-summit "will inevitably deepen the schism in Europe," Kommersant
wrote, while Izvestia pondered: "How can Europe be convinced of the
necessity for a new arms race?" 

Paris and Berlin might understand the need to spend more on defence, but
"the others will be difficult to persuade," Izvestia warned. 

And some papers warned that the initiative would be seen by many European
Union member states as simply "anti-American." 


The Times (UK)
April 30, 2003
Putin taunts Blair: Is Saddam sitting in a bunker ready to blow the whole
place up with WMD?
By Rosemary Bennett and Robin Shepherd in Moscow

President Putin scuppered Tony Blair's efforts to repair Anglo-Russian
relations after the Iraq war by challenging him and President Bush to
uncover weapons of mass destruction to justify the conflict.

The Prime Minister suffered a second blow from the anti-war axis when
France and Germany backed plans for a European defence force independent of

At a summit in Brussels, France, Germany, Belgium and Luxembourg agreed to
set up a "multinational force HQ for non-Nato operations". British
officials said they were baffled by the move, and Mr Blair made clear his
opposition to any initiative that would undermine the alliance. 

Speaking at the end of what was supposed to be a fence-mending meeting with
Mr Blair in Moscow, Mr Putin mocked the coalition's failure to find any
biological or nuclear weapons. He said UN oil sanctions should not be
lifted until they came to light.

Mr Putin reminded the grim-faced Prime Minister that the only reason he
went to war was to eliminate the danger posed by Saddam's weapons programme.

"Two weeks later they still have not been found," he told a press
conference. "The question is, where is Saddam Hussein? Where are those
weapons of mass destruction, if they were ever in existence? Is Saddam
Hussein in a bunker sitting on cases containing weapons of mass
destruction, preparing to blow the whole place up?"

Mr Putin said that the international community had to draw a line under the
row over war in Iraq by allowing UN weapons inspectors back in.

Mr Putin insisted that the UN Oil-For-Food programme, of which Russia is a
prime beneficiary, should be renewed instead of lifting sanctions
completely. The US and Britain are seeking a rapid end to the oil sanctions
to help to finance Iraq's reconstruction.

Mr Putin also questioned Mr Blair's vision of a new strategic alliance
between the US, Europe and Russia, saying it would not work if the White
House made all the decisions.

Mr Putin launched his surprise attack after talks in the presidential
residence just outside Moscow.

Mr Blair had hoped to use the one-day trip to persuade Mr Putin to join
forces with America and Britain and heal divisions over Iraq. He said on
Monday that failure to form a new strategic alliance could result in two
rival camps emerging, reviving the tensions and divisions of the Cold War era.

After listening to Mr Putin's attack, he admitted that the past few months
had been very difficult but said the international community had to find a
way forward. "The stand-off of the last few months is in no one's interest
-not Europe's, not Britain's and not Russia's," he said.

He said it was possible to create a two-way process where the US would
listen to concerns on the Middle East peace process, global poverty and
development while other countries helped the US with its War on Terror and
weapons of mass destruction.

He said that the first crucial test for the international community was to
agree on a role for the UN in post-conflict Iraq.

Mr Blair appeared shaken by Mr Putin's tirade. At one point he interrupted
his interpreter to make the point that the bickering had to stop: "The kind
of stand-off we've had in the last few months, in the end, is in no one's

That is why we need to find a way through. To make that partnership real,"
he said.

Diplomats said the meeting appeared to have achieved so little they
wondered why the two leaders had met in the first place. "They got nowhere
and only showed just how far apart they are," one said.

This was the second successive summit at which Mr Putin had publicly
embarrassed Mr Blair. Last October, when they met at Mr Putin's official
dacha outside Moscow, he dismissed a Downing Street dossier on Iraq's
weapons of mass destruction as propaganda. Downing Street sources said Mr
Blair was angered by his advisers' failure to warn him about how strongly
Mr Putin felt about Iraq.

Analysts say that Russia has been let off relatively lightly by the United
States because of its pivotal role in the War on Terror, its massive oil
reserves and its huge nuclear arsenal.


The Guardian (UK)
April 30, 2003
Russia's mood misjudged as friends fall out 
Nicholas Watt and Patrick Wintour

It had all the makings of a friendly diplomatic encounter to mend fences
after months of tensions over Iraq. 

Eschewing the formality of the Kremlin, Vladimir Putin demonstrated his
high personal regard for Tony Blair yesterday by inviting him to his
private dacha outside Moscow. As a peace offering, the prime minister
invited Mr Putin on the first state visit to Britain by a Russian leader
since the days of the Romanovs in the 1870s. 

Within hours of greeting each other as long lost friends in the grounds of
the dacha, however, their much vaunted personal relationship appeared to be
in tatters as Mr Putin taunted Mr Blair over Iraq. The encounter was being
compared last night to the diplomatic dressing down suffered by the prime
minister in Damascus in 2001 when Syria's President Assad likened
Palestinian suicide bombers to the Free French. 

Downing Street will be sensitive to claims that the prime minister suffered
a humiliating rebuff because Mr Blair has invested a great deal of
political capital in President Putin. His decision to court Mr Putin,
despite the president's unyielding stance on Chechnya, angered human rights
groups and MPs who believe that the prime minister should have kept his
distance from the former KGB officer. 

But the prime minister's decision to forge an alliance with Mr Putin, with
its echoes of Margaret Thatcher's "I can do business with him" relationship
with Mikhail Gorbachev in the 1980s, goes to the heart of Mr Blair's
pragmatic approach to domestic politics and diplomacy. 

Having struggled to form a bond with Boris Yeltsin, partly because Russia's
first post-communist leader was rarely sober in his last years in the
Kremlin, Mr Blair was determined to work closely with Mr Putin. His
thinking was that it was in Britain's interests to be on friendly terms
with Russia's new strongman who is likely to remain in office for years.
While Russia's economy may be little bigger than London's, its position as
a former superpower with a permanent seat on the UN security council means
that it is a world player to be reckoned with. 

Downing Street believes that Mr Blair's approach has paid dividends on
numerous occasions. President Putin decided to limit Russia's criticism of
Nato's encroachment into former Warsaw Pact countries. As Britain and the
US prepared to overthrow the Taliban in Afghanistan after the September 11
attacks, Mr Blair persuaded Mr Putin to ask neighbouring countries, such as
Uzbekistan, to cooperate in the war. 

But the former Conservative foreign secretary, Sir Malcolm Rifkind, said
that yesterday's meeting showed that Mr Blair was "naive" in thinking that
personal chemistry can overcome entrenched national interests. Sir Malcolm
said: "The prime minister has this extraordinary belief that personal
relations can overcome national interests. They can't. Where there is
sufficient common ground a good personal relationship can make a
difference. But no leader can be expected to override national interests. 

"The prime minister's naive approach can lead to unholy messes. He was
warned about Assad, but was made an ass of when he agreed to hold a press
conference with him in Damascus." 

Sir Malcolm said that Mr Putin's performance was a strong reminder that
post-communist Russia is not a western country, particularly with a
president who made his name as KGB spy in the former East Germany. "There
is this assumption that because Russia is not communist it will be another
western country," he said. "We are a long way from that. Russia's interests
are to reassert its influence in the Arab world - it is as unhappy as many
Arab countries with the United States." 

MPs from all sides of the Commons, who harbour serious doubts about the
prime minister's warm relations with Mr Putin, will have a chance to
embarrass Mr Blair today when he makes his weekly appearance in the house.
Mr Blair is likely to point out that disagreeing with a fellow leader, even
in public, is a sign of a good relationship. 

While Mrs Thatcher and Mr Gorbachev are remembered for famously bonding at
their first Chequers meeting in 1984, they often tore strips off each
other. During a pre-election tour of Moscow in 1987, the former Tory prime
minster is said to have lambasted Mr Gorbachev for hours over the Soviet
Union's human rights record. 

Downing Street will be hoping that sharp words will not be exchanged when
Mr Putin pays a return visit to Britain at the end of June. While their
differences may be as great as ever, the backdrop for the first Russian
state visit since the 1870s will help. The Russian flag will line the Mall
and the Putins will be put up by the Queen. 


Vremya Novostei
April 29, 2003
Russia's elections will not be devoid of ideological content 
Author: Igor Bunin, general director of the Political Consulting Center 
[from WPS Monitoring Agency,]

     Every party goes into the elections with its own political 
message, the one which is most appropriate for its voters. The "most 
ideological" participants in this year's election campaign are the 
long-time opponents: the communists and the liberals, the Communist 
Party and the Union of Right Forces (URF). Gennady Zyuganov's party 
has combined various Communist programs in its current ideology. Now 
it includes Stalin's "great power" component, nostalgia for the 
Brezhnev era, and some perestroika formulas like limited acceptance of 
private property. However, this "cocktail" is the most appropriate for 
current supporters of the Communist Party, a group which ranges from 
rigid orthodox voters to the protest voters who don't care about Marx 
or Lenin.
     The URF, on the contrary, upholds political liberties and the 
market economy in its most radical form. Its voters are those who have 
benefited the most from the past decade's reforms, people who are 
active and happy about their lives. In part, the URF ideology depends 
on these people's attudes - this particularly applies to ending 
conscription and moving to a professional military, among the URF's 
major messages in this election campaign. Few URF supporters want to 
see their children serving in the army - but they still disapprove of 
draft dodging. At the same time, polls indicate that URF supporters 
are even more loyal to Vladimir Putin than United Russia voters. 
Therefore, the civil rights defense component of the URF's ideology 
obviously doesn't appeal to the URF electorate. Apparently, this is 
the reason why the URF has been unable to overtake Yabloko in the 
polls, as reported by both VTsIOM and the Public Opinion Foundation.
     The Yabloko party, in turn, is unwilling to reject its 
traditional social liberalism ("shock-free reforms" of the 1990s), but 
it has enriched its ideological arsenal with some moderate state-
orientation. A vivid example is Yabloko's position on Chechnya. 
Yabloko's key supporters are the Russian intelligentsia, who demand 
honest politics and moderate-liberal ideas. The widespread revival of 
the state idea in today's Russia has influenced these people as well - 
thus, in a timely response to this trend, Yabloko has avoided 
transforming itself into a politically destructive organization like 
the Liberal Russia party. Therefore, it has a good chance of securing 
seats in the next Duma.
     There is some reason to believe that the Liberal Democratic Party 
of Russia (LDPR) may also be represented in the next Duma. There are 
two major reasons for its popularity: first, a wish to "spit in the 
face" of the political establishment; second, "just for fun", in 
appreciation of the dramatic talents of LDPR leader Vladimir 
Zhirinovsky. There are over 5% of such voters in Russia; so 
Zhirinovsky is taking full advantage of them.
     The United Russia party is making every effort to identify itself 
with the president - however, that is not enough for any party. At the 
same time, United Russia cannot afford the luxury of a distinct 
ideology - whether liberal, conservative, or social-democratic - since 
its major aim is to defeat the Communist Party and secure a pro-
presidential majority in the next Duma. This objective forces United 
Russia to seek the support of an extremely diverse range of voters: 
conformists (those who always vote for the incumbent regime), some of 
the protest voters who don't want to vote for the Communist Party, and 
some potential voters of the URF. This is the basis of the ideological 
diversity of United Russia - it calls on some of its voters to retain 
their optimism, while seeking to appeal to others who condemn state 
officials for forgetting about the people's needs.
     A center-left party may be required to prevent the protest vote 
from going to the communists - it should combine pronounced state-
orientation with priority attention to social issues; at the same 
time, it should be free from a communist image. Of the existing 
political parties, the People's Party headed by Gennady Raikov best 
meets these requirements. According to VTsIOM, under certain 
circumstances, up to 9% of voters could be prepared to support this 
party. However, in order to succeed in the elections, the People's 
Party will have to convey its message to voters adequately and make 
sure it has a good "top trio" of leaders whose names mean something 
for the protest voters.
     Therefore, contemporary Russia's "de-politicized" society, 
combined with the tradition of voting for individuals rather than 
ideas, does not rule out that ideology may play an important role in 
the forthcoming election campaigns. A party's success greatly depends 
on its ability to "catch the wave" and convey its ideas to voters.
(Translated by Arina Yevtikhova)


Poll: 48% of Russians trust Putin

MOSCOW. April 30 (Interfax) - Almost half (48%) of Russians trusted
President Vladimir Putin in April, down from 51% in March, according to a
poll conducted by the Russian Center for Public Opinion and Market Research
   The poll surveyed 1,600 citizens. 
   The number of respondents trusting Emergency Situations Minister Sergei
Shoigu dropped from 16% in March to 15% in April. Communist Party leader
Gennady Zyuganov's rating dropped from 18% to 13%. 
   LDPR leader Vladimir Zhirinovsky is trusted by 10% of Russians, down
from 11% in March. Around 8% trust Yabloko leader Grigory Yavlinsky, up
from 7% in March. 
   Presidential envoy to the Northwestern Federal District Valentina
Matviyenko and Prime Minister Mikhail Kasyanov are each trusted by 8% of
respondents. Duma deputy speaker Irina Khakamada and president of the
Chamber of Commerce and Industry Yevgeny Primakov are trusted by 7% of
Russians. At least 6% of respondents trust Kemerovo Governor Aman Tuleyev. 
   Some 20% of the respondents distrust all Russian politicians. 
   Putin's activities were approved by 73% of respondents, while 24%
disapproved of them. 
   Kasyanov's work was positively assessed by 38% and disapproved by 51% in
April, compared to 39% and 49% in March. 
   The overall accomplishments of the government were positively assessed
by 36% in April, up from 30% in March, and negatively assessed by 56% in
April, down from 63% in March. 


April 30, 2003
Life Cannot be Worse in Russia! 
It is important to regulate discipline, to stop putting the blame on some
external enemies

Scandalous assassinations, stealing and arbitrary bureaucrats, the same
flourishing of shadow economy are still evident. Is it possible to
establish order in the country so that people could be not afraid to go out
of doors in the evening? PRAVDA.Ru correspondent discusses the issue with
Russian parliament deputy Yaroslav Shvyryayev. 

What should authorities do first to make not only ordinary people but
deputies feel safer? I certainly mean the recent killing of deputy Sergey

As for this problem, I have a point of view of my own. I think that we
should seek criminals among people interested in political disorders in the
country. Killings of this kind are not just an attempt to scare the high
law making authorities; that was also done with a view to scare the
military block and to exert direct pressure upon the president. Right after
the killing of deputy Sergey Yushenkov some people started saying that it
was necessary to dismiss FSB, the Ministry for Internal Affairs and the
Prosecutor General. However, it is right now that we see measures are taken
in connection with machinations with fish and woods; a sanction was issued
for holding investigations in the executive authorities. Some results were
achieved in connection with the killing of Magadan governor Vladimir
Tsvetkov and with machinations implicated with the crime. 

People in ancient Rome said: "Es fecit cui prodest" (which means, look for
someone for whom it is advantageous). First, it is an open secret that
leaders of military structures are appointed by the president. Second, they
are the support; third, they are also the political support. Let's take
Minister for Internal Affairs Boris Gryzlov. A reaction immediately
followed after his harsh statements concerning order establishment in the

I am often asked when life will be better in the country. I think that our
life won't be worse, it's for sure. The mechanism of state management is
very much rusty, lots of different methods and measures are to be applied
to improve the situation. It is important to regulate discipline, to stop
putting the blame on some external enemies, it's time to learn to work. The
crisis is basically surmounted. The government has started gradual
fulfillment of its obligations to those who are on service, although some
problems, the housing problem for instance, are still unsettled. Slight
growth has been also registered in agriculture, it made up 24% within the
past three years, but it is necessary to achieve better results in the
rural area. I understand that everyone must work hard. 

Who is letting the president down with reforms of this kind?

It is a fault of the department responsible for social problems. The matter
of the fact is that finance is available at some other vice-premier; so,
realization of plans requires coordinated actions. If a governmental
official cannot cope with the responsibilities, he must resign. 

Do you think that the prime minister manages his responsibilities? It
sometimes happened so that he missed sessions in the parliament.

First of all, the political culture now leaves much to be desired. Our
ministers can also miss sessions explaining that they are busy. It is often
said that there is no scheme of government management. This scheme, the
mechanism of governmental work, the hierarchy of ministries and the
principle of subordination must be confirmed in the legislation. A special
mechanism of appointing people to governmental positions must be developed.
This work should be also performed on the order of document presentation.
At  present, there are three institutions that can dismiss the prime
minister: the president, the prime minister himself and the State Duma. 

Who is actually holding authority in the country?

Certainly, the president holds the maximum of authority. He is the
commander-in-chief, he is considering the issue of appointing people to
governmental positions. 

Probably, the influence of the "Yeltsin's Family" and oligarchs filling
their pockets with money of the state is still great?

This may be. Sometimes they ask, why the president passes this or that law.
I would ask a reverse question: do we need this Duma that passes such laws?
Why do people shift all the blame onto one man? As we know from history,
people used to shift the blame on the tsar Ivan the Terrible, Vladimir
Lenin and Joseph Stalin. Today we have democratically elected Duma. Why
doesn't it assert its position when it thinks that some law is bad for
people? If a businessman lobbies his interests and says this or that law is
to be passed to allow him not to steal but to increase profits legally, it
is clear that he wants to earn money with legal methods. Probably this is
one of elements of progress. But president and the State Duma mustn't
pursue the interests of this single businessman, they must consider
interests of the state first of all. It is important to consider every
intention of the lobby, to what extent it is useful for the whole state and
if it is favorable for ordinary people. It is important to count social and
economic consequences of such laws against the background of the domestic
and foreign policies. This is what is called the governmental way of
thinking. In cases when we see ministers expedite some lobby interests,
they demonstrate not the governmental way of thinking but merchant

Is it right to make up the staff judging by devotion of people?

Many men, many minds. The principle of personal devotion is one of the
basic elements of making and arrangement of the staff. I mean that a man by
your side mustn't have a single intention to stab you in the back. Remember
the time after the 1996 elections when lots of people from Yeltsin's milieu
abandoned him. Some came to business, others created their institutes. The
people retreated into the shadow,  they show up only now from time to time
on TV. The used the president. The principle of personal devotion is the
basic characteristic for appointment of presidents in American
corporations. Knowledge can be taught, which cannot be done with devotion.
The management principles are unified.  

What is your opinion about corruption in the country? Is it on the decline?
Lots of tragic accident has happened recently: hostage taking, killing of
deputy Yushenkov, but none of the governmental officials quitted the post. 

The problem of personnel training and disbalance of management are
certainly evident. I say once again that the system of government
management must be approved legislatively. The system of administrative
personnel training undergoes its perfection process. 

Yaroslav Shvyryayev was interviewed by
Ilya Tarasov

Jamestown Foundation
Russia and Eurasia Review 
Volume 2, Issue 9 
April 29, 2003 

By Tomila Lankina 
Tomila Lankina has a PhD Phil from the University of Oxford and is a Senior
Research Fellow at the Institute for the Social Sciences, Humboldt
University, Berlin. 

Local government is an important but often overlooked aspect of Russia's
transition to democracy. Over the past decade, municipal authorities in
Russia have been buffeted by the pressures of state budget cuts on the one
side and the ambitions of regional governors and republic presidents on the
other. Local authorities have been plagued by problems relating both to
confusing and excessive functions and to a poorly regulated and weak
financial base. 

Initially, President Vladimir Putin was ambivalent with regard to local
government, but over the past year it has emerged as a major plank in his
broader plan for institutional reform of the federation. After a year of
work conducted largely behind the scenes, a commission headed by Putin's
special appointee, Dmitry Kozak, has finally produced a comprehensive new
draft law on local self-government (LSG). The draft has already gone
through a first reading in the Duma, and is expected to win passage with
few obstacles by the end of this spring's legislative season. But although
the president was quick to describe the law as "revolutionary," and as a
step toward "genuine" local government, the draft is open to criticism for
its centralizing thrust. 

Local authorities may well benefit from the reforms should they be
effectively and impartially implemented. However, some aspects of the
reform, the manner in which it is being carried out, and indeed, Putin's
overall statist-centralist leanings, may also work against the development
of efficient and democratic local governance. 

The draft law is ostensibly aimed at extricating LSG from the quagmire of
jurisdictional and functional confusion fostered by the law on local
self-government that was passed under then-President Boris Yeltsin in 1995.
The law mandates the creation of new types of municipal formations--with a
clear division of authority between them--and also a new set of scaled-down
functions. The previous legislation allowed for a great deal of variety; it
was assumed that some tiny villages would perform functions as complex as
those of large cities. 

The new law clearly distinguishes between settlements (poseleniya),
municipal counties (munitsipalnyye rayony), and city districts (gorodskiye
okruga), and mandates the establishment of local units at all three tiers.
It details not only their internal institutional makeup, but also includes
criteria for setting up new territorial and administrative boundaries. The
settlement level in particular, which suffered greatly after Yeltsin
ordered the disbanding of local soviets in October of 1993, is given much
emphasis in the reformers' rhetoric. They use the settlement level as an
illustration of the democratic and grass roots logic of empowerment that is
driving their efforts. 

However, the reformers' preoccupation with the rights of local governance
for those dwelling in smaller settlements does not appear to extend to
residents of larger and more economically and politically important county
and city districts. Unlike the settlement level, which is entitled to a
locally elected municipal head, the residents of counties and city
districts will not have full control over the election or appointment of
their chief executives. They may have popularly elected mayors, but the
functions of these mayors will be ceremonial, akin to those of the English
Queen. This is an analogy used by Kozak himself. The real power will lie in
the hands of the "city manager," whose appointment and indeed dismissal
will be partly determined by regional level assemblies and governors. 

The residents of Moscow and St. Petersburg are also significantly
constrained in their right to local governance. In contrast to the
settlements, where the establishment of an elected LSG is mandated, the
draft law contains only vague references to the "possibility" of having
sub-city district municipal institutions in these two cities. 

The outside reader may be perplexed by the reformers' preoccupation--one
that seems almost Tolstoyan or Slavophile--with democracy in Russia's dying
villages, while they simultaneously deprive millions of inhabitants of the
economically and politically more significant county and city levels of
this right. The fact that these restrictive provisions crept into the law
is obviously a political concession to the regional governors and to the
presidents of the ethnic republics. Deprived of many of their powers in the
federation as a result of Putin's earlier center-regional reforms, the
regional heads will now have significant and institutionalized prerogatives
vis-a-vis the lower "third level of authority." 

Admittedly, many of the provisions in the draft law create a framework for
local government that is financially more stable, and as such have been
welcomed by municipal practitioners. Rather than being dependent on
annually changing federal and regional tax shares, for example, LSGs will
now be entitled to a fixed proportion of the relevant taxes. This, in turn,
should facilitate long term local budget and developmental planning. LSGs
will also be relieved of the burden of unfunded federal mandates, and of
such costly functions as education and healthcare, over which they will now
lose some of their authority. It will become illegal to make municipalities
pay for populist federal social legislation for which no adequate funding
is provided. 

Currently, as many as thirty-seven types of various social subsidies or
privileges (lgoty) exist, many of them covering almost the entire
population of a given municipality. According to some estimates, the total
amount of hypothetical social subsidies, when added together, would amount
to 6 trillion rubles (US$200 billion), while the consolidated budget of the
Russian Federation as a whole for the year 2002 was only 2.4 trillion rubles. 

In the future, however, LSGs will have an even smaller local tax base, and
much of their revenue will come from targeted regional and federal grants.
Amendments made earlier to the tax code have already left LSGs with only
five taxes, which togther generate very little revenue. The five are the
personal income tax, inheritance, land, advertizing, and license fees. Much
of the control over revenue flows will now be concentrated at the regional
level. The funding that goes to municipalities will be for the fulfillment
of concrete federal or regional mandates, and the localities will have
little freedom in deciding how the money is to be spent. 

The financial and institutional dependence of LSGs on regional authorities
will likely encourage politically motivated reprisals against
municipalities perceived as "disloyal" to the regional regimes. The
regional chief executive and legislative organs will now have extended
powers, including removing local chief executives, disbanding local
councils, or setting up temporary regional administrations in the
localities--albeit largely subject to the decision of an "appropriate
court." The extensive list of causes for which the LSGs may be penalized
ranges from such commonly occurring situations as a local government's
indebtedness exceeding 30 percent of its own budget revenues in a given
year, to a curious reference to the "mass violation of rights and freedoms
of person and citizen, threat to life, health and safety of citizens." Also
listed is the even more curious possibility of a town adopting a decision
that poses a "threat to territorial integrity, national security, defence

The stress on constraining local government from above goes along with a
dismissal of the role of bottom-up democratic forms of accountability and
control, most notably the ballot box. Such an attitude is characteristic of
political discourse in Putin's Russia in general, and of the rhetoric
surrounding the Kozak reform in particular. Thus, in numerous interviews
Kozak presents the elected mayor as an unwise spendthrift who will waste
public money to score cheap points with the electorate by "supporting a
local football team" or will seek personal enrichment by buying "volgi i
mersedesy" (that is, Volga and Mercedes automobiles). This elected
"politician" is then juxtaposed to the appointed city manager, who will
"theoretically dispose more wisely of the money." 

The very nature of the way the reform is being carried out reflects an
unquestioning faith in the wisdom of the bureaucratic state in imposing its
will on a largely passive society. The secrecy with which the Kozak
commission has been surrounding its work for a year would make one think a
classified document concerning matters of top national security was being
prepared, and not a law dealing with fundamentals of grass roots rule. The
scant information made available with regard to the law has usually come
from interviews that Kozak himself gave. 

The first official draft of the law was made public in October 2002, after
which it was hastily rushed through the Duma. Of the twenty-two members of
the Kozak commission, only two were municipal practitioners, the remainder
being mostly federal or regional officials. The few Russian academics who
were on the commission expressed frustration over their failure to
influence the reform, and some of them resigned. The most concerned
party--the municipalities themselves--had very little input into the
reform. No pilot projects were tested in the localities, and, aside from a
few public relations events, where the LSGs felt their role was to rubber
stamp the proposals, no effective mechanisms for soliciting municipal
opinions on the reform were put in place. 

Having been compromised in their "impartiality" from the very start, and
containing many overly centralizing provisions, the formal and legal
aspects of the reform package are already dampening any optimism about the
reform that might have existed. The package also leaves much scope for
abuse of power vis-a-vis LSGs by both state and regional levels of
authority. Should the reforms falter, it is Russian society at the grass
roots level--which was hardly consulted about the new legislation--that is
likely to pay the price. 


Chicago Tribune
April 30, 2003
Russian aid to Chechnya lost to graft
Endemic corruption siphons millions
By Alex Rodriguez
Tribune foreign correspondent

MOSCOW -- Russia handed the officials it appointed to govern the breakaway
republic of Chechnya $6.4 million last year to put 2,700 new computers in
classrooms, a giant leap for an education system battered by nearly a
decade of war.

Then the boxes were opened. Inside were computer terminals, but they dated
from 1981--essentially useless. No attempt was made to recover the money.
No one was ever charged.
"Even when it is known who is guilty, no one is punished," said Malik
Saidullayev, a Chechen businessman who has had access to documents about
the computer purchase and numerous other cases like it.

Moscow has poured millions of dollars into restoring Chechnya, but little
evidence exists of that money actually being used.

Miles of city blocks in Chechnya's capital, Grozny, are lined with empty
buildings destroyed by shelling, six years after Moscow began setting aside
money to rebuild them. The republic's school system remains crippled by a
dearth of safe buildings and supplies. More than 400,000 Chechens who are
able to work are unemployed, and 280,000 are homeless.

In 1994, Russian media began branding Chechnya a "black hole" for
government funds. Nine years later, the label sticks.

Much of the money earmarked for restoration of Chechnya winds up in the
pockets of wily Chechen businessmen and corrupt authorities in the republic
as well as in Moscow. Russian auditors examining Chechnya's restoration
finances have documented the theft or misuse of more than $33 million over
the last two years.

"At best maybe 8 to 10 percent of the money allotted for the restoration of
Chechnya is actually visible," said Aslambek Aslakhanov, a Chechen and a
member of the Duma, Russia's lower house of parliament. "The rest is

The problem is one of the biggest obstacles to resurrecting Chechnya from
the rubble of war, and it is severe enough that Russian President Vladimir
Putin pointedly referred to it during his televised address to Chechens
before the province's March 23 constitutional referendum.

"Many problems are emerging in the course of restoration work because of
red tape and corruption," Putin told Chechens during his March 17 address.
"I know there are serious questions to the federal government as well as to
the [Chechen] republic's administration in connection with this."

Years and years of theft

Corruption has undermined the restoration of Chechnya since 1996, when
Russian troops ended a two-year effort to quell Islamic separatists
fighting for the province's secession. In the next three years that
Chechnya had de facto independence, millions of dollars that Moscow sent to
Grozny disappeared amid the banditry and chaos that doomed the republic's
separatist leadership.

The war resumed in 1999 when Chechen guerrillas invaded the neighboring
province of Dagestan in hopes of creating a larger Islamic state. While
Russian troops have remained in Chechnya ever since, Moscow has tried to
portray the war as all but over and turned its focus to rebuilding
Chechnya's infrastructure and economy.

Two vital building blocks to that recovery, restoration of the republic's
housing and its schools, have become the easiest and the ripest targets for
corrupt businessmen and politicians to ply.

In 2001, for example, contractors hired to rebuild homes and apartment
buildings across Chechnya fraudulently inflated their prices 70 percent or
more, robbing Chechen restoration projects of $2.6 million, according to a
report compiled by the Russian Audit Chamber.

In many instances, corrupt Chechen government officials double-billed
Moscow for housing restoration projects. In another ploy, builders who are
awarded housing construction contracts scour Chechen cities and villages
for newly built homes and approach the owners with a bribe.

$200 on the side

"They come to the owner of a sound house and say, `We'll give you $200 if
you say we built this house for you.'" said Aslakhanov. "Two hundred
dollars is a lot of money in Chechnya, so many people agree to this."

Documents relating to the restoration of schools are routinely fabricated,
according to the Audit Chamber's 2001 audit of Chechen restoration funds.
At times, Chechen officials hired contractors to rebuild schools without
requiring "any project documentation at all," the audit stated.

Embezzlement and fraud taints virtually every aspect of restoration, from
the rebuilding of gas, power and water supply lines to the reconstruction
of industry. Even athletics isn't immune: In 2001 the Chechen government
billed Moscow $141,500 for uniforms for 12 soccer players, or about $11,800
a player.

"Every Chechen understands that money is being stolen, but they also
realize they are hostages to this situation," said Saidullayev, the Chechen
businessman who heads the pro-Moscow Chechen State Council and is eyeing a
run for the republic's presidency next spring. "There is little they can do."

Despite its poverty, Chechnya has one steady source of revenue: oil.

Chechen oil fields have been tapped since 1893 and have always been the
backbone of the republic's economy. Chechnya is supposed to get back nearly
half its oil revenues to help fund restoration.

But the Russian newspaper Nezavisimaya Gazeta recently cited government
figures that stated that during the first seven months of 2002, the Chechen
restoration effort had received just 2 percent of the province's own oil
revenue. Last year oil exports in the province amounted to $235 million.

Audit chamber spokesman Eduard Krustkaln said much of the corruption would
disappear if the money Moscow sent to Chechnya for restoration was
administered by a single government body instead of the 26 ministries
supervising the process now.

Kremlin must act

Aslakhanov agrees but he adds that there has to be a clampdown on
corruption, and it has to come from the Kremlin.

"The prosecutor general's office and the Federal Security Service have
plenty of material on the misuse and theft of money," Aslakhanov said.
"When I've spoke with them, they say, `Yes, we do have the material, but we
don't have the orders yet to start an investigation.'"


Business Week
May 5, 2003
From Russian Oligarch to Oil Kingpin 
Suddenly, one tycoon is sitting atop a giant producer 
By Paul Starobin in Moscow
In an industry and a country equally smitten with size, the merger between
Russia's two fastest-growing oil producers, Yukos and Sibneft, is surely
one for the history books. Newly created YukosSibneft Oil Co., with a
market capitalization of $35 billion, will rank as the world's
fourth-largest oil producer, with current output of 2.3 million barrels per
day. It will also be the third-largest holder of oil and gas reserves,
behind Exxon Mobil Corp. and Royal/Dutch Shell Group. A privately owned
Russian major, boasting production costs half those of ExxonMobil, has
arrived on the world oil stage -- little more than a decade after the
collapse of the Soviet Union and in defiance of predictions that the
nation's infamous oil oligarchs were too fractious to pool together the
holdings they snagged in the murky privatization auctions in the 1990s.  

At a tactical level, the deal can be seen as a strike by Mikhail B.
Khodorkovsky, the 39-year-old chairman of Yukos, Russia's second-biggest
oil producer, to acquire No. 5 Sibneft before covetous Western oil majors
did. His courtship began in earnest in February, after Anglo-American
energy giant BP PLC hooked up with Moscow-based Tyumen Oil Co. (TNK) to
take a 50% stake in a newly created Russian oil major, TNK-BP. Eager to
match BP's play in one of the world's last remaining underdeveloped energy
patches, competitors Royal/Dutch Shell and TotalFinaElf began pursuing
Sibneft, according to Moscow industry sources. Both Shell and Total
declined to comment.

But foreign oil ventures in Russia tend to move like molasses, with
Westerners understandably skittish about the country's still-perilous
business climate. In contrast, Khodorkovsky, who had explored a merger with
Sibneft back in 1998, was able to pounce. The bargaining ended with Yukos
agreeing on Apr. 22 to pay Sibneft's core shareholder group, led by
business baron Roman Abramovich, $3 billion in cash plus sufficient shares
in YukosSibneft to give the group a stake of more than 25%. Slated to
become CEO of the company, Khodorkovsky, a onetime activist in the
Communist Youth League, now stands as the undisputed king of Russian

Not that he won't be challenged. With this deal done, YukosSibneft and
TNK-BP are likely to compete for smaller players. "This deal is a sign for
other Russian oil companies to think about a merger," says Mikhail Fridman,
chairman of TNK-BP.

YukosSibneft, with plans to devote $2.9 billion to capital expenditures
this year, will certainly have the resources to pursue energy ventures
outside of Russia. But the company's main competitive advantage lies at
home. YukosSibneft will be well positioned to bid on state-held licenses
for the vast tracts of undeveloped fields in East Siberia and elsewhere.

The new company plans to boost oil production by at least 20% annually.
"The big growth potential of YukosSibneft is here, in Russia," says Moscow
investment fund manager Mattias Westman of Prosperity Capital Management
Ltd., a holder of shares in both Yukos and Sibneft. The market seems to
like the deal: Yukos shares rose 8% in trading after the merger's

Even as he burrows deeper into Russia's stores of black gold, Khodorkovsky
will be looking for more export routes out of the country. The existing
pipeline network operates at 99% capacity, limiting Russian oil exports to
4 million bbl. per day. A likely top priority for YukosSibneft is building
a pipeline to the port of Murmansk that would sharply reduce the cost of
transporting oil to the U.S. For Russia, "the most important relationship
is with America," Khodorkovsky told BusinessWeek in March.

For Western majors unhappy that Yukos got to Sibneft first, there may still
be the possibility of a strategic partnership with the new Russian titan in
a year or two. Khodorkovsky says he wants to retire from the oil business
altogether by 2007, and as this deal shows, he is hardly adverse to bold
plays. For Russia's most dynamic industry -- and its most visionary tycoon
-- these are early days. 


WPS Monitoring Agency
April 30, 2003

     The past week has seen an announcement of the merger of the YUKOS 
and Sibneft oil companies, as well as widespread anticipation of 
changes in the structure and membership of the Cabinet. This has 
prompted a new wave of media discussion about the relationship between 
business and government.
     [Kommersant-Vlast] magazine was quick to do the math: 
YUKOSSibneft, formed as a result of the merger, could well claim the 
title of a state within a state. Although this new "sovereign state" 
would only rank 172nd internationally on population (YUKOS has 110,000 
employees, Sibneft has 90,000), its GDP would rank 77th (the combined 
total revenues of $13 billion a year would put it somwhere between 
Bulgaria and Equador). And in terms of GDP per capita ($65,000 a 
year), the oil empire would be far ahead of any nation in the world, 
including the current leader, Luxemburg ($43,000 a year). This is not 
surprising: the YUKOSSibneft "state" would rank twelfth on oil 
reserves (2.64 billion tons), ahead of Algeria and slightly behind 
     Actually, even in its present capacity the company holds a place 
of honor: ranking first internationally in terms of oil reserves, and 
fourth on oil production. Moreover, says [Nezavisimaya Gazeta], the 
product of the merger has every chance of becoming the world's largest 
oil company on both these indicators in future.
     Leonid Mirzoian, an analyst with Deutsche Bank, told 
[Nezavisimaya Gazeta] that YUKOSSibneft will stand out among the 
world's other leading oil companies primarily because of its double-
figure growth rate (around 20% a year).
     Obviously, this giant has now taken the lead in the Russian oil 
sector. It owns six refineries in Russia, the Mazeikiu Nafta refinery 
in Lithuania, stakes in the Moscow and Yaroslav refineries, a stake in 
the Mozyr refinery in Belarus, and 2,500 gas stations.
     [Nezavisimaya Gazeta] reports that the president of British 
Petroleum-TNK described the formation of YUKOSSibneft as an 
outstanding event: "The creation of such a company is evidence that
Russia is entering the global economy."
     The [Vremya Novostei] newspaper reports that once the deal is 
complete, the new company will account for 29% of Russia's total oil 
production. The new company's president - "Mikhail Khodorkovsky, who 
couldn't stop smiling throughout the presentation" - says that "the 
new industrial giant, with its substantial production and financial 
capacities, will be able to operate even more efficiently"; and this, 
in turn, will facilitate "the achievement of our strategic goal - to 
become a leader in the global energy market."
     However, [Vremya Novostei] cautions that there's a long way to go 
until the merger is complete, and it's hard to say whether that will 
ever take place. Even back in 1998, during the first attempt to unite 
these companies (under the name of YUKSI), much was said about the 
"different ways of thinking" among the teams of Mikhail Khodorkovsky 
and Roman Abramovich. Back then, "a source close to Boris Yeltsin" 
explained to [Vremya Novostei]: "Abramovich and Shvidler are aiming 
for financial effectiveness, while Khodorkovsky focuses on industrial 
performance. They've tried to work together, and have come to 
understand that it's impossible."
     [Vremya Novostei] goes on to note that as yet it's hard to say 
whether the present Kremlin administration will move to exacerbate 
potential differences between participants in the deal. One thing is 
clear: "This trend of oligarchs selling their businesses (the TNK-BP 
deal, the YUKOS-Sibneft deal), within a year of the elections, cannot 
fail to cause concern in the Kremlin." Needless to say, this gain in 
strength for Mikhail Khodorkovsky clearly disrupts the "balance of 
equidistance" which Vladimir Putin has worked so hard to keep in 
     Yulia Latynina, an observer with [Novaya Gazeta], writes: "At the 
deposit auction in 1995, Sibneft was bought on behalf of Boris 
Berezovsky. Now it belongs to Roman Abramovich." However, many believe 
that Boris Berezovsky still remains the company's co-owner. Rumor has 
it that "one of the influential St. Petersburg groups" even approached 
the president, asking him to prevent the YUKOS-Sibneft deal from going 
through. Latynina asks: What really happened to Berezovsky's stake in 
     There are three possibilities. Berezovsky might have sold his 
shares: "At least he would have received some money - otherwise, he 
would have lost everything." According to another theory, the shares 
might have been transferred to a dummy figure. A recent demonstration 
of this kind of thing was seen at the "Novye Izvestia" newspaper, when 
Oleg Mitvol suddenly declared that he was the sole owner of the 
company, rather than managing a stake on behalf of Berezovsky. 
Something similar may have happened in the case of Sibneft.
     Finally, the third possible version of events - the one 
maintained by the St. Petersburg people and Berezovsky himself: 
Berezovsky still remains a co-owner of Sibneft.
     In any event, says Latynina, this incident is clear evidence that 
"the 'maturing Russian business community' does indeed wish to focus 
on business as such, rather than politics."
     This was once the issue of contention betwen Abramovich and 
Berezovsky: Abramovich wanted to focus on business, while Berezovsky 
clamed that "politics is business". According to Latynina, "subsequent 
events have shown that Abramovich was right". As a rule, those who 
play poker with the state come to a bad end. The shares owned by the 
once-omnipotent Berezovsky in Sibneft, the company he created, 
vanished from the register of shareholders "as if they had been 
recorded in invisible ink".
     According to [Yezhenedelnyi Zhurnal], what sets Mikhail 
Khodorkovsky apart from other major players in Russian business is one 
important detail: "He has never been involved in the media industry." 
Not even when "most of his fellow oligarchs failed to resist that 
     In the 1990s, major finanical-industrial groups acquired media 
assets in the hope of "corresponding with the regime" via those media. 
That was indeed the case during the Yeltsin era, says [Yezhenedelnyi 
Zhurnal]. However, the situation changed on December 31, 1999. 
Nowadays, the media-owning oligarchs can only count on having some 
"general influence".
     Mikhail Khodorkovsky himself considers that the business 
community is far more influential now than it was in the Yeltsin era.
     In an interview with [Yezhenedelnyi Zhurnal], Khodorkovsky said: 
"We - business leaders, I mean - have a better understanding with 
Putin, since we belong to the same generation. For Yeltsin, we were 
like children - he cared about us, but he didn't really understand 
what we needed. Putin, on the other hand, clearly understands that the 
nation's prosperity depends on how well the economy functions, and 
recognizes our right to uphold what we view as advantageous for the 
national economy."
     The opinions of the head of YUKOS have now become even more 
important. Regardless of the merger's economic significance, media 
commentary has noted the importance of its political aspects.
     Sergei Korchagin, an analyst with Prospekt, told the [Gazeta] 
newspaper: "The new company will be worth over $35 billion. Neither 
the $20 billion Gazprom nor the $5.8 billion Russian Joint Energy 
Systems can compete. As a result of this merger, Khodorkovsky is 
gaining sove vast financial resources, enabling him to become a 
prominent figure in politics."
     This view is shared by another expert interviewed by [Gazeta] - 
Sergei Suverov, chief analyst with Zenit Bank. He said: "By uniting 
the administrative resources of Sibneft shareholders, who are known 
for their lobbying power with the government, Mikhail Khodorkovsky 
could pursue some fairly ambitious long-term goals. Of late, there has 
been much talk of his future career in politics."
     Some evidence of this may be found in the YUKOS decision to fund 
various political parties which have a chance of winning a substantial 
number of Duma seats.
     Fuel has been added to the fire by media reports that 
Khodorkovsky intends to retire from business four years from now (just 
before the first post-Putin presidential election).
     Khodorkovsky confirmed this in his [Yezhenedelnyi Zhurnal] 
interview: "Indeed, I would like to move away from day-to-day 
corporate management when I'm 45. That will be in 2007. By that time, 
I will have been working for 30 years - and I hope the company's 
growth will be stable enough to permit me to spend more time with my 
     [Yezhenedelnyi Zhurnal] ponders the question of what Khodorkovsky 
might really do if he quits business. Social and political activities? 
"But he is already directing tens of millions of dollars into 
promoting online education in Russia's schools, without much 
publicity." Charity work? "But he already supports Russia's largest 
charity foundation."
     Mikhail Berger, editor-in-chief of [Yezhenedelnyi Zhurnal], 
writes: "In principle, at his age, with his experience and his 
resources, he can do anything he likes. Presumably, that is exactly 
what is bothering people."
     Khodorkovsky's confidence that his business will continue to grow 
through to 2007 cannot fail to elicit respect. Most analysts these 
days are predicting an inevitable collapse of oil prices due to the 
outcome of the war in Iraq, and a consequent crisis not only in the 
oil sector, but in federal budget policy.
     If this collapse does happen, the government will be forced to 
give up on many social programs paid for by what is called "state 
spending other than interest payments". It's easy to imagine what the 
public response to that would be; and it wouldn't be favorable for the 
political prospects of any oil oligarch.
     Even now, radical left papers like [Zavtra] are by no means the 
only media talking about the need for a state policy on industry, and 
the redistribution of "natural resources rent", and even a review of 
the outcomes of privatization.
     The [Konservator] weekly says: "Remember what the electorate 
hoped for when Putin became president. The first point was Chechnya. 
The second was the fate of the oligarchs and lesser thieves." 
[Konservator] discusses the possibility of destroying "the caste 
system which has taken shape in Russia over the past 15 years or so, 
whereby a thief who has stolen billions becomes immune to any form of 
     [Konservator] takes issue with a statement by Gleb Pavlovsky, 
head of the Effective Policy Foundation: "We need reforms, not 
     Armen Asrian, author of the [Konservator] article, says it's hard 
to deny the first part of that statement - and that is precisely why 
it's impossible to agree with its second part.
     According to Asrian, reforms are impossible without restoring 
equality of all citizens before the law. And that, in turn, would 
inevitably lead to arrests: "Arrests among those who over the past 15 
years have come to genuinely believe themselves to be above the law."
     Asrian says Russia's major problem is that the people don't trust 
the government. In order to restore that trust, the regime must 
inevitably return to the results of privatization.
     This is primarily because "real market liberalism (as opposed to 
Komsomol-style liberalism) means that privatization has to be preceded 
by a process of denationalization." In other words, former "national 
assets" must be bought back from the people. "No one is likely to 
claim that Chubais's vouchers fulfilled this function."
     Moreover, it must be determined which state officials were to 
blame for privatization taking the "Komsomol-style" path (a clear 
reference to the "Komsomol business" of Khodorkovsky himself in the 
1980s, which enabled the present oil magnate to make his first 
fortune). And it must be determined which of the new property-owners 
have been guilty of systematic tax evasion.
     Asrian notes: "Quite possibly, the current regime won't have time 
to accumulate enough strength to carry out such a dangerous and labor-
intensive operation. Then the next administration will do it. But one 
way or another, it will have to be done."
     Implementing such a radical program would be likely to lead to 
civil war in Russia. And, as it frequently happens, the interests of 
the real participants in the conflict would be far removed from 
scrupulous pre-election assurances about concern for the fate of 
"ordinary citizens".
     In fact, this conflict - between state bureaucracy and free 
enterprise - has existed in Russia from the very start of the reforms, 
and has now reached a peak - fortunately, not in the form of all-out 
persecution of anyone and everyone.
     Liubov Tsukanova writes in [Novoe Vremya] magazine: "The 
processes currently underway among the bureaucratic class are 
described by many analysts as a catastrophe."
     When the package of laws on economic deregulation was being 
developed in 2000, it was assumed that the measures contained therein 
would be quite sufficient to ensure industrial growth and make the 
free-market economy "a guarantee that democratic institutions would 
grow stronger".
     However, the economic deregulation measures failed to work: 
research has shown that bureaucrats succeeded in fully retaining (even 
expanding) their opportunities to receive "status-based administrative 
rent" - in other words, bribes.
     The latest studies indicate that Russian bureaucrats make around 
$5-8 billion a year unlawfully. Their main revenue sources are 
registering companies, issuing licenses, and carrying out state 
inspections and oversight measures.
     [Novoe Vremya] says that all the major barriers to business 
development remain as they were; and if any barriers have been 
removed, new ones have been invented in their place.
     Big business is forced to pay up. Small and medium-sized 
enterprises are threatened with ruin. Taking legal action is futile - 
the courts are run on the same principles.
     Moreover, says [Novoe Vremya], some new negative trends have 
arisen: "In the past, those who set out on the warpath against the 
system faced the risk of bankruptcy; now the bureaucrats take over the 
businesses of their opponents."
     In short, the bureaucracy has now completely become the ruling 
class, and has no intention of surrendering power.
     [Novoe Vremya] says that most observers have fallen into deep 
pessimism over this phenomenon, and some have even taken up 
"pseudoscience fiction": proposals range from setting up special 
agencies for "civilized lobbying", to big business and the regime 
joining forces as a special alliance in the name of fighting the 
bureaucracy. [Novoe Vremya] calls the second option "the last hope of 
the liberals."
     In an article written for the [Moskovskie Novosti] weekly, Duma 
deputy speaker Irina Khakamada invites readers to compare the number 
of government bodies engaged in social services, health care, and 
welfare with the number of bodies focusing on "intervention in the 
economy". "The latter outnumber the former by an order of magnitude."
     Khakamada says: "At long last, we need to make a decision to get 
rid of 'excess government' - in other words, non-essential functions 
should be taken away from the bureaucracy."
     However, Khakamada believes that this cannot be done without 
special infrastructure to absorb the displaced bureaucrats. "These 
could be some sort of foundations, public councils, or lobby groups, 
for which society would find the resources." Unless this is done, the 
reforms will fail, says Irina Khakamada: "Resistance to them would be 
too great."
     According to Khakamada, Russia's problem is not that its 
bureaucrats are exceptionally bad; the problem is that they hold 
power. "In the West, the rules are set by civil society. And the 
bureaucracy only becomes harmful if it goes beyond the limits set for 
it. But in Russia, the bureaucrats make all the rules."
     What's more, as Khakamada emphasizes, the administrative reforms 
themselves are being held hostage by the bureaucracy - which has 
absolutely no interest in seeing them succeed, of course. Therefore, 
rather than reforms, we are seeing "institutionalized sabotage at all 
levels of government, and individual sabotage at the level of specific 
state officials."
     Khakamada says that fighting all that, at this stage, is futile. 
"All we can do now is shape public opinion in an appropriate way, keep 
up the pressure on the bureaucratic class, and make waves." Khakamada 
says these "waves" could prove to be the salvation of society: "We are 
approaching a period of low oil prices, so there is once again a 
threat of an economic crisis. Therefore, ineffective administration 
becomes a serious challenge."
     Yegor Gaidar - a co-leader of the Union of Right Forces, like 
Khakamada - considers that the impending oil crisis could even be 
beneficial for Russia, in a way.
     In an interview with [Argumenty i Fakty], Gaidar, head of the 
Transition Economy Institute, said: "Russia doesn't need oil prices to 
be at $30 a barrel. That would even be dangerous for Russia. It's 
dangerous for an entire economy to be dependent on unpredictable 
     Gaidar points out that the collapse of "Brezhnev-era prosperity", 
followed by the collapse of the USSR, was primarily connected with 
abnormally high oil prices - three times higher than they were before 
the war in Iraq. "What happened? Just at that time, we were competing 
with the United States in defense spending, planning to change the 
course of rivers, exporting Soviet-style government to Afghanistan. 
And then, when oil prices fell in the mid-1980s, it turned out that we 
couldn't afford to feed our own people."
     According to Gaidar, something similar has been taking place in 
Russia recently. "Forms of business other than the oil sector have 
been becoming unprofitable. Oil has been corrupting the economy, 
destroying its main support - secondary industry." The flood of petro-
dollars has also led to heightened expectations among the populace and 
legislators; there have been arguments over how the mega-profits 
should be distributed.
     Yegor Gaidar says that a decline in oil prices should help Russia 
sober up: "It would make foolish populism during the election campaign 
impossible." This would be good for the economy, and for politics. In 
Gaidar's view, it's more sensible to base policies on pessimistic 
     According to Gaidar, current grivances against the government (as 
expressed by the Yabloko faction, ally of the Union of Right Forces in 
the Duma) is entirely justified: indeed, there has been an obvious 
slow-down in reforms since the end of 2001.
     At the same time, Gaidar says the present brutal criticism of the 
government is due to simple pre-election populism, characteristic of 
Duma members: "They can't criticize Putin, after all. So it's off with 
Kasianov's head!"
     Many other papers share this view of Yabloko's motion for a vote 
of no confidence in the government.
     [Kommersant] notes that until now, such motions have been the 
hobby-horse of the Communists - but with elections approaching, all 
the Duma's parties have stepped up their criticism of the Cabinet. And 
yet Yabloko has been the first to raise the issue of a vote of no 
     Of course, Yabloko needs to collect the signatures of 90 Duma 
members in order for the vote of no confidence to go ahead. And 
there's not much chance of that.
     The [Gazeta] newspaper says: "Yavlinsky can only count on the 
leftists. The centrists haven't received any orders from the Kremlin 
to topple the government."
     [Kommersant] points out that Yavlinsky, unlike the Communists, 
has not confined himself to specific complaints against the 
government; he has accused it of having a flawed overall strategy. 
More precisely, he is accusing the government of being incapable of 
"resolving strategic questions connected with the nation's post-
industrial development," of "neglecting security issues," of lacking 
"substantial decisions in the fields of taxation, small business, and 
natural monopolies," of creating an abnormal investment climate, and 
so on.
     Worst of all, according to the Yabloko leader, the government has 
turned into a kind of "mini-parliament" - where clans are engaged in 
power-struggles with each other, thus "lacking the energy to get 
anything else done".
     "Even the United Russia party isn't satisfied with the 
government's performance," says Grigori Yavlinsky. He believes there 
is a fairly high chance that other parties will support the vote of no 
confidence: "Let's find out how the Duma majority behaves in relation 
to the government which it is criticizing so enthusiastically."
     Another prominent Yabloko member, Vladimir Lukin, put it even 
more succinctly: "We request all Duma members who are fully satisfied 
with the government's performance not to join us."
     However, according to [Kommersant], Yabloko's hopes are unlikely 
to be borne out; even if it does get the support of the left, this 
still won't ensure that a vote of no confidence motion is carried. 
"But the Yabloko party will gain at least two months of high 
publicity," [Kommersant] concludes.
     Yabloko is working closely with the presidential administration 
these days, so "no one in the goverment has any doubt that this chill 
wind is blowing from the Kremlin walls," says [Nezavisimaya Gazeta].
     This became all too obvious once United Russia started 
criticizing the government.
     However, there was no talk of a vote of no confidence, especially 
not a mere eight months before elections. Indeed, as [Nezavisimaya 
Gazeta] points out: "If a new government takes office in June, whom 
can United Russia criticize between June and December?"
     This is by no means a rhetorical question. Indeed, who could be 
offered as a target for the anger of voters who aren't happy with the 
existing state of affairs? Yavlinsky has clearly jumped the gun, "due 
to an ambitious desire to be first".
     Meanwhile, United Russia has found itself in an embarrassing 
situation: as previously noted, it can't support Yabloko. But if it 
opposes Yabloko's initiative, voters will come to believe that all the 
anti-government rhetoric of the centrists has been no more than a pre-
election propaganda bluff.
     Moreover, according to [Nezavisimaya Gazeta], Yavlinsky 
approached the Kremlin with more than the vote of no confidence idea; 
he also had some proposals about who might be included in the next 
Cabinet (these ideas, however, found no support).
     Apparently, the post of defense minister was requested for Alexei 
Arbatov, and the post of foreign minister for Vladimir Lukin. 
Yavlinsky himself is said to have been willing to accept the post of 
deputy prime minister in charge of the economy, while the post of 
prime minister was proposed for "another Yabloko representative 
associated with the private sector".
     [Gazeta] was even more specific: according to its sources, the 
post of prime minister could have been taken by "one of the senior 
executives of YUKOS".
     Whoever might that person be?
     In any event, despite all assurances from YUKOS that Yabloko - a 
party sponsored by the oil company - made this anti-government move 
all on its own, the regime may well take advantage of the situation.
     This reckless proposal for a vote of no confidence is unlikely to 
have any consequences for the government. However, according to 
experts consulted by [Gazeta], the Kremlin could well accuse Mikhail 
Khodorkovsky - who funds the Communist Party as well as Yaboko - of 
destabilizing the situation.
     [Gazeta] comments: "In the wake of the Sibneft-YUKOS merger, 
Khodorkovsky's positions have strengthened a great deal, and he has 
ceased to conceal his political ambitions. Under the circumstances, 
having this kind of leverage over him is very useful."
     Indeed, the elections - with all their party battles and 
publicity stunts - will come and go, and be forgotten. But 
Khodorkovsky will be around for a long time as head of YUKOSSibneft. 
At any rate, he will be there until 2007...
Mavra Kosichkina
(Translated by Arina Yevtikhova and Alexander Mazzucchelli)


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