SOURCE: The St. Petersburg Times
DATE: Issue #1048 (14), Tuesday, March 1, 2005
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TITLE: U.S. May
Inspect
Russian
Nukes
PUBLISHER: Staff Writer
TEXT: MOSCOW - U.S. officials might be granted unprecedented access to Russian military nuclear facilities by the end of the year for inspections that Moscow previously fiercely opposed, according to a document that was briefly posted on the Kremlin web site after last week's U.S.-Russia talks in Slovakia.
The document was replaced early Monday with a version excluding the paragraph about the inspections, and the Kremlin insisted that the original document had been posted in error.
The switch, which was first reported by Kommersant, raises questions about what agreements President Vladimir Putin and U.S. President George W. Bush may have reached during their closed-door meeting Thursday. Speculation has swirled in some circles that the two leaders might have sealed security or nonproliferation deals that were not made public.
The document in question, a copy of which was provided to The Moscow Times by Kommersant, is titled "Joint Russian-American Statement on Nuclear Security Cooperation" and contains a number of typographical errors.
The new version on the Kremlin web site is error-free and nearly identical to an English-language version posted on the White House web site after Thursday's meeting.
"The appearance of the text that Kommersant referred to was the result of a computer error," a Kremlin spokesman said on condition of anonymity.
He said, however, that he was not ready to say whether Russia might allow on-site inspections of its military nuclear facilities under an agreement that is not reflected in the joint statement.
The paragraph missing from the new version said the Defense Ministry should determine by July 1 which nuclear sites need upgraded security systems and that visits to those sites and nuclear facilities managed by the Federal Nuclear Power Agency should begin before December.
It is not clear from the text whether the sites would be visited by joint U.S.-Russian teams of inspectors or only by Russian officials. Kommersant suggested in an article Monday that the inspectors would include Americans.
"Kommersant is making a mistake by jumping to the conclusion that the text of the joint agreement implies inspections of Russian nuclear facilities by U.S. officials," the Kremlin spokesman said.
Defense Ministry officials did not return requests for comment Monday.
Federal Nuclear Power Agency chief Alexander Rumyantsev defended the security measures at his agency's facilities Monday. "The security and protection systems at our nuclear sites are the best in the world, not all counties have something like them," he told reporters, Interfax reported.
According to the joint nuclear statement, Rumyantsev and U.S. Secretary of Energy Sam Bodman will head a group overseeing joint nonproliferation efforts. It also says the United States and Russia will speed up efforts to upgrade security at Russian nuclear facilities and aim to have the sites fully secured at the new levels by 2008 - ahead of an earlier target of 2012.
In addition, the two countries will work together to develop and share "best practices" and "security culture" at nuclear facilities; develop low-enriched uranium fuel to use in research reactors; and ensure the return of spent high-enriched uranium fuel from the U.S.- and Russian-designed research reactors in third countries.
Securing Russian nuclear material remains a priority for Washington, and Congress has earmarked billions of dollars to strengthen the security infrastructure of Russian nuclear sites after the Soviet collapse. The ongoing struggle against terror and the growing nuclear ambitions of so-called rogue states have fueled U.S. fears that poorly guarded fissile materials might eventually wind up in the wrong hands.
Ivan Safranchuk, head of the Washington-based Center for Defense Information's Moscow office, said Moscow is playing a dangerous game by accepting up to $1 billion per year from the United States to safeguard its nuclear facilities but strongly opposing U.S. requests to visit the sites. "Russia does not want look like a giant nuclear waste dump in the eyes of its Western partners. But by accepting the U.S. money to upgrade security at its nuclear sites, Russia seems to be acknowledging that it cannot handle the problem without outside help," he said.
This behavior will strengthen the belief of some U.S. politicians that Russia is irresponsible and needs stricter controls, Safranchuk said.
Russia allows U.S. inspectors to visit nuclear facilities that both countries have agreed to destroy as a part of a threat reduction initiative.
The Defense Ministry also lets U.S. monitors into a model nuclear storage site in Sergiyev Posad outside Moscow, where it demonstrates security systems that it says are used at all nuclear facilities, Safranchuk said.
He said Russia's reluctance over inspections has little to do with fears about the quality of the facilities' security or possible complaints that U.S. money meant for security was spent improperly. "It is a strategic decision: Russian officials believe - and rightfully so - that if they allow inspectors once, they will never get rid of them," he said.
TITLE: Journalists Who Vanished in Chechnya Recalled
PUBLISHER: Staff Writer
TEXT: Ten years after a city newspaper photographer and his reporter colleague disappeared without trace in Chechnya, an exhibition celebrating the men's work will open Wednesday in the Yelagin Palace.
The exhibition called "Peace and War" presents about 40 photographs by Nevskoye Vremya photographer Felix Titov from conflicts in the former Soviet Union, including North Ossetia, Abkhazia, Georgia, Azerbaijan, Nagorny Karabakh.
Titov and Maxim Shabalin, who was Nevskoye Vremya's political reporter, went to cover the war in Chechnya on Feb. 26, 1995. They were due to return on March 3 of that year.
"We must not forget them, not only because they were our colleagues, but because both men had creative personalities, and the time has come to reveal their talents," said Nika Kukovitskaya, organizer of the exhibition, who worked together with the journalists at Nevskoye Vremya.
The pair were the first Russian journalists to go missing in the first Chechen war, which Boris Yeltsin's government launched against the separatist republic in December 1994.
From 1994 to 2003 at least 28 journalists, both Russian and foreign, were killed in Chechnya, and a few dozen have gone missing there, Boris Timoshenko, head of the monitoring service at Glasnost Defense Foundation, said Friday in a telephone interview from Moscow.
In 1995-1996, Nevskoye Vremya sent nine search teams to Chechnya to find the journalists. However, investigations conducted by the paper's reporters, the missing men's friends and relatives, and human rights activists could not pin down what happened to them.
One team scoured the republic from north to south, while another traveled from west to east.
There were several theories about how the journalists could have been killed, but everyone hoped that they had been taken hostage. The bodies of Titov, 36, and Shabalin, 27, have never been found.
Alexander Gorshkov, who is deputy head of the Agency for Journalistic Investigations and knew the journalists, also went to Chechnya with one of the search teams. On Friday, he said it was very hard to figure out exactly what the fate of the missing men was.
Gorshkov said another group had met witnesses near Achkoi-Martan in Chechnya who said that two men, who resembled Titov and Shabalin, had been taken off a bus by armed Chechens.
A little later, the journalists' bodies had been seen beside the road, the witnesses said.
"We gathered lots of information, talked to people associated with Aslan Maskhadov [who led the separatists' military arm and was later elected president], but we still didn't find the journalists," Gorshkov said.
Meanwhile, St. Petersburg resident Deni Teps, who is head of the World Chechen Congress and who knew Titov and Shabalin, said he was "100-percent sure that it was not Chechens, who killed the journalists."
Teps alleged that the Russian military, who "were irritated by presence of journalists in Chechnya," were to blame for the disappearance of the journalists.
"Both Felix and Maxim were against the war in Chechnya, and therefore Chechens could not have any hostile feelings towards them, especially because many Chechen field commanders were aware of their anti-war stance," Teps said Friday in a telephone interview.
Chechens traditionally have very friendly feelings towards people from St. Petersburg, or Leningrad as it was previously known, he added.
Teps, who headed St. Petersburg's Chechen Diaspora in 1995-2004, said that when the search teams went to Chechnya he had contacted his sources in the republic for information and asking them to assist the searchers.
During one search mission, in which Shabalin's father Georgy participated, Sergei Ivanov, a friend of the missing men and himself a journalist, disappeared after he went to a Chechen village on his own.
Kukovitskaya said Titov had a rare talent, not only for news photos but also for art photography. His pictures of events in Russia are classics of world photography, she said.
Among the pictures to be displayed in the exhibition, are Titov's famous photo of a tired Russian soldier in Abkhazia, an image of a public meeting in Palace Square addressed by former St. Petersburg mayor Anatoly Sobchak, and a photo of an elderly woman with a goat.
Shabalin was not only a reporter; he also wrote prose and poetry.
Kukovitskaya said that this year the memory of the men will be preserved not only by the exhibition, but an album of Titov's work will be published as well as a selection of Shabalin's prose, poetry, and articles.
"Felix, Maxim and Sergei went to nowhere but we want to have them near and we want people to remember them," said Kukovitskaya, who said that many ordinary citizens and official organizations helped to prepare the exhibition.
The exhibition runs through April 17 in the Karetny Hall of the Yelagin Palace on Yelagin Island.
TITLE: High Prices a Barrier to Tourism, Firms Say
PUBLISHER: Staff Writer
TEXT: High prices faced by visitors to St. Petersburg are the main obstacle to development of the city's tourism sector, German tour operators say.
St. Petersburg is more expensive than Europe's most touristy Meccas, including Paris, said a group of major German tour operators in town last week for a fact-finding trip sponsored by the city branch of the Russian Tourism Industry Union, or RST.
Germans are the third-largest group of foreign visitors to the city, after Finns and Americans. The French are the fourth-largest group and Italians the fifth, according to the city's tourism committee.
"St. Petersburg is not a city for mass tourism, and it will not be in the near future," said Christine Kuhn, of travel company CVJM-Hamburg. "When people can spend a weekend in any European capital for as little as 30 euros or 50 euros, the competition is just too tough for you."
A five-day trip to St. Petersburg costs at least 500 euros, not including $90 visa fee. Taking into account that flights and dining don't come cheap, a weeklong tour often exceeds 1,000 euros.
Budget airlines, like Ryanair or easyJet, don't operate in Russia, while local carrier Pulkovo has recently raised fares, citing increasing fuel costs. A return flight to a German city from St. Petersburg costs at least $300.
By comparison, a return flight between a German city to a city in Spain, Italy or Sweden could cost $70 or less.
Called "St. Petersburg Voyage. White Days," the program presented to the Germans was meant to demonstrate the benefits of being in the city in winter. The city is flooded with tourists in the summer months, but foreigners are barely visible in town in winter when the city's hotels are at most half-full.
Vladimir Ilyin, of German travel agency Olympia Reisen, said that high prices were behind a 20-percent decline in the numbers of German tourists going to Russia last year.
Alexei Zhukov, of local travel agency Aktis, defended the pricing policies of St. Petersburg hoteliers and tour operators.
"It is the seasonality of tourism which is forcing us to keep these prices," he said. "If we had a guarantee that tourists would come to town year-round, then, of course, our offers would be different."
Wolfgang Schneider, assistant product manager with Ikarus Tours, a travel agency from Konigstein, said he was very pleased to discover the city's mini-hotels.
"The ones we have seen on this trip were very comfortable and not very expensive," he said. "I am sure my customers are going to be excited about these offers because many people think that in Russia there only two types of hotels: the expensive luxury ones, and giant, grey Soviet monstrous-looking hotels."
Kuhn said people traveling in groups find it very convenient to stay in a small hotel that can be entirely occupied by the group.
One of the biggest negative factors affecting the local hotel industry is what is sometimes termed as "donut syndrome," meaning there's a big hole in between high-end, high-quality and low-price, low-quality tourist accommodation.
Industry professionals mention a lack of three-star or tourist-class establishments as a big part of the problem.
Schneider said many Germans and other Europeans decide against visiting the city in winter because they mistakenly believe the city goes into hibernation, and it is gloomy and boring.
Shostakovich Philharmonic conductor Yury Temirkanov has encountered this impression on his frequent tours abroad, and organized the Arts Square Festival to make the guests reconsider.
"Most foreigners think that nothing happens in Russia, and in St. Petersburg, in winter," Temirkanov said in an interview in January.
"With our festival, we'd like to show that our city in winter is not a silent, breathless and deserted land, covered in snow."
German tour operators recommended that travel industry professionals in St. Petersburg sponsor promotional TV advertisements to be shown in Germany to counter stereotypes.
"Instead of wanting people to come and see your city, why not show them a bit in a short film to attract them," Schneider said. "One of my clients, who originally planned to visit St. Petersburg during the White Nights, changed their mind when they saw a TV program showing the city in winter."
Sergei Korneyev, head of the northwestern branch of RST, was happy with the outcome of the trip.
"The argument we saw is very natural, and the business logic is clear: one side would like to charge more, while the other side wants to pay less," Korneyev said. "Both sides have their reasons, and I am sure it is possible to find a compromise. The sooner the compromise is reached, the better for the city."
TITLE: Composer's Grandson Sues Over Melody Use
PUBLISHER: Staff Writer
TEXT: Vasily Solovyov, grandson of Soviet composer Vasily Solovyov-Sedoi, is suing the Oktyabrskaya branch of Russian Railways for the illegal use of the composer's famed music.
Solovyov filed a lawsuit in the city's Kuibyshev district court to get compensation from the rail company, which plays four-second fragments of his grandfather's melody, called "Vechernyaya Pesnya," or "The City Above the Free Neva," before its announecments at the city's Moskovsky, Finlyandsky and Vitebsky railway stations.
St. Petersburg's Kuibyshev district court held preliminary hearing on the case on Monday.
The song was dedicated to Leningrad - the Soviet-era name for St. Petersburg - and is so widely known that when people hear the melody they instantly recall the song.
The aim of the suit is to stop the unauthorized use of the melody, said a press release from PR-group Social Technologies Bureau, which represents Solovyov in dealings with the mass media.
Lawyer Anna Kirichenko-Churkina said the rights of the composer's descendants have been breached since at least April 2003. Part of the melody is played almost every minute at the Moskovsky railway station, she said.
"Copyright law is no less serious than movie or train timetables, and it should not be broken regardless of what the public is used to," Kirichenko-Churkina said in the press release.
The law on royalties says that a copyright holder should earn 0.1 percent of a user's revenue, she said.
The lawsuit seeks up to 5 million rubles ($180,000) for breach of copyright.
If the case is successful, Solovyov, as one of the three heirs of the composer, is entitled to about a third of the sum.
The two other heirs of the composer are his daughter and a relative of the composer's sister.
Composer Solovyov-Sedoi was born in 1907. He died in 1979. His original family name was Solovyov. His hair turned grey, so he added the pseudonym of Sedoi, or grey, when he entered the Composer's Union, because another composer with the same last name was already registered there.
Solovyov-Sedoi wrote the music to such famous songs as "Solovi" and "Podmoskovniye Vechera."
TITLE: Mixed Interpretations Of Poll on Party Lists
PUBLISHER: Staff Writer
TEXT: An opinion poll conducted last week supported the idea of electing half the members of the Legislative Assembly from party lists and half from electorates, city media reported.
However, the poll, commissioned from the Sociology Department of the Academy of Science by lawmakers, found a total of 22.3 percent of respondents don't want any changes to the local election law. Five thousand people were questioned.
The poll was commissioned as legislators work to amend existing election laws applying to the assembly. The changes are to be ready by the middle of next year in time for the next Legislative Assembly elections scheduled for December 2006.
Deputies are now elected from electorates. The main support for elections from party lists comes from the Kremlin-loyal United Russia party, which has used elections by party list to generate majorities in elected bodies across the country.
Some legislators said the results of the poll vindicate them making amendments to the election law.
"This survey is a detailed and serious work, which I'd treat as a point by which the Legislative Assembly should be guided by making its decision on amendments," Vladimir Yeryomenko, a Legislative Assembly lawmaker of United Russia faction, said Monday in a telephone interview.
However, opposition lawmakers rejected media interpretations of the results, saying the population was largely confused and showed no clear support for elections by party list.
The largest group of respondents in favor of change, representing just 11.6 percent of the total, said 25 lawmakers should be elected in electorates and 25 from party lists. The second-biggest group, consisting of 10.6 percent of the total, favored a city parliament with 50 lawmakers all elected from party lists.
Tatyana Protasenko, a political analyst in the department that conducted the poll, said Friday that only 1.5 percent of respondents favored having 100 deputies with half elected in electoral districts and the other half taken from party lists.
"To avoid a repeat of what happened in relation to the reform of benefits [the authorities] will have to offer the public serious explanations," she said. "If not, the changes in the election law will not be understood, and there is a risk that citizens will not turn out for the elections."
Alexei Kovalyov, a Legislative Assembly lawmaker in the Union of Right Forces faction, said the respondents were given few choices about how they wanted the city parliament to be formed.
"Thirty percent of the respondents did not know about [planned changes to the election law] at all and another 20 percent were against it, which makes about 50 percent that do not support a parliament formed from party lists," he said Monday in a telephone interview.
"People understand that they don't need these changes because the Legislative Assembly is supposed to be concerned with specific problems of the city, which federal party representatives have nothing to do with. Why would city residents have to chose between United Russia or Yabloko if they want to fix their pipe?" he said.
TITLE: Putin Wants
Baltic Dialog
PUBLISHER: The St. Petersburg Times
TEXT: BRATISLAVA -Russia is interested in having friendly relationships with the Baltic States and expects a constructive dialogue with them, Interfax reported President Vladimir Putin as saying Friday.
"We have held out a hand of friendship, but it doesn't depend on us if it will be accepted, if it will be shaken or not," Putin said.
The decision on further development of the relationship depends on Estonia, Latvia and Lithuania, rather than Moscow, he said. "Whatever their decision is we will build our relations with these countries. [We] hope that goodwill will prevail.
"We respect the opinion of those people in the Baltic States who believe that it was a tragedy that their nations lost their independence at the end of World War II," he said. "I also think that we have to respect the opinion of people that believe that Latvian soldiers helped the Bolsheviks to stay in power when they could have been wiped out."
Putin insisted Russia and the Baltic States have to look into the future.
"We have invited the heads of the Baltic States to arrange a constructive dialogue and sign agreements to solve border questions," Putin said.
TITLE: U.S. Blasts Russian Rights
PUBLISHER: Combined Reports
TEXT: WASHINGTON - The U.S. State Department, citing credible reports, said Monday that Russian law enforcement personnel engaged in torture, violence and other brutal or humiliating treatment.
Despite widespread criticism of its own human rights record worsened last year due to scandals of torture of detainees in Iraq, the U.S. State Department issued an annual report rapping other nations for violations in 2004 as the White House sought to pressure its partners as well as its enemies to do more to curb abuses.
The report said Russia's overall rights record in 2004 remained poor in the continuing struggle against rebels in Chechnya, where both sides demonstrated little respect for basic human rights.
"Hazing in the armed forces remained a problem. Prison conditions improved but continued to be extremely harsh and frequently life threatening," the report said.
It also said the September attack on a school in Beslan, where more than 330 people died, showed that Russia is a target of terrorists. The massacre "exemplified the gross violation of human rights in the region by terrorist elements."
As for examples of torture and other forms of mistreatment of detainees, the study said "law enforcement personnel frequently engaged in these practices to coerce confessions from suspects."
It added that the government did not consistently hold officials accountable for such actions. Neither the law nor the Criminal Code defines torture; it is mentioned only in the Constitution, it said.
In an overall assessment, the report said that although Russia "generally respected the human rights of its citizens in some areas, its human rights record was poor in certain areas and worsened in several others."
It said the power of the executive branch was strengthened by changes in parliamentary election laws and a shift from the election of regional leaders to their appointment by the president.
The report also cited evidence of an erosion in accountability, including increased media restrictions, a more compliant State Duma, shortcomings in recent national elections, law enforcement corruption, and political pressure on the judiciary.
A summary of the report, which runs to more than 1,000 pages, did not highlight the abuses in Iraq by U.S. soldiers torturing detainees in the Abu Ghraib prison. It does, however, turn a spotlight on areas where the White House says its foreign policies have been successful, noting advances in democracy in Ukraine, Afghanistan and Iraq.
(AP, Reuters)
TITLE: IN BRIEF
TEXT: Heroin and Bananas
ST. PETERSBURG (SPT) - St. Petersburg customs found about 70 kilograms of heroin on a Maltese steam ship bringing bananas to the city port, Interfax reported Friday.
Last Tuesday, customs officers found 3.5 kilograms of heroin among the possessions of a crewmember of the Polar Honduras, which arrived from Ecuador.
Another 66.5 kilograms of heroin was later found in the engine rooms.
Paid Sadovaya Parking
ST. PETERSBURG (SPT) - Drivers will be obliged to pay for parking at Ulitsa Sadovaya, the city's roads committee said Friday.
"The problem of constant traffic jams on Sadovaya is a problem of the drivers' behavior," Interfax quoted Vladimir Antonov, head of the committee, as saying.
"When they stop leaving their cars on the side of the road, the traffic will become calmer."
Seleznyov a Contender
ST. PETERSBURG (SPT) - Gennady Seleznyov, an independent deputy representing St. Petersburg in the State Duma, said Friday he may lead a left-wing bloc in the next presidential elections, Interfax reported.
Nazi Victims Museum
PETROZAVODSK (SPT) - A Memorial Museum to the Victims of Facism has opened in Petrozavodsk, Interfax reported Friday.
The founder of the museum, Vadim Mizko, who was himself held in a concentration camp during World War II, said the museum had become the first in Russia to "show the Nazis' entire process of killing people."
100,000 Labor Illegally
ST. PETERSBURG (SPT) - About 100,000 workers from the Commonwealth of Independent States countries live and work illegally in St. Petersburg, the city police says. Many of these workers are deceived by their employers, who can take a worker's passport, returning it only two months later and don't pay for the work done. Sometimes employers may not even return a worker's passport, the Agency of Business News reported.
St. Petersburg has a labor shortage of about 300,000 people.
Visa-Free Kaliningrad?
KALININGRAD (SPT) - The Kaliningrad regional government wants to let foreigners enter and exit the exclave without having to acquire a visa, Interfax reported Monday.
The legislators suggested introducing the concession for citizens of the European Union, who would be able to stay in the Kaliningrad region without a visa for 90 days a year, the report said.
The deputies said such a law could help create a favorable investment and business climate in the region. It would also aid visits by foreigners to Kaliningrad on its 750th anniversary this year.
TITLE: Two Russian Reporters
Pry Bush on U.S. Press
PUBLISHER: Combined Reports
TEXT: BRATISLAVA, Slovakia - Incensed by U.S. talk of a lack of press freedom in Russia, two Russian reporters tried to turn the tables on U.S. President George W. Bush during his news conference with President Vladimir Putin.
After Bush said he had raised concerns about Russia's democracy in Thursday's talks with Putin and felt reassured, he suddenly found himself on the defensive.
"Mr. Bush, not long ago you made the statement that the press in Russia is not free. What, in your view, is that lack of freedom all about?" Interfax reporter Alexei Meshkov asked.
Before Bush could answer, the reporter then turned on Putin and demanded to know why he was not sticking up for Russian reporters by talking about violations of the rights of American journalists.
A startled Bush then replied that Putin had brought up the subject of journalists getting fired recently in the United States.
"People do get fired in the American press. They don't get fired by the government, however. They get fired by their editors or they get fired by their producers or they get fired by the owners of a particular outlet or network," Bush said.
Under Putin, journalists who angered the Kremlin have lost their jobs, and television networks that challenged the Kremlin line have been taken over or shut down.
"If you're a member of the press corps and you feel comfortable with the press in Russia, then I think that is a pretty interesting observation for those of us who don't live in Russia to listen to," Bush said to Meshkov, whose news agency rarely deviates from the official line.
An equally agitated Putin rejected the notion he was keeping silent on the issue, but he said it was not something worth making a fuss about.
"What does it mean that we keep silent or I keep silent on some problems? First, I am not the propaganda minister," Putin said. "Second, we discuss all questions absolutely openly."
Putin ended the news conference with a plea not to emphasize the problems between the two countries, which he said could jeopardize the relationship.
"We are paying close attention to all the comments by representatives of the press and opposition forces, but our responsibility, in spite of all the problems, of which there are plenty, is to positively develop Russian-American relations," Putin said.
Earlier in Thursday's news conference, another Russian reporter, Andrei Kolesnikov from Kommersant, which is often critical of Putin, said America's democracy was also faulty. He urged Bush and Putin to see this as a unifying factor.
"It seems to me that you have nothing to disagree about," Kolesnikov said, addressing the two presidents. "And it is worth agreeing that the regimes in place in Russia and the United States cannot be considered fully democratic, especially when compared to some countries of Europe, for example, to the Netherlands.
"It seems to me that, as far as Russia is concerned, excuse me Vladimir Vladimirovich, everything is more or less clear. But as far as the United States is concerned, we could probably talk at length."
The Kommersant reporter said Bush should account for limits on personal freedoms imposed after the attacks on Sept. 11, 2001. But before Bush had a chance to respond, Kolesnikov called on the two presidents "to simply agree [that neither of their countries is fully democratic], to shake hands and continue to be friends."
Foreign Minister Sergei Lavrov said that ahead of the Putin-Bush meeting he had sent a collection of stories from Russian newspapers and clips from Russian television to his U.S. counterpart, Secretary of State Condoleezza Rice. He said his intention was to convince her that the media in Russia were free, Interfax reported Friday.
But when they met in Bratislava and he asked Rice whether she had seen the television clips, she said she had not yet had time, Interfax quoted Lavrov as saying.
(Reuters, SPT)
TITLE: Rosy Moscow Spin on Talks
PUBLISHER: Staff Writer
TEXT: MOSCOW - After escaping public criticism over the state of democracy in Russia, Moscow is portraying the meeting between President Vladimir Putin and U.S. President George W. Bush in Slovakia as a big diplomatic success.
"The meeting went in a very positive way in its character and in the chosen themes," Putin said in Bratislava on Friday, a day after the talks.
Although the meeting did not bring Russia any considerable diplomatic or economic gains, other senior officials appeared to try to outdo one another in praising the event.
Foreign Minister Sergei Lavrov on Friday called the meeting "the most productive in working out concrete decisions" and said about 20 documents had been approved that would advance the agendas of the two countries for years to come. The main reported agreement aims to curb the proliferation of portable, shoulder-fired missiles.
Konstantin Kosachyov, chairman of the State Duma's International Affairs Committee, said the outcome of the talks "exceeded the most optimistic expectations," Interfax reported.
Explaining his assessment, Kosachyov said he was "glad that the predictions of those who expected a drastic cooling of relations with the U.S. because of American criticism of some processes in Russia's domestic politics had not come true."
"The discussion about democracy was not central in the two presidents' negotiations," he said, adding that issues of democracy "concerned commentators to a much greater degree than the participants of the talks."
Mikhail Margelov, chairman of the Federation Council's International Affairs Committee, also sought to point out that security, not democracy, is what forms the "backbone of the partnership between Russia and the U.S.," RIA-Novosti reported. Margelov said Moscow had correctly calculated that the Bush administration was so keen about having Russia as an ally on counterterrorism, nonproliferation and other security issues that it had no desire to jeopardize ties by criticizing Putin over his record on democracy.
Despite mutual misunderstandings and irritations, common interests are continuing to prevail in U.S.-Russian relations, said Sergei Karaganov, head of the influential Council for Foreign and Defense Policy.
TITLE: Iran, Russia Sign Deal on Nuclear Fuel
PUBLISHER: The Associated Press
TEXT: BUSHEHR, Iran - Iran and Russia signed a nuclear fuel agreement Sunday, despite U.S. objections to Russian support of Tehran's nuclear ambitions, paving the way for Iran to get its first reactor up and running.
Iranian Vice President Gholamreza Aghazadeh and Alexander Rumyantsev, the head of the Federal Atomic Energy Agency, signed the agreement at the Bushehr nuclear power plant. The signing was delayed by a day, and came after the two senior officials toured the $800 million complex.
"Today, a very important development occurred, and that was the protocol on returning nuclear fuel, which we signed together. In the next few weeks, many Russian technicians will arrive in Bushehr to speed up the assembly operation" to finish the plant, Rumyantsev said at a news conference with Aghazadeh.
Both officials refused to discuss the details of shipping the nuclear fuel to Iran and the spent fuel back to Russia, but insisted that the agreement respects all regulations concerning nuclear activities.
Russia, which helped build the plant, has agreed to provide the fuel needed to run the Bushehr plant, but wants the spent fuel back to prevent any possibility Tehran would extract plutonium from it, enough of which could be used to make a nuclear bomb. Delays reportedly were in part over who would pay to return the spent fuel.
The signing came a few days after a meeting between U.S. President George W. Bush and President Vladimir Putin in Slovakia, which touched on U.S. concerns over Russian support for Iran's nuclear program.
Washington accuses Tehran of covertly trying to build a nuclear bomb, which Iran denies. Putin has said he is sure Iran's intentions are nuclear energy, not weapons.
It was not immediately clear whether Thursday's Bush-Putin meeting had delayed the signing.
Aghazadeh said the two sides agreed that over the next 10 months, more experts and technicians would complete work on installation and assembly operations. "Three months after that, there will be a test of the power plant and within six months after that, the 1,000-megawatt nuclear power plant will produce electricity," he said.
Just ahead of the signing, Aghazadeh showed Rumyantsev the nuclear fuel storage house as well as the main part of the plant and the reactor expected to be operational by late 2005 or early 2006.
"What I saw was much better and more than I had expected. Assembling operations in the past three to four months have been expedited," Rumyantsev said.
TITLE: Nashi Beats Yabloko Leader
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - Members of new pro-Kremlin youth movement Nashi, or Us, attacked the leader of the liberal Young Yabloko group after he sneaked into a training conference over the weekend, the leader, Ilya Yashin, said Sunday.
Yashin, 21, said he and a friend, Kommersant reporter Oleg Kashin, 24, went to the meeting Saturday in Solnechnogorsk, north of Moscow, to see firsthand what Nashi was about.
Nashi, which is reportedly being formed by senior presidential administration officials, has yet to be officially presented to the public. It appears to be a new version of the youth group Moving Together, whose reputation has been battered in recent months.
Yashin said he and Kashin were recognized after spending several hours at the conference. He said Nashi organizers brought the two out in front of a crowd of about 200 people and described them as "the very people whom [Nashi] is to fight."
He said Nashi ejected the two from the meeting, and as they were leaving a conference organizer and several bulky assistants threw him in the snow and struck him several times. Yashin said he plans to file a suit against the attackers.
Vasily Yakemenko, the leader of Moving Together who attended the meeting, was unavailable for comment Sunday.
TITLE: Ukraine May Join EU by 2015
PUBLISHER: Combined Reports
TEXT: BRUSSELS - A senior European Union official predicted Friday the EU will expand rapidly in the next decade, with Turkey and possibly Ukraine joining the bloc around 2015.
In a speech prepared for a seminar at Sussex University in England, Regional Aid Commissioner Danuta Huebner said Croatia might catch up with Bulgaria and Romania to enter the 25-nation EU in 2007.
"But of course a massive change will occur as the union grows to absorb Turkey and possibly Ukraine by around 2015," Huebner said in the remarks. "These two countries would add around 125 million citizens to the union, bringing the total population to around 635 million or 40 percent more than today."
The European Commission officially says Ukraine's membership is not on the agenda. But some member states such as Huebner's native Poland believe membership for Ukraine should be put on the agenda after pro-Western Viktor Yushchenko was elected president in December. Yushchenko told the European Parliament earlier in the week that Ukraine wants to start EU entry talks in 2007.
Ukraine's Cabinet on Saturday stripped former President Leonid Kuchma of a plush - and widely criticized - retirement package that featured a monthly pension, two cars, a government home and much more. New Prime Minister Yulia Tymoshenko had ordered the government to come up with a new, slimmed-down package for former officials.
(Reuters, AP)
TITLE: IN BRIEF
TEXT: Governor Dropped
MOSCOW (Reuters) - A first governor on Thursday fell foul of a new law that has given the Kremlin the power to appoint regional officials and raised fears in the West that President Vladimir Putin was retreating on democracy.
The head of the Saratov region Dmitry Ayatskov, who has ruled the region for nearly nine years but has recently been pursued by prosecutors for abuse of office, will not be put forward as a candidate, said Putin envoy Sergei Kiriyenko.
The Kremlin drew up the new law after the Beslan hostage crisis - when 330 people died after Chechen rebels seized a school in September.
Media Fuel Racism
MOSCOW (AP) - Russia's media are helping to fuel racism and xenophobia and inciting conflicts among the country's ethnic groups, a scholar and rights activists said Thursday.
Vera Malkova, an anthropologist with the Russian Academy of Sciences, said major newspapers have not called for ethnic confrontations but are spreading xenophobic sentiments by using improper words and headlines.
Headlines such as "Ukrainian woman came to Moscow to sell child" or "All clients shot at Georgian restaurant" or "Gypsy mafia stripped Muscovites of apartments" promote negative stereotypes of various peoples and ethnicities, she said.
Malkova studied the three largest mass-circulation Russian newspapers over the past four years, analyzing their coverage of ethnic issues. The study was conducted under the auspices of an EU-funded program monitoring xenophobia, anti-Semitism and ethnic discrimination.
Three New Reactors
MOSCOW (AP) - Russia plans to launch three new commercial nuclear reactors over the next five years and upgrade existing ones to higher standards that include stronger defenses against possible terror attacks, top nuclear officials said Thursday.
In December, Russia launched its 31st nuclear reactor at the Kalinin power plant in western Russia. By 2010, the nation will have 34 reactors, said Oleg Sarayev, the head of the state-controlled Rosenergoatom consortium in charge of Russia's nuclear power plants. Sarayev said that the two latest nuclear reactors put on line since 2001 featured upgraded security systems providing stronger protection against possible terror attacks.
Klebnikov Suspect
MOSCOW (AP) - Prosecutors on Wednesday charged an ethnic Chechen with murder for the slaying last July of Forbes Russia editor Paul Klebnikov, Interfax reported.
Muslim Ibragimov, also known as Kazbek Dukuzov, was accused of involvement in Klebnikov's killing, Interfax said, citing the Prosecutor General's Office.
Dukuzov was extradited to Moscow last Tuesday night from Belarus, where he had been held since his Nov. 17 arrest. A second Chechen who was extradited, Valid Agayev, remains under arrest while the investigation continues, Interfax said.
Missing Missiles
KIEV (AP) - Two anti-aircraft missiles are missing from a military depot in southern Ukraine after an apparent break-in, the country's Defense Ministry said.
The Defense Ministry said last Tuesday that a duty officer at the depot in the Crimea saw two men trying to force their way in early last Tuesday.
Two missile systems known as SA-7 Grail were missing, the ministry said.
TITLE: Bargain-Hunting on Souvenir Row
PUBLISHER: Special to The St. Petersburg Times
TEXT: For some, souvenir shopping is a last-minute hassle in an otherwise enjoyable vacation. For others, it is a sport in which the happiness of a low price exceeds the enjoyment of the product itself. Every year up to 3 million tourists visit St. Petersburg and contribute an estimated $3 billion to the local economy. Somewhere in those numbers is a deal waiting to be made.
The most popular place for souvenir hunting (and the only one with security) is the market behind the Church on the Spilled Blood. Officially named the "Center for the Support of Art and Entrepreneurs," the vendors refer to it as the Gryadka, or vegetable row.
Walking up and down the booths amid shouts of "My friend! My friend!" one may indeed start to feel like a golden carrot.
Despite what many assume, Russians do not necessarily pay less for souvenirs than foreigners. The most important factor determining how high or low on the sliding scale of selling prices is a person's appearance and behavior. Expensive purses, wads of cash, and a calm, confident demeanor are giveaways of wealth.
"If someone paid a few thousand dollars for a watch, they can pay a few more rubles for a souvenir," said a vendor who declined to be named. Poor people tend to look genuinely solemn and raise a fuss at a high price, he added.
Nevertheless, everyone can get a better price than the vendors' price if they are good at haggling.
"I haggled a bit and I think I got a good deal," said Nathan Dreyer, a British tourist, carrying a bag stuffed with hats and matryoshka nesting dolls. As late entrants to the capitalist world, many Russian customers have yet to learn the art of haggling and simply pay what is demanded, vendors claim.
Some foreigners craftily use Russians to find out the "real prices" of items before any purchase is made. Vendors can spot this, however, as these spies have a simple pattern: they ask what everything costs and buy nothing. One promising strategy in response to this is to hand over your money to a Russian friend with a few instructions.
Prices for souvenirs vary considerably. In summer, during the high season, prices increase, but during the slow winter months prices fall. Icons have the lowest mark-up while fur hats have the highest. In case you are curious, retailers say that the average price a tourist pays is three to four times the price the vendor pays for them.
The most popular souvenirs are the matryoshka dolls followed by decorative folk art boxes. As delightful as a smiling Putin on a living room shelf may be, the old-fashioned matryoshkas featuring homely women sell in much larger numbers. Not everyone prefers matryoshkas, however. The Chinese crave binoculars and the Japanese love amber, vendors say.
"Americans are the best customers. They buy everything and don't demand a big discount," said Alya Ivanova, a vendor.
Her information checks out. All vendors agreed, naming Americans as their favorite customers, Europeans second, Japanese third, and Australians and Chinese their joint-fourth favorites.
"The Australians buy practically nothing. They bargain and bargain, and then say, 'I'll think about it,'" one vendor said, grimacing in disbelief.
When a prospective customer is Chinese, vendors typically start quoting a price 50 percent higher than they expect to get because of these customers' deep-seated unwillingness to spend they said.
SELLING THE MOTHERLAND
Be it flags, banners, flasks, pins, hats, old identity documents, or anything with a hammer and sickle on it, relics from the Soviet Union are great souvenirs. Many tourists are eager to snatch up what they think may eventually become unavailable.
"I'm not a communist, but I like these things," said Francesco Andretti, an Italian tourist. I think maybe they will be worth something some day." Proudly displaying a Soviet Navy flag, his smile summed up his belief that his souvenir was authentic.
Each week in summer, Mikhail Kusinov, a vendor specializing in Soviet souvenirs, sells about two busts of Lenin, one of Stalin, and one of Trotsky. He explained that the French are particular fond of Trotsky busts, while the Finns prefer Lenin. Part of the sales success of the leader of the 1917 Bolshevik Revolution with Finns, Kusinov said, was because Lenin granted Finland its independence.
A couple of booths away, one of Kusinov's competitors, Pochika Bogdan, sells something even more exotic: busts of Felix Dzerzhinsky, founder of the Soviet secret police. Despite their rarity, they sell poorly in comparison with busts of national poet Alexander Pushkin and Tsar Peter the Great.
Not everyone appreciates the availability of Soviet memorabilia to tourists. During the first few years after the fall of the Soviet Union in 1991, the story goes that paratroopers wandered into the souvenir market every Aug. 2, their official holiday. Seeing Soviet items for sale and in a drunken, nostalgic stupor, they angrily shouted, "Comrade, you're selling the Motherland." Such dissatisfaction has thankfully since mellowed.
For those who dislike bargaining but are looking for Soviet pins, flasks, medals, bags, and coins who dislike bargaining, Army Surplus Stores ("Voyenny Magaziny"), offer excellent prices, though their selection is narrow. Andrei, the owner of a store located at 65 Nevsky Prospekt who declined to give his last name, offers interested customers a visit to his apartment where he keeps complete uniforms from every branch of the Soviet Armed Forces.
FAMOUS BUT STINGY
Fame, apparently, is no hindrance to haggling. Robert Plant, the lead singer of the English rock group Led Zeppelin, is remembered to have spent an endless amount of time haggling over a hat. Deep Purple, Whitney Houston, and the Queen of Spain have also turned up as the Gryadka market to get a deal. French singer Patricia Kaas bought a Soviet bag.
Former U.S. President Bill Clinton once visited with a small army of secret service officers. Wearing a black suit and a white shirt, but not wearing a smile, a secret service man was casually asked by a vendor who he was. "Just a tourist," he replied before whispering into his walkie-talkie.
Not too long ago President Vladimir Putin and German Chancellor Gerhard Schroeder came surrounded by a thick wall of security. Putin bought a few paintings and a doll for Schroeder. Surrounded by TV cameras, Putin told one vendor while haggling, "I don't have any money."
Putin is now widely believed to send a proxy to do his souvenir shopping.
Several factories produce matryoshka dolls, and nearly all claim to be "authentic." The Semyonov factory in the Nizhny Novgorod region is the only one, however, that hand paints matryoshkas instead of using computer prints. Instead of a few hours, the complete process takes two months and is a painstaking task for the artists.
Despite the supposed authenticity, Semyonov matryoshkas sell for less than other matryoshkas because of fewer details and colors - they are less exciting for tourists.
Vendors say French tourists are usually the only ones who understand this difference in quality.
All the icons are real, though some have been touched up because of ageing. But be warned, authentic icons from the 19th century and earlier require a special export license from the Culture and Press Ministry to avoid problems at the airport.
As for the Soviet items, many are not real. A close look at the flasks and cigarette cases reveals that they are new with Soviet pins glued on.
Authentic cigarette cases from the Brezhnev era can be found, but they are usually in poor condition. Soviet flags are next to impossible to determine as authentic, though old looking naval flags are not reproduced anymore. Large velvet banners with Communist slogans (costing around 6,000 rubles [$215]) are real.
LIFE AS A VENDOR
"I like this job because I can practice English," one vendor says as he recounted his experiences with Americans. His favorite expression is "Nothing good comes cheap." Like most vendors, he can also speak a few words in Italian, French, German, Spanish, Chinese, Japanese, and can speak a few words to Filipino sailors who work on the cruise ships that visit the city.
Though English is usually the lingua franca of the market, vendors must be careful: French tourists grow upset when greeted in English.
At Gryadka there is an unspoken code of honor: never hassle a customer who is talking with another vendor. Competition can still be fierce, however. Once two vendors were joking loudly and a neighboring female vendor lost a customer and blamed one of the joke-tellers. Soon after, one of the female vendor's friends broke the nose of one of the other vendors.
Two months ago this reporter befriended a vendor. Inquiring about his whereabouts to Alya Ivanova, I learned that the vendor's teeth had been knocked out by another vendor while drinking at New Year. Curious if the fight had been initially provoked by competition over tourists, I received a swift reply from her: "This is normal in Russia. They were just playing."
She then whispered she could give me a special price for some crystal.
TITLE: Report Links Putin to Dresdner
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - The head of Dresdner Bank in Russia, Matthias Warnig, has built his career on his personal relationship with President Vladimir Putin, whom he first met while the two men served as secret agents in East Germany, The Wall Street Journal reported Wednesday, citing former colleagues of both men.
During his time as an agent for the Stasi, the East German secret police, Warnig first met Putin, who was serving as a KGB agent in East Germany, and helped him recruit spies, the paper reported.
Later Warnig opened Dresdner's St. Petersburg office in 1991 and oversaw the bank's awarding of high-profile government contracts such as the valuation of Yuganskneftegaz last year. Warnig maintained a close relationship with Putin, who worked as St. Petersburg's liaison to foreign businessmen in the early 1990s, once intervening to fly Lyudmila Putin to Germany for medical treatment on the company's dime, the paper said.
In 1993, City Hall assisted Dresdner in opening a joint venture branch with Banque Nationale de Paris in the massive former German embassy on St. Isaac's Square, the Journal reported.
Earlier this month, Warnig was nominated to the board of the state-owned energy behemoth Gazprom.
Although neither man has been accused of business improprieties and Dresdner appears not to have violated Russian law, the paper said their relationship "underscores the shadowy interplay between businessmen and former intelligence operatives in today's Russia."
Neither the Moscow office of Dresdner Bank nor a Frankfurt-based spokesman for its investment banking arm Dresdner Kleinwort Wasserstein could be reached for comment Thursday. The Kremlin press office said nobody was available for comment.
Retired Dresdner CEO Bernard Walter, who headed the bank's Eastern European operations in the early 1990s, told the Journal that he would not have hired Warnig had he known of his Stasi past.
In an interview published in the online version of Germany's Manager magazine, Walter said that years after being hired, Warnig alluded to a Stasi connection but that German investigators later dropped the case.
As for Warnig's connection to Putin, Walter dismissed the report that the two men had first met in their capacity as secret agents.
"Mr. Warnig told me clearly that he met Mr. Putin for the first time in his life in 1991, when I sent him to St. Petersburg," Walter said.
Walter confirmed that the bank had paid for Lyudmila Putin's medical treatment after a car accident, which he called "completely self-evident from a humane point of view." But Walter denied the Journal's report that Dresdner had funded subsequent trips to Germany by Putin and his family.
While Putin's KGB past is no secret - and even celebrated - a connection to the Stasi has often been enough to kill a career in unified Germany.
"I am surprised that a man with a Stasi past was hired by the bank," said Andrei Piontkovsky, an independent political analyst. Former KGB officers in Russia have no need to conceal their intelligence background, he said.
"They are proud of it," Piontkovksy said, likening the admiration of intelligence officers to a "new brand of national ideology."
An increasing number of the so-called siloviki, former KGB and military officials, have been receiving key government appointments since Putin took the reins in 2000.
Even before he came to power, Dresdner seized a number of key deals.
The bank consulted Gazprom during its first shares sale to foreign investors in 1996 and advised Ruhrgas, when it acquired a 2.5 percent stake in Gazprom in 1999.
"I personally built up the client relation to Gazprom. Warnig was far from Moscow and had nothing to do with it," Walter told Manager.
Later, Dresdner was among the top managers for Gazprom's issuance of $1.75 billion of eurobonds in 2003. The Journal reported that the government bypassed the requirement for an open bid when choosing Dresdner Kleinwort Wasserstein as the valuator of Yugansk and as Gazprom's advisor on the pending merger with Rosneft.
TITLE: Mystery Protesters Turn Out to Provoke Trouble
PUBLISHER: Staff Writer
TEXT: MOSCOW - Yelena Kashirina says she knows almost everyone from the Moscow chapter of Red Youth Vanguard. But when the leftist group stages demonstrations, dozens of young people she doesn't know mysteriously show up.
The anonymous protesters wear the right clothes and chant the right catchphrases, but then they become aggressive, causing the police to step in and break things up. "After that they disappear immediately," said Kashirina, 19.
Red Youth Vanguard and other left-leaning political groups believe their rallies are being targeted and infiltrated by agents provocateur planted by the police and Federal Security Service, or FSB. The goal, they say, is to surreptitiously undermine and marginalize anti-government demonstrations, especially in light of the widespread protests over social reforms that have prompted calls for the resignation of President Vladimir Putin and the government.
The FSB did not reply to requests for comment. Moscow police acknowledged sending undercover officers to rallies but denied that they were provocateurs.
The setup used by provocateurs is pretty straightforward, according to activists who said they have witnessed it. At some point during a rally, planted officers wearing civilian clothes cause a disturbance - anything from starting a fight to goading protesters into breaking demonstration laws. This gives uniformed police an official reason to break up the gathering.
Red Youth Vanguard leader Sergei Udaltsov said he fell victim to the trap on Jan. 22, when up to 5,000 people, including members of his group, Communist pensioners and radical National Bolsheviks, rallied against social reforms at Belorussky Station.
The demonstration went smoothly until Udaltsov called on the crowd to march to the presidential administration building at Staraya Ploshchad to demand the sacking of the government. Udaltsov said he told the protesters to lay down their flags and signs to avoid being accused of taking part in an illegal protest.
Kashirina, who attended the rally, confirmed this and said that dozens of men in civilian clothes then began to close in on Udaltsov. "They were yelling and pushing their way through the crowd, and when they got up front, our leaders began pushing back," she said.
Once the pushing began, OMON police commandos stepped in and detained Udaltsov and nine other Red Youth Vanguard members, who were taken to a police station and fined for allegedly trying to organize an unsanctioned protest.
The apparent provocateurs also tried to pick fights with other protesters, and Kommersant reported that many of them had ear pieces poking out from under their winter hats. "Yelling 'What's your problem?' a person with an ear piece attacked one of the demonstrators, who tried to fight back," Kommersant said. "But the others stopped him, explaining, 'It's a provocateur!'"
Some of the men filmed their own provocations, Nezavisimaya Gazeta reported.
"This is a common tactic," Udaltsov said. "Aside from the officers in uniform, there are usually many in civilian clothing masquerading as protesters. Some of them are more difficult to recognize, especially those who dress up like members of youth groups. Some are a little more obvious, like the ones with ear pieces."
State Duma Deputy Vladimir Kashin, a Communist who attended the Jan. 22 rally, said party members are being advised not to react to "planned provocations" and to follow the law. "But we will be addressing this problem more closely in the future, and that doesn't mean just talking about it," he said. "We're going to deal with them at the protests and find out where they got the ear pieces and who is talking to them."
Alexander Tarasov, a sociologist who follows leftist youth groups, said the main task of the provocateurs is to ensure that a rally does not get too big. "If it does, they'll try to start a fight to break it up," Tarasov said. "Usually the signal to proceed is given by a senior officer. It can be done using ear pieces or radios, or it could be someone on the scene using visual signals. He might pull a book out of his pocket, open it up and put it back in his pocket. That alerts the agents in plain clothes to start an incident."
Tarasov noted, however, that such tactics are usually used only in Moscow and other large cities. "If it's in a small village, they'll just send in the OMON and chase everyone out," he said. "If you're in a big city, they need to maintain some pretense of legality."
Tarasov said the authorities only send provocateurs into authorized rallies, as they do not need an excuse to break up unsanctioned gatherings.
But members of the National Bolshevik Party said the FSB has used provocateurs at unsanctioned protests. On June 22, about 25 National Bolsheviks handcuffed themselves to the doors of the German trade representation in Moscow to demand that Berlin pay compensation to Russian veterans of World War II. Ten party members climbed on the roof and unrolled a sign reading, "June 22: We Won't Forget, We Won't Forgive," in a reference to the day Nazi Germany attacked the Soviet Union.
During the storming of the trade building, a man who identified himself as a television journalist asked Roman Papkov, the head of the party's Moscow chapter, to step around the corner for an interview, 19-year-old party member Sergei Ilyukin said.
"The guy posing as a journalist punched him, and Roman responded likewise," Ilyukhin said. "The police came over, and the journalist showed his FSB identification. They arrested Roman."
Ilyukhin said Papkov was unavailable for comment because he is facing ongoing problems with the police.
Constitutional scholar Vil Kikot, a professor at the Moscow State Law Academy, said any use of provocateurs to break up demonstrations would be a "gross violation" of the Constitution. "Of course it is illegal and has no place in democratic society," Kikot said. "It is every citizen's right to express his disapproval with the government in a legal, public protest."
City police spokesman Kirill Mazurin said that in addition to uniformed police assigned to maintain order, police officers in civilian clothing are often placed in crowds to watch for any illegal activity among the protesters. "The goal is to keep an eye out for citizens who commit actions not connected with the sanctioned purpose of the demonstration," he said.
Mazurin said undercover police are not involved in provocations of protesters. "Our job is to make sure demonstrations do not get out of control," he said.
Calls to the press offices of the FSB's Moscow and Moscow region branches went unanswered for almost two weeks.
TITLE: FSB to Replace Police in South
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - Under a decree prepared by presidential envoy Dmitry Kozak, the Federal Security Service would take over responsibility from the Interior Ministry in the Southern Federal District for coordinating regional authorities' response to terrorist attacks.
The draft decree, which Kozak submitted to President Vladimir Putin last Tuesday, calls for the heads of FSB branches in the district to take over the coordination of anti-terrorist operations from Interior Ministry commanders.
Existing federal laws designate the FSB as the lead anti-terrorist agency - except in the Southern Federal District, where the Interior Ministry has this role. Putin handed responsibility for coordinating anti-terrorist activities in the district to the Interior Ministry in the wake of last June's raid by rebels in Ingushetia.
The government's coordinating commission for the Southern Federal District, chaired by Kozak, approved the decree last Monday, an official on Kozak's staff said by telephone Thursday.
Kozak told commission members that the decree would establish a clear chain of command and ensure that those involved in making decisions during terrorist attacks were accountable.
Also on the commission are Economic Development and Trade Minister German Gref, Finance Minister Alexei Kudrin and the deputy heads of the interior and defense ministries and the FSB.
The decree would contradict a bill proposed by United Russia deputies in the State Duma after the attack in Beslan last September that would give regional leaders across the country the lead role in responding to terrorist attacks. The bill is awaiting a second reading.
The Kozak staffer, who spoke on condition of anonymity, said the decree would convince United Russia to amend the bill so that FSB commanders coordinated regional anti-terrorist efforts.
TITLE: Kasyanov Hints He May Run for President in 2008
PUBLISHER: Staff Writer
TEXT: MOSCOW - Breaking a year of silence, former Prime Minister Mikhail Kasyanov on Thursday slammed Russia's leadership for turning away from democracy and indicated he may run for president in 2008 in order to correct the nation's course.
"Everything is possible," Kasyanov said at a news conference in answer to a direct question on whether he plans to bid for the presidency in 2008.
"The main thing is not who it is going to be, the main thing is that whoever comes to power spearheads a movement toward democratic values," Kasyanov said as he made his first step back onto the political stage since losing his post one year ago to the day.
Kasyanov said he wanted to remain out of the government in the near future. He announced the creation of his own consulting and research firm, MK_Analytica, which he said would focus on attracting investment to Russia.
Kasyanov, 48, lost the prime minister's post on Feb. 24, 2004, when President Vladimir Putin abruptly fired the Cabinet less than three weeks before the March presidential elections. The reshuffle was believed to have been a result of a power game played at the very top between old and new elites, which also led to a further tightening of Putin's control over the government and the parliament.
The stand-off also resulted in the dismembering of Yukos, once the nation's biggest oil producer, and its partial takeover by a state-owned oil firm close to Putin. Kasyanov was one of the last remaining members in Putin's regime of a powerful clique of officials and businessmen close to former President Boris Yeltsin.
But after ridding himself of much of the old elite and gathering power, Putin had a disastrous start to his second term.
First, there was the Beslan hostage crisis and then his embarrassing attempt to keep Ukraine in Russia's fold during presidential elections there that badly backfired. This year he has been hit with the first mass protests to spill onto the streets since he came to power in 2000.
Kasyanov's return to big politics is a sign parts of Russia's political elite may be ready to challenge Putin's previously unshakable power, said Lilia Shevtsova, political analyst with the Carnegie Moscow Center.
"This means one very serious thing: that not just Kasyanov but the Russian political class felt the weakness of the current regime," Shevtsova said. "They felt the weakness of Putin. They felt that the moment had come when they could come back on the political stage."
Kasyanov, who as prime minister had strong liberal credentials, said he was not ready to name a party or movement that he was ready to align himself with. He said the right democratic wing of Russia's political scene was too divided.
He stressed that he did not consider himself to be a member of the opposition. Instead, he said, it is the regime itself that is now the opposition to the previous course, the course people voted for in the 2003 parliamentary elections and again in the 2004 presidential election.
Political opposition leaders such as Irina Khakamada, who ran against Putin in 2004, expressed the hope that Kasyanov could be inspired by the path to power carved by Ukraine's Viktor Yushchenko, a former prime minister who won the Ukrainian presidency in December after weeks of mass demonstrations.
"Kasyanov has got status and past experience," Khakamada said. "He is from the elite. ... You can work with this material. But the mass demonstrations are not just anti-Putin they are anti-Yeltsin. They hate Yeltsin and [Health and Social Development Minister Mikhail] Zurabov equally. Putin is still more or less above it all. The protests are not ideological yet."
Yushchenko, she said, "had a clear program, a group of support, and he widened that group by talking to people. He made a lot of compromises."
"Kasyanov has made the first step. ... But apart from criticizing the current regime for its lack of democracy, it is important for him to say what he thinks about the past ... and invite parties to talks," she said.
"For a new Russian president to take power, whether this happens on the streets or not, he has to talk to the people. It's not enough for him to be a leader of the democrats, he needs to be leader of all Russians."
Kasyanov on Thursday refused to talk about the events surrounding his dismissal last year, but openly criticized the leadership for turning away from the liberal course.
He said the government has turned away from recognized democratic values, strict division of power, independence of the judicial system, freedom of the press and the protection of property rights.
Kasyanov stopped short of naming names. He also acknowledged that his own Cabinet's work had not been perfect.
"I am not saying that everything was good, but right now we are moving in a different direction," Kasyanov said.
"The direction has changed. It is an incorrect one. It harms, it negatively affects the economic and social development of the country," Kasyanov said.
Among his critical remarks addressed to the government, Kasyanov named what he said was the badly explained, planned and implemented social benefits reform.
Another major failure, Kasyanov said, was the loss of control over inflation.
Some observers wondered if Kasyanov had tipped his card for the presidency too early - a move that could simply end in legal and political pressure on him. Shevtsova said he was most likely to have weighed the potential dangers.
"He was a bit ambiguous. He still has a chance to step back," she said.
Sergei Markov, a Kremlin-connected political analyst, said there was no chance Kasyanov could stay away from politics for too long.
"Politics is like sex. Those who have never tried it can't understand the attraction. But those who have can't keep themselves away," Markov said.
TITLE: Parents' Plea
On Adoption
PUBLISHER: The Associated Press
TEXT: MOSCOW - A group of Americans who have adopted or are waiting to adopt Russian children have appealed to Russian President Vladimir Putin to ease the procedure for foreigners, according to a letter published last Tuesday in Izvestia.
The letter, which was published as a paid advertisement two days before Putin met with U.S. President George W. Bush in Bratislava, asked the Russian president to help resume the process of accrediting foreign adoption agencies in Russia, which it said had been stalled.
"We, 7,000 American families are writing this letter to draw your attention to the serious problems that have come up lately in the sphere of adopting Russian orphans,'' the letter said.
It was signed simply 7,000 American families and it was not immediately possible to find out who had placed the ad.
The letter also urged Putin to speed up the work of Education Ministry officials charged with issuing documents needed for adoption.
The letter claimed that Russian lawmakers responsible for working out adoption legislation were deliberately putting up obstacles to foreign adoptions.
Galina Krasnitskaya, an adoption expert with Russia's Right of the Child advocacy group, said about 125,000 new orphans or abandoned children are registered in Russia every year.
Krasnitskaya said a commission responsible for accrediting foreign adoption agencies was closed down in the midst of last year's overhaul of government ministries and agencies.
"But no one bothered to create a new one or to restart the old one,'' she said.
TITLE: Youth Groups Say the Time Has Come to Oppose Putin
PUBLISHER: Staff Writer
TEXT: MOSCOW - Two liberal youth movements joined forces on Thursday in their fight against President Vladimir Putin's policies and claimed the time was right for a mass pro-democracy movement in Russia similar to those in Ukraine and Serbia.
The Yabloko party's youth wing and the fledgling youth movement Idushchiye Bez Putina, or Moving Without Putin, signed a pact to work together to fight against what they saw as Putin's increasingly authoritarian policies.
At a news conference in Yabloko's Moscow headquarters, the party's youth leader Ilya Yashin and Moving Without Putin's Moscow organizer Roman Dobrokhotov predicted Russia would soon have a student movement similar to those that organized successful street protests leading to changes of government in Ukraine and Serbia.
Ukraine's Pora, or It's Time, movement was credited with being the backbone of the opposition street protests in last year's Orange Revolution, while Serbia's Otpor, or Resistance, movement played a key role in protests that led to the toppling of President Slobodan Milosevic in 2000.
If such a movement were to form in Russia, the Kremlin would see its worst nightmare come true, political analysts said.
"Those in power are afraid of a strong youth opposition," Yashin said. "Our task is to shake the students and to urge them to take to the streets. ... In Russia there will be an organization similar to Pora's in Ukraine. It's just a matter of time, we'll get there."
Yashin said the two youth movements' main duty was to oppose the country's "authoritarian political regime."
"It is important at this right moment to create a student protest movement. Our mission is to be in the vanguard of social opposition to Putin's regime," he said.
Pointing to a map of Russia on the wall behind them, Yashin and Dobrokhotov said a host of clenched fist signs, the symbol of Serbia's Otpor movement, showed the places across the country where other student opposition movements operated. They said they hoped to join forces with these groups that currently were scattered and lacked proper organization.
"Our values are liberal democracy, civil rights and freedom, our methods are street protests to influence mass consciousness. We want to teach people how to fight for their rights," said Dobrokhotov, who was wearing an orange shirt.
Asked whether the shirt was in honor of the Orange Revolution street protests in Kiev, Dobrokhotov said it was a color that "unites those who fight for freedom."
"This is a color that is not linked to extremism or nationalism," he said.
Coming after weeks of street protests against the monetization of benefits, political analysts said Thursday that the formation of a Pora- or Otpor-style opposition youth movement in the country was what the Kremlin feared most.
"The Kremlin has a paranoid fear of what happened in Ukraine occurring here. They fear their own shadow, so can you imagine how much they fear such a scenario?" said Yury Korgunyuk, an analyst with the Indem think tank.
Independent analyst Andrei Piontkovsky said that in an effort to prevent a strong opposition youth movement from developing, the Kremlin was trying to organize a new youth movement to support its policies.
The Kremlin's new movement, which has the working name of Nashi, or Ours, will replace the pro-Putin Idushchiye Vmeste, or Moving Together, movement that the anti-Putin youth movement mockingly took its name from, he said.
Moving Together's reputation has been tarnished by some of its more controversial initiatives, such as burning books of writers it accused of using pornographic language, and has been accused of inducing its student members to take part in rallies by threatening them with sanctions from their universities.
But Yashin predicted the new pro-Kremlin youth movement would soon meet with strong opposition from liberal-minded students.
"Those in power are organizing this new movement to make us believe that young people are for Putin. This means that those in power are afraid to see a student protest movement in Russia," Yashin said. "They are afraid of having a Russian Pora. They're right, they're gonna get it."
Alexei, a student at Moscow State University who asked for his last name not to be published, said that last week a girl from Nashi invited students in the chemistry department to join the new pro-Kremlin movement.
"She told us that a terrible revolution took place in Ukraine last year, then said, 'You don't want to see the same here, do you? So come and join our organization,'" Alexei said.
Pora chairman Andrei Yusov said by telephone Thursday from Kiev that a "huge number" of young Russians had contacted the Ukrainian youth movement during the Orange Revolution for advice on creating a similar movement at home. Yusov said he could not put a figure on how many requests his organization had received but said, "Young Russians are interested in founding a democratic opposition in their country."
Yusov said that the Yabloko and Union of Right Forces' youth sections had also been in contact with Pora.
In an indication of government fears about an Ukrainian-style opposition movement, the latest music video by Ruslana, winner of last year's Eurovision Song Contest, has been cut for Russian television to remove scenes of the singer, a supporter of new Ukrainian President Viktor Yushchenko, taking part in Kiev street protests.
Piontkovsky said that a Pora-style youth movement could now have good chances to develop in Russia.
Moving Without Putin said it has no business sponsors so far and recently organized a demonstration with $100 collected from its members.
Created in St. Petersburg on Jan. 5 and two weeks ago exported to Moscow, Moving Without Putin was born during the protests against the monetization of benefits. Dobrokhotov said that in St. Petersburg many people from Moving Together had joined the new opposition group.
"They saw what was going on from the inside. Many of them are ready to testify that they were forced to take part in demonstrations," he said.
In just two weeks, Dobrokhotov said, Moving Without Putin has recruited 100 members in Moscow. Yashin said that Young Yabloko has 1,600 members nationally. Both youth groups said they had planned to take part in a demonstration against Putin's policies in Bratislava but were denied visas.
TITLE: Oil Club: Land Auction Rigged
PUBLISHER: Staff Writer
TEXT: The Oil Club of St. Petersburg issued Thursday an open letter to Governor Valentina Matviyenko protesting against the conditions introduced by City Hall for the land plot auction.
The sale of plots, many of which are likely to be developed as new gas stations, looks to have been done in favor of just one major company, the oil traders said.
According to local media reports, the authorities are backing the interests of LUKoil, one of the major fuel suppliers in the region.
"We are bound to approach you openly because of the current situation over the auctions for the right to sign rental agreements for land plots," said the Oil Club's letter, published in local media. "To be more exact, this is about one lot of land plots that contains 30 of the most attractive spots.
"City Hall promised to distribute the plots to build gas stations only through open trade, in conditions of transparency and competition. Partially this promise has been fulfilled," the letter said.
"The practice of directly handing over the sites to build gas stations has been stopped. However, the auction conditions do not satisfy market tendencies and are harmful to the St. Petersburg budget," the letter said.
In mid February City Hall filed auction documentation for 56 plots of land that were collected in several lots. The biggest lot included 30 sites in total and had a starting price of $10 million.
According to auction rules a company interested in this lot would have to pay a deposit equal to the starting price plus 2 billion rubles ($71.4 million) in tax to the city budget.
Earlier last week the Oil Club requested the federal anti-monopoly service to initiate a case against City Hall, alleging that the auction's rules were organized against national legislation on competition. Concurrently, the Oil Club asked the service to stop the auction.
Oleg Ashikhmin, the Oil Club president, avoided naming the companies that were behind the letter, but insisted that the club's members, who control 60 percent of the city's fuel retail market, would find it impossible to compete in the sale of the biggest lot.
"The companies that contacted me were not just the local operators, some were also Moscow-based. And all told me that they would not be able to participate in an auction on such conditions," Ashikhmin said in a telephone interview.
"The scheme in our view looks this way: an auction will be organized with the participation of two companies, a really big one and another, which would be fake. The big one would win and then file a letter to City Hall, requesting to change the conditions of the agreement," Ashikhmin said.
"This is written down in the auction rules: city hall has the right to change conditions of the agreement," Ashikhin said.
"LUKoil did not contact me," he added.
In April last year the local fuel operators filed a complaint with the City Prosecutor's Office and the local anti-monopoly committee, asking for City Hall to be stopped from handing over 60 sites for new gas stations to LUKoil.
According to local politicians LUKoil was behind the financing of Governor Valentina Matviyenko's election campaign in 2003.
Earlier in April 2004 the governor signed an agreement, according to which LUKoil would invest up to $100 million into local fuel market development until 2007, and spend another $30 million renovating the Stieglitz Palace at 68 Angliiskaya Naberezhnaya.
City Hall would not comment on the oil traders' demands.
"I'm not sure that we have received the letter," Natalya Kutabayeva, the governor's spokeswoman, said Friday.
Kutabayeva also denied allegations that Governor Matviyenko could have specifically backed LUKoil's interest.
"Let's not aggravate the situation. Matviyenko has nothing to do with the way the rules for the auctions are determined," Kutabayeva said.
LUKoil has also distanced itself from arguments with local oil industry operators.
"We will refrain from any comment on this matter," Polina Lavrova, a spokeswoman for the St. Petersburg branch of LUKoil, said Friday in a telephone interview.
"The question of whether LUKoil intends to buy any plots of land or not will be made in Moscow. So far nobody has said anything about it," she said.
TITLE: Premium Rate Services May Be Paid Via Mobiles
PUBLISHER: Staff Writer
TEXT: Mobile phone users could soon be using their phone to make online purchases, set high stakes in web casinos and even receive medical or legal advice over the Internet, if major content provider Infon can persuade network operators to join it.
The network operators are protesting, however, saying the existing telephone pre-payment system is neither capable nor licensed to receive payments for third-party services - those not specifically aimed at mobile phones, as opposed to, say, ring tones.
"The [online services] market is more than ready for a wider spectrum than the current choice of melodies, Java games and pictures," Anna Chesnova, web-sales manager at Infon in St. Petersburg, said Friday at a roundtable meeting between mobile operators and content providers.
"Not everyone has a credit card, but nearly everyone has a mobile phone. It makes sense to pay for online goods and services via SMS," said Kirill Shranko, general director of Infon's web content development partner Aggregator.
Infon proposes marketing products advertised for sale on the Internet. For instance, a cellphone owner could bid for a car they saw on a website by sending an SMS to a specially created number that's charged at a premium rate. In return, the user will be sent a text with a code that can then be entered online to access the car seller's contact details.
A similar method could be used to join paid personals or chat sites, or to interact online with legal or medical consultants, arranging payments for the expert advice at the cost of an SMS.
Some web sites already run a similar scheme for free, but with low security and poor service, Chesnova said, adding that were the mobile operators to agree to running premium-rate lines it would guarantee service quality and popularize more mobile-related consumerism.
The market possibilities are not as eagerly viewed by the mobile networks.
"As it stands, when our clients put money on their account, they are investing in our services," Mikhail Zhukov, Northwest Megafon's head of development and extra services promotion department, said Friday.
"Spending that credit on content provider services decreases our take. We are not registered as a bank to support payments for third parties," Zhukov said at the meeting.
Artyom Volkov, head of product and services development for MTS, agreed, saying mobile networks would encounter legal and tax difficulties were they to accept payments for non-operator services.
Neither Megafon, MTS, nor Tele2 discounted some cooperation with content providers on premium service projects, but they could not see them as clear-cut cases of success.
At the end of December last year mobile operator VimpelCom froze several numbers that Infon supported just two weeks after they were introduced.
Yevgeny Kruglov, in charge of business client relations at VimpelCom, said Monday that the number for a St. Petersburg-based personals website and an Internet provider number were cancelled because their lines were charged at a premium rate - which was a direct contract violation.
"We have one unified contract that all content providers sign, and it states that we do not accept third-party payments. It's the same contract that Infon signed, they knew our policy," Kruglov said in a telephone interview.
"They introduced the [premium lines] without consulting us and we reacted immediately by freezing those lines," Kruglov said.
Not only is the acceptance of payments against federal laws, but operators see problems of accountability to their customers as a barrier.
"Since all the content services run through us, we have often had to shoulder customer dissatisfaction claims for services that we did not create," Megafon's Zhukov said. "At the same time, the extra services are not our best money earners - that's still the voice calls."
Oksana Pankratova, leading analyst at iKS Consulting, said that launching premium rate SMS-supported services would not be complicated technologically speaking. Hoever, it would require serious investment, which operators remain wary of given voice calls collect such a large percentage of their profit.
Existing premium services are not worth much more than 1 percent of the national mobile telecom market, ten times less than the figure in European countries, she said Monday in a telephone interview.
"It's a market that still needs forming," Pankratova said. "The operators often complain about the legal issues of [premium rate services], but all the setbacks could be solved. Operators make quicker, easier money elsewhere. As soon as growth [in profits] from calls decreases, they'll consider this sector."
According to a Gallup poll, 92 percent of Internet users have a mobile phone, while 1.5 percent of people who have used the Internet at least once have gambled at online casinos, Internet agency Traffic reported Friday.
Infon said Friday it expected the network operators to begin cooperating with them within three months.
TITLE: Oil Terminal Plans Recast
PUBLISHER: The St. Petersburg Times
TEXT: Oil terminal construction projects in the Leningrad Oblast are set for a reshuffle, Oblast officials said Monday.
TNK-BP, a major international oil company, delayed the construction of an oil terminal which it planned to develop in the Ust Luga port.
Construction of the $175 million project was supposed to start in the second quarter this year, and be completed by the fourth quarter of 2006. However, the company extended the project planning period, and will not complete the terminal until 2008, said Oblast Vice Governor Grigory Dvas at a news meeting Monday, Interfax reported.
The delay was due to changes in the Ust Luga general development plan, Dvas said. TNK BP has said earlier that the terminal, once constructed, will have the capacity to process 7.5 million tons of oil annually.
Meanwhile, domestic oil company Severo-Zapadny Alliance will invest 9 billion rubles ($30 million) into the construction of an oil terminal with an 18-million ton processing pace, Dvas said. The terminal will be located in the Oblast port of Vistino near the Kingisepp region, he said.
Construction will be completed in two phases. The first will set up a processing capacity of $10 million tons and will be ready by 2008, Interfax reported.
TITLE: IN BRIEF
TEXT: For the Record
ST. PETERSBURG (SPT) - Reksoft, a St. Petersburg-based software outsourcing company announced turnover growth of 54 percent for 2004. The company would not disclose exact figures.
Five new international companies became Reksoft's clients in 2004, including Denmark's Saxo Bank and Finland's UPM Kymmene, Reksoft's marketing manager Svetlana Antonyuk said Monday.
Reksoft, founded in 1991, is one of the largest IT developers in the city, employing over 220 staff. The company also said it will expand its partner networks to Germany and India.
TITLE: IN BRIEF
TEXT: Siloviye Win India Bid
MOSCOW (Bloomberg) - Siloviye Mashiny, the engineering company that Siemens AG is seeking to buy, said it won a $270 million contract to supply equipment to an Indian power station.
Siloviye Mashiny, which is controlled by Interros Holding, one of Russia's largest financial-industrial groups, will design, produce delivery and install equipment including turbines for the Barh thermal power station being built in Bihar in east-central India, the company said in a press statement.
Barh's first energy unit will start production within 46 months, according to the contract. Siloviye beat Siemens, which also bid for the contract in a tender organized by National Thermal Power Corporation, Siloviye said in the statement.
Siloviye Mashiny last week said net income rose more than four times to $15.06 million, from $3.24 million in 2003. Revenue almost doubled to $638.9 million. Siloviye expects operating profit to jump 38 percent this year to $80.9 million.
Norilsk Output Rises
MOSCOW (Bloomberg) - Norilsk Nickel, the world's biggest miner of nickel and palladium, increased nickel output by 1.7 percent last year and expects 2005 production to be stable.
Nickel production last year rose to 243,000 metric tons from 239,000 tons in 2003. Copper output fell 0.9 percent to 447,000 tons from 451,000 tons, Norilsk said in a statement.
Nickel production in 2005 will be between 240,000 and 245,000 tons and copper between 440,000 and 450,000 tons, Deputy General Director Tav Morgan said in the statement.
TITLE: Lebedev Pleads Innocent In First Court Testimony
PUBLISHER: Staff Writer
TEXT: MOSCOW - Platon Lebedev, one of Mikhail Khodorkovsky's closest business partners, gave testimony for the first time in his eight-month trial Monday, avowing his innocence and slamming the prosecution for sloppy work.
Lebedev, the former president of Bank Menatep, has been in custody since July 2003. He has since been charged with embezzling state property, tax evasion and large-scale fraud. He is standing trial in Meshchansky district court together with Yukos founder Khodorkovsky, who testified on Friday.
"The claims and deductions of the prosecution are contrary to the facts. They are not based on the Constitution, the laws of the land, on the evidence or facts and in many cases are simply artificial," Lebedev said, speaking from the defendants' cage he shares with Khodorkovsky.
The case against the two men centers around their role in the 1994 privatization of the Apatit fertilizer plant. The prosecution claims they defrauded the state by setting up four front companies in the auction for 20 percent of Apatit and later failed to invest the funds they promised.
Lebedev said the charges against him were "slanderous" and based on "deliberate lies" and "absurd contradictions."
Strange phrasing and the lack of any logic made the case incomprehensible to him, he said.
The trial of Khodorkovsky and Lebedev, two former executives of what was once one of the country's leading industrial groups, is widely seen as part of a highly politicized struggle between the Kremlin and Menatep, Yukos' parent company. The oil company has been all but dismembered after crippling tax bills of $28 billion led to the auctioning off of its key production unit, Yuganskneftegaz, in December.
Since the beginning of the trial, Lebedev's lawyers have claimed that he is suffering from cirrhosis of the liver or cancer. Lebedev drifted into rambling and sometimes sarcastic explanations on how banks were run and what the political and economic conditions of the early 1990s had been like. He also provided an in-depth account of his career and education.
Lebedev gave testimony following Khodorkovsky, who likewise refuted all the charges and slammed the prosecution for inventing the charges.
Dmitry Zimin, the respected founder of Russia's second-largest mobile provider VimpelCom, was among the observers in the gallery who exchanged smiles with Khodorkovsky on Monday.
"I came to look Misha Khodorkovsky in the eyes and show my sympathy for him," said Zimin, who has publicly criticized the legal assault on Yukos. "My position has been published and my position hasn't changed."
In an interview published Monday, a Khodorkovsky lawyer said he feared for the life of his client.
"There are things which give me cause for concern about his health and even his life," Yury Shmidt, a member of Khodorkovsky's defense team, told Nezavisimaya Gazeta. When asked what he meant, Shmidt declined to elaborate, the paper said.
TITLE: Transparency Scares Business
PUBLISHER: Staff Writer
TEXT: MOSCOW - The merits of transparent financial practices may be well known, but for many Russian entrepreneurs, cleaning up the books still makes little business sense.
Although investors and banks are more likely to finance a transparent company, the expense involved in switching to more open accounting can be daunting, Natalya Polishchuk, vice president of Delta Private Equity Partners, told a forum of small-business owners on Friday.
"There are industries, where [a company's] 15 percent profitability can turn into negative five," Polishchuk said, speaking at a quarterly meeting sponsored by the U.S.-Russia Center for Entrepreneurship - which is funded by Delta - and Svoi Biznes magazine.
Not only does paying consultancies to eliminate shady schemes cost thousands of dollars and cut into profits, becoming transparent when other market players are not may erode business competitiveness, she said.
Banking is the country's most opaque sector, while telecommunications is the most transparent, according to Standard & Poor's, which found that the ownership of 76 percent of privately owned shares - worth some $114 billion - is not publicly disclosed.
Konstantin Gubin, partner at RB Partnership consultancy, said that restructuring costs often scare off entrepreneurs.
"'Are you crazy? How can I work like that?'" Gubin recalled a client exclaiming after being told that cleaning up his books would decrease the profitability of his firm from 30 percent to 8 percent.
"If your business is dependent on illegal acts, then transparency is not for you," David Gray, head of audit at PricewaterhouseCooper's, said in a phone interview. But without transparency, companies would not get access to cheap financing, he said.
"Western investors are ready to invest in Russian companies," said Delta's Polishchuk. "But very often they cannot find an object for investment."
Albert Gusev said he didn't have a choice but to shed light on the books of his company, Nizhny Novgorod-based Sladkaya Zhizn.
"Transparency was not our end goal ... [but] we wanted to grow," he said. To stay competitive and develop, Sladkaya Zhizn formalized relationships with shareholders, hired auditors and attracted investors. Sladkaya Zhizn was then able to purchase Spar's master franchise and develop supermarkets under the Spar brand.
Although transparency may have helped Gusev's business grow, entrepreneurs at the forum asked why a company not in the market for extra financing would make the extra investment.
"Even if a company doesn't have any immediate plans to seek debt financing, it may want to do so in the future," Gray said. "Hopefully, you can see interesting opportunities for development in the future."
Nevertheless, most small entrepreneurs are not interested in legalizing their financials, Sergei Borisov, president of Opora, which supports small and mid-size business development, said in an e-mail.
What will really spur small companies to become more transparent is a simplified tax system, he said.
TITLE: Houston Rejected Yukos' Plea for Bankruptcy
PUBLISHER: Staff Writer
TEXT: MOSCOW - A Houston bankruptcy judge has dismissed Yukos' petition for bankruptcy protection in the United States, apparently lifting a major barrier in the Kremlin's drive to create a national energy champion via the merger of Gazprom with state-owned oil firm Rosneft.
The ruling, issued late last week and immediately disputed in an appeal filed by Yukos, came after days of deliberation in an unprecedented case that sought to pit the U.S. legal system against the Russian government over its plans to break up Yukos over back taxes.
The proceedings had put the brakes on a Kremlin push to merge Gazprom with Rosneft - which acquired Yukos' main production unit, Yuganskneftegaz, after a December auction - over fears Rosneft could face legal action for being in breach of U.S. law.
But in what Judge Letitia Clark called the "largest bankruptcy case ever filed in the United States," she ruled that Yukos' "sheer size" and "impact on the entirety of the Russian economy weighs heavily in favor of allowing resolution in a forum in which participation of the Russian government is assured," according to a copy of her ruling.
The Russian government had not sent any representatives to participate in the Houston hearings and had reacted angrily to the case, claiming the Yukos affair was a matter for Russian courts to decide.
Yukos had argued the U.S. bankruptcy court was its last chance for protection against the Russian state, which, it said, had rejected all its overtures to restructure its debts and was set on "expropriating" its assets.
But Clark also found that Yukos' ability to carry out a restructuring plan under U.S. bankruptcy protection without the cooperation of the Russian government would be "extremely limited" - a factor that, according to the ruling, was another reason for the dismissal.
Yukos immediately challenged the judgment. Its lawyers filed a motion late Friday that called for a new trial and for Clark to keep a stay protecting Yukos' assets in force until all its opportunities to contest the ruling had been exhausted.
"If there is no stay in place while Yukos pursues its post-judgment remedies, Yukos will likely suffer irreparable harm," Yukos' lead lawyer, Zack Clement, wrote in the appeal.
Clark issued an automatic stay against the sale of Yugansk after Yukos lodged an emergency petition for bankruptcy protection just days before the auction was to take place. The government sold off the unit anyway. But since then, it has backed off from taking action against Yukos' remaining assets, including production units Samaraneftegaz and Tomskneft, Clement said in his filing.
"Without the automatic stay, Yukos will be dismembered quickly through inappropriate processes," he said.
Gazprom spokesman Sergei Kupriyanov said Friday that the ruling will ease the way for Gazprom to go ahead with the merger.
Gazprom local shares climbed to a 10-week high to close at 79.5 rubles (about $3) Friday on news of Yukos' setback. Gazprom's merger with Rosneft is also set to open the way for the lifting of barriers to greater foreign ownership in Gazprom, a long-expected watershed event for the market. By merging with Rosneft, the government aims to increase its stake in Gazprom to 51 percent, allowing for trade in the rest of its shares to be liberalized.
TITLE: The Business of Adventure Is a Steep, Rocky Climb
PUBLISHER: Special to The St. Petersburg Times
TEXT: Shying away from challenges has never been his style. Travel entrepreneur Stanislav Kostyashkin has conquered some of the world's highest peaks and undertaken expeditions to the remotest places on the planet.
After seven years of pushing himself to the limit, Kostyashkin is facing quite a different challenge - that of running Continent Express, a Moscow-based corporate travel management company that has recently expanded to St. Petersburg.
Like all good beginning's, Kostyashkin's had an element of luck. He grew up in a well-to-do Soviet family where his father recognized his son's enthusiasm for traveling and mountain climbing early.
At the age of four Kostyashkin joined his father on a trekking trip.
"My father was a great Soviet scientist and famous university professor. He usually went kayaking and mountain trekking during his two-month summer holidays," Kostyashkin recalls.
"As he was always surrounded by people at work, he needed such trips to remote, sparsely populated places to relax."
Following in his father's footsteps, Kostyashkin enrolled in the geographical faculty. While a student, he also served in the Soviet army and was lucky to be stationed with the frontier troops at Vyborg and later in Karelia.
The young student also decided to enlist in the Communist Party, something he now says was "necessary for making a career." But it was an encounter with the Soviet polar traveler Dmitry Shparo that Kostyashkin describes as a turning point.
"I had known Shparo's son from my time at university. When I got acquainted with his father, he immediately took me into his expedition group, and I started to be actively involved in arctic expeditions," Kostyashkin says.
With time Kostyashkin felt that he wanted to plan his own trips. From 1992 his tours led him to the Soviet Union's remotest places, and beyond.
One expedition that sticks in his mind was the "Olympic expedition," owing its name to the places where it started and was supposed to end.
"We planed to go on skis from Lillehammer in Norway, the venue of the Winter Olympic Games in 1994, then to Nagano in Japan, the 1998 Winter Olympics venue. After two years and more than 10,000 kilometers covered on skis, we ended up in Chukotka," Kostyashkin says, adding "but the scenery was wonderful."
Kostyashkin soon realized that thorough organization was the decisive factor of an expedition's success.
"We got financial support from the Ministry of Defense and the frontier troops," he says. "Without the support of the local authorities, the army and aviation it would have been difficult to carry out those trips successfully."
Besides government funding, his expeditions were financed to a large degree by corporate sponsors, most of which were large Norwegian companies.
"I was not well versed in business at that time but I understood intuitively that we needed as many sponsors as possible to keep our costs low," he says.
He soon established a network of contacts all over the world: an ideal springboard from which to start his own adventure travel business in Russia, perhaps,. but Kostyashkin rejected this idea.
"Unlike in Alaska and Canada, Russia does not have an infrastructure for adventure traveling: there is no insurance system, no rescue system, no [recourse to] supplies - in short, it would be an adventure indeed!" Kostyashkin says.
"It is against my personal principles to take money for something that does not exist," he says. "I am ready to organize extreme expeditions for myself and my friends, but not for money."
Soon Kostyashkin found another market niche in tourism. Utilizing the contacts with sponsors and his own travel experiences, he decided to provide corporate travel services to Russian companies.
"In the mid-90s there was no [such thing as] corporate travel management in Russia," he says. "As my Scandinavian friends said, you can only turn to a local Aeroflot ticket office or to some dodgy tourist company, working according to the principle of 'Grab as much money as you can and run.'"
Even if most of his week is now taken up with the business, Kostyashkin still finds time to indulge in his passion for adventure traveling and mountain climbing. This year, for instance, he traveled with a friend to the Himalayas.
Together with Svein Ruud, the former commercial counselor for Norway in Moscow, he went helicopter skiing in Kilimancharo and Kamchatka, crossed the Baikal Lake with skies and went skiing in Siberia.
The trips may not compare in Koshtyashkin's mind to his earlier ventures, but they are a test - although one Ruud says his companion is able to pass with flying colors.
"He has all that it takes when you are going out there on your own: A great personality, physical strength and a cheerful, motivating mood," Ruud said.
Kostyashkin is quite aware most of his fellow countrymen would prefer something like a Mediterranean resort. In this regard, he believes the Russian government made a strategic mistake in the early '90s by not investing in the domestic tourist resorts on the Black Sea.
"There are no [current] government programs to develop tourism at Russian resorts and thus Russian money does not stay in the country. It is clear that Black Sea resorts cannot compare to Sardinia, but they can certainly match Egypt," Kostyashkin says.
On the whole, the adventurer-entrepreneur keeps optimistic about the economic development in his country.
"Russia is an integral part in world business," he says. "It cannot do without the big wide world and the big wide world cannot do without Russia," he says.
The sterling charisma of a professional mountaineer has certainly added to Kostyashkin's professional life.
"On the one hand, he is very determined in business and obviously in life as well. He knows what he wants and how to get it," says Irena Jovanovic, sales and marketing manager at British Airways Russia.
"On the other hand, he also is an excellent team player and not too shy to ask for advice if he needs it."
For himself, Kostyashkin thinks that by facing extreme conditions he has learned to fight to the end and never give up. It is an attitude he holds true when it comes to doing business.
TITLE: Putin Rues Condition Of Aircraft Industry
PUBLISHER: Combined Reports
TEXT: MOSCOW - President Vladimir Putin criticized domestic aircraft producers Tuesday for being uncompetitive and plagued by vested interests, and urged them to depend less on state support.
"Alarming and negative trends are obvious," Putin was quoted by the Itar-Tass news agency as telling officials at Zhukovsky, a town outside Moscow that has been the main center of Russian aviation since Soviet times.
"It's clear that civil aircraft are becoming increasingly uncompetitive, that their attractiveness is falling and that they don't meet international levels of comfort," Putin said, adding that "group interests are contradicting national interests.
"That is doing nothing to strengthen our position on the global market."
In Soviet times, domestic aircraft manufacturers such as Tupolev, Ilyushin and Yakovlev accounted for more than a quarter of global aerospace production and were a force that Western producers like Boeing had to reckon with.
Now production and research levels are only a fraction of what they used to be during the Cold War years.
Unlike civil producers, warplane makers such as Sukhoi and MiG have staged a remarkable comeback on the global market in recent years, exporting two-thirds of Russia's total arms sales and fetching more than $3 billion in revenue per year.
Domestic airlines like Aeroflot have already started to replace their aging fleets with Western-built planes, raising fears in the government that domestic aircraft manufacturers will cease to exist altogether.
Putin said that opening up the sector, still tightly regulated by the state, to private investment should help avoid that.
Although he did not specify whether he was talking specifically about domestic or foreign investment, Western companies are watching reform in the aviation industry very closely.
He added that he also fully supported the idea of merging the big names of Russia's aircraft industry into a monopoly in the next two years, a move aimed at strengthening the ailing sector.
The merger of the country's most famous brands - Sukhoi, MiG, Tupolev and Ilyushin - will take place at the end of 2006, Interfax reported, citing Industry and Energy Minister Viktor Khristenko.
After the new company is set up, it will be registered on Dec. 31, 2006, he said.
The government initially will hold between 60 percent and 70 percent of the corporation, Interfax quoted Khristenko as saying.
(Reuters, Bloomberg, SPT)
TITLE: Seaports to Get $190M Boost
PUBLISHER: Staff Writer
TEXT: In an attempt to help Russian seaports retain their competitive edge, Rosmorport said it will invest 5.3 billion rubles ($190 million) in port infrastructure development in 2005.
Rosmorport, the federal seaports management agency formed in 2002, will establish maintenance service branches in St. Petersburg, Kaliningrad and Novorosiisk to offer towing and docking services, as well as overseeing ship safety, Rafail Bikmukhametov, spokesperson for Rosmorport said Monday in a telephone interview.
"Considering nothing has been done for port development in the last 14 years, such investment should provide for a considerable improvements to our ports," Bikmukhametov said.
Beside offering their expertise as sea agents, Rosmorport branches will be responsible for processing ballast water from ships, collecting garbage, cleaning oil spills and delivering fuel.
The branches will act independently of port authorities, Bikmukhametov said. It is yet unclear how much financing will be allocated specifically for the new branches. Rosmorport spent 4 billion rubles ($144 million) on port infrastructure development in 2004.
The domestic ports have been facing increased competition from ports in the Baltic and the Scandinavian countries since the railroad tariffs were hiked by 12.5 percent at the beginning of this year, Alexei Mitrofanov, head of Beloye More (White Sea) port complex, told an industry gathering last month.
An improvement in port infrastructure will be essential to insure the survival of the domestic seaport industry, according to industry insiders.
"The competitiveness of Russian sea ports is dropping," Mitrofanov said.
"Competition will become even tougher in one or two years when Russia enters the WTO. [Russia] will have to do away with protectionist tariffs," Andrei Karpov, head of St. Petersburg's transport and transit committee, said at the gathering.
"Tariffs will have to be fair. Meanwhile our seaport industry is much more bureaucratic and value added services [at ports] are lacking," he said.
Nonetheless, transportation to Russian ports remains 1.7 times cheaper than transporting the same cargo to a port outside the country, according Karpov.
TITLE: EBRD in $663M Link
PUBLISHER: The St. Petersburg Times
TEXT: The European Bank for Reconstruction and Development (EBRD) is planning to invest $663 million into the construction of a new train link between Finland and the Leningrad Oblast, business daily Delovoi Peterburg reported last week.
The EBRD is interested in developing a new cargo rail link between St. Petersburg and Vyborg in order to divert cargo trains from the existing line which would then be reserved for passenger trains, the paper said.
Russian Railways (RZD), alleged to be the chosen contractor for the project, would not comment Monday.
EBRD press-service would not confirm or deny the paper's report, saying Friday that it was not in the bank's practice to comment on projects that have not yet been submitted to its board of directors.
TITLE: Russian Bear Ignores Celtic Tiger
TEXT: The chances of President Vladimir Putin achieving his oft-repeated objective of doubling the size of Russia's economy within a decade might improve if he looked to Ireland as a source of inspiration. But given its state-driven focus on the short term, the Kremlin seems to have missed the Irish lesson that common-sense economics, consistently implemented over a period of decades, is a far better path to economic prosperity.
The land of shamrocks and Guinness has become the envy of developing nations the world over by increasing GDP fourfold, and has moved from having outhouses in the yard to having BMWs in the yard within a generation. Ireland enjoys one of the highest levels of economic activity per capita in the world, some 20 percent above the European average. Critically, growth has significantly boosted overall standards of living, and the Economist Intelligence Unit recently named Ireland the country offering the highest quality of life in the world.
Ireland is a tiny country at the periphery of Europe, devoid of any natural resources. But its lessons on leaping into the elite club of developed economies - applicable to Russia regardless of differences in population, oil reserves or economic legacies - are straightforward: Apply Economics 101 to the real world over the long term.
But don't be deceived, as the devil is in the political will. Just because you know something is good for you doesn't mean you'll necessarily go and do it. Yet decades of emigration and economic decline, raising the real danger of the eventual extinction of Ireland as a country, helped motivate Irish society to bring about lasting change. That Russia could acknowledge the extraordinary depth of its problems - the ongoing commodities-fueled economic boom notwithstanding - and muster the political will to create broad-based consensus for a bona fide transformation appears highly unlikely.
Here are some of the basic economic principles behind Ireland's transformation. Economies grow when more people work, thus adding to the absolute size of the economy. But increased productivity, or greater efficiency per worker, is the real long-term driver of economic growth. The most recent chapter in Ireland's growth was fueled by a 50 percent increase in the number of workers in the economy between 1993 and 2003, as unemployment rates dropped and large numbers of women entered the workforce. Far more significant, though, was that starting in the early 1970s, Ireland entered an era of almost unprecedented improvements in labor effectiveness, one brought about through free trade, liberal economics, investment-friendly policies and a healthy dollop of geographic, historic and linguistic good fortune.
On a macro level, a relatively open economy - largely free from barriers to investment, restrictions on the movement of labor, tariff walls and other distortions - was a critical ingredient to Ireland's economic boom. Starting in the 1950s, Ireland began to turn away from an import substitution model of growth - a virulent strain of which contributed to the failure of the Soviet economy - well before free trade became a development cliche.
For Russia, membership in the World Trade Organization will be the easy part and is de rigueur for any aspiring developing country. Finessing the fine print of international organization bureaucrats is as simple as snowmen in Siberia compared with the enormous challenge of creating an environment that is genuinely supportive of investment. Sustainable long-term economic growth will be elusive without investment, arguably the most important by-product of economic openness.
The economics ministries of most Third World investment black holes - Russia, unfortunately, included - can prattle endlessly about how they are "open for investment." Would-be investors need only send cash, and everything will be just fine.
But a necessary - but not sufficient - prerequisite for investment attraction is the rule of law backed by a strong judicial system and, more generally, a government based on institutions rather than individuals. The dismantling of Yukos vividly illustrated the bankruptcy of pledges by President Putin to bring about a "dictatorship of the law." Similarly disturbing is the rise in corruption, as reflected in the deterioration of Russia's standing in corruption watchdog Transparency International's Corruption Perceptions Index from 71st in 2002 to 90th in 2004.
Ireland cultivated its political, judicial and economic institutions over a period of decades, and enjoyed a more positive legacy than Russia. But rather than sit back and wait - and wait, and wait - for good things to happen, it promoted productivity and attracted investment through, for example, low tax rates. It ensured macroeconomic stability with sound and predictable monetary and fiscal policies. A broad-based partnership between trade unions and industry - imagine socialism for the common good of both sides of the production equation - helped restrain wage growth and keep the economy competitive. Meanwhile, a comprehensive education policy, somewhat similar to that of other countries in Europe, ensured a continued supply of globally competitive young workers.
In part as a result of these measures, for an extended period Ireland enjoyed levels of foreign direct investment, as a percentage of GDP, more than double those of China or Eastern Europe. The country is the recipient of roughly a quarter of all U.S. foreign direct investment in Europe. Reversing a decades-long brain drain, Ireland is a net recipient of highly qualified professionals in the global labor market.
Russia, meanwhile, continues to suffer from pathetically low levels of investment, notwithstanding the perception of progress generated by the occasional headline-grabbing deal. Despite some improvement, albeit mostly of a one-step-forward, two-steps-back variety, the investment environment remains poor at best. The recent announcement that foreign investors would be restricted from participating in natural resource deposit bids is just the latest setback for the Russian investment environment engineered by the Kremlin.
Admittedly, Ireland has enjoyed advantages that Russia doesn't. Membership in what is today called the European Union provided for significant investment in infrastructure and other support, and a large market for Irish goods. A small population and landmass has allowed for greater unity of purpose. That English is an official language has been a key attraction for investors. And the 60 million-strong Irish diaspora has supported the home country in myriad ways.
Of course, the Celtic Tiger has its problems. Building from a higher base, growth is inevitably slowing. Prices have risen dramatically, eroding Ireland's competitive position and increasing poverty rates. Urban centers are struggling to support runaway population growth. Social mores are crumbling as Ireland loses its unique identity to creeping Europeanism.
But these are problems that Russia can only aspire to suffer from. The Kremlin looks unlikely to build upon the few strong policy efforts, such as tax reform, that could lay the foundations for sustained growth. Focusing on productivity, as opposed to a Soviet-style concentration on absolute production growth, has been key to Ireland's success. An ongoing demographic crisis and a crumbling infrastructure pose enormous challenges. And a large natural resource base seems more likely to give Russia license to eternally defer genuine Irish-style reform in favor of living off the latest surge in commodities prices, rather than using them as a driver of positive change.
Until recently, Putin arguably enjoyed sufficiently strong support to lay the groundwork to engineer an Ireland-style success story. Instead, the Kremlin has squandered his political capital and will likely have little of real lasting and significant import to show for it.
Kim Iskyan was a securities analyst in Russia from 1996 to 2002 and now lives in Ireland. He contributed this comment to The St. Petersburg Times.
TITLE: Live Up to Your Words, Gentlemen
TEXT: Discussion of democracy - the state of its health in Russia in particular, but also in the United States - dominated the public remarks of the two presidents in Bratislava. Democracy also was a main topic of discussion during their private meeting, they both made a point of saying.
That is a lot of talk about democracy from two men who have not always shown the highest regard for its guiding principles, and it produced some awkward moments as they responded to journalists' questions Thursday.
Vladimir Putin elaborately defended his commitment to democracy and said any turn toward totalitarianism was impossible. He went on to complain that people in the United States and elsewhere who accuse Russia of backsliding on democracy "do not have a full understanding of what is taking place in the Russian Federation."
He said there are those in Russia who support and those who oppose the decisions being made, for instance the decision to change the way governors are chosen. "But those who are opposed are richer than those who are in favor," Putin said. "They have the opportunity to spread their opinion in the media." So much for the democratic principle of freedom of the press.
Putin defended the decision to abolish elections for governors by comparing the new system to the Electoral College, which appoints U.S. presidents. The comparison was absurd but served as a slight dig at George W. Bush, who lost the popular vote in 2000 but still won the election.
Putin then listened as an Interfax reporter tried to goad Bush with a question about U.S. journalists being fired and Bush hit back with a dig of his own: Sure, American reporters get fired, he said, but not by the government. Putin seemed to turn green.
In Putin's Russia, not only have journalists been fired on orders from the Kremlin, entire television stations have been shut down.
Bush, on the other hand, got off easy. He was not asked about the political commentators who recently were exposed as having been on the federal government's payroll.
Bush was asked about a slip in democracy following the attacks of Sept. 11, 2001. A Kommersant reporter asked him to address the greater powers of the U.S. security services, which he said are used "to exercise control over citizens' personal lives."
Bush responded with a ringing defense of U.S. democracy, pointing to the importance of transparent government decision-making, the rule of law, independent courts and protection of human rights.
We can only hope that Putin - and Bush himself - will take those words to heart.
TITLE: Closing the Values Gap
TEXT: When President Vladimir Putin and U.S. President George W. Bush met in Bratislava last Thursday, Bush managed to focus attention on the need for democratic reform in Russia. Prior to the summit, many observers foresaw a possible ideological rift between the two leaders reminiscent of the Cold War. In his inauguration speech, Bush sweepingly declared that the United States would champion liberty and challenge repression in every corner of the globe. The speech placed Bush at loggerheads with Putin, who has dismantled many of Russia's democratic institutions and threatened private property rights. The U.S. and Russian leaders' differing approaches toward democracy reveal a profound values gap.
When they met in Santiago, Chile, last November, Putin lectured Bush about how Russia's history dictates that it adopt a limited form of democracy. In Bratislava, however, rather than debating various styles of democracy, Bush emphasized universal principles, including a free press, protection of minority rights, political opposition and, most importantly, the rule of law, which is a crucial guarantee of private property and individual liberty. In turn, Putin changed his tune and acknowledged that democracy should indeed follow certain fundamental principles.
Private ownership and property rights, two of the fundamental elements of democracy, have a short history in Russia. Without long-standing traditions to counterbalance it, Putin's authoritarian model enables officials to easily manipulate state institutions and laws, diminishing individual freedom from government interference. As a result, Russian citizens reportedly pay more than $30 billion per year in bribes to secure business licenses, avoid taxes, win court cases and gain access to medical treatment, education, housing and transportation. Official corruption has become a socially accepted norm that inhibits the growth of civil society.
To establish the rule of law in Russia would require the government to completely change its course. Yet it seems intent on doing just the opposite. The Kremlin used purportedly independent legal institutions to renationalize Russia's largest private oil company, Yukos. But Yukos is not an isolated incident. Nor is it the most important. From the beginning of Putin's presidency, the Kremlin has used government institutions in the name of vaguely defined state interests to take private property from Russian small businesses and foreign investors who are adding value to the economy. To disguise this creeping expropriation, the Putin administration has created a dependent judiciary. As a result, Russia lacks several fundamental building blocks of a market economy, the freedom to engage in commerce based on an enforceable contract and guarantees of private property.
Though U.S. and Russian values differ widely, the Bratislava summit reaffirmed the two nations' common interests. Such vital interests provide Bush and Putin the opportunity and incentive to reduce the values gap.
But this will be hard work. Russia's membership in the World Trade Organization, for example, should be predicated on a track record of enforcing laws that protect foreign capital and intellectual property. Not only is foreign capital unsafe in Russia, the Kremlin's dependent legal institutions allow it to expropriate foreign investors almost at will. In Bratislava, Putin suggested that narrow economic interests motivate his critics. In saying this, he has effectively left the door open for the Kremlin to continue interfering with fundamental property rights. Under these conditions, it is risky to conjecture that Russia will be more willing to subscribe to the rule of law after it has become a WTO member.
Ultimately, whether the United States and Russia can engage in broader and more practical cooperation on a range of issues will depend on whether a genuine convergence of values can occur. In essence, the issue is whether Russia will allow civil society to grow sufficiently strong to hold the government accountable and demand the rule of law. In order to create a dynamic civil society, it is essential to guarantee both the liberty of Russian citizens from official extortion and the freedom to protect their private property.
It will be difficult for Bush to gain Putin's acceptance of the supreme value of individual liberty and freedom. Nevertheless, Bush has a compelling case. Russia's economic growth depends on whether the state can guarantee contract law, protect private ownership and encourage an independent private sector where small business can develop and prosper. Russia's security depends on whether it can allow civil society to take root and begin to eradicate corruption. In short, Russia can build a stable democracy based on its own culture only if the state is willing to tolerate more individual freedom and limit economic and political interference.
Matthew H. Murray, the president of Sovereign Ventures Inc., a management consultancy that specializes in small business in emerging markets, contributed this comment to The St. Petersburg Times.
TITLE: Power-Profit Tussle Bad for City, Country
TEXT: The board of directors of Lenenergo recently experienced a conflict with two governors - St. Petersburg's Valentina Matviyenko and the Leningrad Oblast's Valery Serdyukov - who represents Lenenergo's main shareholder, Unified Energy Systems, or UES. At the request of the Muscovites who head the management of UES, the chairman of Lenenergo's board Mikhail Abyzov was required to produce a business plan that generated a profit of 3.13 percent in relation to the company's charter capital. To achieve that goal, Lenenergo should produce a profit of about 1.3 billion rubles ($47 million). Lenenergo's general director Andrei Likhachyov says that the only way to do that is to more than halve the spending on repairs (a reduction from 1.9 billion rubles to 900 million rubles), to reduce spending on wages by 165 million rubles and to drop Lenenergo's charitable expenses, including supporting city ice hockey SKA, on which it spent about $5 million last year.
The governors are unhappy that with such a business plan Lenenergo will be unable to fulfill its obligations to the city and oblast to repair and build new energy infrastructure. These obligations were taken on through a process of agreement about what would be done this year, and as part of a contract covering the development of the city's energy infrastructure until 2010 that was signed in July. Under that program, Lenenergo was supposed to invest 17.6 billion rubles - the city was to contribute 4.5 billion rubles - in infrastructure. Lenenergo managers prepared their business plan for 2005 in accordance with the contract. However, the management of UES rejected that plan, and even accused Likhachyov of inefficiency.
By the way, all the repair plans of Lenenergo were given conditional approval by UES so that the conduct of the main shareholder appears to be a refusal to fulfill the agreements. And this is occurring when the lack of energy infrastructure is already holding back the development of the city economy. The city is supposed to provide sites where engineering equipment can be built, even though Lenenergo has not been able to build them. Barely one new construction in the city has sufficient energy supply. Thus the savings program that Lenenergo faces could create a crisis in the residential and commercial real estate markets.
In these circumstances, it is easy to understand Matviyenko's anger; she has branded UES' conduct as "unstatesmanlike" and said that "unless our position is heard, we will take appropriate measures." Serdyukov has expressed similar dissatisfaction that investment in infrastructure in the oblast is under threat.
At UES they are keeping tight-lipped. It is unlikely to suggest that UES head Anatoly Chubais introduced on his own initiative this policy that is so detrimental to the infrastructure of regions that are already strapped by the reform of in-kind benefits and that has sharpened conflicts at high levels of government. It is not hard to forecast what steps will be taken by two governors that are some of the closest to President Vladimir Putin when they are treated this crudely. Such matters can be resolved in one place only, the Kremlin, from where, by all appearances, the initiative began. But there are good reasons for the initiative.
It's possible that one of the Kremlin groupings thought up ways of how to prevent Chubais financing political opposition parties - the Union of Right Forces or the new democratic one that is in the process of being created. The easiest way to do that, considering the Kremlin intriguers don't have the strength to get Chubais fired, would be to humiliate UES financially in regards to its shareholders so that the company and its subsidiaries doesn't have the means to provide what is most necessary. And the Kremlin dwellers seem not to be worried that such a policy harms the country's economy, just like the battle with Yukos.
Although UES is not simply a private company like Yukos, it is one of the fundamental natural monopolies. It and its subsidiaries serve the development of the regions' infrastructure, without which it would not be possible to fulfill the political goal set by Putin of doubling GDP. But a possible thorn in the side of all this is that the fury of the governors may help the infighting Kremlin groups to defeat a rival by undermining Chubais. It is unlikely that Matviyenko will give up her ambitious plans for the development of St. Petersburg without a fight. So, we can expect a sorting out in the Kremlin.
Vladimir Gryaznevich is a political analyst with Expert Severo-Zapad magazine. His comment was first broadcast on Ekho Moskvy in St. Petersburg on Friday.
TITLE: Core Values
TEXT: Day in and day out, patriotic American dissidents on both the left and the right keep shoveling through the bloody muck of the Bush Imperium. The filth is endless, Augean; Salon.com recently catalogued 34 ongoing major scandals, equaling or surpassing the depravity of Watergate. Yet still the patriots bend to the task, tossing up steaming piles of ugly truth before the public.
And with every loud splattering of fresh Bushflop, there's a flurry of hope that this time, the dirt will stick; this time, the stench of corruption will be so overwhelming that the nation's long-somnolent conscience will be aroused. Yet each time, the rancid slurry just disappears down the drain: The Bushists tell their butt-covering lies, the "watchdogs" of the media wag their tails and all is well again in the land that Gore Vidal so aptly dubbed the United States of Amnesia. No scandal, no matter how outrageous, ever gains any traction.
But there is a simple reason why patriots on both the right and the left are stymied: because the center is rotten to its well-wadded, self-righteous, willfully ignorant core. We speak here of the nation's "great and good," pillars of the community and stalwarts of the established order, the "captains, merchant bankers, eminent men of letters, the generous patrons of art, the statesmen and the rulers, distinguished civil servants, chairmen of many committees, industrial lords and petty contractors," in T.S. Eliot's words - to which we might add, as a modern gloss, the highly credentialed academics, extremely well-remunerated corporate journalists, politically wired churchmen and the innumerable massagers of public opinion and commercial desire.
It is this center - which prides itself on being sensible, moderate, decent and respectable - that has become morally corrupted beyond measure, perhaps beyond remedy. Here, where there should be thunderous denunciations of the Bush regime's rape of American honor - a litany of sins that includes aggressive war, the decimation of cities, vile acts of torture, kidnappings, "renditions," imprisonment without charges, indefinite detention, assassinations, war profiteering and the exaltation of presidential power above the reach of law - there has been only silent acquiescence, or the rare, decorous, timorous murmur, or, increasingly, enthusiastic support.
An obscure news story from last week, buried in the back pages - if noted at all - provides a vivid glimpse of the center rot. It was an ordinary wire piece from Knight-Ridder, standard Washington wonkery about a bureaucratic turf battle. It dealt with one of the recommendations of the "9-11 Commission" - that assemblage of the great and good whose "independent" investigation of the 2001 terrorist attacks on America unearthed a vast tangle of criminal negligence and fatal incompetence for which, miraculously, not a single member of the great and good bore the least responsibility.
The Commission issued a slew of recommendations for upgrading national security, including the much-ballyhooed creation of a new "Director of National Intelligence" to oversee the ever-spreading octopus of U.S. "security organs" - 15 separate spy agencies at last count (that we know about). The wisdom of this advice was borne out by George W. Bush's choice for the post: John Negroponte, the death-squad enabler and atrocity manager best known for burying evidence of CIA-sponsored murders, massacres and torture in Central America during the Reagan-Bush I years. Fresh from not-dissimilar duties in Baghdad, this distinguished civil servant is now bringing his dark arts to the Homeland - to general approval from the stalwarts.
But the sages had another, lesser-known recommendation: consolidating "all secret U.S. paramilitary operations, whether clandestine or covert" within the Pentagon. This would make such operations "more robust," the worthies said. But the CIA objected to having its own secret armies taken away. After months of negotiation, it was decided last week that the Pentagon and CIA would keep their separate paramilitary capabilities.
What exactly are these "paramilitary operations" which the Commission, Congress and all our stalwarts think we should have more of? As Knight-Ridder notes, they are actions "conducted by armed units that do not belong to conventional military formations" - in other words, terrorist groups, according to the Bush regime's own definition. Those designated as terrorists by Bush should not be covered by the Geneva Conventions, we are told, because they're not part of a "conventional military formation." They're outlaws, Bush says, fit to be killed or locked up without charges. Yet of course he commands the largest collection of such "outlaws" in the world.
And "outlaw" is no metaphorical term here. As Knight-Ridder explains, specifically "covert" operations are those "in which the U.S. government wants to be able to deny any involvement" because they "at times violate international law or the laws of war."
Here we come to the crux of the rot. Not a single Establishment stalwart involved in the matter - not Congress, nor the Commission, nor the President, nor the press - objected in the least to this horrifying reality: that the U.S. government routinely violates "international law and the laws of war" in secret terrorist actions by "unconventional" forces, including CIA operatives, local proxies and hired killers. It's simply accepted, across the board, as standard practice. In fact, the only concern about these admittedly criminal actions - directed by unrestricted presidential fiat, with their true ends (Counterterrorism? Personal enrichment? Political power games? Ideological zealotry?) forever hidden from public scrutiny - is how to make them more "robust," more efficient and more deadly.
The great societal bulwarks that should mitigate the abuse of power have instead embraced the barbaric ethos of brute force in order to maintain their own comfort, privilege and self-regard. For them, law has become a pretty sham and honor is a fiction, while respectability and decency are fairy tales for fools and children. Truth will never hold where the center is so murderously corrupted.
For annotational references, see Opinion at www.sptimesrussia.com
TITLE: Multiple Oscars Win Makes Eastwood's Day
PUBLISHER: The Associated Press
TEXT: LOS ANGELES - Backstage at the Academy Awards, Clint Eastwood contemplated how deserving he was to come away with his second best-picture and directing triumph, this time for the boxing tale "Million Dollar Baby."
"There's a lot of great movies that have won the Academy Award, and a lot of great movies that haven't," said Eastwood, whose film also earned Hilary Swank her second best-actress Oscar and Morgan Freeman the supporting-actor prize. Humbly, Eastwood added, "You just do the best you can."
Other acting awards Sunday night went to performers in real-life roles, Jamie Foxx as lead actor for his uncanny emulation of Ray Charles in "Ray" and Cate Blanchett for supporting actress as Katharine Hepburn, the love of Howard Hughes' life, in "The Aviator."
Eastwood's triumph meant fresh heartbreak for Martin Scorsese, whose Hughes epic "The Aviator" won the most awards with five but failed to bring him the directing Oscar that has eluded him throughout his distinguished career.
Scorsese, now a five-time loser, matched the record of Oscar futility held by a handful of legendary filmmakers such as Alfred Hitchcock and Robert Altman, who also won 0 out of 5 in the directing category.
Eastwood, who directed a segment of Scorsese's music-documentary TV series "The Blues," had kind words for his rival backstage.
"I was kind of a little disappointed when they started building a competition between Marty and me," Eastwood said. "I have the greatest respect for him and all the films he's done over the years."
The wins by Freeman and Foxx followed Denzel Washington and Halle Berry 's triumph three years ago for "Training Day" and "Monster's Ball," the only other time blacks claimed two acting Oscars.
"In our music, in our everyday life, there are so many negative things," said Foxx, who throughout awards season has praised Washington and Berry as ambassadors for black actors. "Why not have something positive and stamp it with blackness?"
It was the second straight year an Eastwood film won two of the four acting Oscars, Swank as a tenacious fighter who rises to champion status before her life takes a cruel twist, Freeman as a worldly wise ex-boxer.
Last year, Eastwood's dark morality play "Mystic River" earned the lead-actor prize for Sean Penn and the supporting-actor award for Tim Robbins.
With unremarkable career results since her first win, Swank had been in danger of becoming one of those actresses who fades from view after an Oscar success.
Eastwood has climbed in the ensuing half-century to the ranks of Billy Wilder, David Lean, Robert Wise and Steven Spielberg, other filmmakers who have won two or more directing Oscars.
Critics say Scorsese's best work is decades behind him, noting that recent epics such as "The Aviator" and "Gangs of New York" do not measure up to earlier masterpieces such as "Mean Streets" and "Raging Bull." On the other hand, Eastwood has entered a late-career zenith, delivering complex character studies two years in a row that rank toward the top of his long resume as actor and director.
At 74, Eastwood became the oldest directing winner ever. Eastwood joked that it was a sign "we're taking over. The (American Association of Retired Persons) and me."
He said he had great respect for many young directors such as Alexander Payne, who shared the adapted-screenplay Oscar for the wine-country ramble "Sideways," which also had a best-picture nomination.
TITLE: 'BTK' Serial Killer In Custody, Claims Police
PUBLISHER: The Associated Press
TEXT: WICHITA, Kansas - Police say they are confident that the arrest of a man suspected of being the "BTK" serial killer will end 30 years of fear.
Dennis L. Rader was arrested Friday and allegedly confessed to six of the killings, said a source on Sunday.
"The guy is telling us about the murders," the source said on condition of anonymity.
Rader, 59, could appear in court as early as Monday to stand in front of a judge on video while prosecutors recite yet-to-be-filed criminal charges against him. The judge would also review Rader's bond and set a permanent amount.
Rader was being held on $10 million bond in the deaths of 10 people between 1974 and 1991.
A source said police are looking into whether Rader was responsible for the deaths of two Wichita State University students as well as a woman who lived down the street from another known victim of BTK, the killer's self-coined nickname that stands for "Bind, Torture, Kill."
The BTK killer re-emerged during the last year, taunting police with letters and packages sent to media organizations.
Mike Tavares, who worked with Rader, described him as a "by-the-books" employee.
"I never would have guessed in a million years," said a tearful Carole Nelson, a member of Christ Lutheran Church, where Rader was an usher and the president of the church council.
TITLE: IN BRIEF
TEXT: Stone The Crows
LONDON (AP) - The future of the British monarchy lies in the hands of a sharp-shooting warder at the Tower of London because the six ravens who roam the landmark fortresses are under threat from up to 200 crows who have invaded their royal domain.
Legend has it that if the ravens leave, The Tower of London will fall and so will the monarchy. The 17th century monarch Charles II decreed that there must always be six ravens in residence.
But life in the lap of avian luxury has apparently not always been so appealing. The Governor of the Tower has been known to dismiss ravens for "conduct unbecoming."In 1986, one miscreant called George was given his marching orders after developing a taste for TV aerials.
Kyrgyzstan Vote Test
BISHKEK, Kyrgyzstan (Reuters) -Kyrgyzstan voted for a new parliament Sunday, a test of its ability to stage a clean vote eight months before a presidential race that could lead to Central Asia's first peaceful post-Soviet handover of power.
With the stakes high for control of the 75-seat parliament ahead of a possible presidential succession in October, the opposition declared the poll flawed, citing protests in the mountains, a muzzled media and state interference. Rampant corruption and poverty coupled with a relatively liberal political climate have fueled speculation that the first vote in the former Soviet bloc since Ukraine's Orange Revolution, could spill into Ukraine-style protests.
Jackson Trial Opens
SANTA MARIA, California (AP) - The credibility of a 15-year-old boy will be a key element in the outcome of Michael Jackson's molestation trial, observers say. Opening statements Monday will preview the essence of the trial - whether Jackson gave wine to a then-13-year-old cancer patient at his Neverland Ranch and then touched him inappropriately.
"You will see two different trials in opening statements," said law professor Laurie Levenson, "the prosecution's case against Michael Jackson and the defense case against the boy's mother."
TITLE: Jordan Presents Its Formula One Car on Red Square
PUBLISHER: Combined Reports
TEXT: MOSCOW - Jordan gave Russians a taste of Formula One on Friday with the launch of its 2005 car on Moscow's snow-speckled Red Square.
The British-based team, bought by Russian-born Canadian businessman Alex Shnaider last month, will be renamed Midland next year.
The steel magnate has promised the team will adopt a Russian flavor and drop its former rock-and-roll image. Jordan say this season will be about trying to finish races and picking up the odd point rather than podiums and champagne.
"The team is in better shape than we expected," team boss Colin Kolles told reporters. "We think they are very strong and fast drivers and I think that they will be quite a surprise for a lot of people."
With modest ambitions for the season, the launch was all about the location.
Jordan's trademark yellow car was parked on the cobblestones just in front of the multi-colored onion domes of St. Basil's Cathedral, overlooked by the Kremlin and just meters away from revolutionary leader Vladimir Lenin's mausoleum. A military band warmed up the small crowd who had braved sub-zero temperatures to view the Toyota-powered car.
The Midland takeover will increase Russian interest in the sport, and a plan to bring in Russian sponsors and drivers should put the world's biggest country firmly on the Formula One map. A Russian grand prix would be the icing on the cake.
Plans to bring a race to Moscow have failed before, but Formula One supremo Bernie Ecclestone is keen to launch a Russian Grand Prix and is rumored to be talking to officials about setting one up in St Petersburg, Shnaider's birthplace. He told reporters a Russian race could be on the cards soon.
"It shouldn't be too long because I'm not going to be around too long," said the 74-year-old Ecclestone.
Midland also used the event to show its support for Moscow's 2012 Olympic bid. The Jordan automobile presented at the launch was emblazoned with the Moscow 2012 logo.
"I wholeheartedly support Moscow's 2012 Olympic bid," said Alexander Radunsky, Midland's managing partner. "I think the bid slogan, 'Believe in the Dream,' is spot on, and I strongly believe that this dream that is shared by all Muscovites and Russians alike will soon become reality."
(Reuters, SPT)
TITLE: SPORTS WATCH
TEXT: Bobsled Record
CALGARY, Alberta (AP) - Germany's Andre Lange won his third straight world championship in the four-man bobsled Sunday, the first to accomplish the feat.
The 2002 Olympic champion was followed by Russia's Alexandr Zoubkov, the 2005 World Cup champion, and Canada's Peter Lueders. The U.S. sled led by Todd Hayes was fifth.
Lange won all four heats - twice breaking the track record - to finish with a four-run total of 3 minutes, 34.53 seconds. Zoubkov was timed in 3:34.83 and Lueders in 3:34.86.
Lange finished second to Lueders last weekend in the two-man competition. He welcomed the gold-silver results after a World Cup season marred by brakemen injuries and technical problems.
"The entire team was hungry after a World Cup season where we were struggling," he said.
Lange shrugged off suggestions that Lueders, a bobsled star in the two-man, had anything to prove in the four-man.
Sharapova Wins Again
DOHA, Qatar (AP) - Wimbledon champion Maria Sharapova won her second WTA Tour title this month, rallying past Alicia Molik of Australia 4-6 6-1 6-4 Saturday in the Qatar Open final.
Sharapova, seeded second, captured her ninth career title. She won the Tokyo Open this month, then took two weeks off to recover from the flu.
Molik, seeded fourth, broke the 17-year-old Russian in the third game for the first set and appeared in position for her second title of 2005 after winning in Sydney, Australia, last month.
"After losing the first set, I just tried to hang in there and wait for my turn to make something happen," Sharapova said. "I am glad that I managed to play my best tennis today after the first set."
Sharapova made two breaks to even the match. In the third set, the Russian returned extremely well and broke Molik in the fifth game. She then held serve and closed with an ace.
TITLE: Ireland Unbeaten After Downing England
PUBLISHER: The Associated Press
TEXT: DUBLIN - Ireland kept its Six Nations Grand Slam hopes on track with a 19-13 win over England at Lansdowne Road on Sunday.
A Brian O'Driscoll try and strong kicking from Ronan O'Gara sent England to its third straight Six Nations defeat. Ireland and Wales are now the only unbeaten sides in the competition with two matches remaining.
Ireland is chasing its first championship in 19 years and first Grand Slam since 1948. England is continuing its downward spiral since winning the World Cup 15 months ago. Sunday's loss was the first time since 1987 it has lost the opening three matches of the Five or Six Nations.
O'Gara put Ireland ahead with a fourth-minute drop goal but, three minutes later, England went over for its first try. Martin Corry picked the ball up from a ruck and ran unchallenged over the Ireland line.
Charlie Hodgson, whose kicking had been under scrutiny after he missed three penalties and a drop goal in the 18-17 loss to France two weeks ago, converted.
O'Gara scored two penalties to edge Ireland ahead 9-7. Hodgson slotted a second successful penalty, this time from the halfway line before an O'Gara drop goal went in off the post to give Ireland a 12-10 halftime lead.
Hodgson kicked England ahead with a drop goal after 57 minutes, before Ireland captain O'Driscoll scored his side's first try. O'Gara converted for a 19-13 lead but missed a drop goal under pressure from Lewis Moody.
England was given a penalty in front of the posts but kicked to the corner rather than going for three points. Josh Lewsey went over the line with the ball, but the try wasn't given because the ball didn't touch the ground.
Ireland has beaten Italy 28-17 and Scotland 40-13 and next faces France, which lost to Wales 24-18 in Paris on Saturday.
It was England's ninth loss in 13 matches since winning the World Cup. It's also lost 11-9 to Wales this season.
On Saturday, Wales stayed on course to its first Six Nations title since 1994 by rallying to a 24-18 win over France on Saturday, while Scotland ended its losing run and virtually condemned Italy to last place.
Wales flanker Martin Williams scored two second-half tries in Saint-Denis as defending champion France lost in the Six Nations for the first time since March 2003.
Wales, which trailed 15-3 after 20 minutes, has won its opening three matches. It hasn't done that in the Grand Slam since 1978.
"Two years ago in the Six Nations, Wales did not win a single game - and we have worked hard since then and are a very happy camp at the moment," Wales flyhalf Stephen Jones said.
In Scotland, Chris Paterson scored all the points off his boot in an 18-10 win over Italy. A late Andrea Masi converted try couldn't make up for Italy missing two earlier penalties and a drop goal.
Italy is the only team to have lost its first three Six Nations matches.
Wales hosts Ireland on the final day of the tournament on March 19.
Wales last won the tournament when it was the Five Nations in 1994. Since then, France has won Grand Slams in 1997, 1998, 2002 and 2004.
"We can't talk about the Grand Slam," Wales coach Mike Ruddock said. "We have got Scotland next up. They had a good win against Italy today and they will throw everything at us. The pressure is on us to keep winning."
Also on Saturday, Scotland beat Italy 18-10 in the battle to avoid finishing last in the Six Nations tournament on Saturday, scoring all its points off the boot of Chris Paterson.
Paterson scored six penalties from six attempts, while Italy missed two penalties and a drop goal.
It was Scotland's first win in this year's Six Nations, leaving Italy as the only side to have lost its opening three games.
"This was a must-win game and thankfully we've come up with the goods today," Scottish winger Sean Lamont said.
"I think the first half was good for us but we never executed those chances," Italy coach John Kirwan said. "We dominated territory and possession but we didn't take the points and we missed three shots at goal and a drop kick.
"At the end of the day, the difference was the goal kicking which was disappointing for us. That took the confidence out of us and it was a disappointed changing room."
It was Scotland's first win at Murrayfield since August 2003.
"We just needed a win to get that confidence and just to score more points than our opponents," Scotland coach Matt Williams said.