SOURCE: The St. Petersburg Times
DATE: Issue #685 (52), Tuesday, July 10, 2001
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TITLE: World Bank Focuses on Legal Reform
AUTHOR: By Thomas Rymer

PUBLISHER: Staff Writer
TEXT: James Wolfensohn managed to keep himself busy during the first two days of his week-long visit to Russia.
 The president of the World Bank flew into town Sunday, opened the organization's four-day conference on law and justice at the Tavrichesky Palace, and then spent part of the evening socializing with the Mariinsky Theater's artistic director Valery Gergiev. He was back at the palace Monday morning just long enough to give the keynote address and hold a press conference, before jetting off to Moscow for a meeting with President Vladimir Putin.
 The conference - officially entitled "Empowerment, Security and Opportunity Through Law and Justice" - brought together more than 400 members of the legal community from over 75 countries and provided the opportunity for Wolfensohn - as well as other Russian and World Bank representatives - to come to grips with the vexing issue of legal reform.
 Russia's legal system has occupied both the domestic and international spotlight over the last few months as a result of high-profile cases such as the battle between former oligarch Vladimir Gusinsky and natural-gas monopoly Gazprom. The World Bank conference, however, focuses on more systemic questions such as corruption and rule of law - and Wolfensohn was for the most part positive about assessing Russia's progress on these issues.
 "It's no secret that corruption is a problem in this country, as it is in many countries," he told the Monday press conference. "What I find extremely constructive is that it is being talked about publicly."
 "There is no desire to hide this question and, so far as I can see, there's a great interest in doing something about it."
 This conference is the second of its kind to be held by the World Bank, which focuses on issues of poverty and global development, and follows on the heals of last year's conference in Washington, D.C. 
 Many of Wolfensohn's remarks were devoted to the relationship between effective and fair legal systems and questions of development. "Our experience in countries in which we've operated is that putting in money, advice or projects without a sound basis by which the rights of individuals are protected is extremely inefficient, and surely doesn't confront the objectives that we have, and that I know [Russia's] government has," he said.
 Wolfensohn also stressed his belief that the Putin administration's commitment to legal reform was genuine and that there had already been positive signs on that front. One of Putin's constant refrains during his presidential campaign and during his tenure in office has been the need to establish a "dictatorship of law." The Kremlin introduced a sweeping legal-reform concept both to the State Duma and to the Council of Europe in April.
 "[Putin] has identified [legal reform] as a central issue, and that's the way it should be," Wolfensohn said. "We are here to try to support him intellectually or with experience in any way we can, but the leadership comes from him."
 According to Dmitry Kozak, the deputy chief of the presidential administration and the man charged by Putin to oversee the formulation, adoption and implementation of the reform program, the Council of Europe had only minor comments to make about the Kremlin's plan and that those issues had already been resolved.
 In particular, Kozak focused on the question of Russia's moratorium on the death penalty in relation to the Council of Europe's stance.
 "A number of politicians have said that with the introduction of trial by jury in Russia the intention is that we will lift the moratorium on capital punishment," Kozak said on Monday. "The ban on capital punishment was introduced because we were acceding to the convention on human rights and freedoms in connection with our accession to the Council of Europe, and there is no intention on the part of the Russian government to lift the ban on capital punishment."
 Putin later echoed these comments in his meeting with Wolfensohn in Moscow on Monday, according to The Associated Press. Former president Boris Yeltsin brought in the death-sentence moratorium in 1996, stating that it would stay in place until Russia could implement trial by jury throughout its entire legal system. Many in the legal community saw the move as a de facto abandonment of capital punishment, as the Kremlin was seen as either unwilling or unable to commit the necessary resources to establish universal jury trials. 
 The idea of holding the conference in St. Petersburg emerged from discussions between Wolfensohn and Putin 18 months ago - when the latter was still president-elect - and took a more solid form during last year's Washington event.
 After Monday's meeting with Putin, Wolfensohn was to visit the sites of several World Bank projects in Russia, including a resettlement project in the far northern region of Norilsk, part of an $80 million dollar plan to move people from three economically depressed areas in Russia to more viable communities.
 Russia joined the World Bank in 1992, and the organization has approved more than $11 billion in loans for the country since then. St. Petersburg has been one of the benefactors, the most recent example being a $150 million credit for developing the city center which was announced in May.

TITLE: Report: Ukraine Extradites Astoria Hitmen
AUTHOR: By Masha Kaminskaya

PUBLISHER: Staff Writer
TEXT: Police have extradited three unidentified men from Odessa, Ukraine, in a move that seems certain to provide new evidence and fresh scandal in the complex criminal case of noted local businessman Mikhail Mirilashvili, according to a July 6 article in Kommersant.
 The unsourced article, written by Andrei Tsyganov, alleged that the three men are being held in connection with a triple murder in front of the Astoria Hotel last September.
 Although the City Prosecutor's Office has refused to confirm or deny the reported extradition, Mirilashvili's lawyers hailed the development at a press conference on Monday as potentially important to the case.
 "We [the defense] congratulate our law enforcement for seizing the people responsible for those three murders. Finally, the investigators will have [something more substantial] than just guesses to work with," said Mirilashvili's lawyer, Yury Novolodsky, at the press conference.
 Tsyganov's article - which cited only "operational information" - also alleged that Mirilashvili, who is currently awaiting trial on kidnapping charges, was involved in the murders. This accusation and several other statements in the story were denounced as "libelous" by Mirilashvili's defense team.
 Mirilashvili, a 40-year-old Jewish native of Georgia, was arrested on Jan. 23 on charges of kidnapping two St. Petersburg men. His arrest provoked considerable protest as local political and cultural figures proclaimed his innocence.
 The preliminary investigation into the kidnappings is due to end on July 23, at which point Mirilashvili could theoretically walk free. However, Novolodsky said that it is likely the investigation will be prolonged, keeping him in custody.
 The chain of events began with the kidnapping of Mirilashvili's father, also named Mikhail, on Aug. 7 as he was being driven along Vyborgskaya Naberezhnaya. According to the police, his black Toyota was stopped by unknown people wearing police uniforms who checked thedocuments of the car's occupants, showed them a gun and then asked the driver to leave the car. Mirilashvili Sr. was then driven away in his car by the kidnappers. 
 He was released the next day, although the circumstances surrounding the entire incident remain unclear, and police and family members have not even said whether a ransom was paid or even demanded.
 Almost exactly a month later, on Sept. 8, two men and a woman of Caucasian origin were shot in broad daylight in front of the Astoria Hotel, where an international forum on investment and business in St. Petersburg was being chaired by Mirilashvili, and was attended by luminaries such as President Vladimir Putin's chief economic adviser Andrei Illarionov. 
 The City Prosecutor's Office identified the victims as 35-year-old Gocha Tsagarenshvili, his driver, Rostislav Anguladze, and Anguladze's wife, Liana. The authorities also said that Tsagarenshvili was a known criminal with extortion, robbery and kidnapping convictions.
 According to Novolodsky and Mirilashvili's spokesperson, Dmitry Miropolsky, the victim's last name is actually Tsagareishvili. 
 Local media immediately began speculating about Mirilashvili's alleged criminal connections, and they attributed the murders to him, supposedly in revenge for his father's kidnapping. 
 Prosecutors at the time, however, ruled out Mirilashvili's involvement, saying the murders were "most likely a criminal showdown." Following Mirilashvili's arrest in January, however, City Prosecutor Ivan Sydoruk told a press conference that there may be a connection between the charges against Mirilashvili, the Astoria murders and the August kidnapping.
 According to Tsyganov's Kommersant article, the three men who are said to have been extradited from Ukraine are accused of killing Tsagareishvili with the unspecified involvement of Mirilashvili because of a connection, also unspecified, to the August kidnapping. 
 However, Mirilashvili's lawyer claims that the three killed Tsagareishvili precisely because he could have helped Mirilashvili find the kidnappers and the people who masterminded the plot. Mirilashvili's defense claims that a kidnapping group based in Moscow is responsible both for the kidnapping of Mirilashvili's father and for the kidnappings with which Mirilashvili is charged.
 According to both Novolodsky and Miropolsky, Tsagareishvili was very helpful during Mirilashvili Sr.'s abduction and even spent the night of the kidnapping at Mirilashvili's office, although Mirilashvili had avoided contact with him prior to that.
 After the release, Tsagareishvili repeatedly offered him information about the crime and would have handed over that information had he not been killed. Novolodsky further alleged that the three extradited men were also involved in the kidnapping of Mirilashvili's father. 
 Novolodsky also said that he learned about the arrest and extradition of the three men through his own sources, including some close to Mirilashvili. He said that the men were ethnic Azeris, and that their fingerprints matched those found on the weapons and getaway car used in the Astoria murders.
 "Mikhail [Mirilashvili Jr.] was trying to find the kidnappers and the organizer, to secure himself and his family in future, to get in touch with them or to hand them over to [the police]. It was only a matter of time and money. Tsaga reishvili was a danger to them," Novolodsky said.
 He also said that Mirilashvili had not been interrogated about the case since approximately March and that he did not expect the new facts to affect the case.
 Gennady Ryabov, spokesperson for the City Prosecutor's Office refused to comment on the Kommersant story. He said the investigation was proceeding normally and confirmed that Mirilashvili's charge stayed the same.
 Mirilashvili and his family are said to control a wide range of St. Petersburg businesses, including a stake in Gostiny Dvor and other retail outlets, real estate, hotels and construction companies. Mirilashvili himself runs the six casinos of the Conti Group and is said to have considerable influence on the local television station Channel 11. 
 He is also a noted philanthropist and a close associate of former media mogul Vladimir Gusinsky. He holds dual Russian-Israeli citizenship.
 Kommersant's Tsyganov told The St. Petersburg Times that he had received his information from "law enforcement sources." 
 "If you've read the [federal] Law on Mass Media, you'll know that journalists aren't obligated to reveal their sources," he said.

TITLE: Unity To Hold Charity Concert For the Victims of Lensk Floods
AUTHOR: By Liza Utkina

PUBLISHER: Special to The St. Petersburg Times
TEXT: The St. Petersburg branch of the pro-Kremlin Unity party has arranged a charity concert for victims of the eastern Siberian floods that virtually destroyed the remote town of Lensk in Yakutiya in May. 
 The concert will take place on July 10 at the Beloselskikh-Belozerskikh Palace, which seats about 250, and will feature the renowned Mariinsky singer Diana Yafarova. 
 All proceeds will be given to children from Lensk, which was virtually flooded off the map in May when ice floes blocked the passage of the Lena River, swollen with melting snow. The floods left 19,000 homeless and caused more than $200 million in damage. 
 Organizers at Unity have already sent two airplane loads of humanitarian aid to the devastated area, located some 7,500 kilometers east of St. Petersburg.
 Sergei Ratz, the central district chairman for Unity, said in a telephone interview on Monday that he hopes the fundraising concert will be a success. 
 "We hope that all the tickets sell, but this is a more an ideological than a profitable effort," he said. 
 "I don't think we will manage to make more than 25,000 rubles [$850]. And not all the tickets are actually being sold. We invited [for free] everybody who helped us find and send clothes and food to Lensk."
 Yafarova is no stranger to charity benefits. "I don't need to use every concert to earn money," she said in an interview Monday. 
 "Now, when I had heard about this flood in Lensk, I went straight to Unity and asked if I could help. And now I wish I could have benefit concerts [for Lensk victims] all over the country."
 After St. Petersburg, Yafarova will travel to Yakutsk for another benefit concert sponsored by the Yakutsk city administration.

TITLE: Lawmakers Approve Revised Media Law
AUTHOR: By Ana Uzelac 

PUBLISHER: Staff Writer
TEXT: MOSCOW - In two final readings held on Friday, the State Duma passed a bill limiting foreign ownership in the country's most influential media - national television channels - while giving foreigners a free hand in press, radio stations and regional television channels.
 The bill, approved on the third reading by an overwhelming 343-37 vote, is a watered-down version of a draft that passed the first reading in April and would have severely capped foreign ownership in all Russian media.
 The amended version bans foreigners and Russians with dual citizenship from owning 50 percent or more in television stations that broadcast to more than half of Russia's territory or reach more than half its population, according to Pavel Kovalenko, a member of the information committee.
 Yabloko Deputy Sergei Mitrokhin said the bill was aimed at Boris Berezovsky and Vladimir Gusinsky, both of whom reportedly carry Russian and Israeli passports. Berezovsky controls 75 percent of TV6 television, one of the stations whose ownership would be affected by the bill. Gusinsky lost control of NTV television, another station affected by the bill, to Gazprom in April. Both men say they are under attack from the Kremlin, and they are living abroad.
 The media bill also would cap ownership in the country's two largest television stations, ORT and RTR.
 Although considered much less draconian than the initial draft, the bill was still criticized by some lawmakers as unconstitutional and harmful to Russia's investment climate.
 Boris Reznik, deputy head of the Duma information committee, said the bill violates both the constitution and a law on investments that guarantees a level playing field for Russian and foreign investors. "Besides, it's totally useless because it can be easily bypassed. All it would take is a few shell companies to mask the presence of a foreign investor," Reznik said.
 The final version of the bill also orders foreign owners to sell shares taking their ownership over the 50 percent mark to a Russian partner within a year - making the bill de facto retroactive.
 The bill's authors told the Duma in April - when CNN founder Ted Turner was considering buying a stake in NTV - that they were acting in accordance with the constitution, which permits legislation aimed at defending state interests and security to work retroactively.
 During the first reading in April, some deputies claimed they were protecting Russia from a malevolent foreign influence. "Those who want to do business are welcome, [but] those who want to do politics in Russia won't be able to do so," Kovalenko said at the time.
 But the bill would have in fact wrought havoc among foreign-owned Russian publishing houses and radio stations, many of which have been operating here for years. The largest among them is the parent company of The St. Petersburg Times, Independent Media, which is completely foreign-owned and publishes newspapers and magazines such as Playboy, Cosmopolitan and the Russian-language newspaper Vedomosti, a joint venture with The Wall Street Journal and the Financial Times.
 Other publishers are American Conde Nast, which publishes the Russian-language edition of Vogue, and French Hachette, which publishes Elle magazine. There are also several radio stations and entertainment television channels. All of these companies would have had to search for a Russian partner to which to offload shares - a move that, they have warned, would seriously shake investor confidence.
 The heads of these companies applauded the revised bill. "The latest move makes me happy, and gives more confidence to foreign investors," said Derk Sauer, Independent Media's CEO.
 Andrei Richter, head of the Moscow-based Media Law and Policy Institute, said he didn't think the bill targets any specific person, but warned it would be used against political enemies.
 The bill still has to pass the Federation Council before it can go to President Vladimir Putin to be signed into law.

TITLE: Assault on Media-MOST Continues
PUBLISHER: Combined Reports
TEXT: MOSCOW - Prosecutors have frozen the ownership of Media-MOST's headquarters and seized Vladimir Gusinky's Mercedes, as part of a continuing drive by Gazprom to take over Gusinsky's media empire.
 Friday's seizures came a day after five deputy editors at Ekho Moskvy radio - the last remaining independent news outlet in the crumbling Media-MOST empire - announced that they were resigning in protest of the "renationalization" of the station by Gazprom. The resignations came just a day after Gazprom promised to sell a 9.5 percent stake in the station to its journalists - shares that the employees had asked for in order to gain control of the station and thus maintain its editorial independence.
 But the deputy editors said they did not trust Gazprom and feared the state-connected gas monopoly has no intention of giving up control over the station.
 Gazprom called the resignations an internal matter.
 Gazprom became the main shareholder of Ekho Moskvy on Wednesday evening, when a Moscow court confirmed its earlier ruling that Gazprom's media arm, Gazprom-Media, could acquire stakes of 25 percent plus one share in all companies that were once part of Vladimir Gusinsky's Media-MOST. Ekho Moskvy is part of that media empire. Gazprom already owned 25 percent of the station.
 Fourteen percent of Ekho Moskvy was handed to the station's journalists by Gusinsky in May, but prosecutors have frozen the shares on Gazprom's request as a part of bankruptcy procedures against Media-MOST. Journalists had hoped that the 14 percent and the 9.5 percent from Gazprom, together with a 28 percent stake they already own, would allow them to gain control of the station.
 But now, the editors who resigned said, there is little chance that this will happen. "I don't trust Gazprom, and I believe their aim is to close the station as it is now," Vladimir Varfolomeyev, head of the station's information service and a deputy editor who resigned, said in a telephone interview Thursday.
 Varfolomeyev said the promise Gazprom-Media head Alfred Kokh gave on Wednesday "was nothing more than a handwritten piece of paper with no legal weight." "And I don't see myself as the head of the information service of a state radio since, mildly speaking, I disagree with many of the policies of this state," he added.
 Other deputy editors who resigned on Thursday are first deputy editor Sergei Buntman, marketing director Marina Tsvei, deputy editor Marina Korolyova and deputy editor for regional broadcasting Tatyana Shcheglova.
 Ekho Moskvy general director Yury Fedulov and chief editor Alexei Venediktov said that they would quit only if Gazprom breaks its promise and takes the station under full state control.
 Deputy editor Sergei Buntman said 12 journalists at the station had also resigned, but Venediktov declined to accept their resignations.
 Buntman compared Gazprom's pledge to relinquish shares to "an agreement written on a napkin."
 Venediktov told the Kommersant newspaper the resignations were "premature," but said he also doubted Gazprom's word. "After all my experience negotiating with [Gazprom media arm chief Alfred] Kokh, I am 90 percent certain there will be no solution," he said. "If changes to the share register are made within the next two weeks and Gazprom becomes the main shareholder, I'll quit with the rest."
 Gazprom-Media spokesperson Aelita Yefimova said that lawyers were already working on the deal to relinquish control.
 Media-MOST spokesperson Dmitry Ostalsky said on Friday that prosecutors had frozen Media-MOST's rights to its headquarters and "driven off somewhere" with Gusinky's armored Mercedes 600, which had stood unused in a garage for a year. A spokesperson for the Prosecutor General's Office said the actions were part of a case filed at Gazprom's request.
 Gazprom this year has seized NTV television, shut down Segodnya newspaper, and sacked the staff of the Itogi weekly magazine - all news outlets formerly controlled by Media-MOST - in the interests of securing the Media-MOST debt to the state that was purchased by Gazprom. Media-MOST and its supporters counter that the supposed business dispute is a poorly masked attempt to shut down Russia's independent media, with Ekho Moskvy being the last voice to be silenced. 
 <i>
 - Reuters, SPT </i>

TITLE: Hanssen To Talk as Part of Plea Agreement
AUTHOR: By Karen Gullo 

PUBLISHER: The Associated Press
TEXT: ALEXANDRIA, Virginia - Former FBI agent Robert Hanssen pleaded guilty to spying for Moscow in an agreement aimed at providing a full accounting of the damage from one of America's gravest espionage cases.
 Hanssen, 57, stood before a federal judge on Friday and admitted to giving a host of U.S. secrets about defense plans, nuclear-weapons systems and American intelligence gathering to his Soviet and Russian handlers.
 Hanssen admitted to 15 criminal counts, including 13 of espionage and one of attempted espionage. Six counts against him were dropped.
 Under a plea agreement submitted to the court June 14 and unsealed Friday, Hanssen will give a full confession in exchange for a life sentence without parole, thus averting the death penalty. But in exchange, he'll have to tell all. The government has until Jan. 11, the time of Hanssen's sentencing, to debrief him. If he breaks faith with the plea agreement, the government can back out of it.
 Hanssen provided Moscow with information about U.S. satellites, early-warning systems, defense or retaliation against nuclear attack, communications intelligence and major elements of defense strategy, the government said. He is also accused of disclosing the identities of Russian agents secretly working for the United States who were later executed.
 Deputy Attorney General Larry Thompson said that waiving the death penalty was the only way the government could obtain Hanssen's cooperation and assess the damage he'd reportedly done.
 Prosecutors said Hanssen, accused of trading secrets for about $1.4 million in cash and diamonds, was motivated by greed. &quot;His plea of guilty today brings to a close one of the most disturbing and appalling stories of a turncoat imaginable,&quot; said Kenneth Melson, U.S. attorney for the Eastern District of Virginia. &quot;The reassuring news is that Hanssen will spend the rest of his natural life under the watchful eye of a prison guard.&quot;
 Hanssen's lawyer, Plato Cacheris, said that his client &quot;very much wanted to make amends&quot; for his deeds. &quot;He's very troubled by what he's done.&quot;
 The lawyer also spoke of Hanssen's cunning in not being caught for so many years. He said Hanssen kept his identity hidden even from his Russian handlers. &quot;He was in control. He never met any Russians,&quot; said Cacheris. &quot;I think he was pretty good.&quot;
 Under terms of the plea agreement, Hanssen's family gets to keep its home in Vienna, Virginia, and three vehicles. As long as his wife, Bernadette &quot;Bonnie&quot; Hanssen, cooperates with authorities, she will receive an annuity of approximately $38,000 annually, officials said. The annuity is contingent on Hanssen keeping his part of the plea bargain. His wife is eligible for the benefit under federal law because the government did not have evidence she was criminally culpable.
 Cacheris told the judge that Hanssen had spied on and off since 1979, several years earlier than first believed, and took several breaks, including one from 1992 to 1999. He said that Hanssen had a premonition he was going to be arrested - as he was - when he went to a Virginia park to leave a bag full of documents for his Russian handlers last Feb. 18.
 Plea papers unsealed on Friday contain letters Hanssen exchanged over the years with his Russian contacts in which he discusses drop-off plans and classified FBI information. In the last one, he says he believes his spying may have been detected: &quot;Something has aroused the sleeping tiger.&quot;

TITLE: Chechen Mayors Resign Over 'Cleanups'
AUTHOR: By Yevgenia Borisova

PUBLISHER: Staff Writer
TEXT: MOSCOW - Large-scale &quot;cleansing&quot; operations by federal troops in two Chechen villages last week sent thousands of civilians fleeing to neighboring Ingushetia and prompted the mayors of the villages to quit, Chechen officials and human rights activists said.
 Sulim Makhmudov, deputy head of the Sunzhensky district administration, said in a telephone interview on Friday that about 1,500 people were rounded up by federal troops in two villages in the district - Sernovodsk and Assinovskaya, both located in western Chechnya about 12 kilometers from the Ingush border.
 &quot;Now many, many people are bringing us their complaints,&quot; he said, declining to elaborate. He would say only that an investigation is pending.
 Many of the people detained in Assinovskaya and Sernovodsk were beaten and tortured, Lipkhan Bazayeva, an activist with the Memorial human rights group, said on Friday by telephone from Nazran, the capital of Ingushetia.
 Interior Minister Boris Gryzlov acknowledged that the operations were going on, but said tough measures were necessary to root out rebels from among the civilian population.
 Federal Security Service director Nikolai Patrushev said on Friday that he has asked for the events in Assinovskaya and Sernovodsk to be looked into and the results to be made public, Interfax reported.
 Throughout the war, troops have conducted sweeps of Chechen villages and towns, known as <i>zachistki</i>, on the pretext of checking documents and finding rebels. Many men who are detained report being beaten. Some are never seen again.
 Human-rights workers say that troops have stepped up the zachistki in recent weeks.
 Last week, the troops swept through Sernovodsk and Assinovskaya, two of three places in Chechnya that had been declared safe zones for refugees. Refugees had been settled there in tent camps as part of a government drive to persuade Chechens to leave camps in Ingushetia.
 But after last week's zachistki, almost all of the 26,000 refugees left Sernovodsk and Assinovskaya for Ingushetia or were preparing to do so, Interfax reported.
 &quot;The big field between refugee camps in Sleptsovskaya [near Nazran] was covered with people last Thursday,&quot; Bazayeva said. &quot;They were complaining to us, many were crying, many needed medical help.&quot;
 Stanislav Ilyasov, the head of the Chechen government, said that it would now be that much harder to persuade people to return to Chechnya. &quot;Such tactics do nothing to restore peaceful life or to bring refugees back,&quot; Interfax quoted him as saying. As many as 150,000 Chechens have taken refuge in Ingushetia.
 The people who fled the two villages had horror stories to tell when they arrived in Ingushetia. &quot;They were detaining all the men they could find - from 13 to 60 years old. They even took sick people from their beds,&quot; said Ruslan Badalov, who lives in Nazran and heads the Committee of Chechen Refugees. He was quoting a Sernovodsk man whose name was withheld to protect him.
 &quot;They collected about 700 people from our village,&quot; Badalov quoted the man as saying. &quot;Those who could buy them off were allowed to, and the rates were made clear: Boys cost 200 rubles [or $6.86], older people from 500 rubles to 1,000 rubles, depending on whether or not they had local registration.
 &quot;Those who had no money were all taken out to a field near the local mosque where tents had been erected. After being asked, 'Does anyone want to go to a press conference?' the men were pushed inside where they were severely beaten, tortured and bitten by dogs,&quot; Badalov said.
 The cleansing started with looting, the man told Badalov. &quot;On July 2, armored cars surrounded the village and blocked all routes out. No one could enter or exit it for the whole day while the village was pillaged until nothing was left. The military confiscated everything that they could put in a truck, including carpets, electronic equipment and other valuables. They even took food.&quot;
 Bazayeva said the people who fled Assinovskaya and Sernovodsk brought word of a new method for picking out rebels: the living computer.
 &quot;People had to parade before someone - presumably a local resident-informer - who, invisible to them, watched them from a special booth.
 &quot;One by one, the villagers had to march up and stand facing the booth so that the informer could identify them. The villagers were arrested if the informer said they were a rebel or that they helped rebels.&quot;
 Ilyasov said the cleansing operations followed a terrorist attack on July 2 near Sernovodsk, in which five federal policemen from Kemerovo were killed, and another attack on Tuesday near Assinovskaya, in which a land mine blew up an armored car.
 But he added that the terrorists, whose names had been provided to the military by local administrations, had not been detained. The response by the military was &quot;inappropriate,&quot; he said.
 The military's behavior caused the village mayors - Nazarbek Terkhoyev of Assinovskaya and Vakha Arsamakov of Sernovodsk - to hand in their resignations, said Makhmudov of the district administration. Khasan Deniyev, deputy head of the Kurchaloi district administration, also resigned last week in protest, Interfax reported. He said that 20 people from the villages of Kurchaloi, Mairtup and Oktyabrsky had disappeared after a zachistka conducted at the end of June.
 Ilyasov said the incidents in Kurchaloi, Assinovskaya and Sernovodsk had been &quot;studied deeply&quot; at a meeting held on Thursday in his office, attended by the head of federal forces in Chechnya, Vladimir Moltenskoi, and other top commanders.
 &quot;I am sure that today [Thursday] will be a turning point, and all the activities of the participants in the anti-terrorist operation will in the future serve only to achieve goals set by the president of Russia, who has called for the establishment of a dictatorship of the law,&quot; Ilyasov said.
 Ilyasov said he would not accept Terkhoyev's and Arsamakov's resignation letters.
 Interfax quoted Ilyasov as saying that a decision was made at Thursday's meeting that in the future, troops will carry out zachistki in the presence of the heads of local administrations, local police and even Moslem clerics. But Bazayeva said she does not believe any such coordination is possible. &quot;Even now, Ilyasov mentioned only three cleansing operations. But they are taking place nonstop, everywhere,&quot; she said.

TITLE: Travelers, Locals Bugged by Mystery Illness
AUTHOR: By Sam Charap

PUBLISHER: Special to The St. Petersburg Times
TEXT: St. Petersburg has never been a hospitable place for sensitive stomachs. 
 Historically, the most common traveler's complaint is giardiasis, an illness found throughout the world resulting from ingestion of the water-borne parasite giardia. In recent years, however, the number of giardiasis cases has been falling, but another ailment - irritable bowel syndrome, or IBS - has come to the fore.
 The local version of giardiasis even has a nickname - &quot;Leningrad Diarrhea&quot; - in reference to the major outbreak that took place from the late 1960s to the mid-1970s. Between 1969 to 1973, 23 percent of American visitors to the city came down with the bug, according to The New York Times. The parasite thrives in the city's aging water pipes and swampy foundations.
 While the incidence of giardiasis in St.Petersburg has dropped since the early '70s, owing to homespun water purification such as boiling and filters, IBS has lately come to the attention of visitors and locals alike as a result of a major article in last month's New England Journal of Medicine. 
 Medically speaking, IBS, with its vacillating symptoms, is even harder to diagnose than the elusive giardiasis and has been stumping doctors for generations. &quot;The bowels are at one time constipated, at another lax, in the same person. How the disease has two such different symptoms I do not profess to explain,&quot; wrote the physician William Cumming in 1849.
 The modus operandi of IBS remains a mystery to the medical community. But the New England Journal of Medicine's IBS bomb shocked many physicians with new data on just how widespread the problem is. Approximately 15 percent of American adults report symptoms consistent with IBS. The ailment accounts for 12 percent of all visits to primary care doctors and $8 billion annually in direct medical costs in the U.S. alone, according to the journal. 
 Unlike most stomach problems encountered by foreigners living in St. Petersburg - usually either viruses, bacterial infections, or parasites (like giardia) - IBS is characterized by physicians as a so called &quot;functional disorder&quot; and can only be diagnosed by counterintuitive deduction, as Dr. Nikolai Myasnikov of the Euromed clinic in St. Petersburg explained.
 &quot;People complain, but have absolutely no signs of [other] problems. All tests are negative, but people still complain. And I believe my patients, of course. But on investigation, nothing, absolutely,&quot; Myasnikov said.
 Locally, IBS occurs most commonly in people who have an acute gastrointestinal episode such as giardia, or a bacterial infection, such as dysentery, in their medical histories, Myasnikov said. Symptoms of these past disorders continue to assert themselves to a lesser degree or in a slightly different form, though the acute episode has run its course.
 Because IBS is a chronic disease, patients often ignore it. The New England Journal of Medicine article reported that studies show only 25 percent of patients who have IBS seek medical care.
 But, as Myasnikov noted, anyone with IBS-like symptoms should see a doctor. Common treatments include anti-spasmodic drugs, which treat the symptoms, and SSRI anti-depressants, such as Zoloft, which have been shown to calm the bowels. Myasnikov also said that patients sometimes notice an improvement thanks to yogurt or kefir which contain the &quot;good&quot; bacteria the large intestine must contain to function properly.

TITLE: Crisis at City Zoo Simmers On
AUTHOR: By Oksana Boyko

PUBLISHER: Special to The St. Petersburg Times
TEXT: The long-simmering controversy over the management of the Leningrad Zoo continues, and now Northwest Region Governor General Viktor Cherkesov has stepped in, bringing the matter to a boil.
 The zoo crisis has led many of its leading zoologists and biologists to threaten resignation unless the crisis is resolved in favor of the current management. 
 At the request of current zoo director Ivan Korneyev, who has been on sick leave with reportedly high blood pressure since June 14, President Vladimir Putin ordered Cherkesov to investigate the allegations of financial impropriety levelled against Korneyev. 
 In June, those allegations led the City Culture Committee's chairman, Yevgeny Kolchin, to prepare documentation to fire Korneyev - who has run the zoo for 11 years - as soon as he leaves the hospital, according to Culture Ministry sources. Under Russian law, employees cannot be fired during sick leave. 
 At the center of the scandal are the dismal results of an audit conducted at the zoo last month. Korneyev's enemies - such as the City Culture Committee and the Zoosad Charitable fund, which is patronized by Governor Vladimir Yakovlev's wife, Irina - allege the audit contains evidence of graft and mismanagement. It has been passed to the Petrograd District Prosecutor's Office.
 Weighing against the audit's findings, are long-standing rumors that Zoosad, in collusion with City Hall and the Culture Committee, plan to move the zoo to the northwestern Dolgiye Ozera region of the city, near Pionerskaya metro station, and raze the zoo's current location to accommodate upscale condominiums. 
 Zoosad and City Hall have repeatedly denied this, and Yakovlev spokesperson Alexander Afanasyev said this week that there were no plans to move the zoo. As proof, he cited plans for the city's tricentennial that call for a 25 million ruble (about $833,000) revamp of the 136-year-old zoo. 
 In the meantime, Cherkesov's office filed its report with the Kremlin Friday, according to Alexei Buzailo, Cherkesov's spokesperson. Korneyev said in an interview that he had talked with Cherkesov for about an hour two weeks ago, and the meeting &quot;was quiet and friendly.&quot; 
 Although the contents of Cherkesov's report to the Kremlin were not revealed, local media have provided a clue as to its findings. In recent days, national radio and television, as well as the local newspapers Chas Pik - edited by Cherkesov's wife, Natalya Chaplina - and Nevskoye Vremya have run pro-Korneyev stories on the scandal.
 Neverthless, the zoo is currently in the midst of a leadership crisis. After Korneyev applied for sick leave, the chairman of the City Culture Committee, Yevgeny Kolchin, appointed Sergei Yegorov, a former serviceman with no zoological experience, as acting director. 
 The appointment has been derided by many of Yegorov's new charges and lampooned in the local press.
 During his first meeting with his new staff - which was recorded by disgruntled employees - Yegorov confirmed his lack of zoological training, but reminded workers that he had received high marks in biology and zoology in school. 
 Yegorov added that he had a dog, a cat, a canary and a rooster as pets. &quot;All the rest is a matter of self-education,&quot; he told his audience of prominent zoologists. 
 The recording was distributed to local media and many pro-Korneyev papers ran a transcript, publishing Yegorov's words with amusing animal photos.


TITLE: IN BRIEF
TEXT: Train Pile-Up
 

LENINGRAD OBLAST (SPT) - Three freight trains collided at Zaborye station, on the border of the Leningrad and Vologda oblasts, 35 kilometers to the east of St. Petersburg, Interfax reported Sunday. 
 The driver and a brakeman on one of the trains, which was hauling a heavy load of geological equipment to Perm, were both hurt, but the report did not specify the nature of their injuries. Local police would not identify them. The report did not specify the cargo of the other two trains. 
 The accident occurred at 8:50 a.m., and is being blamed on the negligence of the driver of one of the trains, who rolled his train through a red signal. A pile-up resulted when that train hit the rear cars of another train crossing its path. A third train then struck the rear cars of the latter train, derailing a total of 25 cars and a locomotive. Four repair trains are working at the site, Interfax said.
 
 
British Stab Suspect
 

MOSCOW (AP) - A British citizen is suspected of stabbing a Russian with a shard of glass outside a Moscow nightclub, but no formal charges have been brought yet, officials said Monday.
 The Briton, identified as Symon Connelly, 28, was arrested Sunday night outside the Zeppelin nightclub in northern Moscow minutes after the fight in which he stabbed his opponent, a 26-year old Russian citizen, in his face and chest, said Moscow police. The Russian has been hospitalized. 
 Police said Connelly was staying in Russia on a commercial visa. A spokesperson for the British Embassy said he had spoken with Connelly, who was not jailed and was voluntarily returning to a police station Monday to help the investigation. No charges have been filed.
 
 
Burglar Collared
 

ST. PETERSBURG (SPT) - Police in the Leningrad Oblast have detained a man suspected of breaking into a country house belonging to Health Minister Yury Shevchenko, Interfax reported on Friday.
 Anton Gromov, a 21-year-old resident of the village of Pargolovo, situated to the northwest of St. Petersburg, was arrested for allegedly breaking through a window of Shevchenko's house sometime between the morning of July 1 and the night of July 4, and stealing a stereo, clothes, and kitchen utensils. Police recovered the items from Gromov, according to the report. Gromov told police he didn't know the house belonged to Shevchenko, Interfax said.
 
 
Armed Deserter 
 

KALININGRAD, Western Russia (SPT) - Police in the Kaliningrad Region have detained Maxim Starostin, a reportedly heavily armed 19-year-old military deserter, who had fled his border-guard posting earlier the same day, Interfax reported.
 According to the report, Starostin had escaped from his post at the Ozersky training center at the Kaliningrad Regional Border Guard Service around 6 a.m. on Friday, taking his automatic rifle and 60 cartridges. Starostin then allegedly stole a car in nearby Ryazanskoye and drove off. He then lost control of the car and hit a tree. 
 Spotting pursuing police, Starostin is said to have shot at the officers, who were wearing bulletproof vests. Police returned fire, injuring Starostin. Starostin gave himself up at 7:30 p.m. and was taken to hospital, Interfax said.
 
 
Pope Angers Alexy
 

MOSCOW (AP) - The head of the Russian Orthodox Church said on Sunday that Pope John Paul II should have sought consent from the Orthodox patriarchate before making his recent visit to Ukraine. "Unfortunately that was not done before the visit," Patriarch Alexy II was quoted by the Itar-Tass and Interfax news agencies as saying.
 The pope toured predominantly Orthodox Ukraine last month at the invitation of President Leonid Kuchma, who apparently saw the trip as a way of advancing his quest for acceptance in the West. The pope used the trip to press his efforts to heal the rift that split Christianity into Catholics and Orthodox nearly 1,000 years ago.
 
 
Apostle Digging
 

BISHKEK, Kyrgyzstan (AP) - A group of Kyrgyz archeologists said Thursday that it intends to look for the burial site of St. Matthew, one of Jesus Christ's 12 apostles, near Issyk-Kul Lake.
 Vladimir Ploskikh, a member of Kyrgyzstan's Academy of Sciences, said the expedition, inspired by old legends, will set out under his leadership in the near future.
 An ancient manuscript of an archbishop known as Vladimir says the body "was kept in a monastery on the shore of the Issyk-Kul Lake and the whole Christian world knew about it," according to Ploskikh.
 The vast lake lies in northeastern Kyrgyzstan, near the borders with China and Kazakhstan.
 
 
Heavy Metal
 

ARKHANGELSK, Far North (SPT) - Two men have received four years in jail for stealing non-ferrous metals in the port city Severodvinsk, about 1,000 kilometers northeast of St. Petersburg in the Arkangelsk Oblast, Intefax reported. 
 Their sentence was handed out under a new and stiffer criminal regulation that provides for up to three years in prison for damaging or stealing parts from energy providers. The two received an additional year because of prior convictions. 
 The defendants were listed as Azmad Azmed-ogly Nuriyev, an Azerbaijani citizen, and a Severodvinsk native identified by police only by his last name, Antsiferov. Their ages were also not given. 
 Acording to Pyotr Chechel, a spokesperson for Arkhenergo, the local electricity and energy provider, the two men had supposedly been caught red-handed stealing aluminum insulation sheets from city heating main lines. 



TITLE: Duma Hits Kremlin With Forex Proposal
AUTHOR: By Igor Semenenko

PUBLISHER: Staff Writer
TEXT: MOSCOW - Not waiting for the government's version, parliament's budget committee Monday surprised the state by recommending its own bill to lower the amount of hard-currency proceeds exporters have to sell.
 The committee urged State Duma deputies to pass in one session all three readings of its version of the law, which lowers mandatory currency sales for exporters to 50 percent from 75 percent - and removes special privileges for oil companies.
 The government, with the president's blessing, has said it wants the rate lowered to 50 percent and that it could happen by the end of the summer. But the budget committee wants to take the new regulations further and end exemptions for privileged exporters, which is something the government is apparently not ready to do.
 &quot;Such a prompt scrapping of exemptions may have unpleasant consequences,&quot; said First Deputy Finance Minister Sergei Ignatiyev. &quot;The government considers it necessary to keep existing exemptions in order to honor obligations already undertaken and to allow projects already underway to be accomplished.&quot;
 With those remarks, Ignatiyev defended the cabinet's exclusive arrangement with oil majors and other top companies that have been exempt from the 75 percent rule virtually from the moment it was introduced.
 &quot;Oil majors sell the required 75 percent, but they are allowed to buy back the dollars under special arrangements,&quot; said an official at one top oil company who asked not to be named. &quot;Volumes are committed under pre-financing arrangements.&quot;
 All major oil companies - LUKoil, Yukos and Tyumen Oil Co. - contacted on Monday said that they complied with the 75 percent law. Exemptions, however, allow them to buy back what they sell with little delay.
 The move to reduce the obligatory sales of export proceeds could not come at a better time from an economic standpoint. In the second quarter of the year, Russia's capital-account balance - which records capital flight, the change in hard-currency reserves and cross-border asset sales and purchases - stood at negative $2.6 billion, the lowest figure since the second quarter of 1999, the Central Bank reported on Friday.
 The obligatory sale of hard-currency earnings was first introduced in June 1992 at the rate of 50 percent. But shortly after the 1998 crisis, when the Central Bank's foreign-currency reserves hit a low of $11.9 billion, the rate was lifted to 75 percent, where it has remained. Since then reserves have shot up, setting a new record every month since the beginning of the year and hitting a historic high of $35.1 billion last week.
 With reserves at a more comfortable level, the government's priorities have changed. Now it is focused on fighting inflation, which threatens its impressive economic record. &quot;If the assumption is that inflation has a monetary nature, then it is logical to lower sales of export proceeds,&quot; said Alfa Bank economist Natalya Orlova.
 She said, however, that the mandatory foreign-currency sale law was not the main reason for the recent jump in inflation. &quot;The government may have been talking so much about lowering the sales ratio in order to curb inflationary expectations.&quot;
 Inflation stood at 12.7 percent from January to June 2001, compared to the target of 12 percent to 14 percent written into the 2000 federal budget. As a result, leading economists have raised their forecasts for the year to as high as 25 percent.
 By lowering the amount of dollars exporters are forced to sell, the government reduces the amount of rubles the Central Bank has to print to buy incoming currency, thus lowering inflation. But prices have risen primarily because of increases in tariffs on services provided by gas, power and railroad companies.
 &quot;[The reduction of the Forex sale rate] looks significant on paper,&quot; said Peter Westin, senior economist at Aton brokerage. &quot;But my feeling is that it will have a limited effect.&quot;
 Westin said there was another reason the government wants to lower the rate - public relations. &quot;Partly, it is done to improve the relationship with the international community,&quot; said Westin.

TITLE: 5 Banks Make Top-1,000 List
AUTHOR: By Mikhail Overchenko

PUBLISHER: Vedomosti
TEXT: MOSCOW - Five Russian banks are among the top 1,000 in the world by core capital, according to an annual list published by the London-based magazine The Banker.
 MDM-Bank is the only newcomer, joining Vneshtorgbank, Sberbank, Gazprombank and Sobinbank, which all moved up several notches from the 1999 list. Before the financial meltdown in 1998, however, 12 Russian banks were in the top 1,000.
 The magazine, established in 1926, rated the banks by their so-called Tier 1 capital - a term used to describe the capital adequacy of a bank. Tier 1 capital is core capital, which includes equity capital and disclosed reserves. In order to be considered, banks must submit a special questionnaire, along with a profit-and-loss report drawn up according to international accounting standards.
 Vneshtorgbank overtook state-owned savings bank Sberbank as Russia's top entry on the list. It jumped from its placing of 454th in 1999 to 222nd after its Tier 1 capital rose 151.6 percent to $1.43 billion, according to The Banker. The Central Bank, Vneshtorgbank's shareholder, doubled Vneshtorgbank's Tier 1 capital last year. Vneshtorgbank chairman Yury Ponomarev has on several occasions emphasized that increasing the bank's capital is a necessary part of expanding cooperation with Western banks.
 A similar thrust was made by Gazprombank, which increased its capital by 93.6 percent, climbing 232 places to No. 415.
 MDM-Bank was included in the list at No. 814 after it increased its capital by 112.7 percent - mainly thanks to the reinvestment of profits, according to deputy chairman Vladimir Lelekov. &quot;This year we plan to expand on this growth both via internal sources and by the acquisition of other banking and financial institutions as part of our medium-term growth plan,&quot; he said.
 Sberbank's move up the list was less dramatic, going from 388th place to 301st. It remained the largest Russian bank, however, in terms of assets, valued at $19.67 billion.


TITLE: RusAl Gets Energo Spot In a 3-Way Compromise
AUTHOR: By Igor Semenenko

PUBLISHER: Staff Writer
TEXT: MOSCOW - A former Russian Aluminum executive has been elected to run Irkutskenergo, ending months of wrangling for control of a key utility that powers two of the country's largest smelters.
 In a compromise deal with other major shareholders of Irkutskenergo - including rival Siberian-Urals Aluminum Co. and the federal government - Russian Aluminum, or RusAl, garnered the support of all 11 board members for the appointment of Vladimir Kolmogorov as general director last week.
 &quot;There were no conditions for the appointment,&quot; said Alexander Ptashkin, a spokesperson for Irkutskenergo. Like his boss, Ptashkin recently worked for RusAl, which controls about 30 percent of the utility's shares and is the world's No. 2 aluminum company.
 Mikhail Slobodin - the Siberian-Urals Aluminum, or SUAL, candidate - was put in charge of the company's finances to offset RusAl's influence. &quot;This is the reflection of a compromise among shareholders,&quot; said Alexei Goncharov, spokesperson for SUAL, which owns 10 percent of Irkutskenergo.
 According to board chairman Sergei Kosarev, the first deputy property minister, &quot;The government has strengthened its presence in the company.&quot;
 The appointment ends months of fighting between aluminum companies and the federal government over a 15 percent stake in Irkutskenergo. The regional government, supported by aluminum barons, claimed voting rights on the stake. But what became a mudslinging campaign ended in a compromise, although no details were made public.
 Irkutskenergo is a unique and valuable possession, especially for aluminum producers in Irkutsk, which is home to two massive smelters that together generate more than a third of the nation's total annual production of 3.2 million tons of primary aluminum. Electricity accounts for 33 percent of the operating costs of these smelters, so if RusAl and SUAL control the power company, they can choose the price they charge themselves.
 Analysts now expect RusAl and SUAL to guarantee themselves low electricity costs in exchange for a commitment to invest money in upgrading power-generating assets.&quot;On the one hand, it is normal that a general director represents the majority shareholder,&quot; said Vasily Boiko, who lost his position on the board at an extraordinary shareholders meeting in April. &quot;But we should be ready for any kind of developments now.&quot;
 Boiko's investment company, <i>Vash Finansovy Popechitel</i>, or Your Financial Adviser, sold its 9 percent stake last year, so this year he attempted to get a seat on behalf of the Investor Protection Association, a lobby group for minority investors.
 With minority investors no longer having a say in the company, brokerages are less than bullish. Troika Dialog has recommended investors sell their stock; Renaissance Capital rated the stock as a long-term &quot;market underperformer&quot;; and United Financial Group put it in the &quot;hold&quot; category.
 Aluminum companies were unhappy with Irkutskenergo's previous management team after its attempts to raise power tariffs on energy supplied to smelters. Another source of discontent for SUAL was the sale of a 12.87 percent stake in the Kovykta gas field, run by Rusia Petroleum, to a group of companies affiliated with Interros.
 Tyumen Oil Co., which has among its shareholders owners of SUAL, holds 9.06 percent in Kovykta and is hoping to increase its presence. The new Irkutskenergo board voted to reverse the deal, reselling the shares at $6.10 each - 17 percent higher than the price charged to Interros, Interfax reported.
 Last December, the Irkutskenergo board decided to sell the company's 12.87 percent stake for $5.20 per share, despite an offer from TNK to buy the stake at $6 per share.

TITLE: Gazprom Shares Get Northern Trade Option
AUTHOR: By Anna Raff

PUBLISHER: Staff Writer
TEXT: The monopoly on trading in Gazprom shares held by the Moscow Stock Exchange was weakened on Monday when a major stock depositary began doing business in St. Petersburg.
 The St. Petersburg Stock Exchange - in conjunction with the Russian Trading System, or RTS - is now the platform for trades of stock that are held by Gazprombank in depositary.
 Formerly, the Moscow Stock Exchange, or MSE, had a contract with Gazprombank to host all trades, but it was broken when the exchange officials demanded last week that all investors who wished to trade through MSE move their shares from Gazprombank to the Depository Clearing Union.
 At the time, this was a costly alternative to investors. Shareholders would have lost five days of trading to allow for the shares to be physically moved. And when MSE announced the changes, the cost to change depositaries was set at about $1,000 per million shares.
 Since then, the cost has been halved.
 Traders and securities officials say it is too early to tell if the change of venue will have much of an impact.
 &quot;It is difficult to say whether prices or volumes will be affected,&quot; said Alexei Trunayev, a trader with the Aton brokerage. &quot;We need to wait until the end of the week to see how and if the spreads change.&quot;
 In the mid-1990s, the government permitted the St. Petersburg Stock Exchange - along with the Moscow, Novorossiisk and Yekaterinburg exchanges - to trade Gazprom stock, which has circulated on the St. Petersburg exchange since 1997, said Denis Tesluk, head analyst at the St. Petersburg exchange.
 And because of the 1999 agreement, those Gazprom holders who decide to register with the St. Petersburg exchange will have access to the RTS, an over-the-counter exchange.
 &quot;We hope this will lead to an increase in volumes for our market,&quot; Tesluk said.

TITLE: IN BRIEF
TEXT: Data Revised Upward
 

MOSCOW (AP) - Russia's consumer price inflation, gross domestic product and the government's budget surplus will be higher than initially forecast, First Deputy Finance Minister Alexei Ulyukayev said on Monday.
 GDP will likely rise 5 percent this year, instead of the expected 4 percent, as inflation and the budget surplus burst past earlier expectations, Interfax reported him as saying. "In the macroeconomics of the first half [of 2001], much diverged from initial forecasts, and based on this it will probably be necessary to revise the expected budget implementation figures for this year, and possibly revise the main parameters of the budget for next year," Ulyukayev said.
 
 
EBRD Loans $40M
 

MOSCOW (SPT) - The European Bank for Reconstruction and Development has advanced a $40 million loan to Togliattiazot, or TOAZ, the largest ammonia producer in the former Soviet Union, the bank said on Monday.
 The loan will be used to improve environmental standards, promote energy efficiency and provide working capital, the EBRD said in a press release.
 The three-year loan represents the first medium-term finance obtained by the company, which has agreed to produce accounts audited according to International Accounting Standards from 1999 onward as part of the loan agreement.
 
 
Blue Stream Begins
 

ANKARA, Turkey (AP) - Italy's Saipem engineering company broke ground on Thursday to build a twin natural-gas pipeline under the Black Sea from Russia to Turkey, the Anatolia News Agency said.
 The company is planning to begin the operation of laying the 376-kilometer undersea pipeline in late August at a record depth of 2,100 meters by using the world's largest offshore platform.
 On Thursday, the first two pipes were welded together in a ceremony attended by Turkish and Russian energy officials at a port near the Black Sea city of Samsun. The pipeline will stretch from the Russian port of Dzhubga to Samsun.
 The $3.4 billion pipeline project, known as Blue Stream, is scheduled to begin pumping gas in the first quarter of 2002. The total length of the pipeline is 1,213 kilometers with its connections on land.
 
 
UES Plan Blasted
 

MOSCOW (SPT) - The Economic Development and Trade Ministry's energy-sector reform plan may take away government control over the nation's power grids, presidential economic adviser Andrei Illarionov told Itar-Tass.
 The most controversial issue is the status of the newly created Federal Power Grid Co., which will integrate all power grids in the country, Illarionov said Friday. The ministry demands the power grid remain affiliated with Unified Energy Systems, but Illarionov believes that could mean a simple handover of the grids from government jurisdiction to the control of UES executives.
 He called UES a de facto private company. If the national power grid's operator is 100 percent controlled by UES, its managers will be both the shareholders and the board of directors, he said. 



TITLE: Far North Still Resource Rich, But Job Poor
AUTHOR: By Alla Startseva

PUBLISHER: Staff Writer
TEXT: MOSCOW - Its inhabitants are leaving in droves and its natives are facing extinction. Those that remain suffer from chronic unemployment, perennial power crises and dependence on a tenuous life-supporting supply line that snakes thousands of kilometers across some of the most extreme terrain on earth. 
 It's called the Russian North, and there is nobody in the federal government in charge of dealing with its problems. 
 Russia has created and liquidated its State Committee for Northern Territories several times over the last decade. And although Prime Minister Mikhail Kasyanov has vowed to recreate it - or something similar - he has yet to fulfill that promise.
 &quot;That's the kind of interest the [government] has in northern affairs,&quot; Artur Chelengarov, deputy head of the State Duma, recently told a European Business Club conference about the future of the North. 
 &quot;The North is in a sorry state,&quot; said Chelengarov, one of a growing chorus of politicians, officials and businesspeople calling on the federal government to do something to stem the unfolding demographic disaster.
 To regional leaders, the situation seems paradoxical, given the reform-minded government's top-down approach to governing and its emphasis on all things economic.
 In fact, more than 60 percent of Russian territory is technically classified as being in the Far North - an area that contains half the world's palladium, a big part of its platinum and nearly all of Russia's oil, gas, gold, diamonds, aluminum and timber.
 It includes 28 regions whose exports attract 70 percent of all hard currency flowing into the country. It holds just 8 percent of the population, or 11.9 million people, but it supplies 20 percent of the national income and 35 percent of the gross domestic product.
 Yet, for all the North's wealth - the European Bank for Reconstruction and Development says its natural resources are worth some $27 trillion - Northerners have never been able to subsist on their own, depending on government handouts instead. But since the collapse of the Soviet system, which heavily subsidized the region, money has dried up, and deliveries of food, fuel and goods have become an annual struggle.
 While state funding for fuel and food deliveries to remote northern villages is slowing growing, the 4.2 billion rubles ($152 million) allocated last winter provided little comfort. The money that many regions get from the government is less than half of what they need for fuel alone, leaving nothing for food. &quot;It's a one-way street,&quot; said Alexei Okatov, deputy head of the republic of Komi, one of a few regions that finances itself and doesn't receive federal money. &quot;The federal government is not supporting our programs of development.&quot; Last year $586 million was invested in Komi, and the republic contributed 53 percent of its revenues to the federal budget, he said.
 Like many political leaders of the North, the State Duma's Committee on the Problems of the North and Far East is seeking the support of Kasyanov's government for more than 100 development projects.
 &quot;But to implement them, the government's support is very much needed,&quot; said committee chairwoman Valentina Pivnenko. 
 Sergei Bayov, deputy head of investment policy for the Economic Development and Trade Ministry, made it clear that the North would not be able to depend solely on Moscow. &quot;We cannot support all the regions,&quot; he said.
 In fact, Moscow has literally given up on some areas. Under a pilot project funded by the World Bank, thousands of people from remote, &quot;unsalvageable&quot; northern settlements are beginning to be relocated. The initial phase of the project calls for the removal of some 20,000 people from 8,000 households in Vorkuta in the Komi Republic, the Susuman District in the Magadan Region, and the city of Norilsk. Once residents have left, the plan is to raze their former homes because local budgets aren't big enough to subsidize heating, water and electricity for them.
 With little help from the federal government expected in the near future, Northern political leaders are banking on investments from abroad. &quot;Most of our financial support comes from foreign investors,&quot; said deputy governor of the Murmansk region Viktor Miller.
 It is clear, however, that foreign investment cannot possibly meet the needs of the North. The Northwest regions alone require at least $70 billion to modernize outdated production facilities, according to Valery Shlyamin, external affairs minister for the republic of Karelia and chairman of the Association of Northwest Regions.
 The EBRD, the largest foreign investor in the country, has put more than $5 billion into the North over the last decade, according to the bank's deputy head for Russia, Jonathan Harfield. He said the EBRD plans to invest at least another $250 million in the North this year.
 Harfield said that to achieve self-sustainability, the North should not rely on raw materials alone and that more investments should be made in manufacturing. 
 But most of the money the EBRD plans to invest in the North this year is in oil extraction, not manufacturing.

TITLE: Market Association Rates Top Brokerages
AUTHOR: By Torrey Clark

PUBLISHER: Staff Writer
TEXT: MOSCOW - The major Moscow brokerages came out on top of an annual rating of the nation's most reliable investment houses by the National Association of Market Participants, or NAUFOR, released this week.
 NAUFOR rated its 900 members on three main factors. The first, &quot;scale of business,&quot; assessed average monthly turnover, share capital, assets and average monthly net profit. The second, &quot;effectiveness and reliability of operations,&quot; looked at the riskiness of trading, capital sufficiency, liquidity and profitability. The third, &quot;respectability,&quot; considered professional membership, licenses and reputation in the local market. 
 The companies are listed in nine grades. Only the highest six grades - A++, A+ and A for high reliability and B++, B+ and B for reasonable to some reliability - were published.
 Of the six companies given the &quot;maximum reliability&quot; rating, only one was not from Moscow: LUKoil-Reserve-Invest in Omsk, Western Siberia. Aton, which claims to be the largest brokerage in the country, NIKoil, Renaissance Capital, Troika Dialog and United Financial Group filled out the list.
 The leaders topped NAUFOR's rating for the first nine months of 2000 as well, except for Renaissance Capital, which scored A+. 
 The A+ group grew from five to 11 companies, including a number of online brokerages.
 The ratings follow NAUFOR's awards last week for best analysts, traders and back offices, which were based on a survey with open-ended questions sent to NAUFOR members. The results were based on 84 replies from regional dealers and independent brokers from around the country.
 The awards focused on domestic market participants. Head analysts and traders who work mainly with international clients did not make a strong showing.
 Analysts have given mixed reviews to the reliability of the rating itself, with one analyst saying the competition was irrelevant because it was just brokers voting on themselves. 
 For the second year in a row, Troika Dialog won for best back office and best trader, Rufat Askerov. Aton took first for best analyst, Steven Dashevsky, and second for back office. Both Dashevsky and Askerov were in the top three in their respective categories last year.
 &quot;Steven is young, but already one of the best analysts in the market. This is the first step toward his being recognized by Western clients,&quot; said Peter Halloran, executive chairman of Aton Capital. Jim Nail, head of research at Aton, praised Dashevsky for his theoretical work. 
 Not all market participants were impressed by the focus on the domestic market. &quot;This sounds like some kind of small-town survey of small-town people who aren't really aware of what goes on out there,&quot; said a fund manager who asked not to be named. 
 Others took a pragmatic approach. &quot;They sit at computers all day, buy,sell,buy,sell. ... They deserve to have a celebration,&quot; said Vladimir Milovidov of the Federal Securities Commission. 
 &quot;Our analysts have to know the situation in the world markets, macroeconomics, Russian politics, the particularities of Russian enterprises, which do not always lend themselves easily to analysis. In that sense, our analysts do not lag behind their Western counterparts in terms of quality,&quot; Milovidov said.

TITLE: Departing U.S. Ambassador Questions Russia's Direction
AUTHOR: By Judith Ingram

PUBLISHER: The Associated Press
TEXT: MOSCOW - James Collins, the departing U.S. ambassador to Russia, said on Thursday that the country's biggest domestic challenge in the years ahead will be to institute a judicial-reform plan that could help limit the arbitrary exercise of authority.
 &quot;If in fact the priority for [President Vladimir] Putin and the administration is to modernize the economy ... to compete in the modern economic system and participate fully in the system of the industrial democracies, then you're going to have to ensure that this rule of law is the principle of the future,&quot; Collins said.
 Nearing the end of his four-year term as the United States' top envoy to Russia, Collins said the Kremlin was sending out mixed messages on where it was leading the country. On the one hand, it has thrown its support behind economic- reform proposals that should help improve the climate for business. On the other, Moscow has been engaged in the war in Chechnya, where human rights have been violated, and Russia has seen a rise in what Collins called arbitrary authority - including the growing power of the security services.
 &quot;I think arbitrary authority here is a continuing problem, whether it's in private hands or public hands,&quot; Collins said. &quot;It's why I think the issue probably for the next decade to watch, if we're really going to see where the society is going, is what happens on the judicial reform and the seeming effort to create a new set of norms in which laws and predictable norms are going to guide the actions not just of individuals but also of public officials. ... I don't know what the outcome will be.&quot;
 Last month, the State Duma tentatively approved a bill to overhaul the judiciary, which has remained largely untouched since Soviet times. The judicial reform program would grant judges greater independence, trim prosecutors' powers and institute trial by jury throughout the country, and its supporters say it will help even the legal playing field for businesses and private citizens alike.
 Collins said that the growing power of the security services and restrictions on press freedom contradicted Russia's stated goal of modernizing its economy. &quot;Many of the ideas that are held by some of the elements who think of control as the ultimate real problem here are great for running a 1930s economy, but they're just not going to work in the year 2002,&quot; Collins said.
 He said the 1998 economic crisis and the NATO air campaign against Yugoslavia the following year, which Moscow furiously opposed, were the lowest points during his tour. Collins did not mention more recent problems, including the tit-for-tat expulsion of 50 diplomats from each side, and the chill that settled over relations after then-U.S. presidential candidate George W. Bush indicated that Washington would toughen its approach to Moscow.

TITLE: Aeroflot Board Calls Meeting
TEXT: MOSCOW (SPT) - Aeroflot's directors voted on Monday to call an extraordinary shareholders meeting to elect a new board.
 &quot;The board of directors decided that there is no reason to reject the initiative to call an EGM that came from a new shareholder,&quot; Anatoly Brylov, secretary of Aeroflot's board, said by telephone.
 The candidates for Aeroflot's nine-seat board will be confirmed by Aug. 1, and the extraordinary shareholders meeting will take place on Sept. 6. Shareholders were given two weeks to draw up a list of their candidates.
 According to Brylov, the offshore company Carroll Trading, which accumulated just over 10 percent of Aeroflot shares earlier this year, was the one that initiated the vote. The company is said to be connected to Sibneft tycoon and Chukotka Region Governor Roman Abramovich.

TITLE: Japan, Iran Moving Towards Deal Despite Heat From U.S.
AUTHOR: By Afshin Valinejad

PUBLISHER: The Associated Press
TEXT: TEHRAN, Iran - Japan moved a step closer to securing the right to develop Iran's largest oil field on Sunday, despite U.S. pressure on its allies to refrain from making oil and gas deals with Iran.
 &quot;Japan is not affected by U.S. pressure,&quot; Japanese Trade Minister Takeo Hiranuma told reporters during a signing ceremony in Tehran.
 In the letter of intent, Japan agreed to spend $10 million to help fund a seismic study of the 26-billion-barrel Azadegan oil field. The two countries also signed an energy cooperation agreement. A deal signed last November gave Tokyo priority bidding rights to develop the Azadegan field, a key goal for foreign oil-dependent Japan.
 The agreement with Iran is the second in two weeks by a U.S. ally who has defied Washington's threat of sanctions against foreign companies investing more than $20 million a year in Iran's oil and gas sectors. Italian gas and oil group ENI signed a $1 billion deal last week to develop the Darkhovin onshore oil field. Further investments could make Japan eligible for U.S. sanctions.
 Iranian Oil Minister Bijan Namdar Zanganeh told reporters that the letter of intent showed the sanctions &quot;have had no affect on the Iranian oil industry.&quot; Hiranuma was on a one-day visit to Iran, part of a tour of energy-rich Gulf states. He signed a memorandum of understanding Saturday on oil drilling in Kuwait and was expected for talks in the United Arab Emirates later.
 President Mohammad Khatami said during a meeting with Hiranuma Sunday that Iran is looking forward to Japan's participation in oil and energy affairs, with special emphasis on the Azadegan oil field.
 The United States accuses Iran of sponsoring international terrorism and has strongly discouraged investment in the country's energy sector. The U.S. Congress' Iran-Libya Sanctions Act, which took effect in 1996, bars U.S. companies from investing more than $20 million in Iran's gas or oil industry and threatens to punish foreign companies that do so. So far, Washington hasn't followed through on its threat.
 Zanganeh said that the undeveloped Azadegan field near the Iraqi border could produce up to 700,000 barrels a day, but that no decision has yet been made on production levels.
 Iran is Japan's third-largest oil supplier. It provides Japan with 450,000 barrels of oil per day, or 10 percent of Japan's oil requirements.

TITLE: IN BRIEF
TEXT: Air Alliance
 

ROME (AP) - Seeking to strengthen its international presence, Alitalia's board of directors gave the go-ahead Monday for the Italian airline to forge a commercial alliance with Air France and Delta.
 The board authorized management to begin exclusive talks with the two airlines on cooperation in marketing and other services. Alitalia said it hopes to wrap up the talks as early as the end of this month.
 The planned alliance with Air France and Delta would bring Alitalia into SkyTeam, a global airline alliance providing ticketing and other services.
 Alitalia reported a net loss last year of 495 billion lire ($220 million), citing the lack of profitability of international and intercontinental routes, the loss of domestic market share and a small fleet.
 
 
French Net
 

LIMOGES, France (Reuters) - French Prime Minister Lionel Jospin on Monday confirmed 10 billion francs ($1.29 billion) worth of cheap loans for local councils to ensure high-speed Internet links across France within five years.
 As well as loans, a government agency will look into the possibility of using existing electricity networks owned by state utility Electricite de France as a piggyback for a fiber-optic network, Jospin told an interministerial committee.
 "Access to high-speed Internet links across the French territory by 2005 cannot be guaranteed by the will of the market alone," Jospin said. "Because we refuse to take this risk, the government has decided to help local government to build high-speed communication links in unconnected regions."
 
 
Small Change
 

LISBON (Reuters) - Portugal's central bank has rejected printing the largest denomination euro notes because it believes people will shun them, a spokesperson said on Monday.
 The spokesperson for the Bank of Portugal said that the Portuguese prefer to pay by check or credit card instead of carrying 200- or 500-euro ($169 or $423) notes in their wallets. "We won't be putting notes of 200 and 500 euros into circulation because there is no demand for such large denominations," he said. He added that Multibanco, Portugal's national network of automatic teller machines, will not provide bills of those denominations for the same reasons.
 Portugal, along with the 11 other members of the euro currency zone, will switch over to euro bills and coins in January 2002. All euro notes will be legal tender in Portugal. 



TITLE: Cathay Pacific Drops the Ax in Labor Battle
AUTHOR: By Margaret Wong

PUBLISHER: The Associated Press
TEXT: HONG KONG - With its flight schedule severely disrupted by slow-working cockpit crews, Cathay Pacific Airways fired 49 pilots on Monday and said it would introduce a new package of pay and benefits effective immediately.
 &quot;Under the circumstances, we need to take prompt and firm action to resolve the situation,&quot; said Tony Tyler, Cathay's director of corporate development. &quot;We have undertaken a detailed review of the employment history of all our pilots and identified those who, we feel, cannot be relied upon to act in the best interests of the company in the future.&quot; 
 The general secretary of the Hong Kong Aircrew Officers Association, John Findlay, said that pilots would not back down in the face of what he called &quot;threats and intimidation&quot; by Cathay management. &quot;This is a disgraceful and shameful act,&quot; Findlay said, vowing that the pilots would stand firm in the dispute over pay and working conditions.
 Cathay said on Monday it had to use jets chartered from other airlines to keep 35 of its 122 scheduled flights in the air, and many of the flights it did get off were suffering delays.
 Cathay said in a statement it had to cancel 39 flights-one day after temporarily suspending services on 12 routes, including Hong Kong-New York, Hong Kong-Manchester, Hong Kong-Delhi and Hong Kong-Perth.
 Tyler refused to say whether the fired pilots were members of the union, which has been staging a &quot;work-to-rule&quot; action since July 3 that the company claims has been aggravated by numerous pilots calling in sick. Tyler told a news conference it was &quot;irrelevant&quot; whether the terminated pilots were union members.
 Describing some of the alleged offenses that prompted the firings, Tyler said one pilot had called in sick five times over the past six months, giving the company just an hour's notice each time.
 Findlay said any pilots who took sick leave had done so with certification from doctors.
 Cathay fired three pilots, including two union members, last week and said it had &quot;lost confidence&quot; in the pilots it fired on Monday. At the same time, the airline said it would give its pilots pay increases of up to 9 percent while improving housing and education benefits, as well as introducing a better rostering system.
 Cathay had been offering pilots pay raises of up to 10.5 percent before talks between the two sides recently broke down, and on Monday the company said it lowered the amount because of damages the pilots had caused through their industrial action.
 &quot;The crew will not welcome this,&quot; Findlay said during an evening news conference. The union represents 1,260 of Cathay's 1,600 pilots and says 92 percent of them approved the industrial action.
 Cathay spokesperson Lisa Wong declined to comment on how much money the airline is losing. In a similar battle two years ago, Cathay lost about $4.5 million a day when pilots called in sick en masse and grounded Cathay's flights for almost two weeks.
 Hong Kong's government reiterated its call for a settlement. &quot;There are strikes everywhere in the world, but Cathay's happen quite frequently,&quot; Financial Secretary Antony Leung said on Monday. &quot;It will be beneficial for Hong Kong if both parties can find a lasting solution.&quot;
 Asked when the dispute might end, Wong said the company would not negotiate further unless the pilots end their industrial action.
 Findlay has said the go-slow action would continue unless the union is given the data on how many hours the pilots work. Cathay said the information was irrelevant to the dispute, but the union says it cannot assess Cathay's pay offer without more information about how long pilots are working.
 Pilots have been working exactly according to the rules, delaying flights through meticulous checks of all safety requirements. Findlay has disputed suggestions by Cathay managers that a sickout is part of the campaign, but he said it is not possible for the union to keep track of what all members are doing.

TITLE: AT&amp;T Wireless Made Mobile Once More
AUTHOR: By Bruce Meyerson

PUBLISHER: The Associated Press
TEXT: NEW YORK - Eight years after AT&T barged into the mobile phone business by acquiring McCaw Cellular, the time has come to cut the wireless umbilical cord.
 AT&T Wireless Services officially became an independent business on Monday, the first step in AT&T's sweeping breakup plan and the 10th company to be spawned by the former U.S. telephone monopoly.
 The spinoff was first announced last October when AT&T aborted its bid to create a one-stop telecoms shop by purchasing cable TV systems and upgrading them for phone and high-speed Internet service.
 AT&T Wireless, the nation's third-largest cellular provider, had about 15.7 million subscribers at last count, up from about 2 million when AT&T agreed to acquire McCaw for $12.6 billion in August 1993.
 A new common stock representing AT&T Wireless was distributed as a special dividend to all AT&T investors before the start of Monday's trading at a rate of 0.3218 wireless share for each regular AT&T share. At the same time, all of the so-called &quot;tracking&quot; shares that AT&T issued last year to represent the wireless business were replaced on a one-for-one basis with AT&T Wireless common stock.
 As part of the process, the price of AT&T's regular stock was adjusted lower by the same amount to $16.72 - or $5.52 below Friday's close at $22.24.
 Since AT&T is one of the most widely owned stocks in the country with nearly 5 million shareholders, AT&T Wireless instantly joined the same ranks through the special dividend to those investors.
 After the spinoff, AT&T still owns about 188 million shares of the wireless business, a 7.4 percent stake worth about $3.14 billion. AT&T chose to hold onto that stock in the hope that it can be sold for more when the mood improves on Wall Street.
 The biggest single shareholder in AT&T Wireless is NTT DoCoMo of Japan with a 17.4 percent stake, or 448 million shares. The financial services firm AXA owns 168 million shares, or 6.7 percent, across its various investment funds and holdings.
 AT&T Wireless, based in Redmond, Washington, starts out with about 29,000 employees.
 From a financial perspective, the business may have a brighter future than the rest of AT&T thanks to a fast-growing customer base and the expected strong demand for next-generation advanced wireless services. However, the technology upgrades needed to provide those services will cost billions of dollars, a future burden that prompted the company to borrow $6.5 billion through a debt offering earlier this year.
 But aside from the debt load, AT&T Wireless appears to be a healthy operation. Last year, the business posted an operating profit of $528 million on $10.4 billion in revenues.
 The first stage in the roll-out of advanced services is slated for later this summer with the launch of a slightly speedier wireless connection for downloading Web content or using a mobile phone as a modem for a computer.
 In addition to providing mobile-phone service, the company is also engaged in a more speculative venture: using its wireless network in certain markets to connect homes with residential telephone and Internet services.
 Meanwhile, the next step in AT&T's breakup plan is the spinoff of the Liberty Media television programming business, scheduled for Aug. 10. Next would come the creation of separate stocks representing AT&T's ailing consumer long-distance business and AT&T Broadband, which provides TV, Internet and phone services over the company's cable systems.
 Both of those moves are expected to take form later this year. Then, sometime next year, the broadband operation would be spun off as an independent business.

TITLE: WalMart Takes Church to Court Over Donations
PUBLISHER: The Associated Press
TEXT: RIVERSIDE, California - The U.S. department store chain Wal-Mart is suing a church that set up tables in order to seek donations in front of its stores. The company says that the church has failed to abide by the discount chain's policies.
 Since January, Wal-Mart has filed 10 suits in several counties against the 1,000-member Missionary Church of the Disciples of Jesus Christ, seeking to keep the church's members away from its doors.
 The cases were consolidated and will be heard soon in San Bernardino County Superior Court.
 The church gathers about $15,000 a month in donations for food, clothing and other aid for the poor, said Louis Zepeda, a volunteer missionary with the Covina-based church.
 Wal-Mart, which promotes family values and sells spiritual books and other religious products, is being hypocritical by targeting the church, Zepeda said.
 Wal-Mart representatives say that the retail chain is only trying to enforce its policies for solicitors. The guidelines include signing store forms that detail how the groups collect money and where members will stand or set up tables.
 Girl Scouts, Boy Scouts, the Salvation Army and other charities are often allowed to collect donations if they sign forms.
 The church has refused to sign the forms, however, claiming that Wal-Mart favors certain groups over others, Zepeda said.

TITLE: Sorting Out the Sides In Oblast Aluminum
TEXT: Last week the Leningrad Oblast administration rejected a plan for the construction of an aluminium plant in Vsevolozhsk, a town 15 kilometers to the northeast of St. Petersburg. The project had been proposed by the British company Astromex, which is controlled by Alexander Sabadash.
 Sabadash is one of the owners of the Vyborg Pulp and Paper Mill, and he also owns a number of vodka factories. He seems to have turned his business focus to metallurgy after losing a battle for a stake in the Astoria hotel last year and seemingly preparing for a parting of the ways with his partners at the Vyborg mill. His partners now say they are negotiating the purchase of his stake in the plant.
 Astromex's plan was to build the aluminum plant on land that was occupied by the Russky Diesel factory. Russky Diesel has since gone bankrupt and Sabadash stepped right in to snap up some of the assets, including the land.
 In comparison with Russia's aluminum giants SUAL and RusAl, Sabadash's plans were modest, with projected output at 150,000 tons a year - about 5 percent of Russia's aluminium output. According to Astromex's business plan, the factory was to import raw materials and export its production.
 World demand for alumunium is high and prices for the metal show no signs of dropping, while production costs in the Leningrad Oblast are low. It would have been the perfect business for a vodka king who is used to reaping big profits and quick returns on his investment.
 The problem is Sabadash doesn't have the $130 million it would cost to build the factory just lyying around. And where the money would have come from is an interesting question.
 Among the possible sources of investment named by the project's backers was MDM-bank. (The bank's press service would not confirm this). If this was really the case, it's something worth taking a look at.
 This would have created a special allliance, because Sabadash is in a scrap with the MDM-group, which is related to the bank, over the control of another enterprise in the oblast, Fosforit. While MDM-group holds a controlling share of Fosforit, Sabadash is the factory's biggest creditor. It seems that the proposed investment in the aluminium project was dangled before Sabadash as a reward for easing off in the case of Fosforit.
 Now, of course, all of this is just conjecture, and we'll never know, because the project was turned down. Sabadash's allies maintain that they will continue in their efforts to build an aluminum plant in the region.
 If they are serious they might try approaching their former partners, a company called Aimet. Aimet owns Volkhovsky aluminium plant and, along with Sabadash, a stake in the Vyborg Pulp and Paper Mill. These are the partners that would like to buy out his stake.
 So the Leningrad Oblast would seem to have lost out out on a chance to at to its collection of matallurgy factories. The oblast administration gave a number of reasons for turning down the project, from ecological concerns to the inability of the project's backers to work out ties with several departments in the administration. But it is possible that the reason was the poor relationship with Sabadash.
 We may yet get a better idea. Last year Alutech, a U.S. firm, announced plans to build a $500 million aluminum factory in Sosnovy Bor, the home of the LAES nuclear plant. The highest cost in aluminum production is energy, and a plan to locate so close to such a source would be an asset. The company is still a bit of a mystery and it has yet to submit a detailed business plan, so it's hard to predict what kind of decision the oblast will make in the future.
 Should the Alutech plan take shape and get the go-ahead, however, it might tell us a bit more about the oblast's decisions in the past.
 
 <i>Anna Shcherbakova is the St. Petersburg bureau chief of Vedomosti business newspaper. </i>

TITLE: Why Does the State Need Black Money?
AUTHOR: By Yulia Latynina

TEXT: The State Duma is debating a bill designed to prevent the legalization of income received by criminal means. And the deputies are arguing over whether monies that have been hidden from tax collectors count as income received by criminal means. But no one has yet phrased the question this way: Should we consider monies received by the state outside of the budget and in lieu of taxes to be income received by criminal means?
 Most likely, the very idea of such a question would be absurd in the Western countries where such laws were invented. But it makes sense here in Russia.
 Every year, the Duma debates and approves a federal budget. The government states precisely how much it intends to spend on science, pensions, health care and defense. But in reality, the budget has the same relation to the actual amount of money the state spends as a firm's beginning-of-the-year tax declaration has to the amount of money it actually earns.
 Throughout the world, the arms trade is considered a black business, practically on a par with drug trafficking and prostitution. And there's good reason for this. The arms trade is &quot;black&quot; money. Everyone knows that the only way to sell weapons to many countries is by kicking back a percentage of the deal to the local princes and lords. And who is going to say how much was kicked back - and how much might have stuck to the fingers of the Russian seller?
 Alexander Korzhakov understood this perfectly in his day, and that is why he created Rosvooruzheniye, the state monopoly arms dealer. Later that monopoly was broken up, but President Vladimir Putin reassembled it by creating Rosoboronexport, headed by fellow spymaster Andrei Belyninov. If the purpose of Rosoboronexport is not to bring in black money on the side, then I have no idea what it's for. And if it is doing its job, then doesn't it fall under the Duma's new money-laundering law?
 Gazprom has always been Russia's best money pot; no one has ever had any idea what was going on there. Without any accounting whatsoever, it scattered its assets among dozens of Iteras, Rospans and Stroitransgazes. Now Putin loyalist Alexei Miller has been named CEO. Analysts are wondering whether this was done in order to stop the outflow of capital or, rather, to rechannel it according to state desires.
 The very first executive order that Putin signed as president concerned the creation of the state alcohol monopoly Rosspirtprom. He picked one of his St. Petersburg friends, Sergei Zivenko, to run it. Rosspirtprom was supposed to become a second Gazprom, vacuuming up all the vodka revenues that had previously been going to criminals and regional governors.
 Now, however, Rosspirtprom has real control over just Moscow's Kristall and Yekaterinburg's Alkona. But have these companies reported profits in recent months? And if not, where has the money gone? In what proportion was it shared out between the state and companies like OMZ, formerly Uralmash, which also sits on Alkona's board. And can our deputies write a money-laundering law that will cover the Alkona money that eventually goes to OMZ but overlooks the money that goes to the government?
 When I try to estimate how much money the government controls via Rosoboronexport, Gazprom, Rosspirtprom and the like, my head begins to spin. I understand why spies need black money. I understand why criminals need it. But why does the state? The state is supposed to be acting on behalf of the people. So why does money that is earned on behalf of the people need to be hidden from the budget?
 
 <i>Yulia Latynina is a journalist with ORT. </i>

TITLE: Upturn May Be More Than Just a False Start
AUTHOR: By Eric Kraus

TEXT: The summer of 2001 is proving sweet to what had until recently seemed a seriously endangered species: the wild Russian bull. Suddenly, Moscow, London and New York are abuzz with Russia conferences and seminars. As foreign investors return to admire the resurrection, local brokers are again threatened with the twin ravages of sleep deprivation and liver failure - escorting investors through oil fields by day, through Moscow's grueling &quot;cultural programs&quot; by night. Is it 1997 all over again? Are memories so short? Is once a generation not enough? Or this time, is it different?
 For the past five years I have lived a life in synchrony with the gyrations of the Russian financial sector, being treated to more episodes of elation and despair than many men know in a lifetime. 
 When in 1997 I arrived in Moscow after peddling Russian debt from Paris, President Boris Yeltsin appeared to have feet of clay. Government was arbitrary, chaotic, unimaginably corrupt. Ruble &quot;stability&quot; made Moscow more expensive than London or Osaka. There was nary a Russian-manufactured product to be found, and the government was funding its budget deficit by rolling over debt at 35 percent per annum (reaching 150 percent eight months later). 
 While the foreigners were giddy, the Russians seemed skeptical: Was the national anima so gloomy that they could not recognize a good thing, or did they know something we didn't? Reluctantly I opted for the latter, awaiting impending doom with gallows humor and vodka. By the time the crash came, I was in Asia.
 Returning to Moscow to take over an orphaned fixed-income desk in September 1998, I encountered a rapidly changing country. On the one hand, the default could hardly have been handled worse - foreign investors were needlessly antagonized, markets ceased functioning, the currency shed 70 percent of its value. Yet, on the street, gone was the wretched excess, the fast money, the party on the edge of the apocalypse. Within a few months there was a swelling budget surplus, GDP was growing, and the trade surplus was ballooning as Russia started producing what it consumed.
 In the aftermath of the crash it was taken as a sign of madness to remain employed in Russian financial markets. Alongside a few other madmen, notably Goldman's Al Breech, I compounded this folly by rating Russian debt as the buying opportunity of the century. 
 Almost three years after the 1998 crash, Russian fixed income has surged by more than 400 percent, far and away the world's best-performing debt index. This year, Russia is also the world's top equity market, rising some 60 percent against a backdrop of bearish global markets. By comparison with the first &quot;bubble phase,&quot; last year Russia ran an unheard-of 8.7 percent primary budget surplus, a $61 billion trade surplus, and is currently increasing reserves by an average of $400 million per week , despite paying down onerous foreign debts. Notwithstanding the pessimism at the beginning of 2001, growth is beating expectations and will probably top 5 percent as domestic demand continues to strengthen.
 Yet the numbers do not fully convey the reality. If, under Yeltsin the situation was always &quot;grave&quot;... it was never really &quot;serious.&quot; Under Putin, on the other hand, it is unarguably &quot;serious.&quot; Initially seen in the West as some inscrutable Slavic sphinx, he is, in fact, proving a predictable and consistent leader, popular, yet driving more real reform than any Russian politician since Pyotr Stolypin. Virtually everything that Russian strategists have called for over the past decade has been, or is being, addressed. The judiciary and military are being reformed, while at least some attempt is being made to curb rampant corruption. 
 Fears of a new wave of Soviet-style repression have proven nonsensical - one oligarch has indeed seen his tame TV station wrenched from his grip, only to be handed over to other scoundrels. Yet Moscow, at least, has no shortage of critical press, and more significantly, Russians travel freely, surf the net and write and speak as they please. Russia is becoming more predictable, less absurd, less fun, as it matures into a European democracy with a non-totalitarian opposition and the beginnings of a civil society.
 Have I thrown all caution to the winds? No, there are worrisome signs. Russia's officialdom still preys upon its people and the reform process remains far too dependent upon one man. 
 Due to structural inflation and massive dollar inflows, the real ruble exchange rate is rising, imperiling medium-term growth. The banking system remains unreformed and almost totally non-functional, and although energy exports now comprise less than 50 percent of total exports, sensitivity to oil prices remains excessive. While the foreign debt burden is sustainable, the refusal of the Paris Club to accept the same burden sharing it demands of private investors means that vital capital is being exported to service Soviet-era debt. With the global economy looking increasingly weak, Russia's ability to swim against the tide remains unproven. 
 Could the upturn then be just another bubble? I think not. Unlike in 1997, perception is, if anything, currently lagging the underlying reality. Businesses are being restructured, investment time horizons are growing far longer, and - most essentially - both property rights and medium-term political and economic stability seem assured. Russia still has enormous resources, mineral as well as human, and the restructuring of the economy will itself generate substantial growth. Reforms are becoming irreversible as a middle class develops and Western business practices are adopted. After a false start, Russia may at last be breaking free of the shackles of its history.
 <i> Eric Kraus is chief strategist for Nikoil Capital Markets in Moscow. He contributed this comment to The St. Petersburg Times. </i>

TITLE: From One Diehard Banya Lover to Another
TEXT: In response to &quot;High on Health at the Banya,&quot; July 29.
 </i>
 <i>Editor,</i>
 I enjoyed reading your article about banyas. In general, I thought it was well written and well researched. However, as an avid banya-goer over the years, I would like to share some of my experience and add a few thoughts about Russian banyas.
 I disagree that the <i>kaif </i>occurs as a result of two hours of sado-masochistic beating in the baths. Rather, it comes from exposure to the extreme contrasts in temperature one experiences when they go from the wet and intense heat of the steam room to the icy cold water in the swimming pool or shower. In Russian, this is called <i>zakalyatsya </i>or &quot;making the body stronger.&quot; The birch branches are essentially an instrument for softening and massaging the skin.
 Also, be sure to wash off any birch leaves in the shower before you jump into the pool, because the birch leaves dirty the water and clog the drains.
 You are correct to say that the routine is crucial to the banya experience. Your list of items to bring was thorough, but failed to mention a few important things that most regular banya-goers don't leave home without. First, the special washing sponge. You can buy them at most banyas or outdoor markets for a few rubles. The importance of washing oneself well at the banya cannot be overemphasized. 
 Many regular banya-goers also bring a small hand towel which they take into the steam room and sit on to avoid the often scorching hot benches.
 You also fail to mention that beer has become increasingly popular to drink, especially among younger banya patrons, and most banyas sell at least a few brands of local beers, although for more than you would pay at a kiosk. Older or more health-minded patrons more often drink bottled water or bring a thermos of herbal tea. 
 In addition, regular banya-goers never leave without a special woolen cap or at least a simple winter knitted cap. The steam room can be so hot that it almost singes one's hair and is very uncomfortable without some kind of hat. The hat also keeps the sweat out of one's eyes.
 Finally, a more enthusiastic banya-goer might bring along a small bottle of mint extract or <i>myata, </i>which is available for a few rubles in any drugstore. Offer to add a few drops of mint to the water used for steaming the steam room and most banya-goers will be pleased. The minted steam makes for an especially invigorating steam bath for all. 
 Since low-quality banyas can be very unpleasant, I especially welcomed your list of the more popular banyas in St. Petersburg. However, I was surprised that you omitted the Mytninskaya banya on Mytninskaya Ulitsa and the one on 8th Sovetskaya Ulitsa. The latter is about a 10- to 15-minute walk from Ploshchad Vosstaniya metro station, but well worth it. The people who frequent it - some of the most loyal and numerous banya patrons I've seen - claim it has the only wood-heated steam room in the city, and they swear by it. The scent of fresh-cut wood adds to the quality of the steam and, to my mind, beats out the more common gas-heated steam room. It is an example of a banya that puts some of its profits back into improvements. They have replaced the benches and the stairs inside of one of the steam rooms.
 
 <i>Richard Sleder
 St. Petersburg
 </i>
 <strong>How the West Won </strong>
 <i>In response to &quot;These Ends Do Not Justify West's Means,&quot; an editorial, July 3.
 </i>
 <i>Editor,</i>
 As a Yugoslav citizen, I feel compelled to comment on your editorial. The impression one gets is that you haven't fully grasped the intricacies that led to the extradition of Slobodan Milosevic.
 Your readers should bear in mind that Yugoslavia is a federation made up of two constituent republics: Serbia and Montenegro. Vojislav Kostunica is the president of the federation, while the republics have their own constitutions, presidents and governments. (By the way, the current president of Serbia is a close friend of Milosevic and his possible future cellmate.)
 The federal constitution and the republics' constitutions are not harmonized in some parts. This structure was inherited from the Tito era and preserved, with some modifications, to this day, mainly because Milosevic wanted it so.
 There is no justifiable reason for such a federation. Montenegro is heading toward full independence; Serbia is proposing a redefinition of the federation. What will prevail, time - and the West, I suspect - will tell.
 Thanks to this awkward state of affairs, the latest government was formed by coalition partners from Serbia and one political party from Montenegro that represents a minority of voters dedicated to the preservation of Yugoslavia. The strongest Montenegrin party, led by Milo Djukanovic, did not bother to participate.
 It has been clear from the start that the Montenegrin partner in the federal government is opposed to extradition. On the same issue, Kostunica was always dillydallying - even before he was elected - refusing to take a firm position for or against it. Unfortunately for him, the West, which does hold huge leverage over Serbia, got fed up with the foot-dragging president and turned to the Serbian government instead, which eventually delivered.
 Kostunica is a proponent of strict adherence to law. This is laudable in principle, but on numerous occasions minor players on the current political scene have taken advantage of him and of the Serbian democratic coalition, stating breaches of trivial formalities and challenging Kostunica to keep his legalistic word. He would usually oblige, forgetting in the process that this is real life, not some legal textbook case. In any case, adhering to laws mainly written by the Communists for their own purposes, and at the same time not pushing for legal and other reforms, does not do credit to Kostunica. But there is a twist in this legalism.
 Back to your editorial. &quot;Instead of allowing Serbia to come around to its own decision on Milosevic. ....&quot; Well, Serbia, in the form of its government, did come to a decision. It was Yugoslavia, the federal institution, that needed, &quot;its own time and ... accord.&quot; Did anybody in the anti-extradition and legalistic lobbies think about the consequences of wasting time? I'm afraid not. These people live in some other time.
 In substantiating its decision, the Serbian government made good use of a clause in the republican constitution, that- following a close interpretation - gives precedence to republican legislation over federal when the interests of Serbia are in jeopardy. Farcical, but true. And guess who included this clause? It was Milosevic himself, during the last days of the former Yugoslavia, to protect his fiefdom from federal institutions. So, the legal facade is preserved. Now, if Kostunica is so devoted to legalism, why does he ignore the fact that on paper everything was legal? Or does he think it is ungentlemanly to beat Milosevic and his cronies with their own dirty weaponry?
 You are right, &quot;It has reopened deep divisions in Yugoslav society.&quot; The fact of extradition is actually not so important; divisions go much deeper (an analogy with Russian divisions is not out of place). They will hopefully disappear with economic recovery. If not, Yugoslavia - or Serbia and Montenegro - faces the danger of becoming what, with all due respect, Georgia and Armenia are today: an unfulfilled hope.
 Our president is a living example of our divisions. His head is pro-Western, his heart against. It would not bother me if he was a private person, but now that he has taken official responsibility, he is supposed to lead the country, not complain about injustices in the world. Unfortunately, Kostunica failed on that task. That's why &quot;the West has pulled the rug out from under him.&quot; The best thing he can do for our nation is to retire and be remembered as a man who slew the dragon.
 
 <i>Vojin Sevic
 Moscow
 </i>
 <i>Editor,</i>
 In your editorial, I noticed that you glossed over some potentially important arguments. 
 You did mention that Kostunica was pitted against his own government by the West but even more importantly, the West is directly responsible for him in the first place. 
 We (I'm an American) all but staged a revolution in Yugoslavia in the form of over $70 million for Kostunica's campaign. We saw that most of the opposition was either jailed or at least roundly criminalized and - perhaps the most outrageous of all -in the press we completely dismissed the idea that Yugoslavia could heal itself afterwards. As you mentioned, the West held around $1.25 billion in aid over their heads, saying, &quot;Only we can fix your country.&quot; In the end, Yugoslavia was made a puppet. We bought their leaders, we bought the election. and next we will build Yugoslavia back with our own money.
 I am also extremely happy that Milosevic is no longer the leader of his country and that he is having to pay for his crimes. However, as long as the United States feels it can assert its military power all over the world and justify it by either human-rights awareness, national security, or - my favorite - &quot;the war on drugs,&quot; we will continue to use the same terrible means to justify our ends.
 <i>
 Jason Slemons
 Seattle, Washington</i>
 <strong>Cold War Leftovers </strong>
 <i>In response to &quot;Who's Afraid of Putin,&quot; a comment by R. James Woolsey, June 29.
 </i>
 <i>Editor,</i>
 Your article is right. No one is to blame but ourselves. It seems that even though the Cold War is over, the lingering perceptions of the Cold War are still present, and they still treat Russia as a beaten enemy.
 Billions are still spent on weapons. Why spend when the Cold War is over? There are still suspicions between the two countries.
 The United States should have a different attitude toward Russia. It had a chance when Mikhail Gorbachev was leader, but the United States did not provide any Marshall Plan II to help Russia. What the United States should do is to revive a Marshall Plan II, not just for Russia but for those countries that want to create a stable economy, and not give economic aid to countries with fragile economies. That would foster and encourage corruption with those who are in power.
 When Ronald Reagan was president, dictators became more corrupt and abusive. But during the Marshall Plan of 1948, the economies of Western Europe were built, which gave the people in those countries hope. There should be a similar plan to the one in 1948, the tools, not the money, for them to work for themselves. As the saying goes, teach a man how to fish, and you have fed him for a lifetime. Give a man a fish, and you have fed him for today only.
 If Russia becomes another totalitarian state, it is because the United States failed to recognize the problem properly. It is also in the interest of the United States to see Russia become a stable country both politically and economically, and not just when the United States needs help for its self-interest.
 
 <i>Jim Eusebio 
 San Jose, California
 </i>
 <strong>No More Myths </strong>
 <i>In response to &quot;Russia Needs Real History, Not Therapy,&quot; a column by Boris Kagarlitsky, July 3.
 </i>
 <i>Editor,</i>
 The concept of &quot;cliotherapy&quot; reminds me of the 19th-century Italian thinker Benedetto Croce's infamous injunction that historians should not sacrifice the &quot;beautiful myths&quot; of nationalism for the sake of objectivity. In fact, Croce had little to worry about because many historians in his day saw their professional ethos as inextricably linked to promoting the national idea - whether Italian, German, American, or Russian.
 Now the (mis)uses of history have come full circle. Let us hope that more fine scholars like Boris Kagarlitsky will continue to warn the public that history viewed through rose-colored spectacles only serves governmental interests.
 
 <i>Joseph Robert White, Ph.D. 
 Washington, D.C.
 </i>
 <strong>KP Is Outraged </strong>
 <i>In response to &quot;Journalism's Dirty Little Secret Is Revealed,&quot; June 15.
 
 Editor,
 </i>The editorial staff of the Komsomolskaya Pravda newspaper read this article with interest. Of particular interest was the theme of &quot;bought articles&quot; in the post-Soviet Russian press. The problem does indeed exist in the Russian press and needs to be discussed. However, it is disturbing to note an absence of any deep analysis of the problem and the presence of inaccurate information that is harmful to Komsomolskaya Pravda's reputation.
 For example, your author writes that Komsomolskaya Pravda is the champion of &quot;black PR,&quot; that it comprises 70 percent of bought materials, and in April of this year an allegedly huge quantity of paid material appeared on its pages (for $540,000). 
 Forgive our asking, but where exactly did this information come from? From our accounting department or from an independent auditing company that services the paper? Or is this merely the fruit of the idle minds of certain analysts who have calculated our area and materials and decided that the articles might have been purchased?
 And assertions that only two or three journalists remain at &quot;Komsomolka,&quot; while the rest are allegedly &quot;advertising agents trying to sell bought articles&quot; sound completely inaccurate. Would you ascribe such stars of the journalistic firmament as V. Peskov, I. Rudenko, Y. Golovanov, L. Repin to this list, as well as the many other talented writers of whom there are more than 200 at our paper?
 
 <i>Vladimir Sungorkin
 Editor-in-Chief
 Komsomolskaya Pravda
 Moscow
 </i>
 <strong>A Plea for Tobin </strong>
 <i>Editor,</i>
 I wish to write a heartfelt plea to President Vladimir Putin from Kodiak, Alaska - a city on Kodiak Island known for its Russian heritage, where we still have archived Russian documents from the 1700s.
 Please Mr. President, free Jack Tobin, for the sake of goodness and democracy. He is a young scholar who was studying in your country and learned your language perfectly to further understanding and goodwill between our countries. We wish to see him freed and sent home to his family, which misses him greatly. 
 
 <i>Judy Fulp
 Kodiak, Alaska
 </i><strong>Simple George </strong><i>Editor,</i>
 I am an American who enjoys reading the online edition of your paper. I find it interesting to get the world news from a different perspective, especially when it concerns my country. I like being able to compare how your people see us as to how our media portrays your people and society to us.
 Unfortunately when it comes to President George Bush, the world's media and our media see him the same way - as a simpleton. If you don't believe me, just hook up with some of our late-night shows online and see what our comics are saying about him.
 
 <i>Debbie Colleen Gansert
 Clayton, New Jersey </i>

TITLE: EU and U.S. Need To Learn To Play Together
AUTHOR: By Charles Grant

TEXT: THE European Union's decision Tuesday to block General Electric's takeover of Honeywell alerted Americans to the fact that Europe is an economic superpower. But it should have come as no surprise. The big question about the EU's future - and the one Americans should take note of - is how far its economic integration, which deepens every year, will push it to become a more powerful political and even military entity. Remember that just last October, British Prime Minister Tony Blair called for the EU to become &quot;a superpower, not a super-state.'' 
 So far, the EU has been an economic giant but a political pygmy. The EU and U.S. economies are now of similar size. In 1999, U.S. GDP was $9.2 trillion; the 15-member EU's was $8.5 trillion. In the same year, the United States accounted for 16 percent of world exports, and the EU for 19 percent. Through many rounds of global trade liberalization, the EU and United States have played the role of the two giants: When they have reached agreement, the rest of the world has followed. Many Europeans are therefore surprised that General Electric's senior management appeared so slow to realize that in competition policy, too, there are now two giants that must be dealt with, not just one. 
 Ten years have passed since the EU gave the European Commission the power to vet large mergers, with the result that both EU and U.S. authorities claim the right to examine all deals that have an impact on their respective markets. What is remarkable is that the two giants have so seldom fallen out. There was some tension four years ago, when Boeing tried to buy McDonnell Douglas. U.S. authorities waived the merger through, but Boeing made the mistake of taking the EU commission's approval for granted and only received it after changing the terms of the deal. And last year, the commission approved a merger between two European industrial powerhouses, Air Liquide and British Oxygen Corp., but U.S. authorities blocked it. 
 The lesson of the GE-Honeywell deal is not that the EU is becoming more assertive in competition policy. Nor is it that the commission buckles under political pressure from its member states. Quite the contrary: Mario Monti, the current competition commissioner, is as immune as his predecessors to bullying by EU and other governments. 
 The lesson is that the EU and the United States need to cooperate much more closely on competition policy and to discuss their alternative approaches and philosophies in a global context. The United States has irked the EU by resisting the inclusion of competition policy as a subject of discussion in the forthcoming World Trade Organization round because of worries that international agreements in this area could erode U.S. sovereignty. 
 If Americans find the EU's sway over competition policy annoying, they may come to view the euro - whose notes and coins go into circulation next January - as an even more alarming manifestation of Europe's growing economic power. For much of the 1990s, when the euro was under preparation, the predominant view in Washington was that the new currency would never come into being. Now that it does exist, its hesitant start - and in particular the currency's low level against the dollar and the European Central Bank's sometimes ham-fisted presentation of monetary policy - has continued to persuade many Americans that they do not have to take it seriously. 
 But they should. At some point, economic fundamentals will reassert themselves and the currency will rise. This could restrict America's freedom to maneuver in certain circumstances. The dollar's status as the sole global currency has allowed the United States to build up massive international debts in its own currency, at lower rates of interest than it would otherwise have to pay. The euro may make it costlier for the United States to borrow the capital it needs to finance its massive current account deficit. 
 The euro is certainly giving Europeans more self-confidence. The question remains as to how quickly that will translate into more effective and coherent EU foreign and security policies. In 1999, the EU appointed Javier Solana as its &quot;high representative'' for EU foreign policy. A spokesperson and negotiator, Solana is to some extent an answer to Henry Kissinger's apocryphal complaint that he never knew whom to call when he wanted to speak to Europe. 
 The most successful European foreign policy of all has been enlargement. It now looks likely that 10 countries will join the EU in 2004 or perhaps 2005. Those countries that are negotiating entry and those that aspire to do so later have to meet conditions set by the EU and that apply not only to the structures of their economies but also to standards of democracy, civil society and human rights. The EU has significant carrots to reward countries that perform well, such as market access and financial aid - and the latter is worth about $2 billion a year to the East European and Balkan countries. 
 These EU policies have already had a positive impact. Latvia has had to give more rights to its Russian-speaking population. In 1998, the Slovaks voted out the anti-Western and populist Meciar government because they knew they could not move closer to the EU or NATO if he stayed. A little more than a year later, the Croats voted in a moderate, pro-Western government for the same reason. One impetus to the Serbs' overthrow of the Milosevic regime was their wish to get closer to the EU. And recently the commission warned Hungary, one of the best-performing applicants, that the government must reduce its influence over television stations. 
 The EU is thus a sedentary power. It influences the environment around it as much by being as by acting. Its huge market, its aid, its values, its stress on social solidarity and its consensual political culture make it a pole of attraction for non-EU Europe. The EU's strengths are and will remain in the realm of &quot;soft power'' rather than the hard sort. It is unlikely ever to be the kind of power that sends B-2 bombers or cruise missiles to zap thuggish dictators. 
 Nevertheless, the EU is trying to develop some hard power. The jury is still out on whether the European governments will succeed in achieving significantly better military capabilities. But the downward trend in European defense budgets has bottomed out. And, more importantly, military reform is proceeding apace in several member nations. 
 Assuming that the Europeans continue to make slow but steady progress toward closer cooperation on foreign and defense policy, the transatlantic security relationship will become less lopsided, though not one of equals, as it is in trade and competition policy and which it is approaching in monetary policy. But the United States should not fret about the growth of European power. There will be times, as in the GE-Honeywell case, when it is irksome. But most of Europe's and America's fundamental interests and values are similar. We usually agree on the big things. 
 What America needs to do is to learn to harness European power, so that it can make use of those budding muscles as it tries to sort out the world's problems. It will have to consult the Europeans much more than it is used to doing. And it must recognize that unilateral actions on its part, without regard to what Europeans or others think, will not often be the best way to promote American interests and influence. The rise of Europe will make the world a lot less unipolar, but it is still good news for America. 
 
 <i>Charles Grant is director of the Center for European Reform, a London-based think tank devoted to improving the quality of the debate on the future of the EU. He contributed this comment to The Washington Post. </i>

TITLE: Fixing Up the City for All the Wrong Reasons
TEXT: ANYONE who has been walking around St. Petersburg with their eyes open lately will have probably remarked on how much construction and renovation is taking place in the city. After years of inertia and hesitation, the city administration and a number of construction companies have teamed up - in various ways and to varying degrees- and are setting the ball rolling for 2003. (If I have to explain the significance of that date once more, I'll scream.)
 Most, if not all, of the new building projects in action were presented at the recent exhibition of St. Petersburg's 300th anniversary at the Mikhailovsky Manezh exhibition hall. The list is practically endless: buildings for war veterans, blockade survivors and invalids; what looks like a facelift for the entire Petrograd Side; a series of elite dachas on Kamenny Island; the long-running saga of the revamp of Pulkovo airport; parks here, there and everywhere, particularly a large theme park in the Peterhof region and one with all sorts of public facilities near Olgina; the continuation of the World Bank-financed project to restore the city center to its former glories; more pedestrian zones; an Aquapark with a hotel attached for 500 guests; and, of course, Novaya Gollandiya, whose occupants probably snort with derision every time somebody starts talking about turning the area into a modern Hanseatic League.
 This is not to mention the dozens of renovations of crumbling 18th-century facades, as a preface to turning them into business centers, hotels or posh residences; the construction of brand-new buildings such as the apartments on the Kanal Kryukova or the seven-storey block near the Vasiliostrovskaya metro station, or any of the new blocks in the &quot;sleeping regions&quot;; and projects financed by &quot;outside&quot; money - the synagogue and the Armenian Church, for example.
 I have lived in this city for a little over five years, and it has never seduced me. For me, St. Petersburg is about the concrete jungles of Pionerskaya and Kupchino, about Kriminal and Sovershenno Sekretno, just as much as about the Hermitage and the Yusupov Palace. For every case of a restored monument, I see another of financial mismanagement. But this split personality notwithstanding, I think I can see the way St. Petersburg is headed.
 It has taken far less time for all this reconstruction to get going than it has to make serious progress on the Ring Road, for example, or the dam and other pet projects of the current administration - leaving aside the desperate problems of schools, hospitals and other communal services. But this is not just because of economics, although it's obvious that small- and medium-scale private investment with near-immediate returns practically guaranteed are going to fly faster than large-scale industrial investment on the part of the state. To say nothing of social reform.
 It's also because this city is getting irredeemably, stodgily bourgeois. It wants its palaces to be bright and shiny and once more open to the public. It wants its architecture to charm; its restaurants to cost $50 for two with wine; its businesses to be North-West GSM, not Kirovsky Zavod; its publications to be glossy, not newsprint.
 We're not talking about a middle-class that would demand a Museum of Modern Art, or involve itself in politics, but a bourgeois classs that aspires to <i>tusovka </i>membership and artificial nobility, backed by a city administration that doesn't want tourists to be moved or awed by what they see, but that wants them to go away saying, &quot;Darling, it was simply divine.&quot; This is the spirit of a small minority, but it's also the spirit of the times.
 There are thousands of reasons why renovating St. Petersburg makes sense - millions of tourist dollars, a housing market, a cleaner environment, and a showcase celebration for the city's 300th anniversary. ... But they aren't what is driving the reconstruction.
 
 <i>Barnaby Thompson is a former editor of The St. Petersburg Times. </i>

TITLE: Learning Lessons From the Past
AUTHOR: By Yevgenia Albats

TEXT: SURPRISE, surprise. I landed in Washington in the last week of June just in time to learn that Gazprom-Media boss Alfred Kokh was also in town, doing some more image polishing. My first thought upon hearing this was: &quot;That's the end of Ekho Moskvy. He's here to do damage control in view of the upcoming G-7 meeting in Genoa, [Italy] to announce his firm intention to make Russia's best political radio station even more independent - under state patronage - than it was before.&quot;
 Last Wednesday, I returned to Moscow just in time to learn that five of the station's editors and 13 of its best journalists had resigned in protest over a new Gazprom move to acquire final and complete control over the only independent, national broadcast organ left in Russia. Hardly a coincidence.
 Time and again, we must give credit to President Vladimir Putin. At the recent Slovenia summit with U.S. President George Bush, Putin conducted the finest counterintelligence operation of his career. He managed to recruit Bush, even as he allowed his U.S. counterpart to think that just the opposite had happened .
 Now I'm wondering what Bush is going to say as a eulogy to Russia's free press. &quot;I trust him until he proves different,&quot; as the president explained in a post-summit interview to The Wall Street Journal? Too late for that, I guess.
 &quot;He's proven different?&quot; Fat chance. Both administrations are into the heavy bargaining stage of a process that might be called &quot;missiles in exchange for the Baltics.&quot; The essence is that Russia will quietly allow the United States to abrogate the 1972 Anti-Ballistic Missile Treaty, while Bush will not insist on expanding NATO up to Russia's borders and will leave the Baltic states out of the alliance.
 But the approach adopted by Bush - &quot;Watch my lips, and in exchange I will close my eyes on everything else including the demolition of Russia's free press&quot; - is a shortsighted one.
 Likewise, it is shortsighted of Putin to think that he can reform Russia from the top down while keeping its nascent civil society silent. A free press, after all, is not just necessary for society at large, but for the authorities as well. The notion that somehow the security services can perform the function that a free press should be fulfilling was flatly refuted by the experience of the last decade of the Soviet regime.
 After the Cold War ended and both countries started opening up their files, it became clear that the absence of a free flow of information brought damage to the leaders of both countries. Soviet leaders were deluded by false reports of the state of affairs across their own country by regional leaders eager to secure their own positions and gain promotion. It was his own need for real information that prompted Mikhail Gorbachev to push for glasnost, although the move came too late since the country was already bankrupt.
 This turned out to be news to the Americans as well. It seems that the United States wasted billions by relying on erroneous information about the Soviet Union coming from its own secret services. Even if Bush can't bring himself to support democracy in Russia for Russians' sake, he should at least realize that the absence of a free press in Russia could be very costly in real American taxpayers' dollars.
 That is why I think that the fate of the last truly independent broadcast media in Russia - where almost all the others are controlled either by the state directly or through its agents, including friendly oligarchs and state-controlled companies - should be an issue that is no less important than nuclear proliferation, missile defense, NATO expansion and the like.
 The efforts of Ekho Moskvy's journalists to prevent Gazprom from taking control of their station should be loudly and unambiguously supported at the G-7 summit in Genoa. Ekho Moskvy is now the last bastion. If we surrender it, nothing will stop the country from rolling back and, as quickly as Russia became an open country - to the world's amazement - it will again become a closed one.
 It is simply naive to think that a &quot;strong hand&quot; will end corruption and tame the bureaucracy. We have lived through that before in Soviet times. Of course, democracy does not ensure lawfulness, but at least it gives it a fighting chance. Putin and Bush should stop gazing into each other's souls. They should stop mouthing meaningless statements. They should open their history books and think about the past.
 
 <i>Yevgenia Albats is an independent journalist based in Moscow. </i>

TITLE: Audit Chamber Reform Headed the Wrong Way
PUBLISHER: The Moscow Times
TEXT: WE have written many times that one of the crucial reforms needed at present - a reform that would go a long way toward strengthening and reinforcing all the other reforms that are so badly needed - is strengthening the Audit Chamber. Creating an independent body with real authority to investigate and to follow through on its investigations would be a serious blow to corruption in all branches of government, would allow for the rational use of the state's resources, help restore public confidence in the government, and so on. 
 Despite its weaknesses, the Audit Chamber has been the country's only functioning oversight mechanism over the last few years, and it has done much to make the scope and mechanisms of state corruption known - even if it has been unable to do much to punish wrongdoers or return looted money to the budget.
 Now the Kremlin has put forward a reform plan that is patently a leap backward, one that would turn the present weak but relatively objective organ into a directly controlled political tool of the Kremlin. And, unfortunately, the State Duma is so thoroughly cowed that it may allow this to happen with hardly a whimper of protest.
 The proposal would allow the president to choose the head of the chamber - subject to Duma confirmation - and give him the authority to order chamber investigations and accept chamber reports. In short, it puts the chamber on a short leash that leads directly to a single person.
 The Kremlin claims that it is proposing this reform to strengthen the chamber, arguing that by being closely associated with the president it will gain authority. If this argument is put forth sincerely - and we doubt that very much - it is headed in the wrong direction.
 Russia is still a country where proximity to the center is a measure of power and influence. But this is a fact against which we must struggle, rather than something we should accept as inevitable or desirable. The new Russia needs a separation of powers. Russia needs checks and balances. Russia needs a depersonalized political system. 
 President Vladimir Putin should be using his prestige and power to create a new system that is self-sufficient and capable of withstanding the comings and goings of individual politicians, including Putin himself. Otherwise, in the best case, it is a groundless reform just waiting to be undone. Most likely, it is politicians using the concept of reform as a fig leaf for politics as usual. 
 And that is a &quot;reform&quot; we don't need.
 
 <i>This comment appeared as an editorial in The St. Petersburg Times on July 6. </i>

TITLE: From Businessman to Doctor
AUTHOR: By Sam Charap

PUBLISHER: Special to The St. Petersburg Times
TEXT: If you happen to need medical care this summer at the American Medical Center or at two of the city's public hospitals, your doctor could be assisted by a young-looking U.S. medical student named Matthew LeMaitre. Despite his appearance and rank (he's a second-year medical student), LeMaitre, 33, brings to the examination room much more experience than your average starry-eyed medical student.
 LeMaitre made his first trip to St. Petersburg in 1985 on a high-school exchange program. He returned again in 1989 as a Russian Studies major at Georgetown University to spend a semester studying abroad at Leningrad State University. 
 &quot;It was the height of glasnost, a very cool time to be here,&quot; he said in an interview on Sunday. &quot;It was the intellectual's time. ... Every time the newspapers came out there would be an article that was that much more revealing or open than the one before. The whole town would be talking about what that one article said. 
 &quot;I had a blast ... I fell in love with Russia.&quot; 
 After a brief stint at an American bank, LeMaitre returned to Russia in 1990 and ended up leading a high-school exchange program and teaching English in the Siberian city of Novosibirsk. He enjoyed his time, but the $5 monthly salary - when it came - and the cold - &quot;It was freezing&quot; - got to him after a while.
 LeMaitre then headed to Moscow, where, at the beginning of the Russian economic boom time, he was in high demand as an American with good Russian-language skills. He quickly got a job marketing a luxury housing complex to Western businesspeopel, which resulted in daily job offers from his clients who needed someone with LeMaitre's knowledge to run their first ventures into the Russian market. 
 &quot;I got job offers left and right. And I got to see from the inside how the economy was exploding at that time.&quot;
 One such company, Avon, the huge U.S. cosmetics manufacturer, eventually made LeMaitre an offer he couldn't refuse. &quot;[They said], 'We were wondering if you would be interested in running our company.'&quot;
 LeMaitre built Avon's Russian operation from the ground up, using basic business techniques in a market that was almost void of consumer goods like cosmetics. &quot;It was great,&quot; he said. &quot;We had a huge map of the Soviet Union on the wall and we would just pick five cities that were relatively near each other and had a population of about 1 million. We would just go. ... There wasn't any information available at that time about what distributors were where. So when we got to these cities, we'd hop into a taxi and say to the taxi driver, 'Take us to the three nicest stores in town.'&quot;
 After pitching his product, LeMaitre would invariably get calls to his Moscow office within a week. Using this method, he created a domestic distribution system throughout the country within a year. &quot;Within six months we had [distributors] in about 80 cities. It totally exploded.&quot; Avon couldn't even keep up supply with the pace of the Russian market. 
 But LeMaitre soon became disillusioned with the business world.
 &quot;I got sucked into the roaring '90s [in Moscow]. I was thinking about what I should be doing with my life, and cosmetics wasn't it ... so I decided I needed to go back and get an education.&quot;
 With his years in Moscow already under his belt, LeMaitre headed back to the United States, and decided to pursue a degree in medicine, although he had never taken any science in college.
 After the requisite two years of pre-medical classes, LeMaitre was accepted into a unique program at Tufts University in Massachusetts, through which he will receive both a degree in medicine and international relations - to preserve his interest in Russia - after only five years of study. He will be the first student to graduate from the program.
 &quot;This is the perfect way to combine my two interests. Because basically the thing that led me to medicine was working abroad. It's where I want to go with medicine after I graduate from medical school.&quot;
 This summer, he is shadowing the experienced doctors at the American Medical Center, and learning basic medical techniques from his two internships at Russian hospitals - the Family Medical Center near Prospect Prosveshcheniya metro station, and the Alexandrovskaya Hospital not far from Prospect Bolshevikov. His long-term goal is to return to Russia and practice medicine here, maybe even to set up his own clinic.
 &quot;I want to come to a place where they otherwise wouldn't have a Western standard of medical care, and bring it to them - [and] all roads keep leading back to Russia.&quot;

TITLE: Seeing Chizhik Pyzhik Is a Monumental Task
AUTHOR: By Barnaby Thompson

PUBLISHER: Staff Writer
TEXT: While summer is upon us and the city basks in a long spell of hot weather, both tourists and local residents are taking boat trips around the city's numerous waterways. Even for those who know the city well, this is often a good way to pick up a tidbit of local trivia, or to see something that hitherto may have escaped the eye. One such tidbit - in an almost literal sense, as it happens - is the city's smallest monument, <i>Chizhik Pyzhik</i>.
 If you have missed this tiny sculpture, it does not necessarily reflect badly on your powers of observation or your eyesight. Not only is the little bird Chizhik Pyzhik just a few centimeters high, it is located halfway down the wall of the embankment where the Moika and Fontanka rivers merge, near the Summer Garden, and it it is far easier to spot from a boat than from dry land. But the sculpture is visible if you stand on the Engineer's Bridge.
 The creator of this monument, which was unveiled on Nov. 19, 1994, is the Georgian sculptor Revaz Gabriadze (and not Mikhail Shemyakin, to whom it is sometimes attributed). Gabriadze, who runs the Tbilisi Puppet Theater, is also responsible for the The Nose sculpture, from Nikolai Gogol's story of the same name, which is located on the corner of Voznesensky Prospect and Prospect Rimskogo-Korsakova. The reason for Gabriadze's unorthodox choice of subjects with which he graces the city is that he is part of the team that runs the Golden Ostap humor festival. The festival, which has been going for nine years, has made a tradition of building comic monuments all over St. Petersburg.
 As for the &quot;real&quot; Chizhik Pyzhik, he is the star of an old Russian folk song, the first lines of which run: <i>Chizhik Pyzhik, gdye ty byl?/Na Fontanke, vodku pil. </i>(Chizhik Pyzhik, where were you?/On the Fontanka drinking vodka.) 
 Chizhik Pyzhik was also a term used to tease the students of a St. Petersburg law school in the 19th century, possibly for the bizarre uniforms they had to wear. 
 It is said that throwing coins at the monument can bring good luck, especially if you can get one to land on the bird's pedestal.

TITLE: Police Strike Back at Extremist Group
AUTHOR: By Jim Gomez

PUBLISHER: The Associated Press
TEXT: MANILA, Philippines - Officials said on Monday that they had arrested the Muslim extremist leader who planned the kidnapping of 20 people, including three Americans, from an island resort six weeks ago.
 Nadzmie Sabtulah, also known as Commander Global, was described by military officials as the Abu Sayyaf's most respected commander. He is the highest-ranking member of the group to be arrested.
 The group, whose leaders say they are fighting for an independent Muslim state in the south, does not have one clear chief. The Abu Sayyaf has about five other commanders at Sabtulah's level.
 Sabtulah's arrest on Sunday night in the southern region of Mindanao was considered the most serious single blow yet to the morale and might of the 1,100-member Abu Sayyaf, which fended off a major military assault last year and is currently fighting at least 5,000 troops. &quot;This is a big setback for the Abu Sayyaf,'' National Police Chief Leandro Mendoza said.
 The Abu Sayyaf raided the Dos Palmas resort, off the southwestern island of Palawan, on May 27 in the group's second major hostage-taking in a year. The hostages are reportedly held by another commander, Abu Sabaya, on the southern island of Basilan.
 Military spokesperson Colonel Danilo Servando said that Sabtulah, suspected of kidnappings at far back as 1988, is believed to be responsible for planning the Dos Palmas assault. &quot;He's the think tank of the group,'' Servando said. &quot;He hatches the plan and other groups carry out the mission.''
 The 40-year-old Sabtulah gained worldwide attention when he and Galib Andang, another commander, won the Abu Sayyaf rebels millions of dollars in ransom in exchange for freeing another group of hostages seized at a Malaysian beach resort last year. The windfall was so large that it affected currency markets in poor areas of the south.
 The government last month offered a reward of $100,000 for information leading to Sabtulah's capture. Thousands of wanted posters showing photos of Sabtulah and five other Abu Sayyaf commanders were plastered in open-air markets and on walls in southern cities, and airdropped into remote jungle areas. &quot;The reward system is working because informants are coming out,'' military spokesperson Brigadier General Edilberto Adan said.
 Police arrested three junior rebels on Sunday night after civilian informants tipped police off to a hideout in General Santos City, Mendoza said. They were identified as Saltimar Sali, 16, Halik Sabdani, 23, and Javier Sampang, 32, all from the Jolo island town of Talipao. Mendoza said the three were directly under Sabtulah's command and are suspected of conducting a botched raid in early May on the Pearl Farm Beach Resort on an island off the coast of General Santos. Gunfire from security guards repelled that assault, which the government initially claimed was an attempt to steal a speedboat.
 Mendoza said the three other suspects participated an attempted raid in April on a beach resort on the southern island of Mindanao. That gang was driven back by gunfire from resort security staff, he said.
 Other Abu Sayyaf members then raided the Dos Palmas resort, capturing 20 people, including the three Americans.
 The rebels took more hostages in raids on a hospital and a coconut plantation on Basilan island. Some escaped or were freed, reportedly for ransoms paid by their families.
 Island residents recently reported seeing two American captives - Kansas missionaries Martin and Gracia Burnham - in Basilan's mountainous heartland, called Sampinit Complex. Sabaya has said he beheaded a third American, Guillermo Sobero of Corona, California. His body has not been found, however, feeding speculation that he may still be alive.
 Thousands of troops have been hunting the Abu Sayyaf and searching for their hostages for more than a month on Basilan, about 900 kilometers south of Manila. Mendoza said that police have set up &quot;monitoring groups'' in southern cities and in Manila to watch for Abu Sayyaf members and leaders. Troops continue to pressure the group in their bases on the southern islands of Basilan and Jolo.

TITLE: WORLD WATCH
TEXT: 'Human Bomb' Blast
 

GAZA, Palestine Authority (Reuters) - An Islamic suicide motorist blew himself up near an Israeli army checkpoint early on Monday, the first of several "human bombs'' Palestinian militants have vowed to unleash to avenge the killing of an 11-year-old boy.
 The army said no one else was hurt in the Gaza Strip blast a mile from the Kissufim crossing to Israel. The Islamic militant wing Hamas claimed responsibility. In a separate incident, an Israeli army officer died early on Monday of wounds sustained in a roadside bomb attack near Hebron in the West Bank.
 On Sunday, Hamas promised to send 10 suicide bombers against Israel to avenge the army's killing of Khalil Mughrabi in the Gaza Strip on Saturday. Palestinians said the boy was throwing stones at soldiers who opened fire.
 
 
Orange Flash
 

DRUMCREE, Northern Ireland (Reuters) - Pro-British Loyalists hurled petrol bombs over a British army barricade in the Northern Ireland flashpoint town of Drumcree on Monday after a controversial Orange Order march passed off peacefully.
 The three petrol bombs, thrown from a crowd of about 500 people assembled on a hillside overlooking the stout British barrier blocking a bridge into a Catholic neighborhood, exploded harmlessly. The march had ended 12 hours earlier. Police said the incidents, coming late in the evening on the fourth consecutive year that the contentious parade has been banned, were minor compared to violence in previous years.
 Later on Monday, Prime Minister Tony Blair and Irish Prime Minister Bertie Ahern began talks with Northern Ireland political leaders in an attempt to patch up the shaky 1998 Good Friday peace accord.
 
 
Mass Jailbreak
 

SAO PAULO, Brazil (Reuters) - One hundred and five inmates tunneled out of Latin America's biggest jail on Sunday and escaped onto the streets of Brazil's business capital, police said.
 The prisoners escaped in early afternoon in broad daylight from the Detention Center unit of the sprawling Carandiru complex, located just blocks from the financial heartland of Sao Paulo city.
 The mass escape is the latest incident at the penitentiary that was the scene of Brazil's worst prison massacre in 1992 when armed riot police stormed the prison to quell an uprising.
 
 
'Atrocious' Textbooks
 

TOKYO (Reuters) - In a move that has angered South Korea and is certain to infuriate China, Japan has rejected calls for major revisions to a history textbook that critics say whitewashes Tokyo's wartime atrocities, Japanese officials said.
 South Korea warned of actions to protest against the Japanese government's approval of the junior high school text, which Seoul says justifies Japan's invasion of much of Asia in the early 20th century and glosses over war crimes. "We cannot accept the results of the Japanese government's review of the textbooks,'' Foreign Affairs and Trade Minister Han Seung-soo was quoted as telling Japan's ambassador to South Korea.
 
 
Full of Bull
 

PAMPLONA, Spain (AP) - Slick streets made for tricky running as bulls and daredevils tumbled repeatedly during the San Fermin Festival's famed morning bull run Monday. Two people were slightly injured, the Red Cross said.
 Pamplona's cobblestone streets were less crowded than they were over the weekend, but early morning rain made the 800-meter dash route from a cattle pen to the town's bull ring slippery.
 The six fighting bulls, and six steers that are supposed to keep the toros running in a pack, started to fall as soon as they began galloping up a hill leading away from the corral. Several times, bulls got separated from the pack, which experts say is the most dangerous thing that can happen at San Fermin.
 
 
Astronauts Get Ready
 

CAPE CANAVERAL, Florida (Reuters) - The five astronauts due to venture into space aboard the space shuttle Atlantis arrived in Florida on Sunday evening in preparation for Thursday's launch.
 The Atlantis crew will deliver a $164 million airlock to the International Space Station, the orbiting science outpost that is a joint project of space agencies in the United States, Russia, Europe, Japan and Canada. This mission will complete the first phase of construction on the station, which has been occupied since November 2000.
 The airlock will allow the rotating crews of three astronauts who live on the station to leave it in space suits without having to depressurize an entire module of the station. It is similar to but larger than the airlock that flies aboard space shuttles.
 
 
Condit Questioned
 

WASHINGTON (Reuters) - The U.S. congressman caught up in the case of a missing intern withheld crucial information from police and should be a suspect in her disappearance, a former federal prosecutor said on Sunday.
 Police questioned Representative Gary Condit, the 53-year-old Democrat from California, for a third time and said on Saturday he had answered all their questions and was not a suspect in the disappearance of Chandra Levy, who was last seen on April 30.
 But Joseph diGenova, a former U.S. attorney for the District of Columbia and a Republican who handled many high profile cases, told Fox News that he believed Condit should be a suspect because he did not disclose his intimate relationship with the intern.
 Though police would not comment on the nature of the relationship between the congressman, who is married, and the 24-year-old intern, Levy's aunt said on Friday Condit was involved in a 
 
 
No Trial for Pinochet
 

SANTIAGO, Chile (AP) - General Augusto Pinochet cannot be tried on human rights charges because of the 85-year-old former dictator's deteriorating health, a court ruled on Monday.
 
<style text>The trial against Pinochet, the dictator of this South American nation from 1973 to 1990, could theoretically resume if the general's health improves. But that possibility is considered remote. Pinochet suffers from high blood pressure, diabetes and arthritis, has a pacemaker and has had at least three mild strokes since 1998, according to his doctors.The three-judge panel of the Santiago Court of Appeals voted 2-1 to suspend the legal action against Pinochet, prosecutors and defense lawyers said.
 Prosecution lawyers said they would seek a reversal of the ruling.
 "This ruling is the result of political pressures over the court,'' said lawyer Eduardo Contreras. "But Pinochet will still go into history as having been indicted on human rights charges.... The trial was suspended only because he is allegedly ill or crazy.'' 



TITLE: Early Citing of 'Base Ball' Found
AUTHOR: By Richard Pyle

PUBLISHER: The Associated Press
TEXT: NEW YORK - The quest to nail down the origins of baseball has been thrown a curve with the discovery of two newspaper articles showing the game was played earlier than historians thought.
 The articles appeared on April 25, 1823, and show that an organized form of a game called &quot;base ball&quot; was being played in Manhattan, in what is today Greenwich Village.
 The articles were discovered by George A. Thompson Jr., a librarian at New York University. Historians have long wrestled with discovering the true origins of the game, and whether it was invented or simply evolved.
 For decades, the accepted version was that Abner Doubleday dreamed up the game in 1839 while at West Point, and later encouraged it among his Union troops during the Civil War.
 That legend led to the founding of the National Baseball Hall of Fame in Doubleday's home town of Cooperstown, New York, although later evidence pointed to the first real game being played in Hoboken, New Jersey, in 1846.
 Last fall, Thompson was poking through the pages of the long-forgotten National Advocate when he discovered a brief item from 1823 referring to Saturday games of &quot;base ball&quot; at Broadway and 8th Street in lower Manhattan.
 The writer, calling himself &quot;A Spectator,&quot; was &quot;much pleased in witnessing a company of active young men playing the manly and athletic game&quot; and said another contest was to be held on the same field a week later.
 The same day, the New-York Gazette and General Advertiser carried a one-paragraph item saying it had &quot;received a communication in favor of the manly exercise of base ball,&quot; presumably from the same &quot;Spectator.&quot;
 &quot;When I found the item, I was struck by the fact that the game was actually called 'base ball,' and that it had to be a very early reference, if not the earliest,&quot; Thompson said Sunday.
 The newspapers saw no need to explain what &quot;base ball&quot; was, Thompson noted, suggesting that many people were already familiar with the game.
 &quot;They took it for granted that people would understand what it was about,&quot; he said.
 The Advocate called the game &quot;innocent amusement ... attended with but little expense&quot; and &quot;no demoralizing tendency,&quot; an apparent reference to the insidious effects of gambling.
 Thompson said one of his pastimes is looking through for items on early life in New York City, and that he is puzzled he has found no mention of baseball between the 1820s and the 1840s.
 &quot;It would seem that there ought to be references that filled that gap,&quot; he said.
 The Baseball Hall of Fame confirmed the 1823 articles represent at least a very early reference to the game, Thompson said.
 Recently, historians credited Alexander Cartwright, a New York bank clerk, and the Knickerbocker Base Ball Club with inventing many of baseball's rules and using them for the first time in the game in Hoboken in 1846.
 Also, Thompson said a newspaper in 1825 in the New York town of Oneonta referred to a game of &quot;base ball&quot; there - two years after the one in Manhattan.
 &quot;There also was a 'Massachusetts Game' in the 19th century that had five bases and home plate located between what is now home and third,&quot; he said. &quot;I'm pretty hard-pressed to see how they could play it that way.&quot;
 Could that explain why the Red Sox haven't won a World Series in 83 years?
 &quot;Well, they did sort of get off on the wrong foot, didn't they?&quot; said Thompson.

TITLE: SPORTS WATCH
TEXT: Hockey Legend Dies
 

MOSCOW (AP) - Viktor Yakushev, a champion Soviet hockey player, died from injuries after a beating on a Moscow street, news reports said Saturday. He was 64.
 Yakushev was on his way home from a party earlier in the week when he was attacked by a gang of youths, the Kommersant newspaper reported. He died Thursday night from the injuries, the report said.
 Yakushev played for Moscow Lokomotiv from 1955 to 1977, taking part in 400 games and scoring 161 goals. He was a member of the Soviet national team that won world championships from 1963 to 1967, the Itar-Tass news agency reported.
 He played in the 1960 Olympics, when his team won the bronze medal, and in the 1964 Olympics, when the Soviets captured the gold medal.
 Yakushev was to be buried Monday.
 
 
Second Thoughts
 

STATELINE, Nevada (AP) - Hold those thoughts on a comeback for Charles Barkley. He's simply not ready to take on NBA players again.
 "I don't think I could play well," he said. "Right now I'm just working out to get in shape. ... There is no way I could play."
 Barkley was asked by NBC's Jim Gray during Saturday's coverage of the Celebrity Golf Championship if he was abandoning his comeback plans.
 "I'm leaning heavily towards that," he said.
 The 38-year-old Barkley retired after the 1999-00 season after rupturing a knee tendon. In the last few months he has floated the possibility of a joint comeback with Michael Jordan, now president of the Washington Wizards.
 Jordan cracked two ribs during a workout in June and has not disclosed his plans for next season. Barkley is not eager to see his friend back on the court.
 "I hope he doesn't," he said. "If he wants to come back I'll support him." 



TITLE: Olympic Bidders Arrive in Moscow for One Last Pitch
AUTHOR: By Stephen Wilson

PUBLISHER: The Associated Press
TEXT: MOSCOW - With one Olympic era coming to a close, another is about to begin.
 The International Olympic Committee opens a momentous meeting Monday to designate the host city of the 2008 Summer Games and elect a successor to president Juan Antonio Samaranch, who is stepping down after 21 years in charge.
 Beijing remains the heavy favorite for 2008, while Belgian surgeon Jacques Rogge is the apparent front-runner in the presidential contest.
 The two election races provide the backdrop as the IOC executive board begins three days of meetings at the world trade center in Moscow.
 The full IOC assembly convenes Friday to select the 2008 host city, with the election of the new president taking place three days later on July 16.
 The meetings are being held in the same city where Samaranch became the IOC's seventh president in 1980. The former Spanish diplomat, who turns 81 on July 16, said Sunday he was not feeling emotional in his final days in office.
 &quot;I knew for a long time this day was coming,&quot; he said with a shrug and a smile as he left his hotel to attend Sunday church services.
 China, too, has been waiting a long time for this moment.
 Eight years ago, Beijing lost by two votes to Sydney in the election for the 2000 Olympics. This time, the Chinese capital looks virtually unbeatable against its main challengers, Toronto and Paris. Osaka, Japan, and Istanbul, Turkey, are distant longshots.
 Despite continuing criticism of China's human rights record, many IOC members believe the time has come to take the Olympics to the world's most populous country.
 Beijing bid leaders arriving in Moscow this weekend looked buoyant.
 &quot;We are pretty confident,&quot; said Wang Wei, secretary of the bid committee. &quot;But we've got to be careful to make a good presentation, a good image of Beijing, of China, in front of the IOC people, in front of the international community.&quot;
 The pro-Beijing lobby says the games will help open up China to the rest of the world, speed political and social development and improve the human rights situation.
 Critics say awarding the games to China would legitimize a repressive Communist regime and be similar to when the 1936 Olympics were given to Berlin in Nazi Germany. The Bush administration, which has had tense relations with China, has declared itself neutral in the Olympic race despite anti-Beijing pressure in Congress.
 British IOC member Craig Reedie summed up the choice.
 &quot;The decision you have to make is: Do you take the games to the capital of the country with a fourth of the world's population on grounds that it will help changes in Chinese society? Or do you believe a vote not to take the games to China will help the process of change?&quot;
 Britain's Princess Anne chose the latter. The Observer reported Sunday that she will vote against Beijing because of concerns about China's human rights record and the occupation of Tibet. Instead, she will vote for Toronto the newspaper said in quoting unnamed sources.
 The 100-plus IOC members will vote by secret ballot, with the city receiving the fewest votes eliminated after each round until one achieves a majority.
 Sentiment for Beijing appears so strong that some supporters suggest the possibility of a rare first-round win. With around 108 members expected to be eligible to vote in the first round, it would take 55 votes for victory.
 But Toronto and Paris insist they can still pull off an upset. Bid officials from both cities arrived in Moscow over the weekend and will continue furious last-minute lobbying all week.
 &quot;What we would like when the IOC members go to press the buttons to begin voting is to ask themselves the question: What is in the best interest of sports, what is in the best interest of the athletes?&quot; said Toronto bid executive Bob Richardson. &quot;We will be pushing the fact that we are the bid of certainty, a risk-free bid.&quot;
 The presidential election appears tighter than the 2008 race.
 The three main contenders are Rogge, South Korea's Kim Un-yong and Canada's Dick Pound. The outsiders are Anita DeFrantz of the United States and Pal Schmitt of Hungary.
 Delegates are tight-lipped about the race, in part due to ethics commission rules prohibiting members from speaking out about the candidates.

TITLE: Ivanisevic Wins Wimbledon in 5-Set Thriller
AUTHOR: By Howard Ulman

PUBLISHER: The Associated Press
TEXT: WIMBLEDON, England (AP) - Goran Ivanisevic became one of Wimbledon's most improbable champions Monday, beating Patrick Rafter in five riveting sets after barely getting into the tournament.
 Two points away from defeat, Ivanisevic rallied to beat Rafter 6-3, 3-6, 6-3, 2-6, 9-7 and became the second player to win a Wimbledon singles title without being seeded. Boris Becker did it in 1985.
 Ivanisevic needed a wild-card invitation simply to play and - in the end - no man played better. Or with more obvious emotion.
 &quot;This was my dream all my life,&quot; Ivanisevic said.
 Teary-eyed as he served his final points in the last game, Ivanisevic won the championship on Rafter's service return into the net, and then he cried as he embraced his father in the stands.
 The moment Ivanisevic knew he had climaxed his long climb back - from being a Wimbledon runner-up for the third time in 1998 to being ranked 125th in the world entering the tournament - he fell on his back and rolled on his stomach at Center Court.
 Then he stood up, clutched both hands on his head and went to the net where he and Rafter hugged. Ivanisevic, his face contorted as tears fell, then ran into the stands and hugged his father and other supporters.
 &quot;When I came here, nobody even talked about me,&quot; Ivanisevic said. &quot;Now I'm holding this trophy.&quot;
 It was very nearly Rafter's.
 &quot;Someone has to lose, and I'm the loser again,&quot; Rafter said.
 Ivanisevic, 29, joined Venus Williams as this year's singles champions. She beat Justine Henin of Belgium in three sets Sunday, becoming the first woman since Steffi Graf in 1995-96 to win consecutive Wimbledon championships.
 Rafter, 28 and contemplating retirement, just wanted one.
 He had lost his first Wimbledon final last year to Pete Sampras. It was Sampras' fourth-straight championship and seventh in eight years on the grass at the All-England Club.
 &quot;This time it hurts a little bit more,&quot; Rafter said. &quot;The first time was just fun to be there. The second time I didn't want second, I wanted to win.&quot;
 That seemed more likely without Sampras, who lost in the fourth round.
 Somehow, Ivanisevic and his overpowering serve were still around.
 Ivanisevic, from Croatia, had 27 aces, giving him 213 for the tournament and breaking his own Wimbledon record of 206.
 He reached the finals by beating Tim Henman of Britain on a match that began Friday, was suspended twice by rain, and ended Sunday. 
 Rafter led 7-6 in the last set and went up 0-30 on Ivanisevic's serve. Ivanisevic fought back to take the advantage, then Rafter tied the game, leaving him two points from victory a second time.
 But Ivanisevic survived with a service winner and his 25th ace of the match.
 Now the pressure was on Rafter, who came into the tournament seeded third.
 Serving in the next-to-last game, he fell behind 15-30 when he hit a backhand volley long. And when Ivanisevic hit a service return for a crosscourt winner, he had two break points.
 He only needed one of them as he hit another forehand winner on Rafter's service. Sensing his moment had come, he pumped his fist and took his final break between games to contemplate how he would fulfill his dream.
 He didn't make it easy on himself.
 Ivanisevic fell behind 15-30 in the last game, then fired a 175-kilometer-per-hour ace on his second serve to tie it. He wiped his face, then asked for the same ball for his next serve.
 His 27th ace, and a 40-30 lead, followed seconds later. One more point and the championship would be his. Again, he wiped his face as he fought to hold back his tears. He lifted up his socks and licked his upper lip.
 Then he double-faulted.
 Ivanisevic got the advantage when Rafter hit a backhand to the net but, once more, one of tennis' best servers double-faulted, tying the game again.
 Then Rafter hit a ball wide from the baseline, and Ivanisevic had his third match point. This time, he knelt where Rafter's ball had landed and crossed himself.
 Then he kissed the ball.
 But Rafter tied the game again with a deep backhand lob. And that was his final point.
 Ivanisevic faulted, then Rafter hit the second serve into the net. And, once more, Ivanisevic wanted the same ball back. He hit it into the net, then reached back for one last big serve.
 Rafter could only hit it harmlessly into the net.
 &quot;It's all over,&quot; he said after one of the most thrilling finals in Wimbledon history.
 Ivanisevic made it that way.
 &quot;This is so great, to touch that trophy, I don't even care now if I ever win a match in my life again,&quot; he said. &quot;Wherever I go I can always be Wimbledon champion.&quot; 
 With the ruthless aggression that characterizes her best efforts, Williams won her second-consecutive Wimbledon title Sunday by beating Belgian Justine Henin 6-1, 3-6, 6-0.
 Crushing her serves and charging the net at every opportunity, Williams overpowered a smaller, less experienced foe and showed she's back at the top of her game after slumping the first half of this year.
 &quot;I love Wimbledon,&quot; she said. &quot;It's going to be a great place for me for years to come.&quot;
 When Williams won her first Grand Slam title at Wimbledon last year, she leaped giddily across the grass. This time she staged a more restrained celebration, befitting a player who has become accustomed to championships.
 &quot;I couldn't leap because it was raining a little bit, and I didn't want to fall,'' she joked to the crowd during the trophy ceremony.
 A few drops of rain fell as the final game began, and Williams rushed to close out the win. On the first match point she smoked a service return that jammed Henin, who could only dribble a backhand to the net.
 A smiling Williams waved and swung her fists at the crowd, then hopped happily beside her changeover chair. She's familiar with the routine: Since July 2000, Williams has won three major singles titles and two Olympic gold medals.
 For the latest triumph, Williams received $647,500. Henin earned $323,750.
 Williams said the one-day wait because of rain didn't bother her, but her father and coach, Richard, suggested otherwise.
 &quot;The last two days I have never seen Venus so quiet in all my life,&quot; the elder Williams said with a laugh. &quot;Today when she walked on the court was the first time I've seen her smile. I thought, 'After two days, she smiles.'&quot;

TITLE: Dramatic Victory for Earnhardt Jr. at Daytona Speedway
AUTHOR: By Eddie Pells

PUBLISHER: The Associated Press
TEXT: DAYTONA BEACH, Florida - With a swan dive into the waiting arms of his crew, Dale Earnhardt Jr. played the part of the jubilant hero in white, filling the void left by his father, the beloved man in black.
 If only Earnhardt's triumph Saturday night at the Pepsi 400 had been plucked from a storybook, and not the life-and-death world of auto racing, the evening might have been perfect.
 &quot;Teresa is going to get a lot of calls from the major networks trying to get the rights to this,&quot; Earnhardt said, referring to his stepmother.
 He was only half-joking.
 After all, what better setting for another dramatic twist to NASCAR's emotion-filled season than Daytona, in the first race back since Earnhardt Sr.'s fatal crash?
 &quot;I think that's perfect,&quot; driver Rusty Wallace said. &quot;I can't think of a better script to play than to come back to the track that took his father away from him. To have him be able to honor his father with the victory is pretty cool. I wish I would have been the one shoving him across the line.&quot;
 Instead, as fate would have it, that honor fell to teammate Michael Waltrip. He's the driver who got the push from Earnhardt Jr. at the finish of the Daytona 500, while the elder Earnhardt hung back in third and protected them both before his crash in turn 4.
 Waltrip was the first to reach Earnhardt in the infield, where Junior jumped out of the car and thrust his arms in the air. Before that, he spun doughnuts in the grass. For a second, it seemed to be an eerie reprise of his father's own raucous infield celebration after a stirring breakthrough at the Daytona 500 in 1998.
 &quot;This place is part of our lives - more so than any other place in the world,&quot; Waltrip said. &quot;We weren't more emotional than normal, we were just normal - as normal as we could be since we lost our friend.&quot;
 That friend, the Intimidator, surely would have loved what he saw, had he been there to witness the final laps.
 Junior got pushed back to seventh place following a late yellow flag. When the green came out, there were six laps left.
 Earnhardt's car had been dominating all night. Still, the moves he made to regain the lead seemed more like the movies than real restrictor-plate racing.
 Darting in and out of the pack alone - racing without the drafting help that is so vital at Daytona - it took Earnhardt only 1 1/2 laps to overcome all six cars.
 Sure, it was bold and exciting. It was also a practically unheard-of strategy for this kind of racing, where restrictor plates on the carburetors hold speeds down, and drivers who leave the pack without a partner often lose dozens of spots before they get back in line.
 Naturally, that kind of unreal dominance left room for skeptics who wondered if Earnhardt's victory really was too good to be true.
 &quot;You don't go by yourself on the outside and make that kind of time up,&quot; said Johnny Benson, who led after the restart, but wound up finishing 13th. &quot;But it's O.K. It was good that Junior won. I know he wanted to win, and he got it done.&quot;
 Whatever the reason, Earnhardt really did have the best car all week.
 It showed during Friday night's Happy Hour practice, where he put on a show, going to the front of a long line and never letting up, as the crowd roared its approval.
 Come the race, nothing changed. Earnhardt pulled to the front on lap 27, and led most of the rest of the way - a staggering 116 of the 160 laps.
 &quot;My car was the best car here, I think you all saw that,&quot; Earnhardt said. &quot;I was just trying to stay in the right line and keep the RPMs up on the car. It seemed like I could get out there, three or four car lengths ahead, and it would take them a lap and a half to catch back up.&quot;
 He conceded such dominance can make for monotonous racing. Still, it was hard to be bored on this special night.
 It figures that Junior's win can only help NASCAR. This sport is, after all, still smitten by the Earnhardt name.
 That was obvious from the sea of red, white and black that filled the stands; the hundreds of flowers, pictures and messages strewn around a makeshift monument outside turn 4; the overwhelming roar that filled the track when Junior crossed the finish line.
 The loss of his dad in February focused much of the attention on Earnhardt, a 26-year-old who is still getting comfortable in the role of fan favorite and patriarch.
 Going winless so far this year didn't help anything.
 &quot;You start to feel a little pressure that you won't win for them and give them a reason to root for you,&quot; Earnhardt said. &quot;So it's a good feeling. That's why I pulled down on the front straightaway and jumped out of the car. That was for the fans and nobody else.&quot;