SOURCE: The St. Petersburg Times
DATE: Issue #606 (0), Tuesday, September 26, 2000
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TITLE: Russia Calm as Taleban Nears Tajikistan Border
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russia is putting its border guards on alert as Taleban forces advance within kilometers of the Tajik-Afghan border, but the battle for control of Afghanistan is not expected to spill over into Tajikistan, military officers said Monday.

Taleban troops, led by Afghani stan's largest ethnic group the Pashtuns, have advanced over the past few days to seize the Kunduz province and the port of Sher Khan Bandar on the Pyandzh River, separating Afghanistan from Tajikistan. Battles are raging so close to the border that several artillery shells have already landed in Tajikistan.


Taleban forces, which enjoy the support of Pakistan and Saudi Arabia, now control up to 90 percent of Afghanistan.
President Vladimir Putin sent his aide Ser gei Yastrzhembsky on Monday to Paki stan to meet the Islamic country's military ruler, Gen. Pervez Musharraff, a Kremlin spokesman said.
While the spokesman would not disclose the purpose of the mission, observers said Pu tin was probably hoping to press Pakistan into calling for peace talks between the Taleban and Afghanistan's ousted president, Burhanuddin Rabbani. 

Deputy Foreign Minister Alexander Loskov on Monday expressed concern over the Taleban's reluctance to negotiate a peace settlement with Rabbani, whom the United Nations continues to recognize as the legitimate head of Afghanistan.

Despite its recent steps to diffuse the conflict, Moscow is not worried that the Taleban will cross over into Tajikistan, a senior commander said at the Defense Ministry in Moscow.

More than 10,000 Russian and Tajik soldiers guard the border, and Russian soldiers in another 5,000-troop-strong infantry division in Tajikistan are standing by as reinforcements. Russia has long sought to maintain a military presence in Central Asia, which it considers to be a zone of strategic interest.
The commander, who asked not to be named, said the Defense Ministry does not plan to send any other reinforcements to Tajikistan. Moscow is also not planning to provide any official military aid to Rabbani's besieged forces despite appeals for assistance, he said.

Rabbani belongs to Afghanistan's second-largest ethnic group, the Tajik.
Taleban leaders sought to alleviate concerns in Russia and Tajikistan over their recent advances over the weekend. Taleban Foreign Minister Wakil Ahmed Muttawakil told a news conference Sunday that the Taleban "wants peaceful coexistence with our neighbors," according to The Associated Press.

TITLE: Middle Class Is Staging Return
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: Vadim Shishov wouldn't be caught dead in an Italian designer suit.


The middle-aged manager of MVO Holding, a chain of automobile service centers, only buys Russian.

"I consider myself to be a great patriot," Shishov said. "My suits are made by the Bolshevichka factory, and it's okay if they look a little different from other suits. My suits look Russian, and they make me look Russian."

Shishov is far from alone in his patriotism, a trademark of post-crisis Russia's small but growing middle class. 

So say researchers at the Comcon market research agency and Expert magazine, who have drawn up a portrait of the middle-class segment of the population that was all but wiped out by the 1998 financial crisis

The middle-class Russian is 32 years old, smokes, holds a university degree, takes vacations abroad and can smell the difference between Christian Dior and Kenzo perfumes, according to the survey, released late last week. But he also puts in long hours on the job, suffers from headaches and is often exhausted.

And while the middle class' preferences have become more refined - such as the Italian designer suits being out and made-in-Russia wear being in - the general characteristics remain the same, researchers said.

"The concept of middle class defines the American psychology and is beginning to influence ours," said Yelena Ko ne va, general director of Comcon.

The monthly income of middle-class Russian families falls in the range of $500 to $1,500 per person, according to the study unveiled late last week.

Unlike most industrialized nations, the middle class comprises less than 10 percent of the population, Comcon officials said. Before the crisis, about 15 percent of the population were middle-class.

In contrast, about 64 percent of the U.S. population falls into the generally accepted middle-class income of $15,000 to $75,000 a year, according to Comcon.

The size of Russia's middle class remains far from stable and continues to be vulnerable to shifts in the economy, Koneva said. 

The middle class accounts for 4 million people, or 7 percent, of the population between the ages of 18 and 50, the survey found. That group is considered the working-age population. Moscow has the highest concentration of middle class, with about 20 percent of the population.

And in contrast to the middle class in other cities, Muscovites consider themselves to be "more spiritual and heartfelt," mainly because they have enough money to spend time exploring their inner selves, said Alexander Novikov, qualitative research director at Comcon.

The study was conducted over the summer with researchers questioning a random sample of 1,000 middle-class respondents in Moscow, St. Petersburg and nine other cities with populations over 1 million. An additional 120 in-depth interviews were carried out in these cities.

Respondents were selected on the basis of six traits, including income per family member, age, professional status and education.

According to the Comcon study, the middle class is patriotic about more than just Russian-made goods. Almost half - 43 percent - the respondents said they wouldn't leave the country under any circumstances, and 64 percent hold an optimistic view of Russia's future. Only one-fifth said they wanted to immigrate.

Such an outlook was also confirmed by a 1999 survey of the middle class. The study, funded by the Friedrich Ebert Foundation, focused on opinions and attitudes. 

The Comcon/Expert study, which looks at consumer behavior, came to many of the same conclusions as the Ebert Foundation study: a favoring of the market economy, little nostalgia for the former socialist system, and an indifference to the law. 

An overwhelming 62 percent of the respondents said they thought that following the law was not a necessary behavior trait in modern Russia.

"What was interesting is that a majority of respondents spent 1 1/2 to two times more than what they said they earned," said Comcon researcher Pyotr Zalessky. 

Some middle-class Muscovites interviewed said they felt ashamed that their segment of the population is so small.

"The middle class should consist of teachers, lawyers and doctors who get paid by Russia or by Russians," said Ella Levdanskaya, a freelance translator who reluctantly conceded to falling into Comcon's definition of middle class. "Now, they are suffering. That is the tragedy."

Levdanskaya said she worries that the foreign firms that she and her friends work for might abruptly pull out of the country, leaving their middle-class employees scrambling to make ends meet.

"It's not a very stable situation," she said.

TITLE: Kids Dream of a Life With Tax Police
AUTHOR: By Alexander Bratersky
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW - In the Soviet era, children grew up wanting to be cosmonauts or diplomats - two professions that were high on adventure and prestige. Now that big business is the name of the game, however, Russia's younger generations have a new and decidedly different ambition: to join the tax police.


In a quiet courtyard in southeast Moscow, a crowd of boys and girls ranging in age from 10 to 15 gathers sleepily for morning roll call and exercises. The children, 139 in all, are students at the Third Moscow Cadet Corps of Tax Police - Russia's first and only school for budding tax inspectors.

Opened in early September, the school is still short on uniforms and supplies but is already run with the brisk efficiency of a military academy. Students are addressed as "comrade cadet," and their day, which begins with a 6:30 a.m. wake-up call, ends promptly at 9:30 p.m. with a group evening song.

Jointly financed by the State Tax Service, Moscow city authorities and a board of sponsors that includes Gaz prom and LUKoil, the school's curriculum delivers the components of a standard high-school education as well as special training in areas - like combat training, marksmanship and accounting - essential to any future tax enforcer.

The key idea, according to schoolmaster Valery Kuzmich, is to "mold the personalities" of the students and resurrect the traditions of Russia's tsarist past - when 31 such cadet squads were in operation before being abolished by the Bolsheviks in 1917.

The glory of imperial Russia isn't necessarily what comes to mind when one thinks about the contemporary tax police, who have tried everything from TV ads to children's books to put a friendly face on their profession but are still generally known as the people who burst through doors wearing balaclava masks and carrying automatic weapons in an effort to force tax evaders to pay up.

It's tough work, but it seems to get results: The tax police recently announced that they collected 127 billion rubles ($4.5 billion) in the first quarter of 2000, 39 billion rubles more than targeted.

According to director Vyacheslav Romaikin, the school building's recent conversion from orphanage to tax police school did not mean the involuntary drafting of unwilling children - only those with the desire and proper physical condition were kept on. The rest were relocated to other city orphanages.

"Our first criteria for selection is the personal choice of the child," said Romaikin, a gray-bearded Afghanistan war veteran who looks more like Dr. Doolittle than the military tutor he once was. Sitting in his office, surrounded by maps, globes and books, Romaikin admits that his pupils have a vested interest in a properly run system of tax-funded social and education programs.

"These are not children of the elite," he said, as the school's wrestling instructor - a hefty man in military fatigues sporting a tax police badge - looked on.

Following graduation, many of the cadets may go on to study at a tax police academy, the necessary final step before joining the tax police. With a solid education like the school promises, however - instruction in foreign languages and the arts will also be available - some children may easily go on to entirely different careers, Kuzmich said.

Still, for at least one of the school's pupils, a future with the tax police seems assured. Ilya Vorobyov, a shy 13-year-old standing guard outside Romaikin's office, named as his role model wrestler Alexander Karelin. Karelin, the legendary athlete competing in the Sydney Olympics, is also a tax inspector by trade.

Citing his duty to "collect money to help the poor," Vorobyov said he hoped to be someday as strong as his idol, in order to fight tax evaders better.

Not all the students had such noble goals in mind, however. In an interview on RTR television, two cadets said that working with the tax police was a good way to earn money for "a house on the Canary Islands."

Considering that the average pay for a tax police officer hovers somewhere around 5,000 rubles (about $180) a month, their comment may have more to do with the common assumption that civil servants are often on the receiving end of salary-plumping bribes.

Kuzmich, who saw the report, said of the boys, "It isn't their fault. They're just a mirror of the culture that exists today."

TITLE: IN BRIEF
TEXT: Tikhonov Released


n MOSCOW (SPT) - Former Olympic biathlon champion Alexander Tikhonov, arrested in connection with a plot to kill Kemerovo region Gov. Aman Tuleyev, was released from a prison hospital in Novosibirsk on Sunday on condition he not leave the city until the end of the investigation, media reports said.

The Prosecutor General's Office backed the local prosecutors' decision Monday, explaining that Tikhonov - who was hospitalized earlier this month after suffering a concussion - was released in light of his achievements in sports and lobbying on his behalf by public officials, Interfax reported. 



Anti-Semite Youths


n MOSCOW (AP) - Police in Ryazan believe they have identified several youths suspected of carrying out an attack on a local Jewish school, though no arrests have been made, an official said Monday.

A police spokesman said witnesses would be asked to identify the suspected attackers later. He did not say how many suspects there were.

The Anti-Defamation League in Moscow said vandals wielding chains had smashed windows, wrecked an art exhibit and insulted and threatened teachers and students in the Sept. 17 attack.

Police said earlier that some 15 youths had attacked the school, which was in session at the time. No one was injured. 



Driver Charged


n MOSCOW (SPT) - City prosecutors have pressed charges against the driver of a car that collided with a vehicle in President Vladimir Putin's motorcade earlier this month, but the charges were not directly linked to the accident, Interfax reported Monday.

Alexei Rozanov was charged with extortion after a man who recognized him from a newspaper photograph told police that Rozanov had extorted "a significant amount of money" from him, Interfax cited prosecutors as saying.

Rozanov will remain behind bars, as he has since the Sept. 11 accident, which is still being investigated.



Rocket Launched


n BAIKONUR, Kazakstan (Reuters) - A Russian Zenit-2 rocket blasted off from the Baikonur cosmodrome in Kazakstan on Monday, carrying a communications satellite belonging to Russia's defence ministry.

Officials at the cosmodrome, Russia's main space launch pad, said the rocket was launched at around 1 p.m. local time and put the satellite, from the Kosmos series, safely into orbit.

Russia rents the cosmodrome from its southern neighbour Kazakstan and often uses the site to launch commercial satellites belonging to other countries or private firms.

TITLE: Duma Passes Bill for Russia-Belarus Union
AUTHOR: By Sarah Karush
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Russia-Belarus Union inched closer toward reality last week when the State Duma passed in first reading a bill on elections to the union's parliament.


But in practical terms, the union took a giant step backward as Belarus announced it was setting up customs checkpoints on the border - a step Russia took in April.

In December, then-President Boris Yeltsin and Belarussian President Alexander Lukashenko signed a far-reaching treaty on integration, which called for a common currency and harmonization of national legislation by 2005.

According to the treaty, the so-called union state is to be governed by the Higher State Council, headed by the presidents of each country. The union is to have its own parliament, whose laws would take precedence over the laws of the member states.

On Wednesday, the Duma approved in first reading a bill on elections for Russia's 75 deputies in the union parliament. Central Elections Commission Chairman Alexander Veshnyakov told the Duma that 1.8 billion rubles ($64.7 million) had been allocated for elections in the draft budget for 2001.

But Belarus' decision to set up customs checkpoints to collect duties on goods imported from third countries seemed indicative of a growing wedge between the two states.

On Friday, Lukashenko, who has campaigned for unification with Russia since he was elected in 1994, told Interfax that he was forced to take the measure because of Russia's decision.

"Of course, this has had an extremely negative effect on relations between Belarus and Russia," he said, adding that the customs barrier was a "crack in the foundation of the union state."

Despite December's treaty, the process of integration seems to have ground to a halt. Some analysts say President Vladimir Putin, busy trying to tighten his grip on government structures, has no use for structures that he will have to share with Belarus.

"The union parliament does not fit into the structure of power that Vladimir Putin's entourage is actively creating," Alexander Fadeyev of the CIS Institute wrote in Segodnya this week. "There is no certainty that this body will be completely controllable."

Nevertheless, the temporary bureaucracy of the union state, headed by former Kremlin property manager Pavel Borodin, continues to function.

The parliamentary assembly, which is composed of members of each country's legislature and should be disbanded once the new parliament is elected, approved this year's budget of 2.2 billion rubles ($79.1 million), 65 percent of which must come from Russia, in May.

Prime Minister Mikhail Kasyanov told the Duma on Friday that not all of the money was going for its intended purpose, Itar-Tass reported. He did not say how the money was being used.

TITLE: Kazak Minister Roots Out Corruption
PUBLISHER: Reuters
TEXT: ALMATY, Kazakstan - Dozens of corrupt traffic police and customs officials across Kazakstan demanded bribes from the wrong man - their boss.


Interior Minister Kairbek Suleymenov traveled incognito by truck across the Kazak steppes to find out for himself the level of corruption that motorists have to deal with.

"In Almaty I got into the truck without telling anybody so that none of my regional chiefs would know me and we set off," Suleymenov told a news conference in Astana on Wednesday.

The truck's driver, who was transporting 9 tons of melons, had to pay bribes to 36 different officials en route, more than half of them to the traffic police, he said.

Suleymenov, who filmed the bribe-taking on a video camera, said each official would take a few dollars and that the final cost of the journey to the driver totaled $225. After reaching Astana, Suleymenov fired all the officials found to have taken bribes during his journey.

However, he could not bring criminal proceedings against them because under Kazak law a formal complaint has to be made on the spot in such cases and he had not wanted to reveal his identity, fearing the officials would alert comrades further on.

Suleymenov said that in future cases the district chiefs of the traffic police would themselves lose their jobs.

Bribe-taking among state employees, especially customs officials and traffic police, is rampant in most former Soviet republics.

However, according to findings published this month by the anti-graft group Transparency International, the situation in Kazakstan has improved slightly over the past year.

TITLE: U.S. Consulate General Convicted of Fraud
PUBLISHER: The Associated Press
TEXT: CHICAGO - A Russian who worked as an agricultural official at the U.S. Consulate in St. Petersburg has been convicted of lying to help job-hungry fellow countrymen enter the United States.


A federal jury found Igor Galitsky, 42, guilty of visa fraud, and also convicted Viktor Semenov, 44, and Larisa Yakoleva, 49, who were both given visas after Galitsky had vouched for them as being officials of Russian food companies.

The case was investigated by the U.S. State Department's Diplomatic Security Service. 

Galitsky, who was arrested in Chicago after arriving from Stockholm, also was accused of helping three other Russians enter the country illegally.

Galitsky, whose job was to promote trade in farm products, took the witness stand and claimed he believed that the people he had obtained visas for were bona fide businesspeople bound for a food marketing show in Chicago.

Semenov and Yakoleva did not testify but their attorneys claimed the case was built on a misunderstanding and that the companies they worked for were genuine.

Witnesses said, however, that the two had been making about $200 a month in Russia and had hoped for better jobs in America. 

They paid between $4,500 and $5,500 to Russian travel agents who guaranteed them visas, and said if they had any problems whatsoever at the consulate then they should ask for Galitsky.

Yakoleva already had help-wanted clippings from newspapers in her pocket when agents picked her up at O'Hare International Airport shortly after her plane arrived from Frankfurt, witnesses said. 

They said Semenov told an agent at the time that he had hoped to settle in the large Russian community in New York's Brighton Beach area.

TITLE: Bailiffs Freeze Media-MOST Shares To Recoup Debts
PUBLISHER: Reuters
TEXT: MOSCOW - Bailiffs began freezing shares Friday in Media-MOST, the latest shot in a battle to recoup debts of hundreds of millions of dollars from the media holding.


Media-Most, which includes the only nationwide independent television channel NTV, is locked in a bitter ownership row with its creditor, state-dominated gas giant Gazprom. It accuses the authorities of trying to take control of its media outlets.

In a further blow to the media group, its owner Vladimir Gusinsky was summoned to testify as a witness in the case, Interfax reported, quoting the Prosecutor General's Office. 

The report could not be immediately confirmed.

Gusinsky has been living abroad for the past few months, saying he fears for his safety if he returned to Russia.

Media-MOST is locked in a bitter ownership feud with its creditor, state-dominated gas giant Gazprom. It accuses the Kremlin of trying to take control of its media outlets.

The bailiffs moved to freeze Media-MOST's shares after a court order was granted to Gazprom-Media.

Media-MOST lawyer Pavel Astakhov challenged the legality of the bailiffs' move, which prevents them from being traded or transferred until the dispute is resolved. 

"This is a suspect delegation [of bailiffs] with suspect documents. Neither the judge nor the debtor is named in these documents," Astakhov told RTR television.

Acting head of the bailiffs, Svetlana Kukushkina, told Ekho Moskvy radio, which is part of Media-MOST, that shares had been frozen in Media-MOST and related companies.

The dispute centers on a deal signed in July by Gusinsky and Alfred Kokh, head of Gazprom-Media.

Under the deal, signed also by Press Minister Mikhail Lesin, Gusinsky would hand over his company to Gazprom for $300 million and more than $400 million in canceled debt. In return, Gusinsky would be protected from prosecution.

Gusinsky said this week he had signed the deal "under pressure, at gunpoint" and described it therefore as lacking legal validity.

Lesin and Kokh insist that Gusinsky signed the deal of his own free will. Lesin has also said he initialed the agreement as an individual, not as a state official, and only at the specific request of Gusinsky and Kokh.

President Vladimir Putin has ordered Prime Minister Mikhail Kasya nov to look into the dispute. Kasya nov said he planned to question Lesin about his role on Saturday but would make no public comment about it until the following week.

TITLE: Council of Europe Decides To Keep Sanctions on Russia
PUBLISHER: Reuters
TEXT: STRASBOURG, France- The situation in Chechnya does not justify lifting sanctions taken against Russia by the Council of Europe parliamentary assembly, the assembly's president said on Monday.


Lord Russell-Johnston told reporters that abuses committed by Russian troops during their year-old offensive in the breakaway Caucasus territory must be fully investigated and the culprits must be brought to trial.

"Many promises have been made, but little has been done on this issue," he said. "Our position is not really different from what it was."

Russell-Johnston was commenting on a fact-finding visit last week by an assembly delegation who toured a Che chen refugee camp and met top ministers and parliamentarians in Moscow.

He singled out as unsatisfactory probes into three massacres allegedly carried out near the Chechen capital of Grozny last December and February. The delegation's report is to be discussed by the assembly on Thursday.

The parliamentary assembly stripped Russia of its voting rights last April over allegations of excesses in the military campaign, but Moscow retained its membership of the organization.

The Council of Europe and other Western organizations have accused Russia of resorting to excesses in its campaign, citing what they describe as mass killings and indiscriminate bombing.

Russell-Johnston said a review of the sanctions depended on an improvement of conditions for Chechen refugees, which he deemed disastrous, and on talks for a peaceful settlement.

He said the effectiveness of probes into human rights abuses would determine whether Council of Europe experts would remain in Russia.

The three experts were assigned to work with Russia's human rights representative Vladimir Kalamanov under a six-month agreement signed last July with Russian Foreign Minister Igor Ivanov.

The parliamentary assembly, a consultative body, comprises parliamentarians from the 41 members of the Council of Europe, which monitors democracy and human rights in the region.

Russia said last February it had secured control over most of Chechnya but its troops remain vulnerable to guerrilla-style attacks in the region's southern mountains. About 3,000 Russian soldiers have died so far. Casualties among insurgents and Chechen civilians are unknown. 


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Chechen President Aslan Maskhadov said in an interview published Friday that rebel forces were prepared to resist Russia for another decade and he urged federal forces to give up on Chechnya.


"Only new victims lie ahead," Mask hadov told the Kommersant daily. "The Russian army is a great army, and its mission is to fight with superpowers. There is a need to make sure that the Russian army is not shamed again."

Maskhadov, branded a criminal and a terrorist by the Kremlin, proposed that Russia begin talks with Chechen leaders and withdraw its troops to avoid further casualties.

"We are ready to resist for a day, a month, a year, or 10 years, if need be," Maskhadov was quoted as saying.

But Akhmad Kadyrov, the head of the pro-Russian civilian administration in Chechnya, said that Mask hadov spoke only for himself and had no influence over other guerrilla commanders.

TITLE: Officials Say 'Hostages' Were Phony
AUTHOR: By Andrei Shukshin
PUBLISHER: Reuters
TEXT: MOSCOW - Gunmen surrendered to police Friday after a daylong hostage drama near the Black Sea resort of Sochi, but officials said the entire incident may have been staged.


German Ugryumov, deputy head of the Federal Security Service, or FSB, said all hostage-takers and people said to be their victims walked out of the small hotel, the scene of the incident, in Lazarevskoye at 11:15 a.m. Moscow time, Interfax reported.

First Deputy Interior Minister Vladimir Kozlov said police suspected the captors and their victims may have been partners in crime.

"There are serious suspicions that there were never any hostages, and that this was a staged situation with phony hostages," Kozlov was quoted by Interfax as saying.

Ugryumov was evasive about whether the incident was a real life-or-death hostage drama. "Those who had to be arrested have been arrested. All hostages have been freed," he said.

The officials have declined to give the exact number of both, saying it was now up to prosecutors to establish who the real culprits were. Earlier, Ugryumov had said the captors had launched the incident spontaneously, "after a boisterous night and a big drunken binge."

Officials voiced suspicion that at least one of the presumed hostages, a woman, was an accomplice late Thursday.

Early on Friday, the woman walked out of the building and officials said she was handed over to investigators to establish her role in the incident. Earlier, two other people left the building, one jumping out of the window on the second floor and breaking both his legs.

The gunmen, who seized the hostages Thursday, initially demanded $30 million and the release of all Chechen prisoners held in Russia.

But officials have played down suggestions of a political motive, saying the request to free Chechens looked like a smoke screen.

"The terrorists have no consistent demands. Various options have been discussed involving sums of money and means of escape from the scene," Ugryumov said shortly before the gunmen surrendered.

TITLE: Pushkin Is Declared Ambassador to U.S.
AUTHOR: By Elaine Monaghan
PUBLISHER: Reuters
TEXT: WASHINGTON - The 19th-century poet Alexander Pushkin has made a pilgrimage he never made in life to the New World, where Foreign Minister Igor Ivanov declared him a goodwill ambassador and symbol of a stronger relationship. 


Ivanov and Deputy Secretary of State Strobe Talbott, a key architect of President Bill Clinton's Russia policy, unveiled on Wednesday a towering bronze statue of Pushkin whose works condemned him to years of internal exile. 

"This is especially important as Moscow and Washington concentrate their forces on building a relationship of mutual trust and partnership, based on strategic stability, for the years and decades ahead," Ivanov said. 

The event coincided with the release of a report to Congress by Republicans which said Clinton's Russia policy had discredited the United States and fueled Russia's 1998 economic crisis. 

Ivanov told reporters he had not seen the report itself but knew of its substance and that he had earlier met some of its authors, led by Rep. Christopher Cox of California. 

"Any objective analysis today would say that the climate of our relationship has changed fundamentally compared to what it was 10 years ago," Ivanov said. 

"Today we do not look at each other through rockets. We do not point our nuclear weapons at each other. Together we are working to reduce these weapons significantly," he added. 

One of the report's targets was Talbott, one of a "troika" which was accused of ignoring the impact of corruption and brushing aside intelligence reports. 

Talbott's friendship with Clinton goes back to the days when they shared a house at Oxford University, where Talbott studied Russian literature, particularly 19th-century poetry. 

"That planted in my head early on a conviction that the Russian people were possessed of a greatness of spirit that was sure to prevail some day over the bleakness and cruelty of so much of their history and of their political system," he said. He said Pushkin (1799-1837) stood not only for the best part of the old Russia but what had energized the new Russia. 

In his comments to reporters, Ivanov touched on some issues which have plagued relations - particularly NATO's bombing of Yugoslavia, which he said evoked "revulsion" among Russians. 

Talbott said tough issues faced them but added, "Whatever the difficulties in U.S.-Russian relations, there really is such a thing as partnership between our two countries." 

The words of a Pushkin poem in a brochure about the statue sculpted by a Russian father-and-son team captured the spirit of a poet translated into 100 languages and revered by Russians who can typically recite his poetry by heart. 

"And long the people yet will honor me/ Because my lyre was tuned to loving-kindness/And, in a cruel Age, I sang of Liberty/And mercy begged of Justice in her blindness."

TITLE: Traders, Investors Doubt Reliability of Analysts
AUTHOR: By Kristin Roberts
PUBLISHER: Reuters
TEXT: NEW YORK - Wall Street's failure to forecast the impact of a tumbling euro and surging oil prices on U.S. corporate profits has fueled concern among traders and investors that analysts are too often behind the curve.


A string of companies including razor maker Gillette Co., aluminum giant Alcoa Inc. and Goodyear Tire & Rubber warned last week that the double whammy from currency and energy markets meant they would not meet financial expectations.

The reaction? Well, that's just it. The market was surprised and analysts reacted, cutting targets in accordance with new guidance. Stocks dropped, pulling major U.S. indexes lower and indicating the announcements were really news to many people.

"They [analysts] get spoon-fed the information by investor relations officers and they have a very strong tendency to put a positive swing or twist on everything," Hugh Johnson, chief investment officer at First Albany Corp., said. "They don't know because they're not told. And like sheep they follow."

Less than 1 percent of all U.S. analysts' stock recommendations are "sell" ratings, according to First Call/Thomson Financial data.

While some analysts are not surprised by the warnings, many who rely on getting information mainly from a company's executives leave themselves exposed, he added.

Analysts depend on company executives for a great deal of information on financial operations. No doubt, some companies are not forthcoming and most will not reward the Street with the secrets of their hedging policies - policies that are supposed to account for the effect of fluctuations in, say, the euro.

Analysts who do their homework are rewarded for it with a big following among traders, market makers and investors. Still, the tendency to be overwhelmingly bullish has turned into an epidemic and is closely tied to their reactive habits, investment managers said.

Of the roughly 28,000 current U.S. stock recommendations, 36.5 percent are "strong buys," 37.5 percent are "buys," 25.3 percent are "holds" while just 0.4 percent are "sells" and 0.2 percent are "strong sells," according to First Call data.

Even after many companies warned investors of shortfalls this week, most analysts responded by playing with price targets and lowering estimates. Few downgraded.

Many fund managers and investment advisers say they still read analyst reports but they rely more heavily on their own.

"My primary source of research is the legwork I do, talking to companies and going to conferences," Stein Roe & Farnham fund manager David Brady said. "That's my first line of research."

"The analytical reports from Wall Street are very important," he said. "You have to read though for the information content, not necessarily the recommendations."

TITLE: Prague Summit Makes Shaky Progress
AUTHOR: By Martin Crutsinger
PUBLISHER: The Associated Press
TEXT: PRAGUE, Czech Republic - World finance leaders savored fragile victories Monday in their efforts to cut oil prices and boost the shaky European currency while pledging to double the number of poor countries getting debt relief by year's end.


Finance ministers and central bank presidents found themselves breaking away from the annual IMF and World Bank summit to get updates on world markets concerning the price of oil and the exchange value of the euro, the currency used by 11 members of the European Union.

The news through the day was positive, showing their strong words over the weekend on coordinated efforts to push oil prices lower and the implied threat that rich nations might intervene to buy more euros on currency markets were having the intended impact.

After reaching an intra-day high of $32.05 per barrel, the price of oil for November delivery dropped $1.11 to $31.57 per barrel Monday on the New York Mercantile Exchange.

The euro slipped to an intra-day low of $0.8710 as demand to buy dollars continued; but by late Monday, the euro was buying $0.8744, down from $0.8784 late Friday in New York. U.S. Treasury Secretary Lawrence Summers said other countries at the finance meetings had welcomed President Clinton's decision to release 30 million barrels of oil from U.S. reserves in an effort to lower prices.

"What the impact will be, I don't know," Summers said in a Prague television interview.

Private analysts, however, stressed that they believed oil markets were still unsettled in advance of Tuesday's meeting of OPEC oil ministers. They also said the euro was likely to come under renewed selling pressures, forcing further intervention efforts.

Worries about the euro and oil prices took over as top agenda items at discussions over the past three days of policy-setting committees of the International Monetary Fund and the World Bank, whose annual meetings attended by delegates from 182 nations will formally start Tuesday.

Protesters are threatening to disrupt the summit, hoping to repeat the points they made through mass demonstrations last year at a World Trade Organization meeting in Seattle and in the spring at the IMF and World Bank meetings in Washington.

While their numbers were smaller than predicted, the anti-globalization protesters had already had an impact on the meeting as officials refashioned the traditional agenda in an effort to show that the two agencies, who have been accused of having bloated, overpaid staffs, were heeding the call to do more to alleviate poverty in the world.

In a statement issued Monday, the Development Committee - which sets policy for the World Bank - pledged to work toward a goal of having 20 nations approved for debt relief by the end of this year, double the 10 that have so far managed to get through what has proven to be a lengthy qualification process.

World Bank statistics predicted that the inclusion of 20 nations in the debt relief effort, out of 40 that are eligible, will result in forgiveness of 65 percent of those countries' foreign debt, saving them about $30 billion. The money is intended to be used to fight poverty and provide medical care.

TITLE: Oblast and City Compete To Attract Investors
AUTHOR: By Thomas Rymer
PUBLISHER: Staff Writer
TEXT: The statistics are impressive. In September, total foreign investment in St. Petersburg surpassed the $700 million mark for the year, topping the total of $659.6 million registered last year, according to St. Petersburg Legislative Assembly member Vatanyar Yagya.


In the Leningrad Oblast, the doughnut-shaped area about the size of Ireland that surrounds but does not include the city, foreign investment for the current year is just short of $400 million, again already surpassing last year's figure of $340 million.

Explanations for foreign investment growth in the region vary. But local businessmen and analysts seem to agree on three basic factors: a number of tax breaks given by local governments to foreign companies choosing to set up business in the two regions; the incentive toward setting up local production which resulted from the devaluation of the ruble during the economic crisis of summer 1998; and the perception, guarded as it may yet be, that the Russian government under President Vladimir Putin intends to operate in a more transparent and economically rational and predictable manner than its predecessor.

In the summer of 1997, the Leningrad Oblast became one of Russia's first local governments to offer tax breaks in the attempt to attract western firms to set up shop in their region. The law has been amended twice in 2000 to extend further the benefits of the original legislation. The basic effect of the law and its amendments has been to grant companies investing in what were deemed "priority sectors of the economy," including tourism, manufacturing, agriculture, transport, communications, etc., varying levels, first of reductions and then of subventions of profit taxes payable to the Oblast until two years following the time the firm recouped the value of its original investment. The breaks range from 30 percent for firms investing from $1 million to $10 million up to 100 percent for those investing above $50 million.

The success engendered by the Oblast legislation, which has attracted such notable foreign companies as Ford and Philip Morris either to set up or expand already existing operations there, led St. Petersburg to follow suit.

"While the Oblast has received much of the attention, the situation with regard to St. Petersburg has also become very conducive to investment," said Alexei Klim, executive director of the American Chamber of Commerce in St. Petersburg. "What we now have is a situation where there is more competition between the city and the oblast for investment. That definitely can't hurt investors."

According to James Hitch, managing partner at Baker&McKenzie law firm's St. Petersburg office, the oblast's success meant the city administration had to re-evaluate its investment outlook.

"The city was skeptical about giving tax breaks at first because it didn't think that it needed them to attract businesses," he said. "But then they were obviously impressed by the results of the oblast's 1997 law."

The devaluation of the ruble following the crisis of 1988 has been much-touted as one of the sources of Russia's economic recovery, aiding local companies by making foreign-produced goods less competetive in the marketplace. The devaluation has also had a positive effect on foreign investment as many foreign companies interested in selling their products in the Russian market have opted to set up plants in Russia to take advantage of cheaper production costs, as well as to avoid certain import-tax barriers.

"Over the last three years a significant portion of the increase in foreign investment coming into the city and the oblast has been due to the expansion of already existing facilities," Hitch said. "If you're going to be selling your products locally, then it just makes sense."

"And since May and June, Scandinavian, rather than American or other European countries have been the major contributors to this inflow," Hitch added. "They're investing largely in consumer-goods such as food processing."

Finally, given the business truism that investors fear uncertainty, the style of the Russian government under Putin has been a major factor in enticing money into the country and the region.

While it may be too early to start making broad claims about the nature of the government of Russia's second president, the Putin record seems already to have suggested itself to foreigners with business interests in Russia as being more inviting.

"I think that Putin has been a definite positive influence" said Tom Stansmore, head of the St. Petersburg branch of Deloitte and Touche CIS. "Perceptions of stability really make or break stability and, for investors, Putin has had a steadying effect."

One of the most promising developments from the government has been the passing of the second part of the overhaul of Russia's Tax Code. This is especially the case as tax officials had begun to interpret Part One as questioning the legality of regional tax-incentive programs.

One section of Part One of the Tax Code, which went into effect on April 1, 1999, caused concern.

"It was very confusing," said Slava Vlasov, tax manager at the St. Petersburg office of PricewaterhouseCoopers. "It said that all federal taxes should be set by federal legislation, and some came to interpret this as taking away regional authority to grant concessions on the portion of federal tax to be contributed to their budgets."

And, although only a few businesses seem to have been contacted by the tax police in order to collect the money they had originally believed they did not have to pay, the oblast government set about drafting a law that would shift the savings from the disallowed exemptions, to a system of subsidization.

The new oblast law was passed and signed and was awaiting only official publication before it would take effect, when Tax Code Part Two rendered its contents largely redundant. An enabling clause in the second part of the code grants regional governments the right to exempt the portion of federal tax collected that would go to the regional budget - in effect, the system the Leningrad Oblast originally instituted.

While the enabling clause of the code has been greeted positively, it leaves the oblast in a predicament.

"If the oblast law is published and thus put into effect, it will raise questions about the choice between the subsidization and the incentive process," Vlasov said. "It's not clear if the incentives originally provided for in the oblast investment law are still as a result of the introduction of the subsidy mechanism."

But assessment of the possible effects of the new tax code on investment have been largely positive. 

"While the second part of the code gave municipal governments the right to implement a 5-percent profit tax of their own," Stansmore said, "the principle thing is the enabling clause. That's certainly going to be positive."

And Vlasov says that, aside from just reacting to the tax regimes established at the regional levels, investors should take a more active role

"We should not only try to understand what the government is trying to do, but also provide feedback," he said. "The oblast government, in particular, is pretty open and constructive in talking to investors. But if you just let it go without saying anything, then the situation will just stay the same."

TITLE: Snack Companies Unite To Lobby for Easier Laws
AUTHOR: By Andrey Musatov
PUBLISHER: Special to The St. Petersburg Times
TEXT: As far as small business goes, it was a big week for the snacks industry in Russia.


Last Wednesday, nine domestic firms announced the formation of the Russian Association of Snack Producers. And local company Vitek - one of the association's founder members - celebrated the opening of its new potato chips production line.

"Today, even small businessmen want to be able to work effectively in Russia," said Sergey Volkov, general director of Vitek. "The state should help to develop small businesses, or at least leave them alone so that they can work. Small businesses have huge potential, and if the state creates the necessary conditions - such as reducing taxes, implementing a system of privileged credits, and giving them independence from state organizations - small businesses will grow fast."

Maria Nikitina, a Vitek spokes woman, said that the aim of the new association was to "set up a supply of information to members, and [to facilitate] cooperation over the promotion of snack foods in Russia."

According to Maria Ilyushina, Vitek's marketing manager, the snacks market is a sector where small businesses are developing fast. 

"Our company started operations on the St. Petersburg market in 1992, as a distribution branch to foreign leading snacks manufacturers," Ilyushina said. "Today we produce about 40 kinds of snack products."

"We had problems with investment at the very beginning, but when we started our own production lines and became a name on the market, it was much easier to convince investors that we had a future."

According to Vitek research, approximately 35 percent of the populations St. Petersburg and Moscow say they consume snacks - far behind consumption in European countries.

"It's ridiculous," said Svetlana Gavrilova, a representative of the Pskov-based Lubyatovo company which produces cereals, and which is also an association member. "In Germany, the average consumption is six kilograms of chips per person per year, whereas in Russia we consume only about half a kilogram per person."

"But our joint attempt to promote snacks and develop a snacks culture should prove effective in raising [that figure]," she said.

Ilyushina said that equipment for Vitek's new production line was provided by a snack company in the Netherlands as part of a Dutch program to provide technical support to Eastern European countries.

"We also import our raw materials, and this means we can produce a quality but inexpensive product," she said.

Besides promoting chips and other snacks, the association aims "to represent and defend [common] interests in relation to state organizations and on the legislative level," according to a press release. 

"Our integration into the association gives us status," said Vitek's Nikitina. "And we will use this to lobby for our interests as regards consumer and tax law."

TITLE: Yukos Moves Closer to Chinese Pipe Dream
AUTHOR: By Alexander Tutshkin
PUBLISHER: Vedomosti
TEXT: KRASNOYARSK, Western Siberia - At an extended management meeting on Saturday, Yukos, the nation's No. 2 oil company, officially announced that it had purchased a block of shares in the Eastern Siberian Oil and Gas company, or VSNK. 


The deal is an important step in the company's well-known plans for building an oil pipeline to China.

Yukos chairman Mikhail Khodorkovsky announced that the company had acquired 19.9 percent of the shares in VSNK, which it plans to increase in order to gain full control of the company. 

Khodorkovsky's announcement was slightly misleading - the shares that would give Yukos full control of VSNK have already been transferred to the oil major's offshore companies, according to sources close to the company, which has not yet received the Anti-Monopoly Ministry's permission to acquire all of VSNK.

Yukos has refused to reveal the cost of the purchase, which it said was insignificant in its press release. This can be explained by the fact that VSNK's only assets are its licenses for deposits in Eastern Siberia.

The company's price is therefore equal to the price of acquiring the licenses at auction. And in a region with virtually no infrastructure, it is unlikely to be high.

VSNK owns licenses for the Yurubchensk area of the Yurubcheno-Takhom sky zone, or YuTZ, in the Krasnoyarsk region. It has reserves of 702 million tons of oil. The license for the Tersko-Kamsky area in the same zone contains reserves of 388 million tons and belongs to Yukos' Eastern oil company, while the remainder of the YuTZ belongs to Slavneft.

The Eastern Siberian project is closely linked to Yukos' plans for an oil pipeline to China - which is slated to be signed by Yukos' Chinese partner next month and could go into operation as early as 2005.

Initially the pipeline will move oil from the Tomsk region but it is planned that by 2010 the oil extracted from the zone will account for one- third, or 10 million tons, of the pipeline's capacity.

Yukos management also agreed to prioritize its restructuring and release its first five-year plan by November.

TITLE: Kudrin: Spending Hike Unlikely
AUTHOR: By Artyom Danielyan
PUBLISHER: Reuters
TEXT: PRAGUE, Czech Republic - The Kremlin vowed on Monday to stand by its 1.2 trillion ruble ($43.2 billion) draft budget for 2001 despite calls from the opposition for more ambitious spending plans, to be funded by rising oil revenues.


Deputy Prime Minister and Finance Minister Alexei Kudrin said he was even less inclined to change economic forecasts to allow for more spending after speaking with International Monetary Fund officials at the Fund's annual meeting in Prague.

"The question of an IMF credit is still unresolved," Kudrin said, a few days after Central Bank Chairman Viktor Gerashchenko said he thought IMF support was unlikely to arrive this year or next.

Kudrin said he had discussed with IMF officials the possibility of a fund mission coming to Moscow in November. That mission has already been rescheduled repeatedly.

The government, ahead of an Oct. 6 parliamentary budget reading that would set the overall size of the plan, has said spending could include "what-if" scenarios for extra income but that the main budget should not be increased.

In particular, it has cautioned that oil prices, which have led to a windfall for the economy this year, could fall next year.

The State Duma, the lower house of parliament, has cooperated with the government on major initiatives since President Vladimir Putin was elected in March, although the budget is usually one of the most contentious issues of debate.

Lines are still being drawn but many parliamentarians argue that revenues will be higher than planned because inflation will outstrip the conservative 12 percent expected and oil will sell for more than $21 per barrel.

First Deputy Finance Minister Alexei Ulyukayev told the business daily Vedomosti that the government was ready to give parliament some extra control over any revenues that came into the budget above original expectations.

"This is simply a form of distrust in the government. Deputies do not believe that the Cabinet would allow a transparent system for spending additional revenues," he said.

The Communist Party, the largest faction in the Duma, has sought an additional 250 billion rubles ($9 billion) to be written into the budget, Ulyukayev said.

Oleg Vyugin, a former first deputy finance minister and now chief economist at Troika Dialog investment bank in Moscow, said the government forecasts were rational.

If oil prices were to fall, the economy would stumble as the Central Bank slowed buying dollars and printing rubles, which are now lubricating the economy. That in turn would have a negative effect on total tax receipts.

Vyugin told Ekho Moskvy radio that the ruble could firm up from the government budget forecast of 30 per dollar if oil prices remained where they are, or even if it dips to 31 or 32 to the dollar.

"In essence, you are asking me my opinion on the price of oil," he said.

Regarding the world price of oil, Putin said Monday he had told German Chancellor Gerhard Schroeder that Russia was willing to help Europe overcome its fuel crisis, but he gave no further details.

Russia already exports all the oil it can, and Kudrin said earlier on Monday that Russia did not have any measures at its disposal to affect the situation on world oil markets significantly in the next couple of months.

Standing next to Schroeder at a Kremlin news conference, Putin told reporters that the two had touched on the fuel crisis in Europe during Monday's talks.

"Russia can do much in this respect if there is goodwill aimed at the long-term prospects of building our relations," he said. "We are interested in that."

Russia, eager for hard currency, already exports as much oil as its limited routes to world markets will permit and it will take a year or more to bring other pipelines and export outlets on line in order to increase overall export capabilities.

Putin did not elaborate on how Russia could help in the short term.

TITLE: Business Registration for Foreigners Made Easy
TEXT: Ask any foreigner about doing business in Russia, and you may well be treated to a 10-minute-long litany of inconsistencies in legislation, strange procedures and annoying bureaucracy. Predictably, the process of registering a company to do business here is no exception. Setting up and registering a business in compliance with Russian laws is not easy - but it's not impossible either. Masha Hedberg takes a look at how to do it. 


The registration process is indeed daunting, cumbersome and time-consuming, with lots of government departments to visit and documents to carefully fill out. The regulations and procedures vary somewhat depending on what kind of company you want to register - a limited liability company, a joint-stock company or representative office, etc. - with the information below pertaining mostly to limited liability and joint-stock companies. Individual private entrepreneurs are also governed by slightly different rules and procedures.


To register a commercial enterprise with foreign investment you'll have to turn to the State Registration Chamber, or SRC (Gosudarstvennaya Registratsionnaya Palata), and the local registration authorities of the region in which your business is to be located - which here is the St. Petersburg Registration Chamber, or PRC (Peterburgskaya Registratsionnaya Palata). You'll eventually have to visit both bodies.

No matter where the enterprise is located, it must be entered into the State Register of Commercial Organizations with Foreign Investment maintained by the SRC.

The first thing to do is call the SRC's inquiry and information unit in Moscow at (095) 245-2090 or 246-7200. The SRC is accessible and the people who pick up the phone seem helpful.

After you state that you need to register a company and explain what kind of company it will be, the SRC's information unit will provide you with a list of documents you will need to submit to begin the process.

According to the SRC brochure explaining the documents necessary for the process, commercial enterprises need to gather 18 types of documents (see sidebar) which must be either apostilled or notarized, as well as translated into Russian. The documents required by the PRC are similar.

Also, the company must provide copies of its lease agreement proving the actual address when registering with the PRC. The SRC dropped this requirement in 1996.

In cases where there will be foreign investment, in order to comply with the 50-percent contribution rule, it is also necessary to open a currency account and an investment account in a Russian bank. The contribution to the firm's charter capital will be deposited here initially.

While some of the certificates needed are fairly straightforward, others, like the ninth document enumerated in the SRC's list, require considerable thought.

"Pretty much everywhere else, if you're alive, you have the right to conduct business. When you die, that right is taken away form you," said Jamison Firestone, managing partner at Firestone Duncan. "There's no such thing as an official 'I-can-conduct-business' letter, but that's what the authorities here want."

As a result, applicants have come up with all sorts of official-looking letters regarding the right to conduct business, more or less "acceptable fudges" that are needed solely to satisfy Russian bureaucrats, most of whom will be appeased only once they've seen what looks like an official stamp.

Once you've gathered the documents, you - or more likely the firm handling your registration - return to the SRC and submit them to the aptly named Document Reception Center. A day after the submission of the documents you can call and find out the name of the person who will be responsible for reviewing your file.

The chamber takes about three weeks to review the submitted documents and issue a company a temporary certificate of registration, so long as there are no glitches in the paperwork.

If a problem does arise, the chamber has the legal right to issue an otkaz, or refusal, which would mean you would have to resubmit your documents. However, SRC officials say that they would rather not resort to such draconian measures.

"We consider ourselves to be rather pragmatic; in contrast to some other [chambers], we don't just write an otkaz," said Nikolai Savelliev, the head of the SRC's inquiry and information department. "The inspector who's working on the company's file will work with the company to solve the problem."

Once you've received the temporary certificate of registration, don't pop the champagne cork just yet: The hunt for registration has just begun.

With the temporary certificate in hand, the prospective company owner or his or her agent now has to visit a host of official organizations, submitting documents and picking up spravki, or attestation documents, that need to be submitted for review to the registration chambers before the final registration is given.

If you're doing the legwork yourself, be prepared to run all over the city and stand in many long lines during your trip through Russian officialdom. The necessary stops are the State Statistics Committee, to get codes that match your company's entire scope of business activities; the tax inspectorate, where you'll be registered and receive an identification number (INN); the Pension Fund; the Employment Fund; the Social Insurance Fund; and, if one of the founders of the company has aggregate assets exceeding 100,000 times the monthly minimum wage (currently 83.49 rubles), the Ministry of Antimonopoly Policy will enter the company into its database.

At this stage, the new company also has to open its own bank account, visit the local registration chamber if it is being registered with the SRC, or vice versa, and obtain the official company seal. Joint-stock companies, but not limited liability companies, must also go to the Federal Securities Commission to register their shares.

And there is no time to dawdle, as time limits are in force. When registering with the SRC, the company has 30 calendar days - after obtaining the temporary certificate. According to the State Registration Chamber, 30 days is enough time, though extensions can be granted in case of unexpected delays.

Many touch-and-go situations can arise during the registration process. The reason is that each of the many government authorities that constitute the registration network has its own document requirements, time limits and business hours. And then there are the lines. Each authority will also collect its own fee for the service, though tariffs are minimal and in most cases a company will spend $50 to $100 all-told.

For all these reasons, most nascent companies choose not to go it alone, preferring to pass the legwork and headaches to law firms or other agencies that provide registration services

TITLE: Ministry Softens Bandwidth Stance
AUTHOR: By Melissa Akin
PUBLISHER: Staff Writer
TEXT: MOSCOW - It may not be the resounding victory for corporate governance that investors in Russia's cellular companies were hoping for, but the Communications Ministry gave signs Monday of retreating from a government decision to commandeer frequencies from Moscow operators Vimpelcom and Mobile TeleSystems.


The ministry commmittee responsible for frequency allocation announced Monday it was looking into reassigning military frequencies to civilian use, hinting that it might find enough bandwidth for all local operators - MTS, Vimpelcom and newcomer Sonic Duo - to run GSM networks in the 900 megahertz band, rather than snatching frequencies away from incumbents MTS and Vimpelcom.

"Regarding new frequencies, [the committee] issued a decision to conduct a scientific study of this possibility," said Sergei Grigorenko, deputy head of the ministry's Information and Analysis Department.

Vimpelcom and MTS have yet to find out whether they can keep all the frequencies they have acquired to operate their GSM 900 networks since a Sept. 5 order issued by state telecoms regulator Gossvyaznadzor to hand them over - in Vimpelcom's case, two-thirds of its bandwidth in the 900 megahertz range. Communications Minister Leonid Reiman suspended the order a few days later. But he has yet to publicly cancel an internal investigation into whether Vimpelcom legally acquired frequency rights from the military, which had used the bandwidth for aircraft control.

"The conflict was not brought up or discussed," Grigorenko said, adding that the ministry would issue a more detailed statement Tuesday.

On Monday, Vimpelcom first deputy director Nikolai Pryanishnikov declined to comment on the ministry's promise to "study" the potential for converting military frequencies to civilian use. 

What Pryanishnikov may be waiting for are guarantees from Reiman that Vimpelcom's frequencies - or other important assets, such as licenses - will not be taken away.

"There are two issues at stake," said Tom Adshead, a telecoms analyst at Troika Dialog brokerage, the financial adviser to Vimpelcom. "One is the actual impact on Vimpelcom, the extent to which the decision is now ... being reversed. The bigger problem, which actually I think was the main thing to hit the price, is the general heightened perception of political risk in the Russian mobile business. ... The impact on confidence is not going to go away soon."

The ministry's study is "a first step in the search for a compromise," said Adshead. "I think you can't rule out the fact that the incumbent operators may still have to give up frequency." 

It is unclear whether the extra bandwidth will be enough to satisfy all the operators. Pryanishnikov said Vimpelcom found it "stressful" to exist on its current allocation - 45 megahertz.

TITLE: Tips on Avoiding Some of the Pitfalls
AUTHOR: By Jamison Firestone
PUBLISHER: Special to The St. Petersburg Times
TEXT: There are no savings to be realized by registering a company yourself. Huge amounts of time will be lost and it is likely that mistakes will be made that will cost more than a professional's registration fee.


That being said, with or without professional help, there is a lot you can do to avoid the most costly pitfalls.

Be sure to obtain proper documents that are also certified properly. If you are not absolutely sure what the documents must say or what certification is necessary, seek professional advice.

Company documents will govern your relations with your partners and the management structures within the firm. These are not trifling matters. There are things that these documents need to contain, or the authorities will refuse to register the company; and there are some things that are costly to leave out. For example, licensed activities must be included on the charter. The Registration chamber is picky about the wording in these documents, often rejecting them after three weeks of review.

Make sure you have a valid legal address for the business before you begin registration. Your registered address must be legally where your business is. Before you choose your location, keep in mind that the authorities will not pass a company if its address cannot be legally rented or purchased by your company for use as a business.

The company must therefore check its landlord's title and right to rent/sell the premises, and it must follow the chain of title back to the owner and every link in the chain of title must be clean.

Beware of buying a "legal address." Many firms sell the right to use their legal address. A company enters into an agreement for about $150 a year to "lease" its address to the new business. However, the business will not actually be at the leased address, which is a legal violation. Usually this split between legal and actual addresses does not cause any problems, but it could make it impossible to obtain a license. Furthermore, there is no guarantee that the purchased address will work. The authorities compile lists of purchased legal addresses and you never know whether your address is on the list until it is too late. If during registration, a state authority rejects your address, you're back to square one.

Even if a company is successfully registered, it is not in the clear. When the company has to re-register (all are periodically forced to do this), the legal address may have either been blacklisted or it may not be available at that time because these leased-address operations are almost all fly-by-night. The lack of an address will delay registration.

Be wary of "off-the-shelf" companies and shortcuts. There are hundreds of operations that offer registration services and off-the-shelf companies, and the price is usually about $500 when all the owners will be Russian. Usually they use a standard charter for all their companies, and if you have them register a company from scratch they will register it in your name, with the name and address of your choice (assuming that you can provide a legal address).

The emphasis is on delivering companies quickly and cheaply, which often means taking shortcuts. These companies are generally not customized to take into account special circumstances, they are registered at fly-by-night addresses, and they are not suitable for businesses where significant amounts of money will be invested.

That being said, if the business is a start-up with basically no capital, such companies are often an excellent way to jump into the market. If the business works, there will be money enough to restructure, and if it doesn't a lot of time was saved on registration and relatively little money was spent.

Three things in particular about off-the-shelf companies:

1) Make sure the firm was properly capitalized before it was sold to you, otherwise it will be corrupted beyond fixing. The law requires a firm to be fully capitalized before it can be sold, but permits registration when 50 percent of the capital has been paid in. Firms that register as off-the-shelf companies often save money by capitalizing with money or assets that are not really contributed to the company. Upon purchase of the company, you can tell if this is the case by asking whether the company will be sold with the assets or cash listed as capital. If the answer is no and the firm is supposedly capitalized with money, 100 percent of the money required for full capitalization must be paid in before it is sold. If the firm is capitalized with equipment, the old owner should buy the equipment at its stated value with money provided by the new owner and this money must be paid into the company. This can be done after the sale but it should be done at the time of the sale to avoid possible problems later on.

2) If the off-the-shelf company is a ZAO, make sure the shares were registered before the sale and re-registered to you. If this was not done, the original owner can take the company back.

3) Make sure the company is actually registered to its new principles. It is difficult, time-consuming and expensive to re-register an off-the-shelf company to include foreign ownership. A typical shortcut is to put the company in the name of a Russian employee. Of course, if the employee is fired, he or she as shareholder might fire the foreign management and legally take the company and its assets.

If you register a ZAO, make sure to register the initial emission of shares. This will take a month and, until it is done, shares cannot be sold. Even if you don't think that you will ever sell shares, it is highly likely that you will, even if it is just to another company in your own corporate group. When it comes time to make the sale, failure to have registered the emission could add a costly delay.

TITLE: Small Business Keeps a Toehold
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: "Business takes so much time and energy that one of my female business acquaintances ended up contracting tuberculosis," says Irina Lvova, who runs the small business Lianis, a housekeeping and baby-sitting employment service. "She worked 24 hours and could barely find the time to eat."


Nowadays, Russian small businesses are prey to many problems: an increasing number of taxes, complicated relations with different official structures, unclear legislation and unreasonably high lease payments.

In order to pay off the numerous taxes on her newly opened business, Lvova would use her car as an unofficial taxi. In time, Lianis became a success, but the number of problems didn't decrease.

Since 1985, when Mikhail Gorbachev announced the new economic policy of private enterprise for the country, small businesses have been fighting for survival, disappearing and reappearing again and again.

According to the State Statistics Committee, in 1997 there were 842,000 small enterprises in the country. By the year 2000, this number had increased to 890,000. The total volume of small business production in 1999 was 423 billion rubles ($15.67 billion).

In St. Petersburg, there are currently about 110,000 local small businesses operating, while the total volume of small business production comes to about 25 billion rubles (just under $900 million).

By law, the definition of a small, middle or big business is determined by the number of workers. To be termed a small firm, a company should employ not more than 100 people.

But small business seems to be - somehow - holding its own. The City Economic Committee said that the tax share of local small business to the city budget increased from 12 percent in 1998 to 20 percent in 1999. In 1999, small businesses provided work for more than 6 million people in the country, and 615,000 working places for St. Petersburg residents.

Essentially, success in business is still largely dependent on the personality and capabilities of the entrepreneur.

Lvova said that it is especially difficult to be a successful businesswoman. "First of all, you have to be four times smarter then your male partners, and secondly, have a loud voice and incredible persistence," she said.

Conditions for contemporary small businesses are tough compared to their counterparts abroad. "These conditions allow small business to survive, but not to thrive," Lvova said.

Lvova set up Lianis in 1995. She said she made her business choice due to trends of the time. "I used to work as a speech therapist. Then, by the mid-90s, when crime escalated in the country, I suddenly came across the situation where people had turned reluctant to let tutors they did not know into their house. It was a sign that now people need more security, which someone should provide," she said.

She says their firm is doing a doubly good thing: providing secure home service to one level of the population and giving jobs to the other.

Oleg Kuzmin, the assistant to the president of the St. Petersburg Businessmen's Union, said service, food and clothing production are usually the most perspective and demanded fields for small and middle businesses.

"People will always need to repair their goods, to wash their things or to buy food," he said. "Meanwhile, it would be very unprofitable and hard for a small enterprise to produce needles, whereas a big company can make such things simultaneously with their bulk productions," he said.

The State Statistics Committee confirmed Kuzmin's statement, informing that trade and food small enterprises currently make up 44 percent of the general number, while the other two most popular fields - industry and construction - stand for 15 percent each. Education, culture, insurance and communication spheres take the lowest positions, each contributing less than 1 percent.

Kuzmin said that Russian economic policy seems not to understand that the development of small business can give a substantial boost to the national budget.

"However, instead of helping them, the authorities make the life of small businesses more and more complicated," Kuzmin said.

"Compared to several years ago, the procedure for organizing a small business is much more complicated. Sometimes it can take a new businessman several months to go through all the official formalities before he can actually start his work," he said. "Sometimes a businessman has to deal with as many as 50 different official structures before he can legally open his business," he said.

Different types of permission required include licensing of the product, insurance, sanitation, fire and police inspection and registration.

"It's often simply ridiculous the way businessmen are forced to meet all the intricate demands of those services," Kuzmin said.

"I remember one case when the police ordered a firm to fix an iron grill on their ground floor office windows for security. Then the fire inspection arrived and said that these grills did not provide an extra exit from the building and that they had to be removed. So the businessmen first had to pay for the grill to be installed, and then pay to have it removed," he said.

Situations like these often lead businessmen to give bribes in order to avoid the endless red tape.

Many businessmen also say that the increasing number of official regulations appeared in order to please numerous officials.

Gennady Srednyov, owner of the private dental surgery office Skvatter in St. Petersburg, which he established in 1994, said that at the beginning of the new private enterprise era it was much easier to set up a business.

"For instance, the licensing procedure only appeared in Russia in 1993, and it has brought businessmen nothing but trouble," Srednyov said. "When we had to receive a license for our business we had to send our dentists and nurses to special courses, although they were already highly qualified," he said.

Srednyov also said that small business legislation remains flawed and unclear.

Kuzmin said that usually in Western countries businessmen have to deal with a notification law, whereas in Russia they have to deal with a permission law.

"In the West, new businessmen just apply to some business registration structure, pay the duty, and start their activities. Here it may take several months to receive permission from different organizations to start your own business," he said.

However, Kuzmin said that the passing of a notification law in Russia is still impossible for various reasons.

"The fact is that we don't have enough experience yet," he said. "Often we don't seem to have any grasp of civilized business. So we still come across fly-by-night firms whose behavior undermines trust in other companies. This also causes the authorities to make setting up a business so complicated," he said.

Lvova said that expanded taxes are another stumbling block. "When a person is just starting his business he already has to pay taxes, though there is no profit yet," he said.

Vladimir Patrin, deputy chairman of the Economic and Industry Committee, which also controls the city small business, agreed that small businesses are facing many problems, but said that the city is trying to change this situation.

For example, he said, some small enterprises can use a simplified system of taxes. And in June, a law was passed giving financial support to local small enterprises which are seen as important to the city's economy, he added.

TITLE: 6 Legal Ways of Doing Business in Russia
AUTHOR: By Jamison Firestone
PUBLISHER: Special to The St. Petersburg Times
TEXT: Most foreign-owned businesses in Russia consist of more than one company, for example a Russian company and a foreign company that work together to achieve a desired tax result for the business as a whole. The importance of devising a proper structure before beginning the registration process cannot be overstated.


While it's impossible to give practical advice in an article about structuring a business, it is possible to pass on a basic understanding of the most common types of business forms when they are used.

There are six commonly used legal ways to do business here. A Russian company can operate as an OOO, a limited liability company; as a ZAO, a closed, privately held, joint-stock company. All of these types have limited liability.

A public company is an OAO and there are no restrictions on share sales. A privately held company can be either a ZAO or an OOO. When the company will have one owner, the differences between these two forms are not very significant. A ZAO has shares and shareholders, it requires a little more time and money to register, and it generally provides more flexibility when changing owners and distributing profits. An OOO has participants and participant interests and it gives powerful protection to individual participants. For example, a participant in an OOO can demand to leave the company at any time and he or she must be bought out. If the money can't be found for the buyout, the participant can force the company to sell its assets, even if this bankrupts the company. A minority owner might favor an OOO and a majority owner a ZAO.

Representative and branch offices of foreign companies are not distinct legal entities, but are parts of the foreign company that maintains them. Therefore the foreign company is liable for all debts and obligations arising from its Russian operations. The main difference between the two is that representative offices do not have the right to carry on commercial activity within Russia.

Registration as a private entrepreneur is registering as a sole proprietor. This is less expensive than other registration options; it allows one to engage in any activity, and can offer some very advantageous tax and administrative benefits.

However, entrepreneurs do not have limited liability and it is impossible to have partners in this type of business, so this form of registration is generally inappropriate for large-scale business.

TITLE: Metals Dot-coms Sign Deal On Path to Russian Exports
PUBLISHER: Reuters
TEXT: NEW YORK - Online exchange Aluminium.com said Thursday it signed an exclusive joint agreement with Israel-based Metals-Russia.com, creating a $1 billion Internet gateway to Russia's vast aluminum, copper and steel exports.


In the deal, Aluminium.com's registered users gain access to local metals in a move to speed up the site's existing aluminum business and its trading debut in copper, according to a company statement.

The agreement would establish an exclusive supply channel guaranteeing at least $1 billion in metals to Aluminium.com's user base over the next 24 months.

Aluminium.com users will be allowed to participate in online auctions on Metals-Russia.com, a supply-side Web site that connects local metals makers with buyers worldwide. Users of Metals-Russia.com will also be granted access to managed negotiations on Aluminium.com, the company said.

"This historic agreement establishes the premier Internet gateway to the Russian metals industry and will enhance our ability to attract major global users and producers of aluminum raw materials, aluminum semi-finished products, copper and other metals," said Alan Kestenbaum, chief executive of Aluminium.com.

Each Web site will take a minority equity ownership stake in the other, sharing revenues from those transactions that originate between the two portals.

Metals-Russia.com president and CEO Dmitry Tseitlin predicted his site could well become the top provider of business-to-business, or B2B, e-commerce for the local metals industry, given that the sector is not well integrated with existing virtual markets.

"Based on agreements with Russian metals producers, transaction volume through [the two sites] could reach $3 billion within two years, making this site the largest B2B portal in Russia," he said. Active trading is expected to go live on Metals-Russia.com in October.

Headquartered in New York, Aluminium.com launched aluminum trading in April. Its Copper-market.com portal debuts this fall.

TITLE: Gazprom To Build European Pipeline
PUBLISHER: Reuters
TEXT: BUDAPEST, Hungary - Gazprom said Friday it planned to build a "pan-European" ethylene pipeline and had purchased its stake in Hungarian chemicals BorsodChem through an Irish holding company partly for that purpose.


Ethylene is a gas used in plastic and resin preparation, in welding and cutting metals, and as an anesthetic, a refrigerant and a fruit ripening accelerator.

Mihail Rahimkulov, Budapest-based director of Panrusgaz and Gazprom's chief representative in Hungary, said the pipeline was one of the main reasons Gazprom was involved in BorsodChem.

"One of the targets was the creation of a pan-European ethylene pipeline that would include Russia, Ukraine, Hungary and some other European countries," he said in an interview.

Rahimkulov declined to provide further details about the cost or technical aspects of the pipeline, which he said involved various partners.

BorsodChem has been suspended from trading on the Budapest bourse for the past five days in anticipation that the company will divest itself of much or all of its holding in second chemicals TVK.

TITLE: LMZ Creditors Signal Financial Health
AUTHOR: By John Varoli
PUBLISHER: Special to The St. Petersburg Times
TEXT: After nearly two years of conflict over control of the Leningrad Metal Factory (LMZ), Russia's largest maker of power-station turbines -- a conflict which has seen brutal OMON police raids and competing factions simultaneously appointing their own general directors -- the end seems near.


The apparent winner is Interros Group, one of Russia's largest financial-industrial groups, which is controled by oligarch Vladimir Potantin, better known for his controversial 1996 purchase of a controling stake in Norilsk Nickel, the world's leading nickel and palladium producer.

On Thursday, LMZ's council of creditors, dominated by Interros, voted to end external management, convinced that the factory has regained its financial health.

The council of creditors was set up by a local court as LMZ's ruling body in March 1999 after creditors sued the company. Germany's Siemens AG led the council at that time, but in late 1999 sold its 290 million ruble debt to Interros.

"LMZ has taken the decision to end external management because its financial health has improved, having increased income and cut costs, and now it can pay off its debts," said LMZ spokeswoman Maria Aleyeva.

She added that the company has cut costs primarily by optimizing finances, the use of raw materials, and marketing potential. First and foremost this meant implementing a system of financial control and analysis.

"It's hard to believe, but before [external management] there was no system of financial control and analysis, and there was a problem finding out where money and resources were disappearing" said Aleyeva. "Now, we've implemented a system of control that will not allow for resources to be stolen."

LMZ earned 401 million rubles (about $14 million) from the March sale of new shares which doubled the company's equity. Also, in the past 18 months the company implemented a cost-cutting program, and increased sales with orders from Finland, Iran, and India.

The company forecasts net income of 228 million rubles ($8.23 million) for 2000, she said. LMZ this year reported first-half profit of 149.0 million rubles compared with a loss of 3.47 million rubles for the first half of 1999.

LMZ debts total 423 million rubles ($15.27 million), but it only has to pay after external management is officially ended. About 64 percent of the debt is held by Interros, and Lenenergo, the local power provider, holds 28 percent.

Despite the decision, only a court ruling can officially end external management, and no date has been set for a hearing. Such a ruling, however, is expected by the end of the year, the company said. Once the court rules in favor of dropping external management, LMZ will have six months to pay its debts.

Interros is trying to wrest control of LMZ away from the Moscow-based holding company, Energomash Korporatsiya, or EMK. In March, LMZ doubled its equity to allow a takeover by the Interros, but EMK is challenging this move in the courts.

After the March equity increase, Interros raised its stake in LMZ from 16 percent to 51 percent. EMK now owns 15 percent, Lenenergo, owns 10 percent, and Siemens owns 10 percent.

LMZ left EMK in early 1999 after a boardroom dispute over the holding company's attempt to consolidate control over the subsidiaries. EMK has stakes in about 20 engineering companies that produce equipment for the power producing sector.

"It's not clear why Interros has voted to end external management," said Lev Savulkin, senior analyst at the Leontieff Center for Economic Research. "Either it has total control over LMZ, or it has made a deal with EMK how the factory will be run."

Interros' goal is to control most of Russia's leading engineering companies, which make equipment for the energy-producing sector. Indeed, the battle for control of LMZ is tied to the chances of the Russia's power engineering sector to reap the benefits of plans by RAO UES, the national power grid, to invest billions of dollars in new equipment in the next decade.

TITLE: Norilsk Rebounds From Losses of Previous Week
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - The market gave the thumbs up to Norilsk Nickel's share swap plan Monday, rising 17.5 percent to $7.45 from Friday's close of $6.30 after the metals giant detailed the plan that had dragged Norilsk stock down all last week.


Before the plan to transfer all Norilsk Nickel shares into its subsidiary Norilsk Mining Co., or NGK, was announced the shares had averaged about $10.

Norilsk's general director Alexander Khloponin said the result of the 12- month restructuring will double the value of Norilsk shares, raising its market capitalization from $1.82 billion to up to $4 billion. He promised that no investors would be disadvantaged by the swap. 

He said at a news conference that the restructuring would cost up to $7 million, with much of this being spent on Western consultants and technical expenses.

Khloponin blamed last week's plunge in the value of Norilsk stocks on "superficial examinations of the restructuring plan."

Svetlana Smirnova, metals analyst at Renaissance Capital investment bank, said one reason was that Norilsk Nickel began restructuring and completed half of it without asking minority shareholders, who have a total 42 percent stake in the company. The share swap will give minority shareholders just 11.5 percent of net income, she said.

No one knows how big a stake the Interros holding has in Norilsk and minority shareholders were worried that Interros would control a 75 percent stake in the company after the swap, Smirnova said.

A 75 percent stake would mean no other shareholders could block any move by Interros.

British company Norimet Ltd. is the nominal owner of Norilsk but Khloponin admitted Monday that Norimet's owners were Interros and other Russian-owned foreign trading organizations. He refused to give details of the organizations.

Norilsk Nickel shareholders will gain a 88.5 percent stake in the new NGK while Norimet shareholders are to hold a 11.5 percent stake at the end of the restructuring, he said.

Several share issues will be made during the reorganization so that the market capitalization of NGK will be equivalent to that of Norilsk Nickel, Khloponin said. 

Asked if Interros will control NGK after the swap, Khloponin said, "Even if Interros was the sole owner of Norimet, Interros would not own more than about 60 percent."

Norimet has already been bought by Norilsk Nickel in return for a 37.9 percent stake in NGK. That was the first stage of the restructuring of Norilsk Nickel, said Khloponin.

Khloponin said the transfer of Norilsk Nickel's assets to NGK would avoid double taxation.

Renaissance Capital reported that, according to figures supplied by Norilsk, majority shareholders started with a 58 percent stake in the company, but will own a 63 percent stake after the revamp. However, the investment bank cautioned that as the figures were based on 1999 data, it may well be that the majority shareholders already own closer to 70 percent.

Mikhail Armiyakov, metals analyst at Nikoil, said the surge in the price of Norilsk shares was even more incomprehensible than the plunges of last week.

"I think this is the work of speculators," he said, suggesting that Monday's demand for Norilsk shares could be an attempt by Interros to take full control of the company.

TITLE: Aluminum Interest Considering Oblast
AUTHOR: By John Varoli
PUBLISHER: Special to The St. Petersburg Times
TEXT: Alutec Inc., a Washington DC-based management consulting company, is negotiating with Leningrad Oblast to build an estimated $650 million aluminum smelter in the town of Sosnovy Bor, not far from the Leningrad Nuclear Power Station (LAES).


The new plant, to be located close to the Gulf of Finland, would make shipping aluminum to Western Europe more efficient and faster, officials said. Aluminum production is energy intensive, and electricity for the plant will be provided by the regional nuclear power plant.

"Because of its location and cheap power, the Leningrad Oblast is a very advantageous spot for aluminum production," said Grigori Dvas, Oblast deputy governor in charge of industry and economic policy. "And even if Alutec doesn't go ahead with its project, we will find other investors."

A feasibility study for the ob last plant estimates capacity of the plant would be 220,000 tons a year. The oblast already has one large aluminum producer, the Volk hov Aluminum Plant.

"The location of the new smelter near a port on the Gulf of Finland will give it the same logistical advantage as western smelters," said Asim Bose, president and chief executive of Alutec, who emphasized that the project is in a "very preliminary stage of development."

"Alutec and the project sponsors want to construct a world-class plant with the state of the art in technology for the production process and with environmental protection systems that meets the World Bank standards," Bose added. "This can become Russia's flagship plant with the latest technology for efficient operations and serve as a model for the eventual conversion of the industry in Russia."

Russia is the second-largest producer of aluminum in the world, though the industry is plagued with aging equipment and production facilities often located in remote areas, making the product harder to get to market. That's spurred Western companies to seek investment opportunities in Russia, which exports about 90 percent of the aluminum it makes.

The industry is already in the midst of a large-scale reorganization, led by the creation of Russky Alyuminiyum, which will control about 70 percent of Russia's aluminum assets and will be the largest aluminum company in Russia once the consolidation is completed by the end of the year.

Russky Aluminiyum is formed from the aluminum smelters owned by Sibirsky Alyuminiyum, Russia's No. 3 aluminum producer, and the companies owned by shareholders of Sibneft, Russia's sixth-largest oil producer.

That company's main competitor is in a new aluminum holding, SUAL Holding, which was created last week. Now the Russian market will for the most part be divided between these two holdings.

How Alutec will find its niche among these giants is not clear, and certainly a task filled with great risk, if not danger.

Indeed, Alutec understands it will have to cultivate the good will of Russia's oligarchs and aluminum kings -- the likes of Roman Ab ramovich and Oleg Deripaski -- if its project is to succeed.

"The success of this project will require the well wishes and blessings of the existing Russian aluminum industry and their owners," Bose added, without explaining how such friendship may possibly be cemented.

"The construction of the smelter in the [oblast] will not compete with the Russian aluminum industry, but will enhance Russia's position as the second- largest producer of aluminum in the world," Bose said.

Alutec, however, is primarily looking to major foreign aluminum producers for financing, though company officials would not name any company it has approached. Other possible sources may be the International Finance Corp. the private investment arm of the World Bank, and the European Bank for Reconstruction and Development.

Bose said Alutec has worked with the United States Trade and Development Agency, and has been involved in project development work in Russia, Ukraine, Poland, Bosnia Herzegovina, Venezuela, Chile and India.

Though analysts agreed the location in the Leningrad Oblast could cut transportation costs, there are other concerns, such as whether LAES will be able to keep electricity prices down, even after the increased demand.

"There is no strong argument that electricity prices will be cheaper because [the power plant] might not be able to meet both the demands of the proposed aluminum plant and its current customers in the region, and so electricity prices might rise," said Kakha Kiknavelidze, an analyst at Troika Dialog brokerage in Moscow.

He also questioned whether Russia needs another aluminum smelter. Last year, for instance, Russky Alyuminiyum abandoned plans to expand production at its Bratsky plant in Irkutsk, which is already running at full capacity.

TITLE: Draft Budget Changes Planned
PUBLISHER: Combined Reports
TEXT: MOSCOW - A compromise may be made on the draft 2001 budget in its second and third reading, the Agency for Financial Information reported Finance Minister Alexei Kudrin as saying Friday.


Kudrin, who is also a deputy prime minister, added that "there are issues that may be clarified according to the desires of deputies," the agency reported.

Speaking to the State Duma, he said the government "will insist that the main parameters of the draft budget be adopted on the first reading."

Expressing hope that the 2001 budget would be adopted in its entirety by the end of the year, Kudrin said the government intends to submit amendments next month to the 2000 budget that will determine how extra state revenues will be spent.

The draft has to go through four readings in the Duma and be approved by the Federation Council, parliament's upper house, before President Vladimir Putin can sign it into law.

The first reading of the draft 2001 budget is due Oct. 6. Earlier Friday, Prime Minister Mikhail Kasyanov told deputies to pass the draft without demanding more spending, saying foreign aid was negotiable and the world economy was slowing.

Times were good for Russia, but outside forces from high oil prices to foreign support should not be counted on and the government would not hike its revenue projections for next year, Kasya nov said.

The $40 billion draft 2001 budget, based on an estimated average $21 per barrel world oil price, is further based on 4 percent growth of gross domestic product - after 5.5 percent this year - and inflation slowing to 12 percent from around 20 percent.

Many deputies have repeatedly called for an increase of revenue and spending budgeted for the next year on the basis of sustained high world oil prices.

But Kasyanov, back from talks in Britain, which has been shocked by a fuel crisis, told legislators high oil prices should not be counted on and the 2001 spending plan should not be stretched to include additional revenues or spending.

"Global economic growth is forecast to slow in the next year, and this will be reflected in a decrease of exports from Russia. Oil prices are expected to slide in the near future," Kasyanov told deputies.

Moreover, support from the International Monetary Fund was also unclear, he said.

"In the near future we will continue talks on getting a credit, but all the same, you and I know that this source is somewhat unreliable. If additional revenues are received, they should be used to substitute this source," he said.

Nevertheless, Kasyanov painted a rosy current picture.

"Russians feel that things are improved," he said. "The government considers the social economic situation in the country to be fairly good, stable, with signs of improvement for most economic indicators." 

- Reuters, SPT

TITLE: Report: Oil Giant Balks at Project
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - U.S. oil major ExxonMobil has refused to participate in a project to build an oil pipeline from Azerbaijan's capital, Baku, to Ceyhan on Turkey's Mediterranean coast, the Interfax news agency reported Monday.


ExxonMobil, which Interfax said has stakes in five existent projects in the Azerbaijan sector of the Caspian Sea, was unavailable for comment.

The news agency quoted Natik Aliyev, president of the Azerbaijan state oil company SOCAR, as saying that the withdrawal would not prevent the pipeline project from being realized.

In addition, the Associated Press reported Georgian President Eduard Shevardnadze as saying that the reported refusal of one company to finance the construction would not derail the project's plans. The pipeline is to pass through Georgia.

Shevardnadze did not name the oil company that some media reports have said has withdrawn from the pipeline project, the news agency said.

The pipeline would cost some $2.4 billion and is scheduled to be finished in 2004. In Ceyhan, the oil can be loaded on tankers for transport to world markets.

The United States' government has actively promoted the pipeline that would bypass the territories of both Russia to the north and Iran to the south.

TITLE: Chubais To Take October Swiss Study Leave
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - With the government's consideration of controversial plans to restructure national power grid Unified Energy Systems put on hold until December, UES head Anatoly Chubais has decided to brush up on his management skills, UES announced Monday.


Chubais is to leave for Switzerland in late October to take a management course and will return to Russia the same month, the company said in a statement.

The statement revealed neither the name of the business school nor the course Chubais will attend.

Earlier reports on Chubais' study trip had suggested it was untimely and raised concerns he will leave the country at a time when the company is tying up loose ends ahead of the winter season. UES is also facing rancor after a series of power cuts over unpaid electricity bills.

Segodnya newspaper said Monday that Chubais' trip comes at a time of strong opposition to his restructuring plans. 

Meanwhile, energy analysts said the timing of Chubais' trip was a sign he feels secure enough in his position that he can leave the country without fear of either his restructuring plan going astray or that he will lose his job.

An announcement last week that the tax police were opening a criminal case into alleged tax evasion by state-owned UES damaged the company's image.

However, Hartmut Jacob, power sector analyst from Renaissance Capital investment bank, said that although this had indicated a decline in Chubais' political weight with the Kremlin, it does not mean Chubais will be replaced.

"Chubais' position at UES is safe at the moment," he said.

"Until recently Chubais was very busy with restructuring, putting together the pilot project for regional power utilities. UES will not have a mandate for its implementation before December and it makes perfect sense for Chubais to go [on a course]," Jacob said.

Andrei Abramov, utilities analyst at NIKoil brokerage, said extra management knowledge could be an asset as UES moves toward a serious revamp.

TITLE: Anti-Corruption Measures Will Boost Internet Usage
AUTHOR: By Peter Henderson
PUBLISHER: Reuters
TEXT: MOSCOW - Business leaders aiming to stamp out corruption will drag the nation into the information age, adopting e-commerce and all the trappings, the head of the nation's largest computer and technology services firm said Friday.


Businesses will use the Internet to become more transparent, reaping a reward from investors for their openness, the head of Information Business Systems said in an interview.

IBS group, the $250 million leader of the nation's roughly $1.4 billion information technology market, aims to lead Internet novices by the hand and plans its own public offering next year, head Anatoly Karachinsky said.

The reasons for Russia to boot up start with corruption.

"There is a model of stealing money from companies and taking it offshore, which is a much easier way to make money than to earn it honestly," Kara chin sky said.

But bribes are small change. "People are discovering that it is more profitable to have a high capitalization than to steal a bit of money today," he added. "The prize in the West for those who work honestly is larger capitalization."

Thus the infamous gray sector of unrecorded deals, bribes and tax avoidance, a major part of the economy, is becoming a problem for some who built it, as well as the government and more honest competitors. Computerization and the Internet leave deal trails, uncovering bribes and foul play, Karachinsky said.

"It is effectively a way to get out from under the control of independent company bureaucrats.

"It is crucial for Russia's existence," he added.

However, citizens don't get the net - literally. There are only about a million users in the nation of 145 million, with consumers, relatively impoverished and inexperienced, bound to lag business in the move online, Karachinsky said.

Businesses will fight for the few legendary local computer experts, he said, eyeing a public offering to attract people more than fixed assets. That approach addresses what many analysts say is the nation's main deficiency: the lack of experienced managers who understand how a business works.

IBS group plans to place some 20 percent to 30 percent of stock on the U.S. Nasdaq market next year, though details may be changed after an investment bank is hired this month.

More than half its revenues come from selling computers, software and equipment, but IBS' strategic direction is on services, like consulting and contract programming. It already writes computer code for Western firms like IBM and Boeing.

"We do not sell products - that is, a different type of business approach. We are more like EDS or Andersen Consulting," Karachinsky said.

That means that IBS will not produce a piece of software for a broad market, but can use experience on other ventures.

Its software forms the guts of U.S. firm NewspaperDirect, www.newspaperdirect.com, aimed at allowing travelers to download their hometown morning paper, and the would-be Ticketmaster of Russia, Parter.ru, which is in the planning stage.

TITLE: Global Eye
TEXT: Hairpin Curve 


Britain was brought to a standstill last week when an apparently ad hoc group of allegedly apolitical truckers and farmers blockaded the refinery depots of the nation's mysteriously acquiescent oil companies, demanding a reduction in the government's petrol tax. In a matter of days, the country was teetering on the brink of genuine social collapse, as hospitals cut services, schools and businesses closed, and food stocks began to run out.

But no sooner had the battered island begun to recover than another threat was aimed, dagger-like, at the kingdom's heart, as a group even more vital to the lubrication of a civil society than truckers and farmers launched a national tax revolt.

Hair stylists.

Yes, Britain's saucy scissor-jockeys are taking it to the streets this week in a bid to force the government of Tony Blair to lower the sales tax levied on the, er, tonier salons, The Independent reports.

"Unless the prime minister agrees to meet with us personally, we will mobilize thousands of hair stylists against the government," declared National Hairdressers Federation spokesdresser Ray Seymour. The NHF also hopes that the "millions who get their hair cut" will also pour out onto the streets until the tax - a 17.5 percent levy on salons that bring in more than $75,000 a year - is given a nice trim (with the sides layered and the back sort of tapered a bit just there above the collar). Thus far, however, the threat of mass unkemptness has failed to move the shell-shocked Labor government to action. But just wait until Tony's bangs start falling down over his eyes - then they'll beg for mercy.



Currency Violations 


Meanwhile, another totally spontaneous and completely apolitical anti-government protest took to the virtual streets in Britain last week - albeit with a minor glitch or two. 

Campaigners against Britain's adoption of the euro were caught by surprise when an opinion poll on their own Web site showed that 80 percent of respondents were in favor of joining the European currency. How could this have happened - especially in a country where both the mainstream and the tabloid press have kept up a steady (not to mention hysterical) drumbeat of rabidly patriotic prose in support of retaining the dear old drossy pound? 

The leaders of the anti-euro Business for Sterling group think they have the answer. "An organized voting exercise by pro-euro groups could be giving a distorted picture," said BS spokesman George Eustice, in an e-mail to fellow BSers obtained by The Guardian (one of the few press outlets not controlled by those great British patriots - the Aussie-American Rupert Murdoch and the crusty Canadian Conrad Black).

The nerve of those sneaky, pro-euro dastards: voting in a bloc in order to inflate the poll numbers artificially! But not to worry: George has a plan to thwart those proto-pinko slaves of Brussels and make sure the poll is completely impartial and representative of the nation at large, sending out this plea to organization members: "Could I ask all of you to log on to www.no-euro.com and cast your vote to keep the pound? Thanks."

Yes, once again, public debate will be well-served by solid, conservative British BS. 



Manly Arts 


But as always, a strife-torn Britain can turn to the arts for comfort in a time of crisis. Who can forget Laurence Olivier and John Gielgud, striding the boards boldly, bringing Shakespeare to the masses as the Nazi bombs were falling? Or Richard Burton, eloquent and fierce, and Claire Bloom, luminous and tragic, lighting up the London stage in the dark days of postwar recession? 

And now, as the nation stumbles back from the petrolless precipice, Britons can seek spiritual sustenance this week at London's Whitehall Theater, where two artists from the far reaches of the Commonwealth are dazzling the punters with their delightful new show:"Puppetry of the Penis."

Crisis-weary Brits will be thronging (or is it thonging?) to see the "genital origami," where, a press release promises, they will witness "a mind-blowing show featuring two well-endowed Australian men who manipulate their genitalia into various shapes, objects and landmarks."

The latter claim set media minds racing, as the nation's cultural elite tried to envisage the penile impersonation of famous structures. "Nelson's Column may not be too taxing," mused The Guardian, "but can they do the Dome or Tower Bridge?"

Or even more challenging: Ostankino tower. Sure, the basic structure will be a cinch - but those firecrackers at the top are bound to sting something fierce.



Pork Rinds 


Of course, no week would be complete without a word about our ole pal George W. Bush. So what's GWB (pronounced "Gwub") been up to lately? (Besides continuing his constant plunge in the polls, that is.)

Well, this week Gwub has been trying to explain how such a good, God-fearin', family-lovin', right-livin' kinda guy like himself pocketed big profits from the public display of a naked woman being torn in half by a sexual predator.

It seems that Gwub, who spent the week bashing Al Gore for his ties to the godless, anti-family moguls of Hollywood, was himself a mogul of sorts back in the '80s, when he served on the board of Silver Screen Management, and pulled down $100,000 for green-lighting more than two dozen R-rated movies, including the 1986 sex-and-slash bloodbucket "The Hitcher."

But hey, it's not what you think. Campaign aides quickly denied that Gwub played any active role whatsoever at the company, which is run by - who else? - one of his Yale fraternity buds. "The governor was not directly involved with the movies" produced by the movie company of which he was a director, a Bush spokesman said.

Thus, you see, Bush is not a hypocrite who decries the "pervasiveness of violence" in modern movies while making violent movies himself; he's just a freeloader pulling down pork from the old-boy network.

Sounds a lot like presidential timber to us.

TITLE: Timor Conflict Will Prove Test of UN's Effectiveness
AUTHOR: By David DeVoss
TEXT: THE recent killings of three aid workers on the island of Timor underscore the United Nations' ideals and limitations. The men hacked to death by pro-Jakarta, Indonesia, militia groups had come to the politically divided island to feed refugees held hostage in West Timor, an Indonesian province. Yet, when the militias ran amok last week, the United Nations was helpless to evacuate, much less defend, its own employees or the refugees under their care.


Only a year ago, the United Nations celebrated its finest hour by supervising a referendum in which 78.5 percent of the people of East Timor voted to leave Indonesia and form an independent nation. This remarkable act of democracy in a region defined by brutal authoritarianism was followed by a hellish three weeks. Militiamen armed by the Indonesian military murdered 1,000 people, left 300,000 homeless and destroyed 80 percent of the infrastructure built over the 24 years of Indonesian occupation. The United Nations dispatched a peace-keeping force that quickly pushed the militias across the border into West Timor. It formed the UN Transitional Administration in East Timor, or UNTAET, and announced a huge rebuilding effort.

For the United Nations, Timor's reconstruction is a must-win situation after a string of disasters and near-misses. In 1994, the United Nations ignored evidence of genocide in Rwanda, then abandoned the country when such evidence became irrefutable. In Bosnia, it failed to save 7,000 Muslims under its care when Serb forces captured Srebrenica. In Kosovo, it stopped Serbia's ethnic cleansing of Albanian Kosovars but inadvertently allowed last year's victims to become this year's predators.

There are no marauding warlords or pandemic diseases in Timor. Centuries of hostility make Bosnia ungovernable, but Timor is ethnically homogeneous. In Kosovo, the United Nations must contend with recalcitrant politicians and remnants of the former communist government. In Timor, literally cleansed by fire, a new government can be built from the ground up. "East Timor is a test of whether the international community can create a stable, democratic country," says Peter Galbraith, former U.S. ambassador to Croatia who heads UNTAET's political department. "If the UN can't succeed here, it may not be able to succeed anywhere."

Impediments to reconstruction are massive. Chinese entrepreneurs and Indonesian bureaucrats, who dominated the land's economy and government, are gone. The exodus of Indonesian doctors has left 25 East Timorese general practitioners and one surgeon for 700,000 people. Half the population is illiterate. Three-quarters of rural health clinics are destroyed, along with nearly all the schools.

Early this year, Australia, Portugal, the United States and other nations pledged $147 million to supplement the basic cost of UNTAET. At a June conference in Lisbon, an additional $16 million was budgeted for reconstruction. The money paid for emergency-shelter kits, repairs to 95 percent of the schools and importation of breed stock to replace cattle butchered by the departing Indonesian army. Charitable nongovernmental organizations and bilateral assistance programs have prevented starvation, provided vaccines, restored mass transportation and brought in enough newsprint to supply Dili's three competing newspapers.

Unfortunately, the most visible results of UN spending are the hundreds of sport utility vehicles clogging Dili's streets, dozens of cafes catering to foreigners with food imported from Australia and the floating Olympia Hotel on Dili's quayside, where bivouacked UN employees enjoy a rooftop Thai restaurant and a weekend nightclub.

Incremental additions to the general budget might not cover the generous salaries, free housing, monthly vacations and $109-a-day "mission subsistence allowance" paid to most UN employees. Even the United Nations' chief administrator for East Timor, Sergio Vieira de Mello, was hard-pressed to defend some of his organization's business practices. "Something is clearly not right if UNTAET can cost $692 million, whereas the complete budget of East Timor is $59 million," he said.

Eager to counter the notion that most of the money spent in East Timor goes for the care and feeding of the international community, the United Nations enforces a variety of sales and import duties on foreign goods. The taxes are meant to siphon off disposable income from the international community in Dili, but critics say they are premature and have stifled the growth of the private sector.

Timor's transition to democracy will be turbulent. Unemployable guerrillas who spent the past quarter-century fighting the Indonesian army still occupy one of the country's 12 administrative regions. There is little understanding between Timor's aging political leaders, who grew up speaking Portuguese and spent the occupation in Lisbon, and the island's youthful Indonesian-speaking population.

East Timor finally will become a full-fledged country next year, following a UN-supervised election. Can the United Nations stay the course, given this month's atrocity and Indonesia's continuing instability? A recent UN report urging a shift of resources from peace-keeping to conflict prevention could add to the pressure for withdrawal.

Despite their fractured society, most East Timorese are optimistic. "Neither the Portuguese nor the Indonesians prepared us for independence, so we're building a country from ground zero," says Mari Alkatiri, director of the National Council of Timorese Resistance's research and planning department. "It's a slow process that would be impossible without the UN's help."



David DeVoss is a former Time magazine bureau chief in Southeast Asia. He contributed this comment to the Los Angeles Times.

TITLE: City Still Battling To Improve Image
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: While the local government's efforts to promote St. Petersburg to foreign investors are still sporadic, the signs are that it has learned from earlier failures and is starting to see the value of marketing the city abroad.


"The St. Petersburg administration used to take the position that the world would beat a path to its door looking for investment opportunities," said Douglas Boyce, the general director of the Lomonosov Porcelain Factory. 

"Then several years went by, and it watched in horror while the Leningrad Oblast reaped the benefits of a well-thought out business incentive strategy, while the city was left with the crumbs that fell from the table. That was the wake-up call. Over the last few years, the city has made a conscious effort to improve its image as an investor-friendly place, and it is working."

Nonetheless, while most observers say that St. Petersburg has indeed been trying hard to make business easier to conduct in the city, they also reach a common verdict: Could Do Better.



IMAGE PROBLEM

Part of the problem is shaking off the city's reputation - deserved or not - as a center for organized crime and a hive of gangsters.


"The general perception overseas of the dangers of Russia, and of St. Petersburg in particular, continues to keep this city from its rightful place as a prime tourist destination," said Julia Cook, district manager of British Airways in St. Petersburg. 

"The same can be applied to the investment climate, too."

While simplifying registration procedures, creating tax incentives and reducing bureaucracy may do more for St. Petersburg than a million glossy promotional leaflets, businessmen say that City Hall is not succeeding in giving potential investors a clear idea of the local business environment, the advantages of coming to St. Petersburg, what the most attractive sectors are - and even whether investors are welcome at all.

One of the instruments not fulfilling its potential for St. Petersburg is the Internet, said Natalya Kudryavtseva, executive director of the St. Petersburg International Business Association.

"It is great that the local administration has two official Web sites, as well as sites for most of the city committees and the names and e-mail addresses of [local politicians]," she said. "But I have only ever found two sites with an English version: that of the External Relations Committee, and the city government's Business Information Channel." 

Marita Thelen, the managing director of the local travel agency Russia Travel, said that St. Petersburg was also wasting a natural strength by not promoting its position as a sea port.

"By not improving the port's infrastructure and opening it up to a massive market, the city is losing a lot of money. While the authorities are thinking about it, more trade is going to Finland and Sweden," she said.

As for the city's image problem, Thelen said that Smolny needed to poll foreign companies working in Moscow who had not expanded to St. Petersburg in order to find out why not. "The [business] legislation is the same for the whole country," she said, "but the [two cities' economic situations] are incomparable. So we seem to be looking at a public relations problem. St. Petersburg should find out what the city is doing wrong."

But Kudryavtseva said that City Hall was much more responsive to outside suggestions than it used to be. "I can remember when every letter we sent to the administration went unanswered," she said. "Of course, not all of our ideas receive [Smolny's] support, but at least there is a dialog."



PARTY TIME

A golden opportunity to attract attention to St. Petersburg will come with the city's 300th anniversary in 2003. So far, most of the promotional efforts have centered on tourism - but the organizations that have been created for that purpose are also willing to do what they can for business.


St. Petersburg opened its first official overseas tourist office, the Association St. Petersburg 300, in Paris earlier this year. While business is not the office's priority, its managers say they are more than happy to establish contacts between the French and Russian business communities.

"We would like, in particular, to promote St. Petersburg as the perfect place to host international conferences on a range of topics," said Olga Yartseva, executive director of the association, "thus introducing the city to the world's top specialists in all areas, including business."

She added that this had proven highly profitable for Paris.

And the St. Petersburg Institute of Cultural Programs also has experience in establishing liaisons with foreign partners.

"In 1993, a group of U.S. businessmen created a Russian-American association called the Committee St. Petersburg 2003," said Irina Kizilova, the institute's deputy director. "This association, which has already become our institute's reliable partner in organizing cultural events, has told us it would like to help promote St. Petersburg in the United States, and assist with the investment process here."

But when it comes to City Hall's own efforts, the usual noises are being made: It is not sure where the money will come from.

The special committee set up to prepare for the jubilee has unveiled a plan - to be debated by the Legislative Assembly this fall, and theoretically to start next year - proposing a total of 7.86 billion rubles (about $280 million) from the city budget to be spent on implementing a program to develop the city's infrastructure, and on the city's celebrations.

"Naturally, changes to the plan will be made as time goes on, but the priorities of the project need to be set out now," said local legislator Natalya Yevdokimova.

"But given the city's difficult financial situation, there is no guarantee we will be able to afford the entire [projected] sum."

In addition, local officials are hoping for funds from the federal budget and contributions from individual sponsors, although the committee's head, Natalya Batozhok, would not say who these sponsors were.



REACHING OUT

Vatanyar Yagya, a Legislative Assembly deputy who has worked on international relations and investment issues for the city administration for a number of years, said that cooperation between local and regional parliaments in different countries was another tool in the fight to spread St. Petersburg's name around.


"This would be helpful in a number of ways, as well as in the spheres of economics and investment," he said.

Yagya added that tightening relations between St. Petersburg and its twin towns and "partner" cities would help. "Businesses from Hamburg and Helsinki are steadily expanding their cooperation with St. Petersburg partners," he said.

"But there is barely any money coming from [the partner cities of] Los Angeles and Bombay."

"The Soviet idea of twin towns was a sort of exchange of folk-dance groups," he said. "It should be much deeper and more serious than that, with financial cooperation being one of the most important aspects."

TITLE: Polls: Gore, Bush Tied In Race for President
AUTHOR: By Alan Elsner
PUBLISHER: Reuters
TEXT: WASHINGTON - Six weeks before the U.S. presidential election, polls Sunday showed Republican George W. Bush has erased Democrat Al Gore's lead and the race is tied once again.


Three weekend polls by Gallup, Newsweek and Fox TV showed the Nov. 7 race a statistical dead heat. The vice president led by 3 percentage points in a Newsweek survey - he had led by 14 points a week ago - but Bush jumped into the lead by a single point in a Gallup daily tracking poll. In the Fox poll, the two candidates were tied.

The surveys followed a good week for the Texas governor who enjoyed successful appearances on TV chat shows and managed to get his campaign back on message. 

The vice president, in a telephone conference call with reporters Sunday, said he put no faith in polls, whether favorable or unfavorable.

But Bush aides said there had been a sea change. "There's been a definite shift in the attitude among voters in the past week," said Bush spokesman Ari Fleischer in a conference call with reporters.

"There is a growing sense of unease in the electorate with the vice president, his policies and his statements ... He keeps splitting hairs and cutting corners around the truth and he seems to keep doing it when the pressure's on," he said.

Gore had moved into the lead following last month's Democratic convention and had slowly expanded his advantage. Last week, Gore had led the race in most polls by between three and eight points so the past few days suggested a definite change in momentum in Bush's favor.

With the first of three presidential debates now nine days away, both candidates will be seeking to go into that confrontation as the leader while including some intensive preparation time in their schedules.

Bush was in Texas Sunday, preparing for another West Coast swing where he will attempt to dispute Gore's hold on the states of California, Oregon and Washington. Gore was also taking a rest before heading for Florida, a state Bush desperately needs to carry where the race is currently neck-and-neck.

The latest polls did not reflect public reaction to the Clinton administration's decision last Friday to release a limited amount of oil from the nation's Strategic Petroleum Reserve to help consumers pay for heating oil this winter.

Bush fiercely attacked the decision, which Gore had pushed hard for, as politically motivated. His vice presidential running mate Dick Cheney kept up the assault in TV appearances on several Sunday news programs.

"Bill Clinton and Al Gore, said just a few months ago that they thought it was a mistake to take oil out of the strategic reserve in order to manipulate prices," Cheney said on Fox News Sunday.

"They thought that was bad policy ... Now, because it's six weeks before the election and they're worried about prices, all of a sudden Al Gore is for releasing oil out of the strategic reserve in order to manipulate prices. But it's hard not to view it in a political context," said the former defense secretary.

Cheney also gave his assessment of the election. "The race now is virtually neck-and-neck from everything I can tell. I think it's going to go right down to the wire," he said.

TITLE: Exchange Proposed To Ease Fuel Crises
AUTHOR: By Andrey Musatov
PUBLISHER: Special to The St. Petersburg Times
TEXT: The fuel crisis in St. Petersburg and Russia, including the price rises which started last week, could be eased or avoided if contracts on fuel supplies were signed on the commodity exchange, accordng to Svetlana Snegir, director of the Kupol business information center.


According to Snegir, there are various reasons for the fuel deficit. However, crises tend to occur in the autumn and spring, with the increase of fuel usage when people use vehicles to make trips to their dachas.

As a result of the fuel crises in 1997 and 1999, prices rocketed to double their value. More recently, in June this year the price of the most popular 92-octane gasoline rose from 6.80 rubles to 7.30 rubles per liter, and is expected to rise in the next two weeks to 9.50, which is more than 95-octane gasoline costs at the present moment, according to Kupol.

Significant changes on the gasoline or oil markets sometimes happen at the same time as a seasonal fuel usage increase, as was the case with the world oil price rise this year. In conditions of periodical fuel deficit, the exchange could provide a means of planning and insurance.

Forward and futures contracts signed on the community exchange between the retailer and supplier are an agreement on the future supply of the current goods. 

"Any exchange is only an indicator to some sector of the market and its prospects," said Vladimir Glazkov, general director of the Petersburg Fuel Company. "Also, the exchange is the place where the customer and sales meet, and that's all. The exchange doesn't regulate the market. That is why neither a futures exchange nor some other exchange could avoid or ease the results of a fuel price increase in St. Petersburg. The exchange indices would only make the market more transparent."

However, Snegir considers that market regulation of the exchange is possible.

"If the retailers knew that in autumn and spring they will lack fuel, they could sign a contract for futures transactions," she said.

According to Snegir, today the fuel market of Petersburg has a record number of gasoline retailers, totaling about 220 fuel stations and about a hundred operators.

"The fuel market in Petersburg, more than in other cities, has the conditions necessary for running an exchange," she said. "But it is actually Russian retailers, rather then suppliers, who are not ready for such civilized technologies of market regulation. They are unwilling to change the schemes of fuel supply that they are accustomed to."

And that, according to Snegir, provides the opportunity for an army of various intermediaries - sometimes numbering four or five - to survive between the supplier and retailer. This puts pressure on the retailer, increasing the cost of fuel, rather than on locals, who have to pay more for food and other products reaching the market by road transport.

Representatives of most St. Petersburg fuel companies refused to give any comment, arguing that "during the fuel crisis, any remarks only worsen the misunderstanding of the real situation," as one put it.

"The relations between the retailers and wholesalers have been established over the years," said a source at one of the fuel retailer companies, who refused to be identified. "We are not very willing to use new methods in our business, so I doubt that anyone will need this exchange."

"The fuel business is something like a small-traders market," said Alexander Hilchenko, the head of St. Petersburg Faeton fuel stations. "We are dependent on the mood created by other traders and the press. Since we lack stable sources of information about the market as a whole, we change our prices according to neighboring fuel stations."

"The prices should be set by the market, and that is what the commodities exchange would do," Snegir said.

Sergey Mitrofanov, the general director of St. Petersburg Futures Exchange agreed.

"On the exchange we attempt not only to run deals. We stress the exchange trading system," he said in interview with Delovoi Peterburg newspaper two weeks ago.

Snegir also mentioned another way for running the exchange. According to her information the Anti-Monopoly Ministry already has a project for a law which would demand the sale of about 15 percent through the exchange on the internal market.

"That law would automatically start the work on the exchange and provide the outflow of some part of the fuel for export," she said.

"We do have some confirmation from official sources," Mitrofanov said. "A law like this is being developed, and it will demand the sale not only of fuel, but also of strategic raw materials on the exchange."

However, industry experts are proposing other ways of exporting fuel.

"There's nothing frightening in the state taking steps toward the increase of an export tax that limits transferring oil production abroad," Semyon Kukes, the president of the Tyumen oil company, said to Vedomosti business daily. "Oil companies are profitable enough, while these measures provide for the presence of fuel on the internal market."

TITLE: WORLD WATCH
TEXT: Anti-Foreigner Law


GENEVA (AP) - Swiss voters on Sunday rejected a plan to cut the proportion of foreigners in the country to 18 percent of the population and fix it there by law.

It was the fifth anti-immigration plan to fail since 1970, but the result showed that concerns persist among a significant minority over what the plan's backers called "mass immigration."

"I'm extremely happy with the clear result," said Justice Minister Ruth Metzler, adding that the limit on foreigners "would not have been a good thing for our country."

Concerns are frequently raised about high numbers of foreigners in Swiss schools. Some right-wing politicians openly suggest Balkan immigrants have violent tendencies.

The Swiss Democrats, a right-wing nationalist party, which backed the cap, expressed "great disappointment and concern" at Sunday's result.

"In a few years the proportion of foreigners ... will be 25 percent or more," it said in a statement. "It is probably the fate of our country that it will be fully internationalized and its Swiss character will be lost."



Monsoon Mobs


CALCUTTA, India (Reuters) - Hungry mobs in marooned villages attacked relief teams and troops on boats in flood-hit areas of eastern India on Monday, where monsoon flooding has left at least 208 people dead and 165 others missing.

"People were fighting with each other and attacking our men to make sure they got a place on the rescue boats," a senior army official told Reuters.

He said tempers ran high because each boat could rescue only 25 people, while hundreds were stranded on rooftops and in trees.

The flooding, triggered by heavy downpours as the annual monsoon ended its journey across the country, took a dramatic turn for the worse last week when sluice gates of three major rivers were opened to stop dams from bursting.



Barak, Arafat Talk Again


JERUSALEM (AP) - Israeli Prime Minister Ehud Barak and Palestinian leader Yasser Arafat plan to meet Monday evening for the first time since the Camp David summit to try to break the deadlock in peace talks, Palestinian officials said.

The officials, speaking on condition of anonymity, said the meeting would most likely take place at the Erez crossing between Israel and the Palestinian-controlled Gaza Strip.

The two leaders - who have a history of icy relations - last met in the U.S.-hosted peace summit at Camp David in July. The talks collapsed over the future of Jerusalem and have yet to resume at full speed.

Palestinian Information Minister Yasser Abed Rabbo said Arafat was not meeting Barak in order to announce any softening in the Palestinian position.

"By agreeing to the meeting, we are giving the peace process a new chance - we are extending our hand to the other side to tackle the differences on the negotiating table," Abed Rabbo said. "We are not going to make concessions."



Violence in Indonesia


JAKARTA, Indonesia (Reuters) - Nearly two dozen people were killed in clashes around embattled Indonesia over the weekend, with violence hobbling the Moluccas islands and troubled Aceh province, media reports said Monday.

The renewed violence, which included communal clashes on the resort island of Lombok, not far from the tourist haven of Bali, underscores Indonesia's security woes a full three years since the country plunged into political and economic crisis.

The fresh fighting follows a spate of bomb blasts in the capital Jakarta in the past few months.

At least 12 villagers were killed and dozens wounded in fierce fighting on the Moluccas island of Saparua over the weekend, where combatants used mortars and grenade launchers, the Jakarta Post newspaper said.

Human rights groups estimate that at least 2,000 people have been killed and thousands more tortured under Jakarta's rule in Aceh, a key resource-rich province.

TITLE: Suspicion Greets Tax Law Changes
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: Changes to income and social taxes that are due to come into effect on Jan. 1, 2001, are likely to be welcomed by foreign businesses operating in Russia, but are being treated with great suspicion by many domestic firms, who say that in fact the government just wants to get a look at the real salaries people earn before hiking taxes up once more.


The new laws significantly lessen the tax burden on higher salaries, which has led some businessmen to speculate that the whole scheme is all just a gambit designed to get companies to declare employees' full salaries, rather than the "official" figures which are presented to the tax inspector.

Specifically, according to legislation passed by the State Duma in July this year, the array of social taxes which employers used to pay in the past - to the Pension Fund, the Social Insurance Fund, the Employment Fund (which has since been abolished) and the Medical Insurance Fund - is turned into a unified social tax. 

Theoretically, the rate of this unified tax gets less and less as the salaries increase, introducing the following regressive scale: 35.6 percent tax on incomes of 100,000 rubles ($3,570) or less; 20 percent on incomes of 100,000 to 300,000 rubles ($10,710); 10 percent on incomes of 300,000 to 600,000 rubles ($21,420); and 5 percent on all income in excess of 600,000 rubles (although it is planned that this last rate will be lowered again to 2 percent in 2002).

But this proposed sliding scale of social taxes may not end up benefitting those companies who pay smaller salaries, according to James Beatty, the head of Emerging Markets group in St. Petersburg.

"The problem is that employers can apply a regressive scale of tax only if their company's average salary - not including the top 10 percent, or 30 percent for smaller firms - paid in the second half of 2000 amounts to over 25,000 rubles ($890), which means over 4,000 rubles a month. 

"Otherwise, the rate of 35.6 percent applies regardless of what an employee will earn next year. My guess is that hardly any Russian companies will pass this qualification. I think that it is only foreign companies [who pay] high salaries will benefit."

"Russian companies will take their time in sizing up the possible effects of the new tax laws," said Yekaterina Gorokhova, the St. Petersburg branch manager for the recruitment agency Kelly Services.

"Russian companies usually have two accounts - one for the tax inspectorate and a [more realistic] one for its employees, who, say, officially receive a 200-ruble salary, but unofficially get a few hundred dollars [under the table]." 

This situation, she said, was unlikely to change immediately.

And representatives of Russian companies said that they were not at all prepared to "legalize" salary payments by bringing them out into the open.

"Maybe some companies will start legalization in the second quarter of next year, but first we need to look at how things go," said the head of a local firm who asked not to be identified.

"I have also heard that [Prime Minister Mikhail] Kasyanov said recently that the changes in the tax law will be abolished after companies legalize themselves," he said - voicing a fear which many companies harbor over the permanency of the new 13 percent flat income tax rate.

TITLE: All Sizes Fit Into Local Meat Market
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: What do they really put into the sausages we buy at our corner store, and who is responsible for making them? It's a question that many St. Petersburg consumers have been longing to ask.


According to the latest statistics from the analytical center Infoall, on average St. Petersburg residents eat between 380 to 470 tons of bacon, ham and smoked meat every month - on which they spend a total of between 40,000 to 47,000 rubles ($1680).

Although a lot of meat still comes from abroad, local companies now constitute the majority of the meat processing market. Ninety-three percent of salami sold in the city is produced locally, for example.

The St. Petersburg meat processing sector is represented by a number of enterprises of varying sizes. Large-scale enterprises occupy about half of that market.

Statistically speaking, Parnas-M is the city's leader. Expert Northwest magazine defined the market percentage of the leading meat processing enterprises for February 2000 as follows: Parnas-M took 27 percent, Samson 23 percent, and Cherkizovo 6.6 percent.

Parnas-M was founded in 1984. In 1997, the company bought shares in three other meat plants - Volkhovsky, Luzhsky and Tikhvinsky - located in the Leningrad Oblast. 

Svetlana Brikova, representative of the Parnas-M public relations department, said the company produces 160 different products, including salami, sausages, canned meat, pre-cooked frozen food and smoked meats.

Parnas-M produces 150 tons of meat products daily, which it distributes throughout Russia. St. Petersburg and the Leningrad Oblast receive 80 percent of total production.

Brikova said that Parnas-M managed to survive the crisis of 1998 with minimal damage. Whereas the company produced 80 tons a day before the crisis, afterward production decreased only slightly, going down to 70 tons.

Brikova said that Parnas-M owed its stability to the fact that foreign meat made up only 60 to 70 percent of the company's raw materials, whereas Samson and Cherkizovo received almost all their meat from abroad.

For Samson - the former leader of the city's meat industry - things are not looking so rosy at the moment.

Samson, founded in 1933, was once the largest meat processor in Russia's Northwest. In 1992, when it garnered about half of the St. Petersburg market, it became a joint-stock company. But the crisis of 1998 hit the company badly when, according to a report in Delovoy Peter burg, the devaluation of the ruble forced the company to pay four times the initially agreed nominal value for raw materials it had received in the first half of the year. These difficulties dropped Samson to a 20-percent share of the St. Petersburg market.

At the moment, Samson is being investigated for possible bankruptcy. Samson now has more than 600 creditors, and its debts totas 450 million rubles, or $16 million.

The St. Petersburg branch of the enormous Moscow meat processing complex, Cherkizovo, is also a leader in this city's meat market.

Daily, Cherkizovo's five major meat plants, which are located in Moscow, Penza and Belgorod, deliver 20 tons of 200 different meat products to St. Petersburg.

The Cherkizovo meat plant was founded approximately 50 years ago, but by the beginning of the '90s it was in decline. One industry analyst, who asked not to be named, said that the plant received a new lease of life when a new director, Igor Babayev, was elected. Since Babayev's appointment, Cherkizovo has gained a leading position in Russian meat processing, and even joined the list of the 20 largest meat complexes in Europe.

The Strelets meat company, founded in 1995, is a firm that currently holds a good position on the local scene. It offers 80 different meat products, including sausages, smoked meat, chicken legs and frozen products.

Larisa Makuta, marketing manager of Strelets, said that its products cater to the budgets of people from all levels of society.

"We sell products to local markets, meat kiosks and stores," she said.

The remaining half of the St. Petersburg meat market is occupied by small- and medium-sized businesses, which find their own ways to manufacture and sell their products.

"We use the products of many meat-processing firms such as Matera, Troya, Diet-Product and Parnas," said Galina Kudryashova, deputy director of the Vlarus store.

Sergei Arefyev, director of the meat store AKhB, said the concern uses products of more than 40 different companies. Among them are Fortuna, Trio, Morozko, Amega, Veles, Diet-18 and others.

"We prefer to work with [suppliers] who have proved their reliability and who deliver their products on time," Arefjev said.

Igor Kondratov, deputy director of the Matera meat processing company, said that his firm produces about one ton of meat products daily. "We have 50 to 60 different products, including sausages of all kinds, smoked meat and others," Kondratov said.

He added, however, that Matera receives the main bulk of its meat from abroad - from Brazil, Spain and Germany.

"I wouldn't say that we have any difficulties with our big competitors such as Parnas or Cherkizovo. We have had a niche in this business since 1992, and we have our own clients," Kondratov said.

TITLE: Teaching the Teachers Technology Out East
AUTHOR: By Anna Andreyeva
PUBLISHER: Special to The St. Petersburg Times
TEXT: Tatyana Bogonina used to teach a subject called informatika. The secondary-school course was aimed at teaching basic computer programming skills and learning software languages - quite impressive for 1985. The only thing lacking was ... computers. There were few of them in the Siberian city of Khanti-Mansiisk, and not even one in 10 of its schools.


Unfortunately, the situation hasn't changed much since. Computers are either out of date or nonexistent, as is teachers' knowledge in the field.

But to prevent teenagers from missing the boat of the new economy, several teacher training centers have been set up to bring computer technologies and the Internet to average schools.

The Federation of Internet Education, a nonprofit organization sponsored by oil giants Yukos, runs a number of courses for schoolteachers ranging from computer basics to systems administration. It now has three centers - in Mos cow, St. Petersburg and Tomsk - where teachers from the regions come to learn about Internet technologies for everyday teaching. In Moscow, where computer literacy is much better, the local teachers cannot take part.

So far 535 teachers with different levels of knowledge have attended the Moscow center, which opened in March. The center has the capacity to teach 100 people per month.

"I've waited for it for 15 years," said Bogonina, who now teaches mathematics. She had just completed the center's three-week computer literacy course for beginners, which included Microsoft office software, as well as Flash (a program for creating Web sites), the basics of Web-site design and Internet search tips.

A large proportion of the visiting regional teachers, who are mostly in their mid-30s to mid-40s, had never seen a computer. For most, the Internet is something completely new - and for many of them, this is the only chance they have to learn. 

Few statistics are available, but according to the federation only 18.3 percent of teachers have access to computers in schools, and the same percentage has Internet access at school.

All course costs including air fares and accommodation are covered by the federation. The market price would be almost $1,000 per person - which would put it way out of reach for low-paid regional teachers.

Yukos, the only sponsor, has given the federation $10 million for setting up six centers. Centers in Samara, Vo ro nezh and Mur mansk are to be added to the existing three by the end of this year.

Upon completion of the course, the teachers have come as far as creating their own Web site. The topics are usually home cities, flora and fauna of these regions, history or geography, depending on one's teaching subject. A group of teachers from a culinary school in Samara developed a site dedicated to their alma mater. On-screen images show meat being transformed into chicken Kiev, and there are instructions on how to make borshch.

Indeed, finding a way to use the new skills is a major problem, as many schools have no computers at all. As a Khanti-Mansiisk school deputy director and chemistry teacher Natalya Bachinina put it, "We take with us not only these diplomas, but also a big headache - how are we supposed to get computers?" But there's a huge incentive, too: "Now I'm going to go to my boss and demand computers," Bachinina said.

TITLE: Is Web Study Too Impersonal?
AUTHOR: By Barnaby Thompson
PUBLISHER: Staff Writer
TEXT: MBA students who are unwilling or unable to attend regular classes are able to turn to the Internet for management education, but not all participants and experts say they are 100 percent happy without the personal touch.


"Doing an MBA over the Internet, as opposed to personal tuition in the classroom, is rather like the difference between having real sex and having sex over the telephone," said Alexander Yanchevsky, director of the Leti-Lovanium International School of Management in St. Petersburg.

"If you're preparing leaders with an elite education - although I don't like the word 'elite' in the context of what we do at this school - you need to work with the individual, and he must have living contact with his tutors."

But Katie Butler, director of the St. Petersburg branch of the English First language school, said that she was very happy with the MBA course she recently embarked on with the Open University Business School - a three-year program taken on the Internet.

"The Open University course provides you with all the materials you need - books, videos, cassettes - so you don't have to worry about trekking round to libraries and other places trying to find them," Butler said.

"And all the people in my group discuss the subjects we study via e-mail, so you get the chance to see what others are saying."

"I agree that personal contact [with tutors] is important," Butler added, "but even with the OU course, it is there. We have tutors flying out to Moscow from Great Britain for seminars once a month, and my teacher was great, very amenable."

Butler did say that a fellow student in her group was deeply unsatisfied with the way the online program was working out, citing a lack of communication between Britain and Moscow, and Moscow and the St. Petersburg students.

The Open University, which began work in 1971, is one of the world's leading distance education institutions, accounting for one-fifth of all part-time higher education students in Britain.

For budding entrepreneurs in areas of Russia where business schools are few and far between, an Internet course may be the only way to study an MBA or other education program.

Despite repeated attempts, OU Business School officials could not be contacted for comment on its operations in Russia or on learning online in general.

"But I like the fact I don't have to go to a school with this course," Butler said. "In addition, there are over six nationalities in my tutor group, and we're all interested in international business, so it's great to be able to compare business experience in different countries."

"People say when you start out in business, 'Oh, you'll pick it up as you go along.' But it's better to have a structured understanding of what you're doing, especially when it comes to a specialist subject like finance."

TITLE: Pricey MBAs Not Always Superior to State Degrees
AUTHOR: By Fyodor Svardovsky
PUBLISHER: Vedomosti
TEXT: Over the last two years, the MBA degree has become fashionable among Russian managers. After the 1998 crisis, the job market was overflowing with educated and experienced specialists, and having an MBA became an important additional merit for job-seekers.


Over two years have passed since the crisis. Now, in the opinion of many specialists, the majority of MBA graduates simply threw their money away. 

Not that there was ever much need for them. According to the database of candidates from the ANKOR company (93,206 people), at the moment 1,272 people are studying for or have already received an MBA - no more than 1 percent. Of those, only 7 percent are professional managers.

According to Stanislav Kiselyov, deputy general director of the Moscow branch of the headhunting company Egon Zehnder, the demand for specialists with a solid Western MBA clearly fell after the crisis.

But the opposite viewpoint also exists. "A Western MBA, particularly one from a prestigious business school, is in my opinion a big advantage for further promotion," said Yury Borzov, partner at the headhunting company Ward Howell International. "In many places, a Western MBA is a compulsory requirement for employment."

But according to Kiselyov, this is only the case with certain positions in major foreign companies. 

"At the moment, an MBA does not give you any particular advantages," says Maria Afonina, marketing director of ANKOR.

According to analysts, a snobbery still exists denigrating managerial education in Russia compared to an education from a prestigious foreign business school. 

Presently, there are huge numbers of foreign MBA programs. However, no currently operating Russian business school is included in ratings of the Financial Times' Business Week.

Furthermore, education gained at a Western program in Russia is not the same as education gained in Europe or America. "I don't think that a diploma from California University awarded in Moscow would in any way help you get a job in the West," said Tatyana Golubina, a customer relations consultant with the company Manpower. According to recruiters, foreign companies working in Russia are generally satisfied with an adequate business education from a state university. 

After the 1998 crisis, many managers who had lost work but still had savings went to study for MBAs in Europe and America. "However, it turned out that these specialists were not offered positions higher than financial director or financial controller, just as if they had been looking for work in the West," said Anton Storozhenko, deputy head of the headhunting company Accord Group. 

Returning home, graduates of prestigious business schools received positions in Russia that paid up to two times less than they would have earned abroad. "The salary for these specialists in Russia does not normally exceed $50,000 to $80,000," said Storozhenko. 

"And in the West they could earn $120,000. But they could have gotten these positions without leaving the country." Furthermore, when they go abroad, managers drop out of the business world for one or two years. "Leaving at the moment is not very sensible," said Golubina. "Here, there are special factors. Our clients don't need people who have a brilliant understanding of international finance - they need people who can talk to the tax police."

A prestigious Western education, therefore, is only worth having if you have a formulated goal. "I myself just graduated from the French business school INSEAD," said Kiselyov. "And I had a serious reason for doing so - it was connected to my work. But if you look at a MBA solely as a means of increasing your income, you should think about to what extent this is justified."

The price of a Russian MBA, depending on the business school, ranges from $5,000 to $10,000. A year of study at a state economic school with departments of management, finance and marketing costs from $2,000 to $3,000.

According to Storozhenko, if a manager without an economic education isn't dead set on having an MBA in his resume, he should get a state education.

TITLE: Jumping to a Higher Income
AUTHOR: By Max Ogney
PUBLISHER: Staff Writer
TEXT: With administrative assistants in private companies now earning a great deal more than many state-employed doctors and professors, it's not surprising that some of the highly educated are thinking about jumping the income gap. 


After all, why should an intelligent, well-educated person struggle on $25 a month as a doctor when they could be getting more than 10 times as much?

But employment experts say it's not easy. 

Regardless of how impressive one's credentials and work record are in the state sector, there are obstacles in the path of anybody trying to leap over to jobs in commercial enterprises.

So just what does it take to jump the gap?

Anatoly Kupchin, the general director for staffing agency Kontakt, said they receive over 9,000 resumes a month from specialists wishing to find a well-paid job and escape working in poverty.

But for most of them, there is really little hope.

"The market demands are completely different, and it reflects a difficult imbalance between the economic structure of the Soviet Union, where a lot of specialists were artificially guaranteed a job, and the current Russian market, in which many of those people don't meet the demands," Kupchin said. 

"The Soviet era created so many different specialists in various branches that now all of them are finding it very difficult to find their application on the market.

"One can have a very good education but be absolutely useless in business. All of them are not trained to sell what they have - education, skills."

Kupchin said that the rate of employment in the Soviet manufacturing sector was six times higher than was necessary. 

Now, he said, it is three times higher than what market conditions require.

"In all developed countries, most people are busy with trade, while in Russia many still think that most people should be involved in the manufacturing sector. 

"Unfortunately, the government supports this mentality. 

And many are still waiting in vain, hoping the situation will get better. "Many people want to change their job but don't know how to do it. 

"They realize that the only way to get out of poverty is to get a position in a commercial company, but the majority of them have no experience whatsoever in working in business structures."

"People hunting for a job in commercial companies have to understand that there is an enormous difference between working in the state structure and working in a commercial company, because commercial companies have to make money and they simply cannot keep those people who they don't need," said Michelle Schorr, the vice president of Kelly Services Inc. staffing agency.

"The first question one should answer is, 'How can I be useful to society and what can I do to make people pay me money?' 

"You should have a progressive point of view and always be ready to say good-bye to the specialty in which you have worked for many years."

Also, people with no experience working for private enterprise have to realize that no one will pay them good money straightaway. 

The first step is to get an employer to take them on, starting with very low pay, Schorr believes.

"If you have no experience at all in a commercial company, then you can never get good money at first, no matter what your previous position and qualifications are. 

"You should first learn how to work for a commercial company, under pressure, adhering to deadlines and as part of a team."

Of course, for those wishing to change their life, some knowledge can be helpful. 

"There is a simple set of skills which can always be useful for finding a job in a commercial company," said the manager for the staffing agency Imperiya Kadrov, or Staff Empire, Pavel Plaksin. 

"It is better to have skills in computers, and for foreign companies English is necessary."

Plaksin said that making the jump is harder for older people. 

"The problem is not that they are old, but that they have mostly been brought up in the Soviet system and have worked there for a long time. Many young people think older people are representing that system and thus treat them with an element of antagonism.

"It is like the antagonism between different generations and different political systems, and therefore those commercial companies in which most of the staff is young try to avoid hiring them." 

"It will be gone in 10 years but now it still exists," he said.

Schorr said that communication skills are very important for getting a better job. 

"One has to demonstrate a desire to work, and for getting the chance to show that the company really needs you."

"Everything depends on desire," Kup chin said. 

"Even a schoolteacher can make excellent money by joining a private school or by teching private classes. I know of one schoolteacher of geography who developed his own system of teaching students. These days, he is earning a salary of about $100,000 a year."

But many bureaucrats are still scared of changing their stability for the relative insecurity of working in commercial enterprises. 

Mikhail, 45, is a high-ranking official for a Moscow city authority, where he has been working for the past 20 years. 

Recently, he refused a proposal to work for a commercial company where he would have been paid 11,000 rubles (about $380) a month - compared to the 6,000 rubles (about $200) which he is earning at the moment. 

"I refused - because here I have a stable office, my own working room, a car provided by the government and free health services," Mikhail said.

"The service I work for existed, exists and will always exist."

TITLE: Self-Starter Putting Lessons Into Practice
AUTHOR: By Barnaby Thompson
PUBLISHER: Staff Writer
TEXT: If conflicts of approach are generational, then it may well be just a question of waiting until MBA holders rise to the top of their companies and dominate how they are managed. One man who decided not to wait that long is Yury Rysev, who set up his own company after completing a nine-month business course at IMISP in May 1999.


Rysev's company, a plumbing equipment and installation firm called Akvalink, employs four people, and is tucked away in a large building not far from Elektrosila metro station. "While I would have been interested in a middle-level management position in a large company, there's something in my personality that made me want to set up my own business," he said.

Cagey about start-up capital, Rysev, 33, did reveal he scraped the money together the old-fashioned way - borrowing from family and friends. "At times, business can be pretty frightening," he said, "but it's always interesting. And I kind of 'found myself' with the course. An MBA is the next step for me."

TITLE: Petersburg Telecoms Signal Major Sector Trends
AUTHOR: By Thomas Rymer
PUBLISHER: Staff Writer
TEXT: In Russia, what begin as large-scale restructuring projects seem either to get bogged down in battles with minority shareholders or shift toward the more blatantly economic issues of costs and prices. In this way, the St. Petersburg telecoms market is an excellent microcosm of the overall situation in the country, and the national telecoms market itself.


When President Vladimir Putin ordered Communications Minister Leonid Reiman to bring about the sale of a 25-percent minus-one-share stake in state-controlled Svyazinvest this past April, the pressure was raised on the telecommunications giant to bring about a restructuring that would make the company more appealing to prospective investors.

A major part of the Svyazinvest plan involves the unification of smaller companies in which it holds major interest at the regional level into larger, more liquid entities.

The rationale behind the move is that these larger regional telecoms will be better able to attract the amount of investment needed to modernize what are, in many places, overly antiquated lines forced to handle larger loads of traffic than those for which they were designed, and few of which are up to digital standards, with the majority representing copper-wire lines as opposed to higher capacity and quality fiber optics lines.

The most obvious of these is the attraction of markets of scale. The majority of the operators either provide all services in an area to a small client base, or are responsible for only one aspect of telephone service in a larger market. Operationally, the vast majority of the companies are run inefficiently, depending on subsidy arrangements to survive. Nikolai Pevtsov, the CEO at SP MMT has suggested that the merger in St. Petersburg could save the companies an aggregate $70 million over the first five years just through streamlining, although he admits that this will ultimately entail the loss of some jobs.

A second consideration is that of investment attraction and equipment procurement. As mentioned, the majority of the small operators are far behind western standards with regard to ground lines and switching equipment. Especially in the case of the latter, replacement equipment must for the most part be bought from larger foreign producers and the local companies as presently constituted simply do not have the money or the market to enjoy any discounts on larger orders.

Another major problem from which the majority of the companies suffer is illiquidity. As larger entities they would be able to reduce this problem right out of the gates, becoming more attractive targets for outside investment.

All of these prospective advantages served as spurs toward the merger process in the St. Petersburg market. But industry analysts say that mere structural changes will not suffice to attract significant investment. Almost everyone involved with the industry recognizes that at the heart of any successful restructuring must come significant changes in the companies' tariff policies.

According to Yevgeny Golosnoy, a telecoms analyst at Troika Dialog brokerage, presently, weighted tariff rates, combining fees charged corporate and private subscribers, are set at a level about 25 to 30 percent below real service costs. With such a negative profit margin it is not hard to understand the reticence of some investors to become involved.

Political decisions have already been taken to begin to alleviate this situation. Part of the reason rates are so low in the first place is that, until last year, providers were required by law to have all rate increases cleared through local governments before they could be put in place. Governors in Russia's regions were loath to go along in many cases, as rate hikes were politically unpopular.

The governors' powers over local rate policies were rescinded in early 1999 and now the ratification of rate hikes is the responsibility of the Federal Antimonopoly Ministry.

Industry analysts suggest that tariff reform will most likely come in three stages. The first will likely be a rebalancing of the relative rates so that residential charges are more in line with those of businesses. In most areas right now, businesses pay three times or more the rate for basic services charged to residential subscribers.

The second stage will likely involve bringing tariffs charged in line with the actual costs of service.

This process has already begun, with Svyazinvest having applied twice in the last four months for hikes in the tariffs charged by its subsidiaries.

The third step will involve the development of metering systems to set charges for local calls, as opposed to the present case where local service is provided for a relatively small rate. In what came to be known as "Babushka Tariffs," local providers attempted to initiate such charges for local calling, both to increase revenues and to take some of the pressure off of their systems created by those who spent much of their days simply talking on the phone. But public reaction to the proposals was sharp, especially from senior citizens, who are a large part of the electorate in Russia, and the proposals were dropped.

But it appears that the plan is back. Originally, PTS had set December of this year as the date for the introduction of metered services, but that proved to be overly optimistic. At present, the company is aiming at the third quarter of 2001 to begin charging.

This date also seems highly questionable, as estimates of the cost of installing the necessary metering equipment have run as high as $25 million, and the scale of the operation in a city with a population of over 4.5 million would be enormous.

St. Petersburg is an excellent example of the industry's problems, with a large number of the telephone switching stations dangerously obsolete, having been built in the 1950s and having received little in the way of upgrades since then.

The city's telephone market may have been envisaged as the ideal test case for a restructuring scenario because it is a large market with a number of operators, it is located in Russia's Northwest region, providing the opportunity for it to become a true regional center and, perhaps most importantly, as a result of familiarity, as Putin, Reiman and Yashin are all originally from the city.

The St. Petersburg merger, involving the St. Petersburg Telephone Network (known by its Russian acronym, PTS), where Yashin was formerly the CEO and Reiman his deputy, St. Petersburg National and International Telephone (SP MMT) and St. Petersburg Telegraph (SPT), ran into some legal snags earlier this year.

The merger was initially approved by shareholders votes from all three companies held at the end of April and the beginning of May. Everything seemed to be on track until a single private shareholder in SP MMT named Sergei Moiseyev, a pensioner, filed a suit with the Kuibeshev regional court in St. Petersburg, saying that the share-swapping agreements voted in at the three shareholders meetings would illegally dilute the value of his stock and calling for the merger process to be put on hold pending an investigation. The court granted Moiseyev's request and ordered all progress toward the merger to be halted until a second hearing, scheduled for Oct. 12.

Both SP MMT and Svyazinvest filed counter suits to have the injunction lifted, saying that Moiseyev's actions were hurting the majority of investors at the three companies who had already voted in favor of the deal.

On July 27, the court ordered that the merger of the companies should be allowed to proceed

TITLE: Talks Begin at Korean Summit
AUTHOR: By Nam In-soo
PUBLISHER: Reuters
TEXT: CHEJU, South Korea - Defense ministers from North and South Korea agreed on Monday to work toward building links and easing military tension on the divided peninsula.


The talks between South Korea's Defense Minister Cho Seong-tae and the North's Kim Il-chol, were the first between defense chiefs of the two Koreas in half a century.

Their two-day meeting on the South Korean island of Cheju followed a summit in Pyongyang in June between South Korean President Kim Dae-jung and the North's leader, Kim Jong-il.

The two defense ministers agreed to promote relations in the spirit of the June landmark summit, officials said.

"The two sides shared the view in principle they will try to militarily ensure the actual implementation of the historic June declaration," Seoul's defense ministry spokesman, Yoon Il-young, told reporters after the talks.

"Besides the military cooperation in relinking a railway and road across the border, the two sides agreed to continue to discuss other confidence-building measures," he said.

The spokesman said any agreements would be announced in a joint communique at the end of the talks on Tuesday.

Despite the rapidly warming ties between the two old enemies, little progress has so far been made in reducing military tension between them.

The talks come as North Korea looks ahead toward another tough winter with more severe food shortages looming.

South Korea's President Kim said on Sunday North Korea, hard hit by recent droughts and typhoons, could face even worse food shortages next year and urged Japan to send more food aid.

North Korean officials said last week they wanted to limit discussion to military cooperation in the construction of rail and road links across the Demilitarized Zone (DMZ) separating the two Koreas.

The road and rail project is one of several initiatives that followed June's summit and is the most concrete sign yet of a thaw in relations between the two Koreas, who remain technically at war under a 1953 armed truce.

South Korea has budgeted 500 billion won ($440 million) for the project and President Kim last week inaugurated work on the southern side. Pyongyang has not said when it will begin work on its side. The two Koreas have no transport links.

Yoon said the South's Cho proposed establishing a committee to deal with military cooperation for the road and rail project, scheduled to be completed next September, including cooperation on the removal of land mines.

An estimated 1 million land mines are planted in the four-kilometer-wide DMZ.

Other issues the southern side proposed at the talks included setting up a military hotline, notification of large troop movements and observation of major military exercises.

A senior South Korean foreign ministry official said the South also proposed holding a second defense ministers' meeting in Pyongyang in November. Yoon said a decision on regular talks had not been reached.

Speaking to Defense Secretary William Cohen and top military officials at an annual security meeting last week, Cho said the Cheju talks were highly significant.

He said despite the June summit there had been little progress in easing military tension and the North remained a threat.

"Despite the changes, there has been little real progress in dismantling military tensions between the two Koreas, as North Korea's military threat remains the same," Cho said.

Cohen said last week in Tokyo that North Korea has strengthened its military readiness in the past year and must reverse that trend if it hopes to win more economic support from South Korea, Japan and the United States.

"Its forces today are more prepared than they were a year ago ... They are doing more training today than they did last year. They have more forward-deployed artillery pieces than ever before," Cohen said.

South Korean President Kim said he wants the United States to keep its 37,000 troops in the South despite signs of improving North-South ties.

TITLE: Muslim Rebels Killed in Philippine Military Attack
AUTHOR: By Ruben Alabastro
PUBLISHER: Reuters
TEXT: JOLO, Philippines - More than 100 Muslim rebels have been killed in a Philippine military assault on guerrillas holding hostages on a remote southern island, the officer commanding the operation said on Monday.


But 10 days after launching the attack, troops were still looking for the 17 hostages and there was no sign that the military action would end soon.

Brig. Gen. Narciso Abaya told reporters that the operations on Jolo island, 960 kilometers south of Manila, were difficult and being hampered by bad weather, rough terrain and local support for the Abu Sayyaf rebels.

"They never engage us," Abaya said. "It's like a boxing match where your opponent keeps running. No knockdowns."

Jolo's chief medical officer said she had heard of scores of civilian casualties in the bombardment of rebel bases but was unable to go to the battle zone due to a military blockade.

A team of journalists was brought by the military to Jolo by naval gunboat from the nearby city of Zamboanga, the first time reporters have been able to visit the island since President Joseph Estrada ordered the assault on Sept. 16.

The hostage crisis has proved a huge embarrassment for Estrada. Months of negotiations with the rebels led to many hostages being released in exchange for millions of dollars in ransom payouts but also to further kidnappings to replace the victims freed.

Analysts have said the decision to attack was popular across most of the Roman Catholic nation, but added that protracted fighting and the possibility of high civilian casualties could quickly erode any support that Estrada has built up.

There was little sign of fighting on Monday and the main town on the island was functioning as usual, with all shops and schools open and mini-buses packed with people.

There was tension in the hills above the town, however, where the rebels are said to be constantly on the move to avoid confronting the military. But details of the fighting were hard to come by.

"The effect of the assault on civilians and the Abu Sayyaf has been a disaster," said Nelsa Amin, the chief medical officer on Jolo. She said she had heard of scores of civilian casualties in the relentless bombardment of rebel bases.

Abaya refused to comment on civilian casualties.

In Indanan, a village near the scene of fighting, only about 50 students were attending a school where there are usually about 300.

Abaya said at least 104 Abu Sayyaf rebels and one soldier had died since the military launched the assault. More than 50 bodies of rebels had been found and the rest of the toll was based on intelligence reports, he said.

But he had heard of at least 4,500 rebels on the island at the time of the assault, although local officials have said many could desert.

"The areas they are going to are getting smaller and smaller, they are also getting tired. We are pressing on," Abaya said.

"This is a difficult operation. They have the mastery of the terrain and mass support."

The 17 hostages are 13 Filipinos, three Malaysians and an American.

Two Frenchmen, who had also been held hostage, escaped from the rebels last week after the military launched their assault.

The government has said troops have encircled one group of rebels who were holding Jeffrey Schilling, the American, and were close to rescuing him.

But Abaya refused to comment. "Looking for Schilling is like looking for the proverbial needle in the haystack," he said.

"Hopefully, we will get all the hostages," he added.

TITLE: Defeated Milosevic May Still Claim Victory
AUTHOR: By Katarina Kratovac
PUBLISHER: The Associated Press
TEXT: BELGRADE, Yugoslavia - Claiming victory in an election marked by fraud allegations, Slobodan Milosevic's opponents warned that the Yugoslav president may try to rig the vote in a desperate attempt to keep the power he has wielded for 13 years.


"This is the dawn of our freedom," law professor and opposition candidate Vojislav Kostunica said early Monday as Yugoslavians poured onto the streets of Belgrade and other cities. "Milosevic is no longer the undisputed, authoritarian leader, and that is most important at this moment."

No official results had been released from Sunday's election, when an estimated 74 percent of the country's 7.6 million voters cast ballots for president, parliament and local officials.

However, the Democratic Opposition of Serbia party claimed its candidate, 56-year-old Kostunica, had won the presidency, saying its poll watchers reported he had an absolute majority, defeating Milosevic and three other contenders.

"According to our count, the first-round victory is certain," Kostunica said.

If no candidate ends up with an absolute majority, a runoff will be held Oct. 8.

However, Milosevic was showing no signs of conceding defeat, and Western governments held late night consultations to determine how to respond.

Early in the vote-counting, White House spokeswoman Nanda Chitre said questions about irregularities brought into question "the integrity of the whole process." Hours later, as reports came out that the opposition - which the United States backs - was in the lead, State Department spokesman Richard Boucher in Washington took a softer tone, warning simply that "the world is watching."

Believing that there can be no stability in the Balkans as long as Milosevic remains in power, the United States invested millions of dollars in an attempt to organize the traditionally fractured Serbian opposition and defeat the Yugoslav leader.

Milosevic spokesman Nikola Sainovic, however, claimed that with 20 percent of the votes counted, Milosevic was leading with 44 percent while Kostunica had 41 percent.

Kostunica's group, an alliance of 18 parties, claimed returns from 45 percent of 10,000 polling stations showed him leading with 57 percent to 33 percent for Milosevic.

The ultranationalist Serbian Radical Party, which ran its own unsuccessful presidential candidate, said Kostunica was leading Milosevic by 53.5 percent to 37.9 percent with 20 percent of the votes counted.

Confident of victory by an opposition that seemed hopelessly fragmented only months ago, huge crowds streamed into the streets of downtown Belgrade late Sunday to await official results. Helmeted riot police carrying shields and armed with tear gas launchers cordoned off the group but later withdrew as the mood became more festive than confrontational.

Similar gatherings were reported in Nis, Novi Sad, Cacak and several other towns in Yugoslavia's main republic, Serbia. There were no immediate reports of clashes, and the crowds dispersed early Monday.

Despite the public euphoria, opposition leaders said they were concerned that Milosevic would try to claim victory - or ensure a place in the runoff.

"Milosevic has to seriously understand the judgment of history, and he shouldn't gamble any longer," said Kostunica's campaign manager, Zoran Djindjic.

Montenegro, the smaller republic that along with Serbia forms present-day Yugoslavia, said it would hold an independence referendum if Milosevic wins. If he loses, the European Union has promised Yugoslavia massive aid.

Kostunica had been leading in opinion polls - despite a campaign marred by a crackdown against opposition supporters.

The Center for Free Elections and Democracy, a private group including human rights workers, lawyers and other volunteers, reported a turnout of 74.6 percent in Serbia.

In Montenegro - where the pro-Western government boycotted the vote - the turnout was 24 percent, the opposition said.

The center also reported major voting irregularities, including officials kicking opposition representatives out of polling stations or not allowing them to inspect voters' lists, voting boxes and ballots.

Police were in front of many polling stations, and there was public - instead of secret - voting in southern regions of Serbia, according to the center.

In the eastern town of Negotin, opposition representatives were banned from a polling station but managed to get in by force, only to find that the ballot boxes had been stuffed in advance with ballots for Milosevic, the Belgrade-based group said.

The government's electoral commission said the vote passed without irregularities, "despite Western propaganda."

Sainovic claimed Milosevic won "overwhelmingly" in Kosovo. However, the chief UN administrator in the province, Bernard Kouchner, said the "so-called elections did not meet any international and European standards in terms of democracy."

Most of the examples cited by the monitoring group could not be confirmed. However, in Kosovo, Western reporters saw cases where polling stations were never opened, where prominent opposition members were told their names were not on registration rolls or where voters had no privacy to mark their ballots.

TITLE: Russia's Young Managers Given No Easy Ride
TEXT: When people aspiring to middle- and top-level posts in both Russian companies and multinationals cast around for the qualifications to give them an edge in the employment market, all eyes are increasingly turning to the growing number of business education programs. But can a spell in school really take the place of a life of hard knocks in the real working world? Barnaby Thompson investigates.

THOSE who have graduated from one business program or another in St. Petersburg are, as a rule, highly enthusiastic about what they learned. Whether going on to start their own companies, or snapping up a highly paid job in a well-established multinational such as Coca-Cola, all recommend the skills and knowledge picked up in the classroom.

First and foremost in this type of education is the Master of Business Administration, or MBA, a post-graduate program, which took a knock after the August 1998 crisis but which is now gaining in popularity. Other courses - like the Graduate Management Assessment Test, or GMAT - or short-term programs on specific aspects of business are generally viewed as preparation for the MBA.

What Is It?

Most MBAs available in St. Petersburg are courses in general management, covering a wide range of subjects like accounting, budgeting, human resources management, marketing, finance, project management and so on.

The list of topics one could eventually cover is fairly bewildering, but an MBA is usually structured as a foundation course, followed by more detailed papers. For example, a general study of marketing will branch out into strategic marketing, consumer behavior and research; while economics narrows down into anything from a course on international markets to one on production and planning. MBAs generally round off with electives, the choice of which depends on what a student is most interested in.

Most business schools offering MBAs in St. Petersburg offer part-time courses lasting around 18 months. Two exceptions are the Leti-Lovanium International School of Management, which is a strictly full-time program lasting one year, and a course offered by the International Management Institute of St. Petersburg (IMISP), which has - apart from its 19.5-month part-time MBA course - a 22-month modular course. Lessons for part-time courses are typically evening affairs, with the addition of a full weekend day.

A relatively recent addition to the MBA education scene is the Open University's Business School, which allows one to do an MBA via the Internet, but which requires a minimum of three years for completion (see article, page 16).

According to studies carried out by the Web site www.MBAinfo.com - a site specializing in advice and information on business programs - most prospective students are looking for full-time, one-year courses in general management based in their own country. For the simple practical reason that you are required to give up your job in order to do this, however, many people opt for part-time study.

Entrance procedures and requirements vary. Some, but by no means all, schools in St. Petersburg ask for a GMAT. However, nearly everyone admitted to an MBA program will have two or more years of "relevant" - ie. management or similar - experience. The Open University Business School's introduction to its MBA program states, for example, that a student will need "... a knowledge base acquired from previous middle- or senior-management experience ..." and that he or she "... will draw heavily on management experience and [their] current working environment."

Finally, business schools in different countries tend to tailor their MBA courses to suit their own particular environments, and almost all MBA courses in St. Petersburg, while borrowing heavily from American and British models, adjust them to create a course they describe as their own.

St. Petersburg State University's School of Management, for example, modelled its MBA on that used at California University - considered one of the top business schools around - but also drew heavily on what its public relations manager, Natalya Stolyarova, called "Russian and European business experience."

However, Yekaterina Gorokhova, St. Petersburg branch manager for the recruitment agency Kelly Services, said that, "Our Russian clients prefer people to have Western MBAs - not because the level of education is necessarily different, but because of the image of a Western MBA."

But directors of business schools in St. Petersburg reject absolutely the notion that their courses are inferior to Western versions. In fact, they say, MBAs that have been modified to suit local business realities are now being exported back to the institutions they initially borrowed from.

And then one has to factor in the cost. While doing an MBA in Russia is unlikely to set you back more than $9,000 - and many are cheaper - getting onto a course at one of the top 10 business schools in the United States comes with an astronomical price: upward of $160,000 for an MBA degree, far beyond the reach of most young people in Russia.

Even with grants and loan programs, only a few students every year can realistically expect to go abroad for their MBA or other business course.

Pros And Cons

There are roughly two, fairly polarized, schools of thought at work when large companies are looking for a management recruit, and opinion basically boils down to whether or not you believe that managers are born, or whether they can be made. 

The MBA degree itself originated in the United States - and then made the journey to Europe - in the 1960s and 1970s. It made an impact in Russia, however, only with the fall of the Soviet Union - replacing the Soviet source of management training, the Komsomol and its Higher Party School. 

According to Alexander Yan chev sky, director of the Leti-Lovanium school, the idea of the MBA was slow to catch on in two of the post-war, economic power-house countries, Germany and Japan.

"The MBA was criticized in those countries because companies thought that MBA holders were just looking at their own career ladders, which went against the concept of company loyalty," Yan chev sky said.

"German and Japanese companies generally preferred to hire somebody with a specialized education, take them on at the bottom as a low-level manager and let them learn business that way. These are [business cultures] that expect an employee to spend their entire working lives with the same company.

"The way we see an MBA, however, is that it's a necessary [tool] for a manager to have, but on its own it is not sufficient."

"A manager must also be a personality. An MBA proves you are capable of fulfilling certain tasks ... but we teach that he must be able to judge his market value correctly and know its limits," he said.

By way of contrast, Natalya Kudryatseva, executive director of the St. Petersburg International Business Association (SPIBA), placed a much greater emphasis on the importance of learning the lessons of other jobs - and applying them with common sense to management situations. 

"Good experience and competence is better than a good education," Kud ryat seva said. "I would say that a manager's personality is more important than what he has studied."

Kudryatseva's career path took her from being a physics graduate from the Leningrad Polytechnical Institute to her current position via work as a translator, paralegal, chief accountant and mathematics teacher.

"At my institute, we were dealing with a very broad subject, and we were taught that we had to be flexible and creative with what we learned," Kudryatseva said.

"Even as a teacher, the lessons were very useful. I learned management skills, particularly the importance of strategy."

Rules Of Engagement

But in addition to this range of professions, Kudryatseva also went on a "Western-style" business course at the Manchester Business School in Great Britain in 1992.

She remembers, however, that on returning to St. Petersburg, her bosses at the State Institute of Applied Chemistry - which at the time was trying to cope with cuts in funding - listened carefully, before saying thanks - but no thanks.


It's a problem that the bright young things who go breezing into companies with suggestions based on what they learned at business school frequently encounter, for shifting established ways of thinking is no easy task.

Andrei Udalov, commercial director for the Khlebny Dom bakery, did a two-month course in strategic management with the International Management Institute of St. Petersburg. "You are always going to have conflicts [of management styles]," he said, "if you're not one of the top-level managers. It's a gradual process - I can only make recommendations. But the course I did taught me many useful and important things."

There are other obvious problems for MBA holders, including the simple fact that the kind of positions they tend to look for - higher-paid jobs in multinationals - are limited (see article, page 15).

Furthermore, one industry expert said privately that too many MBA graduates thought that a job that paid $5,000-plus as its monthly salary was theirs by right.

Natalya Stolyarova, public relations manager of St. Petersburg University's School of Management, said, however, she believed that the MBA-qualified employee was becoming more popular in Russian companies.

Apart from anything else, she said, the university's management program had recently received long sought-after approval from the government as a recognized course complete with state diploma - a sign of the MBA's acceptance and rise in the domestic business environment.

Nonetheless, the MBA graduate working in a particular area - now most commonly a management role in the telecommunications and banking sectors - can find that management skills are not much use without a specialized understanding of that field.

Hence, analysts say, employers still look for graduates who are specialists in certain technical subjects.

"No one says that an MBA is a must," said Kelly Services' Gorok ho va, "just that it's a plus."

"Some of the big multinationals are looking for young stars to place in junior positions so that they can rise through the ranks. Others consider that if someone has been working for a few years in a company, then they are already taught.

"I would recommend doing an MBA if you're young and looking for a start. If you're inside [a company], however, then you probably already have acquired the knowledge you need."