SOURCE: The St. Petersburg Times
DATE: Issue #630 (0), Tuesday, December 19, 2000
**************************************************************************


TITLE: Taxman Threat to Gusinsky Empire
AUTHOR: By Simon Saradzhyan and Natasha Shanetskaya
PUBLISHER: Staff Writer
TEXT: MOSCOW - Tax authorities said Monday that their attempt to liquidate Media-MOST and its subsidiaries was not politically motivated and offered to settle out of court with Vladimir Gusinsky's independent media holding company.


"Liquidation of these companies is not the aim of the tax inspectorate," Tatyana Luzhina, chief of the tax inspectorate of Moscow's central district, told reporters.

In a separate case, the Prosecutor General's Office said Friday it wanted to seize Gusinsky's property in Spain as a part of its bid to have him extradited to Russia on fraud charges, Interfax said, citing prosecutor Pavel Barkovsky. Gusinsky was arrested Tuesday at his villa in southern Spain.

Luzhina's inspectorate filed a package of suits with the Moscow Arbitration Court earlier this month to liquidate Media-MOST and several of its daughter companies, arguing that their net assets are lower than required under the Civil Code. 

Article 99 of this code says if the net assets of a joint-stock company are lower than the minimum amount of charter capital required by law, the company must be liquidated. This is the case with the NTV and NTV Plus television companies, the Sem Dnei publishing house that includes the Segodnya newspaper, and the Media-MOST holding company itself, according to the suits.

The arbitration court is to begin considering the suits Jan. 17. However, the tax inspectorate may withdraw the suits if the companies bring their assets into line, Luzhina said.

Media-MOST spokesman Dmitry Ostalsky said, without giving specifics, that the holding will try to bring its financial structure into accordance with the law. 

"Unfortunately, Luzhina is formally right," Ostalsky said in a telephone interview.

But he stressed that Media-MOST sees Luzina's action as politically motivated. An overwhelming majority of Russian media companies also have net assets that fail to meet legal requirements, but only Media-MOST is targeted for liquidation, he said. 

And on Friday, Media-MOST released a statement saying: "For the first time, the final goal of the Kremlin's inhabitants has been openly and unashamedly revealed - media that have dared to criticize the authorities, to talk about their errors, about the failings of officials and corruption, should be liquidated." 

Luzhina confirmed that the liquidation suits against Media-MOST are the first her inspectorate has filed against such a large company. She denied, however, that they were motivated by political factors.

Federal Tax Minister Gennady Bukayev backed her up, telling reporters Monday that Luzhina's inspectorate did not consult him before filing the suits.

Media-MOST has seen its offices raided and faced several suits by creditors this year in what Gusinsky believes to be a Kremlin-engineered campaign against his media outlets, which have been critical of President Vladimir Putin and his policies.

Ostalsky said the fact that Luzhina waited for several months after Media-MOST filed its 1999 balances to her inspectorate in March before filing the suits shows the litigation is part of a political campaign. Luzhina said the suits were filed as soon as the violation was discovered.

Prime Minister Mikhail Kasyanov and Moscow Mayor Yury Luzhkov, whose office reportedly is owed $220 million by Media-MOST, joined tax authorities in saying they saw no political aspect to the case.

Former Soviet leader Mikhail Gorbachev, however, said in televised comments over the weekend that the tax inspectorate's litigation was a "step to liquidate not only NTV, but also other independent mass media outlets as channels of expressing ... independent opinions in the society."



Staff writer Andrei Zolotov also contributed to this report.




q

MADRID, Spain - Spanish state prosecutors on Monday opposed bail for Russian media magnate Vladimir Gusinsky, who is being held in Spain while Russia seeks his extradition on fraud charges, court sources said.


But Judge Baltasar Garzon, the High Court magistrate handling the case, gave the first sign he was considering letting Gusinsky out of jail to face what is expected to be a lengthy Spanish legal battle over his fate.

Garzon, known worldwide for his unsuccessful attempt to bring former Chilean dictator Augusto Pinochet to trial in Spain, asked police whether they could guard against Gusinsky's escape by assigning officers to watch him if he were freed, the court sources.

Police have yet to respond.

Gusinsky, a prominent critic of Russian President Vladimir Putin, is wanted on fraud allegations. He was arrested on December 12 at his luxury villa in the south of Spain on an international warrant.

Gusinsky's lawyers contend their client is being singled out for his Media-MOST group's criticism of the Kremlin, and the U.S. State Department has said the pursuit of Gusinsky posed a threat to the independence of the Russian media.

Prosecutors on Monday filed a motion seeking to block Gusinsky's release on bail, court sources said.

The High Court's chief prosecutor said last week that he saw nothing that would prevent Gusinsky's extradition. The court is not due to issue a ruling before early next year.

- Reuters

TITLE: Chubais, Illarionov in Frank Exchange Over UES
PUBLISHER: Combined Reports
TEXT: MOSCOW - Russian energy boss and leading Yeltsin-era "reformer" Anatoly Chubais rowed with an adviser to President Vladimir Putin on live television on Sunday over the carve up of Russia's giant electricity firm.


The government gave the green light Friday to urgent measures to keep the power sector online, but put off until February the approval of a long-awaited plan to revamp national power grid Unified Energy Systems.

The Cabinet also failed to clarify how it is going to deal with UES minority shareholders. 

"A period of uncertainty is inevitable when restructuring begins in a company of such a size," UES chairman Anatoly Chubais said at a news conference after the government meeting Friday.

UES ordinary shares, which lost 9.8 percent of their value on investor jitters Thursday, dropped another 13 percent Friday to 7.55 cents. The shares are at their lowest levels seen since May 1996.

But Chubais said the fall in the share price reflected general market fluctuations. He said his job was the revival and restructuring of the whole energy market and attracting huge investments.

The urgent measures approved Friday call for the creation of an independent grid operator, a central dispatch service, several generating companies and a group of wholesale traders, Chubais said.

But the guidelines for restructuring UES will only be outlined in two months and enacted by a decree signed by Prime Minister Mikhail Kasyanov.

The overhaul will then be carried out in three stages, in 2001, 2002 and a period lasting from 2003 to 2005. Trade and Economic Development Minister German Gref unveiled a restructuring proposal at the meeting Friday.

That plan was loosely based on the one submitted by Chubais nine months ago that called for UES to split generation and transmission into separate companies, liberalize the electricity market and keep the government's control over the national transmission grid.

The plan was approved in the teeth of opposition from some foreign investors and one of President Vladimir Putin's advisers on economic affairs, liberal economist Andrei Illarionov.

"Investors are voting, they are voting with their money, they are running from your company," Illarionov told Chubais on state-owned RTR television, referring to a slide in UES shares, as their discussion turned into a virtual shouting match.

"I want to annoy you. I will fully carry out my task despite your personal opinion, which is different from that of the state. You have to get used to this idea," responded Chubais, an architect of reforms under former President Boris Yeltsin.

Putin has already responded to the men's differences, saying during a visit to Cuba last week that debates within his team were healthy.

But the heat of the two men's debate was a rare public display of temper between officials.

Illarionov said the restructure plan was not transparent and would harm the interests of the state. He said it was not clear what the property or tax base of the firm would be after the restructure and what price would be set on the sale of company property.

Illarionov later criticised Chubais for his Yeltsin-era shares-for-loans deals, which many analysts say resulted in top state-owned companies being sold on the cheap to the benefit of the oligarchs.

"Andrei, my dear friend, if we had not done what we did you would never be adviser to the president. You should not touch our history, with all its pluses and minuses. I will answer for it before the nation and not to you," Chubais declared.

Other backers of the proposal said the detractors did not fully understand the gravity of the revamp.

"Illarionov's estimates are those of the economist, not an expert in the power industry," Gref said. "It's unnecessary to call public attention to discussions in the government."

Former Prime Minister Viktor Chernomyrdin and head of the State Duma Fuel Committee Vladimir Katrenko sided with Gref over the plan.

Also left undecided at the government meeting was the future of nuclear sites, which the Nuclear Ministry wants to bundle into one holding company in order to undermine fierce rivalry among plants in the European part of Russia.

Power analysts said they had anticipated the meeting's outcome.

"Basically, the government meeting yielded no results," said Natalya Baranova, head of research with CentreInvest Securities. "Chubais shunned answering the most sensitive questions."

- SPT, Reuters

TITLE: Analysts: U.S. Will Talk Tough
AUTHOR: By Daniel Mclaughlin
PUBLISHER: Reuters
TEXT: MOSCOW - The Kremlin said on Monday that it looked forward to working with new U.S. Secretary of State Colin Powell, but Russian analysts saw tough talking ahead between Moscow and a no-nonsense foreign-policy team in Washington.


President-elect George W. Bush named Gulf-War general Powell secretary of state and appointed academic and Russian specialist Condoleezza Rice as national security adviser on the weekend.

They face a raft of Russian-related topics as they prepare to re-align U.S. foreign policy after eight years of Democratic rule under outgoing President Bill Clinton.

Moscow's calls for an end to sanctions on Iraq, its aim to resume arms sales to Iran and its vehement opposition to Pentagon plans for an anti-missile shield loom over a new team which diplomatic analysts have said wants a more carefully defined, less engaged U.S foreign policy.

Foreign Minister Igor Ivanov sent a message to Powell saying he was ready for "active joint work with him, without pause or delay, for the good of the people in both countries," Interfax news agency reported, quoting his spokesman Alexander Yakovenko.

The note said Russia and the United States were "united by a wide range of agreement and a readiness to decide constructively and rationally problems which arise ... preserving and widening the positive potential accumulated over recent years."

But commentators said that the new Bush administration looked like it would be tougher on Russia than the Clinton team had been.

Pavel Felgenhauer, an independent defense analyst, said President Vladimir Putin's criticism of U.S. sanctions on Cuba on his visit to the island last week could only increase the likelihood of cooler Moscow-Washington relations under Bush.

"Both Powell and Rice are professional, very reasonable, but they are under no illusions," Felgenhauer said.

He described their attitude to Putin as: "If you want to be friends, then do it. Stop dealing with Castro, don't sell arms to Iran and then we'll see. Powell has said the jury is out, and if Russia behaves like an enemy, the reaction will be harsh."

Dmitry Trenin, of the Carnegie Endowment for International Peace, said he expected a change in Washington-Moscow relations.

"The future administration will approach things from a more traditional view of relations between major powers," he said.

"That means that there will be little support for the growth of democracy in Russia or for development of civil society, but [rather] emphasis on international relations such as those with Iran or regarding others which may worry the States."

"The approach will be more geopolitically orientated, more pragmatic from the U.S. side. It won't want to actively transform Russia from within."

TITLE: New Media Union Aims To Unite Press, State
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: Russian television personality Alexander Lyubimov was in St. Petersburg Monday promoting the Media Union - an organization to rival the decades-old Union of Journalists - whose main goal will be to foster cooperation between reporters and the authorities. 


Lyubimov held negotiations with local media outlets in the St. Petersburg League of Journalists - which is made up of editors from 15 of the city's biggest news outlets - to get them on board in the new union, which many analysts purport is backed by the presidential administration. 

And Lyubimov didn't come away empty handed: New recruits to the Media Union include some of St. Petersburg's leading publications such as the daily newspapers Nevskoye Vremya, Smena, St. Petersburgsky Vedomosti, Vesti, Delovoy Peterburg, and Chas Pik. 

The information agencies Severo-Zapad, Itar-Tass, IMA-PRESS, Radio Evropa Plus, Radio Baltica and local Channel 6 also said they will join. 

The get-together between Lyubimov and the St. Petersburg League of Journalists was organized by Rossbalt, a private news agency headed by Natalya Cher kesova, the wife of the northwest region's governor general, Viktor Cher ke sov. 

Cherkesov's offices, however, said Cherkesov had nothing to do with the meeting - although Cherkesov himself has in the past espoused the idea of doing away with independent media in the Northwest in favor of state-sponsored television overseen by his offices. 

At Monday's press-conference, Lyubimov, who is the general manager of the VID production company and formerly hosted ORT's Vzglyad political talk show, said the existing 44-year-old Union of Journalists had become politicized and outdated, and the Media Union answers the call to create a more modernized organization. 

"[The Media Union] which is needed at the moment should unite media employees and be authoritative for both journalists and for power," Lyubimov said.

The new union - founded on Nov. 30 by Lyubimov, general director of Itar-Tass Vitaly Ignatenko and Eduard Sagalayev, president of the National Association of Telebroadcasters and chairman of the board of TV6 - claims in its preamble to seek to establish a "journalistic community" that is defined as "a relatively organized, professionally unified corporate entity;" a "creative union of mass-media workers;" and a "media community."

Talk of creating the Media Union began at the beginning of November when, coincidentally, the current Union of Journalists began taking a critical stance against Vladimir Putin's administration for its treatment of media mogul Vladimir Gusinsky (see story, page 1).

But many analysts and journalists say the idea to create the Media Union comes directly from the presidential administration, whose members have often voiced an interest in creating "a single corps of journalists in the country." Likewise, provisions of the union's charter - such as one that would create a modern social-security system for mass-media workers - hint at turning journalists into civil servants of the state.

According to Alexei Pankin, a Moscow-based media analyst, the Media Union is strongly supported by Deputy Press Minister Mikhail Seslavinsky.

Instead of unifying journalists, however, Russian Union of Journalists head Vsyevolod Bogdanov said the new organization would make their voices even more fractured - and thus more easily ignored by the powers that be. 

"There is a danger that the solidarity of journalists could be shaken," said Bogdanov in a telephone interview Monday. 

"Just imagine a situation when we are protesting about something and the presidential administration says, look, there is another point of view, an absolutely different one, why should we think you are right?" 

Anna Sharogradskaya, head of the St. Petersburg Press Development Institute, agreed the purpose of the new union was to be divisive. "Democracy implies setting up different organizations, but here everything resembles a policy of 'divide and conquer,'" she said in a telephone interview Monday. 

Journalists were skeptical that the organization was even created with their interests in mind. 

"[The Media Union] is the invention of the Kremlin administration. This is their tactic to create so-called parallel structures," said Alexander Gorshkov, a St. Petersburg journalist, in an interview on Monday. "It is absolutely obvious that the authorities want journalists to be more loyal and to stop them from showing them up," he said.

"I don't believe the Media Union would be for everyone," said Olga Dramaretskaya, a reporter with Kommersant. "There were meetings all the time with the St. Petersburg League of Journalists and ordinary reporters were never invited." 

Igor Sidorov, head of the St. Petersburg Union of Journalists, recalled on Monday that he, too, was never invited to any of the league's discussions about signing up to the new Media Union. 

Still, supporters of the new Media Union, like Nevskoye Vremya editor and League of Journalists president Alla Manilova, insist that its primary goal is to protect freedom of speech. 

Manilova, however, was exposed in 1996 for being offered - and buying - a cut-rate city-owned apartment in exchange for the glowing coverage her paper gave then-Mayor Anatoly Sobchak in his election race against Vladimir Yakovlev. She also fired four reporters who stood up as whistle-blowers against censorship. The paper's stance shifted as soon as Yakovlev took office. 

The League of Journalists has its own past of kow-towing to power. In February, the league's vice president, two government officials and the head of the St. Petersburg government-owned Itar-Tass news agency issued a press statement warning that terrorists have smuggled millions of dollars into Russia in an attempt to bribe journalists.

But the league backed away from the statement in a fusillade of criticism from local journalists, which drew the attention of one of the league's biggest foreign benefactors. League president Manilova assured the Netherlands-based Media & Management Academy that the signed statement - presented at a press conference - was a "misunderstanding."

At present, observers can guess only dimly at what will be next for the union, but the Moscow-based Pankin does not think Lyubimov is fully in control of the project. "I have a feeling he doesn't know what he is doing himself," he said.

TITLE: Union Heads Ask for Lesin To Be Sacked
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - The Union of Journalists demanded the dismissal of Press Minister Mikhail Lesin and called for criminal charges to be brought against him.


In open letters Thursday to Prosecutor General Vladimir Ustinov and Prime Minister Mikhail Kasyanov, union chairman Vsevolod Bogdanov and secretary Pavel Gutiontov said Lesin should be charged with impeding the professional activities of journalists because of his decision to take a Sochi television station off the air.

The ministry suspended the license of Sochi's MAX-TV last week, saying the local election commission had complained about biased coverage of the mayoral race there. 

The election commission said MAX-TV spread slanderous information about Vadim Boiko, one of the two candidates on the ballot in the Dec. 24 runoff.

MAX-TV contends that it never received any warnings from the local election commission. Yury Med ve dyev, Boiko's opponent, has accused Boiko of being behind the sudden silencing of MAX-TV.

An unidentified Press Ministry spokesperson was quoted by Interfax as saying that the election commission "on Dec. 9 rescinded its complaint of Dec. 6." But a Sochi court had ordered that the decision to rescind the complaint be suspended until a court can consider the issue, the spokesperson said.

The State Duma voted 226-117 Friday against an initiative to request information about the Sochi elections from Alexander Veshnyakov, chairman of the Central Elections Commission.

During the debate, Union of Right Forces leader Boris Nemtsov said Med ve dyev had not been given a chance to campaign properly and warned of possible election fraud in Sochi, Interfax reported.

TITLE: Communist Governors Win Control of 4 Regions
AUTHOR: By Sarah Karush and Ana Uzelac
PUBLISHER: Staff Writer
TEXT: MOSCOW - Perhaps it was the boyish charm of the 34-year-old, sweatshirt-clad candidate. Or maybe it was his close ties to the Kremlin. Or the millions of dollars worth of humanitarian aid he poured into the impoverished region.


Whatever the reason, something told Chukotka Gov. Alexander Naza rov he didn't stand a chance against oil and aluminum tycoon Roman Abramovich.

So without a word, Nazarov, who has headed the northeastern territory for 10 years, pulled out of the governor's race on Saturday, leaving Abramovich without any serious competition. 

In exchange for his graceful exit, Nazarov will get to serve as the new governor's representative in the Federation Council, they said.

Abramovich controls the Sibneft oil company and Russian Aluminum. According to media reports, he has distributed $15 million worth of humanitarian aid among the region's 70,000 residents. 

Abramovich's backroom victory was not the only election drama this weekend. In Sunday's election in Marii-El, federal officials succeeded in toppling incumbent Vyacheslav Kislitsyn, who is blamed for rampant corruption and poverty in the Volga River republic. 

But elsewhere, the Kremlin was less successful, with the Communists winning control of four regions.

Alexander Chernogorov, the Communist-backed governor of the Stavropol territory, won that region's election in the second round Sunday.

Chernogorov, who has fairly good relations with Moscow, won 56.6 percent of the votes, while challenger Sta ni slav Ilyasov took 36.3 percent, Interfax reported.

In Ryazan, Communist Vyacheslav Lyu bimov was re-elected in the second round with about 65 percent of the votes, Interfax said. 

State Duma Deputy Vladimir Tik ho nov, head of the Communist Party's local committee in the Ivanovo region, won the governor's seat there. Voters in the Far East region of Kamchatka chose both a Communist governor and mayor: Mik hail Mashkovtsev and Yury Golenishchev respectively.

Communist Party leader Gennady Zyuganov boasted Monday that the results of the regional elections are the best denial of "rumors spread by the liberal press" that the Communists and their allies have been weakened.

According to some reports on the regional elections that have been going on all fall, the Kremlin has chosen its battles carefully, but Marii-El was one region where Kremlin officials made clear they meant business.

A highly placed official in the presidential administration said earlier this month that Kremlin officials were unanimous in their desire to prevent Kislitsyn's re-election.

Kislitsyn received 32 percent of the vote, while Leonid Mar ke lov, deputy director of state insurance company Rosgosstrakh, took 56 percent. 

Gubernatorial elections were held Sunday in two more regions: Ark han gelsk, which re-elected incumbent Anatoly Yefremov, and the Komi-Permyatsky autonomous region, where Gennady Savelyev, defeated incumbent Ni ko lai Poluyarnov. 



Staff writer Andrei Zolotov contributed to this report.

TITLE: Minister Hits Out at Labor Code's Critics
AUTHOR: By Sarah Karush
PUBLISHER: Staff Writer
TEXT: MOSCOW - As the country's unions kicked off a week of protests against the government's proposed Labor Code, Labor Minister Alexander Pochinok said Thursday he would be willing to sit down with pro-union legislators and hammer out a compromise.


But even as he extended an olive branch, he lashed out at the unions for spreading what he said was misinformation about the government's proposal.

"Those who are going to these protest actions have not read the government's proposal," Pochinok said.

Labor leaders have objected to measures in the government's proposed code that would diminish the role of unions, make it easier to fire workers and could extend the work week to 56 hours. Pro-union legislators have offered an alternative proposal, and the State Duma is due to take both versions up for discussion next Thursday.

Pochinok conceded that the deputies' version is an improvement over the current Labor Code, which has changed little since 1971, but he said it did not go far enough. He said he would support the creation of a conciliation commission.

But sounding exasperated, Pochinok said the unions had misrepresented the government version.

On the issue of firing, for example, he said the government's version offered an exhaustive list of reasons a worker could be dismissed, which he said varied little from the current Labor Code.

"Only one thing has been taken away - the requirement of union consent [for a dismissal]," Pochinok said. 

Labor leaders argue that excluding the unions from the process could lead to arbitrary firings and vindictive dismissals of union activists.

But Pochinok argued that there has been "an avalanche of cases when small labor organizations are formed with just one goal: so that they can say, 'Comrades, come to our organization and we will never give approval for your dismissal.'"

He said the case of the union at a McDonald's food processing plant in the Moscow region was just such an instance. 

"Go and see how they [McDonald's] are oppressing the working class," Pochinok said. "For all of its existence, there hasn't been one delay in wages at that workplace. They have a splendid program of benefits. The working conditions are in line with all norms for lighting and safety. But they really did make a mistake. They didn't listen to the union that was formed. They are naive people."

The union at the McComplex plant says the company harasses its members and that conditions are not quite as ideal as Pochinok says.

On the issue of maternity leave, Pochinok said the unions had simply gotten their facts wrong. "They say we are taking away the three-year maternity leave. We are not taking it away. It says three years right here," he said.

Irene Stevenson, Moscow field representative at the AFL-CIO's Solidarity Center, conceded that she and others had been under the mistaken impression that the government wanted to cut maternity leave.

Even so, she said, the government's proposal offers a much harsher blow to women than a cut in maternity leave. Under existing legislation, pregnant women and women with children under three years cannot be fired. The government's proposed code says that a pregnant woman or woman with young children may be fired with due cause.

The lack of protection means that a woman who opts to return to work will be at greater risk of losing her job and jeopardizing her seniority than a woman who opts to take the leave and scrape by on miserly government child-support payments, Stevenson said.

TITLE: State Duma Votes for Prison Reforms
AUTHOR: By Sarah Karush
PUBLISHER: Staff Writer
TEXT: MOSCOW - The State Duma voted unanimously Friday for measures that would lighten the burden on the country's overcrowded jails, including limits on the amount of time suspects can be held behind bars.


The bill is expected to encounter little opposition on its way to becoming law. It was passed in the second reading with 350 deputies voting in favor and no dissenting votes, Interfax reported. 

Oleg Filimonov, deputy head of the Justice Ministry department that runs the prisons, said in a telephone interview that the bill was expected to reduce the prison population by 200,000 to 250,000 over two years. There are 920,000 prisoners in Russia, 220,000 of whom are in pre-trial detention centers, Filimonov said.

The bill would impose a one-year limit on the amount of time a person can be held during pre-trial investigation. There would also be a one-year limit on detention during the trial, except when the defendant is charged with a very grave crime. Currently, there is a 1 1/2-year limit on pre-trial detention during the preliminary investigation, but no limit on detention during the trial.

Alexander Urmanov, aide to Pavel Krasheninnikov, head of the Duma's legislation committee and a former justice minister, said the bill also decreased possible sentences for certain crimes.

Urmanov said the bill would likely get its third and final reading in the Duma in January and is expected to be supported by the Federation Council and the Kremlin.

"Everybody understands that something needs to be changed here," he said.

Filimonov said the one-year limits would go a long way toward easing chronic overcrowding in pre-trial detention centers, where prisoners sleep in shifts and tuberculosis is rampant.

Some human rights advocates have suggested that conditions in pre-trial detention adversely affect the justice system by discouraging defendants from pleading innocent and appealing their convictions.

Other measures in the bill are aimed at easing conditions for convicts. 

For example, prisoners would become eligible for parole after serving a third of their sentence, whereas now they must first serve half of their sentence. The bill would also let more types of convicts serve their sentence in minimum-security facilities, Filimonov said.

TITLE: IN BRIEF
TEXT: Swiss Continue Probe 

GENEVA (Reuters) - A Swiss prosecutor said Friday he would continue to investigate alleged bribe-taking by former Kremlin officials from two Swiss companies and said Russia's decision to close the case was politically motivated. 

Bernard Bertossa, Geneva's chief prosecutor, said he had recently exchanged fresh documents with judicial authorities in Moscow concerning the high-profile investigation. 

The Prosecutor General's Office said Wednesday it had dropped its investigation into alleged bribe-taking by senior government officials from construction companies Mabetex and Mercata, involved in Kremlin renovation deals. 

Bertossa said his inquiry would be complicated by the move. "It becomes difficult to prove that funds manipulated in Switzerland come from money laundering, as we have to prove they are of criminal origin," he said. 



Official Tries for Bail 

ST. PETERSBURG (SPT) -Tatyana Sosedkina, lawyer for jailed City Hall official Dmitry Solonnikov, has filed a request that her client be freed on bail on health grounds. 

The City Court, which will eventually try Solonnikov on corruption charges, will hear the bail appeal Tuesday, RBC news agency reported.

Solonnikov, deputy head of the City Media Committee, was arrested in October and charged with embezzling funds intended to be spent on media surveys. 



Lenin Debate Put Off 

MOSCOW (AP) - The State Duma on Friday decided to put off a bitter discussion about removing Lenin's body from its mausoleum on Red Square. 

The reform-oriented Union of Right Forces drafted an appeal to President Vladimir Putin to decide the fate of Lenin's body. It suggested that the mausoleum be used as the base for a museum of political repression. 

The Communist Party vehemently objected to the measure, which had been scheduled for discussion Friday. 

Other reform-oriented parties like Yabloko said it would be better to take up the fight later.



Alexy II Attacks West 

MOSCOW (SPT) - The head of the Russian Orthodox Church, Alexy II, attacked the West on Friday for attempting to corrupt the morals of the Russian people.

"We must realize that a planned, bloodless war is being carried out against our people with the aim of destroying them," Alexy II said in a speech at the annual diocesan meeting, Interfax reported.

The patriarch blamed the West for a flow of pornographic magazines, contraceptives, drugs and alcohol into Russia and the promotion of a lifestyle suited to "Sodom and Gomorrah."

Alexy II said the church was the only counter to these threats. "We have to get the Russian people to fight for the lives of their children," he said.



No Mad Cow Talk 

MOSCOW (AP) -The State Duma on Friday voted down a proposal to discuss a ban on imports of meat and meat byproducts from European Union countries, which had been prompted by fears of the spread of mad cow disease. 

Supporters of the ban could collect only 181 votes in favor - short of the 226 needed to start discussion. Sixty-seven lawmakers in the State Duma voted against putting the debate on the agenda, and one abstained. 

Deputy Prime Minister Alexei Gordeyev, who is also agriculture minister, said that no case of the disease had been detected in Russia.

TITLE: Rebel Raids Force Army Rethink
PUBLISHER: Combined Reports
TEXT: NAZRAN, Southern Russia - Rebels fired on the mayor's office in Chechnya's capital Grozny on Sunday, prompting a shoot-out with police and guards that left four dead and several bystanders wounded, officials said. 


The attack came two days after a Russian announcement declaring a radical shift in strategy geared toward deterring just such attacks. 

Sunday's was one of the most daring of several recent attacks by rebel Chechens on pro-Moscow Chechen officials. The raids highlight the difficulty Russia is having restoring order to the breakaway republic and how weak its hold is on areas it claims to control, such as Grozny, The Associated Press reported. 

A large group of rebels was taking up positions to storm city hall where they were discovered by Grozny Mayor Bislan Gantamirov's guards, Gantamirov said on Russia's state-run RTR television. 

The rebels exchanged fire with the guards and Chechen police for just under an hour and the shoot-out ended when Russian troops arrived from their nearby base, he said. 

Citing police, the ITAR-Tass news agency said two police officers and two militants were killed, and several guards and bystanders were wounded. Russian troops closed all traffic to and from the bomb-shattered city, and 10 people were detained on suspicion of involvement in the attack. 

"The city is swarming with rebels and this is no secret to anyone," he said during a round-table discussion on Chechnya broadcast on RTR. 

It is just such hit and run type attacks by rebel units that led armed forces chief of staff Anatoly Kvashin to announce a new strategy in the struggle against rebel forces on Friday. According to Kvashin, Russian troops will be taken out of the safety of army bases and deployed in small contingents across the rebel region. 

He also said that a task force would hunt down leading Chechen commanders who form the backbone of rebel resistance 14 months after Russia mounted its second campaign to crush the separatists. 

"I think that this will be the most resolute stage of the anti-terrorist operation," Kvashnin said in an interview with the military daily Krasnaya Zvezda, using Moscow's preferred term to describe the military drive. 

The decision illustrates the degree of exasperation in the Kremlin with the military's inability to stamp out rebel attacks and stem a steady trickle of Russian casualties. 

"Alas, they do not have the influence hoped for by the federal authorities,'' said Russia's chief envoy on Chechnya, Sergei Yastrzhembsky, on RTR Sunday, The Associated Press reported. 

"The problem is that there is not a single man among the leaders of Chechen society who can say he enjoys support of an absolute or even relative majority in the Chechen republic.'' 

The military has repeatedly vowed that it will deal the rebels a crushing blow this winter. 

Russia's long-standing strategy has provided for troops based in a handful of strong points to launch search-and-destroy raids against the rebels, backed up by shelling.

Kvashnin said by fanning out across the province, police and troops would hobble the rebels' movements and stop them blending with civilians often willing to give them food and shelter. 

"Such garrisons will be stationed in more than 200 of Chechnya's 357 towns and villages," he said. Kvashnin dismissed suggestions that he might have insufficient manpower, saying his force stood at much more than the 26,000 servicemen who fought and lost a war in 1994-96, after which Russia withdrew from the region. 

He gave no exact figure, though Russian officials say troop strength has been reduced from a high of about 100,000 during heavy fighting earlier this year. 

The move also aims to give at least some protection to local pro-Moscow administrators, who are frequently targeted by rebel hitmen. 

He conceded that Moscow had so far failed to improve living standards in the impoverished republic, where work is scarce and little rebuilding has been done. But he pleaded with Chechens to take no money from the rebels.


(AP, Reuters)

TITLE: In Canada, Putin Hints at Future Ecological Career
PUBLISHER: Combined Reports
TEXT: OTTAWA - Russian President Vla di mir Putin, fresh from a visit to Cuba to restore ties with Moscow's long-standing ally, arrived in Canada on Sunday to seek common ground on international disarmament and other key issues, Reuters reported.


The agenda may also include the environment. In an interview with the Toronto Globe and Mail and Canadian television, the Russian president expressed his long - and, by most accounts, well-hidden - admiration for environmentalists. 

"I've often thought about what I should do when my term expires," Putin said in the interview, adding that he was considering joining their ranks, the Globe and Mail reported. 

"To be honest," the paper quoted him as saying, "I've always admired people who devote their lives to environmental problems. I've watched with astonishment as a group of people on a little boat try to oppose a huge military or industrial ship. I must say this inspires only sympathy."

Canada was the last of the G7 industrialized countries Putin has visited since his election in March, Reuters said. During a three-day trip intended to stress similarities between two nations with vast Arctic expanses, the Russian leader was to meet Prime Minister Jean Chretien. 

Putin and Chretien will almost certainly discuss the new administration of U.S. President-elect George W. Bush and the proposed National Missile Defense (NMD) system he backs. Both Moscow and Ottawa fear it could undermine a crucial treaty designed to prevent nuclear proliferation.

But even before his arrival, lobby groups and editorial writers signaled they would take issue with him over Russia's bloody campaign to crush separatists in Chechnya and the Kremlin's treatment of the independent media, Reuters reported.

In an editorial, the Toronto Star asked, "Why is Canada rolling out the red carpet for Vladimir Putin, chief architect of the genocide in Chechnya?" and said Chretien would be wrong to soft-pedal concerns over human rights.

"If Canada's human security agenda has any moral code to it, Chretien will demand of Putin that Moscow stop dodging an international inquiry into Russian atrocities in Chechnya ... and grant Chechnya the greatest possible autonomy," Reuters quoted the paper.

The Canadian Jewish Congress urged Chretien and other officials to protest against the arrest in Spain of media magnate Vladimir Gusinsky and to speak out against what liberals see as attacks on independent media, according to Reuters. 

Gusinsky, jailed briefly in June, is head of the Russian Jewish Congress. He faces fraud charges in Russia.

Canadian officials say they intend to raise these issues, particularly Russia's record in more than a year of military operations in Chechnya.

But with disarmament high on the agenda, both countries will stress their concerns about Bush's plans to alter the 1972 Anti-Ballistic Missile Treaty. Bush proposes amending the treaty to proceed with NMD and guard against missile strikes by "rogue states" like Iran and North Korea.


(Reuters, SPT)

TITLE: Religious Groups Threatened by Deadline
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - Hundreds and perhaps thousands of religious organizations around the country are unlikely to meet a Dec. 31 deadline for re-registration and thus may be forced to disband or severely limit their activities, a prominent religious rights lawyer said Friday.


Only 56 percent of about 17,500 organizations registered under a 1991 law on religion had been re-registered by July under a stricter 1997 law, Alexander Kudryavtsev, a presidential administration official in charge of relations with religious organizations, said Friday. More recent figures are not available, he said. 

Lawyer Anatoly Pchelintsev said many Russian Orthodox parishes, Moslem groups and Protestant churches, mostly in the distant regions, have ignored the requirements or waited too long, or faced resistance on the part of local authorities and had to spend months fighting in court.

Groups that belong to a "centralized" organization, such as the Moscow Patriarchate or Union of Evangelical Christians-Baptists, may be able to register next year as new organizations. 

But small churches of religious organizations new to Russia, often described as "sects," are likely to be downgraded to "groups," said Pchelintsev, head of the Law and Religion Institute. They would thus lose their right to hold services in public places, distribute literature, own property or invite foreign guests.

Pchelintsev said that across Russia, authorities have been particularly hard on Pentecostal groups, often denying them registration for ridiculous reasons.

In Cheboksary, he said, a Pentecostal group was initially refused registration on the grounds that it prayed for healing without having a medical license. 

The Moscow branch of the Salvation Army was recently denied registration on the grounds that as an "army," it represents a "security threat." Kudryavtsev, however, said the decision was "illiterate" and predicted the Salvation Army would eventually be registered.

TITLE: Scientists Warn of Asteroid Hit
AUTHOR: By Kevin O'Flynn
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russian scientists warned last week that life as we know it could end as early as Thursday, if any one of the massive asteroids whizzing through the cosmos should happen to be making a beeline for Earth. 


"There is a threat to humanity," said Vadim Simonenko, deputy head of the Institute of Technical Physics. 

Simonenko was among the impressive array of experts at a news conference with a title straight from a 1950s B-movie: "Asteroid Danger: How to Save the Earth From Cosmic Catastrophe." 

The conference, held Thursday at the House of Journalists, brought together astronomers, physicists and nuclear experts to urge global cooperation in saving the world from a devastating asteroid collision that could leave millions dead or even wipe out civilization entirely. 

With asteroids measuring up to 10 kilometers in diameter and traveling at speeds of up to 20,000 kilometers an hour, Earth would stand little chance if it was hit by a big one. 

The gathering - including Simonenko, whose institute is a part of the Russian Nuclear Center - called for the organization of a world body to scour space for incoming objects and destroy any potentially dangerous flying objects with nuclear missiles. 

In the case that preemptive measures fail, the citizens of the world should be prepared to relocate to the moon, the scientists added. 

"After a collision with one of these asteroids, there'll be only fragments left of Earth," said Alexander Bagrov, senior scientist at the Institute of Astronomy. 

Bagrov added that current technology allows experts to detect incoming objects no earlier than three days ahead of time - hence the suggestion the day of reckoning may come as early Thursday. 

Bagrov, a tall, thin balding man with a moon-like face, led the rallying cry of the doom-mongers, telling grim tales of other planets done in by asteroids.

Five billion years ago, he said, the planet Phaeton - located between Mars and Jupiter, the area where the orbit of most asteroids lies - exploded into millions of bits after being hit by an asteroid 1,000 meters wide. The asteroid that destroyed Phaeton also went on to cause the demise of life on Mars, when one of the fragments of the shattered planet whacked into Mars, causing it to sink into a nuclear winter that killed all life forms and turned it the red color it is today. 

Comets and asteroids have been slamming into Earth since time began. But it has only been in the last 10 to 20 years that scientists have started seriously to consider the threat that so-called NEOs, or Near Earth Objects, potentially pose to contemporary civilization. 

"Ten years ago it was thought fantastic," Simonenko said of the concept that life could be wiped out by a NEO hit.

Everything changed, however, when an American scientist proved that a huge crater in the state of Arizona was caused by a meteorite and not, as previously thought, by volcanic activity. 

Scientists now agree that there are millions of asteroids out there that have a chance of hitting the Earth.

If an object of more than 10 kilometers in diameter hits the Earth then there's not much chance of anyone surviving, according to a British task force that earlier this year published research on NEOs. Luckily, the chance of that happening is about once every hundred million years, the research said. 

More dangerous are smaller objects of one kilometer or more which could destroy cities, change the climate and cause huge tidal waves all over the Earth. 

There are roughly 1,000 such asteroids, roughly half of which have been identified as unlikely to strike the Earth. 

Russia has already been hit by two large asteroids in the last 100 years. In 1908 an asteroid crashed into Tunguska, a remote area of Siberia, causing devastation across an area the size of London. Nearly 40 years later another asteroid hit Sikote-Alin, also in Siberia, smashing more than a 100 craters into the land.

According to Anatoly Zaitsev, the head engineer at the Scientific Production Association, a manufacturer of satellites, an international body is needed to track all flying objects and act quickly with nuclear missiles if needed. 

If the big one does come, Zaitsev added, people should be prepared to evacuate the planet, perhaps relocating to the moon.

But how will we choose who goes, someone asked. "Ah, that's the problem," Zaitsev said.

TITLE: Norwegian Bank Taken Over
PUBLISHER: The Associated Press
TEXT: OSLO, Norway - The Norwegian government on Monday approved the $3 billion takeover of Norway's second largest commercial bank, Christiania Bank og Kreditkasse, by the Nordic region's largest banking group, MeritaNordbanken. 


The Finance Ministry said it granted a license to the Finnish-Swedish bank on condition that Christiania continue to operate as a Norwegian bank under national rules. That approval was the last hurdle for the takeover. 

MeritaNordbanken's drive to acquire Christiania started with a bid in August 1999. The breakthrough came two months ago when the Norwegian government agreed to sell its 34.6 percent stake in the Norwegian bank. 

MeritaNordbanken succeeded in acquiring more than 90 percent of the smaller bank's shares with an offer that valued Christiania at $3 billion.

TITLE: IN BRIEF
TEXT: AOL Merger Is On

WASHINGTON (Reuters) - America Online won the blessing of U.S. antitrust authorities on Thursday to buy Time Warner in a $112.5 billion deal that will marry a new-economy Internet giant with a venerable old firm to create the world's biggest media company.

The world's largest Internet service provider will join up with Time Warner's movies, news, magazines and television programming.

The U.S. Federal Trade Commission voted 5-0 to approve the settlement - lasting five years - with conditions opening up Time Warner's cable lines to competition and ensuring consumers have a wide choice of content.



Microsoft Profits Down

SEATTLE (Reuters) - In an unprecedented earnings warning by the world's top software company, Microsoft Corp. said Thursday that its quarterly profits would miss forecasts by 5 to 6 percent, dragged down by an industry-wide slump in consumer and business sales.

The lower forecast rounded out a cycle of bad news for technology companies, including profit warnings by the world's No. 1 PC maker Compaq Computer Corp. and the leading semiconductor manufacturer, Intel Corp.

Microsoft projected that revenue for its second quarter ending Dec. 31 would come in at $6.4 billion to $6.5 billion, while earnings per share would be 46 cents or 47 cents, below the Wall Street consensus estimate of 49 cents per share.



Seagram Buyout

LONDON (NYT) - Diageo PLC and its partner, Pernod-Ricard SA, are poised to buy the Seagram Company's wine and beverage business for about $8.2 billion, beating out a rival consortium, people involved in the negotiations said today.

Diageo and Pernod are preparing to sign a deal as early as Monday with a formal announcement scheduled for Tuesday, although last-minute delays are still possible, these people said.



Publisher Deal

AMSTERDAM, Holland (AP) - The Dutch publishing company that owns Nielsen's U.S. media ratings business is now buying the overseas ratings operations for $2.3 billion.

The deal will give VNU NV, based in Haarlem, The Netherlands, a worldwide market intelligence group and reunites the two halves of Nielsen's ratings business that were split in 1996 into two companies: Nielsen Media Research and ACNielsen Corp.

VNU is offering $36.75 a share for U.S.-based ACNielsen Corp. The deal is expected to close in the first quarter of next year, subject to approval by regulators, both companies said Monday.



Gene Food Report

NEW YORK (NYT) - A blue-ribbon biotechnology committee formed by the United States and the European Union is expected to recommend that Washington strengthen regulation of genetically modified foods and move toward mandatory labeling, according to some panel members.

The report, made public Monday at a summit meeting in Washington between President Clinton and leaders of the EU, says that consumers should have the "right of informed choice" about what they eat, and that the United States and EU will "establish content-based mandatory labeling requirements for finished products containing novel genetic material," according extracts read by one panel member.

TITLE: MARKET WRAP
TEXT: Trouble at Home, Abroad Takes Equities to Year Low 


Equities dropped to year lows on a cocktail of external and domestic factors.


Turkey's political scandal escalated to a new level, undermining the government's chances of getting its much-needed bailout package from the IMF.

Declines in the U.S. markets on the heels of a poor corporate earnings forecast fueled further sell-offs in emerging markets the world over.

Brent futures shed 2.5 percent to $25.89, while Urals hovered close to $22 per barrel, triggering sales of oil stocks.

At home, clouds gathered around Vladimir Gusinsky's Media-MOST, which the tax police threatened to close on legal grounds, sparking another bout of speculations about the freedom of press in Russia.

On the week, the RTS index dropped 16.1 percent to 136.71 after a string of dour trading sessions following Monday's Constitution Day celebrations.

LUKoil led the decline with a loss of 25 percent to $8.05, so its preferred shares, which shed 15 percent on the week to $8.50, are now traded at a premium to ordinaries.

Bellweather UES dropped 21 percent to 7.55 cents a share, backpedaling to a level last seen in May 1996 when Boris Yeltsin was in the middle of a public brawl with Communist leader Gennady Zyuganov.

Aeroflot was the only top-tier stock to hold firm, losing a meager 1.8 percent to 22 cents a share.

Having lost about a quarter of its value since the year's start, the market is entering a dead season.

"This is going to be the last week of activity in the market," says Jesse Loeb, head of trading with NIKoil brokerage. "We already see some bargain-hunting, but nobody is going to dive into the market."

Assuming the dust settles in the United States, traders forecast a bright future for those who carry faith in Russia throughout the next year.

"We expect a rally to unfold," says Alexei Bachurin, head of sales with IFK Metropol. 

"The Russian market could outperform when the situation in the U.S. shapes up," says Loeb from NIKoil. "We are going to see a dynamic market next year."

TITLE: Struggling Chrysler Posts Major Losses
AUTHOR: By Hans Greimel
PUBLISHER: The Associated Press
TEXT: FRANKFURT, Germany - DaimlerChrysler AG warned Monday that its limping Chrysler division could chalk up an estimated $1.2 billion loss in the fourth quarter, and hinted that financial problems at the troubled automaker will get worse before they get better. 


In a letter to the company's shareholders, chief executive Juergen Schrempp blamed the losses on tough competition from the U.S. market and on the costs of launching several new models, including the PT Cruiser, the Dodge Stratus and a new minivan. 

The news means U.S.-based Chrysler will spill more than twice the amount of red ink it bled in the third quarter, when it posted its first loss in years. The $512 million setback rattled investors and forced Schrempp to oust Chrysler's top management. 

Schrempp didn't provide specific fourth-quarter numbers, but warned Monday that Chrysler's year-end operating profit would shrivel to 500 million euros ($445 million). That's a drastic change from last year, when Chrysler generated $4.6 billion in profits. 

Analysts said Monday's readjusted earnings figures amount to a $1.2 billion loss for the final quarter of 2000 at Chrysler. Reacting to the bad news, shareholders drove the share price down 1.6 percent to 47.09 euros ($41.91) in Frankfurt trading. 

Schrempp did not detail where the Chrysler earnings would fall short, but added that the division has "been hurt by the unusually fierce nature of the competition that has occurred in the historically profitable niches in which it has operated; the minivan, the sports utility and the pickup truck segments." 

The company has been forced to offer huge price incentives to lure more customers to their sales lots. Those bargain prices were, in part, blamed for the third-quarter losses. 

"It's hard to tell what they're including in the figures," said Thomas Aney, an auto analyst with Dresdner Kleinwort Benson in Frankfurt. "Until we hear the restructuring plan in February and see the actual year-end results, it's difficult to say if this is the beginning of the end or just the end of the beginning." 

Schrempp didn't predict a turnaround anytime soon. "In 2001, we believe that the competitive market environment will continue to intensify and that our underlying financial performance, particularly in the United States, will reflect this," he wrote. "We will face a year even more challenging than 2000." 

"Although Chrysler is going through a challenging period right now, we are confident that the Chrysler merger, the alliance with Mitsubishi Motors and the acquisition of a stake in Hyundai will bring us the worldwide growth opportunities and the economies of scale we need in order to create long-term shareholder value," Schrempp said. 

Dieter Zetsche took over Chrysler in November after former president James Holden was ousted. Zetsche is expected to outline his plans for the division in February.

TITLE: Kasyanov Adviser Plays Down Talk of Rifts
AUTHOR: By Alexander Bekker
PUBLISHER: Vedomosti
TEXT: As the head of the prime minister's internal administration, Igor Shuvalov is charged with controlling a strong-willed organization that has poisoned the lives and crushed the careers of many a government official. 


But Shuvalov is determined to transform Prime Minister Mikhail Kasya nov's office from one that, at times, has seemed out of control to an administrative arm that realizes the interests of the Cabinet. 

Shuvalov said that a velvet revolution is taking place. One of the most significant changes so far has been that the Cabinet's administration has already stopped acting as an extension of the Kremlin and now acts as an equal to the presidential administration.



Q: How strong is the structure of the Kasyanov Cabinet?


A: It is still too early to make a valid judgment. Nikolai Pizhkov, the former chairman of the Council of Ministers of the Soviet Union, at one time said that no less than three years are required to become an effective deputy minister and at least one year is needed to gain some stature. I think a year is required in order to evaluate Kasyanov's Cabinet. Six months have passed. 

For the sake of fairness it is necessary to say that the government has already achieved some things. Step by step, the government is approaching the task of reforming the natural monopolies. One feature about Kasyanov as a prime minister is that he is not trying to decide everything with one stroke. He has told the ministries more than once that "we don't have the right to failure." Kasyanov says that we cannot allow ourselves to carry out reforms of the Railways Ministry and Unified Energy Systems in such a way that the trains come to a standstill or the regions get left without electricity.



Q: However, great changes are expected from the prime minister. Do you think he might successfully develop a strategy but then lose in a game of politics?


A: It's difficult for me to comment. I am working on the inside and, accordingly, cannot view the situation from afar. As far as I understand, it is dangerous to separate economic reforms from existing political conditions. Yes, world prices have brought Russia success that will allow us to pay off external debts without the use of foreign credits. But it is impossible to allocate 40 percent of the budget for debt payment and ignore social problems. This probably irritates people who think in purely economic categories. When the sterilization of the money supply is discussed for the purpose of repaying external debt, other factors should be remembered, such as defense, pensioners and hidden unemployment. The unique opportunities that we have realized from foreign trade need to be used to the fullest extent. 



Q: Although talk about Kasyanov's resignation has cooled down, it is said that the prime minister does not approve of the relationship between Kudrin and German Gref. What is your impression of all of this as a participant in important meetings at the White House and the Kremlin?


A: I won't comment about resignations. That is the jurisdiction of the government and the State Duma. As for the role of the government, our relations are certainly not without conflict. We argue and yell at each other. But despite all of this, we maintain friendly relations.



Q: Have the relations between the head of the government administration and the presidential administration changed since Putin was elected?


A: It's difficult to answer that question. At that time, I was still at the State Property Fund. I can say that if I have to resolve a problem with Voloshin, I can make a decision quickly. I do not encounter any administrative obstacles in discussing legal problems with [Larissa] Vricheva [the head of the main legal administration]. We sit down and reach a professional decision. 



Q: Do you have to get the Kremlin's approval for all of your decisions?


A: No, only for those matters related to the jurisdiction of the administration. The old way of working is a thing of the past.

TITLE: Privatization: Has the Government Really Changed Its Tune?
TEXT: OVER the next two years, President Vladimir Putin's economic managers plan to sell off stakes in about 10,000 companies. Next year, the plan is to raise 21.6 billion rubles (about $720 million at the budgeted exchange rate) from such sell-offs - with most of the money to be brought in by the privatizations of just 20 major companies. According to a draft privatization program submitted to the State Duma in September, companies to go on the block include the oil companies LUKoil and Rosneft, the Gazprom natural gas monopoly, the air carriers Aeroflot and Sibir, the Samara Aviation Company, the Oryol Steel Plant, three bakeries, an elevator plant, several foreign trade associations and a construction bureau. 


"The goal for [these 20-odd privatizations] is to put as much money into the federal budget as possible," said Grigory Tomchin, deputy head of the Duma property committee and a member of the Union of Right Forces faction. "But much more will be privatized. How the plan is implemented will depend on the outcome of negotiations between the government and the Duma." 

Those negotiations will be held amidst sour memories of the Boris Yeltsin-era privatizations, in which the best companies were doled out through a rigged process to insiders. 

They will also, of course, be occurring in the context of the new Putin era. The new president has pledged not to revisit past privatizations (although his police and prosecutors, whether by chance or design, have hassled some of the oligarchs associated with those privatizations). Instead, Putin has vowed to bring in a fair and orderly approach for new privatizations. That has some saying privatization is about to redeem itself. And indeed, the first privatization under the new regime, the September sale of 85 percent of the Onako Oil Company for just over a billion dollars, has been broadly applauded. 

"It's the best privatization Russia has had," said Roland Nash, chief economist at Renaissance Capital investment bank. "The assumption is that it's a good sign." 

Perhaps. But as with all of the other oil company auctions, foreign bidders were kept out. The winner, the Alfa Group of Pyotr Aven and Mikhail Fridman, is a powerful oligarchic structure that happens to be on friendly terms with the new boss. The new government conducting the privatization has already been involved in some very old-style abuses of power - from the Kremlin's persecution of NTV founder Vladimir Gusinsky, to the Communications Ministry's arbitrary shell games with mobile phone licenses, to the government-wide yawn of indifference at talk of Gazprom managers stripping off assets and parking them into a murky new vehicle called Itera. And many of the same institutional problems that plague the economy as a whole - for example, the lack of a truly independent and professional judiciary - are also there to plague privatization. 

"It's pointless to privatize simply to show the West that we're doing something," said Mikhail Delyagin, an economist who directs the Institute of Globalization Problems. "[Additional] privatizations should take place when the stock market reaches a certain level to maximize profits," Delyagin says, perhaps in 18 months or so. "Or it should be instituted when the conditions are right to create more effective management. The current law was written by bandits for bandits." 

Others insist the sell-offs should proceed at full steam. 

"This is a breakthrough year," said Maxim Boiko, a key architect of the early privatizations last decade as head of the advisory non-profit Russian Privatization Center, and then a privatization minister in 1997. Today Boiko heads the Video International advertising company. He argues that the Putin regime's business-friendly tax reforms and the national windfall of a boom in oil prices all argue for aggressive privatizations in 2001. "It's still a priority to put state-owned businesses into private hands."



Who Sells, How Much?


When the Property Ministry first compiled a list of 2001 privatizations, the plan was to sell off, among other things: 

. 3.73 percent of Gazprom, for at least $246 million. 

. 19.68 percent of the Russian-Belarussian oil company Slavneft for at least $107 million. 

. A 25 percent-plus-one-share blocking stake in state-run oil company Rosneft for $350 million. 


Since then, the Slavneft sale has been postponed until 2003. And in submitting the 2001 privatization program to the Duma, the government has broken with its practice of listing exact stakes to be sold. Unlike the earlier drafts, the program submitted to the Duma only lists companies to be sold - without saying how, or how much of, each company will go - and then gives an overall revenue target of about $720 million. The government has remained silent on the changes. 

At the same time, the Property Ministry has submitted a new law on privatization for the Duma's approval - among other things, the law would dramatically curtail the Duma's participation in privatization. And the ministry has announced plans to tighten its grip on sales in the provinces: It will be reviewing the work of regional property commissions, with which it works on a contractual basis, and as many as a quarter of those local commissions could be stripped of their functions. Over time, nearly all such local commissions - which are often under the thumb of the governors in each of Russia's 89 regions - will apparently be replaced. The Property Ministry intends to open from 20 to 25 of its own regional property management offices by the end of 2001, and about twice as many as that over the next three to four years. 

The demarche against regional privatization teams is consistent with the Putin administration's stated intention of strengthening the federal government at the expense of the regions. 

But the effort to sideline the Duma is perhaps less in character. The Yeltsin era practice was to seek parliament's approval for an annual privatization program - but in general, to basically ignore the Duma. Now the Putin team - which has a better relationship with parliament thanks to the 1999 electoral success of the pro-Putin Unity Party - is asking the Duma to surrender even that paltry influence. 

Renaissance Capital's Nash said that might be for the best. "The Duma has substantially slowed the [privatization] process in the past," Nash said. "The new legislation will provide insurance for when [parliament's] honeymoon with Putin ends." 

Tomchin of the Duma's property committee agreed, saying that some legislators are reluctant to give the government the freedom to carry out its policies. 

"Ten to 20 deputies don't know the difference between the parliament and the executive branches," he said, and don't let the government do its job. 

Some Duma deputies have in fact already announced their opposition to the 2001 privatization program. In a letter of dissent attached to the government's draft and cited by Interfax, those deputies complained sales of the 20 major companies targeted would "strike a blow against the economic security of the country." 

Such talk exasperates pro-privatizers, and goes a long way toward explaining the trial balloon legislation to kick the Duma out of the process. But other observers counter that pushing parliament out will not in itself bring in more transparency or order. 

"In principle, it's better to be insured against the power of one group of bureaucrats with that of another," said economist Delyagin, arguing that keeping parliament in the game is a simple matter of democratic checks and balances. 



Devil in the Details


There are even more startling changes in the Putin team's proposed new privatization law. Most radically, the legislation calls for allowing shareholders in state-owned companies themselves to initiate the process of privatizing the government's stakes. At the moment, only the government can decide to sell, say, its stakes in LUKoil or Gazprom. It is not clear exactly whether or how it could work otherwise - but the draft legislation before the Duma would apparently permit other shareholders to sell the state's stakes. 


The law would also divide all state companies into two groups - those with fixed assets worth more than 5 million statutory minimum wages (around $15 million), and those worth less. 

The more valuable companies could then be privatized under the law only via auctions or by the issuing of proxy securities on Western stock exchanges, such as American Depositary Receipts. The less valuable could be sold in all manner of ways, from auctions to management in trust with an option for the managers to buy. The law would even allow for selling off such companies in "noncompetitive tenders." 

And as long as everything else is changing, exactly who gets the money from the sell-offs is under reconsideration too. Previously, the Property Ministry received a commission on sales, while the federal government took 83 percent of total proceeds. Next year, the Property Ministry will get no commission, simply a flat 300 million rubles ($10.7 million) on top of its annual budget, while 87 percent of revenues - minus 3 billion rubles (about $107 million) to be paid to investment consultants - would go to the federal budget. It remains unclear how the remainder would be distributed, though some of it would likely go to local governments.


Price, Price, Price 


What is the goal of privatization in 2001? How is the process to be judged? 


The government is insisting that the key criteria is the price received for an asset, with the more money brought in the better. "The first goal is to get as much money as possible for the state's assets, especially since the flow of Western capital has declined," said Sergei Markov, director of the Center for Political Studies. 

This new emphasis is in part a reaction to the atrociously bad bargains the Kremlin won for the nation in the sell-offs of 1993-1997, when the industrial crown jewels went for a song. From 1992-1999, the government has earned a total of about $21 billion from its sales of the nation's oil and gas fields, nickel and gold mines and other economic engines. Last year, the government earned a mere 8.5 billion rubles in privatization sales - just a bit over half of what it had budgeted. 

Many economists and politics-watchers have accepted the new premise that the key to a good privatization is a good price. For that reason, many have applauded September's Onako sell-off.

After all, as Property Minister Farit Gazizullin noted, the winning $1.08 billion was the largest sum ever paid in the privatization of a Russian oil company - even though Onako was one of the smaller oil firms to have been auctioned. 

Moreover, the sale of Onako saw arch-oligarch Boris Berezovsky's Sibneft oil company lose out - a rare occurrence in modern Russia. "One can only congratulate the government for the successful privatization of Onako," said Boiko. 

The Onako sale on its own overshot the government's stated quest to rake in $1 billion from sales of stakes in four oil companies: Onako, Rosneft, Slavneft and LUKoil. Sales of the stakes in the latter three were later postponed. In fact, the only privatization auction to have brought the government more money was the sale in 1997 of a 25 percent stake in the Svyazinvest telecom holding for $1.88 billion. 



A Sobering Example


However, the Svyazinvest sale provides a sobering example: Initially it was also hailed as a success, largely because of the high price paid. But the auction was not open to all, only to those working in partnership with a Russian oligarch, and some have drawn unflattering comparisons to similar telecoms sold off around the same time in Mexico and Brazil, for far larger prices. In the wake of the Svyazinvest sale, President Yeltsin pushed out then-privatization minister Alfred Kokh. Today, everyone from Svyazinvest's key buyer, financier George Soros, to President Yeltsin himself basically concede that the auction was rigged. 


So was Onako qualitatively different from Svyazinvest? Or was it simply a rigged deal that cost its participants more, and favored new Putin-era oligarchs like Alfa Group, at the expense of more Yeltsin-era players like Berezovsky? 

Market analysts tend to wave such discussions aside. Dmitry Avdeyev, an analyst at the United Financial Group brokerage, dismisses talk of an insiders' deal as "Kremlinology." Avdeyev says that "the most important factor was the amount of the bid" for Onako. 

Others are much more willing to engage in Kremlinology when pondering the Onako sale - and the future of privatization. 

"Without a doubt, the Onako deal was less politicized [than past privatizations]," said political analyst Markov. "But that does not mean a change of attitude on the part of the government." 

Markov in fact believes the Putin regime is pursuing two goals with its privatizations: One, to earn more money for the budget, and two, to actively "create vertical oligarchic structures, which are the only ones able to be competitive in such areas as oil." 

As Markov sees it, the Kremlin's distaste for the Yeltsin-era financial-industrial groups is that they are sloppy in behavior and structure, and arrogantly politicized in their bragging and financial buccaneering. 

"In the first round [of privatizations], oligarchs grabbed as much as possible, building chaotic conglomerates. And financial problems arose as a result," Markov said. "The second group of oligarchs is smaller, more consolidated. They are more businessmen than politicians." 



End of the Oligarchy?


This summer was a season of hand-wringing on the part of the oligarchs. Media-MOST chief Gusinsky found himself in and out of jail and interrogations, officially as part of an investigation into the suspicious privatization of a St. Petersburg television company. Uneximbank founder Vladimir Potanin that same month saw his Norilsk Nickel privatization also targeted by prosecutors: the 1995 Norilsk auction was one of the most flagrantly rigged of the Yeltsin era. Potanin's Uneximbank had been asked by the government to organize the auction for Norilsk - so Uneximbank promptly put in a laughably low bid of its own, and then declared itself the winner. The Putin-era Prosecutor General's Office found that less than amusing, and in June it asked Potanin to pay the government $140 million for what it called the metal producer's undervalued privatization. Prosecutors called the Norilsk privatization "damage carried out against the state." 


Meanwhile, privatization tsar Anatoly Chubais worried aloud that the Putin had fallen under the influence of Nobel Prize-winning author Alexander Solzhenitsyn - no friend of privatization. And the master of insider dealing, Berezovsky, began to move into public opposition to the Kremlin - a prelude to Berezovsky's decision this fall to go into self-proclaimed "political exile" abroad. 

Was the young new KGB president about to start jailing oligarchs, and overturning privatizations - perhaps by renationalizing choice properties? And was all of this harassment of oligarchs, while viscerally and politically popular, helping to guarantee property rights in Russia - or was it undermining them even further? 

By the end of July, the siege seemed to be over. Putin met in the Kremlin with 21 of the country's most influential businessmen - a sit-down brokered by liberal Duma deputy Boris Nemtsov - to exchange views and promises. The oligarchs emerged smiling: Putin had promised them there would be no re-examination of post-Soviet privatizations, while the oligarchs had promised to obey the law. Nemtsov proclaimed it the "end to the era of the oligarchs." 

Few joined Nemtsov in such gushing talk. But it did seem likely the Kremlin and the oligarchs were entering a new stage in their relations. 

As political observer Dmitry Furman recently wrote in the Obshchaya Gazeta paper, "The era of anything goes for oligarchs is objectively over, and not because the Kremlin has decided to put an end to it - it has just passed. The powers-that-be no longer require the assistance of crafty tycoons who know how to convert power into money. 

"Now, unlike in 1996, the Kremlin is no longer afraid of elections," Furman added, "and can win them without the oligarchs' financial and propaganda support."

TITLE: UK Drug Company Merger Approved
AUTHOR: By Kalpana Srinivasan
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Antitrust regulators approved the merger of British drug companies Glaxo Wellcome PLC and SmithKline Beecham PLC Monday, paving the way for the creation of the world's largest pharmaceutical company. 


The Federal Trade Commission gave its blessing to the $72 billion deal after requiring a series of divestitures in markets where the companies offer overlapping products. 

Without the agreement to sell off some drugs, competition would have been eliminated or substantially reduced in those markets - potentially raising prices for consumers, the government said. 

"The proposed divestitures will lead to continued competition in these critically important pharmaceutical markets," said Richard G. Parker, director of the FTC's bureau of competition. The consent order also "will ensure that competition occur in the future in the markets where pharmaceutical products are not currently available." 

SmithKline already has agreed to shed the antiviral drugs Famvir, used to treat shingles and genital herpes, and the cold sore remedy Denavir because Glaxo has similar drugs sold as Valtrex and Zovirex. SmithKline's drugs will be sold to Novartis AG. 

Glaxo will divest the trademark rights for its blockbuster ulcer drug Zantac 75 to another giant, Pfizer, which currently markets Zantac in the United States. That's to prevent overlap with SmithKline's heartburn medicine, Tagamet. The U.S. market for these over-the-counter drugs totals $502 million, according to the FTC. 

SmithKline had also previously announced plans to sell Kytril, a drug used by chemotherapy patients to fight nausea. Without that sale, the combined company would have had 90 percent of all sales in the $778 million market for those treatments, because Glaxo Wellcome markets Zofran for chemotherapy. 

The government consent order also requires divestitures of an antibiotic used in hospitals, and addresses existing agreements the companies have with other firms for drugs to treat migraines and tumors.

TITLE: St. Petersburg Breaks Its Word on Tax
AUTHOR: By Scott C. Antel
TEXT: TAX reform is the most misused and misunderstood phrase in the Russian legislative lexicon. Held out as a positive force, the Russian version typically yields more problems than it solves.


The St. Petersburg Legislative Assembly has kept true to this tradition with its recent passage on Nov. 24 of the law "On Amendments to the St. Petersburg City Tax Laws." Some of the amendments are indeed positive: specifically codifying into St. Petersburg legislation the reductions to the turnover-based Road Use tax from 2.5 percent to 1 percent, and abolition of the 2 percent Vehicle Purchase tax, both of which were federally mandated by the introduction to Part II of the Tax Code passed earlier this year.

However, one must read further, for in the latter text there are a number of unfavorable provisions.

One such example is the tax on casino and certain other gaming activities, which has been more than doubled. Now, doubtless few readers will shed tears for the gaming industry, although one has to question the legislative logic of encouraging a notoriously subterranean industry to bury itself further from the tax net.

What is significant, however, is that this increase blatantly breaks the two-year "no-new-tax" moratorium passed by the assembly only last May. A moratorium with subsequent "exception(s) for certain taxes" which the amendment announces has little prospective meaning, and one wonders what might be the next exception: the optional local 5 percent profits tax authorized by Tax Code Part II, perhaps, or a retraction of St. Petersburg's already enacted 2 percent regional profits tax-rate reduction over years 2001 to 2003.

But there is more. The amendment further cancels several popular existing tax benefits, including the popular profits tax credit for capital investment expenditure and profits, land and advertising tax concessions available to manufacturers of "excisable" goods (e.g., beer and cigarette producers). Yes, in the "tobacco and brewing capital" of Russia, economic success remains a dirty word.

Technically, the Legislative Assembly can say that the amendment's cancellation of concessions and/or tax credits to existing tax laws is not per se a new tax or an increase of a existing tax, so that it is not breaching its pledge.

Economically, of course, this is simply bad-faith semantics, which will result in increased tax charges to investors who committed resources based on pre-planned budgets and local government promises. One hopes this is not the case, and that grandfather or transition provisions will be announced for those investors who have already commenced investment projects relying on these various concessions. Not to provide for such would be extremely bad faith.

However, true to tax-reform drafting tradition, the amendment offers no specifics on these issues and their application to existing investors. 

Taken overall, the amendment is another example of the business climate being worsened through the back -door guise of tax reform. What is yet worse, the biggest element of tax (and indeed any) reform for Russia and its regions seems once again to have been lost - namely, the development of a civil society where those who govern keep their word.



Scott C. Antel is the Partner in Charge and Andrei Sergeyev an associate with Andersen Legal St. Petersburg.

TITLE: Russia Tells WTO That Membership Is a Top Priority
AUTHOR: By Robert Evans
PUBLISHER: Reuters
TEXT: GENEVA - A senior Russian official told member countries of the World Trade Organisation (WTO) on Monday that it was a top priority for the administration of President Vladimir Putin to win entry to the body.


The official, Deputy Minister of Economic Development and Trade Maxim Medvedkov, said Moscow would step up its efforts to complete the seven-year negotiations, in what diplomats said was the hope of joining the WTO by 2002.

"Accession of the Russian Federation to the WTO remains the priority of the government," said Medvedkov, who was recently appointed Moscow's top negotiator for the project.

"We believe that accession to the WTO will make an effective contribution to the internal economic reform process and facilitate the consolidation of its results," he told the WTO's working party on Russia at the start of a two-day session.

The Russian government, he declared, "has taken a decision to intensify the process of accession" begun in 1993 when Moscow applied to join the WTO's predecessor, the GATT - which was scorned under Soviet Communist rule as "a tool of Western economic imperialism."

Medvedkov, deputy to German Gref who is known to be close to Putin, said Russia had already started to bring all its laws relating to foreign trade into line with WTO rules.

Before the end of this year, he told the WTO working party, a series of draft laws on trade would be presented to the Russian parliament, the State Duma.

These would include import and export licensing, anti-dumping practices, and countervailing and safeguard measures - allowed under the WTO when a country is faced with a surge of imports that could undermine national producers.

He said a reform of the current tariff system, which foreign businesses say is one of the world's most complicated and erratic, was under way, with a new tariff coming into force on Jan. 1 next year.

This, he said, would aim at improving customs administration and lowering barriers to the Russian market of some 150 million comsumers for goods "where for different reasons the present tariff does not create incentives for normal competition."

Early next year, Medvedkov added, Moscow would present a revised set of proposals on market access for goods and services based on requests from WTO member states.

Diplomats from several key countries in the 140-member WTO said Medvedkov's remarks reflected what they saw as a genuine renewal of Russian interest in getting into the organisation as soon as possible.

But they said there were major hurdles ahead that could frustrate that aim.

Agriculture, a key issue for developing countries seeking new markets for their produce as well as for many richer powers, is likely to be a key problem, the envoys said.

Russia's agriculture is still dominated by the collective and state farm system and farmers continue to enjoy many of the huge government subsidies available before the collapse of communist rule in 1991.

Other areas where progress may face blockages are financial services like banking and insurance and intellectual property rights, the diplomats said.

Russia is one of four large economies trying to join the WTO. The others are China, whose 14-year negotiations are widely expected to be completed next year, ex-Soviet Ukraine, and Saudi Arabia.

TITLE: BUSINESS AND THE LAW
TEXT: Who Holds the Reins On Currency Control.
UNTIL recently, there has existed a considerable lack of clarity concerning the powers of the Russian Federation's Federal Currency Control Service (FCCS), in terms of its authority to levy penalties on both residents and non-residents for violations of Russian currency-control legislation.


This lack of clarity was owing to the fact that the Article 11(2) of the law "On Currency Regulation and Currency Control" named the Central Bank and the Russian government as the authorized state bodies of currency control, while failing to mention the FCCS as such a body.

In fact, the government delegated its authority in the currency control area to the FCCS with its Resolution No. 1157 dated Nov. 15, 1993. Nevertheless, many companies that were sued by the FCCS for alleged violations of currency control legislation tried to defend themselves before arbitrazh courts by pointing out that the FCCS was not authorized to penalize or to file lawsuits against legal entities or individuals for such violations.

In response, the Higher Arbitrazh Court, in its Information Letter No. 52 of May 31, 2000, clarified that the government had delegated its authority in the area of currency control to the FCCS with Resolution No. 1157. Therefore, there are no longer any doubts that the FCCS is properly authorized to penalize.

Another important development was Ruling No. 4-O of the Constitutional Court dated Jan. 14, 2000. Until this ruling, it was not clear whether the FCCS had the right to apply penalties directly, i.e., without filing lawsuits against companies or individuals.

Likewise, court practice on this issue was not uniform: Very often, the courts took the position that the FCCS could not apply a penalty against a company or an individual only by its own resolution, but rather, it needed to file a lawsuit against such a company or individual in order to actually levy the penalty.

The Constitutional Court ruled that although the Law on Currency Control does not determine a procedure for the levying of penalties by the FCCS, general rules established by Articles 268 and 285 of the Administrative Code apply.

In accordance with these articles, a penalty may be applied directly by the authorized government authority, i.e., without filing a lawsuit, provided that a company will not have challenged such a decision of such an authority in court within 10 days after it issued its decision. 

Therefore, if a company doesn't file a lawsuit in time challenging the FCCS, the FCCS may directly apply a penalty without going to court - for example, by debiting the company's bank account.

Notwithstanding the Constitutional Court's ruling, it was still not quite clear whether the filing of a lawsuit will suspend the enforcement of the FCCS's decision or not.

Prior to the Information Letter, it was not unusual for a court to reject the request of a plaintiff to suspend the enforcement of a decision of the FCCS and, therefore, the FCCS was able to debit the company's bank account without waiting for the judgment of the court.

Now, the Higher Arbitrazh Court has clarified that if, upon its filing of a lawsuit, a plaintiff requests the suspension of the FCCS's decision until the court renders its judgment and the latter comes into effect, then the court must honor this request of the plaintiff.

Therefore, in such cases it is very important that, first, the company must file a lawsuit challenging the FCCS's decision not later than 10 days after the issuance of this decision; and secondly, the company must request the court to issue injunctive relief forbidding the FCCS from levying a penalty until the court judgment in the lawsuit will take effect.



For more information, contact James T. Hitch, Igor Gorchakov, or Alexey Trusov at Baker&McKenzie's St. Petersburg office (325-83-08, fax: 325-60-13).

TITLE: Banks Loan Industry $31 Bln Over 9 Months
AUTHOR: By Nikolai Mazurin and Boris Safronov
PUBLISHER: Vedomosti
TEXT: MOSCOW - Data provided by the Yunikon/MC agency shows that loans to industry are currently one of the principal activities of local banks. As of Sept. 1, banks this year had invested no less than 870 billion rubles, or $31 billion, an increase of 19 percent compared with the same period last year.


However, the banks are probably doling out the loans because they have no choice, Yunikon said. 

Total investment in the industrial sector was calculated by Yunikon experts based on loans to the non-banking sector (excluding nonresidents), investments in company shares and Russian companies' promissory notes and bonds. 

The figures are yet more impressive if compared with the level of foreign investment, which came to $7.9 billion over the first eight months of this year, according to the State Statistics Committee. 

Investments made by Russian banks have grown by 137 billion rubles, or about $5 billion. 

The nation's two largest banks, however, account for only a little more than one-fourth of those loans. State savings bank Sberbank's credit portfolio came to 211 billion rubles as of Sept. 1, the bank's press service said. As of Dec. 1, Vneshtorgbank's credit portfolio was 28.4 billion rubles. 

Other than Sberbank and Vneshtorgbank, only a handful of the major banks are able to give credit to leading Russian enterprises. The low capitalization of most banks forbids them from making large loans without violating the maximum credit limits for a single borrower. 

But these banks have a found a broad niche for lending credit to small- and medium-sized businesses. 

"Of all the possible sources for making money, loans are the most profitable," said Vladimir Rashevsky, the deputy chairman of MDM-Bank, which is one of the largest lenders to industries. 

"Interest rates on credits are higher than returns from financial instruments with, say, fixed income," he said. "We have a minimum of 60 percent of our assets invested in the industrial sector." 

Banks credit business in general because they have no other stable source of income, said Dmitry Misyulin, head of the banking projects with Yunikon. 

It is for this reason that overall investment into the industrial sector was down from its pre-crisis level of 47 percent in July 1, 1998, to 41 percent in Sept. 1 of this year, he said.

The growth of investments in the economy mirrors an increase in the monetary mass, or the M2 aggregate. The monetary mass increased by 160 percent, while the volume of bank credits has increased by 159 percent, Misyulin said. Total bank investments in the industrial sector have risen 158 percent from July 1, 1998, to Sept. 1, 2000. Bank assets over this period increased by 201 percent.

TITLE: Kasyanov Delays on Oil-Tax Overhaul
AUTHOR: Alexander Bekker and Yelizaveta Osetinskaya
PUBLISHER: Vedomosti
TEXT: MOSCOW - At a tense meeting with the nation's largest oil companies last week, Prime Minister Mikhail Kasya nov backed down from an earlier threat to raise taxes on the industry and settled for a 40 percent hike in export tariffs. 


Kasyanov also postponed until February discussions related to auctions for export quotas and a new tax system for oil producers, who many claim are not paying their fair share of taxes to the government. 

Tariffs on each ton of exported oil will be raised to 48 euros. Tariffs were officially raised from 34 euros to 41 euros, but when indexed in connection with the fall of the euro to the dollar, the total becomes 48 euros.

Big oil executives are alarmed about the Kremlin's recent attempts to strip them of their excess income from exports. Kasyanov's oil summit, his second in as many weeks, included LUKoil chief Vagit Alekperov, Yukos' Mikhail Kho dorkovsky, Surgutneftegaz's Vla di mir Bogdanov, Tyumen Oil Co.'s Simon Ku kes, Mikhail Gutseriyev from Slav neft and Yevgeny Terpurgov of Rosneft. 

Despite Kasyanov's insistence that he will eventually squeeze more money from the oil industry, the oil majors have not stopped lobbying. "The oil companies are exerting strong pressure on us," a high-ranking government official said after the meeting.

The Tax Ministry released figures at the meeting showing a discrepancy in the rate of tax the state collects from each company. The best company paid 1,498 rubles ($53) for each ton, while the worst paid only 608 rubles.

Participants at the meeting said a decision was reached to develop a methodology to determine the real, as opposed to the corporate, prices for oil to simplify tax collection. In exchange, the government is considering lowering certain taxes, and the cancellation of the tax on the production of raw mineral materials.

TITLE: Aeroflot Ready To Float GDRs in February
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Aeroflot has completed preparations to float its first shares on international capital markets, and the paper will start trading in early February, the airline said Friday.


Aeroflot will issue 2.2 million Global Depositary Receipts, or 20 percent of its charter capital, at a conversion rate of 100 domestic shares to one GDR, the airline said. The conversion will start next week with depository bank Deutsche Bank/Bankers Trust Co.

"This is the next step toward turning Aeroflot into an international company not only through its activities but also through the trading of its shares on international markets," Aeroflot deputy general director Alexander Zurabov said at a news conference after an investors meeting.

The amount of shares to be converted is roughly the amount that foreign investors hold in Aeroflot. The state owns a 51 percent stake in the airline.

Foreign investors already holding Russian shares will be allowed to swap them for GDRs. The paper will be traded on exchanges in London, Frankfurt, Vienna and over the counter in the United States. 

With Aeroflot's shares currently trading at about 24 cents, the airline expects the GDR issue to net $50 million, said Dmitry Amunts, Aeroflot's deputy general director for strategic and corporate development.

The GDR project, approved by Aeroflot's board in late September, is Deutsche Bank's first in Russia.

Industry experts applauded the announcement, calling it good news for Aeroflot's image, liquidity and investment potential.

"GDRs will improve liquidity. ... Aeroflot will have a chance to get in the rank of first-tier companies," said Yulia Zhdanova, transportation analyst at United Financial Group.

Yelena Sakhnova of the Aton brokerage said the GDR issue is timely given the company's performance. After flying in the red for the past few years, Aeroflot expects to break into the black with a $30 million profit in 2000. "I would not be surprised if it turns into a blue-chip company by 2010," Sakhnova said.

Aeroflot has long toyed with the idea of floating shares on foreign markets. In 1997, the airline announced it hoped to float 5 percent of its shares as American Depositary Receipts. But the plans were cast aside after the financial crisis of 1998.

Zurabov said Aeroflot picked GDRs over ADRs this time around as a way to gain a larger presence on international capital markets.

The only other Russian airline to have floated paper in the West is Tyumen-based Tyumenaviatrans, which issued ADRs in May 1998. 

Aeroflot's GDR plans are taking shape at a time when the airline is soaring to post-Soviet highs. The air carrier expects to carry over 5 million passengers this year, compared with 4.6 million in 1999. Revenues are expected to jump 15 percent year-on-year from $1.34 billion to $1.39 billion. In addition, its share of the domestic market will grow from 8 percent last year to a forecast 12 percent in 2000.



q

PARIS - Aeroflot is set to sign a letter of intent to purchase about 30 jets from European plane maker Airbus Industrie, a source close to French Prime Minister Lionel Jospin said Monday.


Valery Okulov, the head of Aeroflot, and Airbus head Noel Forgeard were due to sign the letter in the presence of Jospin and his Russian counterpart Mikhail Kasyanov at the French Foreign Ministry on Monday evening.

"There is a letter of intent for Airbus with Aeroflot for about 30 planes," the source said. The source did not provide any details on which types of planes were involved.

European aerospace giant EADS, which owns 80 percent of Airbus, said separately that the plane maker was examining the possibility of furthering its cooperation with Russian industry in programs such as the A3XX superjumbo.

Kasyanov met Jospin on Monday morning as part of the sixth Franco-Russian intergovernmental conference that continues until Tuesday.

The two prime ministers were also expected to sign an agreement on the protection of classified materials.

As part of the visit, European aerospace giant EADS, which owns 80 percent of Airbus, also concluded a cooperative agreement with the Russian space agency Rosaviacosmos.

The agreement provides for expansion of European-Russian programs operated by the three founding companies that merged into EADS as well as new joint ventures.

"EADS is Russia's main partner for joint aerospace ventures in Europe," said Yury Koptev, head of the space agency, in a statement.

EADS said that it would "continue and expand"the joint modernization and marketing of the MiG-29 warplane in cooperation with the Russian aviation industry.


- Reuters

TITLE: World Bank Gets New Russia Head
AUTHOR: By Alexander Bekker
PUBLISHER: Vedomosti
TEXT: MOSCOW - After a whirlwind five-year tour of duty as the World Bank's director for Russia, Michael Carter is stepping down. 


During his tenure, Carter, along with his counterpart at the International Monetary Fund, established himself as one of the most highly respected authorities on the Russian economy. He approved some $10 billion worth of financing for 32 projects and released four grants totaling $109.5 million - making Russia the World Bank's second-biggest borrower.

Carter officially introduced his successor, fellow Briton Julian Schweitzer, at a ceremony Thursday. Schweitzer officially takes over the Bank's Moscow operation Jan. 1, when Carter moves on to run the Bank's operations in Poland and the Baltic States.

Schweitzer said his main goal is to get the Bank's new Russian economic strategy through its board of directors no later than February. He said that if Russia eventually needs a fourth structural adjustment loan, or SAL-4, for restructuring the economy, the Bank won't consider a deal before April.

Schweitzer is a 16-year veteran of the Bank, serving mainly in Britain and India, and most recently held the position of deputy vice president for eastern Asia.

He was witness to the Asian financial crisis of 1997, which caused the financial meltdown and default in Russia a year later.

TITLE: Central Bank Makes Predictions for 2001
AUTHOR: By Igor Semenenko
PUBLISHER: Staff Writer
TEXT: MOSCOW - The State Duma's budget committee on Monday snubbed the Central Bank, refusing to approve its 2001 macroeconomic forecast and ordering it do its homework properly and provide more detailed scenarios of growth.


Central Bank officials, however, took the insult - and resulting debate - in their stride.

"We will pursue macroeconomic policies that are appropriate in the current circumstances," said Central Bank Deputy Chairwoman Tatyana Paramonova after the meeting. "That the Duma must approve our forecasts is nothing but a historic legacy."

In other countries, central banks usually make a presentation of their plans to parliament, but are not required to receive its approval, Paramonova said. "The funny thing is that the responsibility for macroeconomic policies lies with us, but the Duma's approval is required," she added.

The Duma budget committee meeting, during which its chairman, Alexander Zhukov, was derisively called an "anesthesiologist" by one of his colleagues for "attempts to kill lively talks" with Paramonova, produced a recommendation to the Duma to vote down the macroeconomic forecast for 2001 at a regular meeting Friday.

Given that the committees on economic policies and banks are allied with the budget committee, Friday's vote is likely to become a formality.

The committee ordered the Central Bank to draft a new forecast before Feb. 1, but Paramonova said she didn't "know what to do," so it is not clear whether the bank will insist on its forecasts or draft a new version. 

The budget committee asked the bank to provide different economic scenarios that include the dynamics for the foreign exchange rate, balance of payments, interest rates and calculations justifying the inflation forecast of 12 percent to 14 percent written into the budget.

"The Central Bank did not provide the balance of payments forecast," said Mikhail Zadornov, head of the Duma subcommittee on the Central Bank. "Consequently, it is unclear what kind of foreign-exchange policy it is going to pursue."

"Real exchange-rate targets are missing," Andrei Illarionov, President Vladimir Putin's top economic adviser, said at the meeting.

By the end of the year the ruble will have appreciated 10 percent in real terms, undermining the competitiveness of the domestic manufacturing sector, Illarionov said.

Last year, the Central Bank presented three scenarios of economic growth and faced harsh criticism on the part of the Duma for its failure to draft only one document.

"This year we gave them one document and they want more scenarios," said Paramonova, shrugging her shoulders. 

Following the recommendations of the International Monetary Fund, the "Main Guidelines for Macroeconomic Policies for the year 2001" focuses on curbing inflation.

"Inflation should be slowing down every year," reads the text of the document submitted to the Duma.

It also says that the Central Bank will maintain a floating exchange rate and prevent the nominal appreciation of the ruble.

It assumes decline in prices for oil and nickel and growth of international prices for aluminum and copper.

The balance of payments will be smaller than this year, but larger than in any of the years starting from 1994 through 1999.

But the Duma members refused to make complicated calculations, and requested the Central Bank to open its books.

"We could approve your monetary plan for the next 15 to 20 years, because in its present vague form it fits any conditions," said Gennady Kulik from the Communist Party.

The nation's economic performance next year will hinge on a combination of several exogenous factors, including oil price dynamics and the restructuring of debts to the Paris Club.

Last year, the Central Bank missed out on most of the key economic parameters officially approved by the Duma, but its "optimistic scenario" almost exactly matched the 7 percent growth forecasted for the end of this year.

While last year the Central Bank's initial forecasts differed from those of the government, this year the two parties agreed on main parameters.

"We make a laughing stock out of ourselves," said Paramonova. "The international community laughs at our squabbles and constant failures to resolve our disputes on the quiet."

TITLE: Russia and Europe Should Appreciate Shared Interests
AUTHOR: By Andrew Wilson and Nina Bachkatov
TEXT: RECENT developments - including plans for enlarging the European Union, uncertainties surrounding the U.S. presidential election and President Vladimir Putin's ongoing efforts to forge a new Russian foreign policy - indicate an opportunity to enter a new phase in Russia's relations with Europe. The Brussels-based European Press Agency has just completed a study of this subject, examining this dynamic from Mikhail Gorbachev's proposal for "a common European home" to talk of a "strategic partnership" during November's EU-Russian summit.


Our study found plenty wrong with the EU's programs in the 1990s. The lesson that European models may not always be the right ones for Russia was learned at the cost of misspent billions. But today there are new minds at work in Brussels, people concerned not just with economic and commercial relations that were the basis of the 1994 Partnership and Cooperation Agreement, but with broader political and security questions.

The key step was last year's decision to establish a common foreign and security policy and the appointment of former NATO secretary-general Javier Solana to develop it on behalf of member governments. The new EU foreign affairs commissioner, Chris Patten, has also shown a lively interest in Russia.

Experience in the Balkans has shown that there can be no stability for Europe without the active cooperation of Russia. And without such cooperation, plans for the EU's expansion will be seriously undermined. At the same time Europe is deeply interested in the stability of Russia itself.

Russia has no objection to the enlargement of the European Union, in contrast to its fierce opposition to the further enlargement of NATO. Apart from the attraction of long-term trading arrangements is the fact that applicants for membership include difficult neighbors on whom EU rules may have a restraining influence. 

But what can be done to take full advantage of these favorable circumstances?

First it is necessary to know what should not be done or even attempted. This particularly concerns steps being taken to create an EU military capability. On the face of it, the creation of a European peacekeeping force should be welcome to Russia, which has long called for European solutions to European situations. But much depends on how that force is designed.

The Russians can be supportive if the force is for peacekeeping within Europe, if Russia is kept fully informed about its development and possible missions, and if Russia, like other non-EU countries, is on the list of force providers. In order to do this, Brussels must create a mechanism similar to the Russia-NATO permanent joint council.

What certainly will not attract Russian support is anything that looks a proxy arm of NATO. And since Russian policymakers are realistic enough to see the limitations imposed on Europe by its military dependence on NATO logistic and other resources, they are unlikely to go further than trying to persuade the EU to maintain whatever autonomy it can.

However, this leaves scope for action on important advances in the economic and political aspects of the EU-Russian relationship. More explicitly than ever before, Europe has come to acknowledge the dependence of its economic and industrial expansion on Russian oil, gas and electricity supplies.

For geographical reasons, Russian gas and oil supplies will always be cheaper for Europe than those of any other foreign source. However, Russia must recognize that the present market for its manufactures is closer to home - in the CIS and southwards - rather than in the well-supplied markets of Western Europe.

In the political field, too, there are limits to a "strategic relationship." Russia must by now understand the futility of earlier attempts to split Europe from its relationship with North America. Ties of history, trade and sentiment are simply too strong to be exchanged for an alternative - to say nothing of Europe's continued reliance, despite changes since the end of the Cold War, on the U.S. security guarantee.

On the other hand, there is no shortage of Europeans - and even of Americans - sharing Russia's apprehensions about the effects of a "uni-polar" world, in which Europe would be dominated by the interests of the other side of the Atlantic. A strengthened European relationship with Russia would serve two purposes in addition to the obvious one of cementing stability.

First, it would enhance Europe's sense of collective autonomy. Second, it would provide Russia with a valuable interlocutor inside the wider Russia-Europe-U.S. relationship. Particularly, it could show, in some cases of dispute, that Russia's is not a lone voice. For instance, although no one would count on Europe's swaying the United States against deploying a national missile defense, if Europe and Russia are able to adopt a common position, then the dynamic of the discussion would be altered.

Finally, for Europe's relations with Russia to have a firm basis in popular support, it is necessary to refresh each side's cultural attitudes. Russians need to understand that when Europeans speak against horrendous excesses, on both sides, in Chechnya, it is not necessarily an echo of the Cold War.

Similarly, Europeans need to be reminded of the long history that makes Russia part of the European heritage. Certainly Russia's claim in this regard is considerably greater than Turkey's, although that county occupied so much of the EU leaders' time at last week's summit in Nice. Europe could benefit from looking at some of the better aspects of Russian society and seeing if it cannot extract lessons useful for itself.


Andrew Wilson and Nina Bachkatov are co-editors of the European Press Agency's monthly intelligence report "Inside Russia and the FSU." They contributed this comment to The St. Petersburg Times.

TITLE: EDITORIAL
TEXT: Green Putin? Why Not Start Now? 


WE were surprised to learn on Friday that President Vladimir Putin, just 48 years old and in office less than one year, is already thinking about his retirement. In the run-up to his state visit to Canada next week, Putin granted an interview to the Toronto Globe and Mail and Canadian television in which he admitted, "I've often thought about what I should do when my term expires."


Even more surprisingly, it turns out that Putin harbors a secret admiration for environmental activists and is thinking of joining their ranks after he quits the Kremlin. "To be honest," he confessed, "I've always admired people who devote their lives to environmental problems. I've watched with astonishment as a group of people on a little boat tries to oppose a huge military or industrial ship. I must say this inspires only sympathy."

Obviously, we share Putin's esteem for the dedicated people who risk their lives drawing the attention of global leaders - such as Putin - to environmental issues.

Although these statements were just part of a charm offensive designed to take the edge off the ex-KGB agent's Chechnya-frayed image and can't be taken too seriously, the president's image-makers should be more careful to prevent him from looking foolish. Canadians shouldn't be taken in by Putin's sudden desire to paint himself green. After all, Putin's praise for environmentalists in rubber boats has to be taken in the context of his administration's record.

Unfortunately, this record includes abolishing the quasi-independent State Environmental Committee. It includes dogged persecution of environmental whistle-blowers Alexander Nikitin and Grigory Pasko. It includes active advocacy of a controversial plan to import foreign nuclear waste for storage and reprocessing. It includes a Central Election Commission decision last month to invalidate a Greenpeace-led drive calling for a public referendum on that plan.

The president surely understands that activists don't spend their time in rubber boats or hanging from buildings because they think this is the best way to improve the environment. They do so out of frustration because those with the power to really change things usually turn a blind eye to these problems. We are pretty sure that they would welcome the chance to pursue their cause inside the Kremlin or the many international forums to which Putin has access.

In short, it is idiotic for Putin to wait until his term expires to become an environmental activist. He can do a lot more good for this cause - apparently so dear to his heart - from where he sits now than he could sitting in a rubber boat.

TITLE: DEFENSE DOSSIER
AUTHOR: By Pavel Felgenhauer
TEXT: Appeasement No Answer to Xenophobia 


FOR most of its history Russia has been extremely xenophobic. After the collapse of Communism in the beginning of the 1990s, though, this traditional attitude seemed to fade. The idea that evil foreigners are somehow constantly plotting to destroy Russia became merely a bugbear of nationalistic extremists that in no way affected Russia's national security, defense and foreign policy decision-making.


Today, it seems, extreme nationalism and xenophobia are back with vengeance. The ruling elite surrounding President Vladimir Putin, as well as that within the military and the defense industry, seems to be deliberately exploiting the frustration of the Russian people and directing their attention to foreign enemies.

Of course, the Kremlin is still cautiously repudiating the more extreme xenophobic conspiracy theories. But it is hard to take these disclaimers seriously when Russian official actions tell a different story.

Russian naval officials continue to claim - without any serious evidence - that a NATO submarine sunk the Kursk in August in the Barents Sea. In the rank and file of the Russian navy, these unsubstantiated claims are treated with disdain. Genuine professionals understand that the "collision theory" does not jibe with the known facts of the Kursk sinking. But the Kremlin steadfastly refuses to repudiate or discipline its admirals and generals for publicly proclaiming a "collision with a foreign sub" was the cause of the Kursk disaster.

The Russian military has been given an official go-ahead to resume substantial mobilization exercises in preparation for a possible large-scale war. The Russian air force was allowed to run simulations of air attacks on the carrier USS Kitty Hawk in the Sea of Japan. The air force also deployed several strategic bombers to forward positions in the Arctic in an exercise to simulate possible bombing raids on U.S. territory.

No doubt, these exercises are more a demonstration than serious preparation for war. But the Russian military clearly seized the opportunity to make as much mischief as possible. For Russia's military, a confrontation with Chechen or Afghan rebels is not enough: Such enemies cannot promote serious procurement - especially nuclear submarines and bombers.

For the Russian military-industrial complex, confrontation with the West is the only chance to keep alive a big Soviet-style military and defense industry. The livelihoods of millions are at stake. Once the Kremlin gave tacit approval to anti-Westernism, powerful interests rushed to do everything possible to turn a limited standoff into a tense confrontation.

The West itself is also very much to blame for the ugly xenophobic "consolidation" that is taking place in Russia. Many observers have been telling the West for some time now that unqualified support of disastrous "market-oriented" reforms, the expansion of NATO and the illegal air war with Yugoslavia would isolate Russia and cause trouble. Western actions have enraged many Russians and made xenophobia more palatable.

And the Western response to present Russian xenophobic antics has been weak. Apparently, Western leaders believe that appeasement will help Putin's "market" reforms. But a consensus with extreme nationalists and Communist automatically rules out any meaningful reforms. Appeasement has never helped enlighten any xenophobic regime.


Pavel Felgenhauer is an independent, Moscow-based defense analyst.

TITLE: Global Eye
TEXT: Southern Exposure


No doubt you're all fed up with hearing about America's post-election morass. Day in, day out, for weeks on end, this thrice-chewed cud has dribbled onto the green pastures of public discourse, filling us to the collective gills with prissy legalese and partisan bile. The Global Eye - which is nothing if not the keenest diviner of even the slightest, hair-like oscillations in the public mood - shares your sentiments, of course. We too are sick of the post-election mess.


So let's talk about something that happened before the election.

Two days before the election, in fact. Americans - being the best-informed people in the world, with a vigorous, unfettered and independent free press second to none, but fifth or sixth to quite a few - would have no way of knowing it, but on Nov. 5, The Daily Mail of London ran a little item about 16-year-old Jebby Bush, son of Florida Governor Jeb "He Ain't Heavy, He's My Brother" Bush. It seems young Jebby had a spot of bother with the law.

To be sure, Jebby wasn't boozing it up on the highways like his Uncle Georgie used to do back when he was a "youth" of 30 or 40; no, the young man was simply gettin' jiggy with a young lass in the parking lot of a Tallahassee shopping mall, TomPaine.com reports. Mall security guards called in police to investigate a "possible crime of sexual misconduct."

But this was no ordinary probe. Not long after arriving on the scene, "I became aware of the political ties of the suspect," the investigating officer wrote in his official report. Security guard Artie Brown also became aware of those ties - especially after Jebby gave Pa a buzz on the old cellular, then told the guards, "My dad will fix it."

Did Daddy fix it? Did he abuse his gubernatorial powers and call the dogs off his rowdy pup? Or, to grapple honestly with this difficult issue, did he not? The point - here, as in the extraordinary efforts by the Bush campaign to prevent the counting of all the Florida votes - is that we will never know. The police who arrived later said the frisky frolicking had "not been in public view;" the eyewitnesses who called the cops said otherwise.

The case was dropped. The story was buried. And so Big Jeb was free to go about the important work of engineering the proper electoral outcome in Florida free of any pre-election distractions.

The rest, as they say, is history. Or at least the ash heap of it.



Closing Time


But please, no more talk about the election. Let us have what the American punditry call, in their tastefully-appointed, warmly-quilted, highly-paid prose, closure. Let us now put aside our differences, our disagreements, our debates and our democracy to unite as one in the loving embrace of the compassionately conservative regime that has now been so thoughtfully installed for us by our betters.


Oh sure, there are lots of things we could still bring up. We could talk about the family connections binding the U.S. Supreme Court, that supremely nonpartisan arbiter of fairness, to the Bush legal team. Like the fact that the most rabidly pro-Bush justice, Antonin Scalia, has one son who is a law partner of the Bush attorney who argued the case before the U.S. Supreme Court and another son who is the law partner of the Bush attorney who argued the case before the Florida Supreme Court. Or the fact that Justice Clarence Thomas, appointed by George Bush I, has a wife employed as a collector of resumes for the incoming administration of George Bush II.

This is the kind of thing that in a free country might be called a conflict of interest. But in the new, post-democracy regime, we don't have to worry our little heads about that silly-billy stuff anymore.

And yes, we could once again decry the fact that literally thousands of Florida voters - almost all of them black or poor "white trash," as they say at the Austin country club - were illegally disenfranchised by a private firm, run by Republican donors and hired by Republican state officials to "cleanse" the voting rolls. Even the firm itself, ChoicePoint, now cheerfully admits that at least 15 percent of its list was incorrect - 7,000 voters in all. An investigation by The Observer this week found an additional 2,000 were barred from the polls because of "errors" in the ChoicePoint list. When one Florida county tried to find out ChoicePoint's criteria for eliminating voters, the company refused: the information is a commercial secret, they said. Their stance was backed up by a pulsating power couple, Jeb Bush and Secretary of State Katherine Harris. Expect a lot more of this kind of "privatization" of the political process under the new, voter-free Bush-Scalia regime.

We could even mention the fact Georgie argued, and Scalia agreed, that differences in the ways counties handled their manual recounts meant such "undervotes" should not be counted at all - yet Bush himself received hundreds of these additional votes last month when four Republican counties decided to do a manual recount on their own - with differing standards.

Needless to say, neither Bush nor Scalia have discarded these "unconstitutional" votes. Legal consistency and logical coherence are outmoded concepts no longer needed in the new dispensation.

But for God's sake, let's not drag all this ugly business into the light. Let's join with Republican leaders, like New Jersey Governor Christine Whitman and Representative Jennifer Dunn, who are calling for the disputed Florida votes to be sealed from public view. Wise guides, they know truth is dangerous for the lesser breeds. Let us be thankful the oligarchs who paid for our new Leader have given us this blessed closure and saved us from the ravages of freedom.

"Turn your back / Wash your hands / There's always someone who 'understands.' / It don't matter no more / What you got to say. / It's Unbelievable / That it'd go down this way." - Bob Dylan.

TITLE: Peace Rides on Israel Elections
AUTHOR: By Howard Goller
PUBLISHER: Reuters
TEXT: JERUSALEM - Israel's parliament met on Monday to set the stage for an electoral battle that could shape Middle East peacemaking while Israelis and Palestinians raced to close a deal in the twilight of the Clinton presidency.


Lawmakers gathered in Israel's 120-seat Knesset while Israeli and Palestinian negotiators prepared for Tuesday's start of separate talks with U.S. officials in Washington following another weekend of violence at home.

The Israeli parliament was due to consider two bills, either of which could set the stage for an electoral rematch between Prime Minister Ehud Barak and Benjamin Netanyahu, the right-winger Barak vanquished only last year.

Barak resigned last week, setting the clock in motion for a February 6 election that would probably pit him against opposition Likud leader Ariel Sharon unless parliament acts to open the race to his party rival Netanyahu, the front-runner in opinion polls.

The ultra-Orthodox Shas party, the third largest after Barak's Labor Party and Likud, could hold the key to Netanyahu's fate, and its spiritual leader Rabbi Ovadia Yosef called a meeting of party sages for Monday afternoon to take action.

Netanyahu was demanding parliament vote to dissolve itself, hoping to lead a right-wing charge to power in both the top office and the chamber. But Shas, fearing it will see its power dwindle in a new parliament, was withholding support.

As a private citizen, having quit parliament after his loss last year, Netanyahu is otherwise barred from challenging Barak - unless Shas pushes through its preference, a bill enabling private citizens to stand for prime minister.

Netanyahu opposes this bill, fearing the parliamentary gridlock that stymied Barak will hamper him, and insists he will stand only if he gets his way. The standoff with Shas overshadowed revived peace moves with the Palestinians.

On the peace front, Israeli negotiators voiced hopes but Palestinians expressed skepticism ahead of their departure for the talks in Washington five weeks before President Clinton leaves office.

Asked if he was hopeful, Palestinian cabinet minister Hassan Asfour told Reuters on Monday: "Whoever experienced the management of the U.S. administration of peace talks and whoever dealt with the Israelis could not speak about hopes."

But he added: "We are working in order to put an end to the occupation, achieving freedom for our people and establishing our independent state."

Barak is desperate for a peace deal that will shore up his chance of retaining the job he won from Netanyahu in May last year.

The diplomatic offensive may be Clinton's last chance to score a Middle East peace accord before his successor George W. Bush takes office on Jan. 20.

In Ramallah on Sunday, negotiator Yasser Abed Rabbo told Reuters: "We will start consultations with the Americans on Tuesday in Washington and the Israelis will have their own consultations with the Americans.

"And if there is a need, there will be trilateral meetings," he said.

TITLE: Liverpool Sends Man Utd to 1st Loss at Home in 2 Years
AUTHOR: By Stephen Wade
PUBLISHER: The Associated Press
TEXT: LONDON - Danny Murphy scored in the 43rd minute as Liverpool defeated Manchester United 1-0 at Old Trafford on Sunday, the league leader's first loss at home in a league match in almost two years.


Murphy scored with a curling free kick from just outside the area after Man United defender Gary Neville had been called for handling the ball. The victory was also Liverpool's first win over its northern rival in five years.

Manchester United has 40 points to 34 points for Arsenal, but United has played one more game. Arsenal could close to within three with a victory Monday over north London rival Tottenham. Liverpool improved to 30 points.

Manchester United had more of the possession but was unable to crack Liverpool's defense, which has been its weak point all season. United was reduced to 10 men in the 88th minute, when Luke Chadwick was sent off for Vladimir Smicer just outside the area.

Man United's last league loss at home came almost two years ago, 3-2 against Middlesbrough.

Saturday's happiest man in England may have been Middlesbrough's new coach, Terry Venables, who guided his side to a 1-0 victory over his old club, Chelsea, moving Boro out of last place. A deflected shot by Dean Gordon 19 minutes from the final whistle ended a run of eight losses in nine games.

It also meant that Chelsea has not won away this season in the league and has gone 15 matches without a win away from Stamford Bridge going back to March.

Venables holds the role of coach alongside 'Boro manager Bryan Robson, and the club has been in freefall in the last two months. The result lifted the club two points above Bradford, which went down 2-1 at Newcastle.

In another game between strugglers, Coventry lost 1-0 at Derby, the Rams' winner coming after nine minutes from Malcolm Christie.

Ipswich remained third after coming from behind to beat Southampton 3-1. After James Beattie had given the Saints a third-minute lead, two goals by Alun Armstrong on his home debut and another by James Scowcroft handed Ipswich the three points at Portman Road and put George Burley's team within a point of Arsenal.

Leicester remained fourth, two points behind the Gunners, by beating Charlton 3-1, also after falling behind early on. Finnish striker Jonathan Johansson gave the visitors the lead at Filbert Street only for Ade Akinbiyi, Matt Elliott and Arnur Gunlaugsson to seal the game for the Foxes.

Sunderland stayed fifth despite going down 2-0 at Leeds United for whom Australian striker Harry Kewell started for the first time this season after injury. Lee Bowyer and Mark Viduka got the goals for David O'Leary's team.

Aston Villa twice hit back to salvage a 2-2 draw with Manchester City at Villa Park after Alf Inge Haaland and Costa Rican forward Paulo Wanchope had netted for City.

Dion Dublin leveled the first time and David Ginola, criticized by manager John Gregory for being slightly overweight, netted the second equalizer with a 25-meter volley after Villa had Lee Hendrie sent off for abusive language aimed at the referee.

Everton and West Ham tied 1-1, Danny Cadamarteri firing the Toffees ahead at Goodison Park but Frederic Kanoute leveling for the Hammers.

Runaway division one leader Fulham conceded an early goal at home to Tranmere but hit back for a 3-1 victory to stay 10 points clear. Bolton remained second after winning 1-0 at Wimbledon.

Defending Scottish champion Rangers couldn't capitalize on a first-half goal by American defender Claudio Reyna on Sunday and was held 1-1 by last place Dundee United at Tannadice. United had gained only six points from its first 19 games.

The result means that Rangers, which has won the title 11 times in the last 12 seasons, is 12 points behind Glasgow rival Celtic, which crushed struggling Aberdeen 6-0 at Celtic Park on Saturday to remain seven points clear at the top.

Henrik Larsson scored three times and Swiss defender Ramon Vega, on loan from Tottenham, hit two on his debut. Second place Hibernian downed St. Johnstone 2-0.
**********************
Shares in English premier league club Tottenham Hotspur PLC surged Monday after weekend newspapers reported that the club's chairman, Alan Sugar, would sell his stake, Reuters agency reported. 


Dealers said entertainment sports and media group ENIC PLC, which previous reports said had made an offer for Sugar's 40 percent stake and which owns stakes in other clubs such as Glasgow Rangers, could now step in as a buyer. 

The Mirror newspaper reported Saturday that Sugar would sell his stake after suffering abuse from fans, adding that the chairman had decided to sell his controlling interest in the New Year.

TITLE: WORLD WATCH
TEXT: Students Murdered

ALGIERS, Algeria (Reuters) - Algerian rebels machine-gunned to death 15 teenage students and a teacher as they lay in their beds at a boarding school over the weekend, hospital sources said on Sunday.

Other pupils dived under their beds as the gunfire erupted in their dormitory, most escaping unhurt although six were wounded.

About six rebels in military uniform burst into the dormitory of the Lycee Technique of Medea, 90 kilometers south of Algiers, on Saturday night and fired with sub-machine guns at the sleeping boys, aged between 17 and 19.

"Fifteen pupils and the school principal were killed and six other children suffered serious wounds," a doctor at Medea main hospital said by telephone.

Political sources speculated that the school was targeted because the rebels wanted to attract media attention with a spectacular attack.



Chavez Protests

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez attacked what he called Venezuela's ruling elite on Sunday and complained about what he said was a plot by unnamed groups to divide Andean nations.

Chavez's relations with neighboring countries have been hurt by allegations that he has forged contacts with rebels in Colombia, Ecuador and Bolivia. These tensions have been blamed for the cancellation of Dec. 8-9 Andean summit in Venezuela, although the reason for the cancellation was given as scheduling problems.

Chavez, a left-leaning populist who has irked Washington with anti-American rhetoric, blamed "intrigue" on Sunday for the summit's scrapping.

"The intrigue of recent months has made some friends in Ecuador believe that I am supporting some kind of military movement, also in Peru and Bolivia," Chavez said in a speech to commemorate the death of 19th independence hero Simon Bolivar.



Dog Rescuers Perish

LECCO, Italy (AP) - A daring attempt to rescue a dog who slipped away from his master on an icy Alpine mountain led four Italian climbers to their deaths on the 2,414-meter Mount Arera.

Luigi Lazzaretti, 34, a native of Italy's southern Alpine region, was on Mount Arera with his two huskies on Sunday. When they came upon a patch of ice, the dogs slipped, and one slid away. Lazzaretti tried to catch the dog, then fell down himself, and three other climbers slipped to their deaths in futile rescue attempts.

"I told him to leave the dogs with me," said Attilio Rizzi, who directs the Alpine refuge the group set out from. He used his cell phone to call rescue teams.

The accident on Mount Arera, 50 kilometers east of Milan, was the worst incident on an unusually deadly day in the southern Alps. Six other people died in separate accidents, sliding hundreds of meters on layers of ice.



Aid Workers Out

KABUL, Afghanistan (Reuters) - More Western aid workers pulled out of the Afghan capital Kabul on Sunday, fearing a backlash if the UN Security Council imposed new sanctions against the ruling Taliban movement, Western sources said.

Many relief agencies had withdrawn their staff from Kabul because of the fear of possible eruption of violence and risk to their lives if the Council announced the sanctions on Tuesday, they said.

"Those who left were frightened that the sanctions will create unexpected harsh security problems for them," one source said.

"Fear of possible reaction against Western nationals at the hands of Afghans and foreign Islamists are high because of the nature of the sanctions," said the source, who did not want to be named. The United States expects the UN Security Council to approve an arms embargo and other sanctions against the Taliban rulers next Tuesday, a U.S. official said in Washington on Friday.



Tornado Kills 12

TUSCALOOSA, Alabama. (AP) - The tornado that ripped through Tuscaloosa was seven football fields wide and was the deadliest twister in the nation this year, a federal weather official said.

Eleven people died along a 20-kilometer path of destruction in Tuscaloosa, including a 15-month-old boy whose body was found in the rubble the morning after. Authorities said the child's father also was killed, and his mother and two sisters were hospitalized.

A 12th person died in Geneva, more than three hours to the south. At least 75 people were injured in Saturday's storms.

It was the deadliest tornado to strike Alabama since the spring of 1998, when 34 people died in neighboring Jefferson and St. Clair counties. Officials said it was the worst to hit Tuscaloosa, home of the University of Alabama, since 1932 when more than 100 people were killed.



Queen Removed

CANBERRA, Australia (AP) - Australians decided against dumping Britain's Queen Elizabeth II as their head of state, but they've kicked her off their new $5 bill.

In a break with tradition, the Reserve Bank unveiled a new bill Monday that carries no likeness of Australia's head of state.

The Reserve Bank said that as the old version of the bill would continue to circulate there was no need to put her on the new note, a limited issue for 2001.

Scrapping the queen from the currency was discussed last year during a divisive debate about Australia becoming a republic and replacing the queen as its head of state with a popularly elected president. A referendum overwhelmingly rejected replacing the queen. The defeat was blamed on disagreement over how to elect an Australian president.



Milan Bomb Defused

MILAN, Italy (Reuters) - Police found a time bomb in a sack on the roof of Milan cathedral just hours before it was set to go off and immediately defused it, Italian media said.

The bomb, which was set to explode at 3:00 p.m., was found in a sack with wires sticking out of it and contained a kilo of explosive packed into a food container.

Police at the scene said they could not determine the strength of the bomb without further tests.

An employee found a sack propped against one of the spires on the roof of the cathedral shortly before noon and notified police, who quickly evacuated all tourists from the roof and cordoned part of it off.

Deputy magistrate Stefano Dam bruo so, a terrorism expert, visited the scene immediately.

TITLE: U.S. President-Elect Talks Team and Tax
AUTHOR: By Tom Raum
PUBLISHER: The Associated Press
TEXT: AUSTIN, Texas - Carrying through on a promise to bring diversity to his administration, President-elect Bush on Sunday named a second black to his foreign policy team and selected a Hispanic Texas Supreme Court justice to be chief White House counsel.


He also reiterated his support for a $1.3 trillion tax cut, and urged congressional Democrats not to reject it until they had heard him make his case in person.

Before departing Texas for Washington, D.C., Bush named Stanford professor Condoleezza Rice his national security adviser and Justice Alberto Gonzales to the White House counsel's job.

He also announced that his longtime communications director, Karen Hughes, would take up the post of counselor to the president in order to help oversee "strategic planning."

"America will be better off that these three have agreed to serve," Bush said at a news conference in the governor's mansion in Austin, a day after he nominated retired Gen. Colin Powell to be secretary of state.

Asked if he was trying to send a message by including among his first appointments two blacks, two women and a Hispanic, Bush said, "You bet: that people that work hard and make the right decisions in life can achieve anything they want in America."

Bush then headed for Washington to spend three days meeting with congressional leaders from both parties, visiting Federal Reserve chairman Alan Greenspan, paying calls on President Clinton and Vice President Gore, and interviewing prospective members of his Cabinet.

Incoming first lady Laura Bush was getting a jump on her husband in visiting the White House, accepting an invitation from first lady Hillary Rodham Clinton to have tea together in the residence Monday morning.

They arrived at Dulles International Airport in suburban Virginia Sunday evening and went directly to their hotel in downtown Washington without making any public remarks.

Powell, meanwhile, visited with Secretary of State Madeleine Albright for more than three hours Sunday afternoon at her home in Washington to discuss foreign affairs.

"It's the beginning of a dialog that is crucial to get some positive things done," Bush said of his meetings with congressional leaders.

Of his meeting with Greenspan, Bush declined to say whether he thought the Federal Reserve chairman shared his concerns that the economy could be headed for a recession.

"I think it's best for he and I to have our discussion first, and I look forward to it," Bush said. "I have always admired Alan Greenspan. He's got good judgment."

After a bitter five-week legal battle over the election and as the first president to serve since 1888 without having won the popular election vote, Bush must reach out to Democrats if he is to have success pushing his policies through a nearly evenly split Congress.

Some Democratic leaders have said the Bush team's unwillingness to back off its campaign proposal of a $1.3 trillion, 10-year tax cut is aggravating already bitter partisan feelings.

And even some members of Bush's own party have suggested that the tax cut should perhaps not be pushed in one piece.

Bush defended the proposal on Sunday, saying: "I campaigned on a tax relief package that I firmly believe - believed then and believe even more now - is important as an insurance policy against any economic downturn."

"I look forward to discussing my vision of tax relief with the parties. I mean, it doesn't seem to make much sense for people to be drawing lines in the sands until we've had a chance to discuss things," he said.

The trip to Washington is the first in six months for Bush, who campaigned as an "outsider" during the election and often criticized Washington ways on the stump.

TITLE: BJP Faces Opposition on Plans for Temple
AUTHOR: By Sanjeev Miglani
PUBLISHER: Reuters
TEXT: NEW DELHI, India - India's upper house of parliament began debating on Monday a censure motion against Prime Minister Atal Behari Vajpayee's coalition for his apparent defense of the proposed construction of a temple on the ruins of a mosque razed by Hindu zealots.


The ruling coalition lacks a majority in the Rajya Sabha, or upper house, and will probably lose if the opposition presses for a vote on the heated debate over the place of worship in the northern town of Ayodhya that has left deep religious and political divides.

However, under India's parliamentary system, Vajpayee's council of ministers is answerable only to the lower house of parliament where the coalition defeated a similar censure motion last week.

"We know we cannot unseat you ... but we want a message to go out of this house," said Congress party deputy Pranab Mukherjee. "There cannot be a compromise on the basic secular foundations of our country."

Vajpayee, who belongs to the Hindu nationalist Bharatiya Janata Party (BJP), touched off the debate by declaring that efforts to build the temple to the god-king Rama on the site of the razed mosque in the holy city of Ayodhya reflected national aspirations and was an unfinished task.

He also turned down opposition demands that he drop three federal ministers, including his interior minister, who have been accused by federal police of being involved in the destruction of the 16th-century Babri mosque in 1992.

Some 3,000 people died in riots that followed the destruction of the mosque.

"We are really worried, we do believe in a multi-racial, multi-religious India," said Mukherjee. The Congress party has consistently accused the BJP of bias against the country's Muslim minority.

The BJP, which shot to prominence on the back of a nationwide campaign in the 1980s for construction of the Rama temple in Ayodhya, denies it has any prejudice against minorities, but says that it opposes appeasement of any community.

The government, which has trained its guns on the opposition for raking up the sensitive holy site row, has said it was committed to upholding the country's secular constitution.

Rural Development Minister Ven ka iah Naidu said that the coalition was committed to a common minimum agenda, one which excludes controversial issues such as the building of the temple.

"There is no question of deviation, dilution of the agenda of the National Democratic Alliance," he said.

Regional groups that make up Vajpayee's 23-party coalition have said they would support the government as long as it stuck to the common minimum program.

TITLE: Aussies Near Victory as Windies Crumble
AUTHOR: By Julian Linden
PUBLISHER: Reuters
TEXT: ADELAIDE, Australia - Australia was on the verge of victory over the West Indies on Monday after 15 wickets tumbled on the fourth day of the third test.


At the close, Australia was 98 for four in its second innings, needing only 32 more runs to reach its victory target of 130 and clinch the series.

The Australians, who won the first two matches of the five-game series to set a world record of 12 consecutive test wins, put themselves in position to make it 13 in a row when they destroyed the West Indian second innings for just 141.

But not everything had gone Australia's way. It was restricted to a first-innings lead of just 12 when it failed to add to its overnight score of 403-9, then suffered another Brian Lara onslaught.

Following on from his double century against Australia A last week and his first innings 182, Lara was again in great form, smashing four fours and six to race to 39 at better than a run a ball.

With runs hard to come by and the wicket starting to turn at alarming angles, Lara belted leg spinner Stuart MacGill out of the attack by taking 20 runs off one over before off-spinner Colin Miller deceived him, found an inside edge and Langer took the simplest of catches at bat pad.

Even then, with just 130 required for victory, Australia was put under pressure, slumping to 48-4 before Justin Langer (43 not out) and Damien Martyn (18 not out) rescued the innings with an unbroken half-century partnership.

Miller, 36, was Australia's unlikely hero, capturing 10 wickets in a test for the first time in his career.

He added 5-32 to his first innings haul of 5-81 and claimed Lara's wicket for the second time in the match.

Lara's departure triggered another embarrassing West Indies collapse, losing the last eight wickets for just 54 runs.

Miller, a late bloomer who made his test debut in 1998 at age 34, claimed the 50th wicket of his brief international career when he dismissed Daren Ganga for 32 just after lunch.

Captain Jimmy Adams made 15 and paceman Mervyn Dillon 19 to take the total past 100 before Miller and Glenn McGrath (3-27) cleaned up the tail by tea to send Australia into bat for the second time on the day.

Australia had started the day at 403-9 in its first innings, 12 in front of the West Indies' 391, but failed to add to its overnight score as Dillon sent the fourth ball of the day crashing into McGrath's stumps to finish with figures of 3-84.

The Australians' fortunes did not improve when they returned to the crease in the final session.

Dillon dismissed Michael Slater (one) and Mark Waugh (five) in his first spell to give himself 10 wickets for the series.

Then Courtney Walsh sent Matthew Hayden (14) and Ricky Ponting (11) packing to move within 10 of becoming the first player to reach 500 test wickets.

The West Indies were beaten by an innings inside three days in the two previous tests and were suddenly back in the game. But their hopes of winning this match to keep the series alive were effectively extinguished over the next 90 minutes as Langer and Martyn edged Australia closer to victory.

TITLE: Roma Stays Ahead of Field With Derby Win
PUBLISHER: Reuters
TEXT: MILAN, Italy - Roma remained six points clear at the top of Serie A after a 70th-minute own goal from Lazio defender Paolo Negro gave it a 1-0 victory in the Rome derby on Sunday.


But Atalanta and Juventus kept up the pressure on Roma with good away wins, while Inter and AC Milan were both held to draws.

Lazio had the only chance of a tightly fought first half when Diego Simeone's header from a Pavel Nedved corner was well saved by Roma goalkeeper Cristiano Lupatelli.

Roma enjoyed the upper hand after the break, and Gabriel Batistuta went close for Roma in the 66th minute with a powerful 25-meter free kick that Lazio keeper Angelo Peruzzi did well to tip over.

But Fabio Capello's side grabbed the winner when Peruzzi parried a Cristiano Zanetti header only for Alessandro Nesta's attempt to hook the ball clear to strike Negro and bounce over the line.

Juve moved into second place, ahead of Atalanta on goal difference, after another convincing showing in a 4-1 win at Lecce.

Filippo Inzaghi, recalled for the injured Alessandro Del Piero, opened the scoring after a perfect through ball from Zinedine Zidane, and Juve doubled the lead through in-form David Trezeguet, who drove home his sixth goal of the season from close range.

Lecce had defender David Balleri sent off in the 39th minute, but battled hard after the break, and Rodolfo Giorgetti brought his side back into the game with a powerful strike in the 70th minute.

But late goals from substitutes Darko Kovacevic and Gianluca Zambrotta ensured three points for Juve, which next faces Roma on Friday.

Atalanta, promoted from Serie B over the summer, hardly could have expected to be heading into Christmas in the top three, but it again demonstrated that it is much more than a flash-in-the-pan side with a hard-fought win at Bologna.

The Bergamo side has won admirers for its commitment to youth, but it was two Serie A veterans who forged the breakthrough seven minutes from the end when Maurizio Ganz slid home a cross from Marco Nappi.

In Spain, goals from giant Norwegian striker John Carew and midfielder Ruben Baraja gave Valencia a 2-0 win over Malaga on Sunday to return to the top of the Spanish first division after a 24 hour absence.

But Malaga, still smarting from its midweek exit from the Spanish Cup at the hands of Premier League Ceuta, made life difficult for Hector Cuper's side, with the strike partnership of Dely Valdes and Dario Silva threatening throughout the match.

Carew, however, paved the way to victory with a superbly struck volley three minutes from the break and then set up Baraja to make it 2-0 in the 73rd minute.

The result leaves Valencia top on 31 points, two clear of Real Madrid, which won 2-1 at Espanol on Saturday and has a game in hand. Deportivo Coruna dropped to third on 28 points after a 3-1 defeat away to Alaves on Saturday.

TITLE: SPORTS WATCH
TEXT: Boxer Has Surgery

SHEFFIELD, England (Reuters) - English boxer Paul Ingle was critical but stable Monday following surgery to remove a blood clot on his brain after he was knocked down in a title fight by South African Mbulelo Botile.

The 28-year-old Ingle had been defending his International Boxing Federation featherweight belt when he failed to get up after the bout was stopped in the 12th and final round Saturday.

"There has been no change overnight. He is still critical but stable," said a spokesman for the Royal Hallamshire hospital in Sheffield, where Ingle had the operation.

"He is under sedation so we can control the trauma," the spokesman added.



Japan Refuses Probe

TOKYO (Reuters) - The Japanese Olympic Committee will not reopen an inquiry into allegations that Nagano officials bribed International Olympic Committee executives to host the 1998 Winter Games.

The Salt Lake Tribune newspaper reported Sunday that a letter found in the files of an indicted former Utah Olympic official showed some IOC officials may have been paid $100,000 to give Nagano the 1998 Winter Games instead of Salt Lake City.

But JOC officials said they would not start a fresh investigation.

They said JOC internal investigations two years ago turned up no evidence to prove irregularities in Naga no's bidding campaign.



Ghanaians Take Trophy

ACCRA, Ghana (Reuters) - Three late goals from Hearts of Oak earned the Ghana club its first African Champions League title as it beat Esperance of Tunisia 3-1 in an extraordinary, incident-packed match Sunday.

The second-leg victory gave Hearts a 5-2 aggregate triumph, but rioting broke out 15 minutes from time with Esperance leading 1-0 and going all out for the second goal it needed. 

Tear gas was then fired into the crowd, one canister landing in the VIP box, which forced all the dignitaries, including CAF president Issa Hayatou, onto the athletics track surrounding the field.

During the melee, one supporter ran onto the pitch and handed an object to Esperance keeper Chokri El Ouaer, with which he cut a gash on the side of his face.

But the referee and linesman saw the incident, and the only result was that he had to leave the pitch injured.

It took 18 minutes for authorities to clam down incensed officials from both sides, with police chasing players and spectators from the field.

When the game restarted, Hearts quickly scored three goals to secure the continent's flagship club trophy.

An Esperance player received a red card in the final minutes for headbutting an opponent and pushing a referee.



S. Africa Triumphs

EAST LONDON, South Africa (Reuters) - A maiden one-day international century from Neil McKenzie set up South Africa for a comfortable 95-run win over Sri Lanka in their second limited-overs match Sunday.

McKenzie's unbeaten 120 broke two South African one-day records - it was the highest individual score at the Buffalo Park ground and the highest against Sri Lanka.

South Africa made 302 for seven in its 50 overs and restricted Sri Lanka to 207 for six.

The win gives South Africa a 2-0 lead in the series, which will continue in mid-January at the completion of the first two tests.

TITLE: Saints 'Family' Strides Toward Playoff Slot
PUBLISHER: The Associated Press
TEXT: NEW YORK - The New Orleans Saints were lucky - they didn't have to deal with bad weather on a day when snow, rain and frosty conditions were the NFL's big winners.


Playing inside the Superdome, the Saints moved to the brink of clinching their first playoff spot since 1992, with a 23-7 victory on Sunday over the Atlanta Falcons.

Only a tie in Monday night's game between St. Louis and Tampa Bay - there has not been a tie in the NFL since 1997 - can prevent the Saints from reaching post-season play.

"I don't know of too many teams that go 3-13, then have won 10 games to this point this season," said Saints coach Jim Haslett. "The way these guys have stuck together and really become a family, the way they feed off one another, that's the biggest thing I'm proud of."

Terrell Owens had plenty to be proud of, too. While the San Francisco 49ers and their fans were honoring Jerry Rice on possibly his final home game, Owens caught an NFL-record 20 passes for 283 yards in a 17-0 win over Chicago.

Owens broke Tom Fears' mark of 18 catches set with the Los Angeles Rams on Dec. 3, 1950, against Green Bay. Owens also topped Rice's franchise record of 16 receptions against the Los Angeles Rams in 1994.

"What I did by no means overshadows No. 80," Owens said about Rice, his mentor. "He's been a big part of my success."

With tears in his eyes after the game, Rice praised Owens.

"Records are meant to be broken," Rice said. "I feel T.O. is going to carry on the tradition."

The New York Giants clinched the NFC East, winning 17-13 at Dallas.

The New York Jets and Miami Dolphins, meanwhile, missed a chance to clinch a playoff berth for the second straight week.

Detroit guard Jeff Hartings recovered James Stewart's fumble in the end zone with 5:43 left, lifting the Lions over the Jets 10-7.

Hartings tried to celebrate the first TD of his five-year career, but got bogged down in the muck and mire at the Meadowlands.

"Offensive linemen don't get touchdowns, don't think about touchdowns," he said. "We just think about getting touchdowns for the other guys and letting them dance."

The Miami Dolphins lost to Indianapolis 20-13.

In many places, brutal weather ruled.

At Cincinnati, the wind chill factor was minus 20 degrees Celsius and the field was so blanketed by snow that the officials had the Bengals' grounds crew paint orange sidelines and goal lines.

At Cleveland, snow covered the field and players on both sidelines crowded around space heaters to ward off a wind chill factor of minus-10.

And in Buffalo, the driving snow that made it tough to play football also shut the airport, stranding the New England Patriots after their 13-10 overtime win.

Saints 23, Falcons 7. Aaron Brooks, making just his fourth NFL start, completed 24 of 35 passes for 285 yards for New Orleans.

The Saints (10-5) are hoping to earn the fifth playoff berth in their 34-year history.

Atlanta (3-12) scored on an 88-yard kickoff return by Darrick Vaughn to start the second half.

49ers 17, Bears 0. After Rice's daughter sang the national anthem, the NFL's most prolific pass catcher made a 25-yard reception on San Francisco's first play.

With video tributes on the scoreboard all day, Rice finished with seven catches for 74 yards. The crowd saluted him throughout the game with chants of "Jerry! Jerry!" and he took a victory lap after it was over.

Rice, 38, has said he is not ready for retirement, but the 49ers (6-9) probably cannot afford his salary.

Owens caught a 27-yard TD pass from Jeff Garcia. Chicago fell to 4-11.

Giants 17, Cowboys 13. Kerry Collins threw a 33-yard touchdown pass to Amani Toomer and an interception by Emmanuel McDaniel set up an 8-yard TD run by Tiki Barber as New York won its first division since 1997.

The Giants (11-4) won for the fourth straight time since coach Jim Fassel guaranteed they were going to the playoffs. New York can clinch the NFC's top seed with a victory Saturday at home against Jacksonville.

The Cowboys fell to 5-10.

Colts 20, Dolphins 13. NFL rushing leader Edgerrin James ran for 112 yards and Peyton Manning threw for 206 yards as Indianapolis won at Miami in a matchup of playoff contenders.

The Colts (9-6) will make the postseason if they beat Minnesota and the New York Jets lose at Baltimore in the season finale.

For the second week in a row, the Dolphins (10-5) missed a chance to clinch a playoff spot. Miami can still make it if they win Sunday at New England.

Lions 10, Jets 7. James Stewart ran for a career-best 164 yards and Detroit kept alive its playoff hopes.

The Lions (9-6) need to beat Chicago next week and get help to reach the postseason.

John Hall of the Jets missed a 35-yard field goal try with nine second left. New York (9-6) must win at Baltimore next week or get lots of help to make the playoffs.

Titans 24, Browns 0. Tennessee moved closer to clinching home-field advantage throughout the playoffs as Eddie George ran for 176 yards and three touchdowns at Cleveland.

The defending AFC champion Titans (12-3) posted their first shutout in seven seasons, when the team was located in Houston. Jeff Fisher's 60th victory made him the winningest coach in franchise history, passing Bum Phillips' 59 with the Oilers.

The Browns (3-13) lost their fifth in a row to finish off their second season back in the NFL.

TITLE: Horry and Lakers Earn a Useful Win
PUBLISHER: The Associated Press
TEXT: TORONTO - Kobe Bryant prevailed in a marquee matchup, and veteran reserve Robert Horry earned top billing for the Los Angeles Lakers.


Bryant topped Toronto's Vince Carter in a battle of two of the league's top scorers, but it was the contribution of Horry that sealed a valuable victory for the Lakers on Sunday.

Bryant outscored Carter 40-31, and Horry scored all six of his points in overtime as the Lakers beat the Raptors 104-101 for their third victory in seven games.

Bryant discounted the hype swirling around the showdown with Carter.

"I wasn't concerned about that," Bryant said. "People like individual matchups, but when all is said and done and our careers are over with, people are going to judge us by how many championships we win, so I want to win."

The Lakers trail Pacific Division-leading Sacramento by a game and are a half game behind second-place Portland.

Carter, who missed 22 of his 32 shots from the field, guarded Bryant through most of Sunday's game and enjoyed the challenge. "I love playing great players," he said. "I just tried to approach it as a normal game."

Horry capitalized on Toronto's predictable approach of guarding the Lakers' most dangerous scoring threats and accounted for six of the Lakers' 13 overtime points.

"They were worried about the big guns in Shaq and Kobe, so it was an opportunity for me to sneak in," Horry said.

The victory did not mask Los Angeles' continuing difficulty to hold a lead as Toronto rallied from a 15-point deficit in the last five minutes of regulation.

"We should have won that game by double digits. We messed around in the fourth quarter like we always do," said Shaquille O'Neal, who scored 28 points. "We were lackadaisical. We got cute. We started shooting jumpers and missing shots, but in overtime we did what we had to do." 



Kings 95, Nets 79. Chris Webber had 33 points and 12 rebounds as visiting Sacramento won for the ninth time in 12 games and continued its best start.


Doug Christie added 18 points and Vlade Divac 12 for the Kings.

Stephon Marbury, limited to six points in the first half, finished with 17 points for the Nets, who had their two-game winning streak snapped. 



Knicks 100, Bucks 97, OT. Glen Rice had a season-high 32 points and 14 rebounds and host New York overcame a 10-point deficit in the final two minutes of the fourth quarter to beat Milwaukee for the seventh straight time.


Allan Houston finished with 29 points on 11-for-16 shooting. Marcus Camby added 11 points and 13 rebounds for the Knicks.

Glenn Robinson led Milwaukee with 23 points and 11 rebounds. Ray Allen had 18 and Tim Thomas added 17. Lindsey Hunter finished with 14 as Milwaukee had its four-game winning streak snapped. 



Mavericks 99, Pistons 90. Dirk Nowitzki scored 25 points and Christian Laettner had 16 against his old team as Dallas handed Detroit its second straight home loss.


Dallas' Steve Nash had 16 points and nine assists, while Michael Finley had 13 points and eight assists.

Jerry Stackhouse scored 24 points, Joe Smith added 20 points and a season-best 13 rebounds for Detroit, which has dropped four of its last five games. 



Magic 101, Grizzlies 91. Tracy McGrady scored 15 of his 27 points in the third quarter and had eight rebounds and eight assists as Orlando dealt Vancouver its sixth straight loss and fourth in a row at home.


John Amaechi scored 18 points and Michael Doleac added 16 for the Magic.

Mike Bibby scored 19 points and Shareef Abdur-Rahim had 12 points and 14 rebounds for the Grizzlies. 



Wizards 103, Clippers 94. Juwan Howard scored a season-high 31 points and Richard Hamilton tied a career high with 30 in a reserve role as Washington snapped a nine-game losing streak in Los Angeles.


Washington's losing streak, which included four games decided by six points or less and two by 20 or more, was its longest since a 13-game skid during the 1994-95 season.

Rod Strickland had 12 points, 10 assists and seven rebounds for the Wizards, who committed a season-low eight turnovers.

Lamar Odom had 20 points for the Clippers, who have lost nine of 12 to the Wizards.

TITLE: Russians Make a Strong Start to Baltika Cup
PUBLISHER: The Associated Press
TEXT: MOSCOW - Center Andrei Razin scored the winner and had an assist as Russia beat Finland 2-1 Sunday in the opener of the Baltika Cup international tournament.


On Monday, Russia was to face the Czech Republic, which defeated Sweden 4-2 in late action Sunday to gain its first victory in this year's European Ice Hockey Tour.

Four minutes into the first period, right defender Andrei Yevstafiyev opened the scoring for Russia, beating Finnish goalie Kimmo Kapanen from the blue line on a pass from Oleg Orekhovsky and Razin.

Supported by a sellout crowd of 9,000, Russia controlled the game. Razin scored from a goalmouth scrabble 54 seconds into the final period, lifting the home team to a 2-0 lead.

Right wing Hannes Hyvonen scored Finland's only goal in the 44th minute.

The world champion Czechs dominated their game and outshot their opponents 37-18. Seven minutes into the game, center Viktor Hubl put the Czechs ahead 1-0. Ronnie Sundin equalized for Sweden in the 11th minute. Center Kamil Piros scored in the second period and assisted Viktor Ujcik early in the third period to give the Czechs a 3-1 lead.

Ales Kotalik made it 4-1 in the fifth minute when the Czechs were reduced to four men. Pierre Hedin set the final score at 4-2 in the 47th.

The tournament is the third of four legs of the European Ice Hockey Tour. The four teams are playing in round-robin format until Wednesday's final.