SOURCE: The St. Petersburg Times
DATE: Issue #618 (0), Tuesday, November 7, 2000
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TITLE: Radiation Leaks Into 2 Rivers
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - Dangerous levels of radioactivity - exceeding the amount produced by 10,000 nuclear reactors - have been detected in two rivers near a western Siberian nuclear complex, a U.S.-based nuclear watchdog said in a report issued Thursday.


The Government Accountability Project said that more than enough radioactivity to meet the world's electrical power demand had been found in the Tom and Romashka rivers flowing from the Siberian Chemical Complex, Russia's largest nuclear site.

"This pollution is probably the largest ongoing discharge of radioactivity in the world," Norm Buske, the head author of the report, said Thursday by telephone from Washington.

Buske said it was shocking that the Russian government has never announced the contamination and is not taking any precautions to protect civilians or clean it up. "It's a huge secret out of control," he said.

Buske, a physicist and oceanographer with the Government Accountability Project, traveled to the Tomsk region some 3,000 kilometers east of Moscow in August and conducted tests in the Tom and Romashka rivers.

Both rivers run near the 40-year-old nuclear complex, which once developed top secret Soviet weapons. The complex includes two working reactors, a uranium-enrichment plant that was closed in 1990, and a reprocessing facility. It also contains the world's biggest underground storage site for nuclear waste, into which highly radioactive waste from the reprocessing facility is still being pumped.

Alexander Adam, head of the ecological committee in the Tomsk regional administration, said the findings in the report are false and "elicit surprise."

Buske's expedition, which was carried out with a group of Russian environmentalists, aimed to assess the area around Tomsk, where an accident at the complex's reprocessing plant occurred in 1993 and contaminated three nearby villages.

Analyses found strontium 90 in plant life along the Romashka River at 10,000 picocuries per liter, the report said. Levels above 8 per liter are outlawed in U.S. drinking water. Dangerous levels of phosphorous 32 were also found, it said. Buske said fish purchased in a Tomsk market had radiation levels 20 times higher than normal. The levels of radioactivity are too high to originate at a nuclear power plant or in normal reprocessing, the report said, adding that there might be a secret nuclear military reactor or an immense nuclear accelerator at the complex. Some of the radiation was discharged as recently as two weeks before the tests were conducted, suggesting that radioactivity is continuing to be discharged from some source in Tomsk, Buske said. Siberian Chemical Complex officials could not be reached for comment Thursday. 

Nuclear Power Ministry spokes man Yury Bespalko called the report false, saying as far as he knew the complex does not dump any nuclear waste into the rivers. 

Thomas Nilsen of the Norwegian Bellona environmental group said that the fact that Phosphorus 32 was found in samples of aquatic vegetation that grew in at the point where the Romashka River enters the Tom indicated that the pollution came straight from an operating reactor. 

Maintenance of Russia's aging nuclear plants and the adequate disposal of nuclear waste has been a matter of concern with activists for some time. 

In spite of this, Nuclear Power Minister Yevgeny Adamov is fiercely lobbying for legislation that would allow Russia to import nuclear waste for reprocessing and long-term storage, activities that would bring extra hard currency into the government's coffers. State Duma hearings over the proposed bill, which ministry spokesman Bespalko said has been approved by the Cabinet, are scheduled for Nov. 22. 

U.S. Vice President Al Gore signed an agreement in 1994 with then-Prime Minister Viktor Chernomyrdin to close down the old reactors in Tomsk. But the reactors are still running because no alternative power source for the 500,000 residents of Tomsk is available.

TITLE: Exhibition Reveals Fabric of Soviet Society
AUTHOR: By Barnaby Thompson
PUBLISHER: Staff Writer
TEXT: It used to be the case that the Great October Socialist Revolution was the cue for the unfurling of a mass of red banners and flags. But on the eve of what is now the Day of Harmony and Reconciliation, St. Petersburg was treated to an exhibition of fabrics of another kind: Soviet underwear.


The opening of "Memory of the Body: Underwear of the Soviet era" was the main attraction for city residents enjoying a day off at the St. Peter and Paul Fortress on Monday, as they caught a glimpse of the past "from below," as the organizers put it.

The brainchild of the Goethe Institute and the Pro Arte Foundation in St. Petersburg, this excellent exhibit details the types and styles of undergarments that were worn in the Soviet Union from its very beginning to its ultimate collapse in 1991. "[We do not want] to air the dirty laundry of the U.S.S.R.," say the words on an introductory wallboard, "but [to look] at the intimate, human side of its day-to-day existence."

Divided into three parts, the exhibit shows how the most intimate clothes in the Soviet drawer changed throughout the century, passing from the military mindset of War Communism to the sporting ideal of the 1930s, the poverty of World War II, the thirst for inner privacy of the '60s and the depressed economy of the late Soviet era.

"I think that people who come here start telling their own stories," said Yelena Kolovskaya, chairwoman of the Pro Arte Foundation, after the opening ceremony on Monday. "I myself was a serious swimmer [during the Communist era], and went to sports camps at which we were allowed to wear our underwear only, and nothing else!"

And strange though it may seem, the exhibit is highly ... well, revealing: When you've seen what people wear right up close to the flesh, you find out quite a bit about them.

The collection of underwear was culled from various museums and two private collections, including that of Yulia Demidenko, who was at the exhibit on Monday. "Some of the items I just had by chance, from [members of my family]," Demidenko said. "There wasn't much in the museums, and in any case, things you find in museums often come straight from the factory - they are in an ideal [condition], but they're not real things."

Those who supplied clothes also supplied personal underwear stories, written up on the walls of the exhibition. Some of these are hilarious, but also give remarkable insights into Soviet life.

One contributor (all are anonymous) recalled her great surprise at seeing her grandmother doing the housework in her father's underwear - and his total horror upon discovering the same thing. This, however, apparently reflected the straightforwardly unisex attitude to life and work the old lady had adopted as a result of the hardships and privations of the early days of Communism. The emancipated and bra-burning females of the West in the 1960s had no counterparts in the Soviet Union, simply because the bra had ceased to become a major symbol of womanhood.

As well as items of men's and women's underwear, pajamas and corsets - many of which must have been excruciatingly uncomfortable - the exhibit displays the recent work of a number of Moscow-based photographers, who have come up with portraits that veer from being contemporary and artistic to the kind of pictures that used to titillate the Victorians. There are also posters advocating the healthy life in the Socialist Realist style, sketches, videos - such as "How I Spent My Summer," directed by Dmitry Gutov, who clearly spent much of it pointing a camera up ladies' skirts - and even a film lecture room.



"Memory of the Body: Undergarments of the Soviet Era" is on until Jan. 31, 2001, at the Museum of the History of St. Petersburg located inside the St. Peter and Paul Fortress. Admission costs 10 rubles, and the exhibit is open from 11 a.m. to 5:30 p.m.

TITLE: Customs Rescinds Tax on Export of Cultural Items
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: The State Customs Committee, faced with a threat by officers at St. Petersburg's airport to confiscate mundane souvenirs to protest a lack of clarity in confiscation and tax laws, has backed down on a controversial 100 percent tax on art works. 


"We are very happy we didn't have to carry out our threat [to demonstratively confiscate artwork and souvenirs], and that this problem has finally been resolved," said Pulkovo customs spokeswoman Oksana Kudryavtseva. "Now all you need to take a piece of art out of Russia is to get permission from your regional Board for the Preservation of Cultural Valuables." 

Customs has for seven years been assessing a 100 percent tax on "cultural valuables." But the definition of "cultural valuable" has long been vague - as has the legality of the tax itself, or the financial or cultural value of any item lacking a store receipt. 

To draw attention to this fogginess, Kudryavtseva and her colleagues had threatened to confiscated any valuable-looking item from travelers leaving Russia in order to force the State Customs Committee to clarify the letter of the law. 

Last week's move by St. Petersburg customs to do something about the cumbersome system worked, and on Friday the 100 percent tax - or any tax at all - was rescinded nationally. 

"My attitude is more than simple: if the tax legally exists you have to pay it, whether you like it or not," said Andrei Leshchinsky, head of the St. Petersburg's Board for the Preservation of Cultural Valuables. 

"But if it doesn't exist, then don't bother, even if you're dying to do it. Now, I am happy to see [customs] win on common sense. It only took seven years, after all." 

If a customs officer believes an item to be a "cultural valuable," he can stop it and send it to the board for evaluation. 

Travelers can also plan ahead and arrive at points of departure prepared with documentation from a region's board. They should also know that inspection by the board can take from several hours to five working days. The cost for inspection is 80 to 360 rubles, depending on how quickly it must be completed. 

Anything deemed by the board to be over 100 years old, however, automatically remains in Russia, in line with the country's legislation. 

The tug of war between regional customs officials and their Moscow bosses began with the penning of the law "On the Import and Export of Cultural Valuables in the Russian Federation" in 1993. It stipulated that people leaving the country with works of art should pay a tax but didn't specify how much. 

Later in 1993, the State Customs Committee issued a letter saying that the tax should be 100 percent of the value of the art, as estimated by the applicable regional Board for the Preservation of Cultural Valuables. This meant travelers were essentially paying twice for the same item. 

The legal catch, however, was that the tax was never recorded in the books: Neither the Tax Code nor the Customs Code made any mention of such a tax. As such, the tax became nothing more than an instruction from a ministry - and according to Valery Sokolov of the St. Petersburg Aviation and Transport Prosecutor's Office, an instruction from a ministry doesn't serve as a legal basis to levy a tax. 

On July 3 of this year, the St. Petersburg Board for the Preservation of Cultural Valuables refused to evaluate works of art submitted by people leaving the country and declared the tax was illegal. In order to save tourists and exporters the tax, the St. Petersburg Board would issue permission to export the works in question- but without estimating the value. 

Pulkovo customs responded by stopping all potentially valuable art - even art that the St. Petersburg Board certified as permitted to leave, resulting in a pile up of largely cultural junk at the board. 

No one in Moscow paid any attention until the threatened Pulkovo protest slapped the State Customs Committee in the face. 

The news about the death of the tax was a relief for the artistic community. Sergei Basov, director of the Open Society Institute in St. Petersburg, said the tax was damaging. 

"Nearing the St. Petersburg 300th anniversary we should take steps to encourage foreign investment in the cultural sector rather than to create obstacles," Basov said.

But even now, Anatoly Vilkov, head of the national Board of Preservation of Cultural Valuables in Moscow, said the law still needs sharpening. 

"There should be different procedures for exporting household items and real pieces of art, he said. 

"The term 'cultural valuable' needs to be clarified."

TITLE: Liberal Coalition Gives Linkov the Boot
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: Ruslan Linkov of the Yabloko-Union of Right Forces coalition was forced out of the party over his decision last month to continue his own Duma campaign not to support the party's choice of Anatoly Golov. 


Linkov said he disagreed with Union of Right Forces, or SPS, members long before the district Duma elections, because of the party's centralized policies and because it was doing a poor job fulfilling its promise to fight for military reform. 

"Moscow makes all the decisions and doesn't hear what regional representatives want to say," Linkov said in a telephone interview on Monday.

The elections - held in the late Duma Deputy Galina Starovoitova's district - were declared null because voter turnout was too low. Her Duma seat remains open after she was murdered two years ago in her doorway. Linkov, who was with her at the time, sustained head injuries. 

SPS members who could be reached on Monday, a holiday, had little to comment. 

"I can't say anything specific about the situation. This is usual practice," SPS lawmaker Yury Gladkov said in a telephone interview on Monday.

However Olga Pokrovskaya, spokes woman for the Yabloko faction, disagreed with Linkov's comments. 

"SPS and Yabloko follow their promises all the time - as it is about to with army reform, for instance," Pokrovskaya said in a telephone interview Monday, adding that a budget surplus will allow the coalition to spend money pushing the project.

TITLE: Lawmakers Protect Budget Slush Fund
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: City Hall's draft budget for 2001 was shot down on its first reading by lawmakers on Wednesday, because many legislators were dissatisfied with its failure to include a "reserve fund" - a sort of free discretionary fund for each lawmaker to spend in his own district. 


In debate, however, lawmakers opposed to the budget excoriated it for its 1.2 billion ruble surplus. The current budget lists an income line of 41.2 billion rubles and an expenditure line of 40.2 billion, Kommersant reported. 

According to the Viktor Yevtukhov of the Unity faction, lawmakers called the budget surplus "fake" and said it would be used to cover debt from the past budget. Also, he said, opposition lawmakers had complained the budget was lacking in transparency. 

"How can the budget not be transparent enough when it is made up of 15 volumes," said Yevtukhov in a telephone interview Friday. 

City Hall was angry and accused the Legislative Assembly of dragging its feet.

"Lawmakers had the whole month to look through the budget, they could have voted for this much earlier," said Svetlana Ivanova, spokeswoman for Gov. Vladimir Yakovlev. 

Legally, the budget must pass before Jan. 1 or City Hall is allowed to spend money without consulting legislators. That's why Anatoly Kalinin of the Yabloko faction supported the budget, saying the assembly would "lose control" of the purse strings if they continued to bicker. 

Yakovlev told legislators that it was their "business to decide the reserve fund question," according to Kommersant. He then left the session.

Yevtukhov predicted that most lawmakers are holding out for the reserve fund to come through before they pass any budget. 

A memo by Sergei Nikeshin, head of the Legislative Assembly's budget committee, to his colleague Sergei Andreyev, obtained by The St. Petersburg Times, would seem to prove Yevtukhov right. 

"I was blamed for the reserve fund being absent in the budget and [that is why other lawmakers] are trying to force me to find finances to make it happen," Nikeshin wrote in the memo, dated Oct. 30. 

"Some lawmakers suggest finding 25 million rubles for each legislator," Nikeshin wrote in his letter Oct. 30, a few days before the voting took place.

"If I don't do this, lawmakers ultimately say they won't vote for the budget." 

Neither lawmaker was available for comment on the memo because of the holiday weekend. 

The reserve fund idea - which before the 1998 crisis gave each lawmaker about $1 million to spend on pet projects - was first included in a city budget, to much legal outcry, by ex-mayor Anatoly Sobchak as an enticement for lawmakers to vote in favor of changing the date of upcoming elections. 

The ploy worked, but Sobchak, who had hoped that an earlier date would assure his victory - lost to Yakovlevin 1996. Ironically, Yakovlev resorted to the reserve fund tactic earlier this year, winning a second term and a briefly satisfied assembly. 

But the fund has also become a source of suspicious dealings and many lawmakers have been caught spending their city cash on projects involving their close friends rather than their districts. 

According to Ivanova, many in the assembly broke from the debate about the surplus after Yakovlev left to form a pro-reserve fund committee.

TITLE: IN BRIEF
TEXT: Pope Trial Suspended


MOSCOW (Reuters) - A Moscow court has postponed indefinitely the trial of alleged U.S. spy Edmond Pope pending an examination of his deteriorating state of health, Pope's lawyer, Pavel Astakhov, said on Friday.

Interfax quoted Astakhov as saying a prison doctor had reported that Pope had lumbago on his left side and acute joint pain in the spinal area that is moving into his left leg.

He added that since Pope's incarceration he had been denied medication.

The lawyer said that Pope's wife, Cheri, had brought the necessary medication to Moscow for her husband, but had three times been denied the chance to give it to him. Astakhov said they were told it was because it was not registered in Russia.



Russia Runs Nuke Test


MOSCOW (AP) - Russia completed a series of subcritical test blasts of nuclear weapons on the Arctic Novaya Zemlya archipelago last week, the Nuclear Power Ministry announced on Friday. 

The tests were successful and radiation levels were normal in the testing area, said ministry spokesman Yuri Bespalko. 

Subcritical nuclear experiments - in which plutonium is blasted with explosives which are too weak to set off an atomic explosion - are not prohibited by the International Comprehensive Test Ban Treaty. Mos cow says that it will continue the subcritical tests because they are necessary to guarantee the safety of the country's nuclear arsenal.



Joint Ruble Plan


MOSCOW (Reuters) - Russia and Belarus will sign a deal Nov. 14 which will make the Russian ruble the currency of their planned union state as of Jan. 1, 2005, Russian Deputy Prime Minister Viktor Khristenko was quoted by a number of news agencies as saying Friday.

From 2008, the two states will have another unified currency, the name of which is yet to be specified, he said. The two countries will also work out the main principles of their budget and monetary policies on Nov. 14.


Soviet Graves Vandalized


BERLIN (Reuters) - German police said on Monday unknown vandals had desecrated graves of Soviet soldiers killed during World War Two at a cemetery in the northern town of Anklam.

Police said 10 gravestones had been toppled in the cemetery where Red Army soldiers are interred and plaques attached to another five gravestones had been broken off. There are cemeteries for Allied soldiers throughout Germany.

Far-right extremists are suspected in a number of similar attacks recently on memorials to the victims of fascism in the northern state of Mecklenburg-Vorpommern.



Japan Slams Investment

MOSCOW (AP) - Foreign investment in Russia is nearly impossible because of red tape, punitive taxes and lack of transparency in business deals, a Japanese Foreign Ministry official said in an unusually critical interview published Friday.

The interview in the daily Segodnya came as Japanese Foreign Minister Yohei Kono was visiting Moscow for talks with top Russian officials on trade and the territorial dispute over the Kuril Islands. 

"Russian-Japanese relations can be characterized by one word: stagnation," ministry spokesman Yasahuri Kawamura said.

TITLE: Torpedo Theory Resurfaces in Sub Sinking
AUTHOR: By Yevgenia Borisova
PUBLISHER: Staff Writer
TEXT: MOSCOW - Several newspaper reports this week have suggested that the Kursk submarine was accidentally sunk by a Russian navy warship called the Peter the Great.


But the navy emphatically denies the idea, and military analysts interviewed suggested that if it were true, more officers from the Peter the Great would have come forward.

The Peter the Great was the first ship to find the Kursk, and today it is still in the Barents Sea. The idea that it was quick to find the Kursk because it had sunk it was suggested two months ago in the German newspaper Berliner Zeitung, which cited a report it said had been prepared by the Federal Security Service for President Vladimir Putin.

That report, Berliner Zeitung said, indicated that a "Granit-type" cruise missile was launched from the Peter the Great and traveled 20 kilometers before hitting the Kursk.

The Berliner Zeitung hypothesis was problematic since Granit cruise missiles are only designed to hit surface ships.

But this week, two authoritative-sounding accounts in Russian publications alleged that a missile fired from the Peter the Great did indeed sink the Kursk - a torpedo called the Vodopad.

The weekly paper Zhizn on Monday offered its readers an interview with an unnamed officer from the Peter the Great conducted, it said, in the far north port city of Severomorsk.

Zhizn's editor, Vladimir Toporkov - himself a former submarine captain - said that his paper stood by that story.

Zhizn quoted the officer as saying that live Vodopad missiles were being launched in a training exercise. "The first two launches went fine," the officer was quoted as saying. "But after the third, a small mushroom reminiscent of a nuclear blast rose from under the water."

The officer then described agitation on board as crew members wondered what they had hit. Realization that they had hit the Kursk only came after the navy command reported it had lost contact with the submarine, he said.

The Zhizn report was followed by one in Novaya Gazeta, based on an interview with an unnamed source. Both the Zhizn and Novaya Gazeta reports said the crew of the Peter the Great, docking a few days later in Severomorsk, went on a crew-wide drinking binge.

Defense Minister Igor Sergeyev, speaking to reporters on a trip to Chechnya on Friday, declined to comment.

"I can only say that the [government] commission will finish its work and conclusions will be made, and they will be based only on facts and scientific research," he said.

But Igor Dygalo, a spokesman for the navy, dismissed the reports as "complete lies." And independent experts were skeptical.

"Look, I can't believe that such a situation could have been kept a secret. There are hundreds of officers there - how could you shut the mouths of all of them?" retired Vice Admiral Yegor Tomko asked rhetorically in a telephone interview from St. Petersburg.

"If it happened like those papers say, in a few hours it would have been known everywhere."

Douglas Barrie, the European editor of Defense News and an expert on Russian weaponry, was also not convinced.

"Theoretically it is possible. That is what Vodopad is designed to do," Barrie said in a telephone interview from London. "But is it the most likely explanation? Absolutely not!"

Yury Gladkevich, an analyst with the Military News Agency, agreed.

"The commanders must have known where each vessel was, and the decision to fire live missiles is taken by several top officers and several controlling experts," he said. "There is only a tiny chance that all could make the same mistake."

Meanwhile Russian authorities have been arguing among themselves as to whether or not a foreign submarine had breached the closed area surrounding the wreck of the Kursk. Last week navy chief, Vladimir Kuroyedov, said one had, but Vladimir Dobroskochenko, deputy commander of the Northern Fleet, on Sunday dismissed that assertion. 

And an unnamed navy staff officer told Interfax that Russian divers had found evidence leaving little doubt another submarine was in the area when the Kursk sank, but the navy had so far failed to identify what country it belonged to.

"Keeping in mind the gravity of the charges that will be brought against this state, the Russian side is carefully carrying out a whole range of measures to identify the submarine," the officer said.

TITLE: Yugoslav Leaders Probe Milosevic Gas Connections
AUTHOR: By Ana Uzelac
PUBLISHER: Staff Writer
TEXT: MOSCOW - Natural gas monopoly Gazprom resumed gas supplies to Yugoslavia last week, shortly after Serbian officials said they were planning to investigate a huge debt owed to Gazprom by a Yugoslavia-based company suspected of being one of the financial pillars of ousted leader Slobodan Milosevic's government.


Serbian officials say the debt owed by Progres Gas Trade is about $240 million. The company is a joint venture between Gazprom and Serbia's Progres, one of Yugoslavia's two largest trading companies, which is headed by ousted Serbian Prime Minister Mirko Marjanovic, a staunch Milosevic ally.

"There should be an investigation into this debt, to check whether it's just a debt for gas or maybe something more," Nebojsa Covic, deputy prime minister in Serbia's transitional government, said on state television Monday.

Covic has said repeatedly that many Yugoslavian companies could have been used for siphoning money out of the country to Milosevic's private offshore accounts.

New members of the Serbian government discovered, "to their surprise," that gas deliveries to Yugoslavia had been monopolized by PGT, Covic said.

Last year, the International Crisis Group, an non-governmental organization engaged in conflict prevention, identified Progres as one of two companies that formed the financial base of Milosevic's regime throughout the years of war and international isolation.

According to ICG, Progres head Marjanovic is an old acquaintance of Gazprom's former chairman, former Prime Minister Viktor Chernomyrdin, who was Moscow's peace envoy to the Balkans during NATO's bombing campaign against Yugoslavia last year.

Serbian news reports said PGT had no more than 10 employees and a yearly turnover of around $100 million. Its director, Toplica Nedeljkovic, was another prominent politician under Milosevic's regime.

PGT specialized in barter deals with Gazprom, exchanging wheat for Russian gas and oil. Three years ago, it paid for gas supplies by selling grain from Serbia's strategic reserves, resulting in a crisis in the agricultural sector.

But the investigation into PGT could prove difficult, as Marjanovic still controls its parent company Progres, whose workers have organized a crisis committee to force him to resign.

"Only a few people know the truth about PGT deals with Gazprom," crisis committee member Gordana Zarubica said in a telephone interview from Belgrade. "All information on these deals was kept in a separate computer that literally disappeared overnight from the [company's] headquarters a week after Milosevic fell."

PGT officials could not be reached by phone this week. A secretary at PGT's Belgrade headquarters said Friday that Nedeljkovic was "on his way to Belgrade from Moscow."

Gazprom officials did not respond to requests for information Friday.

The results of the investigation notwithstanding, the new Yugoslavian government has pledged to honor PGT's debts to Russia.

Russia resumed sending gas supplies Thursday, six days after newly elected Yugoslavian President Vojislav Kostunica reached an agreement with President Vladimir Putin in Moscow on financing the supplies through Russian loans guaranteed by the Yugoslavian government, Interfax reported.

In November and December, Gaz prom will ship 4.2 million cubic meters of gas daily.

Gazprom cut off supplies to Yugoslavia in June because of a debt dispute.

TITLE: Asylum Seeker Keeping Quiet
PUBLISHER: The St. Petersburg Times
TEXT: Contrary to expectations, the former Federal Security Service agent who fled to London this week saying he feared for his life will not release a statement or hold a news conference for at least a week, a London public relations agency said Friday.


Alexander Litvinenko will be busy filling out the documents to apply for asylum in Britain, said Dubby Leven of Clear, his representative.

Litvinenko and his family flew to Heathrow airport Wednesday, where he approached a policeman and asked for asylum, according to Alexander Goldfarb, Moscow representative of the Public Health Research Institute of New York, who accompanied him.

He told the policeman that he fears people at the FSB may try to kill him to prevent him from revealing information, including what he knows about the Moscow apartment bombings in 1999, which killed more than 200 people.

Litvinenko held a news conference in spring 1998 to accuse his FSB superiors of plotting to kill Boris Berezovsky. Since then three criminal cases have been brought against him and one is still pending. He was not supposed to leave Russia before the case came to trial.

Kommersant reported Friday that Litvinenko fled Russia to avoid appearing at a hearing in a regional military court in Yaroslavl in late November. The newspaper quoted the judge, Igor Piunov, as saying investigators had proved Litvinenko abused his power as an FSB officer, and he faced a prison term.

Litvinenko was fired from the FSB in 1999 and went to work for Berezovsky.

Litvinenko flew to London the same day prosecutors announced that they intend to file charges against Berezovsky accusing him of embezzling Aeroflot funds.

Some observers see the flight of a "Berezovsky man" as a new round in the ongoing fight between the Kremlin and the tycoon.

Troika Dialog brokerage said in a note Friday that Berezovsky is trying to exert pressure on the Kremlin from afar.

Berezovsky called Litvinenko's decision to flee "understandable" and went on to criticize Putin. In an interview with Izvestia newspaper published Friday, he said Putin once told him that he believes Russia should be a democracy but needs to be forcefully pushed into the role.

"He doesn't believe that people are ready to take responsibility for their lives. He thought that the president and other leaders should take care of the people, as before," Izvestia quoted Berezovsky as saying.

TITLE: Kasparov Vows To Win Back Crown
AUTHOR: By Robert Huntington
PUBLISHER: The Associated Press
TEXT: LONDON - Dethroned chess king Garry Kasparov declared Sunday he wants to retake his crown. 


Just hours before new world chess champion Vladimir Kramnik was to receive a trophy and a $1.3 million check for defeating Kasparov, the former champion said at a post-match news conference: "My goal is to make his reign as short as possible.''

The 25-year-old Kramnik clinched the title Thursday with a draw in game 15 of the 16-game match. Game 16 was canceled. 

Discussions are already underway for a rematch, said Sir Jeremy Hanley, chairman of Brain Games Network, which organized the match and has contracts with both players. 

Brain Games must approve any world championship matches between the two Russians until the contracts expire in 2004. Kramnik is so far obliged to play the world's strongest computer in October 2001 and a challenger to be chosen in a Brain Games competition the following October.

Kramnik's victory was a big upset. Kasparov, 37, failed to win a single game, the first time that has happened to a world champion in a title match since Jose Capablanca defeated Emmanuel Lasker in 1921. Kramnik won two games and there were 13 draws. 

Based on the two players' ratings going into the match, Kasparov had an 88 percent chance of winning, according to statistician Jeff Sonas.

American grandmaster Larry Evans called the outcome "an earthquake; it's shocking."

Kasparov attributed his loss to his poor pre-match preparation and a strategy by his opponent that exposed his weaknesses. "He robbed me of positions where I play best," he said. 

Kasparov also denied rumors that any non-chess problems were distracting him during the match. 

"I am healthy. I don't have any reasons to complain outside of chess," he said. 

Kramnik, speaking Saturday to a crowd of over 200 chess fans, similarly credited his victory to a familiarity with Kasparov's style. 

"I'm quite a universal player," he said. "I know him very well and I feel him very well. I know what kind of positions he likes and doesn't like. The match went in a completely different direction from what he expected. He didn't know what to do and he couldn't show his best chess."

TITLE: Local Organizations Targeting Drug Problems
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: From early November to Dec. 16, several anti-drug organizations in St. Petersburg are teaming up in a program called "Salvation Island" to combat the city's skyrocketing drug problem. 


The organizations have joined forces to raise awareness of their presence and to showcase what they do by hosting a series of consultative and cultural events, which will include an art contest. 

"Children can already buy drugs at schools or discos," said Svetlana Sevastyanova, psychologist from the anti-drug club TYUKHE, which is named in honor of one of the three Greek goddesses of fate and is one of the organizers of the event. 

"And very often those children are not only the neglected ones but also those who come from well-off and educated families. They mostly go for the myth and fashion. And we should break that legend."

If statistics are any indication, the legend has taken hold: In St. Petersburg alone, there are some 300,000 active drug addicts, medical authorities say, which indicates a tenfold increase over the last decade. 

Salvation Island's organizers think that previous drug prevention measures have failed. 

"Neither reprimanding nor intimidating lectures from grown-ups can help as much as sneers," said Fyodor Parshin of the youth initiative center TYUKHE, which runs several hotlines for teenagers who have trouble with - or questions about - drugs. 

Other organizations that will be participating include the Ministry of Culture, which runs a continual program called "Movies Against Drugs." 

TYUKHE's own work includes a summer nature retreat for young drug addicts. 

The Bonch-Bruyevich Telecommunications University of St. Petersburg has set aside three rooms in its facility for confidential drug counseling. 

The St. Petersburg Family and Children's Committee put together 20,000 questionnaires on drug use for students to consider. 

As for the art contest, it is being offered as a means of distracting young minds from drug use, said film director Marina Senj. Her organization, Art-Media, has put together a number of films that will be run on local television everyday during the program Salvation Island. 

The final event will be on Dec. 16, when the popular Club of Jolly Quick Wits television program will bring together several teams from across Russia to lampoon drugs.

TITLE: Russian Media Showing Scorn for U.S. Elections
AUTHOR: By Sarah Karush
PUBLISHER: Staff Writer
TEXT: MOSCOW - As Americans prepare to vote for their next president Tuesday, Russian newspapers are attempting to explain to their readers the nature of the U.S. elections. They conclude that in essence it's money, populism and an anachronistic electoral college.


According to a poll of 1,500 people in 29 regions conducted at the end of October by the Public Opinion Foundation, 80 percent of Russians were aware of the U.S. presidential elections. Only 40 percent could correctly name the major candidates.

The media, on the other hand, are fairly informed about the race and in the past week have offered some harsh criticism of the election process.

"The Race of the Money Bags," proclaimed Parlamentskaya Gazeta on Wednesday. "The candidates from the 'party of the donkey' and the 'party of the elephant' have spent millions of dollars in bids to become the boss of the White House."

Itar-Tass ventured to instruct readers on the ins and outs of the electoral college system. "It's difficult to call the upcoming U.S. presidential elections democratic in the usual sense of the word," the agency wrote Friday.

"Contrary to popular opinion, on the first Tuesday after the first Monday in November, Americans will not elect a president, but only a group of people, who will have to make the official choice a month later between Democrat Albert Gore and Republican George Bush Jr."

But Itar-Tass went on to note that the winner of the popular vote has not lost out in the electoral college vote since 1888.

Rossiiskaya Gazeta reported Thursday that the Gore camp planted a leak in the press that the Democratic candidate got C's in college and in one subject - biology - a D. The paper said this information made voters more sympathetic to Gore, who has a reputation for being an egghead.

"There aren't a whole lot of A-students at American schools and colleges. And most often all of them are nerds and don't like sports," the paper said. "The 'average' American will never vote for a university wunderkind.'"

According to the Public Opinion Foundation poll, most Russians do not have a preference in the U.S. elections. Thirteen percent of those polled said Gore's election would be better for Russia, and 9 percent chose Bush.

For the most part, the media have not favored one candidate over another in its coverage. But Ralph Nader, the Green party nominee, took a beating in the Kommersant Vlast magazine.

In its Oct. 31 issue, the magazine said Nader is the sole reason Gore is slightly behind in the polls because his voters would otherwise line up behind the vice president.

TITLE: Weekend Elections Run Smoothly in Regions
PUBLISHER: Reuters
TEXT: MOSCOW - Three Russian regional elections went off without a hitch on Sunday after a first-round vote in one of them sparked fierce controversy two weeks ago.


The runoff in the central Kursk region came after incumbent Alexander Rutskoi was struck off the ballot in the first round, a move he said was part of a Kremlin plot to oust him.

President Vladimir Putin has tightened his grip on the once unruly regions and analysts say the Kremlin has been working to make sure favorable governors get into office.

Russia's Interfax news agency quoted election officials as saying that Communist Party candidate Alexander Mikhailov was ahead in the Kursk runoff with 55 percent of the vote, according to preliminary results.

Rutskoi led a parliamentary revolt in 1993, which then-President Boris Yeltsin crushed by sending tanks against the rebels. He was loyal to the Kremlin after that but he fell out of favor again when Putin came to power last year.

Election officials also reported no violations in gubernatorial voting in Kaliningrad on the Baltic Sea and Magadan in the Far East.

The Kaliningrad vote is expected to go to a runoff. The Russian media says Putin opposes current governor, Leonid Gorbenko, and backs his rival, the head of the Baltic Fleet, Admiral Vladimir Yegorov. Ten other candidates are also running.

Russian news agencies said the Magadan vote, held several time zones to the east of Moscow, had returned Kremlin-backed incumbent Valentin Tsvetkov.

TITLE: American Stuck in Russia in Tax Feud
AUTHOR: By Anna Badkhen
PUBLISHER: Staff Writer
TEXT: MOSCOW - Al Decie has worked for a U.S.-based nonprofit group in Krasnoyarsk since 1996. But now he is camped out in a friend's apartment in Moscow unable either to live in Russia legally or leave the country because his visa was suddenly seized by the authorities.


The Massachusetts native, who turns 32 on Tuesday, was summoned to the visa and registration department, or OVIR, in Krasnoyarsk on July 3. In the presence of a tax official, his visa was taken away and he was told that he had to pay his taxes to get it back.

Part of the problem is that like hundreds of other Americans working in Russia, Decie thought he was enjoying a tax break under an agreement signed by the two countries in 1992.

Under the agreement, employees of nonprofit organizations that receive U.S. government funding are exempt from Russian taxes. But it was never ratified by the Russian parliament and therefore has no legal force.

Decie, however, said he suspects more than a tax dispute may be behind his troubles and pointed the finger at "a few people with power in Krasnoyarsk."

Decie, who works for Education Choices Heighten Opportunities (ECHO), came to Russia in 1996 and helped create a community center in Krasnoyarsk that has helped 70 schools in Siberia by promoting cooperation with local businesses and organizations.

In 1998, Alexander Gliskov, a Krasnoyarsk lawyer for the Moscow-based Glasnost Defense Foundation, whose contribution to ECHO's quarterly leaflet had been turned down by Decie, published an article about ECHO in a local newspaper questioning the organization's legal status and goals.

The article, Decie said, was picked up on by city council member Alexei Kleshko, who reportedly wanted to set up a community center of his own, and within months unfavorable articles about Decie's work began sprouting up in the Krasnoyarsk press. Decie said he holds Kleshko responsible for the articles.

Kleshko denied the allegations in a telephone conversation Friday.

Decie said he also must have raised the suspicions of the local branch of the Federal Security Service, or FSB.

"The FSB was everywhere, they talked to the Krasnoyarsk education department, directors of schools, the department for mass media licensing" about ECHO's newsletter, Decie said.

"Why the FSB was interested, I don't know. I work with schools," he said. "I guess, how do you explain an American who has a degree in political science, who has lived in the region [that is home to important nuclear and military facilities] for five years, who is working for a grass-roots group?"

FSB officials in Krasnoyarsk refused to comment Friday. Krasnoyarsk OVIR director Valentina Karlova said Friday that Decie will have his visa returned as soon as his conflict with the tax authorities is settled.

According to copies of documents in Decie's possession, the U.S. Embassy has appealed to the Tax Ministry to abide by the 1992 agreement and exempt Decie from all taxes. The embassy refused to comment on the case Friday.

Aika Dzhakobayeva, head of the Prime Standards consulting firm in Moscow, is helping Decie handle the conflict with the Tax Ministry. She said his is a test case for Russia and the ministry. "Formally, they have to tax him," Dzhakobayeva said in a telephone interview Friday. "But if they do tax him, hundreds of Decie cases will pop up across the country. Then America will pull out [its aid to Russia]: Why would they want to help if it boomerangs like this?"

"As far as I know, he [Decie] is the first person to get caught in this loophole," she said. "But if his is to be viewed as a test case, then all U.S. consultants who work in Russia on U.S. money - and there are hundreds and hundreds of them - will have to pay, too."

TITLE: Increased Profits Prompt BA To Sell Subsidiary
PUBLISHER: The Associated Press
TEXT: LONDON - British Airways PLC plans to sell Go, its profitable cut-price subsidiary launched two years ago, the company said Monday.


BA announced the sale as it reported 400 percent growth in its second-quarter pretax profit, an improvement that suggests Britain's unofficial flag carrier may finally be entering sunnier financial skies.

"It has made a profit every month this year. However, given the strategic goals we have set for the group as a whole, now is the time for British Airways to gain the benefits of its investment and realize the considerable value created in Go."

Go is based at Stansted airport, northeast of London, a major base for low-fare carriers operating in Britain. BA set up Go when smaller rivals began nibbling away at its market share by offering cheaper flights across much of Europe.

One such competitor, easyJet, has long accused BA of unfairly subsidizing Go. BA has denied the accusation but until now has not said whether Go was making money.

British Airways reported a pretax profit of Pound200 million ($290 million) in the second quarter, which ended Sept. 30, compared to Pound40 million a year ago. Its quarterly operating profit improved to Pound361 million ($523 million) from Pound211 million a year ago.

This income growth indicated that BA's new strategy of trying to attract more business and first-class passengers has started to pay off. BA said its number of premium passengers increased by 7.7 percent during the quarter, while revenues for the first six months of the year rose 4.9 percent to Pound4.86 billion ($7.05 billion).

"We are taking a ruthless approach towards poorly performing routes and assets," said Eddington. "Those not adding value are being removed. It is imperative that each of our aircraft generates shareholder value."

The airline said it plans to cut capacity worldwide by 10 percent in next summer's schedule.

"We have a number of different businesses operating separately within Europe. We are currently examining how we can better rationalize and integrate their activities to deliver better value for the group overall," Eddington said.

BA, the world's fourth-biggest airline in terms of passenger traffic, has struggled to find its way in recent years.

It lost Pound50 million ($75 million) in the first quarter, due to high fuel costs and competition, and last year was the airline's worst since the British government privatized it.

Competition has become intense, particularly on its core trans-Atlantic flights, and former chief executive Bob Ayling resigned in March after a troubled four-year stint.

Talks on a long-planned merger with KLM Royal Dutch Airlines collapsed in September.

TITLE: Airlines Agreement Heads Off Lawsuit
AUTHOR: By Jim Suhr
PUBLISHER: The Associated Press
TEXT: DETROIT, Michigan - Continental Airlines and Northwest Airlines said Monday they have reached a tentative deal that would have Northwest sharply reduce its voting stake in Continental, hoping to settle a federal antitrust suit over the matter.


The two airlines plan to petition U.S. District Judge Denise Page Hood to delay court proceedings for a week to let the companies reach definitive agreements.

A final deal, which Northwest and Continental said will close about two months after the definitive accord is reached, must be approved by both airlines' boards, the Justice Department and certain third parties.

Under the proposed deal, Northwest will exchange its Class A Continental shares that carry 10 votes per share for $450 million in cash and a lesser number of Continental B shares that carry one vote per share.

In addition, Northwest would get preferred stock in Continental that would give it the right to veto a proposed combination between Continental and other carriers under some conditions.

The proposed transaction would depend on the withdrawal of the government's antitrust lawsuit against both companies over Northwest's 1998 purchase of a controlling stake in Houston-based Continental.

A. Douglas Melamed, the acting assistant U.S. attorney general heading the department's antitrust unit, said the government would join the airlines in asking Hood to defer the trial's resumption until Nov. 14.

Melamed in a statement called the agreement "a victory for consumers, who will benefit from lower fares and better airline service. This is the result we have sought all along. It will ensure that Northwest and Continental remain independent competitors."

The proposed deal would also extend until 2025 the carriers' domestic alliance, which both say helps them better compete with the nation's top three carriers - United, American and Delta.

Northwest, based in Eagan, Minnesota, is the nation's fourth-largest carrier, Continental the fifth.

Last week as the trial got under way, both companies said negotiations on a settlement appeared grounded. Continental accused Northwest of bad-faith bargaining and "litigation posturing," while Northwest countered that it had bargained in good faith.

At trial, the Justice Department was pressing for Northwest to give up its 55 percent voting stake in Continental, arguing that Northwest's holding could squeeze consumers, worsen service and stifle competition. Its Class A shares represent only 14.8 percent of Continental's equity, however.

When Northwest bought the stock, it agreed to place the stock in voting trust for six years and comply with restrictions on its voting rights for another four years.

Continental defended the sale when the government filed suit in 1998 but has since sought to get the shares back, saying loopholes in the deal's final four years could leave the carrier vulnerable to a Northwest takeover.

Northwest and Continental run separately but have linked their route systems, share codes that let one carrier book seats on the other's flights, and have reciprocal frequent-flier programs.

The government has not tried to overturn the carriers' alliance.

Under the proposed deal, Melamed said, Northwest would divest all but 7 percent of its voting interest in Continental.

John Dasburg, Northwest's president and CEO, said his company's objectives have been to build a successful alliance with Continental and ensure the independence of that airline, with both missions accomplished by the tentative deal.

The lawsuit has taken on additional importance since No. 1 United Airlines proposed a deal to acquire No. 6 U.S. Airways earlier this year. That tentative agreement is subject to the approval of the Justice Department.

Northwest spokesman Jon Austin declined to discuss publicly Monday's announcement beyond the companies' statement. Messages left for Continental were not immediately returned.

The trial was to resume Tuesday.

TITLE: The Russian National Airline Taking Off Into Friendlier Skies
TEXT: AEROFLOT'S flight attendants have good reason to smile these days. After sinking $60 million into the red in 1999, the airline is winging its way toward a profit-making year as performance improves and passengers embrace a new image tailor-made by McKinsey & Co. for the air carrier.

Aeroflot instructed its flight attendants to greet each passenger with a smile earlier this year when it launched the drive by the McKinsey international consulting firm. The two-to three-year development strategy calls for cuts to unprofitable routes, upgrades to the fleet and alliances with Western airlines. It aims to put Aeroflot in the black and at the same time rid the airline once and for all of its lingering Soviet-era image of lackluster service.

The strategy appears to be paying off rather handsomely. The latest signs came just a few weeks ago when officials announced that Aeroflot is preparing to float shares on international markets for the first time - a solid signal that the airline's bottom line is finally considered attractive for Western investors.

"Our income is on the rise. We are showing growth against last year's results and are also ahead of this year's plan," said Larisa Solodukhina, adviser to Aeroflot's deputy general director Alexander Zurabov.



Fruits of Revamping


The numbers are impressive. Aeroflot's total operating income - calculated under international accounting standards - will increase 15 percent to $1.34 billion, airline officials announced at a recent investor meeting. Net profit will hit $30 million against last year's loss of nearly $60 million.


The airline told investors at a Sept. 29 meeting that the climb in revenues is being fueled by a slimmed-down flight schedule that allows it to pack more passengers into each flight. Aeroflot, which ranked No. 9 among European airlines with 4.6 million passengers last year, expects to carry 5 million travelers in 2000.

Loads are expected to reach 8 million to 10 million passengers by 2005.

Aeroflot carried 3.897 million passengers over the first nine months of this year, officials said.

The icing on the cake for investors came when Aeroflot announced that in November it will issue Global Depositary Receipts, shares traded in proxy on international markets. The float will be worth about 20 percent of the airline's charter capital of 1.11 billion rubles ($40.04 million).

Foreign investors already holding Russian shares will be allowed to swap them for GDRs.

Aeroflot is keeping mum about where the GDRs will be floated, saying negotiations are being conducted with several sources.

Aeroflot had planned to issue American Depositary Receipts equal to 5 percent of its charter capital back in 1997, but was forced to abandon the plan in the wake of the financial crisis of August 1998. The airline's board of directors approved the GDR issue in late September.



Market Reacts


Enthusiasm from investors and industry watchers over Aeroflot's financial sheets and GDR plans came swiftly. Within hours of the investors' meeting Sept. 29, Aeroflot's stock shot up 19 percent to $0.28 on the dollar-denominated Moscow Times Index.


Aeroflot shares, which have swung between a low of $0.054 and a high of $0.28 so far this year, closed at $0.247 on Monday.

"The airline is heading in the right direction," said Eugene Satskov, a transportation analyst with Renaissance Capital investment bank. "With time, Aeroflot will be equal to such majors as British Airways and foreign passengers will turn to it with pleasure," he said.

"Aeroflot has done a reasonable amount of work tidying up its financial situation. If that work is being implemented as I believe it is, then the airline should be profitable," said Paul Duffy, an independent aviation analyst in Moscow.



Grand Beginnings


Aeroflot, which traces its history back to 1923, became the national carrier of the Soviet Union in 1930 under the government's first ever Five-Year Plan.

The state handed it aircraft, fuel and airport facilities on a silver platter, enabling the airline to grow rapidly while at the same time offering cheap travel to tens of millions of Soviet citizens every year.


At its peak, Aeroflot was flying 135 million passengers a year on domestic routes, a far cry from the 21.5 million carried by all Russian airlines combined in 1999.

Then came the breakup of the Soviet Union in 1991. Aeroflot was registered as a joint-stock company in June 1994, with a 51 percent stake kept by the state and 49 percent of the shares sold by closed subscription to its employees.

Now almost 20 percent belongs to foreign shareholders and 29 percent is split up between Aeroflot's employees and Russian companies, according to Aeroflot.

Nominal shareholders include Citibank, CS First Boston, Brunswick Warburg Nominees, Chase Manhattan Bank, the Depositary Clearing Co., Rosbank and ABN AMRO bank.



Berezovsky Connection


In its post-privatization period, Aero flot became widely associated with financier Boris Berezovsky.


Two executives from Berezovsky's sprawling LogoVAZ car dealership were appointed to Aeroflot's board. Alexander Krasnenker was appointed commercial director in 1994, reportedly at Berezovsky's instigation, and Nikolai Glushkov vice president.

Valery Okulov, son-in-law of former President Boris Yeltsin, was believed to also have close ties with Berezovsky when he was named CEO in 1997.

But within two years Okulov made it clear that Aeroflot did not want to be associated with Berezovsky.

Federal investigators raided Aeroflot's offices in February 1999 during a probe into the financier's business activities, which embroiled the airline in a multimillion-dollar money-laundering scandal.

Swiss and Russian prosecutors wanted to find out if Berezovsky had set up two Swiss companies - Forus Services SA and Andava SA - and used them to skim off up to $600 million of the profits from the airline's international operations.

Berezovsky has denied all of the allegations against him and called them politically motivated.

The mogul was summoned to the Prosecutor General's Office as a witness on the Aeroflot case last Tuesday.

Berezovsky afterward said he had told investigators he had "no relation to its [Aeroflot's] activity."

"I never worked in Aeroflot, neither did I create it," he was quoted by Interfax as saying.

Okulov threw both LogoVAZ men out of the airline last year.

Berezovsky's links to Aeroflot continued to diminish this year when none of his allies was elected to the airline's board of directors at an annual shareholders meeting.

While distancing itself from Berezovsky, Aeroflot has sought to polish its image with investors. At the shareholders meeting on June 24, an American was for the first time appointed to the board. David Herne, a manager with Unifund, represents Aeroflot's foreign shareholders.

In a bid to make its operations more transparent, Aeroflot is now funneling all of its hard-currency revenues through Chase Manhattan Bank.



Kudos to Zurabov


Much of the praise for the recent drive toward sprucing up the airline's bottom line - and the apparent success of the move - should go to deputy general director Zurabov, industry analysts said.


"Zurabov looks like the man able to implement changes at the company," said Yulia Zhdanova, transportation analyst with United Financial Group.

Zurabov joined Aeroflot about a year and a half ago as deputy director general for financial, economic and commercial activities. He previously held top posts at the Menatep and Russky Standart banks, and is widely believed to possess an in-depth understanding of the Russian commercial aviation sector.

"Zurabov is a highly professional manager who has a strategic view of the company's development, of what needs to be done and how it should be done," Satskov said.

Zurabov was unavailable to comment for this story.

One of Zurabov's top priorities has been the revamping of Aeroflot's flight schedule, which started in earnest in April. Aeroflot right away scrapped loss-making routes to Jakarta and Miami, and boosted the number of flights to popular European destinations such as Paris, London, Prague and Berlin.

Adjustments are still being made. The number of weekly flights from Moscow to St. Petersburg will increase from 14 to 42 this winter. Flights to Krasnodar are growing from 10 to 21 and flights to Sochi on the Black Sea from 14 to 35.

Aeroflot expects to rake in an extra $32 million over the winter, and $90 million during the summer of 2001 with the new schedule.

All the while, Aeroflot is taking steps to upgrade its fleet of 116 jets. The airline is pushing ahead with a long-planned acquisition of seven Russian-built Il-96-300s.

It is also intending to lease three brand-new Il-96Ts aircraft with state-of-the-art Pratt & Whitney engines and Collins avionics. The first $60 million Il-96T is expected to be delivered next year.


Filling Seats


Focusing on prime destinations is helping Aeroflot increase its seat load factor - the percentage showing how full each average flight is - while cutting operating costs.


"The ongoing restructuring is beginning to translate into higher load factors and more flight hours per aircraft, meaning a more efficient fleet," UFG said in a recent research note.

Flights were 65 percent full over the first nine months of 2000, a 5 percent growth from the same period last year, according to Aeroflot.

The airline managed to put 7 percent more passengers on its international flights, reaching a historic seat-load high of 64 percent. Domestic seat load inched down by 2 percent, to reach 73 percent.

Although domestic flights were less full, the increased frequency of those flights led to an overall 53 percent increase in revenues from January to August, Aeroflot said in its investors report.

Revenues on domestic flights jumped to $102 million. Overall, Aero flot's flight revenues increased 15.2 percent year-on-year to $623.4 million. Aeroflot hopes to increase its share of domestic flights from 8 percent last year to 30 percent by 2005.



Market Strength


Such growth goals appear to be well within Aeroflot's reach, analysts say.


Among the 300 or so domestic airlines, Aeroflot remains by far the largest and strongest. For example, No. 2 airline St. Petersburg-based Pulkovo's 1.4 million passengers on domestic and international destinations last year was a far cry from Aeroflot's 4.6 million passengers.

After Pulkovo, Aeroflot's closest rivals are Vnukovo, KrasAir, Sibir, Transaero, Domodedovo and Dalavia. Those eight airlines carried 60 percent of all domestic traffic in 1998, according to Renaissance Capital.

On the international market Aeroflot has little competition from locals. Despite competition from foreign airlines in international skies, Aeroflot retains an advantage of cheaper fares.

Aeroflot had 58 percent of the international passenger traffic carried by Russian airlines last year, according to Renaissance Capital. Last year Aero flot carried 3.4 million passengers abroad.

"Other companies together cannot beat Aeroflot's volume," said Boris Rybak from Infomost consultancy.

Back home, Aeroflot now flies to 27 cities in Russia. This year it opened new routes to Ufa, Chelyabinsk, Perm and Mineralniye Vody.

Under its strategic plan, the airline intends to fly at least once a day to each of the 27 domestic destinations.

Another part of that plan is to grow aggressively by teaming up with regional airlines.

"Aeroflot is quite aggressive in its policy of absorbing regional airlines," said UFG's Zhdanova.

Among Aeroflot's recent deals was the acquisition of a 51 percent stake in Aeroflot-Don - a joint venture with the Rostov-on-Don-based Donskiye Airlines - and the planned creation of a regional carrier called Aeroflot-Perm.

Aeroflot-Don alone should bring the company a further 2 percent of the domestic market this year, according to Aton brokerage analyst Yelena Sakhnova.

Aeroflot expects to see the industry consolidate to only three to six majors over the next decade.



Looking West


Looking out for new horizons, Aeroflot is eagerly courting Western airlines to sign alliances that would connect routes and bring more passengers through Moscow.


The airline has recently signed cooperation agreements with the national carriers of Ukraine, Kyrgyzstan, Kazakstan, Armenia and Georgia, as well as Pulkovo Airlines.

However, it's the global market that Aeroflot wants the most. It signed a deal in March to start negotiations over entering the SkyTeam alliance with a number of airlines including Air France, Delta Airlines, Aero Mexico and Korean Air in 2003. If Aeroflot is able to join SkyTeam, Aeroflot would be able to expand its coverage from 130 international destinations in 70 countries to 450 cities in 100 countries.

An Air France delegation came to Moscow earlier this month to discuss the alliance. The two sides held talks about ways to coordinate passenger and cargo flows, booking, tariffs and flight schedules, according to Aeroflot. Another meeting is set to be held in six months.

One of the conditions of getting into SkyTeam is the construction of a new terminal at the overcrowded Sheremetyevo Airport.

Plans to build a so-called Sheremetyevo-3 have been in the works for some time, but with the insistence of SkyTeam, Aeroflot is now scrambling to get the project under way.

It estimates that the terminal will cost up to $300 million, double the amount spent to build Sheremetyevo-2 just before the 1980 Moscow Olympics.

Moscow's International terminal Sheremetyevo-2 and domestic terminal Sheremetyevo-1 have a combined capacity of 10 million passengers a year. Peak-time traffic exceeds capacity of 2,100 passengers an hour by about 50 percent, according to airport officials.

Aeroflot plans to open the first stage of Sheremetyevo-3 with a capacity of 3 million passengers in 2003, said Dmitry Amunds, Aeroflot's deputy general director for strategic and corporate development.

Two more 3 million passenger phases would be implemented according to demand, he said.

A business plan for the terminal is expected to be approved by the end of this year.

TITLE: BUSINESS AND THE LAW
TEXT: VAT Exemptions Still Unclear 


ON Jan. 2, 2000, Acting President Vladimir Putin signed Federal Law No. 36-FZ "On Introducing Amendments of the Law 'On Value-Added Tax.'" Among other things, the law provided an exemption from VAT in relation to the import into Russia of certain technological equipment, which is based on two conditions. First, similar equipment must not be produced in the Russian Federation, and second, payments for this equipment must have been made before Jan. 1, 1999.


In accordance with the law, the government of the Russian Federation was required to introduce a list of equipment to which this exemption applies. Ten months after the adoption of the law, the government has finally issued this long-awaited decree. Decree No. 806 "On the Exemption from VAT on Technological Equipment, to Which There is No Similar Equipment Produced in the Russian Federation" of Oct. 18, 2000, contains two attachments. Attachment 1 contains a list of the equipment subject to VAT exemption, pursuant to the relevant provisions of the law. Attachment 2 contains the names of the 300 companies, which purchased such equipment by using loans secured by the guarantee of the government of the Russian Federation. It also provides for the corresponding import contract numbers.

The VAT exemption is applicable only if the equipment was imported under the contract and by the company listed in Attachment 2, and only if the equipment itself appears in Attachment 1. If all of these conditions are met, the importer of the equipment may enjoy a total exemption from VAT imposed by Rus sian customs authorities at customs points. The decree, however, does not provide a rebate of import VAT already paid to the budget for the equipment.

In practice, many of the companies, which have imported equipment which they hoped would qualify for the VAT exemption, are not satisfied, since the list of equipment subject to the VAT exemption is very limited. According to the officials at the Ministry for Economic Development, who drafted the decree, the list of exempted equipment is to be extended next year. As a result, hopefully, more companies will benefit from this exemption and will be more content with this government-proclaimed, but rarely realized benefit.



For more information or advice, please contact James T. Hitch or Elena Mocha lo va at Baker & McKenzie's St. Petersburg office (phone: 325-83-08, fax: 325-60-13).

TITLE: TNK, Sidanko in Share Swap
PUBLISHER: Reuters
TEXT: MOSCOW - The nation's No. 4 oil firm Tyumen Oil Co., or TNK, said Friday it would accept shares from a new issue from fellow producer Sidanko as part of a share-exchange scheme.


TNK and Sidanko have been locked in a dispute over Chernogorneft, previously Sidanko's major production unit, since TNK acquired it in a hostile takeover through bankruptcy proceedings last year.

"TNK shareholders are ready to show flexibility and agree to a plan of action based on old and new shares," the company said in a statement.

In December 1999 TNK agreed to return Chernogorneft for a blocking stake of 25 percent plus one share in Sidanko. Earlier this month TNK had said it would object to obtaining the stake in new shares.

Alex Knaster, chief managing director of Alfa Bank, the financial consultant to TNK on the deal with Sidanko, said earlier this month that TNK was opposed to the new share issue for legal reasons.

TITLE: LUKoil Blazes American Trail With Purchase of Gas Stations
AUTHOR: By Elizabeth LeBras
PUBLISHER: Staff Writer
TEXT: MOSCOW - After a first attempt failed in 1997, LUKoil, Russia's No. 1 oil firm, is trying to establish a foothold in the United States with a chain of 1,300 gas stations.


LUKoil has acquired East Coast-based retailing chain Getty Petroleum Marketing for $71 million in cash, the company said Thursday.

The deal, which is subject to customary regulatory approvals, marks the first time a U.S. public company has been acquired by a Russian corporation.

"This could be the first step in our planned expansion into the U.S. market," LUKoil deputy vice president Ralif Safi said in a statement.

Getty Petroleum operates 1,300 gas stations in 13 northeast and mid-Atlantic states that sell gasoline, diesel fuel, motor oil and lubricants.

LUKoil is now set to buy out all of Getty Pet ro leum's shares at $5 apiece, a 45 percent premium. At $71 million, the agreement will value each one of Getty Petroleum's gas stations at about $55,000.

LUKoil is buying the U.S. company for "bargain-basement prices," the Aton brokerage said in a research note Friday.

"Getty's shares are valued so cheaply that they no longer reflect the value of the company," said Steven Dashevsky, oil and gas analyst at Aton.

"LUKoil is buying into a very recognizable brand name that will give it a solid footing in the U.S.," he said. "It doesn't get better than this. They're getting an ongoing business right away."

A control squabble with its former U.S. partners led to the failure of LUKoil's earlier bid to break into the American market, oil analysts said.

"It was a very messy affair," Dashevsky said.

LUKoil teamed up in 1997 with four U.S. supermarket groups through its 50 percent-owned affiliate Nexus Fuels of Irving, Texas.

But LUKoil could not resolve the ownership structure with its U.S. partners and after the 1998 ruble devaluation, the plans were abandoned.

Nexus has not operated over the past two years, Dashevsky said.

Konstantin Reznikov, oil and gas analyst at Alfa Bank, said the acquisition of Getty indicated that LUKoil had changed its strategy in the United States. In 1997, LUKoil was seeking to construct its own gas stations, but now the purchase of Getty Petroleum will enable it to operate an established network of stations.

Reznikov said that LUKoil will find the U.S. market a challenging environment to operate in and that the oil major is unlikely to yield impressive results from the acquisition since Getty has been posting lean profit margins.

"It must be some kind of public-relations action because it won't be profitable," Reznikov said.

He added that the cheap oil that LUKoil would be able to supply to Getty Petroleum would not meet the high U.S. quality standards.

LUKoil may find it necessary to cooperate with a U.S. refinery for the production of gas, the analyst said.

Getty's headquarters will remain in Jerico, Long Island, LUKoil said.

LUKoil already operates in Ukraine, Czech Republic, Romania and Bulgaria.

TITLE: New Local Provider Joins Phone Market
AUTHOR: By John Varoli
PUBLISHER: Special to The St. Petersburg Times
TEXT: Telecom Invest, a holding company which controls about 30 telecommunications companies in northwest Russia, is spending $50 million to expand the capacity of the city telephone network by 25 percent.


The investment should relieve the burden of overload on the city's existing telephone lines, put more quality lines on the market for those with money to pay commercial rates, and lead to increased competition in the local telecom market.

The new system will create capacity for about 500,000 new telephone numbers to be managed by a new company, Petersburg Transit Telecom (PTT). Telecom Invest has a 100 percent stake in PTT, and its system will be operational in Janurary 2001.

PTT will in turn rent those telephone lines in bulk to other telecom companies - digital telephone providers, Internet companies etc. - a move which will most likely open the way for more foreign companies to enter the St. Petersburg market, and increase competition.

Presently, all of the city's approximatly 2 million telephone lines are controlled by the city's main telephone company, Petersburg Telephone Network (PTS).

Since the company is a natural monopoly, legally its rates have been regulated until now by the government. But, the appearance of PTT and greater competition coincide with government plans to allow PTS to avoid state regulation in the coming year and switch to a pay-by-the-call system for its local calls.

"St. Petersburg needs to solve the problem of overload on the existing PTS network, and the new system being installed by PTT makes it possible to solve this problem," said Slavyana Kalaus, PTT spokeswoman.

She added that the company is laying more than 300 kilomters of optical cable in the city, as well as building the necessary transformers and other stations needed to power the system.

"PTT's investment should allow foreign telecom companies to enter the local market, and should have a dramatic effect on the dynamics of the market as competition increases," said Lev Savulkin, senior analyst at the Leontieff Center for Economic and Social Research in St. Petersburg

Growth of the St. Petersburg telecom market has been hampered by a lack of sufficient capacity. While the city's population is almost 5 million, it has less than 2 million telephone numbers owned by PTS, many of which are old and need to be replaced.

There are two telecom sectors in the city - social and commercial. Rates in the former are capped by the government to protect the population from a natural monopoly. But PTS has long complained that it is being forced to operate at below cost.

"PTS can't develop properly because the government regulation of rates keeps it from earning enough profit," said Savulkin.

Oddly enough, PTS and Telecom Invest are basically run by the same person - Svyazinvest general director Valery Yashin - who is also the former general director at PTS, and who is chairman of the board member at Telecominvest. He founded the latter in 1994 with Leonid Reiman, Russia's Minister of Telecommunications, who was another prominent Telecominvest board member, not to mention Yashin's former deputy director at PTS.

When Reiman took government office earlier this year, he left his board seat at Telecominvest as Russian law forbids government officials to have business interests.

Indeed, it is not surprising that both companies say their relationship is one of "partnership" and not competition.

"Building more capacity is important for the city, but PTS does not have the finances to do it," said Oleg Kurinou, PTS spokesman. "It's a good sign for the market that PTT can carry out this project, and it will help everyone. It's helps us because it will lessen the problem of system overload."

"Telecominvest is a way for Yashin to work about the restrictions imposed on PTS by the government," said Savulkin. "Telecominvest doesn't face government regulations since it is a commercial telecom service for those who can pay,".

"When PTS goes over to a pay-by-the-call system, which is supposed to be established next year, then the company's financial situation should improve," added Savulkin. "Then it will become a competitor to PTT."

Telecominvest's plans to invest in its system comes after posting a profit in 1999 of $11 million, down 70 percent from 1998, which the company explained as being the result of continuing fallout from the August 1998 financial crisis. Sales of services provided by all the holding's subsidiaries totaled $181 million in 1999, down 25 percent from 1998. The company's financial results are released according to GAAP, the American accounting standard.

As Russia's economy rebounds, the company is forecasting better results this year.

Among the companies controlled by Telecominvest are leading St. Petersburg mobile phone providers North-West GSM - its main source of income - as well as mobile phone companies in Novgorod, Pskov, Karelia and Vologda. Telecominvest has a 29.5 per cent stake in the St. Petersburg digital telephone company Peterstar.

The $50 million PTT investment is a gamble for the company, which expects to recoup costs in seven years only if the Russian economy continues to grow.

Financing for the project is coming from the recent sale of a 25.9 percent stake in Telecominvest to Promstroisvyaz, a subsidiary of Promstroibank of St. Petersburg, one of the city's most powerful banks. That sale raised $100 million.

First National Holding SA, a unit of Germany's Commerzbank AG, holds a 49.2 percent stake in Telecominvest. PTS has a 12.7 percent stake, and St. Petersburg International and Intercity Telephone (SPMMT) has 12.7 percent

Telecominvest was founded in 1994 by PTS and SPMMT, both majority owned by Svyazinvest, the national holding for Russia's regional phone companies.

PTS and SPMMT are in the process of merging as Svyazinvest moves forward with plans to reform and modernize Russia's regional telecoms.

While PTT will earn money on rates charged for using its lines, those rates have yet to be determined.

"We haven't established our rate policy yet," said Kalaus. "We're setting rates for operators, and there is no strict government control. But if rates are too high then no one will buy. If they are too low, we won't recoup our investment."

TITLE: Philippine's Market Has Red-Letter Day
PUBLISHER: The Associated Press
TEXT: HONG KONG - Most Asian stock markets closed higher Monday, with the key index in Manila surging to its biggest one-day gain in 13 years on expectations for an end to the political crisis in the Philippines.


The 30-company Philippine Stock Exchange Index soared 212.25 points to 1,500.10, its largest surge since rising 16.3 percent on July 28, 1987.

Investors were cheered by recent defections from embattled President Joseph Estrada's coalition that they think will bring a rapid end to his administration. Estrada is accused of taking illegal gambling payoffs.

In recent days Estrada's trade secretary and chief political adviser have quit and the Senate president, House speaker, and more than 50 other lawmakers have deserted the president's LAMP coalition.

Impeachment on corruption charges appeared certain after a congressional committee Monday rapidly voted to send a complaint directly to the full House of Representatives, where more than the required one-third of congressmen have said they will back impeachment.

Also, the peso registered its largest single-day gain against the dollar, closing at its highest point in two weeks.

The dollar ended at 48.050 pesos on the Philippine Dealing System, down from its 51-peso close on Tuesday. Philippine financial markets were closed from Wednesday to Friday last week for holidays and a typhoon.

In Tokyo, the benchmark 225-issue Nikkei Stock Average rose 533.66 points, or 3.60 percent, to close at 15,371.44 on the improving outlook for U.S. technology stocks. On Thursday, the average closed down 34.61 points, or 0.23 percent.

Japanese financial markets were closed Friday for Culture Day, a national holiday.

In New York, the tech-heavy Nasdaq composite index rose 22.55 points to 3,451.58 on Friday, bringing to 5.3 percent its gains for the week, even as the Dow Jones industrial average slipped 62.56 points to 10,817.95.

In currency trading, the U.S. dollar was quoted at 107.26 yen, down 0.92 yen from its level of 108.18 yen late Thursday in Tokyo and below the 107.40 yen it fetched late Friday in New York trading.

TITLE: Weak Euro Is Given a Boost After Central Bank Steps In
AUTHOR: By Lida Poletz
PUBLISHER: Reuters
TEXT: NEW YORK - The euro surged on Monday after the European Central Bank intervened to shore up the currency for the second trading day in a row, but then drifted off its peaks despite wariness of further central bank action.


The ECB said its latest unilateral foray into the foreign exchange markets was in line with its statement last Friday expressing concern about the global and domestic repercussions of the euro's weakness.

The euro initially rallied nearly a cent to a high at 87.30 cents, but then gradually gave up those gains as traders took the opportunity to sell the embattled currency at a higher level. In early U.S. trade the euro hovered around 86.50 cents, down slightly from the previous U.S. close.

The impact of the intervention was lessened by the absence of other Group of Seven major industrialized nations, which had intervened jointly with the ECB in a rare concerted euro-buying spree six weeks ago, analysts said.

"It's the story of diminishing returns. The first [G7] intervention gave the euro a 7 percent bounce, Friday's solo intervention gave it 2 percent and this last one was 1.1 percent," said Paul Podolsky, currency strategist at Fleet Global Markets.

As long as capital flows continue to favor the United States, and therefore the dollar, the euro will continue to be plagued by a downward bias, he added.

Meanwhile, the dollar dropped to six-week lows around 106.75 yen on Friday, triggered by gyrations in euro/yen, which had spiked up and quickly reversed in the wake of the intervention.

The greenback held steady near 107 yen in early U.S. trade, while the euro stood around 92.60 yen, a full yen off its intervention highs.

Still, U.S. traders said the market was wary the ECB would re-enter the market, and said the perception was growing that the central bank has tried to draw a line in the sand around the 86-cent level.

Some analysts said that longer term, the repeated interventions will help the euro build a base at its lows and possibly start moving higher from there.

Senior euro zone officials offered verbal support to the euro, which also kept alive wariness of further intervention.

ECB governing council member and Bank of Finland governor Matti Vanhala said the ECB was happy with the outcome of its interventions on Friday and Monday. European Commission President Romano Prodi described the ECB's unilateral market intervention to support the euro as a "well-calculated risk."

Traders expected further verbal support for the single currency from euro zone finance ministers gathering in Brussels for a two-day meeting starting on Monday.

They added there was also a risk that Japan could help prop up the beleaguered euro, given that gains which the yen has made against the single currency have hurt Japanese exporters.

However, on a longer-term view, traders said if the euro was to head convincingly higher, the United States would need to join in any action by the ECB and Japan once the presidential elections were out of the way.

TITLE: IN BRIEF
TEXT: World's Largest Ship


MIAMI, Florida (Reuters) - Carnival Corp., the world's biggest cruise operator, said on Monday it has sealed a contract with a French shipyard to build the spectacular luxury liner Queen Mary II, the largest passenger ship ever constructed at a cost of $780 million.

Carrying the famous name of the speedy Atlantic passenger liner than made its debut in 1936, the Queen Mary 2 will weigh 150,000 tons and will be as tall as a 23-story building when it enters service for Carnival's Cunard Line in late 2003, the company said.

Miami-based Carnival said the 345-meter-long vessel - to be built by the Alstom Chantiers de L'Atlantique shipyard in Saint Nazaire, France - will have a passenger capacity of 2,620 and a power plant capable of creating 157,000 horsepower, enabling it to attain a speed of 30 knots. 



Oil Reports


LONDON (Reuters) - Oil prices moved sideways on Monday as dealers calculated the impact of increased OPEC supplies on low inventories.

London Brent blend futures traded 10 cents higher at $30.95 a barrel, and U.S. light crude was down six cents at $32.65.

While oil inventories remain low for this time of year, stocks have started to rebuild under the weight of four OPEC supply increments this year.

"Estimates of the supply-and-demand balance reveal a sharp increase in third-quarter stocks and suggest that the stock change during the fourth quarter will be negligible," said U.S. consultant Philip Verleger.

International Monetary Fund Director Horst Koehler said political tensions in the Middle East were to blame for keeping oil artificially high.



U.S. Investment in Iran


TEHRAN, Iran (AP) - A senior Iranian oil official said Sunday that U.S. oil companies have purchased technical data for an Iranian gas-field project and plan to submit investment bids by a Dec. 20 deadline.

Assadollah Salehi-Forouz, head of the Iranian Pars Oil and Gas Co., would not reveal the names of the U.S. companies.

U.S. companies have been prohibited from investing in Iran's oil and gas sectors since 1995 when Congress passed sanctions against Iran to punish it for supporting terrorism and opposing the Middle East peace process.

Since President Mohammed Kha ta mi, a moderate, came to power in August 1997, there has been a slight thaw in U.S.-Iranian relations, and some non-oil sanctions have been eased. Oil sanctions, however, remain firmly in place.



Hi-Tech Oil Recovery


BAGHDAD, Iraq (AP) - Major French oil companies are pledging to help their Iraqi counterparts with high-tech solutions to increase the amount of recoverable oil from existing fields and improve the quality of refined products.

Spurred by their country's support for Iraq in its fight against UN trade sanctions, French oil companies are confident about business prospects that will be available to them once the sanctions imposed for Iraq's 1990 invasion of Kuwait are lifted.

Total Fina Elf, one of more than 100 French firms participating Sunday in the annual Baghdad International Fair, is near agreement with the Iraqis to develop two fields, one of them believed to be among the largest in the world.

TITLE: Litton Industries Shifts Focus Onto Its Shipbuilding Future
PUBLISHER: Reuters
TEXT: WOODLAND HILLS, California - Military shipbuilder Litton Industries Inc. said on Monday it plans to sell its defense electronics unit and focus on its shipbuilding, information security and telecommunications businesses.


The Advanced Electronics unit, which specializes in navigation and electronic warfare, had $1.6 billion in revenues in fiscal 2000, or about 28 percent of Litton's total revenues of $5.6 billion. It has about 9,500 employees.

Litton shares gained $1 3/4, to $54 3/4, in early afternoon trading on the New York Stock Exchange. They have gained 20 percent since Litton first announced on Oct. 20 that it was considering selling the defense electronics unit.

The evaluation, Litton said, indicated that the defense electronics unit would produce more value in the hands of a company focusing on similar areas. Analysts had previously said the defense electronics unit was experiencing cost overruns on some contracts.

After the divestiture, Litton said it will have revenues of about $4.3 billion. with operations in commercial electronics, information technology, and military and commercial shipbuilding.

Woodland Hills, California-based Litton said it will use the funds from the sale to pay off debt, buy back shares and make internal investments.

Litton also said it believes it can increase the growth rate of its commercial electronics and materials business over the next two to three years by making investments to increase global production capacity and broaden its product offerings for the telecommunications and networking markets.

It will also move to new, high-tech products - such as connectors, laser crystals and fiber optic components.

In information systems, Litton will continue serving the Defense Department, but will also serve civilian segments of the federal government.

In shipbuilding, Litton, the largest builder of non-nuclear ships for the U.S. Navy, said it will pursue new opportunities, including a new class of destroyers and amphibious ships, as well as refurbishing and modernization.

TITLE: Tobacco Firms Plan Settlements
PUBLISHER: Reuters
TEXT: NEW YORK - Shares of most U.S. tobacco companies gained ground on Monday amid a report that two companies may settle punitive-damage claims against them, while the European Commission said it was suing two others over alleged involvement in cigarette smuggling.


Loews Corp. and Vector Group Ltd. shares were mixed following reports that tobacco companies Lorillard and Liggett have tentatively agreed to pay $8 billion to settle punitive-damage claims against them in suits pending in federal court. Lorillard is a unit of New York-based Loews, and Liggett is part of Miami-based Vector.

Loews' shares traded up $1 11/16, or 2 percent, at $87 3/8 after trading as low as $85 3/4 earlier in the day. Shares of Vector Group were off 1/16 at $13 1/4 after trading as high as $13 1/2 earlier in the day.

Meanwhile, shares of Philip Morris Cos Inc. and R.J. Reynolds Tobacco Holdings Inc. both climbed $1 1/16, or 3 percent, to $36 1/16. Both companies' shares had slipped in early morning trading after the European Union said it was suing the tobacco giants for alleged involvement in smuggling cigarettes into the bloc.

A punitive-damage settlement for Lorillard and Liggett could insulate the companies from having to pay punitive-damage awards pending against them in other courts, according to newspaper reports and tobacco industry analysts.

The punitive-damage claims are part of nearly a dozen lawsuits pending before U.S. District Judge Jack Weinstein in Brooklyn, New York.

Lorillard and Liggett have been negotiating with plaintiffs' lawyers for about a month, the New York Times said on Saturday, quoting people close to the talks.

Separately, the European Commission said on Monday it had filed a civil lawsuit in a U.S. court against tobacco giants Philip Morris and R.J. Reynolds Tobacco over their alleged involvement in smuggling cigarettes into the European Union.

TITLE: TACIS Program Sets Out To Train Russia's Taxmen
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: MOSCOW - Tax collectors will soon hit the books as a result of a multinational effort to improve tax collection by retraining some Tax Ministry employees.


TACIS, the European Union's technical assistance program to the Commonwealth of Independent States, on Friday unveiled plans to establish three training centers in three as-yet-unchosen regions.

The program will last for three years and will be financed by a TACIS grant of 3 million euros ($2.58 million).

"Lack of revenue collection was a catalyst of the crisis," TACIS head Jean-Pierre Reymondet-Commoy said at a news conference launching the project. "We are starting the project at a good moment, when the government is implementing its economic program."

Tax collection has long been a bane to the nation's economic existence. For example, 800,000 fewer workers submitted tax documents in 1999 than in 1998.

The new administration's economic program emphasizes improvements to the tax system. The second part of the Tax Code that is to come into effect Jan. 1, 2001, includes the repeal of many taxes that place a heavy burden on businesses.

Yelena Tolgskaya, head of the Tax Ministry's department of international cooperation, said it's ironic that the pace of change is creating a whole new set of problems for the ministry.

"One of our officials puts in a request for clarification of an article, and now, there's no telling when he's going to get an answer," Tolgskaya said.

In the distant future, the number of tax officers, now numbering 170,000, may also be cut, said Alexander Vishnyakov, the ministry's personnel manager.

"This won't happen soon," Vishnyakov said. "We are taking over duties that we weren't responsible for in the past. For this, we need [at least] the number of people we have now."

Since the State Tax Service became the Tax Ministry in December 1998, a requirement has been introduced to retrain at least 30,000 tax officers a year.

David Randall, team leader of the TACIS project, said the program's creators envisage an atmosphere where tax officials and taxpayers can enjoy courses on the nuances of the tax system in flux.

The program will also train 150 instructors.

During the first three months of the project, all the project planning will be reassessed, Randall said. TACIS plans to seek input from other organizations such as the U.S. Treasury and the World Bank that are actively aiding the transformation of the tax system.

The U.S. Treasury helped draft a $3 million pilot program in Volgograd to modernize its tax system. Regional tax officials reported earlier this year that the pilot has eliminated long waiting lines at the tax inspectorate and raised collection rates. The ministry has said that it wants to expand the program to the rest of Russia, an ambitious proposal that its estimates would cost $1 billion.

TITLE: City's 2nd GSM License Comes to Life
AUTHOR: By Andrey Musatov
PUBLISHER: Special to The St. Petersburg Times
TEXT: Telekom XXI, one of two companies which hold licenses to provide cellular telephone service operating on the Global System for Mobile Communications (GSM) system, is finally getting down to business. The company has purchased the base-station equipment necessary to provide cellular service in St. Petersburg and begun construction on its local network.


North-West GSM, which holds the city's other GSM license, began its operations in St. Petersburg in 1994 and has become the city's dominant cellular provider with more then 160,000 subscribers - about 61 percent of the St. Petersburg market.

According to Andrei Rumyantsev, the general director of Telekom XXI, who announced the purchases in an interview with Internet-based ComNews.ru magazine last Thursday, the company will operate a total of 15 base stations, one of which will work on the 1800 MHz frequency and the remaining 14 on 900 MHz. Each of the base stations is a so-called "three-sector model," which technical specialists say will provide Telekom with the capacity equivalent to that provided by 45 conventional (one-sector) stations.

Rumyantsev also said that the company plans to finish the installation of the base stations by Dec. 25, and to pick up its first subscribers in the beginning of January 2001.

However, Mikhail Tigin, a spokesman for Telekom XXI, refused to confirm whether the company had already purchased the base stations. In a telephone interview on Friday he labeled all information coming from Internet Web sites as "rumors," even those in which the general director of the company is quoted.

"I heard about the stations, but I can't say definitely whether or not it's true," Vyacheslav Nikolayev, telecoms analyst at Renaissance Capital said in Telephone interview on Saturday. "Telekom XXI has existed since 1997 and announced its plans to do this four months ago. At this point, this could all just be an attempt to save face and appear as a real cell phone operator."

Nikolayev said that he doesn't see the purchase of 15 stations as representing great progress. According to his calculations the price for the new stations, including delivery and installation, would be in the neighborhood of $1.5 million. 

By comparison, North-West GSM spent about $20 million on its network in 2000, according to Petersburg Telecom 2000 Encyclopedia, which is published by the North-West Media Group Co. 

"North-West GSM has about one hundred base stations, and there are still holes in its network in some districts of the city," Nikolayev said. "Of course the 15 Telekom XXI stations will not be able to cover the whole city."

According to the ComNews.ru report, Telekom XXI plans to set up 110 base stations at the 900 MHz frequency and 85 stations at 1800 MHz. along with increasing its subscriber capacity.

But Nikolayev said that it is doubtful that Telekom XXI has sufficient resources to undertake such a program.

"I don't foresee such a future for Telekom XXI without it being sold to some bigger company such as Telecominvest or Vimpelcom," he said.

This possibility is by no means out of the question, as major Moscow cellular providers have been raising capital over the last year through such actions as the floating of American Depository Receipts (ADR's) with the express intention of expanding into operations in Russia's regions. As Communications Minister Leonid Reiman has said officially that there won't be a third GSM license issued for St. Petersburg, discussion has shifted to other possible means by which the Moscow-based companies might be able to gain access to the St. Petersburg's cellular market.

Rumyantsev was quoted by ComNews.ru in July as saying that Telekom XXI was seeking a major investor to help with its operation, which heightened conjecture that the company would provide an excellent target for the Moscow-based telecoms.

TITLE: $700M Sukhoi Deal Goes Sour
AUTHOR: By Elizabeth Wolfe
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russian fighter-jet manufacturer Sukhoi has pulled out of an agreement with U.S. start-up Alliance Aircraft Corp. to build small passenger planes, a Sukhoi spokesman said Friday.


The deal, estimated to be worth $660 million to $700 million, turned sour because of too little "consensus" on several matters, including financing, Sukhoi press secretary Yury Chervakov said.

Kommersant reported Friday that a letter putting the brakes on the partnership had been sent to Alliance.

The decision was provoked by a "principle divergence of opinion as to the realization of the program and its financial make-up," Kommersant quoted Sukhoi sources as saying.

Chervakov could not confirm whether a formal withdrawal letter had been sent to Alliance, nor the exact timing of the breakdown in negotiations.

Alliance officials were not immediately available for comment.

The companies made a preliminary agreement in June to jointly produce the Starliner, a 50 to 110-seat aircraft adept for regional travel, with first flights scheduled for 2003. Alliance was to raise most of the financing, while Sukhoi would provide the design and engineering expertise.

Kommersant said Alliance was obligated to collect at least 250 orders and contribute $250 million. Sukhoi was supposed to do an estimated $50 million worth of design work and to transfer $2 million to Alliance, provided the Americans were backed up with a guarantee from a major bank.

But Alliance could not secure that guarantee because of other debts, Kommersant reported.

Alliance said in June that it had letters of intent for 30 aircraft.

Chervakov said the end of the partnership did not mean Sukhoi would not go ahead with the medium-haul, passenger-plane project.

"We decided to take a time out with our partner," he said.

Independent aviation analyst Patrick Duffy said that Sukhoi stands out among domestic aircraft manufacturers for its quality and that the company would be a better-than-average international partner, as it already has a fair reputation in the United States.

"Most Russian aviation management is not very well organized, but Sukhoi is probably the exception," he said.

TITLE: British Floods Continue, Kill 2
AUTHOR: By Natsuko Waki
PUBLISHER: Reuters
TEXT: LONDON - Stormy weather returned to batter Britain on Monday, killing two when a falling tree crushed their car.


The Environment Agency issued 52 severe flood warnings on 33 rivers across England and Wales.

"Over 4,000 properties across the country have been flooded. We assume the situation will remain constant until early Friday," an agency spokesman said.

Vast swathes of countryside have been flooded by weeks of rain, cutting roads and railways and forcing thousands to flee their homes.

The River Uck burst its banks and began to flood the southern English town of Uckfield for the second time in three weeks on Monday, causing "widespread chaos", police said.

"There are [traffic] tailbacks up to 10 kilometers long and a number of roads have been closed throughout the day," he said.

Britain's rail network, already creaking under the strain of nationwide safety checks after an October crash outside London, sank deeper into disarray as rising rivers blocked lines across England and Wales.

Navy helicopters were called into action near the Scilly Isles off southwest England to rescue 10 crew on board a Spanish trawler hit by seas 10 to 13 meters high.

The Meteorological Office offered little solace, saying rains would lash the northern half of the country for the next two days with heavy showers affecting the south. More than 50 millimeters of rain could fall in northeastern areas.

"The outlook is still not good in northern parts," said a spokesman. "We're not out of the woods yet."

Deputy Prime Minister John Prescott said the government was spending more than ever on tackling the flooding but described the situation as a "wake-up call."

"These events are going to be more frequent," he told BBC radio. "There is money available for these [flood prevention] schemes. In some cases the recommendations and the money were there but people decided not to implement them. I understand the reasons why but it's not good enough."

The Environment Agency's chief executive, Ed Gallagher, said the stormy weather was unprecedented but called on the government to halt building in flood-prone areas.

"We've already got two million homes in the flood plain," he told BBC radio. "A number of homes that are planned to be built are in the flood plain or flood risk areas and that really should not be allowed to happen."

"Clearly if money is not spent on flood relief measures in those areas we will potentially have a situation where properties may become virtually unsaleable and certainly uninsurable," Hugh Dunsmore Hardy, chief executive of the National Association of Estate Agents, told BBC radio.

Flood damage claims are estimated to run into hundreds of millions of pounds, according to the Association of British Insurers. "Our best estimate at the moment is up to about Pound400 million [$250 million]" a spokeswoman said.

TITLE: Middle Class Stands To Lose Most in a Police State
AUTHOR: By Boris Kagarlitsky
TEXT: MUCH has been written recently about the idea that freedom is only useful for enemies of the people. Commentators have told us that plotting oligarchs are resisting the imposition of law and order by citing violations of democratic freedoms, invariably adding something like, "although the police in civilized countries wield much more power than their Russian counterparts do and it is high time we followed their example." 


Such analysts always create an opposition between the "people" and (to quote one recent article) "a unified pro-presidential power" on one hand and oligarchs on the other. These oligarchs are always trying to convince the masses that an attack on them is an attack on rights and freedoms generally.

However, have there really been any attacks on the oligarchs? The oligarch's main demand is that the results of privatization be considered irreversible. In this regard, President Putin and his team are in total agreement. In general, a police state is necessary to protect the power of property owners.

The propagandists rely on the age-old myth of a doting tsar and his adoring nation who are in complete harmony if only no one comes between them. In this model, anyone in the middle: foreigners, students, intellectuals, etc., are internal enemies.

However, those who are pushing this line face a real problem. The majority of the population has lost much during a decade of "democratic reform." Despite having more formal democratic rights today, people feel more repressed than ever. Even freedom to travel is a fiction, as two-thirds of the population can't afford tickets anywhere. 

Democratic reforms have really only reached the new middle class, and it is against them that the present assault on civil rights is directed. Those reforms created enormous possibilities to live a Western lifestyle for the middle class, and they were not concerned with the fact that two-thirds of the nation has been shut out from these hopes. The new middle class entered into an unspoken strategic alliance with the oligarchs. 

This alliance shifted with the 1998 crisis, when the middle class realized that its position is much more vulnerable than that of the oligarchs. 

The propagandists of the police state are using this rupture. The result will be that the middle class will have as few real rights as the downtrodden masses have always had. Strengthening the police state will merely push the intelligentsia to the left. Within a short time, critically minded liberals will be transformed into radicals and revolutionaries. 

Boris Kagarlitsky is a Moscow-based sociologist. He contributed this comment to The St. Petersburg Times.

TITLE: Global eye
TEXT: Open for Business 


Cynics say that the U.S. presidential candidates are merely creatures of the U.S. corporate culture. Cynics say that the men vying for the White House are nothing but empty suits and errand boys for the staggeringly powerful, immensely remote and casually brutal crony-combines that rule our nations and our lives. Cynics say that the candidates are so deeply compromised by their corporate connections that they could never make principled decisions in office, even if they wanted to.


Well, we're certainly not cynical here at the Global Eye, but we have to agree that at least one candidate making a big noise in recent weeks seems to be little more than a money-grubbing, pocket-lining, capitalist tool.

What else could you call a candidate who has, according to confirmed reports in Salon.com, sizable personal investments in (take a deep breath now): oil giants ExxonMobil, Royal Dutch/Shell, BP Amoco, Occidental, Chevron, Enron, Sunoco, Texaco, Halliburton (the oil servicing company formerly headed by Dick "Big Time Bucks" Cheney), plus arms makers and war merchants Raytheon and General Dynamics, plus such deflowerers of forests, fields, streams, seas and human bodies as Boeing, Kimbery Clark, Louisiana Pacific, Biogen, Genentech, Monsanto, Bristol-Myers Squibb, E. Merck, Pfizer, Clorox, Proctor & Gamble, Philip Morris (cancer-stick makers), plus such eminent spreaders of rapacious, soul-deadening consumerism as McDonald's, Wal-Mart, The Gap, The Limited, Target, Home Depot, Circuit City, Staples and Gillette?

We speak, of course, of that multimillionaire master of the mega-markets: Ralph Nader.

Yes, dear Uncle Ralph, beloved godfather of the anti-capitalist movement, doyen of well-heeled celebrity leftists, official candidate of the Green party, has turned out to be the most corporately enmeshed candidate of them all. Naturally, this has not stopped him from training his rhetorical fire on Al Gore's "phony populism," lambasting the vice president for not forcing his mother to dump the Occidental stock she has in her trust fund. Gore himself owns no Occidental stock - unlike Nader, who has a big stake in the Fidelity Magellan Fund, which owns 4,321,400 shares of the offensive Occidental paper.

But why let a little thing like that get in the way of a crusading reputation? With his anti-corporate creed endorsed by such figures as Pearl Jam's Eddie Vedder (who's been bringing Ralph on during the band's concerts as "someone who represents us and not the corporate interests"), Nader has been gaining ground in several key states. Not enough to win, but possibly enough to tip the balance to the other corporate bagman in the race, George W. Bush.

In fact, the two wealthy candidates have become so close that late last week Bush Republicans began buying ads for their ostensible opponent Nader in a number of swing states - an act of generosity unprecedented in American political history. Maybe that's why the saintly Ralph has been taking the hatchet to Gore. He didn't get to be a millionaire by not knowing which side his bread is buttered on.



High on the Hog


But speaking of swinish behavior, some of the passengers on a U.S. Airways Philadelphia to Seattle flight were squealing with distress over the antics of one of their fellow first-class travelers - a great big snorting hog.


The unnamed animal had a front-row seat in first class for the six-hour flight, the Philadelphia Daily News reported last week. Actually, the porcine punter parked his pork belly on the floor, not in one of the comfortable recliner seats, but the airline admitted he took pride of place among the well-heeled sojourners. "We can confirm that the pig traveled, and we can confirm that it will never happen again," said an airline spokesman. Boss Hog was accompanied by two mysterious, as-yet unnamed females, who somehow convinced the airline that their pudgy pal was a "therapeutic companion pet," like a guide dog.

Unfortunately, Porky got a bit unruly toward the end of the flight. He began roaring up and down the aisles, and tried to bash his way into the cockpit. The pilot eventually got the plane down, and the hog was hustled away with no real harm done. Except to the sensibilities of the other reclinees in the posh compartment. As the incident report noted: "Many people were quite upset that there was a large, uncontrollable pig on board, especially in the first-class cabin." But aren't there always a few of those in first class?



Taken for a Ride


Anatoly Chubais, take note! The centerpiece of Britain's 1980s fire-sale privatization frenzy - in which a Yeltsin-like Maggie Thatcher sold off the crown jewels of the nation's public service sector - has, quite literally, gone off the rails.


The country's rail network was snarled to a virtual standstill this week, as officials of Railtrack, the privateers who oversee train service, moved to repair hundreds of kilometers of substandard track in the wake of the second fatal rail crash of the year.

Four people died in the latest smash-up, which occurred when a train slipped off shoddy track. Railtrack later admitted that there were gobs of bad steel transporting millions of people each day. The company clamped speed limits on most trains, throwing Britain's already notoriously late-running schedule into an intestinal knot.

By week's end, angry passengers were wondering why Railtrack, which has been minting gold for its shareholders and top officials in the past few years, failed to plow a few of those pennies into upgrading the ailing, antiquated system. It couldn't be that they were - gasp! - putting profits before people, were they?

TITLE: Putting Aside the Cleansing Power of Truth
AUTHOR: By Peter Kornbluh, Charles Kupchan and Diane Orentlicher
TEXT: AS Chileans confront their bloody past by moving to put Gen. Augusto Pinochet on trial for human rights atrocities, the United States is also finally beginning to address its own dark history of covert ties to his brutal regime. 


The Central Intelligence Agency admitted in a report sent to Congress last month that it used U.S. taxpayer dollars to buy close relations with Gen. Manuel Contreras, the man most directly culpable for the torture, murder and disappearance of thousands in Chile, as well as multiple acts of international terrorism abroad. 

When the scandal of CIA efforts to destabilize the elected Chilean government of Salvador Allende broke in 1974, the world first learned the ugly details of a covert intervention program, ordered by President Richard Nixon, to undermine Chilean democracy and usher in a military dictatorship. A special Senate committee conducted the first major investigation of what it called "extensive and continuous" operations to undermine Allende. 

"Make the economy scream," Nixon ordered CIA director Richard Helms, according to the first document declassified by the committee. 

But while much is known about the clandestine effort to undermine Allende, little information has been available on an equal, if not greater scandal: covert assistance to Pinochet's dictatorship. For 25 years, the CIA has obstructed all efforts to declassify any records on its "liaison" relations with Pinochet's military forces. The CIA has resisted even presidential mandates to declassify the record. 

It has taken the leverage of legislation to overcome the agency's pathology of secrecy. An amendment to the Intelligence Authorization Act directed the CIA to produce a detailed report on its involvement with Pinochet. Perhaps mindful that former CIA director Helms was convicted of lying to Congress in 1973 about covert operations in Chile, the agency has now decided to be more forthcoming. 

The declassified version of its report, "CIA Activities in Chile," presented to Congress on Sept. 18, acknowledges officially for the first time that the "CIA actively supported the military junta after the overthrow of Allende." It concedes that a number of Pinochet's officers "involved in systematic and widespread human rights abuses were contacts or agents of the CIA or U.S. military." 

The most important CIA asset was Contreras, the head of Chile's feared secret police, known as DINA. The report details three years of "contacts" with Contreras. It acknowledges that the CIA knew that Contreras was "the principal obstacle" to improving the regime's human rights record and a principal proponent of tracking and killing political opponents outside Chile. 

Even so, CIA officials who worked with him "recommended establishing a paid relationship" in mid-1975, and U.S. funds were passed to Contreras, ostensibly to obtain intelligence useful to U.S. interests. He repaid the CIA's largess by ordering a hit team to travel to Washington and assassinate former ambassador Orlando Letelier and his 25-year-old American associate Ronni Moffitt with a car bomb on Sept. 21, 1976. It was an unprecedented act of international terrorism in the U.S. capital. 

Last week, CIA officials finally yielded to pressure from the White House and agreed to declassify most of the hundreds of records on the history of covert operations in Chile that they had refused to release in August. A major declassification of State Department, Defense Department, FBI and CIA records is now scheduled for Nov. 13. 

However, the forthcoming documents are known to be heavily censored and significant portions of the historical record of U.S. involvement in Chile will remain concealed. Until there is full disclosure, there cannot be a full accounting of the U.S. ties to Pinochet's repression. 

By pursuing Pinochet, Chileans are courageously opening the door to a painful past and searching for what they call "the cleansing power of the truth." In the United States, we must do the same.


Peter Kornbluh is a senior analyst at the National Security Archive and author of the forthcoming book "The Pinochet File: A Declassified Dossier on Atrocity and Accountability." He contributed this comment to the Los Angeles Times.
*****
WITH Yugoslavia's nascent democracy still under siege from loyalists of former president Slobodan Milosevic, many Western leaders are tempted to let Milosevic slip quietly into the background despite having been indicted by the UN tribunal in The Hague for war crimes in Kosovo and facing likely charges for his role in the "ethnic cleansing" of Croatia and Bosnia. The Europeans are lifting sanctions against Yugoslavia and have made it clear that "war crimes are not a priority." 


While Washington remains formally committed to seeing Milosevic tried in The Hague, it has suspended key sanctions and officials have suggested that dealing with war crimes must take a back seat. Rebuilding a nation devastated by serial wars and international sanctions, the argument runs, is daunting enough without tackling the explosive issue of arresting Milosevic. 

While the question of Milosevic's fate surely requires deft diplomacy, the Balkans would pay a heavy price should he be allowed to settle into quiet retirement. Granting Milosevic de facto immunity would deal a decisive blow to not only the prospects for peace in the region, but also to the efforts of The Hague tribunal to combat crimes against humanity. 

De facto immunity would be a setback for Serbia. After its citizens have themselves rejected Milosevic, the international community should hardly resurrect him by placing the former president above the law. Yugoslavia's transition to democracy will also remain perilously incomplete unless its citizens are willing to confront the crimes that were committed in their name and to dispel the twisted myths that led their country astray. 

Before his election, Yugoslav President Vojislav Kostunica often described The Hague tribunal as a tool of the West, a point seized upon by people who argue that the new government in Belgrade should not be pressed to surrender Milosevic. But Kostunica recently acknowledged that cooperation with the tribunal "is a part of the Dayton accord, and there are elements of it which can and must be implemented." 

When asked if he thought Milosevic would ever stand trial, Kostunica replied, "Somewhere, yes." Yet, his government has not ordered Milosevic's arrest, he says, because of other priorities. 

It has become increasingly clear in the past few weeks that Serb opposition to Milosevic's arrest does not run as deep as many had supposed. Across Serbia, citizens are demanding he be held accountable. Still, many prefer to see Milosevic tried in Belgrade for crimes such as electoral fraud, whose victims were Serbs, rather than in The Hague for war crimes committed against Albanian Kosovars. 

This new attitude opens up the possibility for greater engagement with Serbia. It may even make sense for the tribunal to hold hearings in Serbia, so Yugoslavians can closely follow the proceedings. 

In light of Kostunica's delicate position, Europe and the United States need not insist on Milosevic's arrest in the weeks ahead. The West should bolster the new government by avoiding policies that might strengthen the opposition and by acting on decisions taken to lift sanctions, clearing the way for a quick infusion of humanitarian and economic assistance. But the international community should also make clear that Yugoslavia will not be eligible for full partnership in the community of nations as long as it flouts its obligations to surrender suspects indicted by the UN tribunal who are at large in Serbia, including Milosevic. 

When the UN Security Council established The Hague tribunal in 1993, its intent was not merely to ensure punishment for past crimes, but to prevent them from occurring in the future. If Milosevic soon finds himself in the custody of the tribunal, other autocrats contemplating ethnic slaughter will think twice before following through. If the international community instead gives de facto immunity to the tribunal's leading suspect, the deterrent power of the tribunal will be irredeemably compromised. 


Charles Kupchan, Shepardson fellow at the Council on Foreign Relations, is associate professor of international affairs at Georgetown University. Diane Orentlicher, professor of law at the American University, is a visiting scholar at Princeton University's program in law and public affairs. They contributed this comment to the Los Angeles Times.

TITLE: Mideast Peace Talks, Shootings Continue
AUTHOR: By Sergei Shargorodsky
PUBLISHER: The Associated Press
TEXT: JERUSALEM - Ahead of planned Mideast peace talks in Washington, the Palestinians complained that U.S. mediation has been ineffective and demanded that the European Union, Russia and the United Nations be asked to join the talks.


Israel said the Palestinians have been violating the latest truce meant to end more than five weeks of bloodshed.

Palestinian gunmen opened fire on several Israeli enclaves overnight. At the time of the shooting, the army chief of staff, Lt. Gen. Shaul Mofaz, was addressing soldiers in Nahal Elisha. At one point, Mofaz broke off his speech to take cover, but then resumed the presentation, the army said. The army fired tank shells in response to the shootings near Jericho and the West Bank town of Tulkarem.

Mofaz said Israel has kept its part in the truce agreement, negotiated last week by Palestinian leader Yasser Arafat and Israel's elder statesman, Shimon Peres, but that the Palestinians have not.

"When you have hundreds of shooting events in a week and dozens in one day, it's not a situation of a cease-fire," Mofaz said.

Arafat, meanwhile, renewed a demand for international protection. "I am asking for quick international forces to protect us, to stop this war, the massacres against our people," Arafat said an interview with the CBS TV news program "60 Minutes," broadcast Sunday night.

Scattered clashes Sunday across the Gaza Strip and West Bank left two Palestinians dead. In all, 170 people have been killed since Israeli-Palestinian fighting broke out Sept. 28. Of the victims, 141 were Palestinians killed by Israeli fire in rock-throwing clashes and gunbattles.

The Palestinians say the violence was triggered by the Sept. 28 visit of Israel's hawkish opposition leader, Ariel Sharon, to a major Jerusalem shrine revered by both Muslims and Jews.

Arafat told "60 Minutes" that ahead of the Sharon visit he had appealed to Israeli Prime Minister Ehud Barak and President Clinton to prevent the trip, warning it could unleash widespread violence, but that his concerns went unheeded. White House officials declined to comment Sunday night.

Arafat was to meet with Clinton in Washington on Thursday, and Barak was to hold talks with the president Sunday.

Arafat's senior adviser, Nabil Aburdeneh, said the Palestinian would demand that "the Israeli aggression against our people must be stopped."

Aburdeneh said the United States has been unable to guarantee the implementation of previous peace agreements and that additional mediators - specifically the European Union, Russia and the United Nations - must be asked to join the negotiations.

"Since the United States has failed to persuade Israel to implement the agreements, there is a need for other parties to be involved," Aburdeneh said.

Israel has said it would not accept additional mediators.

Israeli Foreign Minister Shlomo Ben-Ami said Arafat has raised the possibility of holding a three-way meeting with Clinton and Barak in Washington, but that Israel would only consider a summit once the violence has stopped.

Palestinian officials said Arafat plans to leave Washington before the weekend to attend a conference of Islamic states in Doha, Qattar.

In a new twist, meanwhile, Israel army radio said senior Israeli officials were considering releasing details about corruption in the Palestinian Authority, including the personal use Arafat and his ministers allegedly made of aid money.

Ben-Ami denied that such a campaign was being considered, saying there was already a "general consensus" in the world that Arafat's government was corrupt and that Israel did not need to emphasize this perception.

Aburdeneh accused Israel of waging psychological warfare. "This is proof of failure and weakness," he said.

TITLE: Yugoslav Foreign Minister Touts Ties
PUBLISHER: The Associated Press
TEXT: BELGRADE - Yugoslavia could patch up diplomatic relations with the United States and major European powers soon and start cooperating with the United Nations war crimes tribunal, the country's new foreign minister said today.


"It's only normal that we have close cooperation with the United States, with Russia," Goran Svilanovic told the Beta news agency the day after the new government was inaugurated.

Svilanovic, an ally of new president Vojislav Kostunica, said relations could be restored within a couple of weeks with countries that severed ties last year during NATO's bombing of Yugoslavia, including the United States, Germany and Britain. The country's first non-communist government in more than a half-century was sworn in late Saturday.

Following Slobodan Milosevic's ouster, Kostunica has been struggling to end a decade of international isolation. Milosevic and three associates were indicted by the UN war crimes tribunal at The Hague for alleged atrocities committed in Kosovo, a province of Serbia, Yugoslavia's dominant republic.

TITLE: Huge Shark Kills Australian Swimmer
PUBLISHER: Reuters
TEXT: PERTH, Australia - A large shark killed one swimmer and attacked another on Monday, turning the surf off one of Australia's most popular beaches into a "sea of blood."


Several hours after the dawn attack a small fleet of boats were circling the huge shark in an attempt to herd it out to sea.

The shark, which authorities said measured about 4.9 meters, tore through the torso and severed the leg of a 49-year-old man as he walked in waist-deep water only meters from the sand at Cottesloe Beach in Perth, Western Australia.

It then turned on a second man, who repeatedly pushed the shark away as he desperately raced for the safety of the beach, eyewitness Kim Gamble told Reuters.

"There was a whole sea of blood," Gamble said.

"From the balcony I could see this huge shark - it was really huge. When we saw the fin and the tail, people thought it was two sharks, it was so big."

Gamble said the shark attacked the first swimmer and began rolling and pushing the man through the water before releasing him to attack the second swimmer.

"It went for the other guy who was in a bit closer to the shore, and he was sort of back-pedaling and pushing it away."

The first swimmer was dragged alive from the water and died on the beach from his injuries.

The other man was taken to hospital with leg and foot injuries and was in a satisfactory condition, police said.

Local residents and shopkeepers watched several hours later as four boats from the Western Australia Fisheries Department tried to herd the shark away from the swimming zone.

Lifeguards closed Perth's beaches on Monday.

The shark is believed to be a Great White, a protected species in Australia and a ferocious member of the shark family which frequents temperate waters around Australia.

The two men were members of a local swimming club called the Cottesloe Crabs, whose members routinely hit the water shortly after dawn each morning.

Police said large sharks swim along the Western Australian coast chasing whales and schools of fish.

"At this time of year we have sharks, some very large sharks, swimming up and down the coast of Western Australia," said police inspector Alf Fordham.

Two surfers were killed in separate shark attacks within two days in neighboring South Australia in September.

In October 1997 two men paddling at Cottesloe Beach escaped uninjured when a five meter shark - believed to be a great white - bit their kayak in half.