SOURCE: The St. Petersburg Times
DATE: Issue #673 (40), Tuesday, May 29, 2001
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TITLE: Celebration Sign of Things To Come
AUTHOR: By Barnaby Thompson
PUBLISHER: Staff Writer
TEXT: As first dress rehearsals go, it wasn't bad at all. Sunday's City Day celebrations, billed by one St. Petersburg official as a warm-up for the big 300th anniversary in 2003, did not perhaps amount to the wildest party in history, but there was certainly no shortage of events for city residents to watch, touch and appreciate.
Perhaps it was the recent cold spell we've been having that put a dampener on the municipal mood, as even the carnival floats and marching bands that dominated the first part of the day failed to lift a decidedly subdued atmosphere.
Even the extraordinary maneuvers of the band of the Leningrad Military District - fully five minutes of non-stop playing while the musicians weaved in and out of each other's paths, a virtuoso performance - elicited polite rather than enthusiastic applause.
Hundreds of thousands of people streamed along Nevsky Prospect and in between the canals to get to Palace Square, but it was more of a Sunday stroll than a rush to see the carnival floats from all over St. Petersburg and the suburbs.
"Smile, you miserable lot!" said a stubbly and exasperated harlequin from Tsarskoye Selo - and indeed, most of the carnival floats were doing their own shouting in an attempt to rouse the weary rabble.
Entertainment of a more intellectual variety was clearly a bigger draw, as was illustrated by the number of people at the exhibition dedicated to the 300th-birthday jubilee. A blend of plans for the future and of those already completed, the exhibition gave citizens a glimpse of what the city one day might look like: a maze of parks and elegant apartments, with one reconstruction and renovation project after another - something like living in a computer-generated ideal of a cultural capital, entirely surrounded by gleaming maritime industry.
"Can they get this done by 2003?" wondered one lady.
Also on offer as cerebral entertainment was the City of Masters crafts fair at the Peter and Paul Fortress. The splendor of the moored Shtandart, the replica of a frigate built by Peter the Great, attracted long queues, and the smaller gigs built by the same team were rowed briskly up and down the river. Those unwilling to stand in line could try their hand at woodwork, shipbuilding and pottery under the gaze of professional artisans - although one mother who urged her son to spin the pottery wheel faster and was promptly spattered by wet clay suddenly thought the carnival in the city center was a good idea after all.
But the event that most captured the quiet but content spirit of the day came completely unannounced, as out of nowhere a group of folk instrument players, dressed in civvies, sat down and strummed out some of the genre's greatest hits. At first, they looked like a kollektiv of enthusiasts who had even forgotten to put a cap on the ground for donations (a member of the public supplied it for them).
And the man in the black raincoat standing next to the keyboard gusli just looked like the usual annoying onlooker who wants to get caught up in the action.
Gradually the skill of the ensemble became apparent, and the black raincoat turned out to be Vla di mir Popov, chief conductor and artistic director of the Russian State Concert Orchestra of St. Petersburg, who'd come along for an impromptu gig. "Just for a laugh," he said, "although we normally play with the best singers of the Mariinsky Theater."
They even got the crowd dancing and shouting: "Bravo!"
By the time City of Masters wrapped up and the uniformed crew of the Shtandart hoisted the gangplank at 5 p.m., the products of St. Petersburg's breweries were working their magic and youth were beginning to have their fling, creating a need for portable lavatories (check) and several hundred trash cans (absent). Already by 9 p.m., the lines along the embankment were three deep, in anticipation of a firework display which, when it came, was greeted with the customary screams and cheers.
By the day's end, as people felt the first spots of rain and scrambled to get on the right side of the bridges before they went up, St. Petersburg was a minefield of broken bottles, paper plates and various other kinds of debris. The city sank back into the quiet of the morning, and the rehearsal was over. There had been more than a slight sense of a city going through its paces, waiting for the big one, as you often get with rehearsals. But there's no doubt that, compared with previous City Days, the performance is improving.
TITLE: Kursk Raising'Assured' of Success
AUTHOR: By Irina Titova and Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: Amid a cloud of contradictory predictions, Valentin Pashin, director of St. Petersburg's Krylov Scientific Institute, said Monday he is "99 percent sure" of success for the deep-sea mission to salvage the Kursk.
The announcement at a St. Petersburg press conference by Pashin - whose institution will be providing models for the project headed by the Dutch heavy-lifting firm Mammoet - followed slightly more subdued comments by Vladimir Kuroyedov, the Russian navy's chief admiral.
Speaking in Moscow on Friday, Kuroyedov said the Kursk would be raised this fall, possible dangers notwithstanding. When the nuclear sub sank last August, at least half of its powerful torpedoes and all the cruise missiles remained intact.
When asked if any of the weapons could detonate as the sub is lifted from the bottom of the Barents Sea, he responded: "Anything is possible."
It is precisely these eventualities that Pashin and his institute will have to evaluate as they enact the salvage mission in miniature with hyper-accurate models. But no matter how well things go in the lab, Pashin conceded that "the possibility of an unsuccessful outcome always exists."
To manage possible fallout and avert the bumbling responses to media of officials that attended the initial Kursk disaster, Interfax reported Monday that seasoned government spokes man Sergei Yastrezhembsky would hold talks with Rubin chief Igor Spassky to discuss coverage of the event.
Much of the coverage will likely be limited to footage shot by the various scientific and defense institutes involved.
Under the existing plan to lift the vessel, to be implemented from July to September, after the sub's front section is severed, 20 holes will be drilled in the Kursk's hull and fitted with steel cables. Hydraulic lifting devices will then be used to bring the sub close to the surface before attaching it to a massive barge and towing it to the port of Murmansk. It has yet to be decided whether divers will try to retrieve the remaining bodies while preparing the lift, or once the submarine is placed in a dry dock - scheduled to happen by Sept. 20.
The variables that could complicate or even scuttle the mission are myriad, and many of them are nearly impossible to foresee.
It is unknown, for instance, how firmly rooted to the ocean floor the 18,300-ton hull of the Kursk is. The disposition of weight along the hull is also unknown, since the explosion that sank it caused numerous deformations.
Yuri Sukhachyov, head of the Emergency, Diving and Deep-Sea Works Institute No. 40, said the torpedo compartment in the boat's bow would be severed by robots. Whether to raise it would be decided at a later date.
The sub's two nuclear reactors shut down after the explosion, and would be salvaged to insure against leakage.
Sukhachyov also said that 16 Russian divers - many of whom are volunteers from last fall's operation - are training for the project. Foreign divers will also take part.
Because President Vladimir Putin vowed that the Kursk would be lifted this year, the navy and the Rubin design bureau, which developed the Kursk, walked out of talks with an international consortium earlier this month after its participants said lifting the 18,300-ton submarine this year would be too risky.
The consortium, which included the Norwegian arm of U.S.-based Halliburton and the Netherlands' Smit International and Heerema, suggested the operation be postponed until 2002 due to insufficient time for preparations, Smit spokesperson Lars Wolder said in a recent phone interview.
But Rubin Spassky terminated months of talks and signed a deal with the Netherlands' Mammoet Transport, which specializes in lifting heavy objects, but has never raised a sunken vessel.
Since then, Mammoet has contracted Smit, which has salvaging and towing experience, to participate in the operation, and Deputy Prime Minister Ilya Klebanov said Friday that Halliburton would also rejoin, providing its divers. Mammoet spokesperson Larisa van Seumeren declined to comment Friday, and officials at Smit and at Halliburton's Norwegian office could not be reached.
Thomas Nielsen of Norway's Bellona Foundation, which monitors nuclear issues in the Arctic region, said in a phone interview Friday that Smit and Halliburton agreed to participate because they would act merely as subcontractors and, thus, would bear no responsibility if anything goes wrong during the planned operation.
Even if all works out, Pashin warned that the causes of the accident may not become as clear as many have hoped.
"When we investigate any kind of an accident, be it a Boeing crash or a sunken ship, we can speak about causes only within the extent of probability," he said.
TITLE: Fuel Spill Adds to Siberia's Woes
PUBLISHER: The Associated Press
TEXT: Fuel has leaked from Siberian reservoirs damaged by a flood, spilling into a swollen river and mixing with cracked ice, officials said.
News reports put the volume of the fuel spill into the Lena River at 13,000 to 18,000 tons. But Deputy Environmental Minister Nikolai Mikheyev doubted the reports.
"It may turn out that such an amount of fuel was not even delivered to the region," he said Friday in a telephone interview, adding, however, that the scope of the spill is yet to be determined.
A week of flooding was blamed on ice jams clogging the Lena River and causing it to overflow. By the time floodwaters passed the region's biggest city, Yakutsk, on Wednesday, towns and villages along the waterway had been ravaged, six people had been killed and two reported missing. About 10,000 homes or apartments were destroyed.
Reservoirs holding gasoline, fuel oil and diesel fuel were also damaged.
Cracked ice floating on the Lena will complicate the clean-up of the fuel that they spilled, and some of it is likely to reach the Arctic Ocean, Mikheyev said.
An Environmental Ministry commission will travel to the region next week to assess the damage, he said.
Authorities in the Yakutsk region have canceled all government-funded entertainment and sports events for the rest of the year, to use the money on repairing flood damage, Itar-Tass reported Friday.
President Vladimir Putin said during a visit to the region Thursday that local authorities had estimated the damage at $3.9 billion, while a federal commission put it at $2.4 billion.
Meanwhile, Putin said Friday that he had no plans to sell gold to raise funds to help flood victims.
News agencies on Thursday quoted Putin as saying he intended to sign a decree on gold and diamond sales if a clear scheme was presented to him "to help people now on the streets."
But Putin told a news conference in the Armenian capital Yerevan, where he is attending a CIS security summit, "You misunderstood me."
"I didn't say that Russia intends to sell gold," he said. "I said it is possible. I did not say we would do it."
He also said the government might allow "a company which mines diamonds and other precious stones" to sell stones worth $300 million.
TITLE: Chernomyrdin Looks for Strong Ties With Ukraine
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: On the eve of parliamentary confirmation hearings for a Ukrainian prime minister, Russia's new ambassador to Ukraine Viktor Chernomyrdin on Monday called for speedy resolution to the country's political crisis and stronger economic ties between Russia and Ukraine.
"We want the decision on prime minister to be made as soon as possible," Chernomyrdin said at a news conference.
The Ukrainian parliament is to vote Tuesday on Ukrainian President Leonid Kuchma's candidate for prime minister, business lobbyist and free market advocate Anatoly Kinakh. The parliament ousted the previous prime minister, Viktor Yushchenko, last month in a no-confidence vote over his government's attempts to better the country's deteriorating economy.
As an economic partner and neighbor, Russia has a huge stake in the outcome of Tuesday's conformation hearings, said Foreign Minister Igor Ivanov, who joined Chernomyrdin at the news conference Monday.
"We are sure that Ukraine will overcome the current crisis," Ivanov said.
Once a measure of stability is achieved, Russia needs to plow ahead with encouraging trade and fostering the growth of Ukrainian businesses in Russia, he said.
Trade between the two countries has halved since the collapse of the Soviet Union, Chernomyrdin said without giving any figures.
He said one of his main goals as ambassador will be to restore trade to its former levels.
President Vladimir Putin has also named Chernomyrdin as his special envoy to Ukraine.
Energy is a pivotal aspect of Russia-Ukraine trade relations. Ukraine is the biggest importer of Russian natural gas, and both countries have been trying to fully unify their power grids.
While gas and electricity were non-issues during Soviet times, they took the spotlight after 1991 when Russia began demanding prompt payment in dollars for all energy delivered.
Russia now exports to the CIS a quarter of the crude oil and about 80 percent of the natural gas it used to, said Jonathan Stern, a natural-gas expert at the Royal Institute of International Affairs in London.
Chernomyrdin sidestepped questions Monday about gluing the two countries' energy systems back together.
Stern said integration of the nations' energy systems for political ends isn't bad in itself, but it would be a huge step back in market reforms.
"I don't object to reintegration, per se," he said by telephone from London. "But let's talk about what economic reform should mean. [The Ukraine and Russian governments] should make progress toward paying cost-related prices for energy. Moving away from this would be an admission of failure.
"If they're saying, 'Let's forget all about economics and the market,' then that's just crazy."
Such a move on Russia's part would be inconsistent with its current policy. In past months, the countries have struck an agreement to restructure Ukraine's gas debts to Russia, estimated at $2 billion. Plans for synchronizing the electricity utilities have been put off because the sides haven't agreed on the price for the electricity that Russia would supply.
Chernomyrdin, however, remained upbeat Monday about trade with Ukraine. "Today, the downward trend is turning around," Chernomyrdin said. "The possibilities are endless, much bigger than those with more developed countries."
TITLE: Shevardnadze Heads Off Mutiny Over Wages
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia - National Guard troops returned to their barracks Saturday after taking over an Interior Ministry base in a mutiny to demand payment of overdue wages, military officials said.
"This morning, the National Guard battalion with its military equipment completed its relocation and returned to its base in Noria," Defense Ministry spokesperson Dmitry Lezhava said. Noria is about 20 kilometers east of Tbilisi.
The mutiny began Friday morning when a 400-strong National Guard battalion left military exercises and occupied an Interior Ministry base in Mukhrovani, about 23 kilometers east of Tbilisi. The mutineers had three tanks, two armored personnel carriers and submachine guns.
They were joined by Interior Ministry troops, and their number grew to about 1,000 at the height of the protest. Protest leaders said some military officers had not received salaries in more than a year and soldiers were so poorly equipped that some "serve practically barefoot."
The protest was defused after President Eduard Shevardnadze met with mutiny leaders into the night Friday.
He said afterward that the troops had promised to abandon their protest in exchange for a promise to address complaints about overdue pay and dismal conditions in the military. He also pledged that they wouldn't be prosecuted for the action.
As the troops were returning to their base, about 400 of supporters of the late President Zviad Gamsakhurdia held a protest rally in downtown Tbilisi against Shevardnadze. Gamsakhurdia was Georgia's president from 1991 until he was killed in 1993.
At least 16 policemen were injured - two seriously - when they attempted to break up the rally, police chief Soso Alavidze said. One demonstrator said about 50 of the protesters were injured, but that figure could not be confirmed.
TITLE: Actress, Physicist Are Honored
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: Whether irritated at not having enough trash cans or indignant at the underfunding of Russian science, few people other than politicians are able to feel that their opinions count, at least on a regular basis.
But actress and St. Petersburg resident Alisa Freindlikh can now be assured that she can make her views a matter to concern the city's authorities, since she is now an honored citizen of St. Petersburg.
She is joined by another famous native son, Zhores Alfyorov, who won the Nobel Prize for Physics last year.
But while Freindlikh is famous for her acting on the stage of the Bolshoi Drama Theater, and her roles in classic films such as "Office Romance" (Sluzhebny Roman) and "The Three Musketeers," Alfyorov already leads a highly politicized life as a State Duma Deputy with the Communist Party.
The two were made honored citizens, a title created six years ago, by the Legislative Assembly on May 23, and received some interesting privileges: the right to an audience with the governor of St. Petersburg or the speaker of the assembly at any time; the right to introduce draft legislation before the assembly; and free public transport.
Most similar awards in the United States and Western Europe are largely symbolic, lacking any political angle.
"I'm a bit embarrassed to have received such an honorable title," Freindlikh said in a telephone interview on Friday. "I think there are many worthier people in St. Petersburg."
But despite this modesty, the new honored citizens are in illustrious company. Previous honored residents include poet Joseph Brodsky, sculptor Mikhail Anikushin, and Patriarch Alexy II.
"I don't really have any particular ideas of draft laws that I could introduce yet," Freindlikh said, "but if I have any bright ideas I will certainly use my right to propose it to the assembly."
"For instance, it bothers me when I'm outside and there is nowhere to throw away litter, so I have to carry it home. It's strange that such a cultured city as St. Petersburg lacks such simple and essential [services]."
Freindlikh also mentioned the poor condition of historic buildings and the financial situation of the city's theaters as issues she would like to see addressed.
"It's hard to see talented actors who get ridiculously low salaries having to find extra work," she said.
But being a pensioner, Freindlikh is already entitled to free public transport.
Alfyorov, who is also head of the Ioffe Institute of Physical and Technical Studies, could not be reached for comment on his new status. However, his political career began 12 years ago, when he was elected a member of the bureau of the Leningrad branch of the Communist party of the Soviet Union, then the sole governing body of the region.
In 1995, Alfyorov was elected to the State Duma on the party list of the Our Home is Russia faction. He was re-elected in 1999, this time as a member of the Communist Party for its insistence on better state financing of science.
Alfyorov won the Nobel Prize for his pioneering work in the field of semiconductors, which boosted the development of information technology and paved the way for such modern inventions as the Internet, CD players and mobile telephones.
Politicized or not, none of those who have been made honored citizens has ever proposed legislation to the city's parliament, according to Andrei Oshurkov, an expert in the assembly's legislation committee.
"The procedure of offering draft laws and then following the passage of the readings takes so long that I think people just don't have time for it," Oshurkov said.
He added that it would be easier to persuade one of the assembly's deputies to propose and take responsibility for a law on behalf of an honored citizen.
TITLE: Sponsor Deals for City's Birthday Ready
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: In an effort to defray the high costs of celebrating the biggest birthday party St. Petersburg has seen in 300 years, City Hall has drafted a price list for sponsors who wish to help foot the bill.
It is still unclear how much celebrating the city's 300th anniversary -scheduled for May 27, 2003 - will cost. But the sponsorship price list seems geared to hedge some bets, and has already informally attracted the attention of German electronics giant Siemens.
According to Yevgeny Lukin, head of the so-called City Hall Fund 300 - which is responsible for raising money for the event - city authorities plan to offer a sort of catalogue of sponsorship options.
Lukin outlined the levels of sponsorship Thursday while speaking at an exhibition at Manezh Hall devoted to the city's preparations for the big day.
At the top of the list, Lukin said, are the "general sponsors," who can buy that title for a $2 to $3 million contribution.
Further down the list, the title of "official sponsor" is available for $1 million, and you can become an "honorary sponsor" for $500,000.
If this is still too dear, but you are still burning to contribute something, the somewhat less-than-grandiose title of "ordinary sponsor" is available to those who contribute between $8,000 and $25,000. This money, said Lukin, will be used to finance specific events.
"These figures are just a draft at the moment," said Lukin.
"Everything depends on how much the whole celebration will cost, but we can't yet say how much this will be."
Lukin added that City Hall has so far not fleshed out a roster of events for the celebration, and that officials were cribbing from the experience of Moscow and Stockholm to finalize the schedule of festivities.
Moscow's 850th anniversary festivities cost the city $12 million. And Stockholm, which is celebrating its 750th birthday next summer, is also operating on a $12 million budget.
Natalya Botozhok, the head of the City Hall Committee 300, said that sponsorship negotiations are currently underway with Siemens.
"It is hard to say at the moment how many sponsors we can succeed in attracting and how much money we can collect," she said in an interview on Friday.
"Maybe we will find just one sponsor who can give us enough money to forget about the necessity to look for others," she said.
"There are a lot of foreign companies that are interested in purchasing a sponsorship package."
Siemens representatives said the company would be interested in participating in the sponsorship program, but no specifics have been discussed with City Hall.
"The [St. Petersburg] anniversary coincides with the 150th anniversary of Siemens' international activity. The first foreign offices of the company were opened in St. Petersburg at that time," said Mariya Krivykh, Siemens' spokes person in an interview on Monday.
"Last year the company signed an official statement of intent with City Hall, outlining the areas in which the city is going to cooperate with Siemens," she said.
"There was medical support, transportation, information technologies and communication. As for sponsorship, this could be discussed later."
Lukin promised advantages for companies that agreed to invest their money in the celebration, but did not give any specifics.
"This is all still under negotiation. I can say that the companies are going to be offered VIP services and advertising opportunities," Lukin said.
"This is a good opportunity for companies to get their foot in the St. Petersburg market. Everybody understands the scale of the event," he said.
TITLE: Russian Attitude Remains Icy On Baltics' NATO Accession
AUTHOR: By Michael Tarm
PUBLISHER: The Associated Press
TEXT: KARMELAVA, Lithuania - Major Viktoras Samochinas beams like a proud parent at 20 dots moving slowly across a giant screen inside a new radar station shared by all three former Soviet Baltic republics.
The dots, projected on a regional map, indicate the height and speed of all aircraft flying over the combined territory of Lithuania, Latvia and Estonia.
The technology is common in the West, but here it's a leap forward. And for the Baltic nations, the radar base - funded largely by the United States and Norway - is one sign of how they are ready to join NATO.
But with Baltic claims about being ready to join growing more credible, the United States and its NATO allies are forced to face the prospect of offending Russia, which vehemently opposes the bid. That has made Baltic membership one of the most contentious hurdles to NATO enlargement.
Russia made its displeasure known by refusing to send a delegation to a session of NATO's Parliamentary Assembly that began on Sunday in the Lithuanian capital, Vilnius. Russian legislators usually attend the meetings as part of post-Cold War cooperation.
NATO, which admitted the Czech Republic, Hungary and Poland in 1999, has said the door to the Baltic states is open but that they weren't ready militarily.
When the Baltic republics became independent, they found themselves with ragtag armies of a few hundred soldiers toting hunting rifles. Since then, they have worked at modernizing their militaries and their government to help their effort to join NATO.
All three are spending nearly 2 percent of their national budgets on defense, a figure similar to many west European nations. They now have a combined 20,000 active duty troops with Western-made arms. They also have pooled their resources in a joint peacekeeping battalion, in part to show they could work within a multilateral alliance.
The Baltics also have established dynamic economies and placed their militaries under civilian control, prerequisites for NATO membership.
And now they have the radar station at Karmelava, a village 100 kilometers west of Vilnius, which NATO parliamentarians will tour during this week's gathering.
Samochinas, a radar division commander, said that before the $100 million network became fully operational last year, any plane could easily fly undetected through Baltic air space. Key systems at the station were installed by U.S manufacturer Lockheed Martin Corp.
"This radar's proof we're on course to qualify for NATO," said Samochinas.
With the modernization in the Baltics, the question of their membership becomes more a political one for alliance members.
Members including Germany are reluctant to upset Russia by actually admitting them, saying the door is open but it's too early to decide who to let in.
But President Bush has signaled the Americans could back expansion including the three countries - though still not clearly enough for Baltic tastes - as he appears less concerned than his predecessor about offending Russia.
"NATO must be open to all of Europe's democracies able to meet NATO's obligations and contribute to Europe's security," Bush said in an open letter to participants of a conference of NATO hopefuls in Slovakia last month.
"We are moving toward a position where, for the first time, Baltic membership can be considered on its own merits," said defense and political affairs analyst Nicholas Redman, of the English political consulting group Oxford Analytica. "The fears of upsetting Russia are receding."
Moscow says it would see expansion to any former Soviet republics as a threat. Also galling for Moscow is that former Red Army bases could be used by NATO - like the Lithuanian radar station, which is on the site of what was a major Soviet army base until 1991.
Estonian Foreign Minister Toomas Ilves says the Baltics shouldn't be penalized for having been forcibly annexed in 1940 by the Soviet Union.
"What's the statute of limitations? When do we declare the Soviet Union over and done with?" he said.
TITLE: Chechen Factories Get Investors
AUTHOR: By Yevgenia Borisova
PUBLISHER: Staff Writer
TEXT: MOSCOW - Usman Masayev had just arrived in Argun on March 11 when he saw the bodies of four men who were killed by federal troops. The men were building a fence for a local heating plant when the troops came looking for revenge after a land-mine exploded.
The unchecked violence did not deter the Moscow-based businessman, however, and he decided to invest millions of dollars into Chechnya's economy to revive enterprises that were destroyed in the war.
Masayev said Friday that he and 14 other Chechen businessmen have put together $10 million to invest in four enterprises: a sugar factory in Argun, the biggest in Chechnya; a bread factory in Argun; and wine and vodka plants in Naur and Gudermes, respectively. The enterprises should provide jobs for 15,000 people, he said.
Masayev and his partners are following the path of Khanpasha Ami rov, who re-opened a Gudermes brick factory in March. It was the first factory damaged in the war to be reconstructed and it quickly began to turn a profit.
"Someone has to start," Masayev said in an interview. "I have spent the last two months there. People suffer from attacks by the military every day. We should not sit here in Moscow doing nothing when our people are in trouble."
Masayev heads Diaret, a Moscow-based investment firm involved in the coal and metals industries. His partners also work outside Chechnya - in St. Petersburg, the Urals and Siberia.
He and other Chechen businessmen participated in a meeting Friday of government officials, bank representatives and members of Arkady Volsky's Union of Russian Industrialists and Entrepreneurs.
Vladimir Yelagin, the cabinet minister responsible for Chechnya, Akhmad Ka dyrov, head of the Chechen administration, and Stanislav Ilyasov, head of the Chechen government, were among the top speakers.
Masayev said his group of investors is ready to put money into the four factories and is waiting for the Chechen government to issue a decree giving the investors the shares in trust, which it is expected to do Monday. The pro-Moscow Chechen government is reviewing privatizations of Chechen factories carried out under the separatist government, and it is possible that investors eventually will be given full rights to enterprises they restore.
Masayev said the Argun sugar and bread factories could begin operating almost immediately, with restoration work continuing at the same time.
Argun, which lies between Grozny and the mountains in the south, is considered even by federal troops to be the most dangerous town in Chechnya.
"We decided to take on the most dangerous areas because if it works here, it will work in other areas. Also if we don't do it, no one will do it," Masayev said.
He added that he hopes to win the support of the military and persuade soldiers to guard the enterprises for cash.
Many participants in Friday's meeting said the only way to bring order to Chechnya is to provide jobs for young men, many of whom are believed to be laying land mines and fighting for the rebels only because of the money the rebels pay.
Federal troops are also part of the problem, the participants said.
Ruslan Maayev is general director of the state enterprise Chechentsement, which before the war employed 2,200 people in Chiri-Yurt and produced cement, limestone, stone tiles and other construction materials. He said the plant was heavily damaged only after large-scale military actions stopped in March 2000 and its equipment was stolen by troops.
None of the officials in charge of Chechnya would comment on Maayev's accusations.
Another problem for those trying to restore industry in Chechnya is that despite the federal government's approval of a 14 billion ruble program for Chechnya, no money has yet been released for investing in the Chechen economy.
Under the government plan, Maayev is to get 220 million rubles. And he may indeed get the money, according to Chechen Finance Minister Sergei Abramov, who said he expects mechanisms for releasing the money to be in place "very soon."
The atmosphere was far from optimistic at Friday's meeting, which was held in the offices of Volsky's union and attended by 56 people. Volsky said investing in Chechnya is too risky, and the state must offer something to compensate for the risk.
Volsky said he would talk to members of his union about participating in investment funds to restore Chechnya. His group includes the most powerful businessmen in Russia, although none of the oligarchs attended Friday's meeting.
"I was very glad to hear today that not only federal authorities are thinking about Chechnya, but also Russian entrepreneurs are interested in restoring the Chechen economy," Kadyrov said after the meeting.
However, the best known Moscow-based Chechen businessmen - Musa Bazhayev, Umar Dzhabrailov and Malik Saidullayev - did not attend.
TITLE: SPS Builds a New Party At Marathon Congress
AUTHOR: By Ana Uzelac
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Union of Right Forces transformed itself into a bona fide political party and elected Boris Nemtsov as its leader during a founding congress this weekend that lasted for an extraordinary 22 hours with breaks only for coffee.
The party, known as SPS, hopes it will be able to reverse a decline in its ratings and build up a regional structure strong enough to secure its survival under a planned new law on political parties.
The biggest battle at the congress - which began at 10 a.m. Saturday and broke up at 8 a.m. Sunday - was over the party charter. In the end, SPS approved a much more liberal charter than the one originally proposed, which had called for strict party discipline.
About 400 people attended the congress, held in the Russian Academy of Sciences. By 5 a.m., many of the delegates were fast asleep and others were starting to complain about the seemingly never-ending procedures.
Yegor Gaidar, who chaired most of the session, kept up a brave face. "Weak people can't build strong parties," he said.
Nemtsov, whose election as leader did not come until the early hours of Sunday, laid out his program in a speech at a more civilized hour of the day Saturday. He pledged to work on building a wide regional network for the party, which has often been criticized for its elitist, Moscow-centered approach to politics.
Now, Nemtsov announced, SPS will "go to the people" and build branches in all of Russia's 89 regions.
These ambitions were largely forced upon SPS by the new bill on political parties, which the State Duma passed in a second reading last week. It obliges parties to open branches in at least 45 regions, with a minimum of 100 members in each of them. It also puts minimum party membership at 10,000.
But the political and economic message that SPS plans to bring to "the people" might not find too many supporters in a country where people are accustomed to having a large, if poorly functioning, social security net.
Along with pledging to protect Russian democracy and keep the country on the road to a market economy, the political program adopted at the congress supports providing state help to only four categories of people: the old, "endangered" children, invalids and victims of wars and environmental and industrial disasters. "This is the final list," the program says.
SPS leaders, especially Gaidar and Anatoly Chubais, are associated with the reforms and privatizations of the early 1990s, which many Russians see as the main source of their low living standards.
It was small wonder that the delegates, who refer to themselves as "liberals," reserved their biggest applause not for the congratulatory speech of Grigory Yavlinsky, the chairman of their Duma coalition partner Yabloko, but for the telegram sent by ultra-conservative former British Prime Minister Margaret Thatcher.
SPS gathered nearly 9 percent of the vote in the 1999 parliamentary elections, finishing fourth. By May of this year, the percentage of people who would vote for SPS now had fallen to 4.5 percent, according to the VTsIOM polling agency.
"Their line is unclear when it comes to the attitude toward the president, the war in Chechnya, the takeover of NTV," VTsIOM head Yury Levada said in a telephone interview on Sunday.
Such attitudes, according to Levada, push some SPS voters to Yabloko, which is "accumulating the anti-Putin electorate."
Another part of the SPS electorate has gone to Putin. "People think that it's Putin who is conducting reforms, and they don't know what to think of SPS," Levada said.
TITLE: IN BRIEF
TEXT: Border Guard Suicide
ST. PETERSBURG (SPT) - An investigation has been initiated in Finland by Russian authorities over the alleged escape and subsequent suicide of a Russian border guard, 19-year-old Sergei Strochikhin, Interfax reported on Friday.
Strochikhin, a 2001 draftee from Samara, had been serving at a border outpost near Vyborg, northwest of St. Petersburg. For as yet unclear reasons, he allegedly left his post Thursday night and, taking his machine gun and ammunition, crossed the border into Finland, the agency said.
According to Finnish authorities, Strochikhin then allegedly broke into a house belonging to a Finnish family. He was allegedly aggressive towards the residents, fired his gun several times in the air and then drove away in their car. He then allegedly crashed the car and escaped into the forest, where he was discovered by Finnish border authorities and police, said Interfax.
According to the Finnish authorities, Strochikhin shot himself during negotiations with police.
Sutyagin Testifies
MOSCOW (Reuters) - Jailed arms expert Igor Sutyagin gave evidence Friday on the spy charges against him, Interfax quoted his lawyer as saying.
Sutyagin has been in jail since October 1999, when he was arrested by the Federal Security Service and charged with passing secrets about nuclear submarines to the United States and Britain. He is a researcher at the USA and Canada Institute and faces up to 20 years in jail if convicted.
"He gave evidence practically the whole day on Friday and will continue on Monday," Interfax quoted Sutyagin's lawyer Vladimir Vasiltsov as saying.
Sutyagin denies the spying charges.
Horses Return
ST. PETERSBURG (SPT) - An official ceremony marked the long-awaited return of the restored ensemble sculpture "Taming of Horses" to the pedestals on the four corners of Anichkov Bridge, located on the Fontanka River.
The ensemble - sculpted by Pyotr Klodt over the period of 1841-1859 - was put back in place after an 11-month-long, $120,000 restoration conducted by the Intarsia firm and financed by Baltoneximbank.
This was only the second time in 151 years that the four bronze horses had left their granite pedestals on the bridge. The last time was in 1941, when the horses were removed and hidden to protect them from German air raids during World War II.
Dial-a-Bomb
KALININGRAD (SPT) - Three people were arrested by police in the Russian enclave of Kaliningrad on charges of selling pager-operated bombs, Interfax reported on Friday.
According to the report, which quoted Yury Ivochkin, head of Kaliningrad's Anti-Organized Crime Squad, the suspects are "high-class" specialists in electronics. They allegedly made "unique" bombs that combined 200 grams of dynamite and a detonator with a pager. The bombs could be detonated, Ivochkin said, "by dialing the [pager] number, even from Mos cow." The report did not give the suspects' names.
During a search, police found one kilogram of dynamite, one ready-to-use set of parts for a bomb, and several spare parts. The suspects allegedly sold the bombs for $250 each to Kaliningrad's criminal gangs.
Police suspect some of the bombs were used for a series of explosions in 2000, when a store and several cars were destroyed, said Ivochkin. If proven guilty, the suspects face up to six years in jail, according to Interfax.
'Press is Free'
MOSCOW (AP) - The recent takeover by government-linked forces of several independent media outlets notwithstanding, the Justice Minister on Friday declared that the press in Russia is "freer than anywhere else" in the world.
Yury Chai ka made the comment during a meeting with Walter Schwimmer, the head of the Council of Europe, the continent's highest human rights advocate. Schwimmer had expressed concern about the future of free press in Russia.
"The press in Russia is freer than anywhere else in the world," Chaika said. "Freedom of speech in Russia is registered in the Constitution and ensured by the law on the media."
3 Die in Fire
ST. PETERSBURG (SPT) - Three people died from suffocation during a fire in a two-story residence building on Novo orlovskaya Ulitsa in the city's northwest Primorsky district, Interfax reported on Sunday.
St. Petersburg Fire Brigade officials said the fire - which was reported at 4:31 a.m. - had started in an apartment on the building's first floor, the agency reported. Investigators characterized the fire as accidental.
Fire fighters managed to carry a 62-year-old man out of the blaze, but he later died en route to the hospital. Fire fighters also found the bodies of a man and a woman in the first floor apartment.
Idrisov Arrested
MOSCOW (Reuters) - A deputy prime minister in the Moscow-appointed Chechen government, Kham zat Idrisov, was arrested by regional organized crime officers on suspicion of massive embezzlement, Interfax reported Sunday.
Interfax said the arrest of Idrisov, recently appointed Chechnya's deputy prime minister in charge of construction, was linked to his period in the government of the late Chechen rebel leader Dzhokhar Dudayev and his successor Zelimkhan Yandarbiyev.
TITLE: AvtoVAZ Keeps Grip on Board
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Top carmaker AvtoVAZ said Monday that its sales rose 10 percent in 2000 to 64. 2 billion rubles ($2.2 billion), but it still posted a net loss for the year of $136 million after writing off some $248 million in debts.
At an annual shareholders meeting Saturday, minority shareholders failed to place any of their candidates on the AvtoVAZ board of directors. Shareholders also decided not to pay dividends for 2000 and voted down a proposal put forward by a group of minority shareholders to convert into ordinary shares their preferred shares, which haven't earned dividends in six years.
AvtoVAZ board chairman Vladimir Kadannikov told reporters at the company's headquarters in Togliatti on Monday that "it was earlier planned to pay dividends, however due to writing off lots of debts last year, we had to repudiate a dividends payment," Prime-Tass reported.
Most of the debts that were written off were accumulated between 1993 and 1998, and most of the companies that never paid for their cars have ceased to exist, Kadannikov said.
Kadannikov also said that international auditors PricewaterhouseCoopers had been chosen to audit AvtoVAZ's accounts in 2001.
Each of the three board candidates put forward by minority shareholders got less than 3 percent of the votes, leaving the company firmly under the control of its management.
As before, nine of the new board members are managers of AvtoVAZ and the Automobile Financial Corp., or AFK, which own stakes in each other. AFK has 19.86 percent of AvtoVAZ, which has 49 percent of AFK.
The other three members are Nikolai Kosov, first deputy head of Vnesh ekonom bank, Samara region Vice Governor Viktor Kazakov and Alexander Bychkov, general director of Russ-Invest.
The results of the meeting surprised many observers, with one brokerage, Troika Dialog, downgrading to sell its recommendation for AvtoVAZ shares.
"The results of the meeting confirm our view that the company is fully controlled by the management and presents a corporate governance risk," Troika analyst Andrei Kormilitsin wrote in a research note.
Vasily Boyko, director of the company Your Financial Guardian and an AvtoVAZ shareholder, told Vedomosti earlier this month that a minority shareholder candidate was almost "guaranteed" to make it on the board.
The trading house Aton said it saw no reason to change its hold recommendation because, "There is no reason yet to blame AvtoVAZ's management for bad corporate governance - minority shareholders just can't come to an agreement and vote together for one candidate," said Aton's Alexander Agibalov.
Agibalov said that the biggest development for AvtoVAZ will come in the middle of June, when the company is expected to finally seal the long-awaited $330 million joint venture with General Motors and the European Bank for Reconstruction and Development to make four-wheel-drive Nivas under the GM name.
Kadannikov was quoted by Interfax as saying Monday that the final paperwork for the deal would be signed sometime between June 10 and June 15.
AvtoVAZ is expecting to turn a profit of $310 million in 2001. The company rolled out 252,582 units in the first four months of the year, up 8.6 percent for the same period last year.
TITLE: Siberian Aluminum Counters U.S. Law Suit
PUBLISHER: Combined Reports
TEXT: NEW YORK - Siberian Aluminum and other defendants have filed motions to dismiss a $2.7 billion case under the U.S. Racketeering-Influenced and Corrupt Organizations Act and argued that it should be transferred to Russian courts, the group said.
In a statement issued after filing its response in U.S. District Court in New York on Thursday, the group said: "Russian courts can more appropriately deal with the allegations."
Lead council for the defendants Michael Burrows refused to comment on the motions, saying only, "We are going to try the case in the courtroom, not in the press."
Lawyers representing the plaintiff were not available for comment.
The motion filed Thursday said: "Stripped of its rhetoric and smear tactics, the lawsuit represents a wholly improper attempt to attack collaterally the decisions of Russian courts and administrative agencies."
In December, a group of offshore metals-trading firms filed suit against Russian Aluminum, Siberian Aluminum and key individuals in those companies, accusing them of fraud, money laundering and attempted murder.
The lawsuit, filed by Base Metal Trading SA, Base Metal Trading Ltd. and Alucoal Ltd., accuses Russian Aluminum, its chief executive Oleg Deripaska and his business partner Mikhail Chernoi of taking over and monopolizing the Russian aluminum industry.
Chernoi, one of the defendants named in the suit, is not a party in Thursday's motion.
National power grid Unified Energy Systems and its chief, Anatoly Chubais, are also named in the suit.
"Criminal elements have besieged Russian industry with illegal payoffs, threats and acts of violence," the plaintiffs' attorney Robert Abrams said in a statement, adding that the United States must not allow Russian organized crime to spill into the U.S. banking and commercial systems, and the courts have the power to prevent it.
Russian Aluminum - which now controls about 75 percent of the Russian aluminum market after being set up last year by Deripaska and Sibneft tycoon Roman Abramovich - called the legal action "absurd" and a smear attempt by opponents disgruntled over its founding and rapid expansion.
The plaintiffs in the RICO suit are protesting Russian Aluminum's takeover of the Kemerovo region-based Novokuznetsk Aluminum Plant, Russia's fifth-largest producer of aluminum. Novokuznetsk was bankrupt at the time, thanks to a lawsuit initiated by the Chubais-led UES over 2 billion rubles ($69 million) in unpaid electricity bills.
Siberian Aluminum later merg ed Novo kuz netsk and its other assets with those held by Sibneft shareholders to form Russian Aluminum.
Thursday's response to the suit charges that Base Metal Trading and other plaintiff companies are controlled by Mikhail Zhivilo, the former owner of the Novokuznetsk Aluminum Plant.
Zhivilo was recently released from a French prison, where he was held on charges for plotting the assassination of Kemerovo Governor Aman Tuleyev.
On May 16, a French court refused to extradite Zhivilo to Moscow on grounds that there is no French equivalent to the charges of plotting an assassination.
Zhivilo denied the allegations, calling them a setup.
Meanwhile, Novokuznetsk Aluminum Plant belonged to Zhivilo's company Metallurgical Investment Co., or MIKOM, accused of bankrupting the Siberian aluminum smelter.
In bankruptcy proceedings last year, Russian courts decided that control of sales and supplies in the insolvent Novokuznetsk Aluminum Plant should be passed to Russian Aluminum.
There have been claims that Tuleyev was instrumental in facilitating the transfer of ownership in the aluminum plant to Russian Aluminum.
"Zhivilo is a fugitive from justice, wanted on an Interpol warrant for conspiring to murder Aman Tuleyev, governor of Siberia's Kemerovo region, where the Novokuznetsk Aluminum Plant is based," the motion said.
After losing legal appeals to regain control of Novokuznetsk Aluminum Plant, Zhivilo's companies filed the RICO suit against Siberian Aluminum Group, which includes Russian Aluminum, the motion said.
Bankruptcy settlement is binding under Russian law on all participating creditors, including Base Metal Trading Ltd., it added.
"In essence, Zhivilo is asking the U.S. courts to overturn decisions in Russian bankruptcy courts that have previously ruled against him," the motion said.
Judging by past cases - when foreign parties came to federal court in New York to resolve a civil dispute - if the court found that a foreign court is a more appropriate location for the lawsuit, it has tended to dismiss the case in the United States.
After the judge reviews Thursday's motion, the plaintiffs will have a chance to answer. Siberian Aluminum and other defendants will then have a chance to reply to Base Metal Tradings' answer. At that point, the judge will review the case.
The entire procedure should be decided before the end of the year, said one legal expert.
- Reuters, SPT
TITLE: Sberbank Planning Another Share Issue
PUBLISHER: Combined Reports
TEXT: MOSCOW - Top savings bank Sberbank said Monday it is planning another share issue that would shrink minority investors' holdings in the company.
Last week the bank completed a controversial share issue that diluted minority stakes and prompted a lawsuit.
Sberbank issued a statement on its Web site (www.sbrf.ru) saying the proposed issue of 10 million new shares would have a face value of 50 rubles ($1.71) each.
It said it plans to ask shareholders at its annual meeting June 27 to adopt amendments to its charter that will make it possible.
"I can't say more than what you can find on our official [Internet] home page," Dow Jones quoted Sberbank spokesperson Alexander Goluvanov as saying Monday.
The changes will give the Sberbank supervisory board the opportunity to increase the bank's charter by 150 percent at any time, thus diluting minority shares.
The new issue would raise the number of outstanding shares to 29 million just a week after the bank completed an issue of about 5 million shares to selected investors, including the Central Bank.
The position of minority shareholders is made more complicated by the fact that Sberbank shareholders lack the preemptive right to purchase new shares.
They would like to have this right included in the charter, but doubt that the main shareholder - the Central Bank - will agree.
An entire section is devoted to amendments to the charter in the documents prepared for the annual general meeting of shareholders - which was first reported by Troika Dialog in a research note Friday.
Seventy-five percent of the votes of shareholders present at the meeting is required for the amendment to be passed.
"Sberbank is giving investors little but despair. ... Although Sberbank is included in the Troika Dialog model portfolio, it will be sold next week. Under the threat of a 10 million share issue the risks significantly exceed any possible gain," wrote Troika's James Fenkner.
On Monday, Troika downgraded Sberbank from "buy" to "sell."
Fenkner said that the management should have made a public announcement regarding the shares "rather than having three lines tucked away on page 39" of its AGM agenda.
Troika branded Sberbank as a highly speculative investment Monday, downgrading its recommendation to hold from speculative strong buy.
The decision to issue voting shares for 36 percent of the charter capital was adopted by the Sberbank supervisory board in December last year. On March 26, the Central Bank registered the issue prospectus. The placement went ahead on April 25 by open subscription at a cost of 1,000 rubles per share.
As a result of the issue the Sberbank charter capital increased to 1 billion rubles, and the voting shares of its main shareholder, the Bank of Russia, rose from 57.7 percent to 63 percent.
William Brauder, the head of Hermitage Capital Management, which sued Sberbank over the issue, plans to fight the new dilution.
"We are certain that this is a new attempt to sell a major stake in Sberbank to Russia's oligarchic structures," he said.
- SPT, Vedomosti
TITLE: Interros Takes Matters Into Its Own Hands at Metals Factory
AUTHOR: By Anatoly Tyomkin
PUBLISHER: Vedomosti
TEXT: Interros rendered the management of the St. Petersburg Krasny Vyborzhets factory completely powerless by blocking the group's entry to the building at Sunday's extraordinary shareholders meeting. Then the holding not only used its own 52 percent share to vote but its opponents 30 percent stake as well.
Krasny Vyborzhets, a non-ferrous metals producer, had an output of 14,000 tons in 2000 with losses of 8 million rubles ($275,000). Organizations connected to Interros hold 52 percent of the factory's shares while another 32 percent belongs to Krasny Vyborzhets' management.
The meeting itself was initiated by Rayndorf Enterprises, an offshore holding with close ties to NT-metall (formerly Interrosmetall), which owns a 19.9 percent stake.
Vladimir Potanin's Interros Group gained the controlling share in Krasny Vyborzhets at the end of February 2001, and since then the group has had to hold three extraordinary shareholders meetings in order to gain complete control of the factory. As a result of a meeting held Feb. 17, Interros gained three places on the board of directors, but the company's management barred representatives of the group from factory grounds.
At the second meeting, in April, Interros was able to take every seat on the Vyborzhets board of directors, installing representatives from Norilsk Nickel and the Kolsky Mining and Metallurgy Company, both part of the Interros group.
At Sunday's meeting, Interros was registered as having rights for 81 percent of the shares in Krasny Vyborzhets. According to the new general director of the factory, Oleg Dyachenko, a number of shareholders, including the former director of the factory, Valentin Simonov, had signed their voting rights over to him.
None of the major shareholders, including Simonov, were available for comment on Monday.
Krasny Vyborzhets' annual shareholders meeting was scheduled to be held on May 15, but was derailed by Interros. The agenda had been written without Interros' input, and the proposed list of candidates for the company's board of directors was composed of former members of Simonov's management team, and did not include a single Interros representative. Minority shareholders - mostly workers at the factory - were told not to attend, and shareholders - mostly private individuals - representing only 1.28 percent of all company shares, showed up at the auditorium.
"The voting results at this weekend's meeting show that the former director and his management team have abandoned the fight with Interros," said Ivan Oskolkov, head of the IK Energokapital analytical group.
TITLE: Nation's Search for Corporate Governance Still Stop-and-Go
TEXT: The government has vowed to improve Russia's dismal corporate governance record, often cited by foreign investors as enemy No. 1. But as Torrey Clark reports, that task is not easy in a country barely out of the crude asset-grabbing phase of its development.
As rumors intensified last week that Gazprom CEO Rem Vyakhirev would soon be replaced, one brokerage issued a research note saying that the overall market would "go ballistic on the news."
It was a telling remark.
Sure, Gazprom is the most powerful company in the country. And as the head of a vast empire stretching over half the world, Vyakhirev is a major player. But would simply sacking Vyak hi rev, who is accused of asset-stripping at the company, send the entire stock market into blissful "ballistic" glee?
The answer, according to the brokerage, is yes. Why? "Because the market has decided that [who runs Gazprom] is the major corporate governance issue in Russia."
Corporate governance, the catch-all phrase for treating investors - particularly minority shareholders - fairly, has emerged as a hot-button issue and one of the major hurdles to economic growth.
To demonstrate the concept, imagine you buy 10 percent of a company that has 100 valuable widgets in inventory. You may rightly conclude that you own 10 of those widgets.
But when the company's management secretly sells, say, 20 of those widgets to friends and relatives for next to nothing, you become the victim of bad corporate governance. You've lost 20 percent of the value of your original 10 percent stake. And without legal mechanisms in place to redress this injustice, there is absolutely nothing you can do about it.
This is exactly what Gazprom's management, under Vyakhirev and his predecessor, Viktor Chernomyrdin, is alleged - and partially proven - to have done. If the state, which owns 38 percent of the company, backs the removal of Vyakhirev, the argument goes, it sends a strong signal that it is serious about improving corporate behavior as a whole.
After all, power in Russia is vertically integrated. Any meaningful reform flows from the top down.
Addressing the Problem
If Vyakhirev is replaced at Gazprom's board of directors meeting Wednesday (his contract expires June 1), it would be the second meaningful step toward improving Russia's corporate governance culture in as many weeks.
The European Bank for Reconstruction and Development, the nation's largest foreign investor, last week announced that a final team had been selected to draft Russia's first Corporate Governance Code.
"[The idea is] to develop a code of rules, regulations and proposed legislative amendments to help bring corporate governance in Russia in line with top international practice," the EBRD said.
By helping the Federal Securities Commission draft the code - in the form of a convenient, user-friendly reference containing in a single place the best-practice guidelines for companies' behavior - the EBRD said it was undertaking its "largest single legal reform project" to date.
"The danger of shareholder rights violations becomes the main risk factor discouraging investment in the Russian economy," FSC chairman Igor Kostikov told the Davos, Switzerland, economic conference in January.
"This problem is expected to be resolved through the development and introduction of principles of corporate governance into Russian business practices, ... which will take approximately two years," he said.
One sign of the urgency is that interest in Russia adopting such a code has come from around the globe. The Japanese government is funding the 600,000 euro ($516,000) project. And the Organization for Economic Cooperation and Development (OECD), the World Bank's International Finance Corp., and the law firm Coudert Brothers are all involved.
On the Back Burner
Many corporate governance watchers say the development of the code comes at a time when leading companies are falling into two camps: those that bang the drum of corporate governance standards and those that turn a deaf ear.
State-owned companies such as Gazprom, Sberbank and Unified Energy Systems are the most prominent of those called hard of hearing. These cases highlight the risks and conflicts of interest inherent in government ownership, and are also bellwether cases testing the government's commitment to corporate governance.
For much of the post-Soviet period, corporate governance has lingered on the "to do" list of government reformers, international organizations and investors. The IMF and the World Bank called for improvements when negotiating billions of dollars in loans in the first half of the 1990s. And in 1996 the OECD said in a report on investment in Russia that corporate governance was among the most urgent issues.
So why is the spotlight on corporate governance now? Both external and internal factors play a role.
"If you were an investor considering Russia [five or six years ago], there were a number of other more pressing issues than corporate governance," said Kim Iskyan, research analyst at Renaissance Capital.
Since the early '90s some issues, such as inflation, debt servicing and rampant crime, have largely dissipated, so corporate governance has moved toward the top of the agenda.
"The [1998 Russian] financial crisis was a blessing in disguise," said Yelena Krasnitskaya, editor of Troika Dialog's weekly Corporate Governance Bulletin. "It revealed the depth of the problems."
The economy, instead of foundering, showed improvement within a year after the crisis. The devalued ruble made Russian-made products more competitive and oil prices steadily climbed, drawing the economy along for the ride and helping to eventually stabilize the ruble. And then-President Boris Yeltsin settled on a successor, thus ensuring political stability.
Recently a number of companies and market players have joined foreign investors in speaking out in favor of better corporate governance.
It is part of maturing, say analysts. Globalization has given Russian companies the opportunity to reach for international capital. It also gives investors the chance to go elsewhere if they don't like how they're being treated. Companies are learning the benefits of virtue, or not burning bridges, as they eye bigger prizes.
"There was a time when [managers] would laugh at investors," said one analyst who asked not to be named. "A group of 40 investors went to [No. 3 oil major] Surgutneftegaz in 1997. ... They were met with coy responses and smiles. One investor wanted to know the company's investment plans for the coming year. A manager answered, 'The investment plan is approved every year by the board of directors. When you have enough shares to be on the board, you will know.'"
Hearing the Music
One reason several major companies have changed their tune is that they have procured super-majority stakes - more than 75 percent - in their subsidiaries over the past two years. The concept of corporate governance tended to get trampled in the asset-grabbing phase. Shares represented a means to gain control, rather than an instrument for raising funds and increasing market capitalization.
"Companies where power consolidation is underway commit the most corporate governance abuses," said Krasnitskaya. "It is the most volatile period."
As majority owners have consolidated their control, the temptation to violate other shareholders' rights has abated.
Incentives and penalties - the carrot and stick (or "the gingerbread and the whip," as it is in Russian) - have gained enough force to drive some companies toward acceptance of corporate governance standards. The carrot is the potential to tap deeper or less expensive pools of capital. The stick is the combined pressure of government regulation and shareholder action.
Entering foreign stock markets boosts the liquidity of companies' shares. This in turn helps boost share value and lower the cost of capital, that is, the returns investors demand or the interest rates lenders charge for loans.
An investor survey conducted by McKinsey & Co. last June showed that investors would pay 18 percent to 27 percent more for well-governed companies. Higher risk translates into higher interest rates, so Russian companies have often ended up by paying for their own and for others' misdeeds.
Russian companies depend heavily on borrowing or reinvested profits to finance capital growth. Of 100 leading companies surveyed by the Investor Protection Association, 91 percent reinvested profits, 59 percent used debt and only 14 percent employed stock-market mechanisms. Debt financing allows management to keep tighter control of the company, especially where bankruptcy laws are inadequate. Equity, on the other hand, carries the risk of obstreperous shareholders demanding detailed information and a say in company decisions.
Most companies "don't understand why it is important that a company have a high market value ... [or] that equity is an alternative to financing capital growth," said Krasnitskaya. Although Russia's leading companies are waking up to the potential of raising money through good share prices, the understanding has not reached critical mass, she said.
So which Russian companies have woken up?
"When you look at those companies that have adopted a corporate governance code, the answer becomes self-evident," said Krasnitskaya. Sibneft, Lenenergo and Yukos are the only public companies with corporate governance charters, which they passed when planning to tap the overseas markets.
Understanding the benefits of equity financing is at the heart of the corporate governance issue. It requires relinquishing some control over assets and cash flows in exchange for ownership of a company with higher market capitalization and better growth prospects.
"You may not want to divulge how much you've produced, and how much you've put in your pocket. ... If you choose to disclose, you might be talking not about sticking $10 million in your pocket but about owning 10 percent of a company worth $10 billion," said Jim Nail, head of research at Aton.
Yukos, a former "most wanted" for shareholder violations, has been polishing its image recently. "We know that biding by these rules is the best way to increase shareholder value and that is in the interest of the company as a whole," said Yukos spokesperson Hugo Erikssen. Yukos shares have risen from a low of about 20 cents in early 2000 to $3.20 in mid-May.
Full Disclosure
Investor and regulatory calls for transparency and disclosure of financial information have met resistance from numerous companies, which delay the release of financial statements, provide incomplete or insufficient information, or even refuse to provide information altogether.
"[Companies] are not sure that transparency is good for them from an economic point of view," said Alexander Ikonnikov of the Investor Protection Agency. "The Russian market is not very good. If you create transparency, it doesn't mean you attract investment quickly. Many companies may feel it is not worth trying."
PricewaterhouseCoopers estimated in a survey last month that nontransparency costs the country $9.8 billion annually in lost foreign direct investment. Russia received $2.7 billion in FDI in 2000, according to IMF data used by PwC.
The majority of companies are unlikely to undertake the work that is necessary for full and timely disclosure of information, such as implementing generally accepted or international accounting standards and changing the management mentality, until tax and audit reforms have been carried out. The harsh bite of the Tax Police and the threat of banditry act as further disincentives for disclosing information such as profits or management incomes.
"You must understand why people don't want publicity - this is big money. And if ... they have the possibility of living quietly without hiring security, they value it," Yukos boss Mikhail Khodorkovsky said in an interview with Vedomosti this month. He said that about 62 percent of the company is divided almost equally among 15 people, but declined to name most of the largest individual shareholders.
A Lack of Teeth
Does Russia need the stick of more and better laws and better enforcement? The most common answer from analysts is "yes." Yawning gaps - the first law to address insider trading, for example, is now in development - and loopholes allow companies to adhere to the letter of the law while ignoring the spirit.
"Russian companies have a near perfect record. In fact, Yukos shareholders could never prove in court that their rights have been violated. This is a red flag that the law is imperfect," said Krasnitskaya.
One problem is the power structure. The FSC has not matured to a point where it has authority independent of the president's support.
The 1999 law on the protection of rights and legal interests of investors in the security market gave the watchdog, if not teeth, then at least dentures. The FSC can suspend trading in shares of companies that fail to provide quarterly financial reports on time and can impose fines for securities violations. But the fines are limited to a meager 1,000 minimum salaries (about $10,000). The FSC's only real weapon is the right to deny new share issues.
"If a broker violates the law, the FSC can take away its license. But if a public company violates shareholder rights, there is no regulator, no agency, no instrument strong enough," said Krasnitskaya.
Although some protection of shareholders is written into the law, numerous ambiguities, varying interpretations and uneven application leave shareholders open to risk.
"For foreign investors with a low appetite for risk, the risk can be effectively mitigated by either a majority position in the company or a minority position in an offshore holding company residing in a legal jurisdiction with an unambiguous corporate law and reliable courts," said Paul Murphy, senior manager of corporate finance at Ernst & Young.
Accountability
The boardroom has been the site of numerous battles between minority and majority shareholders. Corporate governance requires a clear understanding of the relationships between management, the board of directors and shareholders. But even after a decade of board meetings, the role and responsibilities of the board still creates confusion and controversy.
"There is a big discussion whether directors are accountable to the group of shareholders who elected him or her or whether the pattern is to be accountable to all shareholders," said Krasnitskaya.
Minority investors have banded together to strengthen their otherwise puny voices. The IPA, headed by Alexander Ikonnikov, has nominated more than 60 candidates to the boards of major companies during this year's annual general meeting season. The IPA had members on the boards of 25 leading companies in 2000.
The government and the FSC have drafted several laws and long-awaited amendments to the joint-stock company law. New legislation addresses pressing areas of corporate governance: shareholder rights, transparency and disclosure of financial and ownership information, as well as insider trading. But the amendments to the JSC law are in legislative limbo.
Financial statements - often called the language of business - are also a target area for reformers.
Prime Minister Mikhail Kasyanov sponsored a draft law, which the State Duma is scheduled to debate next month, that would make withholding information from shareholders or disinformation a criminal offense.
And the Finance Ministry has said it plans to have Russian accounting standards in line with international accounting standards, or IAS, by 2004.
A common set of standards, such as IAS, makes it easier for investors and lenders to compare company performance, said John Davies, head of business law for the Association of Chartered Certified Accountants in London.
Attention to Details
The proposed Corporate Governance Code may go some way to encouraging more companies to take up the corporate governance flag by setting out what needs to be done.
"Corporate governance values have not been articulated, 10 years is not enough to form values and implant them. Companies need to be educated," said Krasnitskaya. "The FSC's plan to involve companies in drafting the code is a smart move."
The initial work on the Corporate Governance Code will focus on five main issues: defining shareholder rights to obtain information and participate in decision-making, the responsibilities of board members, the role of independent directors on the board, business practices and the handling of related-party transactions.
Initially, the code will contain only recommendations, making the state's backing all the more important in encouraging compliance. Kasyanov has already given at least vocal support to the project.
"We will consider these standards ... in conducting various state procedures, tenders and other government-run procedures to urge or push Russian businesses away from previous practices that ... greatly differed from the standards upheld by international corporations," Kasyanov said recently.
In the future, the code may either be enacted into law or serve as the basis for further laws and regulations.
Barry Metzger, senior partner on corporate governance for Coudert in New York, said that some 25 countries currently have such a code, and they tend to be more effective when they define standards above and beyond those set out by law.
"Elsewhere in the world, such codes tend to be voluntary. When certain companies comply, it raises the bar for others in the industry," said Derek Bloom, a partner at Coudert Brothers in Moscow and the project manager for the code.
Bloom said the first draft would be completed in September.
Not everyone is happy about the changes afoot, however. Khodorkovsky of Yukos said last year that only companies working with foreign investors needed tough corporate governance standards. "We must stop and think before we introduce American rules of corporate governance. It costs money, a lot of money, which it isn't worth wasting on honing corporate governance," he said.
The time and expense needed to implement corporate governance procedures are major barriers.
"The psychology makes it difficult," said Nigel Robinson, corporate development director at Alfa Group, a vocal proponent of corporate governance. "Especially when there is a lack of immediate benefits and cost savings."
The process cannot happen overnight. Robinson said it took three years to establish quarterly reporting in compliance with IAS in Alfa's sub-holdings and almost the same amount of time to instill an understanding of corporate governance values in the management of those companies.
CTF Holdings Ltd., the holding company for the Alfa Group, has budgeted 10 percent to 15 percent of its time for corporate governance initiatives, he said.
It may yet be too early to tell if corporate governance has actually taken root, or if good behavior campaigns are just considered a public relations technique.
Even so, once companies announce good intentions, "it will become harder to go back," said David Gould, Robinson's deputy at Alfa Group.
TITLE: Talks Continue in Wake of Lufthansa Pilot Strikes
PUBLISHER: The Associated Press
TEXT: FRANKFURT, Germany - Mediation talks between Lufthansa and its pilots began Monday, as the two sides tried to end an ongoing pay dispute that has triggered two disruptive pilots' strikes.
Neither side would say where the talks are taking place or what the haggling points are.
Rekindled attempts at a settlement came as Germany's umbrella group for organized labor warned that a special deal shouldn't be cut just for pilots.
Europe's No. 2 airline and the pilots' union Vereinigung Cockpit called in mediator Hans-Dietrich Genscher, a former German foreign minister, after talks broke down last week. No deadline has been set for Genscher to find a solution.
The pilots, who have been pushing for a pay increase since February, pledged to interrupt their weekly strikes during arbitration. They have staged two 24-hour strikes this month, forcing Lufthansa to cancel hundreds of flights.
Pilots are demanding a 24-percent wage increase. The airline said its last offer amounted to a 30.3 percent raise - including performance-based pay - in the first year of a four-year contract.
Excluding performance-based pay, Lufthansa said its offer would boost salaries 13.6 percent.
TITLE: WORLD WATCH
TEXT: No New Spending
TOKYO (Reuters) - Japanese Finance Minister Masajuro Shiokawa said on Monday it would be difficult for the government to raise budgetary spending on social welfare, just hours after he suggested it might do so as early as next fiscal year.
Earlier in the day, Shiokawa told parliament he aimed to raise the government's burden on social security to half the total cost from a current one-third by the next fiscal year starting April 2002.
But he backtracked later, saying that would be difficult because the new administration of reform-driven Prime Minister Junichiro Koizumi is trying to reduce overall government spending.
Calls have been growing among the public for greater government spending on the national pension scheme in light of an ageing population and a sluggish economy.
Merger Microscope
BRUSSELS, Belgium (AP) - General Electric Co. and Honeywell International Inc. will confront antitrust regulators, competitors and customers this week as the companies try to overcome objections to their $41 billion merger and win European Union approval.
Lawyers for the U.S. firms will make their case for the deal at hearings Tuesday and Wednesday in Brussels, having sent a written response to the EU's objections last week.
Neither Competition Commissioner Mario Monti nor GE chief executive Jack Welch were scheduled to take part personally, and new concessions were not expected on the table.
The merger has already been conditionally cleared in the United States and Canada. An EU decision is not due until July 12.
Boeing Talks
ST. LOUIS (AP) - Boeing Co. and the union representing aircraft plant workers plan to resume negotiations this week with the threat of a strike looming.
Their task is a challenging one, as some of the 3,200 workers are accusing their union of not fighting hard enough to protect their interests.
The two sides plan to begin talks again Wednesday in St. Louis; union leaders hope they'll have a new contract to vote on Sunday.
Failure to reach a tentative contract, or a rejection by members, could trigger a strike Sunday.
"If you'd see the attitude out on the shop floor, everybody is ready," said Kevin Killoren, a sheet metal assembler and riveter. "They're ready to fight this company to get equality."
Boeing officials said they're unsure about what workers really want. Rather than talking directly to union leaders about a new contract offer, company supervisors spent hours over the past week listening to workers on the shop floor.
Chip Sales Falling
TOKYO (Reuters) - The global semiconductor market will likely shrink 13.5 percent in 2001 to $176.79 billion because of sluggish demand for PCs and cellphones, the World Semiconductor Trade Statistics (WSTS) group said on Monday.
The forecast is a sharp downturn from a 36.8 percent jump the previous year to a record $204.39 billion and would mark the biggest decline in a decade.
WSTS, which represents about 70 chipmakers worldwide, last October predicted 20 percent growth in the chip market for 2001, but a sudden slowdown in demand for information-technology products late last year has taken its toll.
The industry group forecast 5.3 percent quarter-on-quarter growth for the July-September period and 7.3 percent growth in October-December.
Isuzu Layoffs
TOKYO (Reuters) - Truck maker Isuzu Motors Ltd. said on Monday it would cut 9,700 jobs over the next three years in one of the biggest restructuring plans in Japan's auto industry after posting its second straight year of losses.
Isuzu said the 26 percent cut in its 38,000 strong work force was part of a three-year business plan that targeted a more than 30 billion yen ($249 million) net profit in the 2004/05 year and a one billion ($8.3 million) net profit in the current year from April.
Japan's top maker of light trucks, which is owned 49 percent by General Motors Corp, said its group net loss narrowed to 66.79 billion yen in the year to March 31 from a 104.19 billion yen loss a year earlier while sales rose 4 percent.
TITLE: More Balkan Miscalculation
AUTHOR: By Jackson Diehl
TEXT: AS Macedonia's army bombed and shelled Albanian villages last week, U.S. Secretary of State Colin Powell flew to Africa. To the alarmed foreign ministers of Austria and Greece, who arrived in Washington just before he left - and just in time to read Defense Secretary Donald Rumsfeld's latest declarations about pulling U.S. troops out of the Balkans - he offered boilerplate reassurance. But anyone looking for forceful action to stop the latest ethnic bloodletting in Europe had no one to talk to in the Bush administration. On the contrary: "Secretary Rumsfeld is always looking for opportunities to back off on some of the overseas commitments we have, and that's his job," Powell told reporters on the plane to Africa. "The president wants that."
General Wesley Clark can be excused for thinking he's seen this movie before. As commander of NATO forces in Europe in the spring of 1998, he watched the beginnings of the Serb campaign against the Albanians of Kosovo - and pleaded in vain for Washington to intervene before the situation got out of hand. As he recounts in his newly published memoir, "Waging Modern War," his attempt to get the attention of the Clinton administration earned him an angry 2:30 a.m. phone call from the Pentagon. "'Look, Wes, we've got a lot on our plates back here,'" he says he was told by the then-vice chairman of the Joint Chiefs, General Joseph Ralston. "'We can't deal with any more problems.'"
A year later, the Clinton administration and NATO were dealing with a full-blown war in Kosovo, and Clark had confirmed a couple of painful lessons. First, "these situations are best dealt with early on when they are ambiguous," he said last week. "If you delay until the threat to U.S. interests is so clear-cut it's undeniable, the costs and risks are going to be far higher." And second: "The Pentagon is not the right locus for the generation of U.S. foreign policy."
By now those principles have been proven over and over again in America's ventures into the post-Cold War world. And yet each new U.S. administration seems to have to learn them the hard way - especially in the Balkans, where the dangers and stakes have been underestimated by three consecutive presidents. In 1991 the first Bush administration concluded that Yugoslavia's breakup was better managed by the Europeans, only to see the eruption of a bloody war between Serbia and Croatia. In 1993 the Clinton administration decided to leave Bosnia to the Europeans, only to be drawn into the war after two more years of senseless carnage. As Clark persuasively argues, U.S. inattention to Kosovo in 1998 led directly to the war of 1999.
Now the second Bush administration has watched the trouble once again brewing in Macedonia, Kosovo, southern Serbia and Bosnia - and, spurred on by the Pentagon, has decided once again to leave its management to the Europeans. "It's exactly the same mistake as before, only worse," Clark told me. "Now the rivalry between the European Union and the United States is worse than it was at the time of Kosovo." And so may be the consequences of inaction.
Two miscalculations were central to U.S. misadventures in the Balkans during the 1990s. Both the first Bush and Clinton administrations underestimated the power of Serbian nationalism and the ruthlessness with which Serbian leader Slobodan Milosevic was willing to use it. Both also misjudged the importance of U.S. involvement in the Balkan crises to the overall U.S.-European relationship. "When the conflict began I thought it was about Kosovo," Clark said of the 1999 air war. "But later I realized that it was really about NATO." If the alliance was unable to respond effectively to a European conflict, Kosovo showed, it would be fatally weakened.
With Milosevic's downfall last fall, Serbian nationalism is now arguably less of a threat. But longtime watchers of the Balkans say the West, and in particular the Bush administration, is failing to adequately address a new engine of destabilization: Albanian nationalism. Albanians make up more than 90 percent of the population of Kosovo and are a substantial minority in Macedonia, Montenegro and southern Serbia. At the root of the fighting in Macedonia, and the wave of tension building through the region, is the absence of a clear answer to Albanian political aspirations - in particular the lack of a Western consensus about the demand by Kosovo's Albanians for independence from Serbia.
"The whole course of Albanian nationalism is now up for grabs," says Jim Hooper, the managing director of the Public International Law and Policy Group. "Depending on how the West and particularly the United States handle it, it can be a nationalism that buys into democracy and buys into regional stability, or it can turn into another destructive force in the region."
European ministers are quietly telling the Bush administration that it must lead an effort to come up with political solutions for the Albanians, with timetables and conditions - and do it before the guerrillas of the region ignite a new conflict that defies political solution. NATO may have to expand, rather than shrink, its forces in the short term to stop the flow of guerrillas and weapons across the borders of Macedonia, Kosovo and Serbia.
What's needed, in short, is a major investment of U.S. energy, at a time when the level of violence is still low - and Washington has much else "on its plate." Which is why Wes Clark's successors may find themselves learning the Balkans the hard way once again.
Jackson Diehl is deputy opinion page editor for The Washington Post, to which he contributed this comment.
TITLE: Time for SPS To Shape Up, Get Serious
TEXT: THE Union of Right Forces - SPS - held its congress on Sunday. The main order of business was to unite a number of small political factions into a single party and to choose a leader. They chose former deputy prime minister Boris Nemtsov. While it is obvious that the country has long needed a united liberal party, it remains unclear exactly whom the new SPS will represent.
In recent months, SPS has been billing itself as the party of big capital. In this regard, SPS leaders certainly distinguished themselves during the recent NTV crisis, openly siding with the state monopoly Gazprom.
SPS's reliance on big capital doesn't make any sense. This is not because the economic elite makes up less than half a percent of the electorate, but rather because Russia's political structure is such that big capital simply doesn't need political parties in order to advance its interests. The Russian Union of Industrialists and Entrepreneurs - dubbed the "union of oligarchs" - can settle any issues directly with the Kremlin. Thus, they don't need SPS.
The ones who might be genuinely interested in a strong liberal political party are small- and mid-sized business, trapped between the hammer of the state and the anvil of the oligarchs. However, SPS is in no hurry to take up their interests. Small business can no longer tolerate our enormous state, which is growing not by the day but by the hour. SPS, on the other hand, is organically intertwined with the state and with the top bureaucrats; it doesn't want to spoil its relations with them.
Further, SPS cannot and does not want to quarrel with the oligarchs, including Gazprom, for the simple reason that its informal leader - Anatoly Chubais - heads the country's second-largest state monopoly. This is a classic example of conflict of interest (as is the position of another SPS leader, Sergei Kirienko, who is a top Kremlin bureaucrat). And it will inevitably continue as long as Chu bais and Kirienko insist on playing two roles - SPS leaders and head of Unified Energy Systems (in Chubais' case) and governor-general (in Ki ri en ko's) - at once.
The result is that SPS's natural ally and popular base - small- and mid-sized business - invests its money and votes anywhere except SPS. If one is fated to live between the hammer and the anvil, it is only logical that one would try to make peace with the hammer. That is why the rating of the pro-Kremlin Unity party rose by 6 percent in the last three months and is now more than seven times greater than SPS's rating.
One other potential SPS resource is the intelligentsia or, as they are called in the West, "professionals," people who don't have their own businesses but who have adapted to market conditions. These people take no joy in the suppression of the non-state mass media or in stepped-up nationalistic and anti-Western rhetoric. They have enough education to understand that authoritarianism poses a serious threat to them. But the constant SPS appeals to power and their supplications to the president make it evident that SPS is not going to defend them.
And what about the young people to whom Nemtsov appeals so strongly? They probably don't care too much for ideals such as freedom of speech, not least because they are too young to remember what life was like without them. But this generation is attracted by strong leaders and clear positions. SPS's indecision over the last few months has demonstrated anything but strength.
If SPS's rating continues to fall at the rate that it has over the last few months (1.5 percent per month), they will have no support by the time of the next parliamentary elections - whether they are held in the fall or next year. And no "administrative resources" will be able to change that.
Therefore, SPS's real task is to position itself properly. In other words, it must finally formulate its priorities, its target audience and its relationship with the Kremlin. And it must do all of this as honestly as possible. The time when it was possible to play games with the voters has passed. It is time to get serious, and SPS must face this fact.
Yevgenia Albats is an independent, Moscow-based journalist.
TITLE: Who Needs A New Party Of Power?
TEXT: It generally takes a little more than 22 hours to throw together a sensible political party, so perhaps it is unfair to judge the Union of Right Forces, or SPS, too harshly in the wake of last weekend's marathon party congress.
On the other hand, this group has been functioning in the State Duma now for almost a year and a half and it is led by the cream of Russia's so-called liberal elite, so it doesn't seem that unreasonable to expect at least a decent image and a clear platform.
The weekend congress produced neither, and many of us were left with the sense of a party that has sacrificed principle for influence.
"A responsible party that has its deputies in parliament," ran an SPS declaration, "should not indulge in opposition rhetoric. Instead, it should use its intellectual and political resources to influence the government."
Given the liberals' notorious history of neglecting the electorate, such statements must set off alarm bells. They sound suspiciously like Yegor Gaidar's patented recipe for closed-door, elitist government in which explaining positions to the public is regarded as being nothing more than an unnecessary "indulgence."
We aren't saying that SPS must be or should be in opposition to the Kremlin. However, if it chooses to become yet another party of power, joining the club founded by Unity and recently joined by Mayor Yury Luzhkov's Fatherland, it should take the trouble of explaining why in the world Russia actually needs yet another party of power.
If, on the other hand, SPS does not intend to let the Kremlin dictate its positions, then it is all the more imperative that the new party come up with a few of its own.
And stick to them even if Putin disagrees.
And "indulge" us by explaining them.
That a party could possibly be formed in Russia today without a single reference to the bloody civil war in Chechnya is more than unfathomable: It is immoral.
SPS, of course, is free to chose whatever platform and leaders it wants. But it should spare a thought for its constituency. In the last parliamentary elections, SPS received 9 percent of the vote. Now its rating stands at half that.
Clearly, many who pinned their hopes on SPS then have not been impressed with its performance. We doubt whether they saw anything that happened this weekend that would make them want to change their minds.
Eighteen months after its creation, SPS is still getting off to a poor start.
TITLE: Military's Leaders Taking Cover
AUTHOR: By Pavel Felgenhauer
TEXT: IN January, the Kremlin announced a "new stage of the antiterrorist operation in Chechnya" and transferred overall command from the Defense Ministry to the Federal Security Service, or FSB. The government declared that "large-scale military operations in Chechnya are over," that the rebels have been defeated and that the "mopping up" of residual enemy activity will be performed by the FSB through a series of special operations aimed at eliminating separatist guerrilla leaders.
It was decided to deploy small garrisons in at least 200 Chechen towns and villages to help FSB operatives establish control, defend Moscow-friendly Chechens, arrest rebel supporters and quash the insurgency. Moscow announced that it would increase financing to rebuild Chechnya and partially withdraw federal troops.
Five months later, though, none of these things has happened. Rebel attacks have increased in scope and effect, with federal forces suffering more than 50 men dead and wounded each week.
No government aid has arrived in Chechnya yet this year. Over 40 Che chen oil wells are on fire - some of which have been burning since 1999. Federal forces have done nothing to extinguish these fires, which are polluting the entire North Caucasus region. The oil from these wells could have provided much-needed money to rebuild the republic, but the authorities apparently fear that the proceeds would be hijacked by the rebels and used to finance their resistance. In any event, the permanent black clouds of oil smoke over Chechnya amply demonstrate that the Kremlin occupies, but does not control the territory.
Another indicator of the hollowness of Kremlin declarations of victory is its inability to capture leading rebel commanders after all the claims that "we know where they are," "we'll get them soon" and the like. Average Chechens support the rebels and genuinely hate the occupying federal troops, which continue to detain, torture, sometimes kill civilians alleged to be rebel supporters. It is generally believed that the Russians have done nothing to alleviate the appalling plight of the impoverished population. In fact, by all accounts, life in Chechnya is worse today than it was during the period when unruly warlords ruled the land before the Russian intervention in 1999.
This month, the military quietly halted the previously announced withdrawal of combat units from Chechnya. In February, the Kremlin stated that only about 23,000 troops would remain in Chechnya as a permanent garrison. Of course, this was a propaganda exaggeration that deliberately did not count over 20,000 FSB and Interior Ministry special and police units, according to Duma Defense Committee chairman, General Andrei Nikolayev. The total "permanent" occupation force for Chechnya has always been envisaged to number from 40,000 to 50,000.
Now the federal withdrawal has stopped with some 75,000 troops in Chechnya. For some time now, the rebels have been threatening a massive counteroffensive, a general uprising that they claim will defeat the federal force and compel the Kremlin to negotiate an end to hostilities and independence for Chechnya. Apparently, the Russian military is taking such statements seriously enough to halt its troop withdrawals.
The commander of the joint task force in Chechnya, General Valery Baranov, was given leave last week until September, and the commander of the North Caucasus military district, General Gennady Troshev, has taken over command of operations in the region. This change would make it easier for Troshev to rush reinforcements into Chechnya from nearby garrisons in the North Caucasus immediately if there is an emergency.
At the same time, Moscow has been full of rumors that overall responsibility for the "antiterrorist operation in Chechnya" will be taken away from the FSB and given to the Interior Ministry. Although such rumors have been officially denied several times, they still persist. The FSB's obvious lack of successes in recent months would seem to be reason enough to transfer control to the Interior Ministry. However, there may be another motive as well.
The war in Chechnya is unwinnable. Disaster is imminent, and officials are scrambling to get out of the line of command to avoid responsibility for defeat and the mounting casualties. The FSB is probably eager to hand the affair over to Interior, although it is less certain whether the Interior Ministry would want to accept it. Just before the Russian defeat in Grozny in 1996 that ended the first Chechen war, there were also a number of command structure changes. Perhaps the present bloody stalemate is also nearing the breaking point.
Pavel Felgenhauer is an independent, Moscow-based defense analyst.
TITLE: A Career Spent With the Prisoners Who Wait for Death
AUTHOR: By Jim Willett
TEXT: HUNTSVILLE, Texas - For three years I presided over the place where nearly all Texas prisoners spend their final moments behind bars. Most are released to a life outside. But many others come here to die. For some, even that is a release. As the senior warden at "The Walls" (as the Huntsville Unit of the Texas Department of Criminal Justice is known), I oversaw the execution of 89 inmates at the busiest death house in the nation.
I retired this year, which has given me time to reflect on some of the prisoners who died on my watch. Death row inmates were transferred to The Walls and its death house in the early afternoon of their execution day. Usually, their remaining hours played out on schedule. But there were times when the condemned would be prepared to die - then walk out alive. That's because more than half of them arrived with an appeal pending in the courts. Last minute stays of execution, like the 30-day reprieve granted Friday to Timothy McVeigh, were a far more ordinary occurrence than most people seem to realize.
But I'm getting ahead of myself. My first meeting with the prisoner was usually about 1:30, shortly after he'd been placed in his cell. I'd introduce myself, answer questions, try to get a sense of his mood.
I never knew what to expect. Most were willing to talk. Some conversations were surprisingly humorous; others were heavy. We nearly always discussed the last meal, phone calls they wanted to make, last visits with attorneys and spiritual advisers. We talked about what would happen a few hours later, and about a last statement and arrangements for his remains.
There were times when, even after six, we'd still be waiting for a court to rule on a stay of execution. Stays never bothered me. If we got the word, it was just a matter of telling the employees they could go home and thank you for coming. But the wait was nerve-racking for the inmates, especially the ones who came to the death house banking on it. If they didn't get the stay, they'd have only an hour or two to prepare themselves.
As I walked around The Walls, I'd glance up at the huge clock that has overlooked the recreation yard for more than a century. For me, the clock ticked away the minutes until I went home, but the inmate saw something else: a constant reminder of the time he couldn't make up.
Texas began executing condemned inmates at The Walls in 1924. Death row was an old structure even then, having been built around the time of the Civil War. The current death house contains eight cells; the execution chamber, with its adjoining IV room; and two galleries, one for the victim's witnesses and one for the inmate's. No one lives in the death house anymore. The condemned live in a new high-security unit about 60 kilometers away, in Livingston.
In most cases, I don't think the inmates I talked to were anything like the people who had committed the crime. By then they'd become accustomed to a different way of life than they knew outside prison. They had grown older, and not just in years; most communicated intelligently, were often insightful, even witty, and many were prepared to die. Two things surprised me most: How much they could eat a couple of hours before their execution and how calm some of them were. One man, Excell White, had been on death row 24 years and six months. He was at peace with the world and ready to go.
Carrying out executions was only one of my responsibilities. As many as 1,700 inmates at a time lived at The Walls. Add to that 12,000 inmates who came and went in any given month, mostly while being transferred from one prison facility to another. Every one of the 150,000 male inmates housed in more than 100 units statewide will be processed out through The Walls. If one dies in prison and nobody claims the body, he'll be buried by a detail from The Walls. The state buried 107 inmates at Huntsville last year. I attended most of their funerals.
So being senior warden is a big job. But the aspect that draws the most attention is the business of the death house.
My first one was April 22, 1998. Shortly after 6 p.m. I walked to the cell where Joseph Cannon was waiting and told him it was time. I'd never even witnessed an execution; now I was about to oversee one.
I watched as the tie-down crew secured Cannon in his straps on the gurney. Watched as the IV was inserted after a struggle to find a good vein. Listened as he made his last statement. Then, the IV fell out. The chaplain and I closed the curtains. The witnesses were taken away. Eventually, the IV was reinserted. I took off my glasses. That was the signal to the hidden executioner to start the flow of the three fluids, one to put him to sleep, one to collapse his lungs and diaphragm, one to stop his heart. I waited three minutes before asking the doctor to make his pronouncement. Then I went home to my family.
It was the most emotionally draining experience I'd ever had.
People wonder how I could do it. I remind them that mine was but the final contribution to a long, complex process. Each juror had a part, along with the attorneys and witnesses and judges. I've never lost a loved one to a murder. I've never spent years investigating a case. I've never sat on a jury and decided whether to put someone to death. That must be an enormous burden.
Has an innocent man ever been executed? Probably. The judicial system is designed to promote fairness, but anyone who expects perfection is asking for an impossibility. The system could be improved, but because human nature is involved, it won't be perfect.
Does the process provide the victim's family the "closure" so often mentioned? I have no way of knowing. But I do know this: Those who have taken part in or witnessed a legal execution will leave with an understanding of how fragile life is. A new set of victims is created among the family members of the condemned who watch. I wondered most about the mothers who saw their sons being put to death. Some would just wail out crying. It's a sound you'll never hear any place else, an awful sound that sticks with you.
By far the question people ask me most is how I feel about the death penalty. I can tell you only this: Apparently our society believes some people must be removed permanently and completely. As the warden, and a servant of the taxpayer, I tried to do the best job I could. As a human being, I see it as a sad affair.
But it's as a Christian that I struggle most. Jesus teaches us how we should treat one another, but part of me has absolutely no compassion for someone convicted of murdering a child. I have watched men being put to death for hideous crimes and wondered at that moment if we were doing the right thing.
I walked out of this job much the same as when I began it, full of questions. And with a gnawing in my gut that hasn't gone away - and isn't likely to any time soon.
Jim Willett, who worked for the Texas prison system for 30 years, is writing "A Warden's Journey," based on a journal of his years as senior warden at The Walls. He contributed this comment to The Washington Post.
TITLE: In Memory of Lenin's Favorite Hatchet Man
AUTHOR: By Thomas Rymer
PUBLISHER: Staff Writer
TEXT: In this building from the 7th (20th) of December, 1917, to the 10th (23rd) of March, 1918, was located the All-Russian Extraordinary Commission for Combating Counterrevolution and Sabotage, which was headed by the eminent Communist Party leader and Soviet statesman, the close comrade of V.I. Lenin, Felix Edmun do vich Dzerzhinsky.
Although the Bolsheviks had come to power in Russia following the Oct. 25, 1917 Revolution, which overthrew the Provisional Government under the leadership of Alexander Kerensky, by December their control over the situation in Petrograd, not to mention the country as a whole, was still tenuous.
The Bolsheviks faced serious opposition from many different political and social groups, including a number of other socialist parties who opposed what they saw as a hijacking by the Bolsheviks of a revolution that had been carried out in the name of the Soviets - the political bodies which claimed to represent the interests of the workers, soldiers and peasants in Russia and which had worked in opposition to the Provisional Government throughout 1917.
On Dec. 19, the Council of People's Commissars (Sovnarkom), chaired by Vladimir Lenin, heard a report that state employees, led by some of the socialist opposition, were planning to go on strike.
Sovnarkom's answer was to order Felix Dzerzhinsky, a Polish-Lithuanian Marxist who had joined the Party in 1917, to organize a "Special Commission" to deal with the situation.
Like many of the Bolshevik leaders, Dzerzhinsky was no stranger to the work of security organs, having on many occasions been held and often subjected to torture under the Tsarist political police - the Okhrana. Dzerzhinsky reportedly bore the scars of this torture over much of his body.
Although Dzerzhinsky's experiences with the Tsarist internal security organs must also have had some effect on his outlook toward the legitimate use of repression to achieve political goals, contemporary evidence tends to shift much of the responsibility for the nature of the Cheka - and such organizations as the GPU and KGB, which were its successors - to Lenin's pronouncements as party leader.
Dzerzhinsky, who was known by the nickname "Iron Felix," led a very ascetic life, had very frugal habits, and even lacked personal ambition, proclaiming that he was only interested in furthering the goals of the revolution.
However, he is reported to have broken down at a New Year's celebration in 1918, drunkenly pouring out his guilt for the amount of blood the Cheka had spilled and begging Lev Kamenev and other Bolshevik leaders to shoot him on the spot.
And much blood had been spilled, with one estimate putting the number of deaths that the Cheka was responsible for in the first year of Bolshevik rule alone at 200,000.
TITLE: Street Kids: A Growing Problem
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: They hang out huddled in small groups near metro stations, markets, and railway stations - crowded spots where it's much easier to beg, work, or steal.
They are St. Petersburg's street children, a constituency that - as the result of broken alcoholic homes, violence and poverty - is blossoming by the thousands.
Not all are homeless, but all are neglected, superfluous, forgotten.
SLAVA
Among them is Slava, a 13-year-old freckled kid who doesn't look a day over ten. He first ran away when he was eight, fleeing a home life of drunken parents, sloppy late night parties and regular raids by the police.
Slava tolerated it as long as he could, but one day his patience broke and he left home.
Now, Slava's home consists of makeshift beds he has arranged in cellars and entry ways. He gets his schooling from the hard knocks of Prospect Pro s veshcheniya metro station, where he sells hand-picked flowers, hustles garbage-toting gigs with local kiosk owners, or simply preys on the soft-hearted old women to give him money for milk and bread.
Understandably, Slava has acquired a swagger here on the streets that make him one of the gang, and when asked what he wants to be when he grows up he replies, with informed detail, that he wants to be a bandit.
"I want to be a bandit because they have beautiful cars, girls, and lots of money," he says, raising his voice to be overheard by his compatriots.
But there is a flip side to this bravado, and he lowers his voice when discussing his other goals - goals of returning to school, from which he was expelled two years ago for behavior problems and bad grades.
"I want to go back to school because they feed you, and I like the physical education classes," he says quietly.
But not quietly enough, and a couple of his compatriots who overhear him snigger.
STATS SHOW HARD KNOCKS
New research from St. Petersburg State University's sociology department fix the number of street children in the city at 16,000. A full 77 percent of these children - some as young as nine - work exploitative and dangerous jobs.
As could be expected, this is in violation of Russian Labor Laws, which fix the minimum working age at 15 - or 14 in special circumstances that require parental consent.
Because of this, working children rarely confess their employment for fear of losing it, regardless of how miserable the conditions may be.
But work they do.
The university study, which included interviews of 1000 street children, revealed that as much as 30 percent of them are involved in illegal activities.
About 70 percent of the child work force are boys between 10 and 15 years old, the university survey said. They are mainly exploited as cargo handlers, scavengers, janitors, drug runners, and prostitutes. The rest are young girls, who are mostly forced to work as prostitutes or in black-market pornography. Others find work in kiosks.
Still others collect beer bottles for return or sell mushrooms and berries in the summer.
Many children work at night, and some are beaten by their employers and bullied by street gangs. For their labors, they receive between 10 rubles ($0.36) and 200 rubles a day. For those who work in the semi-organized world of child prostitution, congregating around metro stations, saunas and low-tide hotels, pay ranges from $1 to $100, depending on the sexual contact involved.
Of course, each individual child has his or her individual history, but the pattern is the same: They are the products of alcoholic homes, and most of them have been expelled from school, depriving them of that one last safety net.
But they all found they were welcome on the street.
"I like this life because of the freedom," says Slava.
WHO CAN HELP?
That freedom, however, is more often than not short lived. Street children who work as laborers are nonetheless exposed to the elements, and freeze to death or die of starvation. Some, too, are beaten and killed.
Though no official statistics are available on how many street children meet what fate, the problem has swelled to such extremes in St. Petersburg that it has attracted the attention of the International Program on the Elimination of Child Labor, or IPEC, which is affiliated with the International Labor Organization, or ILO.
The IPEC plans to call upon the City Labor Committee to form a task force devoted to rooting out the most dangerous forms of child labor, which the IPEC says have been all but ignored by local authorities.
St. Petersburg's IPEC manager, Alexei Boukharov, said the key to achieving this is by coordinating and channeling the work of organizations that touch on children's lives.
"At the moment there is no coordination of schools, district governments, police and other organizations in charge of these kids," Boukharov said.
Yelena Voronova, who co-supervised the recent St. Petersburg University study, added that preventing children from taking to the streets is no less important than caring for the ones who have already landed there.
"When a child has spent a month and a half on the street, it's often impossible to drag him back," she said.
She added that there should be more available for children in the way of clubs and organizations. Boukharov agreed and added district daycare centers could be established to help distract kids from street life. Foster families, too, would be invaluable for giving these children homes, he said.
But institutions like this have become more and more scarce since the collapse of the Soviet Union.
The IPEC recently submitted blueprints for the task force to the Social Affairs Committee of the Legislative Assembly.
But in an interview last Wednesday, Committee chairperson Natalya Yevdokimova poured cold water on the idea, saying that the City Labor Committee has been charged with looking after street children. The Children and Family Department is involved as well.
"I think these departments are able to coordinate this work by themselves, and there is no need of a special department," she said.
Meanwhile, St. Petersburg situation's is not unique in the country. Moscow is home to 60,000 severely neglected children. According to a report in the Guardian newspaper, a consortium of children's charities sent an open appeal for action to President Vladimir Putin.
But no one is expecting immediate results, and as the adults continue to consult and quarrel, another couple of 12-year-olds in St. Petersburg, Dima and Rita, return to the manhole where they live and fill another bag full of glue.
A couple of men are hanging around the manhole.
Breathing deeply from the bag, Rita doesn't really want to explain what they want.
TITLE: Macedonia Civilians Trapped by Battles
PUBLISHER: The Associated Press
TEXT: SKOPJE, Macedonia - Macedonia's army claimed a success Monday in its push to clear its rugged northern hills of ethnic Albanian insurgents, saying it forced the rebels to cede a village stronghold. But government forces began shelling the village again later, suggesting the rebels continued to resist.
A military spokesperson, Colonel Blagoja Markovski, said the militants were expelled from the village of Matejce late Sunday and that special police units were moving house to house to make sure none were hiding out.
"We kicked them out of the village. They scattered up in the hills," Markovski said. But government artillery later resumed heavy shelling of Matejce on Monday and also fired at Slupcane, another rebel-held village near the rugged border with Kosovo.
The attacks on Slupcane and Matejce have hindered efforts by international aid groups to help thousands of civilians trapped in the fighting. Monday's assaults came hours before a key European official was due in Macedonia in an effort to end the crisis.
European Union foreign policy chief Javier Solana will try to negotiate a way out of the government deadlock which occurred after two ethnic Albanian politicians made a deal with the rebels, angering their Slavic partners in the leadership.
Revelations of a deal pushed Macedonia's leadership into turmoil, just weeks after ethnic Albanian and Slavic politicians forged a national unity government and raised hopes that further violence might be avoided.
The fighting, meanwhile, stymied hopes of helping the civilians who have been cowering in basements for three weeks.
Macedonian media and government sources reported that the International Committee of the Red Cross was trying to negotiate an evacuation of civilians from the besieged villages, but the ICRC refused to comment.
It was not immediately clear how many people are still trapped in the rebel-held villages. Up to 3,000 have crossed into Serbia, Yugoslavia's larger republic in the past weeks, while an army spokesperson said that more then 1,300 left the area in the past 24 hours. Thousands more have crossed into Kosovo since the crisis began earlier this month.
The U.S. ambassador in Macedonia, Mike Einik, met with ethnic Albanian politicians on Sunday to discuss ways out of the crisis.
Siding with the Macedonian government, which says no deals can be made with the "terrorists," international officials have urged the two key ethnic Albanian leaders to renounce their deal with the rebels.
The rebels say they are fighting for greater rights for Macedonia's minority ethnic Albanians. The government contends they are bent on seizing territory and carving out an ethnic Albanian mini-state.
After talks with Einik, one of the ethnic Albanian leaders, Imer Imeri, spoke of a new U.S.-European initiative to end the crisis.
"The important thing is that the killing stops and that the civilians are saved," Imeri said.
The deal reportedly provided that the rebels would agree to stop fighting in exchange for amnesty guarantees and the power to veto political decisions on ethnic Albanian rights.
TITLE: WORLD WATCH
TEXT: Tourists Abducted
MANILA, Philippines (AP) - A Muslim extremist group claimed responsibility Monday for abducting 20 people, including three Americans, from a luxury resort and said it was holding the captives on two islands in the southern Philippines.
One of the Americans, Martin Burnham, went on the radio to offer reassurances to relatives in the first contact since armed gunmen snatched the tourists in a daring raid early Sunday morning.
Abu Sabaya, a leader of the Abu Sayyaf separatists, told the radio that the hostages had been divided into two groups and taken to different islands in Basilan and Sulu provinces.
Abu Sayyaf is the small and more radical of two rebel movements that say they are fighting for an Islamic state in the southern Mindanao region.
Jospin Versus Germany
PARIS (Reuters) - French Prime Minister Lionel Jospin delivered a powerful counter-offensive Monday to German proposals for a more federal Europe, insisting nation states remain the hub of power in the 15-country bloc.
In a long-awaited speech on the future of Europe, Jospin gave notice he would fight to maintain lucrative European Union subsidies to French farmers but pleaded for an overhaul of current Brussels structures, proposing the election of a European "president."
Jospin bluntly rejected a recent proposal by German Chancellor Gerhard Schroeder to turn the EU Council of Ministers, currently at the center of decision-making in Brussels, into a chamber of the European Parliament.
The German government declined to comment in detail on the speech, noting it added to the "lively discussion" underway.
India Helps Afghans
NEW DELHI (Reuters) - India said Monday that it would provide shelter to minorities from Afghanistan if they fled from the austere vision of Islam being implemented by the country's Taleban rulers.
External Affairs Minister Jaswant Singh said that India and the international community were "deeply troubled" by the Taleban's plan to force Hindus to wear identifying yellow badges.
The Taleban say they are attempting to protect the estimated 1,700 Hindus from the religious police, who impose rules on Muslim Afghans.
Singh said India had accepted a large number of Afghan nationals over the years and stood ready to accept minorities who did not want to subscribe to Taleban decrees.
The minister said the creation of the Taleban was "one of the most terrible legacies of the ending years of the Cold War."
Law and Order
JAKARTA (Reuters) - Indonesia's embattled President Abdurrahman Wahid on Monday told security forces to enforce law and order in the country, but stopped short of his threatened declaration of a state of emergency.
The nationally televised address left little clue as to how the country's deepening leadership crisis might be resolved and Wahid himself warned attempts to oust him would break the giant nation apart.
The leaders of parliament and the top legislature immediately dismissed Wahid's order as ineffectual.
Parliamentary speaker Akbar Tandjung, who also heads the second-largest party, Golkar, said Wahid's move changed nothing.
Presidential secretary Abdul Mudjib Manan said Wahid was not delegating authority and the order would last "until everything settles down."
But the signs are that will not be soon and police throughout the country Monday were placed on top alert.
Chad Leader Re-Elected
N'DJAMENA, Chad (AP) - Police briefly detained six opposition candidates on Monday, hours after incumbent President Idriss Deby was declared the winner of Chad's second multi-party presidential election.
Police patrolled the streets in large numbers. Earlier, they had prevented an opposition demonstration from taking place at a race course in N'Djamena, the capital.
At about 2 a.m. Monday, Yokabdjim Mandigui, head of the Independent National Electoral Commission, announced that Deby, who seized power in a December 1990 coup, had won 67 percent of the vote. His nearest rival, Yorongar Ngarlejy, won 14 percent in the May 20 election, Mandigui said.
The six opposition candidates have said they will challenge the results in some constituencies through the constitutional court, accusing Deby's ruling Popular Salvation Movement of fraud.
Voting was monitored by 1,300 Chadian and 60 international observers. Nearly two-thirds of the country's 4.7 million voters turned out for the election.
Children Leave Army
MAKENI, Sierra Leone (AP) - Hundreds of child soldiers celebrated release from the ranks of Sierra Leone's rebels on Friday, some setting their old uniforms alight and dancing around the flames.
Sierra Leone's Revolutionary United Front surrendered 581 boys, some as young as 6, to the United Nations on Friday, the latest release of child soldiers under a week-old cease-fire. Ten girls, ages 6 to 11, were also freed.
The UN, meanwhile, confirmed new attacks by ragtag militias fighting the rebels in the east. Some suspected the militias were trying to take rebel-held diamond fields before any peace talks.
Sierra Leone's rebels have waged a 10-year campaign of terror in the West African country, killing and mutilating thousands of civilians in a war aimed at toppling the government and controlling the country's diamond fields.
Race Riots in Britain
OLDHAM, England (Reuters) - Police Monday said a weekend of rioting in the northern English town of Oldham between whites and Asians was provoked by racist groups from outside the area.
Police chiefs pledged to mount a major operation to prevent any repeat of the violence in which white and mainly Bangladeshi and Pakistani youths fought each other and police with stones and petrol bombs in the worst racial clashes for years.
The police did not name the groups involved, but noted that the extreme right-wing British National Party, which opposes immigration, had been campaigning in the area ahead of Britain's June 7 general election.
Appealing for calm, police Chief Superintendent Eric Hewitt said that there would be a heavy police presence on the streets of Oldham.
TITLE: Avs Surprise Devils in Stanley Cup Opener
AUTHOR: By John Mossman
PUBLISHER: The Associated Press
TEXT: DENVER, Colorado - It's back to basic hockey for the New Jersey Devils, who made the mistake of believing their press clippings.
Jolted back to reality by the Colorado Avalanche's 5-0 romp in the opening game of the Stanley Cup finals Saturday night, the Devils were a humbled team Sunday as they made adjustments for game 2.
"It's hard when everybody tells you how good you are," goaltender Martin Brodeur said. "We paid the price for it."
Devils coach Larry Robinson, still dismayed that his team was "outhustled and outworked" in the opener, said his team was guilty of reading "how good we were and how we were going to walk all over the Avalanche, and we started to believe all of our clippings."
"We forgot that games are still won and lost on the ice," Robinson said. "We found out we can't just put our sticks on the ice because we are the defending - so-called defending - champions. We have to play well."
It's difficult not to be smug when one of the strongest compliments came from Pittsburgh's Mario Lemieux, who called the Devils the best team he has ever faced after his Penguins were dispatched in five games in the Eastern Conference finals.
If the Devils took Colorado lightly, they know better now.
"There's a reason why the Avalanche are here," Robinson said. "In the first game, they beat us to the loose pucks. A lot of times we were caught standing still. They were dumping pucks and chipping them past us with speed, and we weren't in good position."
Robinson insists his team must be more physical when the series resumes here Tuesday night.
"If you're not scoring goals, you have to do other things well," he said. "That means that guys who don't normally consider themselves physical players still have to be a part of the physical game. They have got [Dan] Hinote and [Chris] Drury, and even Joe [Sakic] is out there finishing checks. We have to get the same thing from our players."
Brodeur said the common theme in the locker room Sunday was playing with more intensity.
"There are some adjustments we'll need to make," Brodeur said. "We need to go back to the basics, listen to the coach and play the game the way he wants us to play it."
Despite their dominance in the series opener, the Avs expect the remaining games to be more difficult. They expect to face a more intense, more focused New Jersey team in game 2.
"We were at the top of our game and, obviously, they didn't play as well as they're going to play the next game," said Sakic, who had two goals and an assist in the opener and who leads all playoff scorers with 11 goals. "We expect a totally different game the next game."
Coach Bob Hartley expects his team to have to play even better in the second game.
"We don't plan to change many things on our side," Hartley said Sunday, the first of consecutive days off for the two teams. "I really like the approach of our players. We are focused. We recognize the situation, the importance of making sure we challenge ourselves to find ways to be better. I think we can play a better game than we did in game 1."
Besides containing Sakic, New Jersey must figure out a way to solve Avalanche goalie Patrick Roy, who extended his shutout streak in the Stanley Cup finals to 213 minutes, 12 seconds - the second-longest streak in finals history.
"How do we deal with this? How do we respond?" forward Bobby Holik said of the Devils' worst playoff defeat since a 7-0 loss to Pittsburgh in 1993. "Every team finds itself in a situation like this, but good teams make something of this."
Scott Stevens, the Devils' best defenseman who was on the ice for three goals, promised that his team "is going to rebound. We were flat. We have to come back with a much better game and I'm sure we will."
TITLE: Teenager Steals Show At U.S. Track Event
AUTHOR: By Bert Rosenthal
PUBLISHER: The Associated Press
TEXT: EUGENE, Oregon - Not since Jim Ryun was running during the 1960s has America seen a miler with the potential of Alan Webb.
On Sunday, the unassuming 18-year-old senior at South Lakes High School in Reston, Virginia, even outdid Ryun, considered the greatest miler in U.S. history.
Competing against some of the world's best milers, including world record-holder and Olympic 1,500-meter silver medalist Hicham El Guerrouj, plus the third through sixth-place finishers in the 1,500 in the Sydney Games, the teenager put on a show worthy of an international star.
Capped by a blistering 55-second final lap, Webb finished fifth in the Prefontaine Classic at 3 minutes, 53.43 seconds.
The time eclipsed Ryun's scholastic record of 3:55.3 set in 1965 at San Diego. In addition, Webb was timed at 3:38.26 for 1,500 meters, smashing another Ryun record.
Webb, who became the first American high school student to run a sub-four minute mile (1,610 meters) indoors, earlier this year with 3:59.86 at New York, was the fourth to do it outdoors, following Ryun, Tim Danielson and Marty Li quo ri. Liquori was the last to do it, in 1967.
"It's exciting to come out on the track and watch a phenom like Alan Webb run," said Marion Jones, the only woman to win five track-and-field medals at one Olympics.
Maurice Greene, the Olympic gold medalist and world record-holder at 100 meters, embraced Webb after the youngster had completed his second of two victory laps - one with El Guerrouj, the winner with a U.S. all-comers' record of 3:49.93, and one by himself.
"I wouldn't race him in a mile," Greene said. "He don't look like no high school dude."
Alberto Salazar, the former Boston Marathon and New York City Marathon winner, and Bob Kennedy, the former American record-holder at 5,000 meters, also were duly impressed with Webb.
"This kid can be the best in the world," Salazar said.
"Wow!" Kennedy said. "He surprised me. Spectacular."
Webb was even shocked with his stunning times.
"Everybody was a little surprised with that, even Alan," said Scott Raczko, his coach at South Lakes High. "He knew he was in shape to run 3:54 or 3:55, but 3:53 was great."
Webb said he was hoping to run 3:55.
"I wanted that high school record," he said.
Webb's time was the fastest by an American since 1998 and made him the 19th-fastest American in history.
"One of his goals was to be the first American in the race," Raczko said.
He did that, and became the first in the hearts of many of the spectators attending the meet.
Afterward, Webb stayed more than an hour after the meet signing autographs and posing for pictures.
For the moment, at least, he was more popular than Jones.
As the Olympic star Jones walked past Webb, where he was accommodating the fans, no one paid any attention to her.
TITLE: Brazilian Rookie Leads Penske to 1-2 Finish at Indy 500
AUTHOR: By Mike Harris
PUBLISHER: The Associated Press
TEXT: INDIANAPOLIS - Spiderman jumped out of his car and onto a 6-meter steel fence at the Indianapolis Motor Speedway, punching the air over and over with one raised fist.
Nobody at the Indy 500 had ever seen anything quite like it.
Helio Castroneves, the Brazilian rookie who earned his nickname for similar antics at other tracks, beckoned his crew to help him celebrate his victory. Team Penske came running, and the big crowd roared.
Minutes earlier, Castroneves and fellow Brazilian Gil de Ferran gave renowned team owner Roger Penske a 1-2 finish Sunday and a sweep of the top five spots for Championship Auto Racing Teams.
"It's the best day of my life, redeeming myself like this," said Penske, following a record 11th victory at Indy after failing to put any drivers in the race in 1995 and a five-year boycott by CART.
Penske remained in the pits while the 26-year-old Castroneves and crew scaled the fence.
"I'm climbing with him tonight, when nobody's looking," Penske said.
Michael Andretti, Jimmy Vasser and rookie Bruno Junqueira followed the two Penske drivers across the finish line, making it a tough day for the rival Indy Racing League, which considers the Indianapolis 500 its centerpiece.
Eliseo Salazar finished seventh in the best showing for an IRL regular.
"We're just fortunate to have this sport, and somewhere along the line we've got to figure out a way to pull it together," Penske said when asked about the CART-IRL split. "There's too many good drivers in IRL, too many good teams and some great talent, and the same thing on the other side."
This was the first oval victory for Castroneves, whose four previous victories - all in CART - came on road and street courses.
"This is a dream come true," he said. "I wasn't thinking about history. I was just thinking about winning my first oval race."
In only his second season with Penske, after two years with weaker teams, Castroneves is considered a strong contender in his regular series. At Indy, though, he was less touted than his older teammate, defending CART champion de Ferran, and was one of a dozen or more favorites.
The race appeared up for grabs among the two Penske drivers, Andretti and Tony Stewart when all made a pit stop on lap 137 during a caution brought on by rookie Cory Witherill's harmless spin.
De Ferran led going in, followed by Castroneves, Andretti and Stewart.
As the cars left their pits, Castroneves darted into the outer part of the two-lane pit road, alongside de Ferran and directly in front of Stewart, who braked hard. Andretti banged into the rear of Stewart's car, damaging his front wing.
It was the latest example of bad luck for the Andrettis. Father Mario Andretti won the 1969 Indy 500, but he was never able to do it again despite dominating at times.
His son has often been in contention, too, but something always seems to go wrong. Michael Andretti, who led 16 laps Sunday, is the career leader in laps led without a victory.
IRL officials penalized Castroneves for driving into the outer lane by giving the lead to Stewart before the green, and the former IRL champion stayed out front until he pitted on lap 148.
That was it for Stewart, who never was able to mount another challenge and finished sixth. He left the track quickly after the race in a helicopter, heading for NASCAR's Coca-Cola 600 in Concord, North Carolina, the second time in three years he has driven in both races. In the stock-car race, he overcame an early spin to finish third.
Castroneves inherited the lead and stayed out front the rest of the way, fighting off challenges from de Ferran and IRL regular Robbie Buhl, who spun out of contention on lap 165.
De Ferran's best shot at the leader came on a restart on lap 172 when he tried to get around Castroneves on the outside in the first turn of the 4.025-kilometer oval. But both Penske cars had to back off.
Castroneves was unchallenged the rest of the way, beating de Ferran to the finish by 1.74 seconds and joining former Penske winners Rick Mears (four times), Mark Donohue, Bobby Unser, Al Unser, Al Unser Sr. Danny Sullivan and Emerson Fittipaldi.
"Sometimes you want to lead all the race, but it doesn't matter," Castroneves said. "It's the last lap. Save fuel, try to make sure you go longer than anyone else."
Chip Ganassi, owner of another of CART's elite teams, ended the boycott last year with a resounding victory by another Indy rookie, Juan Montoya, who is now racing in Formula One.
Ganassi had four cars in Sunday's race, with Vasser, Stewart and Junqueira all proving the strength of the team once more.
Castroneves and de Ferran raced without the Marlboro sponsor logos they carry in CART, giving their cars a Spartan red-and-white look. The team agreed to remove the decals because of the settlement with tobacco companies reached by a group of state attorneys general in 1998.
Castroneves, however, celebrated in victory lane, drinking from the traditional bottle of milk and wearing a baseball cap emblazoned with a Marlboro logo.
TITLE: Paris Bids 'Au Revoir' to Venus
AUTHOR: By Michael McDonough
PUBLISHER: The Associated Press
TEXT: PARIS - Venus Williams lost in the first round of the French Open on Monday, beaten in straight sets by Barbara Schett in a match that drained the women's field of another marquee player.
Williams, seeded second, lost 6-4, 6-4 to the Austrian on opening day at the Grand Slam event, not long after fifth-seeded Amelie Mauresmo also lost.
Williams, the reigning U.S. Open and Wimbledon champion, seemed to rally after dropping the first set. She then produced a string of unforced errors, allowing the 24th-ranked Schett to break for a 5-4 lead in the second set.
She saved three match points in the final game before dropping the match on her 43rd unforced error, a long forehand.
This was only the second time Williams has lost in the first round of a Grand Slam tournament. The other time was her first Wimbledon in 1997.
Schett, ranked 24th, beat Williams for the first time in five matches.
Williams' clay-court season began with promise, a title at Hamburg, Germany, this month. She then ran into trouble with a third-round defeat to Justine Henin in the German Open. She reached the quarterfinals at the French last year and in 1998.
Williams' defeat follows the withdrawal Sunday of third-seeded Lindsay Davenport because of a knee injury. Also out because of injuries are last year's champion, Mary Pierce, as well as Monica Seles and Anna Kournikova.
Mauresmo's big plans for the French Open ended with a 7-5, 7-5 loss to Jana Kandarr that left the tournament without one of the tour's top players this season.
The Frenchwoman had won four titles this year and was seeded fifth at Roland Garros.
Mauresmo wasted a 5-1 lead in the second set and lost the match on a wide backhand, one of her 37 unforced errors against the 60th-ranked German.
The loss on center court left French fans without a major home contender, following last week's withdrawal of defending champion Mary Pierce. Nathalie Tauziat, seeded ninth, is the next highest-ranked Frenchwoman.
Among the men, defending champion Gustavo Kuerten made a more predictable start, defeating Guillermo Coria 6-1, 7-5, 6-4. The top-seeded Brazilian served 14 aces and broke his opponent five times.
"I had to play a great game from beginning to end," Kuerten said. "I really did everything I was planning to do."
Coria, a 19-year-old Argentine, went down surprisingly easily against the two-time French Open champion. Coria is ranked 13th in the ATP Champions Race and has the third-best record on clay this season behind Kuerten and Spain's Juan Carlos Ferrero.
"He's already one of the best guys around," Kuerten said. "Next year he will have more success."
No. 7 Yevgeny Kafelnikov opened by defeating Federico Luzzi of Italy 6-3, 6-3, 6-4 for his 500th career victory. Luzzi, a lucky loser, replaced South Korea's Hyung-Taik Lee, who withdrew Monday because of a torn abdominal muscle.
"Even though I won in three sets, it wasn't easy," said Kafelnikov, who captured the French in 1996. "I was pushed almost to the limit."
Kafelnikov, playing his ninth consecutive French Open, has not won a title on clay since his Roland Garros championship.
Lleyton Hewitt got off to a shaky beginning against French wild card Paul-Henri Mathieu, winning 7-6, 4-6, 6-3, 6-2.
The sixth-seeded Australian saved two set points to force the tiebreaker and served only five aces to Mathieu's 10. But Mathieu, the 2000 junior champion at Roland Garros, made 86 unforced errors to 55 for Hewitt.
(For more results see Scorecard.)
TITLE: SPORTS WATCH
TEXT: Koch Earns LPGA Title
CORNING, New York (Reuters) - Sweden's Carin Koch fired a 6-under-par 66 to win the LPGA Corning Classic on Sunday by two strokes from Scotland's Mhairi McKay and fellow Swede Maria Hjorth.
Koch captured her first LPGA title by finishing with an 18-under-par total of 270. McKay shot a 70 and Hjorth posted a 69 for four-round totals of 16-under 272.
"I'm not sure if it's hit me yet. It will take a while," said Koch, who had finished as runner-up in six LPGA tournaments.
"It's really more of a feeling of relief than I thought it was going to be."
Last year, Koch claimed her first professional victory at the Chrysler Open on the European Tour. She also sank the winning putt to clinch Europe's victory in the Solheim Cup.
Morariu Has Leukemia
MIAMI (AP) - Top-ranked doubles player Corina Morariu was in serious but stable condition early Thursday after receiving heavy doses of chemotherapy to treat a rare form of leukemia.
Dr. Albin Morariu, Corina's father and a neurologist, said his daughter became very sick the past few days after returning to her Boca Raton home from a match in Germany two weeks ago. She complained of fatigue and nose bleeds, he said.
Albin Morariu said his daughter has a "fighting chance" of sending the disease, known as Acute Promyelocytic Leukemia, into remission. She is being treated at Jackson Memorial Hospital in Miami.
Corina Morariu, 23, turned pro in 1997 after winning three junior Grand Slam championships. She missed five months of action that year because of a kidney infection.
In 1999, she teamed with Lindsay Davenport to win the doubles title at Wimbledon. Morariu captured this year's Australian Open mixed championship with Ellis Ferreira.
Morariu earned the No. 1 ranking twice last year in doubles for individual players.
Red Deer Captures Cup
REGINA, Saskatchewan (AP) - Jeff Smith scored at 13:16 of overtime as the Red Deer Rebels beat the Val-d'Or Foreurs 6-5 on Sunday to win the Memorial Cup.
The Alberta team gave the Western Hockey League its 14th Canadian Hockey League title, the most among the three major junior leagues.
Kyle Wanvig scored twice for Red Deer and was selected the MVP of the tournament. Derek Meech, Ross Lupaschuk and Joel Stepp also scored for the Rebels.
Jerome Bergeron scored twice, and Simon Gamache, Brandon Reid and Stephane Veilleux added goals for the Quebec Major Junior Hockey League champion Foreurs.
TITLE: Schumacher Claims 5th Monaco Grand Prix
AUTHOR: By Nesha Starcevic
PUBLISHER: The Associated Press
TEXT: MONTE CARLO, Monaco - For Michael Schumacher, it was a matter of finishing the race safely. For David Coulthard, it was a matter of just getting started.
Coulthard, sitting on the pole, stalled at the start of the formation lap for the Monaco Grand Prix when the electronic launch control device of his McLaren-Mercedes malfunctioned and he was relegated to the back of the pack.
That opened the way for Schumacher to be at the front of the starting grid and the three-time defending champion took full advantage of the unexpected opportunity to cruise to his fifth victory on Formula One's most demanding circuit.
Leading virtually from start to finish in the 78-lap race, except for five laps (55 to 60) following his pit stop, Schumacher cruised home to pace a 1-2 Ferrari finish, with Brazilian teammate Rubens Barrichello 0.4 seconds behind him.
Eddie Irvine was third in a Jaguar, earning his first points of the season.
Schumacher's fifth victory on the Mediterranean principality's famed 3.37-kilometer street circuit put him in a tie with Graham Hill on the all-time list. Ayrton Senna, the late Brazilian, had six.
With his 48th career victory, Schumacher is now three behind all-time Formula One leader Alain Prost.
"To win here in Monaco, first you have to finish," Schumacher said. "In some ways it was an easy and straightforward race because I was out in front on my own.
"I love this circuit as it is always a challenge," the German said. "Today, I just had to think about reliability and make sure I didn't make a mistake."
Schumacher had a comfortable lead last year, only to be forced out with suspension problems as Coulthard came through with the victory.
"That was in the back of my mind today. I was just hoping that I wouldn't have any mechanical problems," Schumacher said.
Schumacher increased his championship points lead over Coulthard to 52-40 with his fourth victory of the season.
The two Ferraris were never threatened once Barrichello moved past slowing Mika Hakkinen on lap 13. Hakkinen tried to bring his McLaren-Mercedes back on track but finally dropped out on lap 16.
Coulthard battled back to finish fifth, but it was a frustrating day for McLaren. Coulthard is the only driver to earn points in all seven races so far this season, but he has also stalled twice in his last three races.
The launch control is a device that was designed to give drivers a trouble-free start. It was allowed earlier this year and some teams have been struggling with the technology.
"It's something we've tested a lot and it shouldn't have happened," Coulthard said. "Obviously I was frustrated when it occurred, but as a racing driver you have to overcome that and concentrate on getting the car started and getting on with the race."
Twice a winner this season, Coulthard moved over swiftly when Schumacher came up to overlap him on lap 27.
"The sporting gesture was to move over. I was a full lap down and you have to give way to the leading car," Coulthard said. "I was so far behind."
Underlining McLaren's troubles, Hakkinen has now failed to finish five of seven races this season. The former two-time champion only has four points and almost no chance of battling for the title.
"I made a good start and was close behind Michael when all of a sudden the car just started pulling to the right," the Finn said. "I went into the pits but the crew couldn't find anything wrong immediately and we decided to go back out. The car was still behaving in a strange way and I decided there was no other option but to retire."
McLaren team boss Ron Dennis called it a "frustrating day."
"At this stage, it's inappropriate to comment on the problems we experienced apart from the fact that the responsibility doesn't rest with the drivers," Dennis said.
Barrichello overcame cramps in his right foot to hold onto second place.
"My race was not as easy as it looked, because around lap 10 I started to get cramps in my right foot," the Brazilian said. "There might have been a problem in the cockpit because the pedals were vibrating a lot and I had trouble with my heel rest."
"The team advised me to try and move my toes and drink more water. I could not feel my foot and I had to brake early and concentrate on not going off. The situation improved after my pit stop," Barrichello said.
"The car was brilliant, I've never had such a good car."
Schumacher crossed the line in one hour, 47 minutes, 22.561 seconds, recording an average speed of 146.97 kilometers per hour over the race distance of 262.97 kilometers.
TITLE: Lakers Brush Aside Spurs To Reach Finals
AUTHOR: By John Nadel
PUBLISHER: The Associated Press
TEXT: LOS ANGELES - By early in the second quarter, the Staples Center crowd began chanting "Sweep! Sweep!"
By that time, the San Antonio Spurs had assured themselves of such a fate in the Western Conference Finals.
Seldom has a good team looked as bad as the Spurs did in the final two games of their season - a 111-72 loss to the Los Angeles Lakers on Friday night, and a 111-82 embarrassment to complete the sweep Sunday.
Of course, the streaking Lakers had something to do with San Antonio's ineptitude, although the Spurs seemed listless and uninspired from the start of game 4.
It was 6-0 before San Antonio scored, 11-2 after three minutes, 41-24 in the opening two minutes of the second quarter, 56-30 midway through the period, and 64-41 at halftime.
Game over.
The Spurs were gracious in defeat.
"They played incredibly," said Spurs star Tim Duncan, held to 15 points after scoring only nine in game 3. "They were better in the series, they always seemed to have an answer for us.
"They've been rolling since the end of the season, and they kept on rolling through us."
The Lakers have won 19 straight, including 11 in the playoffs. They have at least a week off before facing Milwaukee or Philadelphia in the NBA Finals.
"We ran into a very good team," Antonio Daniels said. "You could see in their eyes, they think they're the best team in the NBA.
"We had a great season, the best record in the NBA. It's very disappointing," Daniels added.
No matter what kind of a roll the Lakers are on, the Spurs had plenty to be disappointed about.
Outrebounded 63-35 in game 3 despite the presence of Twin Towers Duncan and David Robinson, the Spurs didn't show up on the backboards Sunday, either, being outrebounded 28-13 in the first half and 54-33 overall.
"As a team, they did everything," Robinson said. "They beat us to loose balls, they got rebounds, they made shots, they were fantastic."
The Spurs swept the Lakers in the conference semifinals two years ago, before beating Portland and New York to win their lone NBA title.
Of course, that was a different Lakers team with a different coach, Kurt Rambis, at the helm. Phil Jackson and his seven championship rings as a head coach - perhaps soon to be eight - runs the show now.
With Duncan on the sidelines due to injury, San Antonio was eliminated by Phoenix in the first round of the playoffs last year, and the Lakers won their first title since 1988 without having to contend with the Spurs.
The Spurs entered this series with homecourt advantage by virtue of their NBA-best 58-24 regular-season record.
However, they played like cellar-dwellers in the final two games after at least being competitive in the first two at the Alamodome.
The Spurs were the best three-point shooting team in the NBA this season, but horrendous from long range in this series, making 13 of 59, including three of 16 in game 4.
The Lakers, not known for their three-point shooting, were 10-of-22 Sunday and 32-of-72 in the series.
"They made plays and we didn't," Terry Porter said. "They had guys shoot at an unbelievably high level."
Duncan and Robinson never got together. Duncan was terrific and Robinson not so hot in the first two games; Robinson was good and Duncan bad in game 3; and neither was a factor in game 4.
Sean Elliott, a key ingredient in the Spurs' championship run two years ago, may have played his final NBA game Sunday.
The 33-year-old Elliott, who underwent a kidney transplant less than two months after the Spurs won their title, has indicated retirement is a strong possibility.
"After the season's over, I'm going to take a little vacation, clear my head and go from there," he said.
Derek Anderson, San Antonio's second-leading scorer during the season, played only 12 minutes - all in the first half - and scored only two points.
Anderson played Friday night for the first time since separating his right shoulder May 5 on a flagrant foul by Juwan Howard of Dallas, and had only two points in 29 minutes, missing all eight shots he attempted.
The Spurs hoped he'd give them a boost. He didn't, but wasn't alone in failing to contribute in the last two games.
Anderson admitted he wasn't at 100 percent physically, and said it would probably be two or three more weeks before he is.
"I need rest," he said, rubbing his shoulder. "About 95 percent of the guys in the league would have played. I couldn't get loose at the start of the game."
Anderson said he had spasms in his shoulder.
"No way in the world Rick Fox can guard me," Anderson said, clarifying he would have been much more effective against Fox had he been at 100 percent physically. "I tried."
TITLE: Aussies Down Russia To Win World Team Championship
AUTHOR: By Roy Kammerer
PUBLISHER: The Associated Press
TEXT: DUESSELDORF, Germany - Australia won the World Team Cup on Saturday, overcoming the withdrawal of an ailing Pat Rafter and getting a big victory by Lleyton Hewitt over Marat Safin.
The Aussies captured their third title in this $2.1 million event - a tuneup for the French Open - when they won the deciding doubles in the best-of-three series.
Hewitt defeated Safin 6-3, 6-4, breaking Safin to lead 4-3 in the second set. Safin, struggling with an 11-10 record this year, is seeded second at the French Open, which began Monday.
Yevgeny Kafelnikov evened the final for Russia with a 6-2, 6-4 victory over Scott Draper, who replaced Rafter at the last minute and has played just seven matches this year.
Wayne Arthurs and Draper then upset Safin and Kafelnikov 7-6, 1-6, 6-4 to add to Australia's 1999 and 1979 titles. Russia lost in the finals last year to Slovakia.
"It's nice to have a win over the guy that's sitting second going into the French Open," Hewitt said. "I wouldn't be surprised if I reached the final. I believe I can beat anybody out there."
Rafter, a two-time U.S. Open champion, pulled out of the singles and doubles Saturday to rest his inflamed elbow on his serving arm for the French Open.
"I'm sorry," Rafter told spectators from center court. "I tried in practice today, but I've played quite a few matches here and my arm is quite sore."
Rafter was coming off a six-week layoff because of tendinitis in his right wrist.
Kafelnikov, the 1996 French Open champion, won three of four matches at this event, where 12 of the world's top 15 polished up their clay-court games.
"I've got my belief back and everybody knows I'm hard to stop when I get things rolling," the Russian said of the French Open. "I think there are about eight favorites, including Pete Sampras. He surprised me at how well he played here."
Sampras and the United States finished tied for first in the group with Russia. But Russia advanced to the final because it won the head-to-head matchup.
Hewitt raced to a 4-1 first-set lead in 15 minutes against Safin in a match between two young players with a chance to win in Paris.
Hewitt frustrated Safin by chasing down every one of the 6-foot-4 Russian's drop volleys while driving him around the court with his ground strokes.
Safin then made three straight errors in the decisive break. When the Russian lost the game, he slammed a ball into the stands and drew a warning. Earlier in the week, he broke a racket and accused the referee of bias against Russians.
Hewitt and Safin could face each other again in the French Open semifinals.Hewitt is one of the few Australians comfortable on clay. He thinks he's ready to win a Grand Slam event.
"I like those situations, putting on a show in the big matches," Hewitt said. "I'm lucky to be born with that."