SOURCE: The St. Petersburg Times
DATE: Issue #656 (23), Tuesday, March 27, 2001
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TITLE: Museum Heist Reward Offered
AUTHOR: By Masha Kaminskaya
PUBLISHER: Staff Writer
TEXT: A reward has been promised for any information leading to the retrieval of the 19th-century painting "Pool in a Harem" by Jean-Leon Gerome, which was stolen in broad daylight from the State Hermitage Museum on Thursday.
Meanwhile, St. Petersburg police and the Federal Security Service are continuing the investigation of what has been termed the boldest heist that the world's largest art museum has seen in 40 years.
The reward was declared by the Hermitage and the Culture Ministry on Friday, but the sum of the reward has not yet been announced, said Interfax news agency, citing the museum's chief spokesperson, Larisa Ayerova.
However, Larisa Korabelnikova, another Hermitage spokesperson, said the award would be "not less than $1,000, paid to anyone giving a lead [strong enough for police] to find the painting."
"People are already calling with information, although few calls have been really worth attention," said Korabelnikova in a telephone interview on Monday. She also said that police and the Hermitage's security service are still searching the museum's premises, although visitors are being allowed in.
"Pool in a Harem," painted in 1876, was cut from its frame sometime before 4 p.m. on Thursday, when the Western European art exhibition on the third floor where the painting was hanging was closed to visitors. None of the paintings in the exhibition was connected to the museum's alarm system, and they were supervised by only one custodian.
When the theft was discovered at 4 p.m., the museum was closed, and several hundred people were trapped inside until late evening as police searched their clothes and bags before letting them out.
According to Korabelnikova, "Pool in a Harem" - which measures 73.5 centimeters by 62 centimeters, and bears the artist's signature in the top right corner - was not insured, contrary to reports late last week. As with all the museum's roughly 2 million exhibits, it has only an estimated insurance value, which comes into force when an item is taken for exhibition abroad. This value is the amount the inviting party must compensate the Hermitage in the case of loss or damage.
The "Pool in a Harem" was given an insurance value of $1 million in 1995 when taken to Japan. Police said that its market value might have grown since. At a press conference on Friday, Piotrovsky said the work was "not a masterpiece, although frequently copied."
During the search of museum visitors on Thursday, two museum employees were detained and interrogated, and were found to be carrying items of art including a porcelain Easter egg, a box containing beads and an ashtray, according to police. Police would not comment further, saying only that the items were "valuable." However, the items turned out to be the employees' personal belongings and the workers were let go the same day.
According to Hermitage director Mikhail Piotrovsky, the eight investigators dealing with the heist have come up with what they say is a police sketch of a suspect. He also said that both Interpol and Russian customs officials have been informed of the theft.
"Right before [the discovery of the theft] a visitor saw a man who she said looked suspicious [and] was holding a package," Piotrovsky was quoted by Interfax as saying at the press conference. "According to the sketch, the suspect is a 30- to 40-year-old European-looking man with a moustache."
Piotrovsky apologized for the inconvenience that the searches brought to the visitors, and said that he did not rule out that the painting was still hidden in the museum, according to Interfax. He sounded more positive on Monday while on ORT's Dobroye Utro live show. During transmission, a caller from Lugansk who claimed to be clairvoyant said that the painting was still in the museum. Piotrovsky said this theory fitted the investigation so far.
But Leonid Rostovtsev, a spokes person for the St. Petersburg police, said by telephone Monday that this was unlikely. He refused to elaborate or disclose any leads or the number of suspects.
Rostovtsev also refused to comment on a report in Saturday's Kommersant daily, which said that the third-floor exhibition Thursday was open to student groups, and between 10 a.m. and 11:30 a.m. a group of students was in one of the halls. The report said the students are now the main suspects.
Piotrovsky said it was possible the theft was an inside job, recalling a 1994 incident when an electrician employed by the Hermitage stole an Egyptian vase dating from the 3rd century B.C., and valued at $500,000. The vase was found a year later and the thief imprisoned.
Aerova said, however, that the latest theft was the biggest since the late 1950s, when a thief got in through the roof and stole a painting from a Russian art exhibition. That painting was later recovered with the help of a taxi driver who had given the thief a ride, Aerova said.
"No museum can be safe enough for criminals. ... But we'll try to improve our security system," said Korabelnikova. She added that the Hermitage does not have enough custodians to keep watch on all the museum's collection, because the $13-a-month salary made it difficult to attract recruits to guard the 50,000 or more exhibits on display at any one time.
TITLE: Trampolinists Fly in Face of Trouble
AUTHOR: By Molly Graves and Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: In an unmarked and nondescript warehouse off Sadovaya Ulitsa, heads bob up and down as coaches - wrapped warmly in sweaters and scarves - silently watch the bodies of young trampolinists doing somersaults and twists high above their heads.
The spartan accommodation houses one of the St. Petersburg Trampoline Federation's two co-functioning training halls for trampolining - a sport in which Russia displayed unparalleled prowess during the 2000 Olympics in Sydney. And the coaches for St. Petersburg are conscious that they may be training the next round of Olympic medalists.
Because of the heart-stopping performances of Krasnodar's Irina Karavayeva and Alexander Moskalenko, Russia leads the world in this little-known but fast-growing new Olympic sport.
And with St. Petersburg's jumpers ranked second nationally, it would seem the bundled-up coaches have little to worry about in their hopes for future Olympic gold.
However, with federal funding cuts and opportunities for local athletes and coaches looking bouncier abroad, coach Lyubov Bakina of the St. Petersburg Trampoline Federation is concerned for the future of her sport.
"There is an array of problems, and all of them have roots in lack of funding - trampoline training centers are closing down, and this sport in general gets very little attention from all levels," said Bakina in an interview last week.
"Even Russia's Olympic champions only get 1,200 rubles [about $42] a month from the Olympic Committee [as a living stipend], and the St. Petersburg trampoline team is getting nothing at all. We will never make money the way commercial sports - like soccer or hockey - can. We will never pack full houses."
This seems ironic, as outside Russia, interest in the sport has soared to new heights since trampolining made its debut as an official Olympic sport last year at the Sydney Summer Olympics.
But the trampoline didn't make the Olympics without its share of mockery. Invented in the mid-1930s by American George Nissen and long viewed as a somewhat dangerous childrens' plaything, the trampoline has a reputation to live down.
Some 50 years later, the future of the sport looked promising, with a demo exhibition of the trampoline at the 1980 Moscow Olympics.
However, the twisted ankles and chipped teeth that came of the new invention soon put it on parents' blacklists as a potential sport for their children.
But the trampoline has bounced back - after its debut in kangaroo-ridden Australia. And perhaps it is no surprise that Russia leads the world in the high-flying sport.
But if Russia leads the world, then Krasnodar leads Russia, boasting the regional training center which produced Sydney gold medalists Irina Karavayeva and Alexander Moskalenko. The Kras no dar team also swept the lion's share of the trampoline medals at the Russian Cup in Trampoline, Double-mini Trampoline, and Tumbling, held March 23 to 25 in St. Petersburg's Winter Stadium.
Krasnodar's attitude toward the sport is in contrast to most other Russian trampoline centers.
According to St. Petersburg's Bakina, the Kras no dar city government provides substantial funding for its local bouncing stars, with Moskalenko and Karavayeva getting 13,000 rubles a month (about $450).
"Trampoline is sport number one in Krasnodar," said Bakina.
"They have several schools, and they don't have problems getting sponsorship" from both city administration and private institutions.
But Olympic champion Moskalenko admits that there is little incentive to stay in the field.
"I doubt that I will work as a trainer ... It's thankless work - especially in Russia. You receive just a few kopeks," he said in an interview following the Russian Championships on Sunday.
Additionally, Moskalenko, who returned to the sport after several years in retirement in order to compete in Sydney, was only able to clinch third place in the men's trampoline finals at the Russian Championship that took place last weekend - evidence that the torch for Russia must pass to a new generation of trampolinists.
According to Bakina, the trampolines at St. Petersburg's two co-functioning trampoline halls, which currently train a total of 200 students, are open to all who want to learn, free of charge.
She adds, however, that often children have personal reasons for wanting to jump. "Now, most children come from troubled families," she said. "They are looking for approval, to assert and prove themselves in life, and they use sports as a means of doing so."
But the free training may disappear if the financial situation doesn't improve. Because of funding troubles, centers across Russia have already closed, leaving a mere nine functioning trampoline centers.
As local trampoline coaches complain, their main problem is that city sports funding - a typical budget item - is spread too thin. "Petersburg is a large city - it has other sports to be concerned with," Bakina said.
"Success needs investment - not only the athlete's time but also state attention is needed."
Perhaps one would expect the Russian Olympic Committee to take care of the country's strongest trampoline training centers. But according to Bakina, the committee only provides finances for the 12-member Olympic team, its coaches and management.
Meanwhile, the St. Petersburg trampoline federation faces the task of staying afloat on a budget of 142,000 rubles ($5,000) annually - to be divided among acrobatics and trampoline together.
Viktor Spiridonov, an official from the Committee for Sports and Physical Culture of the St. Petersburg administration, said the Legislative Assembly had cut the committee's budget by 30 percent this year, reducing it from 150 million rubles in 2000 to 100 million rubles in 2001.
"Yes, trampoline is an Olympic sport now, but with a very limited budget like ours, we cannot, unfortunately, be of much help," Spiridonov added.
TITLE: World Awaiting Act II of the Putin Presidency
AUTHOR: By Jon Boyle
PUBLISHER: Reuters
TEXT: MOSCOW - A year after winning the elections, President Vladimir Putin remains vastly popular, having restored strong Kremlin control and used windfall oil receipts to lift the living standards of the poorest.
Despite progress on economic reform, the war in breakaway Chechnya has underscored concerns over human rights and the future of the free media, and raised questions about Russia's direction under the former KGB spy.
Elected on March 26, 2000, amid almost universal fatigue with his frail, erratic and scandal-tainted predecessor Boris Yeltsin, Putin's 70 percent popularity rating has rarely dipped, despite his mishandling of last summer's Kursk submarine disaster.
After a tumultuous decade, which saw output fall more than 40 percent, living standards plummet, tanks shell parliament and constant political crises, Putin has, above all, brought what millions of ordinary Russians crave most - stability.
"On the foundations of a strengthened state, we have made a step towards consolidating society," he said in a recent interview to mark his first year in office.
A skillful team of spin doctors helped Putin transform the Chechen conflict into a battle for the very soul of Russia, restoring a measure of national pride and securing him a reputation as a man of action and capable administrator.
Within weeks of his inauguration he made good on a pledge to restore strong central control over Russia's 89 unruly regions, winning from a newly compliant parliament the right to sack influential governors, and stripping them of their automatic right to sit in the federal legislature.
His appointment of seven "super prefects" to police their activities gave the novice Kremlin chief further leverage over provincial leaders accused of acting like potentates.
In a ruthless act of political patricide he ousted business mogul Boris Berezovsky, instrumental in Putin's meteoric rise to power, from his role as Russia's ultimate Kremlin insider.
Berezovsky has since portrayed himself as a victim of Putin's authoritarian tendencies, even flying to the aid of long-time rival Vladimir Gusinsky, another out-of-favor oligarch battling to keep his media group free of Kremlin control.
Business circles have feted Russia's new-found political stability and reforms such as a new tax code, but foreign investors who stampeded out of Russia during the 1998 economic crisis want structural reforms before returning.
But while enjoying a vast array of powers, the master of the world's second-largest nuclear arsenal remains politically vulnerable.
As surprised as anybody at his rise to power, Putin came to the Kremlin without a "network". That forced him to staff his administration with a heteroclite group drawn from his KGB spy days, economic reformers from his hometown of St. Petersburg, and key aides inherited from the Yeltsin kitchen cabinet, known derogatorily as "The Family."
Belying his image as a taker of tough decisions, political analysts say Putin is crippled by indecision unless he feels strongly about a course of action or a clear majority exists. Witness his failure to resolve a year-long row between his defense chiefs over military reform.
His April 3 state-of-the-nation address to parliament will give Putin the chance to outline his plans in his second year. But history shows that world oil prices could play a more important role in determining whether Putin heralds a Russian renaissance, or is merely a coda to further decline.
TITLE: Beloved Mir Goes Out in a Blaze of Glory
AUTHOR: By Anna Dolgov
PUBLISHER: The Associated Press
TEXT: KOROLYOV, Moscow Region - Russia bid a dignified farewell to the Mir space station as the orbiter's 15-year voyage ended with a spectacular shower of blazing debris over the South Pacific and computer screens in the Mission Control room went eerily blank.
A somber silence fell over the control room after flight controllers guided Mir to its fiery end Friday, and pride about an operation carried out with flawless precision mixed with a sense of restrained mourning for the home Russian space experts had built.
Mission Control chief Vladimir So lo vyov shuffled out of the room, exchanging a few handshakes. "I congratulate you on the operation, but not on the results," he said.
Mir went down without a glitch, a 140-ton, 33-meter structure disintegrating into scraps of metal that rained over a designated area of the "space graveyard" - an expanse of the Pacific between Australia and Chile where Russia dumps abandoned spacecraft and satellites.
Four fragments of the station flashed above the palm trees and beaches of Fiji in white balls of fire with a swarm of smaller debris in their wake, lighting up the early evening sky for about eight seconds. Four thunderous sonic booms shook the island about three minutes later.
"We didn't say anything, just looked at each other," said Viktor Konstantinov, a Mission Control expert in charge of the Mir's life-support system. "On the one hand, we were happy that it fell in the correct place - but everything else we understood without words."
A display that had been lit up with rows of figures conveying technical data about Mir, blinked to switch to the words: "The 15-year flight of Mir is complete."
On a huge electronic map on which Mir's route had been traced for years, three white lines followed the station's final orbits - the last one terminating in a small dot at 40 degrees south latitude and 160 degrees west longitude, at the center of a target zone about 200 kilometers wide and 6,000 kilometers long.
Worry prevailed until the end that the controlled crash would go wrong, plunging heavy chunks of metal from Mir down on land. Russian officials had insisted they could carry out a safe descent. But the station was by far the heaviest spacecraft ever dumped, and its size and shape made it difficult to exactly predict the re-entry.
A Progress cargo ship docked with Mir fired the last of three thrusts at 8:07 a.m., the most crucial moment in a series of computer-driven overnight maneuvers to guide the craft down.
"It has been an exemplary operation," said the head of the Russian Aviation and Space Agency, Yury Koptev. "The world has become convinced that Russia knows not only how to build spacecraft but how to control them and how to forecast their flight."
Mir was a symbol of space leadership, glory, and romantic dreams. All nationwide television networks broadcast the images of Mir's happier days Friday - cosmonauts laughing and hugging, floating with loads of equipment through the station's tubular passageways, Mir itself gliding above the blue semi-sphere of Earth and its white rippling clouds.
"There were many happy moments - but we also had a great deal of trouble," said Mission Control chief engineer Mikhail Pronin.
By its final day, Mir had circled the Earth 86,331 times, and it went down in a faultless descent. "Mir left in style," ORT television commented.
TITLE: 3 Blasts Blamed on Chechens
PUBLISHER: Combined Reports
TEXT: MINERALNIYE VODY, South Russia - Authorities in a southern Russian province, rocked by a series of deadly bomb explosions, declared a day of mourning on Monday amid a security operation to capture those responsible.
Federal authorities almost immediately blamed the blasts - which killed 23 people and injured more than 100 - on Chechen separatist guerrillas, and Prosecutor General Vladimir Ustinov said Sunday they seemed to be the work of rebel commander Khattab. Federal Security Service chief Nikolai Patrushev said men believed to have been involved in the bombings have been detained in Chechnya and were being interrogated.
Separatist Chechen President Aslan Mas khadov released a statement denying any role in the explosions. The rebel Web site kavkaz.org said they could have been staged by "a desperate Che chen whose family was ruined and destroyed by Russians - or the Russian Federal Security Service [FSB], which wants yet again to heighten the degree of popular rage against the 'bandits.'"
Newspapers said Saturday's blasts were a setback for Moscow's attempts to push the slow-burning Chechnya conflict out of the public eye.
A municipal government spokes person in the spa resort town of Mineralniye Vody said that six victims had been buried on Monday. They were among 21 killed when a booby-trapped car exploded at the entrance to a busy morning market.
The funerals were supposed to be low-key affairs held at different cemeteries but hundreds of mourners turned up with flowers to express their grief. Police guarded the processions as authorities endeavored to stave off feared new attacks. Long funeral corteges rolled through the small town, whose streets were lined with tearful residents. Crowds of emotional teenagers came to say goodbye to their schoolmate Anya Denezhkina, one of six children to perish in the blast.
The spokesperson said that Monday was declared a day of mourning in the Stavropol region, where two of the three explosions to hit Russia over the weekend occurred.
The other bomb went off near a police station in the town of Yessentuki, killing no one but injuring a dozen people. A third explosion in neighboring Karachayevo-Cherkessia killed two bomb disposal experts as they tried to defuse a car bomb.
The Emergency Situations Ministry said that two people had died in hospital over the last 24 hours of wounds sustained in the Mineralnye Vody blast, bringing the toll to 23. About 20 injured were in hospital in a serious condition.
The attacks drew strong condemnation from outside Russia, including messages of sympathy from Belarus, Ukraine and the European Union. The Council of Europe called the bombings an attack against basic human rights.
"The perpetrators of these barbaric acts and those who are behind them underlined that they are not interested in living in any form of civilized society," Walter Schwimmer, the head of the pan-European democracy watchdog, said in a press release. President Vla di mir Pu tin has promised the victims' relatives he would take the "toughest measures" against the bombers, and police and security services have launched a massive operation to identify and arrest those responsible.
Security has been stepped up across the region and in major cities throughout Russia. In territories near Chechnya armed police came out in numbers on the streets and traffic police were stopping and checking all vehicles.
Officials say they have arrested at least one strong suspect, apparently the driver of the car which killed the two bomb experts, and prosecutors in Chechnya said three other people had been detained in connection with the blasts. Prosecutor General Ustinov has said investigators had reasons to believe a prominent rebel commander, Jordanian-born Khattab, had ordered the bombings.
A leading Russian daily, Kommersant, said the blasts made a mockery of a raft of reports by law enforcement bodies that they were successfully rooting out "Chechen terrorism."
"Khattab and his sidekicks drove it home that the war is far from over. They also showed that large-scale special operations by law-and-order authorities ... are worth nothing," it said.
In Chechnya, where Russian troops come under daily attack despite having established shaky control over the territory, three policemen were killed on Sunday in the town of Gudermes when they stopped a car for checks, Interfax news agency said.
- LAT, AP, Reuters
TITLE: Baptists Attacked in Georgia
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia - Followers of a defrocked Georgian priest beat eight visiting American Baptists in this former Soviet republic on Saturday and stole camera equipment, Baptist leaders said.
The Americans had just arrived in Georgia's capital, Tbilisi, when former priest Vasily Mkalavishvili and his supporters arrived at the city's Baptist headquarters and attacked them, said Baptist priest Malkhaz Songulashvili.
Songulashvili accused police of ignoring the victims' pleas for help, and suggested they were sympathetic to the attackers.
Police officials and Mkalavishvili would not comment on the attack. The names and hometowns of the Americans were not immediately available.
Mkalavishvili was stripped of his post by Georgia's Orthodox Patriarchate in 1995, which accused him of anti-Christian policies. He has strongly opposed activities by religious minorities in this traditionally Orthodox nation.
TITLE: New Nuclear Power Plant Draws Mixed Reaction
AUTHOR: By Angela Charlton
PUBLISHER: The Associated Press
TEXT: VOLGODONSK, South Russia - For Yuri Kormushkin, the opening of Russia's first new nuclear power plant since the 1986 Chernobyl accident is a colossal accomplishment. Now chief of nuclear safety for the station, he nursed it for most of the 22 years since its conception.
For Alexander Filipenko, the launch is a mistake. The hair on his arm bristles when he describes the intense heat and destruction the reactor's fuel rods can produce. He speaks from memories of sealing the charred gash in Chernobyl's reactor No. 4, and of once-hardy comrades withered from radiation exposure.
Amid increasing power blackouts and deepening energy shortages across this vast country, Russia's Atomic Energy Ministry wants to build 20 new nuclear reactors by 2020 and double reliance on nuclear power. The start-up of the Rostov plant in southern Russia is just the beginning, officials hope.
It marks an end to what many call the Chernobyl era, nearly 15 years of fear that emerged from the radioactive ashes of the world's worst nuclear accident.
The Chernobyl plant is in Ukraine, which won independence from the Soviet Union in 1991, and Russian officials have tried to distance themselves from responsibility for the accident.
No other former Soviet republic has opened a nuclear plant since the 1986 accident, although Ukraine is keen to finish two long-stalled reactor projects to compensate for the energy lost when it shut down Chernobyl in December after years of international pressure.
Despite warnings from environmental groups about the risks of nuclear power, Russia's government appears to be winning its campaign to convince Russians that nuclear power means jobs and electricity, not death and destruction.
"It really feels like a breakthrough. Other nuclear workers are looking at us with hope," Kormushkin said of the moment when Rostov's Soviet-designed, cylindrical orange reactor was switched on for the first time in mid-February.
Plant officials insist Rostov will never see a Chernobyl-style accident.
Its VVER-1000 reactor has a concrete containment structure that the RBMK model at Chernobyl lacked. That is supposed to contain damage from explosions and withstand a major earthquake or the crash of a 20-ton aircraft. The Rostov reactor's fuel rods also are cooled by pressurized water instead of the less-stable graphite used in RBMKs.
International industry groups and environmental watchdogs acknowledge the VVER-1000 model is the safest of Russia's reactors, but say it still is less reliable than modern Western counterparts.
The government's chronic cash shortages amid Russia's post-Soviet decline kept development of the plant at a standstill in many sectors. Then in 1999, the government saw a windfall from high world prices for oil. Financing for the Rostov plant and other projects resumed.
The Rostov plant will pump electricity to the North Caucasus region.
Environmental groups warn that the Rostov plant was built on earthquake-prone land and worry that it sits on the shore of the Tsmilyansk Reservoir, a key water source.
Atomic Energy Minister Yevgeny Adamov has promised residents within 30 kilometers of the plant they will get discounted electricity and medical care.
Adamov has also predicted an employment boom for depressed Volgodonsk, a Soviet-era city of 180,000 people adjacent to the plant, which is 1,000 kilometers south of Moscow.
Plant wages average 4,700 rubles ($167) a month, above the Russian median income. But of 3,000 employees, the 300 top wage-earners were brought in from elsewhere in Russia - and most of the 8,000 people who have worked on the recent construction will soon return to joblessness.
TITLE: IN BRIEF
TEXT: Hijacker Extradition
MOSCOW (AP) - Prosecutor General Vladimir Ustinov has sent an official request to Saudi Arabia for the extradition of the two ethnic Chechens suspected of hijacking a Vnukovo Airlines Tu-154 airplane bound from Istanbul, Turkey, to Moscow on March 16, officials said.
The suspects, 16-year-old Eriskhan Arsayev and 19-year-old Deni Ma go mer zayev, have been charged with hijacking and hostage-taking that caused the deaths of a passenger and a flight attendant, a spokesperson for the Moscow prosecutor's office said Friday.
The third suspect, 42-year-old Supyan Arsayev, was killed during a Saudi operation to free the hostages, said the spokesperson, who refused to be identified by name.
More Tobin Charges
MOSCOW (Reuters) - A U.S. student arrested on drugs charges in Russia has been accused of a second, heavier charge of being involved in a drug-dealing ring, investigators said on Monday.
Senior criminal investigator Andrei Makarov told Reuters that John Tobin, 24, already charged with illegal possession and sale of drugs, now faced the heavier charge of being part of a drug-dealing ring and a possible prison sentence of up to 15 years.
Tobin, a Fulbright scholar with a letter of recommendation from the State Department, denies all the charges and says drugs were planted on him.
Tobin's lawyer, Vladimir Kulinich, said the latest charge was very weak because police had not arrested or questioned any members of the alleged group.
Heroin Bust
ST. PETERSBURG (SPT) - A 22-year-old St. Petersburg resident was detained by police after police allegedly found over a kilogram of heroin in his car, Interfax reported Sunday.
The suspect, who is unemployed but whose name has not been released by authorities, was stopped at about 6 a.m. on Sunday morning by GIBDD officers on Zanevsky Prospect, the report said.
Rent Dispute
MOSCOW (Reuters) - A diplomatic dispute has erupted between Washington and Moscow, and the Russians are hopping mad. The issue is the rent the Americans pay - or rather don't pay - for their ambassador's Mos cow residence.
Called Spaso House, a palatial vintage mansion and grounds in Moscow's most prestigious neighborhood, Washington rents it under a Soviet-era contract for 72,500 rubles per year.
That was an enormous sum back then. But runaway post-Soviet inflation made it all but worthless: taking into account the three zeros that were lopped off the ruble in the mid-1990s, it adds up today to a little more than $3.
Deputy Foreign Minister Ivan Sergeyev said Friday that Moscow was determined to get $6 million it believes it is owed in back rent for the property, but Washington is standing firm.
U.S. Embassy officials were not immediately available for comment.
Wolf Attack
KALININGRAD OBLAST (SPT) - Six people, including two children aged 3 and 7, suffered numerous and severe bites from a stray wolf in the village of Gromovo in the Slavsky region of the Kaliningrad Oblast, an enclave on the northwest of Russia, Interfax reported on Monday.
The victims were taken to a local hospital. According to witnesses, the wolf was running around the village, attacking people until two of the villagers killed it, Interfax reported without elaborating.
TITLE: Americans Ordered Home in Spy Feud
AUTHOR: By Patrick E. Tyler
PUBLISHER: Reuters
TEXT: MOSCOW - Russia said Monday that it was expelling four United States diplomats for "activities incompatible with their status," the diplomatic phrase for espionage, and added that it would take "other measures to halt the unlawful activities" of official American representatives, but did not elaborate.
In a formal statement read to John Ordway, the second-ranking American diplomat in Moscow, a Foreign Ministry official did not identify the diplomats to be expelled in the next few days and did not state that Russia would fully retaliate for the Bush administration's decision to expel a total of 50 Russian diplomats between now and July.
But State Department officials in Washington said that based on the public remarks of senior Russian officials, they expected Moscow to make a fully proportional response by expelling 46 more Americans.
Both President Bush and Secretary of State Colin L. Powell publicly defended the decision to confront Moscow over what officials consider its robust level of espionage a decade after the end of the Cold War. In a speech to the National Newspaper Association, General Powell seemed at pains to say the Bush administration was not motivated by a desire to poke the Russians in the eye.
Mr. Bush, speaking with reporters in Portland, Maine, indicated that he still believed that the United States could have good relations with Russia. He said that even though he would take a firm position with Russia's president, Vladimir Putin, "that doesn't preclude the ability for Mr. Putin and me to meet at some point in time and have good, honest discussion about common interests, areas where we can work together, and be able to discuss our disagreements in an open and honest way."
At the White House, Mr. Bush's spokesperson, Ari Fleischer said, "The president considers the matter closed," though it appeared this was hardly the case as both governments prepared for an exodus of diplomats and their families. At the same time, European governments were trying to glean how this Cold War-style flare-up was going to affect a complex agenda of security issues festering from the Balkans to Baghdad.
Though Mr. Bush and General Powell said they had acted prudently, the contrast in approaches to Russia was apparent today as European leaders, meeting in Stockholm, invited Mr. Putin to join them in discussions aimed at deepening Russia's integration in Europe.
Still, in this forum, Mr. Putin also played down the seriousness of the espionage dispute, saying he did not think that it would create serious tensions between the two nations. "I do not believe this will have major consequences," he said.
But back in Moscow, senior officials of his government continued to warn that Russia would respond in kind to the expulsion of its diplomats.
Sergei Yastrzhembsky, Mr. Pu tin's communications director, told reporters here that "however many" diplomats were expelled from the United States, the same number "will be expelled from Russia." And at the Foreign Ministry, a spokesperson, Alexander Ya ko venko, told the Interfax news agency that Russia's response to the expulsions would be "proportional and equivalent."
Sergei B. Ivanov, secretary of Russia's national security council, indicated on Thursday that Mos cow would match Washington, spy for spy, in the expulsions, saying during a visit to Warsaw: "We have time to think, to carefully pick from among more than 1,000 U.S. diplomats in Russia, to chose those 46 who are most precious to the Americans."
TITLE: NATO Blasted for Activities in Macedonia
PUBLISHER: The Associated Press
TEXT: MOSCOW - Defense Minister Igor Sergeyev has accused NATO of aiding the ethnic Albanian guerrillas conducting an armed uprising against Macedonian government forces.
NATO "with its prejudiced attitude toward the non-Albanian population and its inclination to favor the extremists has assisted the formation of illegal armed formations, their equipping and training and the unleashing of military operations," Sergeyev was quoted as saying by Interfax on Friday.
He said that "it was important for purely selfish group interests reasons to ignite this conflict, which in fact will lead to the further dismemberment of Yugoslavia and other Balkan states."
Sergeyev singled out the United States, saying that "Washington's interest in such a turn of events in north Macedonia is that it will permit the growth of American military-political influence in Europe and in the Balkans."
Russia was a fierce critic of the 1999 NATO-led air war to halt attacks by Yugoslav forces on ethnic Albanians in the province of Kosovo, which borders on Macedonia.
Most of the rebel commanders and many of the ethnic Albanian insurgents in Macedonia were members of the former separatist Kosovo Liberation Army, which fought in Kosovo.
Macedonia has strongly criticized NATO as well, and specifically the United States, for what it said is a failure to prevent arms from coming into the country and helping fuel the month-old Albanian insurgency.
TITLE: IN BRIEF
TEXT: 'Free Trade' Nixed
MOSCOW (AP) - The government late last week said that it would end customs privileges it had hoped would spur the economy of the Kaliningrad region.
The customs breaks had been intended to help the lagging economy, spur trade with Europe, and compensate businesses for their distance from mainland Russia. But Trade and Economics Minister German Gref said they hadn't worked.
The "special economic zone" in Kaliningrad was capriciously enforced and even canceled "by mistake" at one point by former president Boris Yeltsin.
Amber Crackdown
MOSCOW (Vedomosti) - The Economic Development and Trade Ministry has asked the government to halt the production of amber for the next two years in an effort to cut down on rampant theft at the state-owned Kaliningrad Amber Plant.
The global amber market is estimated to be worth more than $200 million a year, but the plant, which produces 90 percent of the world's supply, earns less than $1 million a year.
The ministry has asked that the plant be closed while it establishes a new system to control sales and production. All 800 people who work there are expected to be laid off.
CPC Opens Pipe
ALMATY, Kazakhstan (AP) - Russian and Kazakh officials Monday began pumping crude oil down the first major pipeline to be built in the Caspian Sea region in a decade.
The pipe runs from Kazakhstan's Tengiz field to Russia's Black Sea port of Novorossiisk. For at least three months, operators will pump a test flow of about 70,000 barrels per day. The crude will reach Novorossiisk only at the end of June, when the first tanker will be loaded. The pipeline will have a capacity of 600,000 bpd upon completion.
The pipe is owned by the Caspian Pipeline Consortium, which consists of the governments of Kazakhstan, Oman and Russia and eight oil companies.
Russia To Pay IMF
MOSCOW (Reuters) - The Finance Ministry has reserved 27.69 million euros (19.47 million Special Drawing Rights) for a payment to the International Monetary Fund on Wednesday, a Finance Ministry spokeswoman said Monday.
The next payment to the IMF, also of 19.47 million SDRs, is due April 10.
The spokeswoman also said Russia would pay interest on three Eurobonds on Friday. The Eurobonds due for coupon payments include the 2005 bond, with a 117.19 million mark payment; the 2010 bond, with a $105.39 million interest payment; and the 2030 bond, with a $229.48 million payment.
Border Post Cut Off
HELSINKI, Finland (AP) - Russia closed a northern border post Monday after suppliers on Finland's side cut electricity because of unpaid bills, the Finnish Frontier Guard said.
The Salla border crossing in Lapland, 1,000 kilometers north of Hel sinki, was closed at 7 a.m. on the Russian side until further notice, said Major Antti Varrio.
Since the Salla crossing was opened in 1990, Finns have supplied electricity to the border post. But the Russians have failed to pay their bills and the Finns cut off the power supply to the border post Saturday after giving more than a month's warning.
TITLE: European Meat Imports Banned
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Agriculture Ministry on Monday banned all imports of meat, fish, poultry and dairy products from Europe to protect Russian agriculture from the outbreak of foot-and-mouth disease now threatening to sweep across the continent.
The ban will have the side effect of shutting down U.S. poultry exports to Russia because they are shipped through European ports, said Michael Smith, agricultural attache at the U.S. Embassy in Moscow, in a telephone interview.
U.S. chickens and other fowl accounted for 92 percent of Russian poultry imports last year for a total of $1.6 billion, according to the U.S. Poultry and Egg Export Council. U.S. poultry makes up about 45 percent of the Russian market.
Silvia Kofler, spokesperson for the European Commission's delegation in Russia, said the European Union understands Russia's concerns but feels the ban goes too far. She said the inclusion of fish and chicken, which are not susceptible to the disease, and countries that do not have the disease was unnecessary.
The EU was studying the ban and its veterinary committee planned to discuss it Tuesday. The Americans were seeking a meeting with Russia's head veterinarian, Smith said.
It was unclear how long the ban will last. "After the ban is in place, we will monitor the development of the situation in Europe and if it stabilizes, we will allow imports," said First Deputy Agriculture Minister Sergei Dankvert in comments carried by Interfax.
Restrictions already were in place for EU areas where foot-and-mouth disease has been detected - Britain, the Netherlands, and six departments in France. Ireland became the fourth country to be hit by the outbreak last week, but the new ban includes all of Europe, including non-EU countries like Norway and Poland, and the three Baltic countries.
Monday's ban also extends to a variety of goods. In addition to food, it covers live animals and all animal products.
The Associated Press reported officials in Norway saying they were puzzled as to why the ban includes fish, a major Norwegian export. Norway earns 1.05 billion kroner ($117 million) a year on fish exports to Russia.
It was not clear how Russia will cope without imported meat, which the Meat Union says accounts for one-third of consumption. The Meat Union, which represents the biggest players in the Russian meat industry, predicted prices will rise about 15 percent.
Russia appeared to be counting on Belarus and Ukraine for some help in keeping meat on the shelves. Dankvert said Russia would be able to buy meat from those two countries, Brazil and some regions of China, Interfax reported.
Foot-and-mouth also has been detected this year in Turkey, Kyrgyzstan and Mongolia.
According to figures supplied by the Meat Union, European Union countries last year exported to Russia 221,089 tons of beef, or 59.6 percent of all beef imports, for $260.7 million. EU nations supplied 87,995 tons of pork, or 65.4 percent of pork imports, for $94.3 million.
The Meat Union estimates that at least 15 percent of imports enter illegally, said union spokesperson Viktor Yatskin.
Figures for Russian meat production in 2000 were not yet available, but in 1999, Russia produced 1.9 million tons of beef and 1.4 million tons of pork. The Meat Union itself, however, questions the reliability of the figures, which are based on government data, and is urging changes in the way the State Statistics Committee collects data on the meat industry.
A collapsing agricultural sector has seen Russia's annual meat production fall steadily from 10.1 million tons in 1990 to 4.3 million tons in 1999. It appeared to stabilize last year at 4.4 million tons, according to Meat Union statistics. These figures include poultry and lamb, but they do not account for unregulated parts of the market, such as livestock that people raise for their own consumption or for barter.
A short-term solution to compensate for the loss of European meat imports would be to seek imports from other suppliers. Industry insiders, however, say that countries that are free of foot-and-mouth are likely to export to wealthier buyers and bypass Russia, considered a dumping ground for cheaper cuts.
TITLE: New Investment Agency Aims To Slash Red Tape
AUTHOR: By Igor Semenenko
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russia has formerly launched a "one-stop" agency that it hopes will attract foreign investors by slashing the number of official signatures needed to begin doing business.
The new State Investment Agency, which falls under the Economic Development and Trade Ministry, will act as a consulting and support center whose aim is to raise an additional $10 billion in foreign direct investments by the year 2005.
"What it should not become is a one-more-stop agency," said the head of the new agency, Sergei Tsakunov, who at one time was the chief of the Investment Support Center.
Tsakunov said that a new framework will be used to woo foreign companies into the jungle of Russian business.
"We will do all the paperwork on a number of investment projects and then invite foreign businesses to make an appraisal," Tsakunov said. "The set of drafted documents will include all the [various signatures] necessary to kick-start the new enterprise."
In Moscow, simply starting an investment project requires the signatures of some 250 different bureaucrats, according to Deputy Economic Development and Trade Minister Ivan Matyorov. "The number of state bodies issuing permits will be reduced drastically," he said.
"The idea of a one-stop agency is to force civil servants themselves to get the signatures needed for new projects."
To make sure everything goes smoothly, the agency will work together with regional companies that already have experience in preparing, promoting and selling projects to foreign investors.
One such company is the Nizhny Novgorod-based Invest IN, which for three years has been offering regionally the kind of service the new agency now plans to offer on a national scale.
"The ideal situation is when a foreign investor can sip on his beer in his office somewhere in Munich and flip through an investment proposal that has been posted on the Internet," said Invest IN president Valery Trofimov.
One of the projects that Trofimov's company is working on is finding a tenant for a vacant production site that is located near one, which is occupied by chocolate-manufacturing giant Cadbury in Nizhny Novgorod.
Invest IN has a several-hundred-page catalog that includes several plots of land that already have official approval to receive gas, power and telephone lines.
"We draft the documents on a turn-key basis," said Trofimov.
Even facilitators like Trofimov, however, cannot guarantee economic paradise:
"The first thing we tell [potential investors] is that Russia is not a good place to do business in right now," he said.
"Then we offer our help."
Invest IN helped the Spanish chewing gum maker Joyco Group, the cigarette packager Amcor, and a succession of other foreign companies get settled in the Nizhny Novgorod region.
But although Novgorod is among merely a handful of Russian regions in which foreigners feel comfortable doing business, there are many others that are all too often compared to Al Capone's gangland Chicago of the 1930s.
Tsakunov said he can handle it.
"We have a list of target regions. ... And there is, of course, a list of others that I would not recommend to anybody."
Tomsk, Nizhny Novgorod and the Moscow and Leningrad regions are all areas that are targeted by the State Investment Agency, Tsakunov said.
Similar one-stop agencies operate in a number of countries, including India, Ma lay sia, France and Bri tain, according to a report which the agency released last week.
Singapore set up its Economic Development Board in 1961 to woo foreign investors, and the United Kingdom has Invest U.K. to take care of foreign businesses investing in Britain.
The announcement on Thursday of the birth of the new agency was coupled with Economic Development and Trade Minster German Gref's presentation of the government's investment strategy for the next decade.
"The main idea is not to achieve more investment, but to change the structure [of the investment]," said Sergei Bayev, who heads the ministry's investment department.
Bayev named six industries that will be given priority by the government in its investment proposals.
The list includes export-oriented machinery manufacturing, transport infrastructure, power- and energy-saving projects, information technologies, production of medical equipment and agricultural machinery.
The strategy will tie together the State Investment Agency, the Russian Bank of Development and 10 Trade Representative Offices - Torgpredstva - which are located in the countries that invest the most in Russia.
Last month, the government declared that de-bureaucratization will be one of its main priorities for 2001.
TITLE: Prosecutor Calls for Harder Corruption Fight
PUBLISHER: Combined Reports
TEXT: MOSCOW - Rampant corruption in Russia costs the country about $15 billion annually, Prosecutor General Vladimir Ustinov said Friday.
The country's law enforcement bodies have been unable to put a stop to massive money-laundering scams, Ustinov said at a conference of officials from Russia's courts and defense and security agencies, news agencies reported.
Ustinov also called for the introduction of tough new controls over hard-currency transactions and offshore and foreign banking activities by Russian companies and individuals.
Ustinov singled out financial deals that involve offshore zones such as Cyprus, where "Russian criminal structures launder some $12 billion annually," the meeting's summary document read. Ustinov called for the introduction of a temporary moratorium on any funds transaction that involve using offshore banking as a hub-point.
"In a country where corruption is rampant, society is split apart," Ustinov said. "Every year the damage sustained by Russia as a result of corruption amounts to $15 billion."
Corruption stains nearly every facet of Russian life, and bribes are often demanded for everything from clearing customs and dealing with traffic police to getting medical treatment or a college degree.
According to Ustinov's office, 2,000 cases of money-laundering or concealment of other illegally obtained property were reported last year, and criminal proceedings were instituted in 1,285 cases.
Ustinov said that as much as $20 to $25 million is illegally taken out of Russia every year and that about one-third of the banks in Russia are controlled by criminal groups.
- AP, SPT
TITLE: Gazprom Seeking Retribution
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: MOSCOW - Natural gas monopoly Gazprom has sued Ukraine for stealing gas from its pipe network that supplies roughly 25 percent of total European consumption.
Gazprom officials want payment for 1.1 billion cubic meters of gas used by Ukraine last year that wasn't covered by existing contracts, business daily Vedomosti reported Friday. Gas sells at cash auctions in the Ukraine for $25 to $30 per 1,000 cubic meters, so Gazprom is asking for payment from Naftogaz - Ukraine's national gas company - of approximately $27.5 million. Gas exports to Europe sell for $80 to $90 per cubic meter.
Local news agencies quoted Gaz prom spokeswoman Olga Moreva as saying Friday that the initial hearing took place at the International Commercial Arbitration Court of the Russian Chamber of Commerce and that the next hearing was scheduled for April.
"No ruling has been made," The Associated Press quoted her as saying.
Gazprom officials were quoted Thursday as saying that the company had filed a suit in an unnamed international court regarding gas debts from last year.
Officials in Kiev on Friday expressed bewilderment at the lawsuit.
"We are surprised," Reuters quoted Oleg Dubina, Ukraine's deputy prime minister, as saying. "Right now, there is no unsanctioned tapping of gas. Last year, there were 8.2 billion cubic meters [siphoned off], which have been registered and agreed on."
Dubina, who oversees energy questions, is due in Moscow for talks with the Russian government on Monday.
The court case is the latest in a serious of moves initiated by the Russian government and 38 percent state-owned Gazprom to crack down on Ukraine's problem with payment for both gas that it purchased and for gas that it stole during transport to Europe.
Dubina's predecessor as deputy prime minister, Yulia Tymoshenko, has been jailed since Feb. 13 on charges of importing nearly 3 billion cubic meters of Russian gas in 1996 and hiding hundreds of millions of dollars in profits.
Tymoshenko is a popular and outspoken critic of Ukrainian President Leonid Kuchma, who has admitted that his country has illegally siphoned off Russian gas on several occasions.
Directors of Ukrainian power companies still tap Gazprom's supplies to generate electricity after they are "officially" cut off for nonpayment.
"This announcement is completely political and groundless," said Vadim Kopulov, head of Naftogaz, in remarks reported by Vedomosti.
It is uncertain what weight the lawsuit might have, but it is a strong statement in conjunction with Russia's overall strategy to get Ukraine to pay, said Stephen O'Sullivan, a gas analyst with United Financial Group.
"We don't know how far down the line the court process will go," O'Sullivan said. "But Gazprom is definitely piling on the pressure."
The gas trade between Russian and Ukraine is second only to that between the United States and Canada, so this lawsuit is probably the largest of its kind in the industry, O'Sullivan added.
When Ukraine siphoned off gas from Russia during Soviet times, the practice was winked at by Soviet officials. Since the fall of communism, however, Russia has struggled with its troublesome neighbor, its gateway to Europe that it cannot ignore.
For one thing, Ukraine is Gazprom's biggest customer within the Commonwealth of Independent States. At 27.2 billion cubic meters, Ukraine imported more than twice as much as Belarus, which came in second.
Until the Yamal-Europe gas pipe line is completed and fully operational, Russia relies on Ukraine to pump through gas to Europe. Last year, European countries bought 129 billion cubic meters from Gazprom.
This spring, Russia's administration plans to set out a plan that was agreed to in principle by Prime Minister Mikhail Kasyanov and Uk rai ne's Prime Minister Victor Yushchenko in December. Under that plan, Uk rai ne's debt to Russia will be consolidated and converted to securities guaranteed by Ukraine.
"The suit represents a continuation of Gazprom's policy to get official, legal recognition for Ukrainian debt so that - one day - it may be paid back," said Jonathan Stern, a gas expert with the London-based Royal Institute of International Affairs.
TITLE: Analysts Place Little Stock In Long-Term Predictions
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Economic Development and Trade Ministry on Thursday released its Strategy for Development until 2010, foreseeing a rosy economic outlook and a metamorphosis into a consumer-based society.
However, analysts and economists say that these predictions are too optimistic, and that many barriers still have to be overcome before Russia can complete such a transformation.
If the indicators are to pan out the way the government wants them to, the administration needs to succeed in implementing structuring reforms and restructuring the Paris Club debt.
As of January 2001, Russia owes $38.7 billion in former Soviet debt to the Paris Club of creditors. Officials within the administration have taken various positions concerning Russia's ability to pay this year, everyone agrees that Russia won't be able to afford debt payments in 2003 unless the deal is restructured.
For example, the ministry predicts that the share of final consumption will grow steadily after 2004 and will reach 70 percent of gross domestic product by 2010. Currently, the share hovers around 60 percent.
"This will put us in line with other European countries," said Natalya Orlova, an economist with Alfa Bank.
Market liberalization and reforms are pivotal to the plans of German Gref, economic development and trade minister, to stimulate economic growth and eliminate distortions in the market.
It is doubtful, however, whether these reforms will be implemented fast enough to meet the 2010 timetable, said Yulia Tseplyayeva, senior analyst at ING Bank's Moscow office.
"These prognoses are a target more than a reflection of reality," Tseplyaeva said. "It's my suspicion that those in the ministry understand that."
The strategy assumes that Russia will exhibit 5 percent growth in GDP every year until 2010. Also, from 1999, GDP is set to increase 160 percent to 180 percent in dollar terms for that duration. In 1999, GDP totaled $188 billion. If such an increase were to take place, per capita GDP would grow to $3,500 compared with $1,300 now.
The figures illustrate what could happen in a best-case scenario if Gref's package of economic reforms passes the State Duma; if the Land Code is successfully implemented; if deregulation of the economy takes place; and if the government can create a stable tax environment to encourage businesses to transfer export earnings back into Russia instead of parking them in offshore accounts.
These are a lot of big "ifs," and it is unlikely that the stars will align exactly the way President Vladimir Putin's administration wants them to, said Tseplyayeva.
Tseplyayeva considers 5 percent yearly GDP growth "too optimistic." She predicts it will be closer to 3.5 percent.
Analysts discount the usefulness of long-term predictions, saying that it's easier to stay accurate in looking ahead three years rather than 10.
TITLE: UES Assesses the Cost of Theft of Metals for Scrap
AUTHOR: By Mikhail Yenukov
PUBLISHER: Vedomosti
TEXT: MOSCOW - Thieves have stolen some $100 million worth of metal, including 8,000 kilometers of wire, from Unified Energy Systems over the last two years to sell abroad, the national power grid said Wednesday.
Andrei Trapeznikov, a member of the UES board, said that 1,180 accidents occurred in 1999 and 2000 during attempts to steal wire from the power grid - 834 of those resulting in death. The company registered some 43,000 thefts.
The UES announcement came a day before the State Duma was to vote on overturning a presidential veto on a law banning the export of non-ferrous metals, from which wire is made. Details of the vote were unavailable at time of press.
The volume of non-ferrous scrap exported is estimated at 700,000 to 800,000 tons a year at an average price of $1,000 per ton, according to UES figures. However, law enforcement agencies estimate that only 400 tons of scrap metal is lawfully exported.
In a move to deter thieves, a 50 percent tariff was applied to the export of non-ferrous scrap metal last year. Dealers quickly found a way to get around it, however: Sellers melt down stolen metal into ingots, which are taxed at only 5 percent of the declared selling price.
In November 2000, the Duma adopted a law imposing a ban on the export of non-ferrous scrap metal until Jan. 1, 2005. However, that law was vetoed by President Vladimir Putin.
According to Sergei Zolotilin, a Duma deputy who co-wrote the draft law, the scrap metal market is so plagued by criminals that the authorities need time to establish an entirely new system for the collection and processing of scrap. And while lawmakers and the government are contemplating the creation of the new system, exports of non-ferrous scrap should be banned, he added.
"I believe it is also necessary to ban the sale of ferrous scrap metal abroad," said Duma Deputy Yaroslav Shvyryayev, another author of the draft law. "Perhaps, under industry pressure, the government will take a more active approach to solving the problem."
However, the Putin administration is pushing a more moderate approach. "In general, proposals to reconsider the customs rates for the export of non-ferrous scrap metal and ingots have been submitted to the commission [for protective measures in foreign trade]. But this issue is still being studied," said a member of the commission, headed by Deputy Prime Minister Alexei Kudrin.
Companies involved in the collection and processing of scrap metal strongly oppose the ban. "This is not a solution," said Mikhail Zharkov, press secretary for the industrial group MIAR.
Speaking about the crimes committed in the scrap metal industry, Zharkov said, "They discredit the business and control must be tightened - first of all, over them."
TITLE: Ministry Pledges Support for Industry
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Express delivery is a very foreign concept in Russia.
So foreign, in fact, that there is no set of regulations or laws that govern companies working in the sector. And that lack of clarity has made it extremely difficult to develop the industry, which is considered a vital lubricant for the wheels of business worldwide.
But all that is changing.
After some 18 months of lobbying the Transportation Ministry to define the laws under which express carrier companies must operate, the association that represents those companies announced a breakthrough last week.
The Association of Express Carriers and the ministry signed an agreement in which the ministry pledged to provide cooperation and assistance in solving the industry's problems - mainly by clearly defining the rules of the game and simplifying the paperwork needed to play.
While an agreement to help doesn't sound like a landmark achievement, the association considers it a major victory.
"The whole office is celebrating the agreement with the Transport Ministry," said association president Vla di mir Stroikov.
"We are also very happy," said Alexander Filimonov, a spokesman for the ministry. "The main dialogue will be in the future," Filimonov said, "because the desires [of the association] have not been formulated yet." But the agreement signifies the government's readiness to work with the association to develop the industry, he said.
"This is a turning point in the history of the industry," said Dmitry Tcheltsov, manager of Russian operations for international express company TNT.
"Several years ago, no one knew about our industry. ... There were doubts about how to categorize us - as post or as transport, though, of course, we are closer to the transport industry," Tcheltsov said.
The agreement comes at an important time for the industry, which is expanding with the economy as a whole.
Express companies account for 34 percent of Russia's international export delivery market in dollar terms, according to a report commissioned by DHL that was completed at the end of 1999 and released last year by Research International.
With less than two dozen members, the Association of Express Carriers is one of the smallest industry associations in Russia. But it carries substantial influence due to the fact that its member companies posted total global sales last year greater than Russia's annual budget, according to a report in Dengi magazine.
The market share of the express carriers, according to the Research International report, shows that the leader of the industry is DHL Worldwide Express with 51 percent, followed by TNT Russia with 19 percent, United Parcel Service and Federal Express with 10 percent and 7 percent, respectively.
"The industry today has a rather developed structure, but has to play by nonapplicable rules," he said, referring to the fact that legally, express companies operate in a categorical vacuum.
One example of such "nonapplicable" rules, Stroikov said, is the recent customs crackdown on tariff dodgers and illegal imports.
Late last year and early this year, the Central Customs Department, which controls imports and exports in Moscow's 16 regions, issued a series of decrees that has dramatically slowed the clearance process for cargo trucks and caused the number of imports into the capital to plummet.
The original decree targets a group of imports in the 5 percent tariff category. Customs officials now fully unload trucks carrying less than $15,000 worth of goods and open each container.
The result is a huge backlog of trucks waiting to get through customs, with truckers reporting a wait of as long as 17 days.
The Association of Express Carriers estimates that while the figure varies from company to company, on average its members transport roughly 10 percent of their packages by truck.
And as all express deliveries fall under the category of goods worth less than $15,000 per truck, the association's members were faced with the possibility of losing at least 10 percent of their business by the new delays.
The association immediately wrote a letter to the State Customs Committee and, for more effectiveness, to the Central Custom Department and directly to different customs chiefs, asking for a "green corridor" of exemption to the new decrees.
Faced with the unintended prospect of striking the industry a major blow, the State Customs Committee responded, issuing a decree Feb. 14 that exempted express delivery companies from the lengthy customs checks.
Central Customs Department spokes man Viktor Sokolov said that express carriers were classified as the customs "risk group" subject to full inspection through an "official mistake."
The "green corridor" actually turned a near disaster into a major boon - as importers faced longer and longer delays at customs, many turned to using express delivery as the only way to guarantee timely delivery of their products.
"The amount of road freight delivery our company has increased ... a minimum 20 percent," Tcheltsov said.
Adrian Marley, DHL's CIS operations manager, said DHL also is seeing "encouraging" growth.
For other companies, however, the customs crackdown is reaching crisis proportions.
The American Chamber of Commerce said that hundreds of its member companies have had "serious difficulties" with the new customs decrees.
AmCham, together with the Foreign Investment Advisory Council, the German Business Association, the European Business Club and the International Road Union, asked Prime Minister Mikhail Kasyanov in a letter Feb. 23 to "undertake a number of concrete actions to resolve the problems."
In what AmCham said was a "first-of-a-kind" reply, the chairman of the State Customs Committee, Mikhail Vanin, invited the signatories of the letter to a roundtable March 13.
On Friday, Sokolov from the Central Customs Department said that a list of "reputable importers" had been created and the number of companies approved for "green corridor" status is 150 and growing. He refused, however, to name the companies.
"The increase of companies on that list is the principal measure of the current crisis," he said.
However, the director of one of Moscow's customs terminals, who asked not to be named, said last week that the situation is only getting worse.
"It is ridiculous that the list of companies is the main measure. In my terminal there are 200 trucks, and only five belong to a company from the [green corridor] list," he said.
The crackdown at customs led to a 75 percent drop in imports in January, figures for February are still not available, said Sokolov.
TITLE: U.S. Senator Takes Swipe at LUKoil ADR Plans
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: MOSCOW - A U.S. senator has taken a special interest in LUKoil's planned flotation on the New York Stock Exchange, asking two U.S. securities officials to carefully scrutinize the oil company's application.
Jesse Helms - a Republican senator from North Carolina and chairman of the Senate's Foreign Relations Committee - wrote a letter to NYSE chairman Richard Grasso and to Arthur Levitt, chairman of the U.S. Securities and Exchange Commission.
"My concerns about this potential listing are rooted in reports of inappropriate and roguish conduct by LUKoil in Russian and other markets that have adversely and unjustly affected the interests of American firms," Helms wrote in the March 12 letter.
LUKoil, whose American Depository Receipts already trade over the counter, is in the process of floating level 3 ADRs on the NYSE. However, the float has been delayed until possibly next year. That delay has been attributed to LUKoil's reluctance to publish its GAAP financials for 1998 and 1999.
Citing a Moscow Times article from Jan. 19, 2000, written by Yevgenia Bo ri sova, Helms discussed LUKoil's relationship with Mazheikiu Naft, a Lithuanian oil refinery that is one-third owned and operated by Williams International, which is based in Tulsa, Oklahoma.
Mazheikiu, with a capacity of 263,000 barrels per day, is the only refinery in the Baltics and accounts for 5 percent to 10 percent of Lithuania's gross domestic product, according to a U.S. Energy Department report from January 2001. In October 1999, Lithuania concluded a $150 million agreement to sell a 33 percent stake to Williams.
Williams isn't Mazheikiu's only international partner. In April 2000, the refinery clinched a deal with BP Amoco that allowed the global oil major to market the oil.
LUKoil, which traditionally has-coordinated Russian oil exports to Lithuania, also expressed an interest in buying a stake in the refinery, and when Lithuanian government officials said they prefered Williams, LUKoil decreased oil supplies to the refinery and several times completely cut Mazheikiu off.
LUKoil spokesman Dmitry Dolgov said the accusations of "roguish conduct" were groundless, Reuters reported.
"LUKoil cannot stop anyone from delivering oil to Lithuania," Dolgov said Monday. "Perhaps no one really wants to. Maybe the senator just doesn't grasp the situation."
LUKoil takes applications for shipment from oil companies and hands them over to pipeline regulators, he said. "Access to the pipeline is controlled by Transneft," Dolgov said, referring to Russia's pipeline monopoly.
Helms sees it differently. In his letter, he writes that "LUKoil is using its control over the pipeline to essentially blackmail the refinery and Lithuania itself."
He also accused LUKoil president Vagit Alekperov of "tax and currency fraud schemes, among other criminal activities."
It is uncertain to what extent a prominent senator's involvement can affect the outcome of a petition to the SEC.
"We don't comment on correspondence between congressmen and SEC officials," said Don Hainy, an SEC spokesman. NYSE's Grasso could not be reached for comment on Tuesday.
The SEC has the power to approve or deny LUKoil's request to float ADRs on the New York Stock Exchange.
Helms' office said Tuesday it would not comment on the senator's letter or the motivation behind it.
Helms' stance on LUKoil in many ways reflects the Bush administration's attitude toward Russia: Proceed with caution. President George W. Bush warned after his election that he would cut off direct U.S. financial aid that is aimed at stimulating a market economy until significant reforms are carried out.
A level-3 ADR issue isn't direct U.S. financial aid, but the windfall from such a float could supply LUKoil with much needed funds for investments in equipment and oil-field exploration.
"It is important that only companies of the highest ethical standards and conduct are allowed to participate in U.S. markets," Helms wrote. "These allegations of improper conduct by LUKoil are very troubling and, I believe, deserve close scrutiny by the SEC."
This request comes at an unfortunate time for LUKoil, which - with its purchase of 1,300 Getty gas stations last year - was the first Russian oil major to break into the U.S. retail market.
LUKoil has also recently been the target of criticism from analysts for failing to release its financial reports according to generally accepted accounting principles. After repeated delays, the reports are set to be published in April to coincide with a meeting of the board of directors.
Also, a former EBRD banker has accused LUKoil management of being in control of Reforma Investments, an offshore vehicle that purchased a privatization packet of LUKoil shares in 1999.
In concluding this letter, Helms wrote that he would be "grateful for information on the status of the LUKoil application and how these allegations are being factored into SEC's review of this application."
TITLE: Who's Side Are You On? A Matter of 2 Governors
TEXT: Who's the real power in St. Petersburg? The city's governor, Vladimir Yakovlev, or the governor general of the Northwest region, Viktor Cherkesov?
Much ink has been spilt (not least in this newspaper) on the issue, right from when Cherkesov moved into Wedding Palace No. 3 on the Petrovskaya Embankment in an early display of political muscle. But there is a strong financial angle to the issue as well.
Cherkesov claims that the federal budget will provide about 40 billion rubles (over $1 billion) to city projects within the next two years. The reason for such largesse is, of course, the 300th anniversary of St. Petersburg, with the money flowing into renovation of old buildings in the historic city center, construction of the Ring Road and the Flood Protection Barrier (a.k.a. the Dam) and various other projects. I wrote about this myself - as well as the much smaller amount Governor Yakov lev says he expects from Moscow. And I wouldn't mention it again were it not for certain comments he gave in an interview last week (see next page).
Cherkesov said that his office is responsible for the 40 billion rubles, that the money has nothing to do with the city budget, and that the 2003 jubilee is more than just a local celebration. He added that he will also control all the big projects that will be financed from the federal budget.
Later last week, funnily enough, Interfax reported that according to Yakovlev's press office, Sberbank will come up with $30 million to put toward the Ring Road, another $28.5 million for the Dam, that this would go to the city administration, and that the government would guarantee the loans.
(Incidentally, touching on the topic of creditworthiness, the chairman of Sberbank Northwest, Vladimir Shorin, recently confirmed that the city-owned Ice Palace, which was built for the 2000 World Hockey Championship, had not paid off a 500 million ruble loan, and that restructuring negotiations are being held with Sberbank head office and the Finance Ministry.)
So what we have is a race. Whoever gets the money first - from the state budget or from Sberbank - to fuel these large infrastructure projects, will win.
Cherkesov has managed to attract the support of many businesses in this region. It has reached the point that sooner or later, every business is going to face the question: "Who are you with?" It seems that the big companies, like Baltika Brewery and Menatep St. Petersburg Bank, or those with mighty mother companies like Lenenergo (under the wing of UES), are Cherkesov's supporters. Local businesses such as construction companies and stores are adherents of the Yakovlev Way.
But while Yakovlev has been opening chains of shops and offering them moral support, Cherkesov has been meeting the Finnish trade minister in Helsinki and visiting a Kaliningrad-based BMW car construction facility and the amber factory.
Operating on different levels, you might say.
Anna Shcherbakova is the St. Petersburg bureau chief of Vedomosti newspaper.
TITLE: Cherkesov Keeps a Hand on State Financing
AUTHOR: By Anna Shcherbakova
PUBLISHER: Vedomosti
TEXT: Viktor Cherkesov, the governor general of the Northwest region, began his new job by making alterations and amendments to regional laws in order to bring them into line with federal legislation. The 300th anniversary of St. Petersburg, which will be celebrated in two years' time, may become another stage in the assertion of this new power. Cherkesov will be assuming responsibility of finances flowing from the federal budget aimed at the jubilee - the kind of money that in the past was controlled by the city administration. This has intensified the stand-off between Cherkesov and Vladimir Yakovlev, governor of St. Petersburg. Rumors that the center of power may be moved from Smolny, where the city administration is based, to Cherkesov's residence on the Petrovskaya Embankemnt, are being heard more and more frequently.
Q: You have talked of a sum of 30 to 40 billion rubles that the city may receive as part of the 300th anniversary celebrations. For some reason, Governor Yakovlev named a different and much smaller sum for the celebrations. Why the contradiction? I remember that when he returned from Moscow, Vladimir Yakovlev was rather vague about the sum that the city would get, estimating it from 350 million to 1 billion rubles.
A: Perhaps the city administration had something entirely different in mind. This is why the sums differed. I think the governor named a different sum because he had in mind what the city itself would be getting. He probably thinks of the city as being the city administration, but most of the financing will be coming from federal channels. And the work will be done by a federal client.
When we talk about 40 billion rubles being set aside for financing the anniversary, we are talking about federal programs. There are various programs that are consolidated by various ministeries, and they will be financed from the federal budget. For each one of these, there is a ministerial agreement and a governmental decree. Here I mean the Ring Road, the Dam, the rebuilding of the collapsed metro line, and the refurbishment of the historic city center. Let's remember that the best buildings in the city, as a rule, are federal property. In order to refurbish them, the ministries will give money to the people who are in charge of the buildings.
As far as control is concerned, it will certainly happen. But I am not about to point fingers at anyone. The Audit Chamber will, of course, control the spending of federal money - that is its direct responsibility. I would like to stress that the governor general's office includes among its roles the inspection of the main controlling administration - this is the board responsible for spending the money.
Q: You mean that your responsibility is to ensure that the money is received?
A: I wouldn't like to play a game of one-upmanship. The figures I named are part of a plan, which has been decided and which will be put into practice. The president's involvment as chairman of the state committee [on the 300th anniversary] is no mere gesture. It is a part, and a very large part, of the responsibility that the president of Russia has taken upon himself.
Q: Is any parallel use of private finances expected?
A: Of course, these initiatives already exist. They vary by the amounts and the participants involved. There are personal donations, and there are major banking structures and concerns, among them international ones, and there is private capital.
Q: Have you noticed a growth in investment from the federal budget and from private capital? How, in your opinion, are they related? Is it possible for a private investor to come directly to you?
A: There are certain statistics that realistically confirm the investment process has intensified. In 1999, the Northwest region had 16 percent of all foreign investment in Russia; in 2000, over 18 percent.
Representatives of major European and world businesses are getting in contact with us. Last week, I had a long talk with the management of the French concern, Total. The talk was about the concern's participation in two major projects: the development of the Timano-Pechorsky oil field, and the Stockman gas concern. I give this example in order to make it clear that potential investors come here not to count lengths of pipeline or the number of tankers that will transport the oil. For them, these meetings are an important part of allowing long-term plans to be made. They then decide the paths the oil will take by taking into account the new element of the strengthening of the Russian government, and the influence on the stability of the region. Meetings like these are becoming increasingly frequent.
Q: How is the creation of a business consulting board for the governor general's office coming along?
A: The list of participants on this board has already been prepared. We keep in constant contact with them, and consultations are held on economic issues. But we do not want to confirm and announce this list until we have finalized how this board will work. It is important that we can interact with businessmen not just through their personal attachment or their interest in being close to power structures. I think that the membership and tasks of the board will be made public at the beginning of April.
Q: Which mechanisms for managing the situation in the region do you have, and how do you use them?
A: Unfortunately, many of the problems of ineffective management in the country arise not because of regional conditions, and not because of the ability or experience of the heads of regions. It happens because the Constitution is such that the determination of authority leaves a gap between two power levels - the federal center and the subjects of the federation. In recent years, the state has lost many mechanisms for regulating economic, juridicial, and social problems, and the regions have taken the responsibility on themselves. At times, this happens simply beacuse it was impossible not to address problems that needed to be solved.
But the regions also took onto themselves things that were not their responsibility. That is, they are addressing problems that are unsuited to subjects of the federation. For example, in almost half the regions, so-called boards of safety were created: They had different names, depending on the imaginativeness of the leaders of the regions. Under their flag, managers of sub-departments of federal structures were united: the Tax Police, the Tax Inspectorate, the FSB, the Prosecutor General's Office, and the Customs Committee. And essentially, the heads of the subjects of the federation managed these structures, set tasks and attempted to solve them.
In such conditions, it was possible to deal with crises, this is true. It was also possible to solve problems of a regional level, and sometimes group tasks of the region that involved several regional leaders. But state interests and functions became lost. Therefore, it became necessary to reform the system of managing the country.
If we talk about the Northwest region, we have nothing particularly unusual here that is any worse or better than in the rest of the country. There is, for example, a Committee for State Security in the Komi Republic. This is essentially an administrative department that is supposed to ensure the interaction of the administration of the republic with the sub-departments of the federal structures of the law-enforcement agenices. But the very name suggests functions that are beyond the power of federal subjects. This situation, of course, raises questions and requires correction.
Q: We've been talking about political issues. But what economic mechanisms can you bring to bear?
A: Along with other tasks, the president entrusted the governor generals with maintaining control over spending of finances from the federal budget, for realizing federal programs and for the use of federal property.
There is a direct opportunity to do this. The federal governors have functions such as controling and coordinating the activities of territorial sub-deparments of federal ministries.
Among them are the sub-departments of the economic organs. In the nine months that the federal governors have existed, a range of ministers and departments have created regional teams - for example, the Tax Police, and the Justice Ministry. Regional sub-departments of the Property Ministry are also being created. One of the representatives of the Transport Ministry supervises the entire work of transport structures of the Northwest. Their head of the Tax Ministry's department for St Petersburg, Viktor Zubkov, has been appointed as the coordinator for this department for the Northwest. Through these structures, we solve economic isues, and, if necessary, formulate an approach to problems, and determine their priority. This is the most basic method.
Other things comprise what we do by direct order of the president. We control everything concerned with deadlines, volumes, participants in federal programs, and coordinate with the government. If a program has strategic significance, we inform the president directly.
There are other mechanisms, and I think they are even more important than involvement in administrational activity. To influence economic processes in the region, it is not essential to make long-term forecasts, or to develop separate or interregional programs of economic development. I consider such large-scale planning to be irrational, because it is difficult to determine the correct procedure for acting on and taking responsibility for these issues.
I think that today and in the immediate future, our involvement in economic processes will take the form of anti-crisis management. Such measures are relevant when conflicts arise in any strategic or economic spehere, or in town-planning enterprises.
TITLE: Aeroflot Opens Agency in A Bid for Tourism Market
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - Aeroflot on Monday unveiled its own tourist agency and announced its intention to corner one third of the Russian tourism market.
The birth of the new agency, Mir Aeroflota, is the latest in a string of moves the company has made since it adopted an aggressive development strategy last spring.
Registered late last year by Aeroflot subsidiaries Sherotel and non-commercial training company Aviabusiness, the agency has a charter capital of 15 million rubles ($525,000) and is being managed by former heavyweights in the banking sector.
Mir Aeroflota general director Andrei Kozlov is a former first deputy chairman of the Central Bank. And board chairman Alexander Zurabov, who doubles as Aeroflot's deputy general director, is a former Russky Standart Bank executive.
The company has targeted Turkey as its first project and hopes to handle 25 percent of the tourist business from Russia by the end of the year.
Aeroflot was adamant that the new agency would not receive any better treatment than the other 300 or so agents that it works with.
"For a company with such a name it will be easier to attract clients and partners than it is for smaller companies," said Zurabov adviser Larisa Solodukhina.
Solodukhina said that winning new business is a matter of providing the quality and customer care that are expected in the West.
Mir Aeroflota will focus on special interest travel such as golf or scuba diving vacations, for which it will offer travel loans through Russky Standart Bank.
Mir Aeroflota will also have the support of Aeroflot's own network of 139 representative offices across the world.
The company has already secured a partnership deal with major German operator TUI Group and is negotiating with other major global tourism agencies.
Irina Tyurina, spokeswoman for the Russian Association of Tourist Agencies, said it was yet early to comment on the new agency's ambitions. "Such declarations have been voiced by other companies before," she said.
TITLE: Getting Help May Be Best Advice for Taxpayers
AUTHOR: By Simon Ostrovsky
PUBLISHER: Staff Writer
TEXT: The deadline for filing personal income tax returns in Russia - April 30 - is drawing near, and while the question of whether to pay taxes at all remains for many, those who do plan to file will do so under the old graduated system, where the percentage of income paid in tax depends on the person's income level.
While there has been much talk of the institution of the 13 percent flat tax rate for 2001, the tax paid this year is on the old scale and the rate depends on income level. The rate runs from 12 percent in the lowest bracket and up to 30 percent for the highest.
While a large number of workers have their taxes withheld automatically by their place of employment, those who do not or have additional income are required to submit a return to the tax inspectorate. A return will also have to be filed by those in line for tax refunds of any sort.
For all who are legally tax residents of Russia - defined as those spending 183 days or more in the country in a calendar year - who need to file returns, here's a little background on how and where to file.
ONE DOCUMENT AT A TIME
Before going to the local tax inspectorate - not to be confused with the tax police, who usually come to you - get the documents you are required to take with you in order. First of all, you'll need your passport and commercial visa (remember, foreigners on tourist or student visas are not allowed to work in Russia.)
If you want to get a jump on next year's filing in the process, bring these documents to the tax inspection office in the region where you live (not where you work) to get an Individual Taxpayer Number (INN). The deadline for all taxpayers to get INN's was shifted back to later this year, so it's not mandatory to file this time. INN application forms can be purchased for about two rubles. The wait to receive an INN can be anywhere from half an hour to a month. If you'd rather skip it this year, your passport number will suffice.
The tax inspection office is also the place to pick up a declaration form - the tax return. The document can be up to 12 pages long, but, mercifully, it's usually a lot shorter. The only page that all taxpayers are required to fill out is page "01" where basic personal information such as income is listed.
Other pages need to be filled out depending on the nature of the income you received during the past year and the kind of deductions you are eligible for.
Most taxpayers, for example, won't be needing page "Zh", which lists deductions for persons working under special conditions, such as a miner in the far north or as a sniper in Grozny. Each page includes instructions on its reverse side, including who is obliged to fill out the page and how. Some of them even give examples.
All income and deductions listed should be documented. In the case of an audit by the tax inspectorate, you can be fined 50 rubles per document not presented.
DEDUCTIONS
For many, deductions are the only reason to file taxes at all. Companies are required by law to withhold tax from their employees' pay, so getting money back is the only reason for these people to file.
There are a number of expenditures that can be deducted from the amount of tax an individual is required to pay, the major ones being social, property and standard deductions.
Social deductibles include money donated to charities, medicine and education (your own, or your child if he or she is less than 24 years of age).
Each of these can be claimed at a sum of up to 25 percent of total tax paid, so the three together can wipe out 75 percent of your tax bill.
Property deductions include contributions to the construction of apartments or homes, with the deductions allowed here being a little more complex.
Standard deductions are automatic, and apply to individuals who have an income of less than 20,000 rubles per month. Until income for a year reaches 20,000 rubles in total, fixed amounts are subtracted from the calculation of taxable income, thus reducing the amount to be paid. There are also credits granted for each child up to the age of 18 (300 rubles), for being a "hero" of the Soviet Union or Russian Federation under a variety of categories (500 rubles), and to invalids (3,000 rubles).
The tricky thing with refunds is that you can only apply for them a year after spending the money on the deductible items. Thus, even though medicine was purchased in December of 2000, the deduction can't even be applied for until 20002, as the tax filing date in 2001 follows less than a year after the purchase. And then, if deemed eligible for a refund, it could take up to a year to get the money back.
GET HELP
If this sounds complicated, that's because it often is. Fortunately, there are a number of firms out there offering tax services and, while they are scarce compared with what is in offer in Europe and North America, their numbers are growing.
The first step in choosing one of these firms is to determine whether they handle personal tax returns at all. Most firms listed in the yellow pages here accept only legal entities - companies or individual entrepreneurs. But there are a number providing a range of services for individuals.
The prices charged by different companies surveyed varied, with some as low as 300 rubles, while others said the price could run very high, depending on the complexity of the return. Most firms reported fees of about $500.
"Personal income tax consulting is a growing area of our work," said Svetlana Petrova, an auditor at United Consulting Group (UCG). "We have about 30 clients a year who come in to get help with their [income tax] declarations."
A representative of Ermitage Markets Group (EMG), who asked not to be named in this article, said the company handles more than just the client's return.
"We process about 10-20 tax forms per year, and these are mostly for foreigners," she said. "We don't just fill out the form, but also deal with the tax inspection for the client as well."
And there are other benefits that come with hiring a consultant.
"In the event of an audit by the tax inspection, we also represent our clients in court," Sabina Uchvatova, a consultant at Ernst&Young, said. "But to my knowledge, that has never happened."
And talk of court actions and legal representation brings up another subject - fines.
The fine system for failure to pay all or part of the proper amount of tax varies. There is an automatic charge of 20 percent of any unpaid portion of tax due added to total outstanding taxes if the court decides the mispayment was the result of miscalculation, and 40 percent if it determines that the oversight was intentional.
Added to this is 1/300th of the total amount owed for every day after April 30 that this has not been paid.
TITLE: Only Way Is Up for City Mortgage Plans
AUTHOR: By Barnaby Thompson
PUBLISHER: Staff Writer
TEXT: While St. Petersburg's real-estate market lags well behind Moscow's, the good news for prospective home owners in the northern capital is that they are living in one of the few places in the country where it is possible to get a mortgage.
According to analysts and local banks, the prospects for growth in the mortgage industry are bright, with a largely untapped market of people who are on stable incomes but unable to come up with the huge cash outlays to make a one-time payment for property.
In Soviet times, people on municipal housing lists could wait as long as 15 years to get an apartment. Now, the market is replete with residential houses. But the cost has become prohibitive for many.
The leader in supplying mortgages for existing apartments - the "secondary" (vtorichny) market - in Russia is DeltaCredit, a branch of the U.S.-Russia Investment Fund, a private investment firm established by the U.S. Congress in 1995 to promote direct investment in Russia.
DeltaCredit launched its program with four local banks in St. Petersburg a year ago: Inkasbank, Promstroibank, Petrovsky Narodny Bank and Rossiisky Capital. There are plans to add the St. Petersburg branch of Investment Banking Corporation to the list of partners when that branch opens.
The fund does not loan directly to would-be homeowners, instead lending to the banks, which in turn lend at a slight mark-up to people who meet the criteria for a mortgage loan. The banks eventually repay the fund, and the two divide money earned on the interest.
DeltaCredit also works in partnership with the northwest subsidiary of the Mortgage Credit Agency, a state-run organization set up in October 1997. Part of a government effort to kickstart a potentially hot real estate market, as apartments worth billions of dollars fell into private hands a decade ago, the Mortgage Credit Agency is at present relying on DeltaCredit for financing.
DeltaCredit also collaborates with 10 local real estate agencies, but some firms are reluctant to take clients with mortgages. According to Sergei Dobrolyubov, DeltaCredit representative for St. Petersburg, the problem is not the mortgage system per se, but rather one of bureaucracy: All transactions are done through bank accounts, for instance, meaning that payments must by law be made in rubles and not dollars. Additional paperwork also puts some real-estate firms off.
In addition, the strict conditions of taking out a mortgage limits the size of the market, said Sergei Drovdov, sales director of Peterburgskaya Nedvizhimost, an "approved" DeltaCredit realtor.
Dobrolyubov said that DeltaCredit's bank partners have given out $382,000 to 33 clients to date, with another $930,000 at the prequalification stage, i.e. waiting to be disbursed to clients who have been accepted. "Our aim is to get this money disbursed by the end of this year," Dobrolyubov said.
In Moscow, by contrast, the program - which has been running since 1998 - has already disbursed $7.22 million to 237 clients, with almost $16 million worth of mortgage loans in the pipeline, he said.
GETTING STARTED
A fair amount of documentation is required to apply for a mortgage, but what the process boils down to is proving one's creditworthiness. Mortgage sizes can be anywhere from around $5,000 to $80,000 - although higher loans are theoretically possible - to be repaid on a monthly basis at an interest rate hovering around 15 percent.
In February, DeltaCredit lowered its minimum downpayment from 30 to 20 percent of the value of the apartment being purchased, although in some cases the downpayment may be higher.
To be accepted for a mortgage, an applicant must have proof of income, and be able to demonstrate that he or she is able to maintain that level of income in the long term, via, for example, a reference from an employer. Proof of payment of utility and telephone bills may be required, as well as any credit history.
The monthly repayment rate is normally around 30 to 35 percent of a client's salary. Income is also defined by other property, such as shares and bank accounts, or if an applicant is renting out an apartment. Outlay is also registered - debt, insurance payments and so on. The financial situation of an applicant's spouse also counts in the assessment.
Income declarations can present difficulties, in that many companies use what might be termed complicated accounting procedures to minimize income tax payments - meaning that the official figures are lower than the actual ones.
Working out the size of mortgage one may be eligible for is a straightforward process, and can be done at the Web site calculators operated by both DeltaCredit (www.deltacredit.ru) and the Mortgage Credit Agency (www.ipoteka.spb.ru). As an example, an income of $1,000 a month entitles a client with no dependents to aim for an apartment costing $35,291, on condition of paying $10,588 up front and obtaining a mortgage of $24,704. Repayments would be $400 a month over 10 years, but it is possible to negotiate to pay off the loan more aggressively.
According to Dobrolyubov, it normally takes from two to four weeks to process an application.
AFTER ACCEPTANCE
After an applicant has been cleared, the next step is finding an apartment that's ready to be sold. In other words, the size of loan one can receive is assessed first, so subsequent apartment-hunting is undertaken with an eye on the upper price limit. Mortgage recipient Andrei Surovtsev, who heads Promstroibank's department that works with private clients, found this, and the capriciousness of state bureaucracy, to be bigger obstacles than his application. "It took me two days to fill in the forms," he said, "but on five occasions the deal for the apartment I wanted crashed at the last minute." Surovtsev is now trying to buy an apartment in a new building, but has encountered problems registering at the address with the State Registration Bureau, or GBR.
While recently constructed buildings that have been completed are "primary" (pervychny) real estate, the city's DeltaCredit branch will give out mortgages for the purchase of such apartments.
DeltaCredit in Moscow, which has 10 partner banks, has also started collaboration with two construction companies, a lucrative market with high demand for housing and millions of square meters being added every year, and a need for available financing for those who can't produce thousands of dollars overnight.
However, the St. Petersburg branch steers clear of potential buyers who are investing money in apartments that do not yet exist.
PRIMARY CONSIDERATIONS
But Albert Avetikov, press spokesperson for Baltiisky Bank, said that the bank's own mortgage program for primary real-estate was growing fast. "We find primary real estate more interesting [than the secondary market]," Avetikov said. "We prefer to use our own financial resources, and we have close relations with several construction companies."
Baltiisky Bank has had its mortgage program going since July 1999. Up to mid-March, Avetikov said, the bank has given out 80 credits worth $1.79 million.
"There is indeed a big interest in new apartments," said DeltaCredit's Ko zhev nikov. "They are considered more comfortable, and they are cheaper."
"But before [investing mo ney] in a building that hasn't yet been built, you should check the financial state of the construction company," said Ko zhev ni kov. If investing in a new building is your bag, it is probably best to go with a bank like Baltiisky for security reasons, rather than going solo and handing over money to an unfamiliar construction firm.
AND FINALLY ...
DeltaCredit also requires the borrower to take out its insurance plan against property damage, loss of ownership rights, life insurance and disability. According to the organization's Web site, "The Borrower pays the insurance premiums which usually amount to 1.5 percent of the annual loan balance."
A final caveat is that mortgages are priced in dollars but paid in rubles, meaning that a devaluation on the scale of the August 1998 financial crisis, when the dollar rate went from around six rubles to 21 rubles in the space of two weeks, could be catastrophic to someone with a large repayment to make, particularly if the value of the property also plummets.
On a more positive note, Tax Code Part II provides for tax deductions on up to 600,000 rubles (about $21,500) paid for housing purchases, and on all interest payments on the mortgage.
TITLE: Playing Cards: Finding the Right Bank for You
AUTHOR: By Andrey Musatov
PUBLISHER: Staff Writer
TEXT: The personal banking market in St. Petersburg today provides a wide and growing range of services, including debit and credit cards, ruble and foreign currency accounts, currency exchange, investments and fund management and safety deposit boxes - not to mention heavily guarded rooms for business meetings.
Of the approximately 70 banks operating in St. Petersburg, only about 10 provide the entire range of banking service to private clients. These banks also offer the greatest number of branches and automated teller machines (ATMs).
The list includes Promstroibank (PSB), Petrovsky Narodny Bank, Baltiisky, BaltUneximbank, Menatep St. Petersburg and Inkasbank, along with the local branches of Moscow-based Alfabank, Sberbank and Avtobank.
Some banks also offer special services. Sberbank, Petrovsky and Baltiisky banks, for instance, accept payments for utility bills as well as payments to cell-phone and Internet service providers. PSB even offers guarded rooms for negotiations, which cost $5 for 15 minutes.
So, for foreigners and Russian citizens alike, the system is developing to allow a wider range of banking options.
For foreigners, opening a bank account in the city isn't all that difficult. To open an account, a prospective customer needs to bring exactly what is required of Russian citizens, with one minor addition. They need to produce their passport and official registration in the city. The only difference for foreign clients is a logical one - they also have to show their entry visa.
The procedure of opening the account is then relatively simple. All that is required is the filling out of an application form and signing of an agreement between the bank and customer - all of which takes 15 to 30 minutes.
The time-consuming part is the 3-day wait for the account to actually become active - regardless of whether it includes ATM or credit card service. This is the time banks say they need to assign and input an individual account number into the databases of the bank and the ATM or credit card services themselves.
In the case of ATM cards, the client goes to pick the card up at the bank as they are not mailed for security reasons.
The information on the application form is pretty straightforward, with the prospective client providing detailed employment information (including the name of their supervisor and previous employment record) and place of residence.
In order to establish a confidential database on clients, there are also a few mundane questions. Questions can include place of birth or mother's maiden name, eye color, or even your favorite name.
But bank employees say that these questions are not as strange as they might seem at first.
"If a client forgets his or her pin-code, the system is set up so that no one in the bank, or anywhere else, would be able to access it," Alexei Khitrov, press officer at PSB, said in a telephone interview on Monday. "The ATMs are programmed to seize the card if the pin code is typed incorrectly three times in a row."
"If the card is lost the client should call the processing center of the bank to have it canceled," Khitrov added. "In three to four days the bank will issue a new card with a new pin-code, as this is the safest way to keep the information confidential."
According to Khitrov the majority of plastic cards issued by all banks in St. Petersburg are debit cards.
"There is no mechanism available to track the credit histories of the Russian bank's clients, so banks have a tough time assessing whether a client will pay his balance," Kim Isakyan, banking analyst at Renaissance Capital analysis agency said. "At present credit-card holders represent a relatively small group - senior managers and directors of large companies - where the credit history of the company is assumed as their personal history."
According to an official at one of the biggest St. Petersburg banks, who spoke under condition of anonymity, Russians lack experience and familiarity with the broad variety of transaction options.
"We're trying, for instance, to launch a program familiarizing card holders with the idea that they can pay directly in stores using debit cards," the source said. "But people aren't yet comfortable with the cards, preferring instead to withdraw funds at ATMs and then go shopping with the cash."
But banks are aggressively marketing debit-card and credit-card programs for more than just the service fees involved. A large number of the plastic card accounts are opened by banks for employees of their companies so, especially where the companies are big, attractive plastic-card programs can help to lure corporate payroll accounts. Most of the major firms have been locked up already, with the accounts for Petersburg Telephone Network (PTS) and local energy utility Lenenergo held by PSB, and Oktyabrskaya Railways carried by Baltiisky Bank.
According to a November report in Expert business weekly magazine, the further development of ATM networks is one of the major goals this year at the city's major banks to attempt to attract even more clients to use the cards.
The report named Sberbank, Petrovsky Bank, PSB and Baltiisky Bank as the leaders in providing card services in the city, but said that the client bases differed.
Sberbank, with about 100 ATMs in the city and 330,000 clients with cards, and Petrovsky, with 360,000 cards and 42 ATMs in operation, tend to serve less affluent clients, such as pensioners and students.
Conversely, PSB, with 235,000 cards and 98 ATMs in operation, and Baltiisky Bank, with 230,000 cards and 49 ATMs, tend to have wealthier clients.
And while the banking system appears to be developing, and Russians and foreigners alike are beginning to shed some of their anxieties about trusting Russian banks with their funds, Isakyan says that depositors should be careful when choosing.
"A lot of ratings are based on estimations of banks' assets or the total number of accounts, which is a far too simple system," he said. "These indicators don't provide much information on what is really going on."
"If we rate the banks by sheer number of accounts then Sberbank - which holds about 85 percent of all accounts in Russia - would be rated the best, which is absurd."
But Isakyan said that depositing money in Sberbank also has its up side.
"It's supported by the state, so there's less of a chance that it will go bust," he said. "Even if it did go bankrupt I would still stand a chance of not losing all my money."
TITLE: Sberbank Caught Up in Row Over Stalled EGM
PUBLISHER: Reuters
TEXT: MOSCOW - Minority shareholders trying to oust the head of Russia's biggest bank, Sberbank, over a planned share issue said on Monday that they would fight the bank's refusal to hold an extraordinary general meeting (EGM).
"We will take all legal measures that are necessary to enforce our rights," said Hermitage Capital Management director Bill Browder.
"We will go to court if that is required or take whatever other legal steps are necessary."
The bank's supervisory board on Friday rejected the demand for an extraordinary general meeting, saying that shareholders had filed it incorrectly and had failed to prove that they held the 10 percent needed to call the meeting.
Browder said the group held more than 10 percent of Sberbank, and had filed the EGM request after ample legal advice.
"The refusal to call this meeting is a clear example of how shareholder-unfriendly Sberbank is, and demonstrates the need for reform and change," he said.
The Central Bank has a controlling stake in Sberbank.
Andrei Ivanov, a banking analyst at the investment brokerage firm Troika Dialog, said that the refusal might hurt Sberbank's share price, which edged up after Hermitage Capital Management announced two weeks ago that the group would call an extraordinary general meeting in an attempt to force the ouster of Sberbank chief Andrei Kazmin.
On Monday, Sberbank shares were up 0.94 percent at $32.30.
The shareholders' group said that the planned share issue - which was approved by shareholders several years ago - would amount to selling off new shares at a fraction of book value because of adverse market conditions.
TITLE: Investors Going Private To Plan for Retirement
AUTHOR: By Thomas Rymer
PUBLISHER: Staff Writer
TEXT: The Russian government has been making noise over the last few months about revamping the country's pension systems - both state-run and private.
But even government officials admit that the reforms presently being discussed are not intended for those who have already reached pension age.
"It should change the fortunes of people who are now in their '30s or '40s," says Mikhail Dmitriyev, first deputy minister of economic development and trade.
The current state pension system, which has not moved far from the egalitarian system created during Soviet times, has been rocked since the fall of the Soviet Union by the devaluation of the ruble, so that the amount pensioners receive is barely enough to keep them above the subsistence level.
Average pensions have increased six times since President Vladimir Putin took office, and average pensions doled out by the state plan are expected to top 1,000 rubles (about $35) per month by the end of 2001, up from the figure of 550 rubles (about $20) at the start of 2000, but still woefully low.
Russia's next generation of pensioners can't be blamed for looking for other options to seek better financial conditions in their old age.
Private pension funds, set up by individuals themselves are becoming more popular in Russia, although the market conditions under which they operate are still heavily restricted.
Pavel Pechko, an official with the Severny Vsyeregionalny nongovernmental pension fund, says that, although there is a certain wariness among Russians toward these funds, interest in his firm's programs has been on the rise.
"Right now we have about 5,000 clients and the number has been growing steadily," Pechko said. "The state-run pension fund doesn't provide very much income so people are looking around more to see what else is out there."
"People are looking for all possible ways to take care of their financial interests in their old age."
But present Russian regulation makes providing the type and variety of aggressive savings options available to those shopping for pension alternatives in the West impossible to provide in the Russian context.
"There are a lot of restrictions," says Michael Bohm, manager of the St. Petersburg branch of Ost-West Allianz insurance firm. "The rules on capital investment here are so strict, so our hands are tied as to what we can do."
Ost-West Allianz has been operating in Russia for 11 years, and has had a St. Petersburg branch office for six years, but Bohm says that the services the firm provides are still rather basic.
"What we are able to run is really just a simple endowment program," he says. "The program itself is extremely primitive in this sense. It's not as developed as in the West where the client can choose the nature of the portfolio."
And Bohm says that contribution rates here are still far below those common in Europe or North America.
But, while unfamiliarity with private pension funds, coupled with a sense of distrust of private financial institutions may be playing their part in limiting the success of these organizations, another factor is the low levels of return they are able to generate.
The pension product offered by Ost-West Allianz allows investors to choose the term of their policy and the level of contributions they prefer, but the company promises a return of only 4 percent per annum on the invested total, a figure significantly below that of Western funds.
"There are two basic problems faced by pension fund managers under the present system," Pavel Popov, legal adviser to Ost-West Allianz says. "The first of these is that the institution must maintain the funds invested as entirely its own property."
"But an even bigger difficulty is that the firms can't invest money abroad."
The government is presently looking at ways to open up the avenues of investing contributions to nongovernmental pension funds, but issues of regulation and governance still remain a concern.
"To a degree, government regulations until now have had a certain reasoning behind them," Popov says. "So many of the investment avenues open to pension funds are very risky, so these restrictions have been kept in place to try to keep risks for investors down."
"The concern is that, if they lift these restrictions too much or too quickly, then these funds might follow the negative example of Russia's banks."
Other analysts see a more concerted approach to changing regulation of nongovernmental pension funds.
"If the government goes ahead with some of the proposals that are in the draft legislation - which has already passed the first reading - then this could create a greater push for people to choose to put money in the funds," says Yevgeny Morozov of Renaissance Capital research.
The draft law, which would allow firms to include among its investment instruments such things as shares that are registered on Russia's MICEX exchange, depository certificates and commodities such as gold.
"If this ultimately passes, then it will give a big push to new purchases of shares as market instruments," Morozov said. "And, given the contents of the law concerning reporting procedures, it could also provide a lift in standards of transparency and disclosure."
While there appears that attention is being paid to regulation in the sphere of individual private pension contributions, another problem in Russia is the general lack of corporate-sponsored and -run programs.
Some of the richer Russian firms - Gazprom, LUKoil and Surgutneftegaz to name the most significant examples - already run pension plans for their employees and have branched out to offer these plans to individuals outside their corporate structures.
While the unsteady nature of much of corporate Russia has kept these firms in the minority, Ost-West Allianz' Bohm says that his firm is making an effort to broaden the practice.
"It's taken for granted in Europe and the United States that companies should provide this type of program," he said. "It's really a new approach for them to see their obligations as being covered by the payment of salaries and social taxes."
Bohm's firm is presently in the process of rolling out its new corporate-based program, which has much in common with the product it already offers to individuals, with payments being fronted in this case by employers.
But, while Bohm says that there target market largely consists of those companies involved in the same type of programs abroad, foreign firms are not their sole concern.
"We've scheduled meetings this week with seven major companies in the area to give them a better idea of what we do," he said. "But these aren't all foreign, as a couple of these are major Russian companies as well."
Staff writer Igor Semenyenko contributed to this report in Moscow.
TITLE: Tech Stocks Lead Charge in Asian Markets
AUTHOR: By Valerie Lee
PUBLISHER: Reuters
TEXT: SINGAPORE - Shares in Asia started the week in an upbeat mood on Monday, heartened by Wall Street's Friday recovery and with telecoms spiced up by news of Singapore Telecom's multibillion dollar offer for Cable & Wireless Optus.
Technology stocks led the charge, taking their respective benchmark indices from Tokyo to Taiwan up by as much as four percent as investors eased away from the safe haven of defensive stocks sought in recent weeks.
"Investors are not totally convinced they have seen the worst. But after New York rebounds, they are more inclined to put money into techs since they are most likely to outperform the rest of the market after being battered so much," said Toshihiko Matsuno, deputy general manager at Sakura Friend Securities.
Tokyo's benchmark Nikkei average ended up nearly five percent on hopes the U.S. rebound meant tech issues may have hit a short-term floor.
Tech stocks had also been the biggest beneficiaries on Wall Street on Friday, with the NASDAQ composite index climbing 1.63 percent to end at 1,928.68 as investors snapped up shares at bargain prices. The Dow climbed 1.23 percent, to 9,504.78.
The U.S. buying is likely to gather steam this week, some analysts say, despite the fact a slew of companies are expected to tell investors this week that they'll miss profit forecasts because of the soft economy.
"This period reflects spring cleaning by a number of companies trying to get the skeletons out of their closets," said Ned Riley, chief investment strategist for State Street Global Advisors, which oversees $720 billion.
"But portfolio managers are looking beyond that shock value. The ingredients for a bottom are here."
Rallying Tokyo stocks helped the yen recoup more than half its losses made earlier in the day against the dollar, but dealers said the Bank of Japan's ultra-easy monetary policy would likely drive it lower again.
The dollar spurted higher in early Asian trade, rising nearly a full yen from levels seen in late U.S. trading on Friday.
But it gave back nearly a half yen in afternoon trade as a strong rise in stocks boosted yen demand. The dollar was quoted at 122.82/85 yen by 0900 GMT, against a peak of 123.80.
Tokyo's benchmark Nikkei index ended up 4.90 percent at 13,862.31, powered by rebounds in high-tech stocks and buoyed by optimism for a speedy disposal of Japan's bad loan mess.
High-tech stocks saw the biggest gains with Advantest, a top manufacturer of semiconductor-testing devices, leading the sector with a 9.39 percent surge to 14,100 yen.
The hi-tech gains came after the Philadelphia Stock Exchange's semiconductor index firmed 2.51 percent on Friday, adding to Thursday's 12.25 percent jump.
Taiwan stocks also ended higher on Monday for the third consecutive session, tracking Wall Street's gains.
Along with end-quarter window dressing by local fund managers, "the chance is big for the local market to continue rising until the end of the month," said Hsieh Chih-mao, portfolio manager of Ting Kong Securities' proprietary trading department.
South Korean shares closed at a two-week high on Monday as Samsung Electro-Mechanics and technology stocks rallied, buoyed by the U.S. gains.
In Hong Kong, the main theme for the day was China plays with the benchmark Hang Seng index ending up 2.92 percent at 12,950.49 boosted by a more than six percent gain in shares of China Mobile, China's largest mobile phone company.
A cross-border merger between telco companies Singtel and Optus dominated news in markets in Singapore and Australia.
SingTel said on Monday it would offer up to A$4.57 ($2.26) per share in cash and scrip for Optus to create Asia's leading wireless carrier. Optus is 52.5 percent owned by Cable & Wireless Plc.
The offer valued Australia's second largest telecoms group at A$17.2 billion ($8.4 billion), about 14.5 percent higher than the value of Optus at Friday's close of A$3.99 ($1.97) per share.
TITLE: Putting All the Pieces Together: St. Petersburg's Property Puzzle
TEXT: With one-quarter of its historic downtown housing sector on the verge of collapse, St. Petersburg asked the World Bank in 1995 for a financial lifeline. Six years later, The St. Petersburg Times looks at the progress being made in what Fyodor Dostoevsky called a city filled with nothing but "windows, holes and monuments." Yevgenia Borisova reports.
IN 1995, even before a comprehensive scientific analysis was commissioned, Anatoly Sobchak knew something had to be done about the appalling condition of residential buildings in the heart of this city.
With his own budget too tight, the former mayor, who died last year, asked the World Bank to help finance a novel reconstruction project that would help put in place the market mechanisms needed to put a safety net under St. Petersburg's collapsing housing sector.
That move proved prescient when, in 1997, the city completed a comprehensive study that found that a quarter of all downtown housing was "extremely worn out and in urgent need of complex reconstruction." Roughly 4.8 million square meters, or 26 percent of all residential apartments downtown, were considered on the verge of crumbling, while another 30 percent were listed as "unsatisfactory."
Every year, the study found, the cash-strapped city repairs only about 5 percent of the buildings that need it - a pace that would see no less than 22 percent of all downtown housing become uninhabitable by 2007, with half of the rest downgraded to "emergency state."
"When Russia started to reform itself in the early 1990s it became clear that the housing sector was the most underdeveloped and the most conservative," said Boris Smirnov, deputy head of the Moscow-based National Foundation for Housing Reforms, in a recent interview.
"It just could not work in the market economy the way it used to in the past," he said. "We needed to make crucial changes."
The World Bank agreed. It gave the city two groups of loans: $30 million for a pilot project to reconstruct the downtown area in a way that would attract investment for housing renovations; and a series of loans totaling $74 million to both the city and to private companies to develop ways of building inexpensive housing.
The $30 million loan from the World Bank was designed to create a successful rejuvenation model for downtown that could be applied to other parts of the city in the future.
For this, two areas were initially chosen: The Cappella Courtyards near the St. Petersburg State Cappella along the Moika River, and the area between Nev sky Prospect and Vosstaniya, Maya kovskogo Ulitsa and Zhukovskogo Ulitsa, also known as Block 130.
As part of this project, the city modernized the infrastructure under Nevsky Prospect, improved the lighting and traffic-control systems, and repaved the sidewalks.
So far, 67 percent of the $30 million has been spent, said Alexei Vasilyev, general director of the Foundation for Investment Projects of St. Petersburg, the agency set up by the city to run the World Bank projects.
Felix Jakob, the project manager for the World Bank's Urban Project in Russia, said that the city has done "a good job" with the loans - the housing project is finished and the infrastructure project is "largely completed."
Six years later, however, the majority of St. Petersburg's downtown buildings remain dilapidated, fragile real estate properties, and the city is still facing the same problem: a lack of private investment.
Cappella Courtyards
The passage connecting 20 Moika with Bolshaya Konyushennaya Ulitsa was once a row of old stone buildings connected by unkempt courtyards lined by walls with collapsing plaster.
Under the project, the courtyard was turned into an orderly, replastered, bench-lined and tiled corridor with new balconies and lampposts.
What is not visible is the infrastructure - outdated pipes, wires and telephone lines in the area were all replaced. Ground-level tenants of the surrounding buildings - 28 people in all - were relocated to new apartments of their choice, and their old apartments were converted into retail space. A few shops have opened already.
Vasilyev said that the city will now earn much more from leasing out this space than it could have earned before.
"The Cappella Courtyards [project] provides a good example of what a city can do to improve pedestrian traffic on the one hand and, on the other, rejuvenate the urban fabric of its city center by cleaning out interior courtyards to make them attractive to the public," Jakob said.
Indeed, the city is hoping the project will attract investors interested in purchasing buildings around The Cappella Courtyards. To that end, the city recently resolved a major problem - it managed to persuade the federal government to demote the status of the buildings in the area, some of which were listed by the Culture Ministry as national monuments, Vasilyev said.
Having "national monument" status with the Culture Ministry does not mean that the buildings are maintained or guarded by the federal government, it simply means that they cannot be sold. To sell them to developers who otherwise would not be interested, the buildings needed to be downgraded to at most "municipal monument" status.
But while the city managed to win a potential investment victory with the declassification, not everyone is happy.
Residents of the buildings along The Cappella Courtyards said they have not benefited from the renovations at all, and complain of outdated radiators, peeling walls and dangerously tangled wires in their foyers, which have no security and are often used as toilets.
"It's a kind of Potemkin village built here," said Olga Zhiltsova, a resident of one of the buildings along The Cappella Courtyards. "I really don't get it - why did they make all these decorations, put nice tiles on the ground, when they will want to reconstruct the buildings later so that all this will be ruined?"
Block 130
Block 130 is a series of buildings and courtyards just a few meters off Nevsky Prospect, and resembles the remnants of a war zone.
Like The Cappella Courtyards project, the reconstruction of Block 130 included an infrastructure overhaul and a series of cosmetic improvements designed to attract investors to upgrade neighboring buildings.
New water and heating pipes replaced the massive, hodgepodge system of older ones that blocked pedestrian walkways, and two large boilers were built so that residents of the area no longer had to heat their water by gas.
Since the project started, private investors, who are now busy relocating residents to new apartments, have purchased four apartment blocks.
Valery Shevchenko, a 35-year-old resident of the building at 104 Nevsky Prospect, is one of those waiting to be relocated.
"I want to get out. My neighbor was offered an apartment on Moskovsky Prospect, and I don't think I'll mind leaving my room in a communal apartment," Shevchenko said.
The project has also helped generate interest in four idle land plots in the area that the city expects to sell for a total of $4 million, which will go toward servicing the World Bank loan, Vasilyev said.
The city is hoping that these plots, which are located about 100 meters from Nevsky Prospect along an unnamed lane just off Mayakovskogo Ulitsa, are slated to be developed into hotels, offices, retail stores, restaurants and housing.
The starting prices for the plots, which range in size from 1,131 square meters to 2,271 square meters, run between $320,000 and $735,000. But city officials believe that the price could double, which would cover the cost of setting up the area's infrastructure.
The deadline for applications was March 19.
Inexpensive Housing
St. Petersburg's role in upgrading the infrastructure of Block 130 and The Cappella Courtyards proved invaluable for the project to build inexpensive housing, to which roughly 2,000 families have already been relocated in new apartments in the suburbs of Kamenka and Kolomyagi.
This work was done as part of a larger deal Russia and the World Bank signed in 1995, when the National Foundation for Housing Reforms was set up by the Russian government to manage the project.
Since then, the bank has allocated $370 million to implement housing reforms, mostly in St. Petersburg, the Altai territory capital, Barnaul, Nizhny Novgorod, Novgorod and Tver. Recently, 10 other cities also joined the project.
Of the $33.46 million given by the World Bank to St. Petersburg (to which the city added $7.9 million of its own money), the city spent $13 million on building infrastructure in Kamenka and Kolomyagi. Both areas are about a 15-minute drive from the city's metro system and about 40 minutes northwest of the city center.
The rest of the loan was spent on rebuilding a downtown water pipeline system, a pumping station in the Parnas industrial zone and a sewage collection facility along the Karpovka River embankment.
In the past, such infrastructure projects were an extremely complicated process full of red tape and delays.
The city had no zoning plan, so it used to take months and thousands of dollars in bribes to get technical documents approved by officials for such projects.
"It would have taken us at least twice as long to agree on documentation and to build infrastructure if the city hadn't done it," said Mikhail Salenko, general director of the construction company Elf, which is building town houses in Kamenka for the project.
Elf was one of 10 companies that purchased the rights to develop land plots at auctions organized by the city in 1996-97.
When the project is completed, the new flats and cottages in Kamenka will house 3,130 families and cost between $300 and $500 per square meter.
In 1996, when the city first announced the project, it was talking about developing ways to provide St. Petersburgers with cheap housing. Alexander Vakhmistrov, who now heads the city's construction committee but at the time was the committee's head of investment, said that prices for housing built within the World Bank project would be three times cheaper than the average market rate and would be affordable for average-income families.
The financial crisis of 1998 ruined that plan.
The National Foundation for Housing Reforms' Smirnov said that St. Petersburg took many steps to reduce the share of infrastructure in overall construction costs.
The cost-cutting, however, has not led to cheaper prices and new owners have mixed opinions about how much value they got for their money.
"We like living here," said Ilya Remeslo, a 17-year-old student. His father, a psychotherapist, has a private practice in St. Petersburg and bought an Elf-built house in Kamenka to move his family from Nalchik, the capital of the Kabardino-Balkaria republic.
"It's ecologically clean here and we, even [we] children, all have our own rooms. The conditions here are better than in any city apartment," said Remeslo.
Unlike Remeslo, many residents of Kamenka and Kolomyagi said that they were disappointed with their new homes. Many complained of not having a telephone, while others said their roofs leak and their basements are partially flooded.
"My ceiling is 7 centimeters higher at one end of the room than at the other, and my corridor for some reason has five angles instead of the normal four," said one Kolomyagi tenant, who asked that his name be withheld.
Vera Martynyuk, who owns a 115-square-meter cottage on the same street, said, "Cracks appear in the walls one after another. Just after we fix one, another appears. We had to fix our bumpy floors and the walls were uneven until now, the ceiling in our garage was caving in. But our construction company refused to fix the faults - it just gave us some construction materials, but we had to hire workers ourselves."
Martynyuk said that her family was effectively ripped off: "We paid $71,000 for the house [$617 per square meter] and then had to invest an additional $30,000 in repairs."
Martynyuk, who moved with her family from Almaty, Kazakhstan, said she did not know who to complain to.
Preparing Development
Although there is a special city-backed agency - The Expert Council for Reliability of Construction Companies, or ESON - set up to collect and analyze data on the quality of work being done by local construction companies and make it public, no one in Kolomyagi seems to know about it.
Mikhail Viktorov, general director of ESON, said in a telephone interview, "I know that low quality is a fairly standard approach adopted by many construction companies, who are trying to make prices look competitive to potential clients."
"This is a problem, but we are receiving so many complaints and eventually bad [builders] may have their licenses withdrawn."
The city also prepared dozens of other schemes, technologies, facilities and regulations that together represent a new market infrastructure for developing downtown areas and constructing affordable housing.
Builders in Kamenka and Ko lo myagi counted on low-interest loans from the World Bank to reduce construction costs, but the $28.9 million earmarked for the project was never used for this purpose.
"St. Petersburg construction companies have obtained low-interest loans via local authorized banks, but none of the builders for Kamenka and Ko lo myagi could get these loans because they failed to provide collateral," said Va lery Lipatkin, head of the Bank Credit Operation Center in the St. Petersburg administration.
To get around that problem, officials recently finalized a new scheme that allows construction companies to officially register unfinished buildings as collateral for loans.
The city has also prepared regulations for tenders to auction the rights to develop land plots and has set up a special exhibition for investors that provides details of the properties and explains the city's investment laws.
St. Petersburg also spent $11.7 million of the World Bank loans on setting up three factories to supply materials used in housing construction - two lumberyards and one that makes heating pipes.
This year the city will also narrow down a list of eight other areas where it intends to modernize infrastructure, Lipatkin said.
Overall, Smirnov said, a lot of new schemes and regulations throughout Russia have been established based on the St. Petersburg housing projects.
But despite the emergence of market and control mechanisms, the issue of where to raise the capital needed to finance the further development of the housing sector remains unresolved.
The 1998 collapse of the country's banking system, which has yet to be revived, together with the absence of a proper legal system to protect investments, is forcing the majority of investors to wait.
More Loans To Come
Jakob said the World Bank keeps "strict close supervision" over the project and that "as far as we know no misspending has taken place."
Having established a proven track record, the St. Petersburg administration is currently negotiating another loan with the bank. Jakob said the amount could be as high as $150 million, depending on the city's borrowing capacity and revenues.
"Our current plans are to get an agreement on the general features of this next project certainly by the end of 2001," he said.
TITLE: Minister: Argentina Can Expect Recovery
AUTHOR: By Brian Winter
PUBLISHER: Reuters
TEXT: BUENOS AIRES, Argentina - Argentina's new economy minister predicted in interviews published Sunday that the country would bounce back from its economic woes so quickly that creditors will soon be eager to lend it money.
"Argentina is assured of meeting its financial needs for the year," Economy Minister Domingo Cavallo told Clarin daily. "In the coming weeks, they will be coming to us looking to lend us money."
Cavallo became Argentina's third economy minister in as many weeks on Tuesday amid hopes that he would be able to pull the country from the brink of an economic crisis caused by fears that squabbling politicians would be unable to control runaway public spending.
The key element of Cavallo's plan to soothe nerves, a request for special powers that would allow him to bypass a divided Congress and make tough economic reforms via decree, was expected to get final approval from Congress on Monday, a day later than he had hoped.
Although many legislators are reluctant to hand Cavallo near total control of the economy, Congress is expected to address those fears with a compromise plan restricting the executive branch from firing or reducing the salaries of public workers - a politically explosive issue.
Key lawmakers told reporters Sunday that they expected the lower house to approve a bill granting the emergency executive powers early Monday. The Senate would then debate the bill later in the day, they said.
But Cavallo, renowned for stamping out hyperinflation during a 1991-96 stint as economy minister, told La Nacion newspaper's Sunday edition that doubts surrounding the country's solvency were overblown and that "it will never occur to us to discuss" restructuring Argentina's debt.
"In just a couple months, years at most, the whole topic of debt in Argentina will be like it is in Australia or Canada, or any European country, where nobody even talks about it. It will be managed as a routine technical matter, not a political one," Cavallo was quoted as saying.
Cavallo has already persuaded Argentina's Congress to approve a new tax on financial transactions, which officials hope will take a bite out of a government deficit, which many fear could exceed the targeted $6.5 billion for this year.
Signs of emerging political consensus late Friday cheered markets, which had been battered during the week by rumors of a debt default, devaluation and the possible resignation of the president.
To get the economy - which hasn't shown real growth since July 1998 - moving again, Cavallo said the government was going ahead with plans to protect local industry by raising tariffs on consumer goods to as high as 35 percent and slashing import duties on some capital goods to zero.
"We are going to exit from this long recession. And we're going to resolve the problem of fiscal solvency. We will create the conditions so that those who want to invest and work can do so," he told Clarin.
Cavallo minimized the importance of the International Monetary Fund (IMF), with which Argentina has agreed to a $6.5 billion deficit target this year, saying that negotiations with the lender were irrelevant.
TITLE: Seattle Left Second-Guessing At Boeing's Recent Departure
AUTHOR: By Chris Stetkiewicz
PUBLISHER: Reuters
TEXT: SEATTLE, Washington - As Boeing Co. gets ready to skip town, Seattle is grappling with the haunting accusation that its own bad business practices forced its most venerated corporate citizen out the door.
Boeing denies it, along with many Washington state politicians and business leaders, but there is little question among free market advocates that the aerospace giant was slowly squeezed out by high taxes, snarled traffic and red tape.
"I don't think we should be surprised. Studies have shown that [the area] is not receptive to business, but the legislature and governor really haven't done anything about it," said Dann Mead Smith, who heads the Washington Institute Foundation, a conservative think-tank.
In announcing plans to move its corporate headquarters to either Chicago, Dallas/Fort Worth or Denver, 86-year Seattle resident Boeing cited geography as its primary reason, with the central United States closer to major airline customers, Wall Street bankers and federal regulators in Washington.
But Boeing executives for years have griped about costly environmental rules, lengthy building permit processes and labor costs, threatening to take their business elsewhere if the problems were not fixed.
In 1991, then-Chief Executive Frank Shrontz warned that the Northwest could become an aerospace "rust belt" with abandoned factories and job losses unless business costs came down.
"The necessity to stay competitive in the world market demands that we consider these costs as a significant factor in our plans to accommodate additional growth," he said.
In 1993, another warning came from Deane Cruze, then a senior vice president of operations.
"It was clear two years ago that our state was falling out of step with a world shaped by global competition, but what has been done? Nothing," Cruze said.
And most recently in 1999, former chief financial officer Debby Hopkins said Washington ranked 16th out of the 27 states in which it operated as a place to do business, with cheap power costs overwhelmed by high fees, taxes and labor costs.
"When you add it up, it's not the best environment for business," Hopkins said.
Boeing has angered its unions and some local officials by slashing its payroll and selling off underutilized plants and by talking about shifting wing production for an all-new 747X superjumbo jet to Japan and consolidating its Washington state jet assembly sites.
With rival Airbus Industrie chipping away at its once dominant share of the commercial jet market, Boeing has vowed to get leaner, more nimble and more diversified in order to boost profits and shareholder returns.
Boeing's good-bye could actually improve local business conditions if local officials heed what seems like a screeching wake-up call, said Bob Watt, president of the Greater Seattle Chamber of Commerce.
And after all, only 500 of the 1,000 headquarters employees will be heading east - some 78,000 rank-and-file employees are staying in the state.
However, Watt conceded that clogged highways and steep operating costs offset the educated work force and absence of corporate or personal income tax in Washington state.
"There's no question that if you are a company looking to relocate today, you are worried about transportation in Seattle and Washington state. If you want to move anything, you probably don't want to be here," Watt said.
TITLE: WORLD WATCH
TEXT: More Daewoo Clashes
SEOUL, South Korea (Reuters) - About 500 South Korean workers angry about layoffs at bankrupt Daewoo Motor hurled firebombs on Saturday after riot police drove them onto a university campus.
Members of the militant union group Korean Confederation of Trade Unions (KCTU), including former Daewoo workers, were driven into a university near Daewoo's main plant in Pupyong after their plan to gather in the city center was thwarted by the police, union officials said.
"Two police helicopters flew over the gathering site in an apparent move to discourage protesters," said Sohn Nak-koo, a spokesman for the KCTU.
Witnesses said there seemed to be no injuries in the clash where about 300 hand-made firebombs were thrown.
Police were not available for comment.
In February, Daewoo Motor issued layoff notices to 1,750 workers at the Pupyong plant, triggering a series of protests and violent crashes with police.
Daimler Denies Rumor
FRANKFURT, Germany (Reuters) - DaimlerChrysler AG on Sunday repeated that it was not mulling the sale of its troubled U.S. Chrysler division, after a media report said a sale option was being discussed at the auto giant.
German magazine Spiegel said that DaimlerChrysler major shareholder Deutsche Bank AG had appointed its new mergers and acquisitions chief Michael Cohrs as adviser, and that all options for Chrysler were still open to discussion.
Spiegel said in a report to appear on Monday that no concrete reform proposals had been made but that discussions included selling Chrysler or merging it with parts of U.S. auto firm Ford Motor Co., Volkswagen AG or others.
A DaimlerChrysler spokesman rejected a Chrysler sell-off, saying the firm's chief executive Juergen Schrempp had pledged on Feb. 26 to invest $4 billion in the U.S. unit to restore it to full profitability by 2003.
Motorola Job Cuts
SCHAUMBURG, Illinois (AP) - Motorola Inc., the world's second- largest mobile-phone maker, is cutting 4,000 more jobs, bringing the total eliminated companywide since December to 22,000, or 15 percent of its work force.
Motorola officials on Friday refused to rule out further layoffs, saying sales are flat and the cuts are needed in order for it to remain competitive in a slowing economy.
The latest cuts are in Motorola's networks sector, which was created in January to provide broadband and wireless communications products and systems.
"Motorola is making tough but deliberate and strategic business decisions in order to remain competitive in the slowing economy," Edward D. Breen, president of Motorola's Networks Sector, said in a statement.
Comair Pilots Walk
HEBRON, Kentucky (AP) - Comair pilots walked off the job early Monday after contract talks with the airline broke off, and union officials said the pilots were prepared to continue the strike for as long as necessary.
"I think it's fair to say that there was not a single Comair pilot who wanted this to happen, but we have prepared for this mentally and financially and we are together," union spokesman Max Roberts said after the strike began at 12:01 a.m.
Comair, the United States' second-largest regional airline, serves 95 cities in the United States, Canada, Mexico and the Bahamas and carries more than 8 million passengers annually.
Comair's 1,350 pilots are seeking a company-funded retirement plan, more rest time between flights, higher pay and the right to be paid for all hours they are on the job, not just actual flying hours.
TITLE: Forwarding Services Crucial for Deliveries
AUTHOR: By Alex Nicholson
PUBLISHER: Staff Writer
TEXT: MOSCOW - What do you do when you need to send two tons of condoms from Britain to Omsk, or a planeload of chicken eggs from Belarus to the far eastern island of Sakhalin?
It's time for freight forwarding.
The condoms and the eggs - which were shipped after a Sakhalin poultry farm was wiped out by disease - are just some of the orders filled over the past 10 years by Armadillo, one of hundreds of freight forwarding companies operating in Russia. The company, which started out in 1991 forwarding extraction equipment for Texas oilmen to Western Siberia and Kazakhstan, has also shipped breast implants from Holland, a painting by Chagall and a 2-meter Great Dane for the wife of a Japanese diplomat.
"Together with a piano and other personal items, we safely dispatched the Great Dane from Moscow to Tokyo," Armadillo said on its Web site Armadillo.ru.
As any Western company shipping cargo into Russia could testify, a freight forwarder is crucial for the safe and timely delivery of goods to local consignees. Such companies not only make up for the slow and unreliable mail system, but cut red tape at customs and ensure the delivery of goods to the far-flung regions.
Fees for freight forwarding are slightly higher than standard mail. For example, sending 20 kilograms of books from London to Moscow costs about $60 with International Cargo Service. Forwarding that shipment then to Vladivostok would cost 840 rubles ($30). International Cargo Service is also willing to help clear the books with customs at the cargo terminal at Sheremetyevo Airport. The cost: $100.
Bringing goods into Moscow - orders that were typically among the simplest deliveries - has become more difficult in recent months amid a customs crackdown on so-called gray imports. But freight forwarders say business is booming and expected to beat last year's levels.
Delays of up to a week are being seen by the Russian Logistic Services company, which specializes in moving foodstuffs and promulgates its ability to move goods directly into the regions without going through Moscow.
Nonetheless, the demand placed on its 100 staff at 10 branch offices nationwide is expected to be three times higher this year than in 2000, client manager Lena Bezrukova said.
She and other freight forwarders interviewed declined to provide details about their revenues or volumes.
Customs chaos has given Armadillo its share of grievances as well. February was "a slow month" due to the customs backlog, a company representative said.
Backlog or not, volumes still remain below those seen before the 1998 financial crisis - and the exodus of foreign professionals left in its wake - said Vla di mir Subota, general director of Ferryman International, whose company deals with moving offices and personal effects.
"The situation isn't that bad, but put it this way: Everyone says that three years ago things were much better," he said.
Vinlund group's general director Peter Vins, though, remains positive about the local freight-forwarding market and logistics in general in Russia.
"We have more work than we can handle," Vins said.
Indeed, due to the workload, he said he has had little time to think about the TransRussia Transport Logistics Exhibition being held this week at the Olympiisky Sports Complex.
A range of freight-forwarding companies will be strutting their stuff at TransRussia, which organizers call "the meeting place" for Russian industry and its trading partners. Last year the event was attended by more than 2,300 importers and exporters representing all elements of the distribution chain - from air-cargo services and warehousing to port and terminal operators and, of course, the freight-forwarding companies, who this year are expected to account for about a quarter of the exhibitors.
Another meeting place for customers and freight forwarders these days is the Internet, where tracking down a forwarder is just a click away. The exhaustive Russian-language site Perevozki.ru (www.perevozki.ru) lists more than 600 Russian and foreign firms in its freight-forwarding section. The services offered by each are clearly displayed as an icon-based key, while an internal rating system shows a list of top-10 companies. For an English-language listing, the Freight Directory site at http://forwarding.to/russia/freight-forwarders-index.html provides an alphabetically arranged directory that isn't quite as broad as Perevozki's, but does include a separate list of Russian customs brokers.
There, one can find old-timers such as Soyuzvneshtrans, which has existed for over 75 years, or pick between the scores that sprang up in the early 1990s and have blossomed since. International Cargo Service, for example, started up back in 1993 when their business was run by "a few enthusiasts" out of a humble office in Sheremetyevo 2, according to the company's Web site (www.ics.ru). The company is now a member of international giant Hellman Worldwide Logistics.
TITLE: Is It Too Early for Mopping Up?
AUTHOR: By Pavel Felgenhauer
TEXT: THE Kremlin has begun to withdraw combat troops from Chechnya. Trainloads of men and armor of the 74th motorized rifle brigade are on the move through Russia into Siberia. Three other regiments from the Moscow military district are scheduled to be withdrawn in the coming month.
According to official information, there are approximately 80,000 Russian troops in Chechnya, about 40,000 of which are from the Defense Ministry and the rest from other forces - Interior Ministry troops, border guards and so on. Chechen resistance sources claim that the Russian occupying army is 120,000 to 160,000 strong, but these figures seem dramatically exaggerated.
Official Kremlin spokesperson Sergei Yastrzhembsky put the number of troops in Chechnya (including logistical units) at the end of January as: 57,000 from the Defense Ministry and 36,000 from the Interior Ministry (a total of 93,000). This figure did not include garrisons stationed close to the border in the Northern Caucasus or logistical and support units stationed outside of Chechnya but involved in the fighting (including air-force squadrons flying bombing or reconnaissance sorties into Chechnya). Taking this into consideration, perhaps there is some measure of truth to the inflated rebel figures.
The Kremlin has insisted that the present troop withdrawal is the beginning of the end of the war and that other units will soon follow, ultimately leaving a permanent garrison of some 25,000 consisting of an enlarged motorized rifle division of 16,000 men and an Interior Ministry brigade of up to 6,000 men, plus support and specialized units. The Kremlin has announced that this permanent occupation force will be supplemented by pro-Moscow Chechen armed militias.
But it will still be some time before the present force in Chechnya is reduced to such levels. The military plans to keep a division-sized group of Russian paratroopers in the southern mountains and to maintain a significant concentration of armor and motorized infantry in the southeast near the Dagestan border.
The units currently scheduled for withdrawal consist of about 5,000 men. Moreover, it should be noted that the authorities have often withdrawn various units with great fanfare, only to quietly replace them with other units later. Essentially, they try to depict the normal rotation of units as a cutback.
It appears that the Chechen resistance has recovered from the heavy losses it suffered after Russian troops captured Grozny and chased the rebels into the mountains a year ago. For the last few months, the rebels have been running an increasingly deadly guerrilla campaign: mining roads, ambushing columns and killing Russian solders daily.
Russian commanders say that in "liberated" Grozny troops can move only in large detachments even during the day, usually supported by armor. Going out alone means certain death or capture. At night, Russian troops in Grozny barricade themselves in strong points while the rebels move around freely.
Solders believe that virtually all pro-Moscow Chechen support troops are actually armed rebels in disguise, ready at any moment to shoot them in the back.
This notion seems to be at least partially true: A Chechen rebel commander told me recently that he often moved through Russian check-points posing as a member of a pro-Moscow militia, sometimes escorted for safety's sake by a genuine pro-Moscow Che chen official.
The Russian public, brainwashed by official propaganda, may believe that victory in Chechnya is around the corner. But solders and officers in Chechnya know that this is not true. However there are powerful reasons why the Defense Ministry is beginning a partial pullback now.
Some of the units being withdrawn should soon be disbanded in accord with the newly approved military reform plans to dramatically reduce Russia's military manpower. Also, in recent months the war has evolved into a series of relatively small-scale engagements, meaning that fewer large-caliber guns are need and so some howitzers and other heavy equipment are being removed.
The present campaign was planned as a relatively short victorious campaign followed by a long low-intensity, low-casualty mopping-up operation. Now, with the global economy apparently heading toward recession and world energy prices predicted to fall, the government seems eager to try to curtail the cost of its Chechen adventure. The government may be trying to move to the mopping-up phase before all organized rebel resistance has in fact been broken. And that would be a mistake sure to end in disaster.
Pavel Felgenhauer is an independent, Moscow-based defense analyst.
TITLE: Some Unpleasant Truths: First Come Law and Order, Then Democracy
AUTHOR: By Paul Klebnikov
TEXT: JUST over a year ago, Vladimir Putin became post-communist Russia's second president. Since then, many people in the West have been sounding the alarm. Putin, it seems, is trying to turn back the clock. He has adopted a more aggressive military posture; revived some old-fashioned Soviet symbols; and cracked down on his country's unruly governors, media magnates and other top businessmen.
How alarmed should the West be?
Is this former KGB man killing off the fragile shoots of Russian democracy and capitalism that sprouted after the fall of communism? No. By dismissing Putin's policies as a rebirth of a Soviet-style dictatorship, Western analysts and policy-makers risk repeating the same simplistic mischaracterization they made in the 1990s, when they naively praised Boris Yeltsin for being a "democrat" and "reformer."
Any sober-minded analysis of Russia today would have to include several unpleasant truths.
UNPLEASANT TRUTH #1
The businessmen that Putin is currently persecuting - men like media magnate Vladimir Gusinsky, billionaire power-broker Boris Berezovsky and other oligarchs - are not and never have been avatars of free markets or democracy. For the most part, they are crony capitalists who made their immense fortunes through corruption, fraud and even violence. For most of the Yeltsin years, they were allowed to dictate government policy, loot state property at will and siphon off their earnings abroad. The result was a ruined economy, a bankrupt government and an impoverished population. In any just society, these kinds of operators would end up behind bars.
Therefore, Putin's crackdown on the oligarchs - clumsy and ham-fisted though it is - should be applauded. He calls this establishing a "dictatorship of the law." Is he destroying democracy?
UNPLEASANT TRUTH #2
Russia was not a democracy under Yeltsin, it is not a democracy today and it is not going to be one for a long time, no matter what Putin does. A real democracy can be built only on the foundation of a vigorous civil society -hundreds of thousands of institutions and associations operating independently from the state. Only when a nation's citizens are active in local self-government and the court and are united in a broad range of political parties, religious institutions, labor unions, professional associations and political-pressure groups of all kinds does the citizenry acquire a voice capable of challenging the authority of the state. Without these associations, the role of the people in popular government is little different from the role of the crowd in a football match.
It was utopian to believe that you could take a totalitarian dictatorship of the Soviet mold and turn it into a democracy overnight merely by re-writing the constitution. With its independent civic institutions having been rooted out by 75 years of communism, Russia today has very little of the foundation needed for the people to have an effective voice in who runs the country. It will take years, perhaps a whole generation, to develop Russia's civic infrastructure.
UNPLEASANT TRUTH #3
The economy that emerged after the fall of communism was never a genuine free market. Here again, Westerners applauding Yeltsin's "market reforms" were naive in thinking that you could take a Soviet-style planned economy and turn it into a market economy merely by freeing prices and privatizing the bulk of the state's assets. The result of this "shock therapy" was that the most powerful insiders grabbed the best state-owned companies and ran them as corrupt rackets. It was as much of a free market as the garbage-hauling business in many American cities.
A free market cannot be created by government decree. It has to evolve on the foundation of millions of small businesses, operating without fear that corrupt bureaucrats or gangsters will be knocking on the door. This is something that Russia does not yet have.
Although the establishment of free-market capitalism and democracy is going to take a long time in Russia, there is one thing that Putin can do relatively quickly: establish the rule of law.
In the evolution of most societies the establishment of the rule of law predates the onset of democracy. It is the essential precondition for the development of civic society. So lawless was Russia in the 1990s that independent labor leaders were simply murdered when they challenged management too aggressively, while the heads of several big charities were murdered by gangsters who wanted to use the institutions' non-profit status. Among other things, the rule of law protects the weak from predation by the strong; it protects unarmed citizens from thugs and gangsters. For this reason, the rule of law is also essential to the development of the small-business sector that underlies any healthy market economy.
Yet, Putin's push for the rule of law has evoked cries of alarm. Boris Berezovsky - car dealer, media magnate and chief of the oligarchs - has fled Russia and refashioned himself as a political refugee from Putin's "authoritarian" regime. Berezovsky argues that since virtually every successful businessman had to violate the law in the Yeltsin years, Putin should declare an amnesty on all crimes committed in the 1990s. Those in the West wringing their hands about the new activism of prosecutors and tax inspectors under Putin's administration would seem to agree.
Yes, the laws on the Russian books are highly imperfect, but that does not mean that the law shouldn't be enforced at all. The Russian government could start with enforcing one of the simplest laws, the one against murder. Every year many top businessmen, government officials and civic leaders are assassinated. Yet, the police solve only a fraction of these contract killings. There simply is no political will to enforce the law.
By indicating that he wants to apply the law to some of Russia's most powerful tycoons, Putin has made a step in the right direction. True, the Russian president may yet turn out to be a mad dictator, but there is no evidence of this to date. If anything, Putin has been too hesitant and haphazard in going after his country's biggest malefactors. Prosecutors talk about going after crony capitalists like Berezovsky and Gusinsky for fraud and embezzlement, but even after several years of gathering evidence, they have failed to bring a single high-profile case to trial.
Putin has also taken steps to make life easier for small businesses - by simplifying the tax code (with a 13 percent flat income tax) and supporting a law on private ownership of land. But here again, a lot more needs to be done. Putin still has to clear away the thicket of government regulations that continues to stifle entrepreneurship in Russia.
It is on this basis that the West should judge Putin's administration. Is he strengthening the rule of law? Is the wave of gangsterism subsiding? Are small businesses flourishing? Are civic associations multiplying? These are the yardsticks by which we will be able to tell whether Russia is moving towards democracy.
Paul Klebnikov is a senior editor at Forbes and author of "Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia." He contributed this comment to The St. Petersburg Times.
TITLE: Russia Can See Beyond Bush's Cold-War Logic
AUTHOR: By Sergei Markov
TEXT: HOW is one is to explain the logic of U.S. actions, its pressure on Russia in all directions, including expelling diplomats, receiving Chechen terrorists and refraining from meeting with Vladimir Putin? There may be many explanations, but I prefer the point of view that the new administration simply is demonstrating to Russia that it has the usual status of a large but averagely-developed country. So, from now on it will be treated like all countries of this status and no one will be endlessly taking into account Russia's special circumstances any longer. It is understandable logic.
However, Russia should reject the Cold-War logic being imposed on it and demonstrate a will for dialogue and cooperation.
The team of Cold-War veterans and inexperienced diplomats who shape the diplomacy of the new U.S. administration is pushing Russia toward actions in keeping with Cold-War logic. But Russia cannot benefit from such logic: Russia seeks not confrontation but integration with the West. Therefore Russia should not accept Cold-War logic. Instead, it should impose its own logic of understanding and constructive dialogue on the present situation, while steadily observing its national interests.
For that reason Russia should not expel a single American diplomat, no matter how many Russian diplomats might be ousted from the United States. There should be a clear statement that Russia regards the expulsions as a blunder made by the new U.S. administration but it does not want a return to the Cold War and, therefore, will refrain from retaliatory acts in that spirit.
But as far as Russia's genuine national interests are concerned, there should be a tough response. A case in point is contacts by U.S. officials with Chechen terrorists. It is essential for Russia to respond because each such meeting results in the deaths of thousands of Russians and delays a settlement of the conflict in Chechnya. The response in this case could be a simple one: Russia will regard any official of the U.S. administration who meets with representatives of Chechen terrorists as persona non grata - forever. That is to say, if you want to support terrorists, you are free to do so, but in Russia - a country where thousands of civilians have fallen victim to those terrorists - you will be arrested as an accomplice of terrorists. That is the law.
Putin has been censured abroad as a former spy, but he has long since become a politician and must demonstrate this to the whole world. The logic of his response should not lie in the context of an exchange of blows by espionage departments but in the wisdom of an experienced politician willing to forgive uncouth and dangerous actions by his inexperienced partners. Europe and the whole world will understand and appreciate such restraint and goodwill.
Sergei Markov is the Director of the Institute for Political Studies. He contributed this comment to Strana.ru.
TITLE: The President's Real Address To the Nation
TEXT: THE other day I caught myself imagining what it would be like if President Vladimir Putin gave a real address to the nation. In my imagination, he begins as usual by stating that he and his government had good intentions but things turned out ... "not exactly the way we expected."
Yes, the president continues, thanks to some $32 billion of oil revenues, we managed to increase pensions and have started to pay salaries more or less on a regular basis. Yes, we changed the tax system so that some businesses could emerge from the gray zone. But, he admits, we only went half way and, as a result, the majority of companies are still cheating.
Finally, Putin says, we managed to alter the state-oligarchs relationship. While before they struggled hard to use the mass media to get to the ear of President Boris Yeltsin, we now assign sectors of the economy to various oligarchs in exchange for "voluntary" contributions (sometimes as much as $30 million) to specific non-budgetary funds.
What is really bad, Putin continues in my imaginary speech, is that the reforms of the banking and pension systems have been postponed until the beginning of 2002. Ditto for the reforms of the natural monopolies and the courts. Military reform may become a reality sometime toward the end of the decade. The long-anticipated land reform was castrated before it even reached the Duma. The reform of the administrative system is far away as well.
In the field of political reform, Putin continues, we invested considerable efforts to reinstating the vertical of power between Moscow and the regions. But so far instead of a clear vertical structure, we have received a competition with elected governors pitted against the seven appointed "super-governors." This means that the transactional cost of doing business in Russia has gone up.
Basically, Russia this year has seen another round of property redistribution through corrupt means. Those who were mere stepsons of the Yeltsin regime are now rushing to grab power and all its benefits. Although the FSB is monitoring the computers of top officials and former KGB people occupy many crucial posts throughout the government and even though the hands of law-enforcement structures have been completely unfettered, corruption is up, not down.
Then my imaginary Putin turns to the sphere of international relations, admitting that there too the situation is not ideal. So far we have failed to define our national interests. While claiming that Russia would like to be an equal partner on the global stage, we have somehow found ourselves marginalized along with other exotic regimes.
Then Putin reaches the end of my imaginary speech. "I admit we had a great window of opportunity based on my high popularity rating and high expectations. But we missed it. I am grateful to everyone who gave me the benefit of doubt a year ago. I failed to live up to it and therefore I am resigning, so as not to do any more harm to my country."
No, this isn't going to happen. On the contrary, Putin told journalists last week that: "On the whole, I am satisfied with the results of our work during the last year."
In fact, one national paper labeled the first year of Putin's presidency, "stagnation Putin-style."
I was among those who gave Putin the benefit of the doubt a year ago. I deeply regret that now.
Yevgenia Albats is an independent journalist based in Moscow.
TITLE: One Year On And Putin Is Still a Mystery
TEXT: ONE year ago today Russians went to the polls and elected Vladimir Putin president. After the checkered reign of Boris Yeltsin, the nation had great expectations for the energetic and determined young heir, even while many harbored fears that his KGB background constitutes poor preparation for the head of a democratic state.
Over the last year, Putin has neither lived up to the hopes of his admirers nor fully justified the fears of his detractors. However, given the opportunities he has enjoyed in the form of a favorable global economy and a compliant legislature, Putin's failure to transform his popular support into concrete reform has been a bitter disappointment.
The president's supporters argue that Russia's bureaucracy, traditions, entrenched interests and various other circumstances have rendered impossible more progress in such crucial areas as legal, military and administrative reform.
Although there have been occasional, half-hearted initiatives in all these areas, the president has inexplicably refused to publicly explain and advocate any of them. He has declined to provide the personal leadership that any country experiencing such a fundamental transition cannot do without. And only Putin is to blame for that.
The notable exception to this rule - memorable because it was so exceptional - was Putin's advocacy of tax reform. In this case, when officials hinted the 13 percent flat rate may be temporary, Putin spoke up and guaranteed that it was a long-term measure.
We can also fairly judge the president on the team that he has assembled. Here too, he comes up short. He turned a blind eye, for instance, when Press Minister Mikhail Lesin signed a secret agreement guaranteeing Media-MOST owner Vladimir Gusinsky personal freedom in exchange for surrendering control of his media holdings to Gazprom. Putin had nothing to say when the Audit Chamber released accusations of profiteering against Nuclear Power Minister Yevgeny Adamov earlier this month.
No assessment of Putin's presidency would be complete without considering Chech nya, a quandary that becomes more intractable with each passing day and which threatens to overshadow all else the president does. Putin has not moved a jot from the "kill-them-in-the-outhouse" campaign rhetoric that he brought into office. No attempt to fashion a political settlement, no effort to win the support of civilians or to ease the conditions of refugees, no investigation or condemnation of atrocities. Nothing.
The bottom line is that, on dozens of crucial issues, we are - one year on - still asking, "What does Putin think?" The country has every right to demand more of its president than that.
TITLE: Death of Coexistence?
AUTHOR: By Yekaterina Stepanova
TEXT: AFTER violence broke out around the northern Macedonian town of Tetovo about ten days ago, Macedonian Prime Minister Lubco Georgievski declared bluntly that "Macedonia is under aggression" from armed groups of Albanian extremists. Furthermore, he accused the United States and its European allies of not doing enough to prevent the export of violence from Kosovo. While Georgievski's pathos and indignation are fully understandable, his sudden discovery of NATO's passive position is less so.
The current crisis in Macedonia did not come as a surprise to most regular observers. The republic has experienced ethnic disturbances several times in its brief history, although they never before amounted to a full-scale insurgency. Macedonia, it should be recalled, was the first country cited by those who argued against the dangerous precedent set by NATO-backed Kosovo Albanian separatism. Only the unparalleled flexibility and rationalism of Macedonia's multi-ethnic political class - reinforced by negative lessons from the experiences of the country's neighbors - had (until recently) allowed this young state to escape the fate of the other post-Yugoslav republics. Macedonia is ruled by a multi-ethnic coalition government that includes representatives of the Democratic Party of the Albanians.
This same rationalism, however, led the Macedonian authorities two years ago to back NATO in its war against Belgrade and in support of the extremist Kosovo Liberation Army (KLA). It could be argued that, given the fragile character of the young Macedonian state and its own problems coping with an Albanian minority, Skopje simply had no other choice than to support NATO, despite significant domestic opposition.
However, as demonstrated by the recent outbreak of violence, the logic behind the decision to support NATO did not work to Macedonia's benefit.
There is bitter irony in that, having sided with NATO in its criticism of Belgrade's efforts to fight Albanian extremism in Kosovo, Macedonia now has to figure out how and whether counter-insurgency and counter-terrorist operations on its own territory could be done differently - with much fewer resources than Belgrade had at its disposal in Kosovo.
In this, Macedonia is not likely to receive direct military support from the West. NATO, trying to keep its current presence in Kosovo as unproblematic - and casualty-free - as possible, is totally dependent on its "non-confrontational" approach to the Albanian extremists. Support for Macedonia from its regional neighbors - Bulgaria, Yugoslavia and Greece - may be a substitute - but it is a controversial one, given a history of their claims to Macedonia regarding everything from its territory to its name and language.
Russia, for many reasons, is sympathetic with Skopje and will probably be ready to help indirectly, perhaps by providing helicopters or sharing its vast counter-insurgency experience. This means that, despite considerable political support throughout the world and even limited military assistance, Macedonia is left alone with the virtually impossible task of suppressing a sustained insurgency backed by armed incursions from Kosovo without alienating its own Albanian minority. While fighting has remained limited so far, even a limited level of violence might suffice to destroy the delicate ethno-political balance in Macedonia, where Albanians live throughout the country.
While the Macedonian crisis is far from over, the recent outbreak of violence has made several things perfectly clear.
First, it has more vividly than ever demonstrated the chronic inability of NATO forces in Kosovo to solve one of their main declared tasks - to prevent the export of violence to other regions. This, in turn, further undermines the official rationale for the international occupation of a part of Yugoslav territory.
Second, NATO's call to Belgrade to do the "security work" in the buffer zone on Serbia's administrative border with Kosovo and on Yugoslavia's border with Macedonia completely rehabilitates the Yugoslav military after its 1999 capitulation to NATO. Whether the Yugoslav military would use this opportunity to reassert its limited presence in Kosovo proper, envisaged by the UN Security Council Resolution 1244, or would prefer to let NATO drink the Kosovo cup to the bottom unassisted, is now to be decided by Belgrade.
Third, the crisis has created a sense of common anxiety and concern throughout the region, especially for Macedonia's neighbors with Albanian minorities of their own. In particular, the leadership of Montenegro - a republic which, together with Serbia, comprises Yugoslavia and which has a compact Albanian minority - will probably think twice now before leaving the Federation and will give up any hopes that "the international community" is prepared to guarantee the republic's integrity.
Finally, the situation in Macedonia once again underscores that, in the years to come, it is the "Albanian issue" that will present the key security problem for the Balkans. The "Albanian issue" did not begin with and will not end in Macedonia - a country that, of all Balkan states, seemed to be on the road to building a truly multi-ethnic society. One of the most distressing conclusions of the potential destabilization of Macedonia is that if even this relatively successful (until recently) example of "peaceful coexistence" between non-Albanian and Albanian populations has failed, it may mean that such coexistence is impossible in principle.
Yekaterina Stepanova is a senior researcher at the Center for Political and Military Forecasting. She contributed this comment to The St. Petersburg Times.
TITLE: New Faces Rise to Top of Figure Skating World
AUTHOR: By Laurie Nealin
PUBLISHER: Reuters
TEXT: VANCOUVER, British Columbia - Michelle Kwan silenced her doubters and retained a world title for the first time in her stellar career in an otherwise rough week for title holders at the World Figure Skating Championship.
Three of four defending world champions went down to defeat to hungrier rivals and battle lines were drawn for next February's Olympic Winter Games in Salt Lake City.
Evgeni Plushenko soared with his quad-triple-double to claim the men's gold, Jamie Sale and David Pelletier shocked the Russians in the pairs, and Barbara Fusar Poli and Maurizio Margaglio won ice dancing for Italy's first-ever gold.
Kwan, alone, survived the charge of challengers to take her fourth world crown, ending what the 1996, 1998 and 2000 titleholder termed her "odd-year jinx."
Russia's perennial bridesmaid Irina Slutskaya settled for silver yet again, despite becoming the first woman to perform a triple salchow-triple loop-double toe loop jump combination.
Sarah Hughes, 15, the No. 2 American woman, signaled her arrival as a top-flight contender to claim bronze ahead of 1999 world champion Maria Butyrskaya, 28, of Russia.
"I've had a roller-coaster year. To end like this is really amazing," said Kwan, who had lost twice to Slutskaya this season.
Defending three-time world titleholder Alexei Yagudin, his injured foot injected with anesthetic, fought valiantly to hold off his younger compatriot but a feisty Plushenko would not be denied this time.
No perfect 6.0s were handed out in the week, despite a flurry of fabulous performances. None of the skaters, including Plushenko, seemed to mind.
"To me it didn't matter - 5.9, 6.0. The most important thing was that I won," said the mop-haired blond.
American Todd Eldredge, the 1996 world champion, stepped back into the fray after a two-year hiatus to claim bronze.
At 29, he is the oldest man to win a world medal since 30-year-old Roger Turner won silver in 1931.
Meanwhile, Elvis Stojko, Canada's three-time world champion who was coming off a series of injuries, crashed and burned on home ice.
Stojko finished 10th, his worst showing in 11 world championships, but vowed to return to skate another day.
While Stojko went zero-for-five in the quadruple-jump department this week, a record 10 other high-flyers did land the four-revolution jump.
The United States and Russia dominated the singles events, taking the top six spots in the women's, top four in men's. That result gives those countries three singles entries each at the 2002 Olympics.
China also earned three berths in the men's event thanks to the top-10 finishes of their masterful quadruple jumpers.
In pairs skating, Canada, Russia and China were the dominant forces and will account for nine of the 20 Olympic entries.
Canadian duo Sale and Pelletier represent Canada's best hopes for Olympic gold after their win over Russia's double world champions Elena Berezhnaya and Anton Sikharulidze.
The Canadian duo's emotional, jubilant reaction to their win is certainly one of the most enduring images of this championship.
The Russians, however, were near-flawless, too, ranking first on three judges' cards.
China's Shen Xue and Zhao Hongbo, dismayed by their bronze-medal finish, could pose the biggest challenge to the top two teams heading to Salt Lake.
The ice-dancing triumph of Italy's Fusar Poli and Margaglio was a bitter pill to swallow for 2000 world champions Marina Anissina and Gwendal Peizerat of France who dominated last year.
"It's like a dream," Fusar Poli said of the Italians' win.
Russia's Irina Lobacheva and Ilia Averbukh took bronze.
Some 214,000 paid spectators filed through the turnstiles this week, not including the 9,000 who showed up just for the men's practice sessions last Sunday.
The 2002 world championship will be held post-Olympics in Nagano, Japan.
TITLE: SPORTS WATCH
TEXT: Dove Hit by Pitch
TUCSON, Arizona (AP) - A pitch by Randy Johnson hit and killed a dove flying in front of home plate.
The lethal pitch came during the seventh inning of the Arizona Diamondbacks' 10-5 victory against the San Francisco Giants on Saturday.
The bird was knocked over the catcher Rod Barajas' head and landed about 1 meter from the plate amid a sea of feathers.
"I'm sitting there waiting for it, and I'm expecting to catch the thing, and all you see is an explosion," Barajas said. "It's crazy. There's still feathers down there."
Johnson, the NL Cy Young winner and perhaps the game's hardest thrower, was not amused.
"I didn't think it was all that funny," he said.
In 1983, Yankees outfielder Dave Winfield killed a seagull in Toronto with a warmup throw. Police charged him with animal cruelty, although the charge was later dropped.
"This was a little more dramatic," Arizona manager Bob Brenly said. "I can honestly say I have never seen that before."
De la Hoya Stops Gatti
LAS VEGAS (Reuters) - Former champion Oscar de la Hoya made a victorious return to the ring Saturday when he stopped Arturo Gatti in the fifth round of their scheduled 10-round welterweight bout.
De la Hoya, fighting for the first time since losing his World Boxing Council welterweight crown to Shane Mosely nine months ago, outclassed the former junior lightweight champion.
"I felt good," said de la Hoya (33-2), who is fighting under a new trainer, Floyd Mayweather Sr. "Gatti is a tough guy, he can take a punch."
De la Hoya had lost two of his last three fights and turned his back on the ring to pursue a career as a recording artist.
Now the Golden Boy says he wants to capture his fourth title in as many weight classes by moving up to face WBC super welterweight champion Javier Castillejo of Spain.
Gatti fell to 33-5.
Canada Names Roster
TORONTO (AP) - Mario Lemieux will captain Canada's hockey team at the 2002 Olympics, heading a list of eight players named Friday by Wayne Gretzky.
The Pittsburgh Penguins star and owner was joined by defensemen Rob Blake of Colorado, Scott Niedermayer of New Jersey, Chris Pronger of St. Louis and forwards Paul Kariya of Anaheim, Owen Nolan of San Jose, Joe Sakic of Colorado and Steve Yzerman of Detroit.
The rest of the roster will be filled by Dec. 22.
Contract Extension
PEORIA, Arizona (Reuters) - Showing no signs of slowing down at the age of 38, Seattle Mariners designated hitter Edgar Martinez on Sunday agreed to a one-year contract extension that includes a club option for 2003.
Financial details were not disclosed.
Martinez has spent his entire career with the Mariners and last season hit .324 while posting career bests with 37 home runs and a league-leading 145 RBI. The 145 RBI were the most in baseball history by someone over the age of 36.
Martinez is the only major leaguer to hit .320 or better each of the last six seasons. His .332 mark since 1994 is the best in the American League.
New World Record
HOBART, Australia (Reuters) - Ian Thorpe set a world record of seven minutes 41.59 seconds in the men's 800-meters freestyle at the Australian swimming championships on Monday afternoon.
Thorpe shattered the previous world record of 7:46.00 set by fellow Australian Kieren Perkins at the 1994 Commonwealth Games in Victoria, Canada, with a devastating late burst.
The 18-year-old Thorpe, a triple gold medallist at last year's Sydney Olympics, was contesting the 800 meters for the first time in his career and had to race the final less than 20 minutes after swimming in a 200-meters semifinal.
TITLE: WORLD WATCH
TEXT: Social Democrats Win
BERLIN (AP) - Chancellor Gerhard Schroeder's Social Democrats won sharp gains in two German state elections Sunday, but a massive vote hemorrhage by the Greens weakened the national governing coalition.
Baden-Wuerttemberg's two-time governor Erwin Teufel fended off a strong challenge by Social Democratic candidate Ute Vogt, who led the party to its best showing in 29 years in Germany's richest state and a conservative stronghold.
The Christian Democrats won 45 percent of the vote, a gain of just 3 percent over five years ago, compared with the Social Democrats' surge to about 33 percent from 25 percent five years ago.
The Social Democrats won 44.5 percent of the vote in Rhineland-Palatinate state, gaining from 40 percent five years ago and strengthening incumbent Social Democratic governor Kurt Beck for a fresh five-year term. The Christian Democrats reckoned with a 36 percent result, a loss of 3 percent, in the smaller state bordering Luxembourg, Belgium and France.
But it was shifts among the smaller parties that gave rise to political calculations as Germany heads to national elections next year.
The tiny pro-business Free Democratic Party finished strong enough to retain their position as governing partner in both states, with small losses.
Mass Grave for Animals
LONDON (Reuters) - The British army sent in bulldozers Monday to dig a mass grave the length of a football pitch for up to 500,000 farm animals in the latest attempt to bring a foot-and-mouth epidemic under control.
Britain now has 617 confirmed cases of foot-and-mouth and has slaughtered 406,000 animals, most of which have been incinerated, the agriculture ministry said.
The virus has spread to The Netherlands and Ireland as well as to France, where authorities were Monday trying to track down animals infected by the disease.
With Britain's livestock and rural tourism industries in crisis, time is running out for Prime Minister Tony Blair's hope of holding a general election in May.
Mori Faces Ditching
TOKYO (Reuters) - Japanese ruling coalition power brokers were set on Monday to step up efforts to replace unpopular Prime Minister Yoshiro Mori, after a stark warning that many voters are fed up with parties of all persuasions.
In a poll widely seen as a bellwether for a July election for parliament's Upper House, voters in Chiba Prefecture east of Tokyo on Sunday elected as governor independent Akiko Domoto, a former Upper House lawmaker backed by grass-roots civic groups.
Lawmakers in the LDP-led ruling coalition are keen to ditch Mori - one of the nation's most unpopular premiers ever - ahead of the July Upper House poll. The prime minister has already promised to bring forward from September an LDP election to replace him as party president and hence premier.
Sharon: Blame Arafat
JERUSALEM (AP) - Israeli Prime Minister Ariel Sharon told a U.S.-led commission investigating Mideast violence that full blame should be placed on Palestinian leader Yasser Arafat for the past six months of unrest.
But Palestinians said Sharon's visit to a disputed Jerusalem holy site last September was the spark for the current fighting and that he should bear responsibility for the conflict.
A 15-year-old Palestinian boy was shot in the abdomen and seriously wounded in the Gaza Strip near the Karni border crossing with Israel, hospital doctors reported Monday. Also, stone-throwing Palestinian youths clashed with Israeli troops in the West Bank town of Jericho, but no injuries were reported.
German Nuke Protests
LUENEBURG, Germany (Reuters) - About a thousand anti-nuclear activists occupied a stretch of railway Monday where a shipment of nuclear waste traveling back to Germany from France was due to pass on its way to a storage site.
The protesters managed to break through police lines and onto the railway tracks near the northern town of Lueneburg, where a high-security freight train shipping nuclear waste is due Tuesday. Police were trying to move the activists.
The train, made up of six flatcars carrying massive Castor containers with the nuclear waste, and passenger cars fore and aft packed with police, left a Normandy train terminal before dawn and was due to cross into Germany late Monday evening.
S. Korea Cabinet Shuffle
SEOUL, South Korea (AP) - President Kim Dae-jung replaced nearly half his Cabinet on Monday in an effort to allay public discontent with his government's handling of the economy and other domestic issues.
One of the most prominent officials who was let go was Foreign Minister Lee Joung-binn, who was held responsible for a series of policy fumbles related to Kim's delicate rapprochement process with North Korea.
The shake-up had been anticipated for weeks after Kim, whose popularity has plunged in recent opinion polls, expressed disappointment with the performance of some of his Cabinet members.
Park Joon-young, a presidential spokesman, said nine out of 22 ministers were replaced.
Kim kept Prime Minister Lee Han-dong, whose job is largely ceremonial.
UN Eases on Milosevic
BELGRADE (Reuters) - Serbia's Justice Minister said Monday the UN war crimes tribunal had unofficially agreed to ease pressure for a year on Belgrade's new authorities to hand over former president Slobodan Milosevic.
But a tribunal spokesman and the UN chief prosecutor Carla del Ponte appeared to pour cold water on the notion of any grace period.
In Belgrade, meanwhile, political sources said that several allies of Milosevic were arrested Monday for abuse of office.
Justice Minister Vladan Batic said he had asked informally for a two-year grace period on the issue when he met with tribunal officials at the court's seat in the Dutch city of The Hague last week.
The tribunal indicted Milosevic, along with four of his closest allies, in May 1999 for atrocities their forces allegedly committed in Kosovo against the ethnic Albanian majority in the southern province.
TITLE: Sampras Falls to American Teen
PUBLISHER: Reuters
TEXT: MIAMI - American teenager Andy Roddick swept Pete Sampras out of the Ericsson Open in straight sets Sunday.
Roddick, 18, defeated fourth-seeded Sampras, three times a winner of this tournament, 7-6, 6-3, in the third round to record his first win over a player ranked in the top 10.
"The way he competes, the way he plays, he really is the future," said an admiring Sampras, gracious in defeat. "He's the beginning of a new American breed. I'm obviously older than he is and so I'm trying to fend him off."
The match turned in Roddick's favor in the first-set tiebreak when the world's top-ranked junior last year reeled off the first four points, one of them coming from a Sampras double fault.
Roddick held his nerve in the second set, never allowing Sampras a break point on his service.
When Sampras' weak, backhand pass attempt struck the bottom of the net on match point Roddick held his head in disbelief, took off his hat and shook his hero's hand.
"I think I did make a statement by beating my first top-10 player and probably the greatest player of all time," said Roddick.
Roddick will next play Romanian Andrei Pavel, who upset Frenchman Sebastien Grosjean, the 1999 finalist.
"I'm still hungry," said Roddick, who also beat another former No. 1, Marcelo Rios of Chile, in straight sets in the second round.
Fifth seed Yevgeny Kafelnikov, winner of the Australian Open in 1999 as well as the French in 1996, also bowed out 6-4, 6-1 to Argentine Gaston Gaudio.
The Russian, whose concentration appeared to wane after a tough first set, made 36 unforced errors to Gaudio's 15.
Unseeded Jan-Michael Gambill, who won his second career title at Delray Beach earlier in the month, posted another credible performance in ousting 14th-seeded Thomas Enqvist of Sweden, 7-5, 6-7, 6-1.
Gambill won the match despite the fact that he has a stretched nerve in his arm that is leaving him with constant pins-and-needle feelings in the limb.
"The arm has felt better, but frankly I'm amazed," said Gambill, who upset the top-seeded Gustavo Kuerten in the third round of Indian Wells last week.
On the women's side, Australian Open champion Jennifer Capriati continued her career revival when she swept past Mariana Diaz-Oliva of Argentina, 6-1, 6-1, in just 56 minutes to reach the fourth round.
Capriati is happy with her form and enjoying a purple patch after winning her first Grand Slam in Australia.
"I mean coming off of Australia, that win there, I'm definitely more confident and mentally tough," she said.
The Williams sisters had very different third-round outings with Serena struggling to beat little-known Iroda Tulyaganova of Uzbekistan, 3-6, 6-3, 6-2, while Venus dropped only four games in dismissing fellow-American Sandra Cacic, 6-2, 6-2.
"I'm not too pleased about the match," the fifth-seeded Serena Williams said. "It's kind of scary the way I played."
Top-seeded Martina Hingis was even more efficient than Venus, in eliminating Tatyana Panova of Russia, 6-1, 6-0.
TITLE: No Surprises in Weekend of European World Cup Qualifiers
AUTHOR: By Mike Collett
PUBLISHER: Reuters
TEXT: LONDON - England kick-started its World Cup campaign with a 2-1 win over Finland, Germany needed a late header to squeak past Albania 2-1 and Italy beat Romania 2-0 in Bucharest as 22 European World Cup qualifiers were played Saturday.
The biggest winner of the day was the Netherlands, which got its campaign back on track with a 5-0 win over Andorra in neutral Barcelona; Denmark, which crushed Malta 5-0 in Valletta; and Spain, which trounced Liechtenstein by the same score in Alicante.
Group 1. Russia stayed on top despite being held to a 1-1 home draw by Slovenia in Moscow- only the sixth time the home team has drawn in 39 home matches since 1957. The 33 other games have all ended in home wins.
Dmitry Khlestov put the Russians ahead after only eight minutes, while Aleksander Knavs equalized for Slovenia 16 minutes later.
The Faroe Islands scored a rare international success with two late goals ensuring a 2-0 away win at Luxembourg, which has now played 27 successive home World Cup matches since it last won one at home in April 1973. Of those 27 matches, Luxembourg has lost 26 and drawn one.
With Yugoslavia and Switzerland drawing 1-1 in Belgrade, Russia tops the table with seven points from three games, followed by Slovenia (six), Switzerland (five), the Faroes (four) and Yugoslavia (two), although Yugoslavia has played only twice.
Group 2. Ireland won 4-0 in Cyprus, with skipper Roy Keane scoring twice, to move to within two points of Portugal. Portugal (10 points), leads Ireland (eight) and the Netherlands (seven). Portugal did not play. The Netherlands boosted its hopes with a 5-0 victory over Andorra in neutral Barcelona, which included two goals from second-half substitute Pierre van Hooijdonk. Patrick Kluivert, Jimmy Floyd Hasselbaink and Mark van Bommel got the others.
Group 3. The Czech Republic (10 points), took a firm grip at the top with a 1-0 win over Northern Ireland in Belfast, thanks to a 12th-minute goal from skipper Pavel Nedved.
Bulgaria (seven) came from behind to beat Iceland 2-1. Denmark (eight) stayed in second place, with Ebbe Sand scoring a hat trick in a 5-0 win over Malta, which has an even worse home record than Luxembourg - 28 home World Cup matches since 1971 without a win.
Group 4. Turkey, Slovakia and Sweden all have eight points from four matches after Turkey and Slovakia drew 1-1 in Istanbul and Sweden struggled to beat Macedonia 1-0 in Gothenburg with a 43rd-minute goal from Anders Svensson.
Hakan Sukur (53 penalty) put Turkey ahead in Istanbul before Robert Tomaschek (68) scored Slovakia's equalizer.
There were more players sent off than goals when bottom two Azerbaijan and Moldova drew 0-0 in Baku. Moldova had two players sent off, Azerbaijan one.
Group 5. Poland (10 points) won a thrilling match 3-2 over Norway in Oslo, with Nigerian-born striker Emmanuel Olisadebe scoring twice. He put Poland 2-0 up before John Carew and Ole Gunnar Solskjaer pulled goals back for Norway. Substitute Bartosz Karwan scored the winner for Poland 10 minutes from the end.
Poland moved three points clear after Ukraine and Belarus drew 0-0 in Kiev. The slim hopes of Wales and Armenia all but disappeared when they drew 2-2 in Yerevan.
Group 6. Scotland blew a 2-0 lead against Belgium, which came back to draw 2-2 at Hampden Park with a goal in the dying seconds from substitute Daniel van Buyten.
The Scots went ahead after just two minutes through Billy Dodds, who then made it 2-0 from the penalty spot after 29 minutes.
Belgium came back with goals from Marc Wilmots (58) and van Buyten (90) after having Eric Deflandre sent off for handling, which led to Dodds' penalty.
While Belgium (eight) and Scotland (eight) lead the group, Croatia (five) moved into third place with a 4-1 win over Latvia. Bosko Balaban scored a first-half hat trick for the Croats.
Group 7. Spain, which has never lost a home World Cup qualifier, crushed Liechtenstein 5-0 to stay in top spot with 10 points.
With second-placed Israel (six) not playing until it meets Austria on Wednesday, Austria (five) wasted a chance to close the gap when it was held to a 1-1 draw in Bosnia.
Group 8. Italy took another step toward the finals with a good 2-0 win over Romania, which now even looks in danger of missing out on the playoffs. Filippo Inzaghi scored twice as the Italians moved on to 10 points from four games.
Second-placed Hungary (five points) was held to a 1-1 draw by Lithuania, which picked up its first point following three successive defeats.
Group 9. Germany left it late to score a 2-1 win over Albania, with Miroslav Klo se heading home what looked like a suspiciously offside goal in the 88th minute.
Germany, which took the lead through Sebastian Deisler after 50 minutes, has a 100 percent record with nine points from three games.
England moved up from last to second place with four points from three matches following its 2-1 win over Finland.
TITLE: NCAA Tourney Set To Tip Off Final Four
AUTHOR: By Jim O'Connell
PUBLISHER: The Associated Press
TEXT: ANAHEIM, California - Maryland made school history with its first Final Four appearance.
The three teams joining the Terrapins in Minneapolis this weekend are all chasing history on different levels.
Duke, which will play Maryland in an all-Atlantic Coast Conference semifinal, is in the Final Four for the 13th time, nine under coach Mike Krzyzewski.
Only John Wooden's 12 trips with UCLA and Dean Smith's 11 with North Carolina are above Krzyzewski on the coaching list, and a national championship would be his third and tie him with Bob Knight, behind only Wooden (10) and Adolph Rupp (four).
The last time Duke was in a Final Four in Minneapolis was 1992, the second of the school's back-to-back titles.
Michigan State, which will play Arizona in the other semifinal, will be trying to become the first repeat champion since then.
The Spartans are in the Final Four for the third straight season, the longest run since Duke went five years in a row, ending with the consecutive titles.
Arizona is in the Final Four for the fourth time, all under coach Lute Olson, who led the Wildcats to the national championship in 1997.
If the 66-year-old Olson were to do the same this year, he would be the oldest coach to win the title, beating Phog Allen of Kansas in 1952 by two months.
Duke and Maryland will be meeting for the fourth time this season, with the top-ranked Blue Devils winning twice.
In the first game, Duke rallied from a 10-point deficit with one minute to play for a 98-96 overtime victory. Maryland matched the road win with a 91-80 victory at Duke, and the Blue Devils won the ACC tournament semifinal 84-82 on a tip-in by Nate James with 1.3 seconds to play.
"The game we had in Atlanta was truly one of the remarkable games played this year," Krzyzewski said of the most recent meeting. "I thought the brotherhood and camaraderie that was displayed between the coaches and teams after that game was amazing. I think some of the kids even said to each other 'We'll see you at the Final Four,' because I think they know we're good and we know they're good."
Saturday's 79-68 victory over sixth-seeded Southern California gave Krzyzewski a 9-1 record in regional finals, and his 6-2 mark in national semifinals is almost as impressive.
Olson's sixth Final Four appearance - he took Iowa there in 1980 - will be his first without his wife of 47 years, Bobbi. A big part of the Arizona program, she died Jan. 1 of ovarian cancer.
"It's difficult," said Olson, whose family sat in the first few rows behind the second-seeded Wildcats' bench in Sunday's 87-81 regional-final win over top-seeded Illinois. "Part of the emotion is that I'm so pleased for our guys to have to go through what they've gone through to achieve their season's goal."
Izzo made it clear the pressure isn't off just because the top-seeded Spartans returned to the Final Four with Sunday's 69-62 win over 11th-seeded Temple.
"I was always told by coaches like Jud Heathcoate that if you are a good coach, the biggest pressures come from within and the pressures that you put on yourself," he said. "So with that, there is no pressure off because what I want to do is win another national championship."
Third-seeded Maryland's 87-73 win over top-seeded Stanford on Saturday knocked Gary Williams from the ranks of the best coaches not to have reached a Final Four. He got there in his 23rd season as a head coach.
"You start thinking, 'When's it going to be your turn,'" he said.
TITLE: 'Gladiator' Prevails at Oscar Ceremony
AUTHOR: By David Germain
PUBLISHER: The Associated Press
TEXT: LOS ANGELES - The Oscars were like a sudden-death overtime, with the best-picture announcement a three-way tie-breaker between "Gladiator," "Crouching Tiger, Hidden Dragon" and "Traffic."
Each film had already taken four Oscars, so it all came down to Sunday night's last award, with the Roman epic Gladiator finally prevailing.
Even then, all three films came away with top prizes. Crouching Tiger's wins included foreign-language film and original score. Among Traffic's honors were best director for Steven Soderbergh, supporting actor for Benicio Del Toro and best adapted screenplay for Stephen Gaghan.
Russell Crowe took best actor for Gladiator, and Cameron Crowe won the Oscar for original screenplay for his rock 'n' roll memoir "Almost Famous."
Hollywood's top female star, Julia Roberts, won best actress for "Erin Brockovich" after going 10 years since her last nomination.
Amid the box-office hits that dominated the Oscars, there was the small, searing drama "Pollock," which earned the supporting-actress statue for Marcia Gay Harden.
Pollock director Ed Harris, a best-actor nominee for the title role, spent a decade trying to make the film biography of painter Jackson Pollock.
The only best-picture contender that came away empty-handed was "Chocolat," which lost in all five of its categories.
Gladiator had led the field with 12 nominations, followed by 10 for Crouching Tiger and five apiece for Erin Brockovich and Traffic. The latter films were both directed by Soder bergh, who had two director nominations.
Ang Lee had seemed the favorite for best director for Crouching Tiger. Lee had won the Directors Guild of America honor, and it was only the fifth time in the 53-year history of the guild's awards that the winner failed to also take the Oscar.
Some Oscar analysts thought Soderbergh was handicapped with two nominations because he might split his own vote. The gritty, documentary-style Traffic had been widely considered Soderbergh's best chance of the two films to win the directing honor.
Throughout awards season, Soderbergh had refused to give Oscar voters any hints about which film he would prefer them to support.
It was Hollywood's return to the gladiatorial arena that took center stage at the Oscars. Gladiator was a glitzy, $100 million revival of the mammoth Roman spectacle, the first time Hollywood had taken on the genre in 35 years.
While Gladiator director Ridley Scott, co-star Joaquin Phoenix and the film's writers were shut out, the movie's creators had cause to celebrate considering the obstacles it overcame. The movie had the majestic scope that the academy often favors, but some critics felt it lacked the writing and acting heft that helps make a best picture.
But after grossing $450 million worldwide, the biggest commercial success in the best-picture field, Gladiator also proved durable with awards voters.
The movie's other wins were for visual effects, costume design and sound.
The Coliseum seats were filled with 2,000 live extras and 33,000 computer-created spectators. Legions of warriors in the savage opening battle, when Maximus exhorts his troops to "unleash hell," were augmented by digitally reproducing the extras.
It was the second straight best-picture win for Hollywood's newest studio, DreamWorks, formed in 1994 by Steven Spielberg, Jeffrey Katzenberg and David Geffen.
TITLE: Tensions Rising in Macedonia
PUBLISHER: Reuters
TEXT: GAJRE, Macedonia - An eerie silence hung over the heights above the northern Macedonian town of Tetovo on Monday, one day after government forces launched a dramatic assault on ethnic Albanian guerrillas dug in there.
Prime Minister Ljubco Georgievski said the attack by tanks, artillery, infantry and helicopter-borne commandos had enabled the government to regain control of rebel-held villages and all key positions.
Yet tensions throughout northern Macedonia remained high. A policeman was shot and wounded after his convoy was machine-gunned on a road between the capital Skopje and the border with the Yugoslav province of Kosovo.
"His flak jacket was the only thing that saved his life," a police source said.
In the lull after Sunday's assault, NATO Secretary-General George Robertson and European Union security chief Javier Solana were due in Skopje later in the day for crisis talks.
They were expected to press the government to pocket its military gains and open talks with ethnic Albanian community leaders on the grievances of their people, who account for about one third of the tiny Balkan state's population.
Above Tetovo on Monday, the village of Gajre was back in government hands after 12 days under guerrilla control.
Macedonian police let reporters travel up the mountain road to Gajre, on one of the main routes used by tanks and infantry in Sunday's offensive.
Nervous soldiers crouched behind walls scanning the hillside along the barrels of their rifles.
At one point, reporters were surrounded by a group of soldiers who told them they could go no further because of "action" beneath.
Above the town half a dozen armored personnel carriers marked what appeared to be the new front-line.
Macedonia says the guerrillas infiltrate its northwestern mountains from UN-administered Kosovo. The police source said it was "obvious" who had carried out the attack on the police convoy.
In Gajre, the silence was briefly shattered by a mortar bomb which was fired at suspected guerrilla remnants beyond. From the distance came the faint boom of shelling.
The village was almost deserted. One house was completely burned out, another smothered by charred roof timbers.
Bullet-riddled cars sat in the streets, abandoned cattle wandered among the buildings.
One old man wept as he dragged away three sheep killed in crossfire. "Terrorists?" he asked, pointing at the carcasses.
Most people had left the village before the fighting began, but others hid in cellars as the battle raged.
There have been no reports of civilian casualties in the village so far. Tetovo hospital said five civilians suffered gunshot wounds down in the city Sunday.
Western diplomatic sources expressed dismay Sunday as Skopje, ignoring calls for restraint, launched its all-out assault on rebel positions after a 12-day standoff.
TITLE: WHAT IS TO BE DONE?
TEXT: The undoubted cultural highlight of the coming week will be the "Days of Icelandic Film" at the Avrora Cinema. The festival program, promoting the largely unknown gems of Icelandic cinema, has been sponsored by the Icelandic Embassy in Moscow and the island's consulate here and focuses largely on Icelandic auteur Fridrik Thor Fridriksson's most celebrated films.
Particularly recommended is Fridriksson's Children of Nature which begins with a grandfather being dumped in an old people's home where he meets his childhood sweetheart. The film becomes both a road-movie and a visual stunner as the dramatic Icelandic scenery is beautifully captured on celluloid. Also hailed by critics has been Hormakúr's debut film 101 Reykjavik, a very funny account of a layabout son who falls in love with his mother's lesbian partner, played by Victoria Abril.
The program is as follows and runs until Friday: March 27: 5.30 p.m. White Whales, 7 p.m. 101 Reykjavik (Hormakúr, 2000); March 28, 5.20 p.m. Children of Nature (Fridriksson, 1992); March 29, 5.20 p.m. Cold Fever (Fridriksson, 1996); March 30, 5.20 p.m. Devil's Island (Fridriksson, 1996). Tickets cost 50-70 rubles and Fridriksson, actress Victoria Abril and actor-director Baltasar Hormakúr will be in attendance. (60 Nevsky Prospect, Tel. 315-52-54)
The week ahead also looks good for opera with the second performance of the Mariinsky's La Bohème on Thursday. The new production of the Puccini classic premiered two weeks ago to rave reviews, despite its relatively traditional approach. Directed by Britain's Ian Judge, La Bohème stars Irina Dzhioyeva as Mimi and Yevgeny Akimov as Rodolfo.
Tuesday also sees a relatively rare performance of Das Rheingold at the Mariinsky. Johannes Schaaf's production of the first part of the "Ring of the Nibelung" cycle is conducted by Valery Gergiev. (Mariinsky Theater, 1 Teatralnaya Pl., Tel. 114-4344)
TITLE: Good-Bye Alaska and Chagall, Hello Beria
TEXT: March 27, 1922: Lenin, giving his evaluation speech at the 11th Party Congress declares: "This has been our first lesson: We do not know how to manage the country, as we have proven this year."
March 27, 1927: Mstislav Rostropovich is born, cellist, conductor and sometime Soviet dissident.
March 27, 1968: Yury Gagarin dies in uncertain circumstances during a road trip. He was just 34 years old.
March 28, 1776: The Bolshoi Theater is founded in Moscow.
March 28, 1930: Mikhail Bulgakov writes his famous letter to the Soviet government, asking to be allowed to leave the country or to be able to publish his work in the USSR.
March 28, 1943: Sergei Rachmaninov dies in Switzerland, where he has lived in exile with his wife. Since leaving Russia, however, the composer confessed to having "lost himself."
March 28, 1985: Marc Chagall, one of Russia's most celebrated 20th century artists, dies.
March 29, 1858: The first Russian high school for women is opened in St. Petersburg.
March 29, 1891: Tsar Alexander III gives the imperial order for the building of the Trans-Siberian Railway.
March 29, 1899: Lavrenty Beria, future head of Stalin's NKVD terror machine is born.
On March 30, 1867: Russia sells Alaska to the United States for $7.2 million. Despite its wealth, Alaska had not been properly exploited by Russia since it was first settled in the 1780s, and the empire was happy to see it go.
TITLE: Moral Issues Blurred At Street Children's Shelter
AUTHOR: By Desmond Tumulty
TEXT: Dima, like most of our new children, came to our children's shelter because he'd heard of us through a friend. He lived close by and hardly went to school, so we were an attractive alternative to hanging around on the streets and avoiding being at home.
Having just arrived at Caritas myself, I was as intrigued by this newcomer as he was by me. First, he used to knock on the door every time he came - quite unlike the others - and would look bashfully in, popping his head round the door and clearly be happy to see us. He even addressed me in the polite form - too good to be true.
Not to say that Dima's background was an exception. He is from as rough a home as the next kid, he smokes, drinks, has tried grass and glue, and has regular run-ins with the police.
But was I mistaken in thinking he has a very clear view of right and wrong? It might be rough justice indeed, but none of the other children would grab hold of one of the others in a very threatening way and force them to apologize to another child who had in some way been wronged. Admittedly, the methodology was far from perfect, but the thought was certainly a sound one.
There was some discomfort on his part when he tried to open up to me - perhaps he was simply too polite to refuse to answer my embarrassing questions. "I've never told an adult before that I've tried drugs. It's a bit embarrassing. But I promise you I'll never inject and I'll never drink vodka." How long have you been smoking and drinking, I asked. "Since I was 7," came the ever bashful reply. And what do your parents think of that, or do they even know? "Well, of course mum doesn't like it. The thing is, she gave me some wine accidentally when I was 7. She saw I liked it so carried on giving it to me." Dima now drinks and smokes openly at home.
Here's a boy we can really help, I thought. Lots of problems, sure, but he's intelligent, he's willing to learn and he's got that sense of right and wrong which I had set such store by.
But then there was the blow.
I called at his house one day to ask for his mother's permission to take him camping for a week with a group of kids from Tikhvin. She readily agreed, bursting into tears at the sight of me. "He loves you. You're his favorite. He keeps a photo of you and him together." She was the worse for drink, true, but there was sincerity in her sobs. She knew she hadn't given Dima a proper life. He wasn't quite in on the secret yet - he knew that he was poor but he didn't know he was getting quite such a raw deal out of life. His mum did and alcohol seemed to be a full-time refuge from the fact.
Dima shouted at his mum to shut up - she was embarrassing him. I liked her, however, she obviously adored her son, and had tried to do her best for him. I'm sure she instilled that sense of right and wrong. However, she quickly shut up and there was true pathos in seeing that at 13, Dima had become the man of the house.
His father was nowhere to be seen. Dima had been statistically unusual in having both mum and dad at home, but dad had disappeared off to Kresty Prison just prior to my visit. "For nothing," I was assured by mother and son. "The old bag next door's to blame."
Camping was a chance to spend more time with the children, to see how they reacted to being away from home and the city for a while. I asked Dima more about his father and what had happened to him. What exactly had he done? "He came home drunk and the old bag next door started complaining so he took a knife, slashed her throat and chest and cut off two of her fingers." She's 87. Amazingly, she survived. More amazingly still, she is back living in the next room in the same kommunalka. But Dima thought his father had done nothing wrong. Nothing at all.
It's hard to say what the moral of this story might be - that you can still care for someone whose life view is so utterly different from your own, that someone can be sweet and charming and yet have such cold-blooded views or that values don't just sink in out of nowhere, but have to be very specifically instilled. But Dima is a good-natured, sweet and intelligent boy. I've tried to explain to him that he can love his father without respecting everything he does.
But what chances for the future with such values in a city like St. Petersburg? I want to hope for the best. If only charm and intelligence were enough on their own.
Desmond Tumulty is a charity worker at Caritas. He submitted this article to The St. Petersburg Times. If you would like to do so, please contact masters@sptimes.ru
TITLE: Rediscovering a Forbidden Past
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: The State Russian Museum boasts the world's largest collection of Russian art, with some 400,000 works which represent a comprehensive cross-section of over 1,000 years of Russian art.
According to the museum's director Vladimir Gusev, despite the large number of visitors to the museum, Russian art as a whole deserves to be much better known both by Russians and foreigners. He believes that stereotypes and shortsightedness in the perception of Russian art have yet to be overcome, and says that this is one of the major tasks facing the museum today.
Back in the Soviet era, of course, entire artistic movements were unknown to the general public, banned as they were for ideological "incorrectness." Russian art lovers missed out on much émigré art, with names such as Zinaida Serebryakova and Marc Chagall only rediscovered in the late 1980s.
"For a long time, Russia was a country with closed borders, and so until the mid-1980s the avant garde was not just unknown to general [Russian] audiences, it was simply forbidden," Gusev said.
Though the era when Moscow bureaucrats decided which art exhibits to put on is long gone, Gusev says that the museum now faces the rather difficult task of breaking the stereotypes which have been inculcated both in Russia and abroad. "Museum curators, arts historians and critics were deprived of power," he said. "They had little opportunity to influence decision-making in their own fields and allow original ideas to circulate among art enthusiasts."
A further stumbling block is that Russian audiences still tend to favor 19th century art, with many of the major 20th-century trends ignored. For example, Russian-born fauvist painter Alexei von Jawlensky (1864-1941), a highly celebrated artist in the West, had his first exhibition in his home country at the Russian Museum last year, almost 60 years after his death.
There is barely a dozen works by Jawlensky in the whole of Russia, so the State Russian Museum had to contact foreign museums and private collectors to bring more than 70 paintings to St. Petersburg.
Themes for future projects include an exhibition targeting Russian artists in America, while another exhibit will explore Russian-born painters in France.
In the meantime, Gusev says that the view of Russian art abroad has long been limited to the avant garde and church icons - also as a result of the Soviet closed-door policy - and needs to be broadened.
"What we are doing now is trying to restore the previous situation, when Russia made up an integral part of the international artistic world." said Gusev.
All the exhibitions which the museum organizes outside of Russia are funded by the countries hosting them, and according to Gusev, his counterparts abroad find it safer to pay for what they already know is good. But few would disagree that the Russian Museum has nevertheless been very successful in promoting the country's art to the rest of the world. An extensive exhibition in the Kunsthalle in Bonn several years ago presented a cross-section of the museum's collection, tracing the entire history of the development of Russian art. San Marino recently hosted an exhibition entitled "Unknown Treasures of Russian Art," revealing lesser known aspects of the country's artistic legacy. Another exhibition touring the United States this year features masterpieces that belonged to prominent art collector Count Stroganoff and his family.
The marketing strategy of the State Russian Museum is naturally different from that of the Hermitage, which receives the lion's share of its budget from foreign sponsors.
"Unlike the State Hermitage Museum, we - just like Moscow's Tretya kov Gallery - cannot rely as much on foreign sponsorship," Gusev said. "I am not being jealous, but I am aware of how the situation works. The Dutch, for instance, are proud of Rembrandt, and so help with some funding; the French in turn adore the impressionists: It's all completely understandable."
"Artists who are lesser known outside of Russia, such as Pavel Fedotov and Ivan Aivazovsky, are unlikely to inspire similar degrees of enthusiasm in foreign donors. Thus, the museum's marketing strategists first and foremost target Russian businesses to sponsor such exhibits."
"Back in the early 1990s, Russian cultural institutions all suffered from dramatic budget cuts. Since federal funding now only covers maintenance, salaries and some repairs, the museum has been forced to learn to raise money itself. Indeed, even though fundraising wasn't exactly what a professional art historian such as Gusev was initially trained to do, he learned much from his foreign counterparts, who themselves had to adapt to the changing financial realities in arts funding the world over.
"Western museums faced drastic budget cuts several decades ago, and they have developed new money-making strategies," said Gusev, who saw how the process works while on a working visit to the New York Metropolitan Museum of Art a few years ago.
Currently, the Russian Museum has a number of such strategies, including selling books and CDs, holding lectures and providing information services, as well as putting on exhibitions abroad. Several companies pay the museum to use its name on calendars, chocolate and other merchandise. Showing even more versatility, the Russian Museum opened a restaurant, Stroganovsky Dvor, in the courtyard of the Stroganoff Palace, one of the branches of the museum.
"Raising money through ticket sales and souvenirs was difficult during the first years of economic reform in the country. Fewer and fewer people went to museums and theaters in the early 1990s, as their salaries bought less and less. During the Soviet era, the museum's had between 1 to 1.5 million visitors annually. This figure dropped enormously to just 500, 000 visitors in 1991-1992. Only in the last two years have the numbers improved, and are currently close to 1 million again."
Looking ahead, it is important that the museum keep its position as the most complete collection of Russian art, and so new purchases have to be made.
Over the last 100 years, the collection has received about 12,000 works of art, half of which were donations. But money from the federal government for new purchases is almost nil, so donation is of ever increasing importance. Furthermore, the museum always has to get approval from the Russian Culture Ministry for every piece of art purchased. Even so, the museum hasn't given up using the money from ticket sales to buy new masterpieces.
"The main criterion is that the piece be of artistic merit," Gusev said. "Even though we know that the second half of the 20th century needs to be more thoroughly represented in our collection, if we come across a good work by Ilya Repin or Karl Bryullov, we are, of course, unable to turn it down."
TITLE: PRICE WATCH
TEXT: The cost of dry cleaning in St. Petersburg:
Pants Skirt Suit Coat
Rinzachi 78 55 175 195
Mai 70 60 155 170
Lantona 75 75 175 160
Garant 78 55 175 195
Superkhimchistka, 85 65 185 190
Grand Hotel Europe 300 360 720 -
Rinzachi, 46 Sadovaya Ul., Metro Sennaya Ploshchad, Tel. 310-08-65
Mai, 37 Zanevsky Prospect, Metro Novocherkasskaya, Tel. 528-38-19
Lantona, 80 Ul. Marata, Metro Pushkinskaya/Ligovsky Prospect, Tel. 311-79-65
Garant, 24 5-aya Sovetskaya, Metro Pl. Vosstaniya, Tel. 271-57-69
Superkhimchistka, Gostiny Dvor (2nd Floor, Sadovaya Side), Metro Gostiny Dvor.
Grand Hotel Europe, 1/7 Mikhailovskaya Ul, Metro Nevsky Prospect, Tel. 119-60-00
TITLE: RUBLE AROUND TOWN
TEXT: Monday's ruble/dollar rates in St. Petersburg:
Address Buy Sell
Avto Bank 119 Moskovsky Pr. 28.00 28.85
Alfa Bank 6 Kanal Griboyedova 28.30 28.90
Baltiisky Bank 34 Sadovaya Ul. 28.50 29.24
Bank Sankt Peterburg 108 Ligovsky Pr. 28.40 28.90
Impexbank 58 Nevsky Prospect 28.20 28.95
MDM Bank 53 Kamennostrovsky Prospect 28.30 28.76
Mezhdunarodny Bank 54 Nevsky Prospect 28.30 28.85
Pervy-Gorodskoi Bank 5 Kievskaya Ul. 28.28 28.85
Promstroi Bank 4 Mikhailovskaya Ul. 28.25 28.90
RusRegion Bank 54 Nevsky Prospect 28.65 28.85
Average 28.32 28.91
Change from last week +0.07 -0.02
TITLE: Melrose And 90210 Still Ruling Budget TV
AUTHOR: By Masha Kaminskaya
PUBLISHER: Staff Writer
TEXT: The last week of my TV life was marked by something that - how shall I put it - really knocked me out. Yes, it was shock that I felt when I saw St. Petersburg's Channel 6 programming for Monday morning: 9:30 Beverly Hills: 90210; 10:30 Melrose Place.
You will probably shrug at my reaction (more serials, big deal...), but I felt as if I'd traveled through a time warp: This is probably the seventh time the first series has been shown on TV - the Walsh kids have started a new year at Beverly Hills High so many times that I wonder that they are not dizzy from so many repeats - and I have said my hearty farewells at least four times to Melrose Place's whimsical Amanda, hard-drinking Alison, Jake the red-neck and other such quirky characters.
In the several years that have passed since they first hit Russian screens - Beverly Hills: 90210 first started on NTV when the channel began in 1993, back when it had just a few evening hours of programming to fill - prime ministers have come and gone, Russia nearly melted down entirely after the August 1998 financial crash, President Yeltsin resigned and the second Chechen War began, but Brenda and Brandon, 17 yet again, still rule the television screens, and Russian teens still dream of having a car like David's or a dress like Kelly's.
Over the last decade Russians have seen several dozen soap operas on some 10 new channels, extending their horizons from St. Petersburg's criminal underworld in National Security Agent to Chicago's health problems in ER - let alone Brazil, whose geography some of us probably know better than our own seven federal districts. But in L.A. Kimberly still goes mad, Michael finds new women, Amanda finds new men and Matt finds new men too, and Rhonda never tires of raising "black issues."
In the meantime, show business has affected the serials' stars, too. Aside from Internet fan sites, Courtney Thorne-Smith has appeared in the successful Ally McBeal series, and Heather Locklear advertises hair dye for Russians. As for the ever-adolescent Shannon Doherty and Jason Priestly, they have ensured themselves an eternal place in the annals of Hollywood gossip. (In fact, I'm a little sorry for poor Priestly - playing Brendon must have been like playing Jesus: once you're there, there's no way out and oops! your career is over.)
Over the past few years, however, one thing about Russian TV has remained unchanged: lack of money, with each channel seeking to fill the enormous programming gaps in different ways. While the audience scratch their heads wondering what channel will be the next to show Menty; or say out loud the lines they know by heart when ORT repeats Soviet classics; or go berserk over RTR, which seems to have a schedule of repeating Perestroika-era Russian action "films" (which don't deserve to be a part of the history of television, let alone that of cinema), ORT and RTR are waiting humbly for state subsidies, NTV is scraping by to pay its debts and Channel 6 ... I have no idea what Channel 6 is doing, but with its current schedule, it's obviously not doing too well.
TITLE: Tiger Wins 2nd Straight Tournament
AUTHOR: By Pete Iacobelli
PUBLISHER: The Associated Press
TEXT: PONTE VEDRA BEACH, Florida - Forget the slump and bring on the Masters. Tiger Woods held off a late charge from Vijay Singh on Monday to capture The Players Championship, his second straight victory after early-season doubts.
Woods lost a duel with Hal Sutton in a similar Monday finish a year ago. This time, Woods didn't need much fight to finish one stroke ahead of Masters winner Singh to take one of the few golf prizes he didn't already own.
The victory "means my slump's over," said Woods, the unquestioned favorite at Augusta National in two weeks.
Woods had a 67 and was at 14-under 274 after a final-hole bogey. Singh had a 68. Bernhard Langer was two shots back after a 67. Little known Jerry Kelly had a 73 and was four off of Woods.
There wasn't much magic in Woods' round, certainly none to match his twisting 60-footer for birdie on No. 17's island green Saturday or the 90-foot eagle chip on the second hole Sunday that first gave him the lead. It didn't matter as each challenge faltered.
Woods, who won the U.S. Amateur here at 18 years old in 1994, was pressed a bit when Singh recovered from a triple bogey on the 14th hole to go eagle-birdie on Nos. 16 and 17.
But moments after Singh hit his 10-foot birdie putt on the 17th, Woods tapped in for birdie on the 16th hole - he barely lipped out a 50-foot eagle putt - to restore his lead to two shots.
Woods scared the crowd and himself at the island hole, flying a 9-iron right of the flag that spun perilously close to the water. But like everything Monday, it settled into the rough and Woods left with par.
On the 18th, where Woods was in the water Saturday, he drove into the rough, chipped out and got down in two putts for the victory and the $1,080,000 first prize.
Singh, a Ponte Vedra Beach resident who regularly practices at the TPC at Sawgrass' Stadium Course, seemed to have the most motivation and the sharpest game to chase Woods down. Singh's Masters victory was almost lost as Woods fashioned one of golf's most amazing years with nine victories, including the U.S. Open, British Open and PGA Championship.
TITLE: Legal Woes? How To Get Yourself a Lawyer
AUTHOR: By Tom Masters
PUBLISHER: Staff Writer
TEXT: Nobody ever really plans to go to court in Russia - least of all foreigners. The legal system is arcane at best and groaning under corruption and overburdened court dockets at its worst.
However, if you find yourself in the middle of a dispute over the terms of your lease, or - God forbid - you run afoul of the police, tax authorities or the FSB, you had better familiarize yourself with the terms of the Russian legal system, and quickly, before you find yourself staring through the bars of the defendant's cage.
The Russian legal system, like any, is complex, and particularly so if your Russian is not strong. In the event of needing a lawyer, there is certainly no shortage of St. Petersburg legal firms eager for you to be their client. However, for many the sheer choice is overwhelming, and the jungle of legal terms confusing without a basic guide.
THE RUSSIAN LEGAL SYSTEM
The Russian judicial system is split into three branches: general jurisdiction courts, arbitration courts and the constitutional court. Arbitration courts are the setting for disputes between private companies or business interests, while a case must be heard in a court of general jurisdiction if a party to a civil case is a private citizen, not involved in business activities, or the case is a criminal one. Courts of general jurisdiction, therefore, handle the vast majority of Russian court cases.
The Russian legal system is administered by the Justice Ministry, an executive agency which - unlike the U.S. Department of Justice, for example - is not itself a law enforcement agency, but a coordinating body. Instead, law enforcement functions are performed by the Prosecutor General's Office (prokuratura), the Interior Ministry and the Federal Security Service.
The manner in which cases are tried also varies from a presiding professional judge and two lay judges (called "people's assessors"), to three professional judges, or to just a single judge. While jury trials were introduced to some Russian regions in 1993, these were an experiment and were only available in cases involving serious crimes.
While in criminal proceedings (ugo lov niye dela) only Russian lawyers can represent a client, foreign lawyers may do so in civil cases (grazhdanskiye dela).
Private practice lawyers work almost exclusively within the Russian Bar, or collegia of advocates (kollegiya advokatov). These collegia are self-managed cooperatives that are generally formed in accordance with regional subdivisions - by city, oblast, republic or autonomous area. The relevant collegium's members can give all legal assistance to plaintiffs and defendants: Advocates counsel people, draft legal documents, represent clients in civil litigation, and provide defense in criminal proceedings. In St. Petersburg, some of the largest collegia are the Gorodskaya, Mezh dunarodnaya, Leningradskaya Ob lastnaya and Obedinyonnaya Kollegiya.
FINDING THE RIGHT LAWYER
The major problem, of course, is where to begin. The general Russian term for a legal expert is a yurist, which usually signifies that the relevant party has graduated from a law school. According to Russian law, only those who are members of the Bar (any advocate's collegium), have a right to use the title advokat (lawyer).
Despite this, self-proclaimed lawyers (often without any higher education or legal qualifications) continue to call themselves advokaty, making this the first hurdle to finding a competent lawyer. Legal sources agree that never having dealings with non-Bar members is a wise first move for criminal and civil cases, although this is not always so for business-related disputes.
Local lawyer Yury Schmidt points out that being a Bar member can, nonetheless, mean very little, because aside from higher education no qualifications are needed, and often inexperienced and incompetent lawyers can practice within a collegium with impunity. This is further compounded by the fact that you can quite simply buy your way into a collegium - according to one lawyer, this can cost as little as $200.
Finding the lawyer best suited to your problem is a further challenge: So much so that last month a group of St. Petersburg-based lawyers announced the launch of a new 005 helpline that aims to help individuals find a lawyer specializing in the field of law they need. Staffed by highly educated legal specialists, the helpline is supposed to start working later this year.
In the meantime, your first point of reference will often be a legal consultation bureau (yuridicheskaya konsultatsia), which exist all over St. Petersburg. Lawyers who can help with basic advice and first legal steps staff these offices, which are both state and privately run. While state consultation bureaus give basic information and assistance for free, privately run ones are inexpensive, and both can provide very helpful preliminary information, and even full legal services if the matter is not one for specialists. English-speaking lawyers are a rarity, so if you do not speak Russian, bring a friend who can interpret.
By Western standards, lawyers are blissfully inexpensive. Legal Consultation Bureau No. 17 (31 Gorokhovaya Ulitsa, Tel. 314-80-27), for example, charges just 200 rubles ($7) for an in-depth consultation with a lawyer, and a buy-out fee of 2,000-3,000 rubles ($70-$107) for full legal representation in court (vedeniye del). Charging for legal services by the hour is unusual for Russian lawyers. See the Yellow Pages for your nearest legal consultation bureau.
A notary (notarius) draws up various legal documents and certifies them or witnesses their signing. They operate in independent bureaus called notarialnaya kontora.
PITFALLS TO AVOID
St. Petersburg legal Web site www.advokat-spb.narod.ru warns visitors to be skeptical of "specialists," arguing that they may not always be specialists, and that this is simply a euphemistic term for lawyers with a narrow knowledge of the law who prefer to focus on one subject rather than the whole spectrum. The Web site also points out that it is far better to employ lawyers who will expect payment up front - like most establishments in Russia, this is done in cash at a kassa in the office itself - than those that demand payment only after the successful completion of the case. As in the West, the initially attractive proposition of paying later is often a front for unprofessional lawyers who will, as a rule, only take on cases that they are sure they will win.
Having found a lawyer who will take your case, the waiting time from your first consultation to the start of litigation will depend on various factors, such as the type of court and the state organs involved, but cases filed in local courts in March are being heard in autumn, according to one lawyer at Consultation Bureau No. 17. If there is a reason why the case needs to be heard more urgently, your lawyer can file a request with the court, but there is no guarantee that it will be granted.
Lawyers who expressed their views on the subject repeatedly emphasized the importance of reputation. Schmidt, for example, suggested that foreigners are best avoiding legal consultation bureaus, as in his view they are very inconsistent in the quality and professionalism of service that they can offer. He considers that foreigners are best off contacting an international law firm's local offices.
WESTERN ASSISTANCE
For most people who suddenly find themselves needing a lawyer, the first reaction will be to call their consulate for advice. Most foreign missions in St. Petersburg keep a list of Russian lawyers to whom they are often able to refer their citizens, and in general can provide advice and support depending on the problem. A U.S. Consulate official explained that consular staff "cannot vouch or endorse any local lawyers, but a list of those used in the past is available, although it's a very unofficial arrangement."
While the presence of Western legal firms is strongly felt in Moscow, thanks to the capital's vast volume of foreign investment, only a handful of the biggest Western names have representative offices in St. Petersburg, among them Baker McKenzie, Andersen Legal and Coudert Brothers.
In general, however, these companies serve corporate clients rather than individual ones for the simple reasons that Western lawyers are not members of the Russian Bar and that their services tend to be prohibitively priced for anyone save corporations.
One lawyer from an international legal firm, who asked not to be named, explained that Western firms will in certain cases represent individuals pro bono in a Russian court, but in order for them to do so, it is usually necessary for a foreign embassy or consulate to request their intercession, as this is again an informal agreement.
Maxim Popov of Andersen Legal explained that his company "represents individuals in Russian courts if there is a problem involving tax returns, for example, but in general [Andersen] do not take individual cases unrelated to this field, although [they] can often refer our clients to Russian lawyers for criminal cases."
Unfortunately, even the best lawyers can sometimes make very little difference to the outcome of a case in a system that suffers notoriously from corruption. Yury Schmidt laments the fact that "15 or 20 years ago, people simply would not have dared to engage in such corruption. The reality is that today Russia has a legal system that itself suffers from unlawfulness. Results in many courts can often quite simply be bought."
This is the first of two articles concerning foreigners and the law in Russia. The second in the series will cover relations with the police and what to expect in the event of arrest in St. Petersburg.