SOURCE: The St. Petersburg Times
DATE: Issue #1072 (38), Tuesday, May 24, 2005
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TITLE: Fewer
Tourists
Forecast
PUBLISHER: Staff Writer
TEXT: St. Petersburg tour operators are predicting a drop in visitor numbers this season, blaming the gloomy outlook on high prices, negative media coverage, complicated processes to obtain visas and inconsistent international promotion.
Svetlana Fedotenkova, general director of travel agency Favorit, forecast a 40 percent decline in foreign tourists and a 20 percent to 30 percent drop in the numbers of Russian visitors this season due to said increased prices for accommodation and services.
"Prices started to grow as the city's 300th anniversary [in 2003] approached and they have been rising slowly but surely ever since," she said last week in a telephone interview. "This is the major reason why potential visitors started looking elsewhere."
Most players in the city's tourism industry agreed.
Agnieska Jasinska-Goerdt, general director of travel agency Via Hansa St. Petersburg, said exorbitant prices are making the industry stagnate.
"This season, for the first time in our practice, hotels themselves are approaching us to offer rooms in the high season," she said. "This is a clear indication that tourist flows are stagnating."
St. Petersburg is more expensive than Europe's leading tourist destinations, including Paris.
Yelena Grabova, incoming tourism manager of travel agency Russkaya Yarmarka, said a week in Belgium costs less than two or three days in St. Petersburg.
Many tour operators say the hotels are to blame. Several, including the Grand Hotel Emerald, the Moskva, the Astoria and the Angleterre, raised their rates in January and at the same time switched from dollar rates to euro prices.
Sales managers at the Angleterre said the price increases had no effect on their occupancy rates, but Vyacheslav Rashchupkin, deputy director of the three-star Moskva, said raising prices was a mistake.
"Our increase varies in line with the time of year: it is 3 percent in the low season, 5 percent in mid-season and 7 percent in the high season," he said. "But we should have lowered the rates. Now, we are facing weaker sales."
Foreign experts agree. A group of major German tour operators who visited St. Petersburg in February on a fact-finding trip sponsored by the city branch of the Russian Tourism Industry Union, or RST, expressed concern about local pricing policies.
"St. Petersburg is not a city for mass tourism, and it will not be in the near future," one of the participants, Christine Kuhn, of travel company CVJM-Hamburg, said in February. "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."
A five-day trip to St. Petersburg costs at least 500 euros, not including a $90 (71 euros) visa fee. Considering that flights and dining don't come cheap either, a weeklong tour often costs more than 1,000 euros.
Sergei Korneyev, head of Northwestern branch of RST, said incoming tourism in the city is at a turning point.
"The future depends on how efficient our efforts will be this year," he said. "The promotion campaigns for the city's 300th anniversary were very successful, but we can't rest on these laurels forever. High prices made sense during the festivities, but two years later they produce a bad impression. With an offer like that, we risk dropping out of the international travel market."
Jasinska-Goerdt noted that competition is getting tougher for the city as the Baltic states strive for an even greater slice of foreign tourists visiting the northeast Baltic area.
"In addition to St. Petersburg's traditional rivals, like Prague and Budapest, the city is now facing more competition from Tallinn and Riga," she said. "The advertising campaigns of these cities are excellent and the marketing policies well-tailored."
High prices are directly damaging the market, and if no steps taken to encourage incoming tourism, the number of visitors will decline, she added.
But Sergei Timralyev, general director of travel agency Neva, said it is pointless to try and turn St. Petersburg into a cheap, mass tourism destination.
Budget airlines, like Ryanair or easyJet, don't operate in Russia, while local carrier Pulkovo has recently raised fares, citing increasing fuel costs.
"The city is becoming more attractive, and everything has its price," he said.
Oleg Aframeyev, general director of Calypso-World of Travel, said seasonal dependence is an important contributing factor to the decrease in tourist numbers.
"All foreign partners are eager to stick all their charter flights into [the peak] period, and naturally some tours collapse because the city just can't accommodate so many guests," he said.
Finns, Americans and Germans are the three largest groups of foreign tourists to the city. The French are the fourth-largest group and Italians the fifth, according to the city's tourism committee.
Tour operators say bookings suggest these nationalities will remain the most frequent visitors despite a total decrease.
A recent poll conducted by experts from the EU-funded TACIS project of tour operators from Germany, the U.K., France, Italy and Baltic and Scandinavian countries revealed a consistent pattern of complaints.
Respondents cited high accommodation costs, a lack of cheap flights, and a bureaucratic visa process as major drawbacks. But all described the destination as otherwise very attractive.
Korneyev called for more active and coherent promotion of the city. A main goal should be to spread the flow over the year by receiving more tourists in winter and extending the summer season.
"Besides the 'White Days' program funded by the city's leading hotels and 'St. Petersburg Voyage - Just Russia' offered by RST and the city administration, there is nothing else happening to promote the city," Korneyev said. "Promotion - if we expect a sensible outcome - requires a greater commitment and bigger investment."
TITLE: Brodsky
Plans In
A Muddle
PUBLISHER: Staff Writer
TEXT: As what would have been the 65th birthday of Joseph Brodsky, the only St. Petersburg-born Nobel prize winner in literature, approached on Tuesday, an ownership battle raged for his former city apartment.
And a plan to build a monument to him is buried in bureaucratic battles and under suspension.
When Brodsky died in New York in 1996, St. Petersburg's late mayor Anatoly Sobchak promised to do "everything in our power to ensure that the memory of Brodsky is preserved forever in his native city."
Sobchak's successor Vladimir Yakovlev gave written approval to the creation of Brodsky Memorial Apartment Museum, and Yakovlev's successor, Governor Valentina Matviyenko, urged action at a government meeting this month.
But City Hall has made no tangible progress in the nine years since the poet's death.
In 1998, a group of enthusiasts established the Brodsky Museum Foundation with an eye to buy out the communal apartment at 24/37 Liteiny Prospekt where the poet and his parents had two rooms.
With the help of Alfa-Bank, two rooms, including that of Brodsky's parents, have been acquired, but progress stopped. Not only did funds dry up, but the remaining tenants aren't ready to move out just yet.
Two tenants, a mother and daughter, are reluctant to leave because they say they are comfortable in the apartment where they have spent their entire lives and relocation would be stressful.
And the current inhabitant of Brodsky's 12-square-meter room "behaves as if he had struck oil," as Alexander Kobak, director of the Dmitry Likhachyov International Charitable Foundation and member of City Hall's Cultural Heritage Council.
With haggling still in progress, the negotiators are reluctant to even estimate the price of the deal.
The buyers fear the costs will rocket as they see sellers' appetites growing by leaps and bounds. One tenant is already claiming enough money to buy him a spacious four-room apartment in the historical center, Kobak said.
As Mikhail Milchik, who runs the Brodsky Museum Foundation, points out, time is precious. The tenants have started renovations, removing crucial features of Soviet-era kommunalki.
"Eurostandard repairs are destroying the atmosphere; to be a successful museum, this place needs conservative renovation," Milchik said. "Stepping into this apartment, complete with numerous electricity meters and other surviving signs of Soviet communal living, is like plunging yourself into a different era."
The toilet and bathroom have already been modernized and in a couple of years the kitchen, corridor and lobby would follow.
The money to create the museum was offered by the influential Tyumen Oil Co., which regularly donates money to finance restoration programs in the historical center. The oil company asked that some of its donation be spent on buying Brodsky's apartment, but City Hall ignored their request.
Ironically, the most important memorial event in the émigré poet's native city, is the reconstruction of Brodsky's American study, which opens Tuesday in the Anna Akhmatova Museum at the Fontanka House.
When the Soviet authorities launched a witch hunt for the young Joseph Brodsky in 1964, Akhmatova, his mentor and friend, was heard to remark: "What a biography they're creating for our red head! You'd think he hired them."
A self-taught translator and poet, Brodsky slammed the door of his school at the age of 15 and never went back. He worked as a geologist-prospector, morgue attendant and stocker.
His poetry was published in clandestine circulation gaining much attention from both literary circles and the security forces.
Locked in a psychiatric hospital in 1965, he was subsequently confined to a collective farm in the Archangelsk Oblast on the charges of social parasitism - a Soviet term for not having a permanent job. Brodsky was forced into exile in 1972 and spent his later years writing and lecturing in the U.S.
The regime that persecuted Brodsky is long gone, and the poet's books, now legally printed, sell out quickly. But the city is still struggling to find a way to commemorate its once unwanted hero.
The Brodsky monument project finds itself in a similar plight. The much-advertized international competition for the best monument, launched in 2002 ended with St. Petersburg sculptor Vladimir Tsivin winning the contest. But Tsivin's design - two pillars inscribed with Brodsky's verse next to steps descending to the Neva - could not be installed in its intended site on the Neva embankment near the State Mining Institute.
The city's Committee for the preservation of architectural monuments banned the work on the grounds that the embankment, being a historical monument, cannot be altered.
Architectural competitions in St. Petersburg have not been very successful of late, with a competition to design a monument for the city's 300th anniversary being among the most recent examples. Light-minded thinking by sculptors goes hand-in-hand with the conservatism of city officials.
Vasilyevsky Island was the location most favored for the Brodsky monument by members' of the contest's expert council and close friends of Brodsky.
The most obvious reason for the choice is the famous line: "I will come to die on Vasilyevsky Island," from one of Brodsky's untitled verses. The choice has been criticized for not saying anything new about Brodsky, but those who knew the poet personally explain that Vasilyevsky Island would be suitable in a much wider sense.
"While a [St. Petersburg State University] student, Brodsky frequented [one of] our friends' apartment on Vasilyevsky Island - and this 'house with the dark-blue façade' is present in his verse,"
Yakov Gordin, editor of the literary magazine Znamya, and a member of the contest's expert council said. "For Brodsky, Vasilyevsky Island appeared as the essence of St. Petersburg, as a symbol of the city."
TITLE: United Russia Wins Control in Magadan
PUBLISHER: Staff Writer
TEXT: MOSCOW - United Russia won control of the Magadan legislature in weekend elections even though fewer people voted for the pro-Kremlin party than in December 2003 State Duma elections, according to preliminary results released Monday.
United Russia garnered 29 percent of the vote in elections Sunday, about 5 percentage points less than it received in Duma elections - in an indication that the party's popularity is sliding. The populist Russian Party of Pensioners - which won an eleventh-hour court ruling allowing it to participate - placed second with slightly more than 20 percent.
The ultranationalist Liberal Democratic Party gathered 17 percent, a drop of 3 percentage points compared to the Duma elections, while and the Communist Party got 13 percent.
The number of people voting "against all" shot up to about 16 percent, from 5 percent during the Duma vote.
Turnout was 36 percent.
The leader of the Russian Party of Pensioners, independent Duma Deputy Valery Gartung, said his party's showing was a great achievement.
"In the city of Magadan, we got 25 percent of the vote, while United Russia got 22 percent. We lost only in the rural areas, since we were unable to reach people in only one week of campaigning," Gartung said, Interfax reported.
The party was only able to hit the campaign trail after the Supreme Court threw out a decision by the Magadan elections committee to prohibit the party from taking part. The decision came after four of the party's candidates withdrew from the race.
Nevertheless, Gartung said, his party was not given airtime on local television. Founded in 1997, the Russian Party of Pensioners failed to break the 5 percent barrier to get into the Duma in 2003 elections.
Senior United Russia official Andrei Vorobyov put a positive spin on Sunday's elections, saying the results "show that voters actively back the party and that they back the reforms of building a strong Russian state," Interfax reported.
While denied coverage in Magadan, opposition parties are finally getting a chance to air their views on state-controlled national television networks, which are scrambling to fulfill a promise by President Vladimir Putin to provide equal access for all parties represented in the Duma to state media organizations.
Communist leader Gennady Zyuganov and Rodina leader Dmitry Rogozin made a rare, primetime appearance on Rossiya television on Sunday night for a wide-ranging discussion of their parties' work in the Duma.
The two leaders, speaking during a seven-minute segment on the "Vesti Nedeli" program, said their parties were ready to join forces to organize rallies and fight corruption.
United Russia gets near-daily coverage on national television networks, while Rodina and the Communists are routinely shut out.
Critics have accused President Vladimir Putin of cracking down on freedom of speech since he came to power in 2000 and of shutting down television stations whose reporting was critical of the government.
In an apparent effort to counter criticism of a growing centralization of power, Putin promised parliamentary leaders last week that he would ensure that state media offers access to all political forces.
TITLE: Ivanov's Son Kills Pedestrian
PUBLISHER: Staff Writer
TEXT: MOSCOW - The elder son of Defense Minister Sergei Ivanov struck and killed a pedestrian crossing the street while driving in southwest Moscow on Saturday night, police said Monday.
Alexander Ivanov, 28, was driving in his Volkswagen Bora on Ulitsa Lobachevskogo, near the Yugo-Zapadnaya metro station, shortly after 10 p.m. Saturday when he hit an elderly woman on a crosswalk, police spokeswoman Natalya Krivova said.
The woman, Moscow resident Svetlana Beridze, 68, died at the scene from injuries sustained in the accident.
Krivova said she could provide no other details of the accident, noting that an investigation was ongoing.
The city prosecutor's office and traffic police could not say whether any charges had been filed against Ivanov.
By law, a person convicted of vehicular manslaughter can receive up to five years in prison.
It was unclear if Ivanov had run a red light or if Beridze had ignored a "Don't Walk" signal while crossing. Media reports said the street was slick that night due to rain.
Several "powerful officials" from the police and traffic police arrived at the scene of the accident shortly after is took place, Gazeta.ru reported.
According to a police report, Ivanov lives in an apartment building on Rochdelskaya Ulitsa, near the Krasnopresnenskaya metro station. State Duma Speaker Boris Gryzlov lives in a neighboring apartment, Moskovsky Komsomolets reported Monday.
Alexander Ivanov works at Vneshekonombank, while his younger brother, Sergei, 24, is a vice president at Gazprombank.
Moscow streets are perilous terrain for pedestrians, with drivers rarely stopping or slowing down for people waiting to cross on foot.
A total of 8,873 traffic accidents were registered in Moscow last year, and about half of them involved cars hitting pedestrians, Komsomolskaya Pravda reported Monday.
TITLE: Putin Invites CSKA Moscow to His Home
PUBLISHER: The Associated Press
TEXT: MOSCOW - President Vladimir Putin hosted CSKA Moscow's players and coaches at his Novo-Ogaryovo home near Moscow on Saturday to congratulate them on their UEFA Cup victory.
In return, Putin got a gold shirt with his name on the back.
Praising the club for a "brilliant result" in Wednesday's 3-1 victory over Sporting Lisbon, Putin said he had watched the entire match. The come-from-behind win produced the first European title for a Russian team.
"This was not a random victory. It was a victory achieved through hard work and talent," Putin said.
CSKA coach Valery Gazzayev handed a soccer ball to Putin, who bounced it on an oriental rug and placed it in the trophy. Brazilian striker Vagner Love reminded him it was a soccer and not basketball team he was hosting. Putin then kicked the ball up and caught it.
"I don't consider myself a good soccer specialist or a knowledgeable fan with experience," said Putin, a judo and alpine skiing enthusiast.
Defense Minister Sergei Ivanov wondered out loud how much champagne the cup would hold. Gazzayev said they had tried to find out, but the cup leaked.
TITLE: Russia Urged to Pay
For Nuclear Safety
PUBLISHER: Staff Writer
TEXT: MOSCOW - A U.S. report on nuclear security has called on Russia to contribute more money and resources to safeguard its nuclear weapons stockpiles at home and abroad, rather than relying on U.S. funding.
"We call for transforming the U.S.-Russian cooperation from a donor-recipient relationship into a genuine partnership in which Russia would contribute more of its own resources and more openness and the United States would fully integrate the ideas and expertise of Russian experts," said Matthew Bunn of Harvard University's Belfer Center for Science and International Affairs, presenting the report in Moscow on Monday.
The report, titled "Securing the Bomb 2005: The New Global Imperatives" and coauthored by Bunn and Anthony Wier, another Belfer Center researcher, was released in Washington earlier this month.
Bunn said there was a 5 percent to 10 percent chance of a terrorist attack involving a nuclear bomb in the next 10 years.
He said that Russia had made some progress on guarding its nuclear facilities, but there was still more to do. Guards sometimes patrol facilities without weapons, turn off the intruder alarm so as not to bother checking if it goes off and leave security doors open for their own convenience, Bunn said.
Alexei Arbatov, head of the Center for International Security at the Russian Academy of Sciences' Institute of World Economy and International Relations, said he doubted the United States and Russia could become true partners in the non-proliferation effort. The two countries did not have the experience of military cooperation that would enable them to trust each other, and levels of political trust have also been waning lately, he said.
The report comes amid an atmosphere of growing distrust between Washington and Moscow over nuclear weapons proliferation. Russian defense analysts say a U.S. missile defense system under development could be aimed against threats from countries including Russia, and President Vladimir Putin has said that Russia is developing missiles that would be able to penetrate that system, Arbatov said.
"We are still looking at each other as potential enemies," he said. "Under these circumstances we cannot count on cooperation."
The report recommended that both countries appoint a senior official to take over the responsibility for nuclear security from a handful of agencies that currently handle the issue.
TITLE: Kiev Probes
Police Attack
PUBLISHER: The Associated Press
TEXT: KIEV - Ukraine's top human rights official said Monday that she has opened an investigation into a possible police attack on three opposition lawmakers.
"The use of force against lawmakers is a clear sign of a police state," Nina Karpachova said in a statement.
Ukraine's opposition Social Democratic Party of Ukraine (United), claimed that its lawmakers had suffered injuries in the western city of Uzhgorod while attempting to prevent police from transferring a former regional official from hospital back to jail.
Ukrainian investigators detained Ivan Rizak, a former governor of the western Zakarpatye region, earlier this month and charged him with abuse of power and bribery. Rizak, who suffers from a heart condition, was later transferred to a hospital for treatment, but last Friday doctors reported he was fit enough to return to jail.
Interior Ministry spokesman Volodymyr Mulko said Monday that it was "too early to draw any conclusions."
Ukraine's new pro-Western leadership came to power after mass protests over election fraud last year. It has promised to improve human rights after the decade-long rule of former President Leonid Kuchma, who was accused of violating civil freedoms.
TITLE: Starovoitova Trial Ends
PUBLISHER: Staff Writer
TEXT: The trial of six men accused of assassinating liberal State Duma Deputy Galina Starovoitova in 1998 ended Monday with the six defendants making their final statements.
Only one, Alexei Voronin, pleaded guilty and offered his apologies to the victims and their relatives. Voronin, the only defendant who cooperated with prosecutors and gave evidence during the investigation, is facing the mildest charges.
The prosecutors have asked for life imprisonment for Yury Kolchin and Vitaly Akishin, while demanding 4 1/2 years in jail for Voronin.
The prosecutors have demanded 12 to 18 year terms for other defendants - Yury Ionov, Igor Krasnov and Igor Lelyavin.
Kolchin, whom prosecutors accuse of organizing the crime, denied the accusations.
"I am not guilty of the crimes you accuse me of," Kolchin said in his final statement. "By pronouncing me guilty, the court will thus sentence not just me but common sense, all moral standards and the Russian Constitution."
Kolchin also asked for life imprisonment to be replaced with 15 years term in jail. "I am asking that because it means I will be released in 2018, which is a very special year for me: Easter falls on my birthday April 8 and I will turn 50 then," Kolchin said.
Akishin also pleaded not guilty, saying he was in his apartment when Starovoitova was shot.
Lelyavin not only denied committing any crime but said he was a victim of slander. Blaming the security services for "using all means available to fill the gaps in the case," Lelyavin said that several witnesses changed their evidence over the course of the investigation.
Federal search warrants have been issued for three other suspects, Yevgeny Bogdanov, Sergei Musin and Oleg Fedosov. Another, Pavel Stekhnovsky, was extradited from Belgium in December 2004.
No one has been charged with ordering the assassination but deputy city prosecutor Alexander Korsunov has said Starovoitova was assassinated for political motives.
Korsunov said that the assassins took neither Starovoitova's money nor her valuables.
The deputy had a substantial amount of cash, including 855 rubles, a 1,000 Deutschmark note and about 18 $100 notes, with her when she was shot on the stairway leading to her apartment on Naberezhnaya Kanala Griboyedova.
The verdict will be announced on June 30.
TITLE: IN BRIEF
TEXT: Sakharov Honored
ST. PETERSBURG (SPT) - Members of St Peterburg's Yakbloko youth movement on Saturday laid flowers at a statue to human rights campaigner Andrei Sakharov, Interfax reported.
Leading Soviet nuclear scientist and dissident Sakharov won the Nobel Prize in 1975. Five years later, the Soviet government banished him to internal exile in Gorky. He was released in 1986, becoming an early supporter of perestroika. He died in 1989 and his statue was erected in St Petersburg in 2003.
The Yabloko members announced that they were honoring Sakharov's work in "the development of freedom and democracy," on what would have been his 84th birthday.
Atomic Station at Sea
ST. PETERSBURG (SPT) - Rosenergoatom boss Stanislav Antipov announced that the federal nuclear power agency has finalized plans for a new floating nuclear power station in the Arkhangelsk region, Interfax reported Saturday.
The project was first proposed in 1986, but abandoned after the Chernobyl disaster. Rosenergoatom returned to the idea because of a shortage of electricity generation in the region.
At a press conference in St. Petersburg, Antinov confirmed that Rosenergoatom is ready to appoint a shipyard to begin work on the power station's floating base and that they were "seeking finance for the project's realization". Potential investors include Russian and international banks, as well as the federal government.
Nuclear Bloc to Close
ST. PETERSBURG (SPT) - The second bloc of the Leningrad Nuclear Power Station at Sosnovy Bor west of St. Petersburg is to be shut down by July 17, Interfax reported Saturday.
"The decision to shut down the reactor is connected with the necessity of carrying out work that will extend its working life," general director Valery Lebedev said at a news conference.
Before the end of this month, the station should receive documents from the federal nuclear power agency that will allow the work prolonging the life of the reactor to be done, the report said.
Court to Visit Home
ST. PETERSBURG (SPT) - A St. Petersburg judge plans to hold a session of the court in a city apartment for one day, Interfax reported on Saturday.
Judge Oksana Svirskaya announced her decision while hearing a case against famed cellist Mstislav Rostrovich and his opera singer wife Galina Vishnevskaya, whose apartment, which they intend to convert into a Shostakovich museum is under arrest. Repairs to the museum have allegedly caused thousands of dollars worth of damage to neighbors' apartments.
According to the judge, she needs to visit the apartment "to satisfy herself personally that the plaintiffs are making reasonable demands". The media will not be admitted to the unusual court sitting, which has been scheduled for Friday.
TITLE: Electoral Law Revision
All But Completed
PUBLISHER: Staff Writer
TEXT: MOSCOW - The State Duma on Friday tentatively approved a raft of bills that would prohibit parties from creating electoral blocs, make it easier to ban a party or a candidate from running, and restrict media coverage of elections and referendums.
The Kremlin-sponsored legislation is the final significant effort in President Vladimir Putin's reform of the electoral system, which he has said is needed to fight terrorism and develop democracy.
Political analysts, however, said the bills - 13 amendments to existing laws - would hinder opposition parties and deal a blow to democracy.
The legislation, which was approved in a first reading Friday, would ban a party from creating blocs with other parties - something that small parties have done in the past to pass the mandatory threshold required to win Duma seats.
United Russia, which is controlled by the Kremlin and dominates the State Duma, has faced strong competition from blocs of liberal and leftist parties in regional elections.
Also, in 2003 Duma elections, nationalists won a surprise victory after teaming up to form the Rodina bloc.
In another significant change, a bill was approved that would reduce from 25 percent to 5 percent the number of invalid voters' signatures needed to disqualify a party or a candidate from a race.
Duma Deputy Speaker Vladimir Pekhtin, of United Russia, defended the amendment during a debate Friday, saying, "How can we talk about fair and honest elections if a quarter of the signatures that voters give to parties are invalid?"
But Communist Deputy Valentin Kuptsov said the proposal would lead to "an even greater arbitrariness" toward candidates and parties that are disliked by the authorities.
Nikolai Petrov, an analyst with the Carnegie Moscow Center, called the amendment "terrible." He said the authorities could prevent candidates or parties from running because they control the police and some elections commissions - the agencies that verify the signatures.
The amendment provides an alternative that allows candidates and parties to put up a cash deposit instead of collecting signatures.
That option, however, could prompt pro-government rivals with signatures to claim that they have more popular support, Petrov said.
Another amendment approved Friday would raise from Jan. 1 the amount of state funding for parties that have factions in the Duma. The funding would soar from 50 kopeks to 5 rubles for every vote they garnered, Central Elections Commission chief Alexander Veshnyakov told the Duma in presenting the legislation.
The change appears to be in line with a law that Putin signed Thursday and which ends the election of independent Duma deputies. "The idea is to raise the fence and allow only the parties that support the authorities [into the Duma]. And once they are there, they will get a larger piece of the pie," Petrov said.
Among the other amendments approved Friday:
. Media organizations would be liable for reprinting or rebroadcasting false or erroneous reports during election campaigns.
The amendment will apply to Article 57 of the law on mass media, which prohibits the prosecution of media organizations and their employees for reprinting articles word for word, even if the information in the articles is erroneous or slanderous.
Andrei Richter, director of the Media Law and Policy Institute, has said the amendment would "infringe media rights" and warned that regional media might lack resources and staff to double-check all news reports for accuracy.
. A Duma deputy would lose his seat if he switches parties after election. Veshnyakov said, however, that the deputy would not be dismissed if he is expelled by his faction because, for example, he "did not vote the right way."
Pekhtin said the amendment would make parliament more stable and end any behind-the-scenes theatrics by deputies.
. A single date would be set for all regional and municipal elections - the second Sunday of March. The first Sunday of October would serve as a backup date, apparently for elections that unexpectedly need to be rescheduled after a death or resignation.
Veshnyakov said the amendment would not change the timing of the next Duma elections and they would be held on the first Sunday in December 2007.
TITLE: Pop Beats Politics in Kiev
PUBLISHER: Staff Writer
TEXT: KIEV - Resisting attempts by the Ukrainian government and opposition to hijack it, the Eurovision Song Contest kept the cameras focused on the performers as favorite Greece earned the dubious honor of its first win in Europe's biggest kitsch-fest.
None of the possible distractions - the 300,000 people on Independence Square, opposition pickets or a tent city organized by pro-Orange Revolution youth group Pora - could distract Europe's 120 million television viewers from rooting for their favorite act.
The contest - the 50th since Eurovision began in 1956 - attracted 39 entries, the most ever, from as far afield as Iceland and Israel.
Bulgaria gave its maximum vote of 12 points to Greece, as did Albania, Serbia-Montenegro and Cyprus, as traditional allies helped Helena Paparizou's seductive, Balkan-inspired performance, "My Number One," claim the top prize early Sunday with 230 points. Malta came a distant second with 192.
A favorite of the crowds in Kiev was Zdob Si Zdub, or West Meets East, from first-time entrant Moldova. The group's frantic chorus and drumming grandmother helped win the audience over to its weird folk-inspired tune, "Boonika Bate Doba" (Grandmama Beats the Drum-a). It finished sixth on 148 points, despite a perfect 12 from Ukrainian viewers.
Once Paparizou and her winning group had run onstage though a hail of silver ticker tape and hugged friends along the way, Ukrainian President Viktor Yushchenko came out to address the crowd, squeezing Ukraine's last few moments of glory before passing the torch to Greece with a special trophy for the new winner.
"This is the prize for the song that unites all Europe," he said.
Whether the contest really did unite the continent, or even Ukraine, was another matter.
Ukraine's entry, Greenjolly's "Razom Nas Bahato," or Together We Are Many, a politically charged anthem from last year's Orange Revolution, did not go down smoothly with its eastern neighbors. Greenjolly earned a stingy two points from Russia and none from Belarus - a big change from last year, when Russia gave Eurovision winner, Ukraine's Ruslana, 12 points, and Ukraine gave Russia 10 points.
Organizers ordered changes of the original lyrics, which included "Machinations, No. Falsifications, No. Yushchenko, Yushchenko, Yes!" But the message kept its revolutionary undertones with backing dancers wearing handcuffs before breaking free during the course of the song. The performance was preceded by images from last year's revolution. Poland and Moldova reacted warmly, however, giving the song 12 and eight points respectively, out of 20th placed Ukraine's meager haul of 30 points.
Belarussian-born Natalia Podolskaya, representing Russia, received the rowdy support and full 12 points of her native country for her anti-war soft rock anthem, "Nobody Hurt No One." Ukraine voted her a modest four points as Russia went on to place 15th.
TITLE: Poll: People
Fear Famine
And Terror
The Most
PUBLISHER: Staff Writer
TEXT: Russians most fear famine and terrorist attacks, according to a recent state-sponsored opinion poll.
When asked to pick from a pre-selected list of 20 threats faced by Russia, 70 percent of respondents in a survey by the state-controlled VTsIOM polling agency chose famine.
When asked to pick a threat to their personal safety, 36 percent selected "a terrorist attack on a strategic facility." This menace was followed by fear of depopulation, picked by 33 percent, and fear of famine, picked by 30 percent, VTsIOM said in a statement last week.
But analysts said the results of the survey, carried out in late April, reflected the Kremlin's worries as expressed through the state-controlled media rather than those of average Russians.
VTsIOM's list of fears included a split in Russia's ruling elite on the eve of the presidential election in 2008 leading to a "power struggle" (46 percent); Russia splitting into several countries (34 percent); a revolution in Russia, similar to those in Ukraine, Georgia and Kyrgyzstan (27 percent); and a coup supported by Western secret services (22 percent).
"Some of these fears, like the disintegration of Russia, were real during the Boris Yeltsin era, but they almost disappeared when Vladimir Putin came to power and consolidated the power of Moscow over the provinces," said Tatyana Stanovaya, an analyst with the Center for Political Technologies.
"These fears returned as the Kremlin began to fear a velvet revolution in Russia," she said.
The fears would also explain how a Western-backed coup and loss of Russia's sovereignty and the establishment of "external" rule over the country by the United States (18 percent) could appear on the list, Stanovaya said.
VTsIOM analyst Dmitry Polikanov agreed, saying that a ruling elite could well spread such fears in an effort to frighten people into supporting it.
Fear of political instability featured less in personal fears than in fears for the country, the survey found. Only fear of civil war (18 percent) and the breakup of Russia into several states (15 percent) made it into the top 10 personal fears.
Yury Korgunyuk, a political analyst with the Indem think tank, said the polling agency's list of fears was contentious and did not reflect Russians' real worries. "For many years, Russians have said in polls that their biggest fear is the spread of crime. There is no word about crime in VTsIOM's poll," he said.
"The government uses the media to lull people into the feeling that that the economy's prospects are good, terrorism is being quelled and money is being given to science and culture," Stanovaya said. "But when people return to reality with inflation, shrinking incomes and never-ending reports of terrorists being killed, all positive illusions collapse, and this frightens people."
But the survey also put a question mark next to the success of "anti-fascist" rhetoric used by the pro-Kremlin Nashi youth movement.
While Nashi leaders have vowed to combat "fascists," among whom they number most of the country's liberal politicians, the survey found that only 4 percent of Russians fear fascism, marginally ahead of a threat from a comet or meteorites (2 percent).
The poll, in which 1,600 people were questioned in 40 regions, had a margin of error of 3.4 percent.
TITLE: Russia Charges Detainee Adamov
PUBLISHER: The Associated Press
TEXT: MOSCOW - Russian prosecutors have charged former Nuclear Power Minister Yevgeny Adamov with fraud and abuse of power, Kommersant reported Friday.
Moscow wants Adamov extradited to Russia, rather than to the United States, where he faces up to 60 years in prison on charges of embezzling funds for improving Russian nuclear security.
Adamov was detained in Switzerland earlier this month on a U.S. extradition warrant. Russia has filed a rival extradition request and said Adamov should face trial here - a move observers say is motivated by fears of Russian nuclear secrets falling into U.S. hands.
The Prosecutor General's Office on May 14 obtained a Moscow court order sanctioning Adamov's arrest, Kommersant reported. The U.S charges against Adamov carry a penalty of up to 60 years in prison and $1.75 million in fines. In Russia, fraud and abuse of power carry a maximum 10-year sentence.
TITLE: 1,500 Demand Media Freedom
PUBLISHER: Combined Reports
TEXT: MOSCOW - Some 1,500 protesters demanded greater press freedom and more access to state-dominated television networks at a Yabloko-organized rally Sunday near the Ostankino television tower.
Yabloko leader Grigory Yavlinsky told protesters wearing masks reading "Shut Off" and carrying signs reading "News Is Propaganda" and "Down With Censorship!" that Russia had no freedom of the press.
"The freedom of the press is not the freedom of propaganda or pornography. It is the freedom to discuss the hardest questions and to find answers," Yavlinsky said, making a rare public appearance since he and his liberal party failed to get elected to the State Duma in 2003.
Many of those at the protest, which included Communists and activists from the radical National Bolshevik Party, wore orange T-shirts in a nod to Ukraine's pro-democracy Orange Revolution and held posters showing jailed Yukos founder Mikhail Khodorkovsky.
"It is no coincidence that we are gathered here at Ostankino. It is here that orders arrive on what ... to show on television," Communist deputy head Ivan Melnikov said.
Sunday's rally was the biggest for Yabloko in recent memory and the largest at Ostankino since 2001, when liberal activists gathered to protest the takeover of privately owned NTV by state-connected Gazprom. Most national television channels are now directly or indirectly controlled by the government.
(AP, MT)
TITLE: Saddam Hussein Traded a School in UN Oil Program
PUBLISHER: Staff Writer
TEXT: MOSCOW - A shabby, prerevolutionary building near the Kremlin has become an unlikely piece of evidence in the widening investigation into the UN oil-for-food program.
A new U.S. Senate report has accused Vladimir Zhirinovsky, the leader of the Liberal Democratic Party and a deputy speaker in the State Duma, of trading a section of the building to the Iraqi Embassy in 2002 in exchange for the right to resell Iraqi oil. The building on Ulitsa Volkhonka is now used for Arabic language classes.
Zhirinovsky and other Russian politicians are accused of making millions of dollars by subverting the oil-for-food program, which ran from 1996 to 2003. They have denied any wrongdoing.
Zhirinovsky said he had helped the Iraqi Embassy find a new building for its school but he had not owed the Iraqis any money and did not give them the building.
"There must be translation mistakes. I didn't give anything to anyone," he said Thursday in an interview in his office.
"I never had any debts with the Iraqis," he said. "To have debts, you need to do business with someone. I never had any business with them. I never gave them a single dollar and they never gave money to me."
Citing testimony from three former top Iraqi officials, U.S. investigators said Zhirinovsky offered Saddam Hussein's regime the building in place of cash payments for oil vouchers - payments that were made in violation of UN sanctions.
Under the oil-for-food program, Iraq was allowed to sell some oil to approved buyers and use the proceeds to purchase food for its people.
But U.S. investigators have charged that Hussein issued vouchers to his supporters in Russia and elsewhere that allowed them to buy Iraqi oil at cut-rate prices. The oil vouchers were then resold to oil merchants at a hefty profit. During some phases of the program, recipients of the vouchers, such as Zhirinovsky, were required to pay surcharges for them, payments that essentially amounted to kickbacks, investigators said.
The U.S. Senate report, released Monday, said about 30 percent of the oil sold in the program was allocated to Russians. Zhirinovsky and his party made an estimated $8.7 million through the scheme, the report said.
At one point, however, the Iraqis stopped giving him oil allocations after he failed to make payments to Hussein's government for an extended period of time, former Iraqi Vice President Taha Yassin Ramadan told Senate investigators, according to the report. Ramadan said he traveled to Moscow to personally give Zhirinovsky the message: "Pay or get nothing."
Zhirinovsky finally proposed to pay off his debts by handing over the building, the report said.
"During our numerous meetings we discussed questions about delivery of the building on a free basis in the center of Moscow for an Arabic school," Zhirinovsky wrote to Tariq Aziz, Hussein's deputy prime minister, on March 12, 2002, investigators said. "Today the building registration documents are in the final stage of registration."
Soon after, Zhirinovsky handed over the deed for the building to the embassy, the report said. One unnamed "senior Hussein regime official," interviewed by the Senate investigators, testified, "I was there personally."
The Iraqis interviewed for the report estimated the value of the building at $800,000 to $840,000.
An undated memorandum written by the Iraqi Oil Ministry said Zhirinovsky had turned over the school because he "pretended" not to have the money for the surcharge, the report said.
An official at the Iraqi Embassy, who would not give his name, said he could not comment on Zhirinovsky's involvement. He said according to documents written in Arabic, the embassy had purchased the building on Feb. 15, 2002, from "Mr. Lebedev, A.V."
Zhirinovsky's son is Igor Vladimirovich Lebedev, also a member of LDPR's faction in the Duma.
A school employee who answered the telephone Wednesday in the principal's office said the building was bought from Zhirinovsky three years ago. The employee, who declined to give his name, said the building previously housed the Institute of World Civilizations, which was established by Zhirinovsky in 1999.
Fifty-five students, mainly children from mixed Russian-Arab families living in Moscow, pay to attend Arabic-language classes at the school, he said.
The school occupies eight three-room apartments, each about 45 to 50 square meters, the employee said. He refused a request to see the school, which occupies one section of a four-story building and is identified by a plaque saying "Arabic School Moscow."
From the outside, the building appears to be in need of repair. Green, sun-bleached paint is peeling from the walls. Windows on the first floor are protected by iron grills. The wood of the window frames is cracked with age.
Zhirinovsky said Thursday that the Iraqi Embassy had asked him for help with its school. The embassy had been renting a building on Ulitsa Ulofa Palme near Moscow State University but could no longer afford the rent, he said.
"I helped them find a temporary location for their school, that's all," Zhirinovsky said, adding that it was more than three years ago. "It was many years ago and not when the Americans say," he said.
Zhirinovsky, who has visited Iraq numerous times and had close ties with Hussein's government, said the Iraqi Embassy in Moscow occasionally asked for his assistance.
"The Iraqi school, the embassy, the businessmen, had to pay a lot of money for rent. The government had no money for that," he said. "They didn't have any money to pay and had problems, and I would go to the Foreign Ministry and other organizations to ask them to help."
Zhirinovsky said he also would make phone calls to help the Iraqis resolve business problems with Russian oil companies.
"That's all I did," he said. "I never had debts and I never did business with them."
In the summer of 2002, Zhirinovsky was given another building in the center of Moscow, on 1st Basmanny Pereulok, for his Institute of World Civilizations, Vedomosti reported at the time. The institute had been renting the building for $102,000 per year.
The instruction to transfer the building was signed by then-Prime Minister Mikhail Kasyanov on June 28, 2002. No explanation was given for the transfer, which was interpreted as a political favor to Zhirinovsky, the report said.
U.S. Senator Carl Levin, the ranking Democrat on the committee leading the investigation, told journalists on Monday that he hoped Russia and other countries would bring anyone implicated in the oil-for-food scandal to justice.
But the Foreign Ministry issued a sharp rebuttal the same day, saying it is cooperating with an inquiry led by the United Nations. That commission has not yet provided Russia with any evidence that Russian politicians or companies broke the law, the ministry said in a statement on its web site.
"Russia is incriminated by the sheer fact of its participation in the Iraqi humanitarian program," the ministry said. "It is difficult to escape the impression that the senators are trying to discredit the UN itself."
TITLE: Sole Beslan Defendant Denies Being Guilty
PUBLISHER: The Associated Press
TEXT: VLADIKAVKAZ, North Ossetia - The sole defendant in the trial over last September's deadly school hostage seizure pleaded innocent in an emotional session that saw angry relatives hurling themselves at court bailiffs in frustration over the slow pace of the proceedings.
As prosecutors concluded nearly two days of reading lists of victims and medical details, Nur-Pashi Kulayev was asked Thursday if he wanted to plead guilty to any of the charges including terrorism and murder. "No," he said.
Kulayev also told the judge in a low voice that his brother had introduced him to the group that seized more than 1,000 hostages at Beslan's School No. 1 on Sept. 1. The attack ended on Sept. 3 in the deaths of more than 330 people - more than half of them children.
With more than two dozen relatives and survivors in attendance, the trial has alternated between tedium and shrill emotion as prosecutors read the lengthy indictment and spectators occasionally cried, shrieked and sometimes demanded Kulayev be turned over to them for punishment.
Kulayev, dressed in black shirt and trousers and black shoes, stood in a courtroom cage for the day's proceedings, his eyes downcast. In television footage last year, he was shown confessing to participating in the raid, but said he personally did not kill anyone.
At a briefing after the court adjourned until next Thursday, Deputy Prosecutor General Nikolai Shepel declined to say whether Kulayev's plea was unexpected.
"This is his right. This is his right to see the evidence," Shepel said.
But, he said, "I consider that we have enough evidence to prove [his guilt] to the court."
Earlier, as the court adjourned for a midday break, three women threw themselves at bailiffs, angered by the slow pace. Bailiffs quickly removed the handcuffed Kulayev from the room as the irate women shrieked and flailed their fists, trying to reach him.
When the court convened in the morning, several woman started crying and yelling and one woman tried to walk up to the cage to show Kulayev a newspaper page that had dozens of color photographs of dead children.
More than 1,200 hostages were held in a sweltering gymnasium at the Beslan school by more than 30 heavily armed militants last September. The raid ended in a maelstrom of explosions, gunfire and frightened, bloodied children fleeing the mayhem; more than half those killed were children.
Officials say 31 of the terrorists were killed.
During the midday break, women dressed in black and headscarves sat on door stoops, sobbing and whimpering; bleary-eyed men second-guessed how riot police stormed the school.
"Kulayev, Kulayev, Kulayev! It's like he was the only one there. And with a thousand hostages?!" said Clara Zosayeva, 65, whose 8-year-old grandson was killed. "It was our own people, the Ossetians, who sold them all out. Beasts!"
"They've built a show for us. We have to sit here for five, six hours and watch this spectacle! What for?" said Zalina Tybloyeva, 45, whose sister, niece and nephew died.
If convicted, Kulayev could get up to life in prison. Survivors of the attack and others have called for the death penalty, but Russia imposed a moratorium on the death penalty in 1996 to join the Council of Europe.
Shepel said the entire trial could take three to four months.
TITLE: Kasyanov
Steps Up
Criticism
Of Putin
PUBLISHER: Staff Writer
TEXT: MOSCOW - Former Prime Minister Mikhail Kasyanov stepped up his criticism of President Vladimir Putin on Thursday, warning that unless pro-democratic political forces unite, the nation could revert to "a Soviet system with elements of state capitalism."
"The country is going in the wrong direction. Unfortunately the speed of movement in this negative direction is increasing," Kasyanov told a news conference.
Kasyanov, who now heads his own consulting company, MK_Analytica, also said that he is in talks with various political figures to create a united democratic front.
Although he refused to name names, Kasyanov said that in his view democratic forces are not limited to liberals but include certain leftist and social democratic elements.
Putin's plan to change the way State Duma elections are held is one of the greatest dangers to Russian democracy, Kasyanov said. On Thursday, Putin signed into law a change effectively blocking independent lawmakers without party affiliations from taking office.
Kasyanov also reiterated his criticism of the state's legal onslaught on the Yukos oil empire and its founders Mikhail Khodorkovsky and Platon Lebedev.
The two men face up to 10 years in jail on fraud, embezzlement and tax evasion charges if convicted. The reading of the verdict started on May 16 and is expected to last several more days.
"This trial is a farce," Kasyanov said. "The Khodorkovsky case has brought Russia to a turning point, while the verdict could mean that the point of no return will be passed."
Kasyanov, whom Putin abruptly fired a month before the March 2004 presidential elections, also repeated that he may run for president in 2008. He added that his final decision would depend on the support of the people.
"This depends on you," he said, addressing reporters. "If there is a [public] desire and need for me to do it, I will. If not, I will find other business for myself. There are plenty of interesting things to do."
Kasyanov said that a Ukrainian-style revolution would not be a suitable path for Russia. Instead, he said, the main goal for the democratic opposition was to achieve fair and transparent Duma and presidential elections in 2007 and 2008, respectively.
In February, when Kasyanov reappeared after vanishing from public life for a year, he dropped his first hint that he would run for president in 2008. He also said that he planned to work on uniting the opposition.
Kasyanov said there have been only two pieces of good news for Russia over the past month - CSKA soccer club's winning of the UEFA Cup in the early hours of Thursday and the government striking a deal with the Paris Club to repay $15 billion of debt without any penalties or extra charges.
TITLE: Bush Foresees Changes in the Caucasus, Central Asia
PUBLISHER: Staff Writer
TEXT: MOSCOW - U.S. President George W. Bush predicted more democratic changes across the Caucasus and Central Asia and pledged Washington would help new democratic governments.
Speaking at a Washington dinner on Wednesday evening given by the International Republican Institute, Bush recalled the arrival of democratic governments in the former Soviet republics of Georgia, Ukraine and Kyrgyzstan as well as in Iraq and Lebanon in the last 18 months and said more countries would follow.
"These are just the beginnings," Bush said, according to a transcript of his speech published on the White House's web site. "Across the Caucasus and Central Asia, hope is stirring at the prospect of change - and change will come."
The comments appeared aimed at the former Soviet republics of Armenia and Azerbaijan in the South Caucasus and Uzbekistan, Kazakhstan, Tajikistan and Turkmenistan in Central Asia.
Bush also announced a plan to create an Active Response Corps within the State Department by 2006 that would be on call to quickly deploy staff to crisis situations in countries that overthrow "tyranny" and elect pro-Western governments.
The U.S. federal budget for 2006 will request $24 million for this office and $100 million for a new Conflict Response Fund, Bush said.
The IRI, a pro-Republican Party nonprofit organization dedicated to advancing democracy worldwide, was helping Poland, Lithuania and Latvia in an effort "to bring freedom" to Belarus, he said.
Russia is jittery about conceding ground to the United States in the CIS, its traditional sphere of influence. Federal Security Service director Nikolai Patrushev said last week that the revolutions in Georgia, Ukraine and Kyrgyzstan showed that "certain forces in the West were trying to weaken Russia's influence" over its neighbors.
He also claimed that IRI had earmarked $5 million to finance opposition groups in Belarus this year, but an IRI spokeswoman said the organization spent about $500,000 annually on programs in Belarus and that none of it went to political parties.
No official reaction to Bush's comments came from Moscow on Thursday. The chairman of the State Duma's International Relations Committee, Konstantin Kosachyov, could not be immediately reached for comment, and the Foreign Ministry had no comment, a spokesman said.
Independent political analyst Andrei Piontkovsky said Bush's predictions and promises of help to possible new democracies in the former Soviet Union would not hurt relations between Russia and the United States.
"We haven't been making any efforts to stabilize the situation in these areas," he said, referring to last week's uprising in Uzbekistan, which left hundreds dead, as an example of the region's instability. "That's why [the United States] began to deal with this."
Timofei Bordachyov, deputy editor of the Russia in Global Affairs journal, said the Active Response Corps would most likely help new pro-Western governments handle refugee crises, rein in public disorder and build Western-style institutions.
The promise of such help would not, in and of itself, necessarily spark new revolutions because what really causes them is corruption and poverty, he said.
TITLE: Kaloyev Faces
Murder Trial
PUBLISHER: The St. Petersburg Times
TEXT: ZURICH - A Russian citizen has been charged with the premeditated murder of the air traffic controller whom he held responsible for a midair collision above southern Germany in 2002, local media reported.
Vitaly Kaloyev's wife and two children were killed in the collision that cost the lives of 71 people, the majority of whom were children from Bashkortostan bound for a holiday in Spain.
Zurich prosecutors charged Kaloyev on Thursday with fatally stabbing the controller, Peter Nielsen in February in the Swiss town of Kloten in February last year where Kaloyev was detained the next day. Zurich prosecutors said the trial is expected to take place this year.
TITLE: Helsinki Alleges Russia Violating Its Airspace
PUBLISHER: The Associated Press
TEXT: HELSINKI - Russian military aircraft have repeatedly violated Finnish air space during the past few months, despite demands to Russian officials to end the violations, the government said Thursday.
Finland's Foreign Ministry confirmed the violations in a brief statement after a report by Finnish commercial TV channel MTV3 on Thursday.
"Yes, we confirm it. And although we have approached Russian officials, the violations simply have continued," Foreign Ministry spokesman Yrjo Lansipuro said, but would not comment on the seriousness of the violations.
The violations allegedly took place in Finnish air space over the Gulf of Finland in the Baltic Sea, as the fighter jets had been flying to and from the Russian military enclave of Kaliningrad, sandwiched between Lithuania and Poland, Lansipuro said. They were seen and identified by Finnish air force fighter crews and were picked up on radar screens, he said.
The president and government have discussed the violations and plan to take the matter up at a political level with Moscow, Lansipuro said, but did not provide details. Prime Minister Matti Vanhanen is expected in the Kremlin on a scheduled visit early next month.
Similar alleged violations by Russian planes have been reported in the Baltic states of Estonia, Latvia and Lithuania. In November, the Estonian government filed an official complaint with Moscow, but said none was serious enough to merit intervention by the four NATO fighters that patrol the Baltics' air space.
Neutral Finland, which patrols the 1,270-kilometer border with Russia, has been wary of its eastern neighbor with which it fought two wars during 1939 to 1944. No violations by Russian jets have been reported over that land border.
TITLE: LSR Seeks Partner For
Cement Producing Plant
PUBLISHER: Staff Writer
TEXT: LSR, a large St. Petersburg construction holding, said Monday it is looking for an international partner to build a cement plant and widen the market of cement producers in the Northwest region.
Speaking at a news conference outlining the company's plans for 2005, vice president Igor Levit said the new plant's capacity should reach between one million to two million metric tons of cement per year. LSR's own consumption is about 800,000 tons, while the total Northwest region market consumes about 2.5 million tons annually.
"Initial estimates of the cost of building such a plant are up to $100 million," Levit said.
LSR would be ready to take a 25-percent to 50-percent share in the construction, while the international partner would cover the remaining costs.
"We are negotiating with large international companies who would be able to bring the technologies and the experience necessary to build a top-notch facility. They would also bring in the cheap loan funds that would be obtained under long-term credits," Levit said.
LSR's responsibilities in the partnership would be finding a suitable location, taking care of all the necessary paperwork and providing the rest of the financing.
LSR has contacted five major international companies including French Lafarge, and major German, Mexican and Italian companies with partnership proposals.
"Three investors have expressed real interest in the project, and right now we are in active negotiations," Levit said.
However, he said, large international companies are less "mobile" and flexible in their decision making, especially when it comes to striking a deal when the stake is large.
"We are hoping to conclude negotiations and sign an agreement by the end of this year," Levit said.
Analysts said increased competition would be welcomed on the domestic cement market, even though LSR's plans are too small to capture a strong position in the market dominated by Moscow-based Eurocement Group.
"We don't have enough capacity to offer an alternative [to Eurocement] to the consumers," Mikhael Bogush, general director of Alfa-Cement, another cement manufacturer, was quoted by Vedomosti as saying.
Eurocement took a 40 percent share of the market with a purchase of largest competitor Inteko this spring. Industry consolidation prompted a price rise of more than 30 percent since the beginning of May - a hike which raised inquiries from the Federal Anti-Monopoly Service.
Tatyana Krilova, head of the purchasing department at city-based construction company Stroimontage, said spending on cement-based products increased by an average of 20 percent as a result of May price hikes.
"One competitor in the industry is better than no competitor,"she said in a telephone interview Monday, adding, however, that only FAS involvement could ease the short-term situation for cement consumers.
The future LSR plant would be too small to engage in price wars with Eurocement, which produces about 25 million tons of cement at its 15 plants in Ukraine and Russia, she said.
TITLE: Coca-Cola Staff Threaten Strike
PUBLISHER: Combined Reports
TEXT: Trade union workers at the St. Petersburg Coca-Cola plant have threatened to strike if the company management does not take steps to settle employment disputes.
About 20 of the Coca-Cola Hellenic Bottling Co. (HBC) employees, joined by a group of the federal agro-industrial trade union members, picketed the plant's front entrance Friday. The picketers demanded annual salary indexation and negotiations on the collective contract terms that all trade union members sign with the company.
"Salaries [for trade union workers] have not been indexed for several years," Vladimir Okhrimenko, the head of the plant's trade union, said Monday in a telephone interview. "Also the amendments to the trade union's collective employment contract terms were denied by the management," he said.
No one from HBC administration came out to meet the protesters Friday, but management said it will meet with the employees at the beginning of June.
Alfina Solovyeva, HBC's HR manager said the company is "aware of the workers' demands and ... is ready to meet with them June 7."
Solovyeva denied allegations that the company pressures trade union workers by not indexing their salaries.
"We raise employee salaries based on an individual achievement ... rather than on inflation," she said Friday.
Okhrimenko said the plant workers, who either work on conveyer lines or drive delivery trucks, will continue to do their job until the June meeting. However if the management does not take any steps to meet their demands, there will be a strike.
Between 300 and 400 people work at the HBC's city plant. The company's majority shareholders are Greek, while a 24-percent share belongs to the U.S.-based Coca-Cola Co. HBC owns 11 plants in Russia and its domestic annual sales are estimated at $700 million.
UFG analyst Alexei Krivoshapko said a one-day production delay would cost the Coca-Cola plant from $200,000 to $300,000,
Experts said the picket and threatened strike must be resolved amicably between the two sides.
A.S.T. Legal managing partner Anatoly Yushin said HBC management has to negotiate with the trade union group.
"Besides posting financial loses the protests can deal a considerable blow to the company's image," he said.
UFG's Krivoshapko agreed.
Alfa bank analyst Yelena Borodenko said the company management would be able to find a compromise with the workers without making any serious concessions.
"Coca-Cola has a lot of experience negotiating with trade unions," she said.
Olga Chebotkova, managing partner at employment agency Top Hunt International's city office, said employee problems at the HBC plant were not surprising.
"Many qualified workers have left the plant in recent years due to their dissatisfaction with the management culture."
HBC has adopted an expense minimization strategy, which is taking its toll on the working conditions at the plant, she said.
(SPT, Vedomosti)
TITLE: Cabinet Signs Auto Strategy
PUBLISHER: Staff Writer
TEXT: The Cabinet on Thursday signed off on a roadmap that sketches out the strategy for the country's automotive industry through 2008.
Industry and Energy Minister Viktor Khristenko said the plan would bring Russia into line with import and safety standards used around the world.
Khristenko's ministry also sought to defuse public anger that the government would ban vehicles with right-hand steering, popular with drivers of second-hand Japanese cars, especially in the Far East.
Khristenko said that as Russia prepares to join the World Trade Organization, it should shift away from protective tariffs on foreign cars, instead tightening emission standards.
Khristenko, who has sought to shield domestic automakers from global competition, appeared to have turned a corner.
Khristenko said he saw no difference between Russian and foreign automakers who assemble their cars in Russia.
"All of them will be Russian residents and all of them ... will enjoy absolutely equal conditions," he said.
Following a change in tariffs last month, foreign carmakers are lining up to assemble models in Russia. Their arrival will help boost the auto industry's share of GDP to 4.3 percent by 2010 from today's 2.5 percent, Khristenko said in the Cabinet meeting, RIA-Novosti reported.
Khristenko said he would welcome a move by a foreign giant to buy a Russian carmaker and turn it around, citing the example of Volkswagen's transformation of moribund Czech Skoda into a competitive manufacturer.
At the same time, Khristenko said the government would return to the issue of protective tariffs on second-hand cars in July but reassured reporters the changes would "not be critical." An additional measure, he said, would be progressively steeper emissions standards, that would match current European Union standards by 2008.
Last week the minister said he was seeking to impose protective import tariffs on used foreign cars more than five years old to prevent such vehicles from turning the country into "the world's car junkyard. To help domestic automakers, Russia in 2002 introduced protective tariffs on secondhand foreign cars more than seven years old.
Last year, Russians spent $18 billion on cars, 60 percent of that amount going toward foreign cars, he said, adding that the market is projected to expand to $20 billion this year.
After the Cabinet meeting, the ministry sought to defuse reports that it was pushing a ban of cars with steering wheels on the right-hand side.
On Thursday thousands of drivers of used Japanese cars protested across the Far East and Siberia, honking their horns and tying orange ribbons to their antennas. A couple of hundred drivers protested across from the White House during the Cabinet meeting.
"We are not against right-hand steering wheels," Andrei Deineko, the head of the ministry's industry department, said in a statement. "We are for safe right-hand driving."
Among other factors, the authorities blame high traffic deaths on cars with steering wheels on the right side, and part of Khristenko's plan aims to improve road safety.
TITLE: Khodorkovsky Verdict
Could Last Until June
PUBLISHER: Combined Reports
TEXT: MOSCOW - Mikhail Khodorkovsky, the former chief executive of Yukos, may have to wait until June to hear the final verdict from judges reading out their conclusions in his 11-month trial for embezzlement, fraud and tax evasion.
Khodorkovsky and his former business partner Platon Lebedev on Monday faced the sixth day of hearings on the verdict at the Meshchansky District Court. The pace at which the tribunal of judges is proceeding makes it possible the verdict will take several weeks, Yelena Liptser, a lawyer for Lebedev, said.
Only about a third of the giant summing up document they must get through before pronouncing their verdict has been read.
The recital of the verdict is dragging on so long that even Khodorkovsky's parents left the courtroom early Friday.
Many media organizations have already scaled down their coverage of the trial and protests by Khodorkovsky's supporters and opponents outside the court have dwindled away.
The judge and two assistants in the case have been reading the verdict in relays for only about four hours per day. The court adjourned for the weekend after about three and a half hours on Friday. That "doesn't formally break the law, but normally they read the verdict in a more simple way and faster," Genrikh Padva, one of Khodorkovsky's lawyers, said.
Liptser, said about 20 to 30 pages had been read Friday, and estimated about 1,000 remained. "This is a first in my experience," she said.
"The judges list countless number of names of firms and organizations that we think don't have anything to do with the case."
"The court is just blabbing on and on," Khodorkovsky's father, Boris, told Ekho Moskvy radio, as he left the courtroom.
Khodorkovsky called his trial on charges of fraud and tax evasion a politically motivated attack that devastated Yukos. He funded politicians who opposed President Vladimir Putin and sought to cut taxes on oil producers. Yukos, once Russia's largest oil company, was hit with $27.5 billion in tax claims after Khodorkovsky's arrest in 2003.
Both men said they were innocent of the prosecution's charges.
Liptser said the judges may be dragging out the verdict to reduce the attention paid by journalists and the public.
Court officials said they would not comment on the case.
The lawyers would first have to appeal the verdict in the Moscow City Court, Anton Drel, a lawyer for Khodorkovsky, said Friday. The next instance would be the Supreme Court, he said.
Judges summing up the politically charged case have said the 41-year-old billionaire committed crimes related to all seven of the fraud and tax evasion charges against him - leaving no doubt of an eventual guilty verdict.
Former economy minister Yevgeny Yasin said earlier this week that he expected the tycoon - whose personal wealth is still estimated by the U.S. magazine Forbes at more $2 billion - to be in jail beyond the 2008 presidential elections.
(Bloomberg, Reuters, AP)
TITLE: Foreign Insurance Accepted at Top Clinics
PUBLISHER: Staff Writer
TEXT: Although they may sometimes be joked about as being authentically Russian, medical services offered at state-run Russian institutions are not an option for the majority of foreigners in St. Petersburg.
The language barrier, the service level and general differences in the Russian medical system to that at home narrow the pool of medical service providers to those who visit, study or work in St. Petersburg to the city's few top clinics.
The dependency, although costly, is luckily supported by the fact that these clinics will work with most major foreign insurance companies and usually offer assistance when it comes to settling the bill.
THE COVERAGE
"If you already have a foreign insurance policy there is usually no need to buy an additional Russian policy - just check the terms of your policy in regards to travel abroad," said Alexander Strelnikov, medical director at the Medem Clinic.
Medem, the American Medical Clinic and EuroMed Clinic have long been working with numerous foreign insurance companies from throughout the world, and say that about 80 percent to 90 percent of their foreign patients have foreign insurance coverage.
However, it is still best to call one's insurance service center before departure to find out what and how much the insurance provider will cover.
"Usually an insurance policy does not cover all and any emergencies that can arise" said Yefim Danilevich, general director of the American Medical Clinic. "In our 12 years of operations, we often dealt with tourists, especially American tourists who come to Russia with a policy that does not have Russian coverage [although it serves to satisfy visa requirements], and they only find out about it when an emergency arises," he said.
Due to the frequency of such cases, AMC signed a contract with American Blue Cross Blue Shield, one of the largest American insurance companies, which agreed to provide international coverage on domestic American policies at no additional charge.
"Unfortunately, no Russian insurance companies would agree to do the same in a similar situation," Danilevich added.
Clinics said that British and German private insurance policies usually guarantee the most thorough coverage and work very efficiently.
PRICES AND LIMITATIONS
Even a policy that works in Russia will not cover any and all services that may be necessary.
Usually the limitations on foreign insurance are the same as on domestic policies - a payout limit and refusal to cover accidents that occurred when a policyholder is under the influence of drugs or alcohol. There are also limitations related to a person's medical history.
"Usually foreign insurance companies cover the treatment of serious illnesses, fractures and accidents," said Alexei Lazutin, client service manager at EuroMed Clinic. "But they will not cover the treatment of chronic illness and sexually transmitted diseases."
Coverage varies from policy to policy, but in most cases the most expensive provide the widest and best choice of services - the higher the price the better the coverage and the wider the choice of treatment facilities. However, there are options available to smart consumers who know how to pick and choose.
"There are two ways a clinic interacts with a foreign insurance provider -either direct billing or a 'pay and claim' system," Lazutin said. "Direct billing is the most convenient for the patient, who doesn't have to make any payments. In "pay and claim," the patient is responsible for contacting the insurance companies to receive compensation, but he stays better informed of the options available."
About 85 percent of all claims made with foreign insurance providers are direct billing claims, Lazutin said.
An insurance policy that specifies a deductible, or a co-payment, may be a good option for generally healthy people looking to minimize payments.
"Such a policy will cover all accidents and serious illnesses, while regular check-ups and routine treatment are covered by the patient," AMC's Danilevich said.
American insurance policies are usually the most expensive ones, while many doctors recommended IHI, International Health Insurance, which covers 80 percent of all expenses incurred by patient regardless of the treatment, and can be purchased in Russia.
THE DIFFERENCE
As the local market of insurance services develops, more international and domestic companies are beginning to provide Russian insurance policies to their foreign employees.
"Large companies now insure all of their employees, including foreigners. However, we see that when a serious medical problem arises or there is a need for emergency evacuation, foreigners tend to use their own, trusted policies," Danilevich said.
An insurance expert, who asked not to be named due to existing employment contracts, said that as a rule, local insurance providers try to cover the lowest possible costs - thus local coverage may not cover more expensive facilities.
The domestic policies most commonly used by international companies are Rosno, Reso Garant and Russky Mir, which cover a mid-priced range of services at "European standard" clinics such as Scandinavia and Admiralteiskiye Verfi. However, these clinics will rarely accept foreign insurance policies or only do so in emergency situations.
"We work with mostly Russian providers, such as Reso and Renaissance," said Sergei Anufriyev, the head of Scandinavia. "The only foreign provider we accept is Eurooppalainen," he said.
TITLE: FAS Plans Two-tier Medical Services
PUBLISHER: Staff Writer
TEXT: The Federal Antimonopoly Service (FAS) has proposed that a two-tier compulsory medical insurance system be created in Russia to boost market competitiveness.
The system would create increased competition in the area of compulsory medical insurance that all domestic companies have to provide their employees, Andrei Kashevarov, FAS deputy head said at a meeting of the FAS expert council in April.
The first tier of the system would include free medical aid for unemployed citizens, Kashevanov was cited by PRIME-Tass as saying.
The tier financing would come from a social security tax and budget funds, provided by federal and regional governmental bodies.
The second tier of compulsory medical insurance would provide medical aid for people in the country's work force. Employers would provide financing for the compulsory insurance payments, receiving cuts in tax payments in exchange. A minimum insurance rate by the employer would be established by a new law under the proposed system.
Kashevarov said the FAS proposal provides a more direct relation between the insurer and the insured (the company in the second case), bypassing the middleman - the budget. The adoption of such a model would make it possible to increase financing of compulsory medical insurance, as the insurer would be receiving funds immediately after the insurance agreement was signed.
Participants in the expert council said the introduction of the system would lead to a widening gap between the levels of medical insurance services provided at different companies. "The level would be different at poor and rich enterprises," a participant was quoted as saying.
Kashevarov said that there was nothing wrong with varying degrees of medical services, as insurance quality would come as part of the job's benefits package and would either enhance or decrease the attractiveness of the job.
FAS also said it was imperative for a healthy compulsory medical insurance market that any insurance company with a license be allowed to operate, rather than only those companies with specialized medical insurance liscenses, as is the current practice.
TITLE: Motorists Gear Up for Cross-Border Policies
PUBLISHER: Staff Writer
TEXT: MOSCOW - Millions of Russians may in the near future become Green Card holders. But Americans need not panic over a sudden immigration influx. Russia is preparing an application for transitional membership in Europe's Green Card car insurance system.
The Green Card, or international motor insurance certificate system, was introduced in 1953 under the aegis of the United Nations' Economic Commission for Europe and is managed by the London-based Council of Bureaux.
According to the council, with the Green Card covering third-party liability, a motorist does not have to obtain insurance coverage each time he crosses the border of a foreign country.
Forty-four European, Mediterranean and North African countries, including Belarus, Moldova and Ukraine, are part of the Green Card system today.
"Russia is the only European country that is not part of the system," said Ulf Lemor, president of the council, by phone from Kiev, Ukraine.
Lemor was in Kiev to meet Volodymyr Romanishyn, president of the Motor Transport Insurance Bureau of Ukraine, to discuss remaining issues related to the country's membership.
Ukraine became a full member of the Green Card system on Jan. 1, 2005, after six years of rigorous monitoring by the Council of Bureaux as a transitional member.
With the introduction of required third-party auto insurance in July 2003, Russia completed the first step required to qualify for transitional membership.
Lemor said he hoped Russia would be able to submit an application by the spring of 2006, when the council's General Assembly convenes for its annual meeting. If the council votes in favor of Russia, the country will join the Green Card system in 2007 as a transitional member.
Until that time, Russian residents have to buy international insurance certificates from Russian dealers when they drive their cars to Europe. The most popular certificates include Germany's SOVAG and Alte Leipziger, Poland's Hestia and Bulgaria's Bulstrad. Rates vary depending on the types of vehicle and length of coverage. For example, Hestia's insurance certificates cost 10 euros ($13) for a 15-day period.
The Russian Union of Auto Insurers, which at present comprises 180 insurance companies, is the main negotiator with the council. It is working to establish the Green Card National Bureau to organize Russia's bid.
Yevgeny Gurevich, head of the marketing department at Russky Mir, one of the largest insurance brokers handling Green Cards, said that by the end of the year, Russian insurers would have to secure up to 14 million euros ($18.7 million) as proof of financial eligibility for a 2006 bid.
The sum includes 11 million euros as a bank guarantee or a deposit commensurate with Russia's current car fleet of 35 million vehicles and a 2 million euro reinsurance, he said.
Russia's absence from the system also means that European Green Card holders have to fork out an extra $400 to $600 to purchase Russian insurance certificates before entering the country.
Lodewijk Schlingemann, who drove his Saab from the Netherlands to Russia in 2002, said he would very much welcome Russia's joining the Green Card program.
"The change would mean that foreigners would not have to purchase a Russian insurance certificate, because on the basis of the Green Card, their home insurance policy would be valid in Russia," said Schlingemann, the Moscow-based founder of the Juralink Legal Consultancy. "It saves some hassle at the border and extra costs."
In 2002, Schlingemann paid 400 euros for his first Russian insurance policy, which he bought back in the Netherlands.
In 2003, he bought another insurance certificate from Russia's Ingosstrakh for "$500 or $600," he recalled, and a third one in 2004 from the RESO insurance company, for $400.
He said that authorities at the border also "want to see that the insurance is valid for the whole period of stay."
"It's ridiculous because if you need to renew it, you can always do it later in Russia," he added.
Ukraine, as it has joined the Green Card system, is a different story.
"If you hold the Green Card, you just pass through," Romanishyn said by telephone from Kiev.
He added that 12 of Ukraine's insurance companies now sell national Green Cards.
Boris Kolosyuk, vice president of Ukrainian insurance firm Garant-Avto, said that advantages of the membership were obvious.
For one, now that drivers do not have to buy certificates abroad, paperwork is reduced and efficiency increases, he said.
"The only bad thing is losses," he said by telephone from Kiev.
Before Ukraine became a member, foreign insurers had to foot the bill for any claims.
Now local insurers have to cover between 6 million and 10 million euros per year ($8 million and $13.4 million) of damages that Ukrainian drivers inflict on third parties while in Europe, according to Romanishyn. "This is a serious figure," he said.
Russian insurance experts said the same figures for Russia were not available, as Russian drivers bought their international certificates from many different companies.
Some unofficial estimates, however, suggest the damages may be two to three times higher than those of Ukraine.
As a result, at least some of the foreign insurance companies would be happy to lose business to their Russian counterparts when Russia joins the Green Card system.
"Russian drivers are so undisciplined," said Dina Safina, a Moscow representative of SOVAG, the German insurance company.
When Russia joins the system, she said, "we will heave a sigh of relief."
TITLE: What Makes Investment Strategic?
TEXT: The main principle of the St. Petersburg legislation regulating procedures for granting rights to renovation and new construction is that such rights are to be granted under tender. However, this principle has several exceptions, one of which is that rights for real estate development may be granted without a tender "under agreement with a strategic investor." For several months after such exception was introduced the definition and criteria for "strategic investor" was unregulated in the legislation, however, on March 1 resolution No. 216 of the St. Petersburg Government was signed by the Governor of St. Petersburg and officially published and came into force on April 8.
This resolution covers two regulations intended to introduce clear criteria and rules to be used to determine which investment projects and investment relations are to be deemed strategic, and outlines the procedures to be used by both the city authorities and investors, in the fulfillment of such projects.
Adoption of these regulations makes clear the criteria on which projects are deemed to be considered "strategic."
"Strategic investment projects" are required to demonstrate a significant improvement in the social, economic and cultural lives of the residents of St. Petersburg, and support development in the fields of investment, industry, tourism, science, culture and education, information technology, finance, transport and logistics, and other areas.
In addition to the rather general criteria above, a strategic investment project must meet all of the following five qualification requirements in their entirety:
n the project must substantially assist in the development of individual locations within St. Petersburg, the city as a whole, or separate areas of the city's economy, by stimulating investment and business activity through the realization of the strategic investment project, or by stimulating economic activity in a specific area of the city's economy;
n the project must be economically viable in terms of financial recoupment;
n the project must provide total investment which amounts to (as a rule), not less than 3 billion rubles. The city government is responsible for determining the term over which such aggregate investment must be made;
n where a strategic investment project is related to industrial production, use must be made of energy-saving, resource-saving and other high technologies;
n where fulfillment of the project is related to the jurisdiction of a corresponding governmental executive body, the organization in question is required to make a positive decision in support of the project before it can proceed.
Strategic investors may be: individuals; legal entities; associations of companies established on the basis of a joint activity agreement but without the status of legal entities; government bodies; local self-government associations; or foreign individuals or entities engaged in the fulfillment of strategic investment projects having particular significance for the social, economic, cultural, and other development of St. Petersburg.
Any decision to assign strategic status to an investment project or to an investor will be taken by the city's committee for investments and strategic projects. The necessary process may be initiated by the applicant (either a potential strategic investor or a governmental executive body) on submission of the application (together with all necessary documents proving compliance with the criteria above) to the committee. The committee must, within three days, reach a decision on whether or not to proceed with the application and conduct a full analysis of the documentation received, or make clear its decision to postpone such analysis due to lack of supporting documents. In the latter case, the applicant will have a two-month period to re-submit the remaining documents. In the event of a positive response, the committee must conduct the full analysis of the proposed documents within a one-month period, which may be extended for another one-month period if additional information is required.
On completion of its analysis, the committee is required to rule on whether or not the project or investor will be given "strategic project" or "strategic investor" status. Where the ruling is positive City Hall is required to adopt a legal act confirming the status of the project or investor. While it is hoped that the recent adoption of these regulations will simplify regulation of major investment projects in St. Petersburg, it remains to be seen how these will be implemented in practice.
Maxim Kalinin is a partner at Baker & McKenzie - CIS, Ltd., in St. Petersburg.
TITLE: Courage in the Face of Corruption
TEXT: Will Russia's people, who recently celebrated their victory in World War II, ever again be heroes? In a battle against the pure evil of Nazism, the ordinary citizens of the Soviet Union, overcoming appalling leadership, deployed moral qualities that changed the course of history. Today, many see Russia beset abroad by an aggressive America and a rising China, while weak and divided at home, a state trapped in terminal decline. If this indeed is a mortal challenge, how should Russians respond?
The answer, for the grandchildren of the veterans of the Red Army, is to make money. To make money is to produce something of value, in rivalry with other producers, that people prize and for which they are willing to pay. Individuals who make a lot of money in this way contribute great new wealth to society, which distributes this benefit as it sees fit through its political process. A nation made up of enough wealth-makers is a nation that successfully competes on this planet of nations. That nation will be a state whose borders will be secure. Whose interests will be reckoned by other states. Whose voice will be heard.
Understood this way, the greatness of a nation is a function of the greatness of its individual citizens. After 20 years of upheaval, and facing the cold calculus of international power, today Russia is calling for heroes. Millions of them.
The challenge of 60 years ago demanded from ordinary people the sacrifice of everything that humanity holds dear. The values of courage, loyalty and patriotism inspired individuals and were the bedrocks of the moral strength that helped them endure and fight back, for the sake of their children and their country. The challenge of the 21st century is nothing so dreadful. But to build a prosperous, competitive and just country, Russians will have to embrace values that are different, yet in their own way, noble and certainly vital.
Among the individual qualities that Russia demands in quantity are excellence, adaptability, innovation, efficiency, accountability and transparency. These qualities are the hallmarks of entrepreneurship. After centuries of statism, these qualities are not woven into the traditions of Russian life. Russia does not have institutions or institutional dynamics that promote these qualities. And while Russia has individuals who are shining examples of these entrepreneurial qualities and who give life to them in business, in the professions and in public service, it hardly has a surplus of such people.
In Russia, the feeling is widespread that money is at best a necessary evil and that those who have a lot of it are themselves evil. Too rarely is the crucial distinction made between those who have been granted or who have stolen wealth, and those who have been rewarded with money in fair exchange for their value added through normal economic processes. President Vladimir Putin recently made the distinction, declaring citizens who make a success of new businesses heroes deserving of medals.
The president's metaphor, suggestive of war, is apt because, like many policymakers, he places entrepreneurs on the front lines of battle against an enemy more dangerous to Russia than any external foe: corruption. As individuals - and increasingly, collectively in grassroots organizations - entrepreneurs in Russia are fighting back against the mediocrity and parasitism that is endemic in the country's public and commercial life. They are ideal fighters because entrepreneurs are the first to feel the true cost of the grasping hand of a predatory bureaucracy, because their experience tells them that even daunting obstacles can be overcome and because the values that they hold dear offer no choice but to fight. Otherwise, they will lose entirely their self-respect. As a group, people of enterprise are motivated to defeat the corruption that others accept as an inalterable fact of life.
What is at stake can be gleaned from the wisdom of Gandhi, who said, "Acknowledge and watch your habits, for they shall become your values. Understand and embrace your values, for they become your destiny."
In Russia, corruption has become a habit for people who are comfortable taking cash in one hand while stabbing their nation in the back with the other. Russians who truly love their country will recognize this evil for what it is. Like their grandparents once did, they will draw strength from noble values, including courage, patriotism and self-sacrifice. They will act to defend themselves and the future for their children. Those less capable or less brave will at least acknowledge with pride those who have stepped forward, like Russia's entrepreneurs. The people who do these things will be Russia's next generation of heroes.
Bernie Sucher is a Moscow-based entrepreneur. He contributed this comment to The St. Petersburg Times.
TITLE: Kangaroo Court Costs
TEXT: President Vladimir Putin is quickly becoming a classic example of a politician who was very successful during his first term, when he tried to do all the good things people wanted in order to consolidate his power, but a disaster in his second term, when he had consolidated power and could do all the bad things he wanted to do.
One date marks the divide between the first benign Putin and the second harmful Putin. It is Oct. 25, 2003, the day of Mikhail Khodorkovsky's arrest. This event was never a matter of one person or his actual acts. The causes given for this arrest are many, but in the end they boil down to Putin's wanting to increase his political control and to his close associates' desiring to grab Yukos' assets.
Khodorkovsky's arrest signified the end of the oligarchs as a political force. After carrying out an intricate and elegant balancing act between oligarchs and KGB officers and being everything to everybody, Putin transformed himself from the president of the whole of Russia to the president of a small group of KGB men from St. Petersburg. He seems to have become their hostage because he has not demoted anybody from his closest circle. The remaining oligarchs were allowed to make money - even more than before - but they were ousted from politics.
This tiny group of siloviki from St. Petersburg sits on top of the state administration and the big state enterprises. Therefore, they have no interest in reforms, which in turn are thus precluded. They distrust everybody, so they have centralized decision-making to so few that both the quantity and quality of decision-making has lapsed to Soviet levels. As good KGB men, they do not believe in anything but their own disinformation, keeping themselves distant from reality. Such an unrepresentative and dysfunctional regime can hardly last for long.
Three of Russia's greatest recent reforms have been tax reform, judicial reform and the reinforcement of property rights. Through the Yukos case, Putin has effectively jeopardized all these achievements.
Whatever the final sentence will be in the Khodorkovsky affair - if it is ever concluded - Putin has rendered his judicial reform a joke, because it has been obvious that every turn of the Yukos story has been ordered by the Kremlin.
The worst long-term effect is that property rights in Russia have been severely undermined. If even the richest capitalist cannot assert his property rights, then who can? With the arrest of Khodorkovsky, Putin unleashed a property-rights populism that may be difficult to stop. As a result, the political risk premium for investment in Russia remains high.
Anders Aslund is director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace. He contributed this comment to The St. Petersburg Times.
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