SOURCE: The St. Petersburg Times
DATE: Issue #687 (54), Tuesday, July 17, 2001
**************************************************************************


TITLE: State Duma Closes Productive Session
AUTHOR: By Ana Uzelac

PUBLISHER: Staff Writer
TEXT: MOSCOW - When they close their drawers, pack their documents, and wash their coffee mugs on their way out of the State Duma this week, most of the deputies will probably feel they are starting a well-deserved vacation.
 They will be leaving behind them an exceptionally long and productive spring session intended, in the words of Prime Minister Mikhail Kasyanov, to "turn Russia into a different country."
 But many analysts worry that this "different country" - with its revamped judiciary and tax systems, new labor and land codes, and overhauled pension system - might not necessarily be as advanced, free-market and democratic as Kasyanov promised in April.
 The 130 bills that the Duma passed this year at breakneck speed will influence practically all spheres of life in a country that, 10 years after the fall of Communism, is ruled by an odd mixture of old Soviet laws and liberal decrees issued by its flamboyant first president.
 The new bills should bring down taxes, introduce private ownership of land, redefine old Soviet labor relations, open private pension funds, control money laundering, and turn courts from dreaded institutions into places where people come to seek justice.
 But analysts still wonder whether changing the laws could lead to a change in the way the country - governed by an overgrown bureaucracy, plagued by corruption and burdened by an ugly war on its southern edge - actually works. They warn that some of the new laws will open the borders to other countries' spent nuclear fuel and alienate people from politics by turning it into the exclusive domain of the big political parties.
 "Legally speaking, yes, we will soon be living in a different country," Igor Bunin, the head of the Moscow-based Center for Political Technologies, said in a recent telephone interview. "But how will this country look in practice, well, that nobody can tell."
 The bills should make the economy more vigorous and entrepreneurs' lives sweeter by gradually abolishing the punishing turnover tax and cutting the profit tax from 35 percent to 24 percent. But the changes, intended to stimulate investment and make more companies pay their taxes, can have paradoxical results when applied to reality, Bunin said.
 Similarly, the long-awaited liberal judicial reform, passed under the personal guidance of Kremlin legal guru Dmitry Kozak, could turn up various surprises once it hooks up with the bleak reality of the country's Soviet-style legal practices.
 The bills are meant to establish jury trials throughout the country and transfer the right to issue arrest and search warrants from the prosecutors to the courts. They should also raise the professionalism of the judges by cracking open their notoriously corporate professional bodies and putting them under more outside scrutiny.
 But these good intentions, the critics warn, can easily go by the wayside.
 Overworked judges in the crowded courts could simply stamp all the arrest warrants presented to them without thinking, and the stricter administrative control over the judges could be used to make them more dependent on the government instead of more responsible toward the citizens.
 The pension reform bill, which passed in the first reading Friday, came in for particular criticism. "The bill should be called 'the bill against the pensioners,'" Vladimir Pribylovsky of the Panorama think tank said in a telephone interview.
 The Kremlin's main asset in its relationship with the not-always-enthusiastic Duma is its almost infallible voting machine - the Unity party - which together with its ally People's Deputy had just enough votes to outweigh the Communists and their allies the Agrarians. And last week, Unity formed an official alliance with the centrist Fatherland faction, gaining even more voting power.
 "Everything the Duma achieved was achieved only thanks to the efforts of the presidential administration and the government," said Sergei Ivanenko of the Yabloko faction, summing up the session at a press conference Friday. This, Ivanenko argued, may have made the Duma more efficient, but it also has turned it into a "department of the presidential administration."
 Still, some of the bills had a hard time getting through the Duma, especially the land and labor codes, and the government had to make major concessions.
 The tempo in which the bills were passed - with deputies working until 10 p.m. and over weekends, hardly having time to read what they were voting on - left many bills plagued with serious internal contradictions. The deputies agreed to leave some of them to be resolved in second readings in the fall. Others will be discovered in practice.
 "There was no need for such speed in passing the economic bills, such as the Labor Code or Land Code," said Andrei Ryabov, a political analyst with the Moscow Carnegie Center. "There is no justification for making the deputies pass an average of 100 amendments an hour."
 The speed, Ryabov argues, was partially a result of Kremlin pressure, but also a consequence of deputies losing touch with their electorate. "They have passed bills that were drafted by the same people who drafted Yeltsin's reforms: hardline liberals who believe in concepts and don't take reality into account."
 As if in confirmation of this, a Kremlin-connected analyst said last week that there were no real assessments made of how feasible it is to conduct several major reforms at the same time.
 "Of course nobody made such assessments," said Sergei Markov, foreign editor of the Strana.ru Web site, in a telephone interview. "It would take more time to make such assessments than to push through the reform. Time will tell whether we were right or wrong."
 Voter alienation could be a consequence of another bill that was passed and signed by the president last week: The bill on political parties, which will wipe out 90 percent of all existing parties and make politics a sort of "nature reserve" for around a dozen of the biggest political organizations, Ryabov said.

TITLE: Local Deputies Vent Frustration
AUTHOR: By Vladimir Kovalyev

PUBLISHER: Staff Writer
TEXT: As the spring session of the State Duma came to a close over the weekend, local deputies expressed their frustration at having to pass bills too quickly without proper legislative input.
 At a joint press conference on Monday, independent Deputy Konstantin Sevenard and Yabloko Deputy Sergei Popov complained that many bills submitted for consideration were so shoddily prepared, or were submitted so late, that there was no time to study them properly.
 "I am not happy about the results of my work," said Sevenard. "There was a huge number of different laws, and no common sense was achieved there."
 "From the point of view of my ideology, I was defeated this session and could not defend the interests of my constituents," Sevenard said.
 During just the last two months of the spring session, the Duma considered, among other things, bills reforming the federal court system, pension laws, the Labor Code, the Land Code, the Criminal Procedures Code and the law on importing nuclear waste. In all, 130 bills were passed during the session.
 Virtually all of these initiatives were submitted to the legislature by the Kremlin.
 "[The government] was throwing in laws sometimes just four days before the voting took place," Popov said. " ... [I]t was simply impossible for any deputy to master such a [wide range] of questions."
 Popov stated that the pace and process of considering new initiatives during this session was unlike that of any other Duma session in his experience. 
 "I felt like we had returned to Soviet times, when [the Communist Party] came out with a plan and insisted that it be completed at any cost. Quantity was put ahead of quality," Popov said. 
 Analysts also expressed concern over the haste with which complex reform legislation was pushed through the Duma.
 "[The deputies] found themselves not in the role of leaders, but rather as those being led. They just turned out to complete the role of a voting machine, so there is no surprise they are not delighted [with the results]," said Leonid Kesselman, a political analyst for the sociology department of the Russian Academy of Sciences in an interview on Monday.
 One of the most important bills adopted this session was the Land Code. The bill is controversial because it would allow foreigners to purchase land. 
 But neither Popov nor Severnard was happy with the bill. Popov argued that the price for land would be too high for locals. "For foreigners, the land taxes will be like 20 kopeks for us. But this is big money for Russians," Popov said.
 Sevenard does not support the idea of selling land at all. "By allowing foreigners to buy our land, we let them put Russian land into their economy, which would take the land out of our country. This would support foreign economies, but does not help ours," he said.
 Asked to name his primary achievement during the spring session, Sevenard pointed to a bill that recommends that the government use federal budgetary financing to conduct repair work in the town of Kronshtadt.
 "The St. Petersburg Ring Road will go through Kronshtadt by 2005 and that town is in ruins at the moment," he said. "It must be renovated from federal [budgetary] sources, because the St. Petersburg budget cannot afford it."
 For his part, Popov named his effort to put through a law that would remove the excise tax from non-alcoholic beer as his crowning achievement. 
 "While we were speaking about the problems of alcoholism in the country, non-alcoholic beer was actually more expensive than ordinary beer. Now it will be cheaper," Popov said.

TITLE: Unity and Fatherland Form Centrist Alliance
AUTHOR: By Ana Uzelac

PUBLISHER: Staff Writer
TEXT: They may have been bitter political enemies in the past, but Moscow Mayor Yury Luzhkov and Emergency Situations Minister Sergei Shoigu seemed the best of friends Thursday, exchanging sweet gifts as they formalized the alliance of their two political movements - the centrist Fatherland and pro-Kremlin Unity.
 The move, which is bound to give the Kremlin even greater sway in the State Duma, comes three months after the parties first announced they would work together in support of presidential bills. Backing President Vladimir Putin seemed to be the coalition's main objective for the future as well.
 "Our union must become the main buttress for the president in his attempts to build Russia into a unified, successful state," Luzhkov said in his speech, delivered to some 400 delegates, among them many Duma deputies.
 Together, the two groups hold about 130 seats in the 450-member Duma, but with Unity's other allies, such as the People's Deputy faction, they can easily pull together a majority when needed.
 The president seemed pleased with the alliance. In his congratulatory telegram, he called it "an important step toward strengthening the party system and building a strong civil society."
 Also Thursday, Putin signed into law a controversial bill on political parties, which could get rid of 90 percent of existing political groups and make the rest more dependent on the Kremlin.
 The Unity-Fatherland congress, which opened with the new Russian - or old Soviet - anthem, took place at the Duma during a break between the morning and afternoon sessions. It lasted 45 minutes - short enough to give the delegates plenty of time for lunch.
 Unlike the delegates of the 22-hour-long marathon congress held by the Union of Right Forces in May, Fatherland and Unity members didn't seem to have any unresolved or even debatable issues.
 All the coalition's documents were passed unanimously, without a single amendment. When it came to choosing the two co-chairmen - Luzhkov and Shoigu - the delegates were so enthusiastic they forgot about voting and started applauding instead. The two leaders had to remind them to finish the formal vote first.
 The only surprise was a gift Shoigu presented to the Moscow mayor - a pot of honey in the shape of a bear wearing a cap. The bear is Unity's symbol, while Luzhkov is famous for his bee-keeping hobby and his trademark leather cap. The present, Shoigu said, was to symbolize the honey-sweet future of the alliance.
 The parties, fierce opponents in the 1999 Duma elections, will remain separate entities for the time being. However, they will vote together in the Duma and will put up joint candidates for regional and parliamentary elections, the leaders said.
 Although neither group has had much of an ideology - other than becoming a party of power - some of the delegates warned that they still have enough differences to keep them from a complete merger.
 "Unity is a conservative party with a liberal economic agenda, while we are more socially oriented, kind of social-democrats," Vyacheslav Volodin, a Fatherland deputy, said Thursday. "It will take time before our positions become close enough for full unification."
 But such differences did not faze Unity's brawny leader.
 "You can call Fatherland social-democrat or us conservative, but our political positions are the same," Shoigu said at a press conference after the congress.
 The connection with the Kremlin will apparently be reciprocal: The presidential administration sent two high-ranking representatives to the congress - Deputy Chief of Staff Vladislav Surkov and presidential envoy to the Central Federal District Georgy Poltavchenko.
 The Kremlin will also have a presence in the coalition's main executive body, the General Council. The council will comprise nine people: four from Unity, four from Fatherland and the ninth, potentially deciding vote will belong to Poltavchenko's deputy, Alexander Bespalov.

TITLE: Prosecutor Says Troops Hurt
 10 Civilians During Rampage
PUBLISHER: Combined Reports
TEXT: MOSCOW - At least 10 Chechen civilians were injured by federal troops who went on a rampage as they carried out security sweeps of villages looking for rebel fighters, a prosecutor said.
 "The facts of bodily harm were legally established. There is testimony, the beatings have been certified by medical experts and reports have been drawn up," Chechnya's chief prosecutor Viktor Dakhnov said Friday, Interfax reported.
 He said investigators "have established the facts of material damage" to property in the villages of Assinovskaya, Sernovodsk and Kurchaloi in early July.
 Viktor Kazantsev, the presidential representative in the Southern Federal District, has promised to present the final results of the prosecutors' investigation early this week. The top military commander in the North Caucasus, General Vladimir Moltenskoi, denied that his troops committed major offenses.
 "In principle, a number of violations was committed during the operation by individual soldiers or police officers," he said during a visit to Assinovskaya in remarks shown on television.
 "Most of what was said has not been confirmed. All of this happened against the background of considerable emotion."
 Dakhnov, speaking at the Khankala military base, also said some of the complaints have been found to be false. Moltenskoi said those injured "may have resisted the police. This will be clarified."
 He said two rebels had been found hiding in a school. Newspapers and television stations have shown pictures of a ransacked school, and local residents said troops stole money that was intended for paying teachers.
 ORT television showed Moltenskoi telling villagers: "I believe we will restore mutual trust. If we can do it at our level, why can't we do it with ordinary people?" ORT quoted him as saying that troops would make good the damage by installing a computer room in the school.
 Defense Minister Sergei Ivanov warned against blaming the military until the probe is completed.
 
 <i>- Reuters, AP </i>

TITLE: Media Panning for Fool's Gold
AUTHOR: By Sam Charap

PUBLISHER: Special to The St. Petersburg Times
TEXT: Following a broadcast on the local NTV &quot;Segodnya Sankt-Peterburg&quot; news program on Friday, the wires hummed with some shocking news.
 Independent Duma Deputy Konstantin Sevenard's seemingly far-fetched notion that buried tsarist-era treasure lies hidden under the former estate of the famous balerina Matilda Kshesinskaya - which now houses the Russian Museum of Political History - was proven true.
 The broadcast showed Andrei Konstantinov, director of the Agency of Investigative Journalism, knee-deep in a hole dug near the museum, proudly displaying a box of treasure, including a 48-carat diamond, some paper currency, rare books and coins.
 Konstantinov claimed he had conducted his treasure hunt without official permission. And, in a jab to Sevenard, who claimed to have received a tip about the treasure from sources in France, Konstantinov declared, &quot;And I didn't have go to Paris [to get my information].&quot;
 In fact, he didn't go anywhere for his leads. It was all a hoax.
 &quot;It was a joint action by NTV, the management of the museum and the Agency of Investigative Journalism,&quot; Yevgeny Ivanov, deputy director of the agency, said. &quot;Why did we do this? Konstantin Sevenard ... swears there is treasure there, that we must dig it up and so on. We think that there are various ways of answering this. One can answer with reason, and one can answer with humor.&quot;
 So the agency approached the museum's director, Yevgeny Artyomov, and proposed the idea of a guerrilla journalism-style prank. &quot;They proposed it to us and we agreed,&quot; Artyomov said in an interview on Monday. &quot;[Sevenard's] idea that a treasure could be buried under the palaces of St. Petersburg is absurd. We decided to take this absurdity to its extreme ... .&quot;
 &quot;We decided to conduct a sort of experiment. How would society - not Sevenard, but civil society - react to a television program where total rubbish is portrayed,&quot; Ivanov said.
 After the NTV broadcast, the Interfax news agency reported the find. In due course, many newspapers and radio outlets picked up the story. And to the dismay of the jokesters, it was taken completely seriously by the media.
 &quot;There wasn't one phone call to [our agency], NTV or the museum either from journalists, activists or citizens who doubted that a treasure was found or laughed [about it]. Absolutely everyone took this seriously,&quot; Ivanov said.
 Artyomov, however, was even less satisfied with the results of the prank. On Saturday, he sent a fax to the media explaining the hoax and disavowing it.
 &quot;It didn't turn out as we had hoped. [The Agency of Investigative Journalism] didn't have the theatrical talent to pull off the joke,&quot; Artyomov said.
 The agency and the museum had differing motives for the stunt. 
 Artyomov is driven by his certainty that the historical record disproves Sevenard's claim, and that useless digging at the site could be disastrous for the historic building. On the other hand, Ivanov and Konstantinov - irked by the media's recent failure to cover their discovery of a collection of Leon Trotsky's letters - wanted to prove a point about news coverage and society's lack of scrutiny of the media.
 &quot;No one needs the concrete history of our country,&quot; said Ivanov, in reference to his agency's find. &quot;But treasure, everyone needs that. We urge you, when you hear something or see something or read something, analyze at least part of it.&quot;
 Monday's &quot;Segodnya Sankt-Peterburg&quot; opened with an explanation of the joke and ran interviews with both Konstantinov and Artyomov. Yulia Ya shina, an editor of &quot;Se godnya Sankt-Peterburg,&quot; denied NTV's involvement in the joke and told The St. Petersburg Times that she also learned about the hoax when she received Artyomov's fax. &quot;We are not charged to verify all the information we receive. When our colleagues said such-and-such an event had occurred, we went and filmed it,&quot; she said.
 To some observers, the hoax seemed poorly thought-out. &quot;In principle, if there's going to be a joke, it should be clear that it is a joke from beginning to end,&quot; said Alexei Pankin, editor of the Moscow-based media magazine Sreda.
 But others seemed unmoved. &quot;If people have a sense of humor and can laugh at something like this, I don't see anything problematic in that,&quot; said Yury Vdovin of Citizen's Watch, an organization that monitors the Russian media. 
 Artyomov said there were more visitors to the museum Monday than usual, including many who had heard of the museum for the first time by way of the treasure reports. &quot;The hoax didn't work, but the absurdity remains,&quot; he said.

TITLE: Berezovsky's Crystal Ball Foretells Putin's Demise
AUTHOR: By Oksana Yablokova 

PUBLISHER: Staff Writer
TEXT: MOSCOW - Berezovsky, a man who likes to brag that he helped bring President Vladimir Putin to power, has predicted Russia will have a new president by year's end.
 In an interview that appeared last week in Italy's La Repubblica as part of the paper's six-part expose on the Russian president, Berezovsky said Putin would leave the Kremlin well before the end of his term in 2004 and would be replaced by a powerful regional leader.
 &quot;There will be a new president by the end of the year. I know it will be one of the governors Putin is trying to crush while pursuing the shortsighted goal of achieving centralization,&quot; Berezovsky was quoted as saying.
 The interview appeared on the same day as the second in the paper's series of articles on Putin's rise to power, published in the run-up to this week's summit in Genoa of the Group of Seven leading industrial nations and Russia. The story linked Putin to shady barter deals to bring food imports into St. Petersburg in 1991-92, when he served as an aide and then a deputy to Mayor Anatoly Sobchak. The allegations, many of which have been reported before, concern a period when the state system for supplying food to major cities collapsed and St. Petersburg was on the verge of starvation.
 The story - a Russian translation which was available on Inopressa.ru - also links Putin to organized-crime bosses, in particular to the infamous head of the so-called Tambov group, Vladimir Kumarin.
 Berezovsky said that Putin had &quot;without a doubt&quot; lobbied the interests of various commercial groups. &quot;[If] corruption is bureaucracy taking money in return for helping to solve the problems of certain parties and companies, then no one in Russia can say that he has not broken the law, unless he was asleep all these 10 years. Without a doubt, Putin lobbied the interests of different companies. The law interprets that as corruption,&quot; he was quoted as saying.
 Berezovsky also said he considered Putin &quot;solely&quot; responsible for the bloodshed in Chechnya, although the tycoon has previously blamed the war on Putin's predecessor, Boris Yeltsin.
 In the first of La Repubblica's articles on Putin, which appeared Wednesday, Berezovsky said he used to be on friendly terms with Putin, and said he was the one who suggested Putin as Yeltsin's successor and a political counterweight to then-Prime Minister Yevgeny Primakov.
 Berezovsky's predictions about Putin's political demise are strange considering the president's high popularity rating and political domination. Observers have proposed varying interpretations of the tycoon's opposition to the Kremlin: While some believe that Berezovsky's influence is waning and he wants to cast himself as a fighter for freedom to appeal to the West, others have speculated that his new stance may be a facade, coordinated with the Kremlin, to create the illusion of dissent in the absence of genuine opposition.

TITLE: 10 Die in Cargo-Plane Crash
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - In the second air disaster in as many weeks, a cargo plane crashed Saturday shortly after takeoff from the Chkalovsky military airport near Moscow, killing all 10 people on board.
 The four-engine IL-76TD flown by Rus, a private airline, was bound for the Arctic city of Norilsk with 40 tons of construction materials. The 10 people on board were all crew members.
 Investigators are expected to issue a preliminary report into the cause of the crash Tuesday. Initial speculation that overloading was to blame was quickly denied by Rus, which is Russia's 13th-largest cargo carrier.
 &quot;We don't have any theories. We are waiting for the results of the government commission investigation, which are due Tuesday,&quot; Yevgeny Rybyakov, adviser to the Rus general director, said by telephone Sunday.
 He said Rus was working closely with investigators to find out why the plane, whose fuel tanks were filled to the brim, abruptly dived to the ground about half a kilometer from the runway and burst into a ball of fire.
 Interfax quoted an Air Force official as saying the plane could have climbed to 600 meters before crashing into the woods at about 9 a.m. It took the 300 or so firefighters and rescuers 40 minutes to put out the blaze, according to news agencies.

TITLE: Payouts to Nazi-Era Slaves Are Ready To Go
AUTHOR: By Robin Munro 

PUBLISHER: Staff Writer
TEXT: MOSCOW - Nazi-era slave laborers living in Russia should begin to receive payments from a 10 billion Deutsche mark ($437 million) German fund this month after an agreement between the Russian Foundation for Mutual Understanding and Reconciliation and state savings Sberbank was signed this week.
 Payouts to Czech, Polish and other claimants living outside the former Soviet Union began last month, but payments have been delayed to the hundreds of thousands of people in Russia and other ex-Soviet republics who worked in involuntary servitude for the Third Reich.
 Kai Hennig, spokesperson for the German foundation Remembrance, Responsibility and the Future, which is overseeing the payouts through seven partner foundations, blamed the delays on the appointment in June of a new head to the Russian foundation who needed to familiarize herself with operations and the finalizing of the deal with Sberbank.
 &quot;We are very relieved that we have finally concluded this,&quot; he said Thursday by telephone from Berlin.
 Sberbank spokesperson Sergei Rachkovsky declined to release details of the agreement and blamed the delays on its complexity.
 The deal covers many technical issues that aim to ensure that the 835 million Deutsche marks the foundation is to distribute to up to 400,000 claimants do not go astray.
 Natalya Malysheva, head of the Russian foundation, was unavailable for comment.
 Hennig said the Russian foundation had wanted several banks to handle the payouts, but the German foundation and Lyudmila Narusova, widow of former St. Petersburg mayor Anatoly Sobchak and head of the Russian foundation's supervisory board, had favored state-guaranteed Sberbank as the sole distributor of the funds.
 Interfax earlier quoted Narusova as saying the payments, to be made in two tranches, could take three years to complete. She said the first payouts of 15,000 marks each will be made to people held in ghettos or concentration camps.
 The foundation covers claimants in Russia, Latvia, Lithuania and residents of the Caucasus and Central Asian republics, whom the Nazis deported from Russia to work in German enterprises.
 Hennig said the Russian foundation had decided that those who were forced to work in factories are entitled to receive up to 5,000 Deutsche marks, while those who worked on farms will get 2,000 Deutsche marks.
 In addition, some Russians may be able to claim compensation from the International Organization for Migration, which handles claims from people who lost property during the Nazi era as a result of the actions of German companies, The Associated Press reported.
 Hennig said his organization has received lists of claimants from the Russian foundation and was cross-checking them against other lists to ensure there were no double payments.
 When those checks are complete, an inspection team from the German foundation will travel to Moscow to double-check the claims registered by the Russian foundation, he said. Only then will the money be transferred.
 The Russian foundation must make the funds available to claimants within 10 days, he said.
 &quot;After the money has been disbursed to victims, we are also going to check randomly if the people received the money,&quot; Hennig said.

TITLE: Moscow Denounces Missile Test
PUBLISHER: Combined Reports
TEXT: WASHINGTON - The U.S. Defense Department shot down a mock warhead over the Pacific Ocean late on Saturday in a successful test of a controversial anti-ballistic missile defense.
 &quot;The kill-intercept was confirmed by all our sensors,&quot; Air Force Lieutenant General Ronald Kadish, head of the Pentagon's Ballistic Missile Defense Organization, told a news briefing.
 Russia on Sunday denounced the U.S. test and accused Washington of threatening to undermine global disarmament treaties.
 A similar blast came from the environmental group Greenpeace, often at loggerheads with Moscow, as it accused the United States of threatening to spark a new nuclear-arms race with the successful weekend test of its controversial anti-missile defense system.
 The test came just three days after the Bush administration announced its intention to break ground at Fort Greely, Alaska next month on a missile-defense test site, and to develop a multilayered shield that will include ship-launched missiles and lasers mounted on airplanes within four years, pentagon officials said on Wednesday. 
 In Moscow, Foreign Ministry spokesperson Alexander Yakovenko said: &quot;A logical question again arises: Why take matters to the point of placing under threat the entire internationally agreed structure of nuclear disarmament and nonproliferation, including its core, the 1972 ABM Treaty? Russia stands by its position that it is vital to maintain and strengthen the ABM Treaty, and is prepared to discuss all problems in full accordance with its obligations on this cornerstone treaty.&quot;
 U.S. Deputy Defense Secretary Paul Wolfowitz was to outline the plan to Congress on Thursday, and he made clear that the U.S. administration is moving quickly to build at least rudimentary missile defenses by 2005, regardless of objections by Moscow.
 Although President George Bush has repeatedly stated his determination to build a missile shield, Wednesday was the first time that the administration had laid out a detailed plan and timetable for erecting an initial system for shooting down enemy missiles.
 Lieutenant General Kadish termed it &quot;one step on a journey&quot; toward building a multilayered shield against missiles that could be tipped with nuclear, chemical or biological warheads. But the results of Saturday's test would take up to two months to analyze fully, and &quot;in all probability&quot; some of the test's objectives were not met, he said. Two out of the three previous such $100 million flight tests had failed, most recently just over a year ago.
 U.S. Defense Secretary Donald Rumsfeld described the effort as an ambitious and accelerated testing program, saying the administration has no intention of breaking the ABM Treaty any time soon.
 Last week, the State Department instructed U.S. embassies around the world to inform foreign governments that the United States plans to test not just land-based interceptor missiles, but also &quot;other technologies and basing modes, such as air- and sea-based capabilities'' against long-range missiles.
 Although the administration's plan calls for upgrading a &quot;Cobra Dane&quot; radar installation on Shemya Island in Alaska and basing five interceptor missiles there by 2004, Rumsfeld said none of the work at Fort Greely would violate the ABM Treaty this year.
 Although no firm cost estimates have been developed beyond fiscal 2002, officials said that basic testing of all those technologies could be sustained for about $8 billion a year, the amount now included in the spending plan that goes into effect Oct. 1.
 Saturday's test kicked off at 10:40 p.m. - delayed briefly by Greenpeace protesters - with a Minuteman 2 intercontinental ballistic missile streaking into the night sky from Vandenberg Air Force Base in California.
 Twenty-one minutes and 34 seconds later, an interceptor lifted off from Kwajalein Atoll in the Marshall Islands, 7,725 kilometers away.
 The target was intercepted 225 kilometers above the central Pacific, outside the Earth's atmosphere, at a combined closing speed of about 25,750 kilometers per hour.
 Sensors aboard a 54-kilogram &quot;kill vehicle&quot; selected the target instead of a large, black Mylar balloon, its temperature matching that of the dummy warhead to function as a decoy. 
 Bush, citing what he calls a growing missile threat from countries like North Korea, Iraq and Iran, is eager to deploy a multilayered shield including missiles launched from ships and lasers fired from modified Boeing 747 aircraft.
 
 <i>- WP, AP </i>

TITLE: U.S.-Led Group Secures Kazakh Plutonium Stock
AUTHOR: By Christopher Pala 

PUBLISHER: Special to The St. Petersburg Times
TEXT: ALMATY, Kazakhstan - U.S. officials are expressing quiet satisfaction after an enormous stockpile of weapons-grade plutonium, located in a sensitive zone in Kazakhstan, was made theft-proof in what the U.S. Energy Department is calling &quot;one of the world's largest and most successful nonproliferation projects.&quot;
 More than 3 tons of plutonium, enough to make 400 bombs, had been stored in a fast-breeder reactor on the Caspian Sea shore under security that one early visitor likened to that of an office building.
 Today, the plutonium has been fully secured, Trisha Dedik, director of the Energy Department's office of nonproliferation policy, said in an interview. &quot;It's been a great success.&quot;
 On Thursday, Dedik and others took part in a ceremony in the city of Aktau with Kazakh officials celebrating the end of the project.
 The plutonium was produced by a BN-350 fast-breeder nuclear reactor located on the northwestern shore of the Caspian Sea, a few kilometers from Aktau. The city and 350-megawatt power plant, the first-ever commercial breeder reactor, owed their location to uranium deposits that were mined nearby.
 The plutonium was designed to be shipped to other parts of the Soviet Union for use as fuel in other reactors like it, but only one, the BN-600, was ever built. Located near the Urals city of Yekaterinburg, it ultimately took little or no plutonium from the BN-350, so the material just piled up.
 The plant closed in 1999, at the end of its useful life. After 26 years of providing electricity and water to the Aktau region by powering a desalinization plant, there was an accumulation of 3,000 5-meter cylinders called fuel assemblies containing spent nuclear fuel, from which a total of 3,250 kilograms of weapons-grade plutonium could be extracted with relative ease, according to the Energy Department. Nearly half the assemblies emitted little radiation and could be safely handled by men wearing light protection. The other half was too &quot;hot&quot; to be handled by anything but robots. All spent years in a cooling pond in the plant.
 &quot;When I walked in there the first time back in 1995, it had all the security of a modern office building,&quot; recalled Fredrick Crane, an American physicist familiar with the plant. &quot;It was a clean and well-run reactor, [and] there were some guards, but otherwise all you needed was one code, like in an airport terminal, and you were in.&quot;
 With each fuel assembly weighing 135 kilograms, a couple of strong men with accomplices inside could spirit out the half-dozen cylinders required to make a bomb. &quot;It was attractive material and it was accessible,&quot; said Dedik of the Energy Department.
 Just 800 kilometers to the south along the Caspian coastline lies Iran and what U.S. officials say is a covert nuclear-weapons program. About 1,300 kilometers to the southeast is Afghanistan, home to accused terrorist Osama bin Laden, and due west, straight across the Caspian, Chechnya smolders.
 &quot;There are fast-breeder reactors in Western Europe and Japan, but the plutonium produced there doesn't accumulate like it did in Aktau. It's reprocessed pretty quickly,&quot; Dedik said. &quot;There just aren't any big stockpiles. Remember, most weapons-grade plutonium is produced by dedicated reactors, controlled by the military, and they're usually much better guarded than this one was.&quot;
 In 1996, the government of President Nursultan Nazarbayev, the International Atomic Energy Agency and the United States set up a program to increase security and, starting in 1998, to package the fuel assemblies to make them impossible to steal. Dedik and Crane were among dozens of Americans who worked on the project, which was funded by the U.S. Cooperative Threat Reduction Program under the Nunn-Lugar Act.
 A torpedo factory in Almaty that had converted to civilian work was assigned to manufacture big steel canisters in which four or six of the plutonium-rich assemblies - some &quot;hot,&quot; some &quot;cooled&quot; - were packed together and sealed before being returned to the cooling pond. Weighing well over a ton, the filled canisters are far too heavy to be handled by anything but a large robot, and all of them now emit lethal doses of radiation. Last month, after nearly three years and $43 million in U.S. aid money, the 478th and last canister was welded shut and lowered into the cooling pond. At the plant, Crane said, there are now manned gates, closed-circuit televisions, X-ray machines and turnstiles with magnetic cards, along with sensors that monitor the materials around the clock.
 The packing is designed to last 50 years, but the plutonium isn't destined to stay at the closed Aktau plant that long. Eventually, under a decree signed six months ago by Nazarbayev, the canisters will be taken 4,400 kilometers by train to the former nuclear testing grounds at Semipalatinsk, on the other side of the country. There, silos will be dug into the vast steppe and the fat cylinders will be buried, using a technique perfected in the United States.

TITLE: Operation To Retrieve Kursk Gets Underway
AUTHOR: By Oksana Yablokova

PUBLISHER: Staff Writer
TEXT: MOSCOW - Salvagers kicked off an $80 million, two-month operation to raise the Kursk nuclear submarine on Monday by sending an underwater robot to the bottom of the Barents Sea to measure radiation levels around the sunken vessel.
 The Norwegian ship Mayo, carrying a team of Russian and Norwegian divers and salvaging equipment, arrived at the Kursk site off the Arctic Kola Peninsula on Sunday.
 Initial tests in the water and sea bed around the wreckage, which were carried out to make sure the area is safe for divers, showed radiation levels did not exceed normal levels, navy spokesperson Igor Dygalo said in a statement.
 The Kursk sank during exercises on Aug. 12 after a series of powerful blasts went off inside the vessel. All 118 sailors aboard died. The 12,700-ton submarine, which lies 108 meters below the surface, has two nuclear reactors and about 22 missiles on board.
 The salvage operation is designed to lift all but the first torpedo compartment of the submarine, which was most heavily damaged in the blasts, on 26 cables to just below the sea's surface and then be dragged to the Roslyakovo shipyard near the port of Murmansk. It will be brought to the surface there and defueled.
 Just days before the start of the operation, the Norwegian Bellona environmental group cautioned the Rubin design bureau, which is responsible for the technical part of the operation on the Russian side, that more time should be taken to prepare for the lift.
 Bellona researchers said raising the Kursk would risk a possible breakup of the vessel or rupture of the protective castings around the reactors.
 While acknowledging that no major accident could possibly take place during the lift, Bellona said that if the operation fails, the chances of recovering the Kursk would be slim to none. Bellona also said that if something goes wrong during the lift, the likelihood of the seabed being contaminated with radiation was high.
 In the first step of the operation, the Kursk's mangled first torpedo compartment will be cut away from the vessel and left on the sea floor. The authorities say that the move will minimize the possibility of further explosions.
 But Igor Kudrik, a researcher with Bellona's Russian division, said by telephone from Oslo that the radio-controlled slicing device could hit a torpedo warhead and spark a new explosion.
 Rubin officials said they share Bellona's concerns but ruled out the possibility of any malfunctions during the salvaging operation that could lead to radiation leaks, according to remarks posted on kursk.strana.ru, the official server of the lifting operation set up by the Kremlin's official Web site Strana.ru, Interfax and ORT television.
 &quot;The fact that Rubin has responded to our concerns is good already, but they offered minimal explanations,&quot; Kudrik said.
 He added that Bellona is also concerned with the risks of taking the submarine to the surface and defueling it.


TITLE: Russia, China Sign Agreement
PUBLISHER: Combined Reports
TEXT: MOSCOW - Russia and China revived their strategic friendship on Monday, throwing down a challenge to America's domination of the post Cold War world and its controversial plans for a missile-defense shield.
 The presidents of the two former communist superpowers, with a combined population of 1.4 billion people, signed a friendship pact to defend mutual interests and boost trade. They also reiterated their faith in the 1972 Anti-Ballistic Missile Treaty (ABM) as a primary prop of international stability.
 Aspiring to forge a &quot;new international order&quot; and offset U.S. influence, President Vladimir Putin and Chinese counterpart Jiang Zemin signed the document - called the Good Neighborly Treaty of Friendship and Cooperation - which is the first post-Soviet friendship treaty between the two nations. The treaty cements the two countries' decade-long post-Soviet partnership.
 Both presidents said that the document, signed days before Putin attends the G-8 summit of industrialized states in Italy, was not aimed at third parties. That was an allusion to the United States, although neither leader referred directly to Washington.
 The document comes at a time when the two countries are expressing mounting concern over American national missile-defense plans as well as trying to attract more countries into their own orbit.
 In a joint statement on Monday, Putin and Jiang said they were hoping for a &quot;just and rational new international order&quot; to reflect their concept of a &quot;multipolar&quot; world led by the United Nations, rather than Washington.
 Yet the treaty made it clear that the two countries had no immediate plans to form a closer alliance.
 &quot;The friendly relations of the two countries are interstate relations of a new type. They are ... not directed against third countries,&quot; it said.
 The treaty is the first such document since 1950, when Josef Stalin and Mao Tse-tung created a Soviet-Chinese alliance that later soured into rivalry by the 1960s. But officials said this document had nothing in common with that pact. 
 However, since the collapse of the Soviet Union in 1991, Moscow and Beijing have put their disputes behind them and forged what they call a strategic partnership.
 Jiang arrived in Moscow on Sunday for a four-day visit on the heels of the International Olympic Committee decision to award the 2008 Olympics to Beijing, and met with outgoing IOC President Juan Antonio Samaranch.
 Jiang's visit also followed the United States' successful test Saturday of a missile interceptor (<i>See story, page 4</i>) - a step forward in Washington's quest to build a missile-defense system.
 Both Russia and China warn that the proposed American missile shield would upset the strategic balance and trigger a new global arms race. China's concerns are potentially even stronger, because its nuclear arsenal is tiny compared to Russia's, and even a limited missile defense could erode its deterrent value.
 China bought billions of dollars worth of Russian jets, submarines, missiles and destroyers during the 1990s, becoming the biggest customer for Russia's ailing military industrial complex. Analysts say Russia is in a position to help Beijing speed its military building by providing even more sophisticated weaponry.
 Yet some analysts also point to contradictions and underlying tension in the Russian-Chinese relationship. The two nations' trade volume was $8 billion last year and $3.8 billion in January-May 2001 - dwarfed by China's $115 billion annual trade with the United States. 
 The joint statement Monday focused at length on future cooperation in the sphere of advanced technologies, space exploration and industries including electronics, telecommunications and nuclear-energy production, and called for Chinese companies to invest in Russia.
 Some in Russia have voiced concern about Chinese migrants overrunning Russia's Far Eastern and Siberian regions bordering on China. 
 Putin and Jiang said the Russian-Chinese border from now on will become a border of &quot;eternal peace'' and pledged that the sides will jointly resolve &quot;the questions left by history.''
 
 <i>- Reuters, AP </i>

TITLE: IN BRIEF
TEXT: Anonymous Tips Stay
 

MOSCOW (AP) - The Supreme Court confirmed late last week that the Federal Security Service was entitled to consider anonymous reports on prospective and actual crimes and their perpetrators, the court's press service said.
 The court considered an appeal from the For Human Rights movement, which argued that the practice smacked of Soviet secret-police methods and could lead to abuse.
 "This may allow the FSB to fabricate cases" and may contribute to "political processes based on [anonymous] reports and calumny," the movement's chairman Lev Ponomaryov said, according to Interfax.
 But FSB officials, who ridiculed the group, persuaded the court that their instructions and methods did not violate citizens rights.
 Ponomaryov said he would not give up and would try to gather the 90 signatures of legislators necessary to bring the matter to the Constitutional Court.
 
 
Anti-Nuke Vigil
 

ST. PETERSBURG (SPT) - About 200 people turned out on Palace Square for a candlelight protest Friday night against the passage of a law allowing Russia to import and reprocess foreign nuclear waste. 
 Organized by the environmental organization For Nature - in conjunction with members of Greenpeace, the Social Environmental Society and the Nature Protection Fund - similar protests were held in major cities throughout Russia, including Moscow and Chelyabinsk. 
 
 
Reactor for Myanmar
 

BANGKOK, Thailand (Reuters) - Myanmar's ruling military is negotiating with Russia to buy a nuclear reactor in a move that raises concerns over the impoverished nation's ability to cope with high-maintenance technology.
 David Kyd, chief spokesperson of the Vienna-based International Atomic Energy Agency, said that although Yangon had asked for "general advice" on the purchase, there were safety concerns.
 The deal would provide Myanmar - snubbed by much of the Western world for its human-rights record and alleged involvement in the illicit drugs trade - with its first taste of nuclear technology.
 
 
Bon Voyage
 

ST. PETERSBURG (SPT) - The 146 passengers who were stranded in St. Petersburg when their vessel, the Konstantin Tsiolkovsky, caught fire on July 13, will be heading on to Kazan on another ship, Interfax reported. 
 The fire was caused by an explosion in the water-heating system. Two people, a mechanic and a doctor, were injured. 
 According to Viktor Bezrukov, the deputy general director of the St. Petersburg Passenger Port, passengers will be sent either to Moscow or Yaroslavl, from which point they will continue their journey to Kazan, 1,000 kilometers to St. Petersburg's southeast. 
 Representatives of the company who owned the Konstantin Tsiolkovsky will arrive soon to remove the damaged vessel, Interfax said.
 
 
Closed-Cities List
 

MOSCOW (AP) - Formalizing restrictions that date back to Soviet times, the government has issued a list of about 90 cities, towns and villages that are closed to outsiders for security reasons. The order, signed by Prime Minister Mikhail Kasyanov, was published in Rossiiskaya Gazeta on Wednesday. Kasyanov said the order was intended to establish the names of the settlements.
 The list includes the nuclear centers of Zheleznogorsk in Siberia and Snezhinsk in the Ural Mountains, the chemical center in Shikhany in the Volga River region, and the Arctic naval bases of Polyarny, Severomorsk and Vidyayevo. 
 
 
No Ekho Deal
 

MOSCOW (SPT) - Boris Nemtsov, head of the Union of Right Forces, or SPS, will not hand over any stake in Ekho Moskvy radio that he gets from Gazprom to the station's management, his spokesperson said, rejecting a statement from two State Duma officials.
 "Nemtsov never told anybody anything like that," spokesperson Lilia Dybovaya was quoted by Interfax as saying.
 Deputy Duma speakers Irina Khakamada of SPS and Vladimir Lukin of Yabloko said earlier that Nemtsov would hand a stake of 9.5 percent to Ekho Moskvy management if he obtains that amount from Gazprom. Gazprom last week said it would be willing to give Nemtsov an unspecified stake in the station as a gift in order to prevent it from having a controlling stake.
 
 
Underground Hero 
 

ST. PETERSBURG (SPT) - Vasily Levashov, the last member of the legendary wartime anti-fascist youth organisation, Molodaya Gvardiya, or "Young Guard" was buried in Peterhof's cemetery near St. Petersburg on Friday, Interfax said. He was 78.
 A former wireless operator for the guard, Captain Levashov was one of very few to survive when Stalin turned on the organization after the war. 
 The famous underground organization and its struggle against the Nazis in Donbass, Ukraine, in 1943 and the heroism of its members was described by Alexander Fadeyev in his novel "Molodaya Gvardya," considered to be classic literature in Soviet times, the agency said.
 
 
Zavadsky Case
 

MINSK, Belarus (AP) - A trial could begin in August in the case of a missing ORT television journalist, the Belarussian interior minister said Friday.
 Interior Minister Vladimir Naumov said that four suspects faced trial and that the materials in the case had been handed over to the court. The trial will begin after the judges familiarize themselves with the case - possibly in August, he said.
 The government says missing cameraman Dmitry Zavadsky was kidnapped by a group led by a former officer of an elite police force who was angered by Zavadsky's reports. 



TITLE: PM Throws Wrench In World Bank Plan
AUTHOR: By Alla Startseva

PUBLISHER: Staff Writer
TEXT: MOSCOW - The World Bank signed an agreement with Deputy Prime Minister Viktor Khristenko for an $80 million loan to move unemployed workers from northern regions - but Prime Minister Mikhail Kasyanov promptly put the deal on ice.
 The loan is aimed at relocating 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 - remote areas that were settled by the Soviet-era gulag system and large-scale industrial projects.
 Kasyanov, however, decided Thursday to postpone discussing the loan project until later this week, and it was included on the cabinet's agenda as an additional item.
 According to madia reports, the problem with the loan deal, which World Bank head James Wolfensohn and Khristenko signed Wednesday in Norilsk, was the $10 million earmarked for non-core expenditures, in particular, consulting services.
 Wolfensohn defended the provision, saying the money is for all the management and consulting services for the duration of the five-year project.
 &quot;The figure is not dramatic, but I'll take a look at it,&quot; he said, adding that the bank is ready to study the problem so that money is not wasted.
 On Friday, Wolfensohn touted the World Bank's new three-year strategy, which is based on the Russian government's mid-range economic program.
 The strategy is to be ready by April 2002, he said at a news conference, also attended by Khristenko and Economic Development and Trade Minister German Gref.
 He said the bank is ready to support President Vladimir Putin's structural reform program - primarily measures in the energy, transport and banking sectors and the modernization of the treasury, tax and customs systems.
 The World Bank head spoke positively about Russia's economic plan, saying it is a &quot;very comprehensive and a very realistic program.&quot;
 The main task of the World Bank in Russia will be assistance in implementing these reforms, he said.
 &quot;We believe that it is a very critical time to demonstrate our willingness to help Russia in financial terms, in terms of technical and other forms of assistance,&quot; said Wolfensohn.
 He said the bank's projects in Russia are above the &quot;85 percent satisfactory level, which on a global basis is very high.&quot;
 The World Bank is also negotiating with the Health Ministry for a $150 million loan project to slow the spread of AIDS and tuberculosis.
 As of Jan. 1, Russia had drawn 41 loans from the World Bank at a total of $9.1 billion, Prime-Tass reported.
 Critics stepped up their accusations that the World Bank and associated organizations were doing more harm than good to the countries they are trying to help.
 They cited the bank's approval of the 1996 loans-for-shares program, which concentrated the country's natural resources in the hands of a few so-called oligarchs.
 However, the World Bank has learned from its past mistakes, and its approach to working in Russia has changed, said Michael Carter, the bank's Russia representative.
 &quot;A fundamental feature has changed in the past few years,&quot; Carter said last year. &quot;The Moscow office has begun to play an increasing role. They administrative staff] have taken on more responsibilities for the oversight of projects.&quot;
 Last year, the Audit Chamber, the Duma's budget watchdog, found violations in a $40 million loan project for the electricity sector.
 The chamber discovered that some $1.5 million was spent inappropriately, Interfax reported.
 &quot;I do not exclude the possibility that money could be stolen or wasted,&quot; said Wolfensohn, adding that projects in Russia are no different from those in other countries in terms of corruption.
 When the bank discovers any misdealings, it prosecutes and blacklists the company, he said.
 Eric Kraus, chief strategist at NIKoil brokerage, said, &quot;The World Bank has shown flexibility in dealing with the Russian economy, rather than trying to apply textbook measures where they are clearly inappropriate.
 &quot;It is one of the most useful institutions here, and it is much more favorable towards Russia than the IMF.&quot;

TITLE: Baltika Expands With 6 New Breweries
AUTHOR: By Alla Startseva

PUBLISHER: Staff Writer
TEXT: Baltika, the country's largest brewery, plans to invest about $360 million building six new breweries in the former Soviet Union, Adam Tlekhurai, vice president of Baltika, said Monday.
 Four of the breweries will be in Russia, one will be in Central Asia, probably Uzbekistan, and one will be in Belarus, Baltika officials said. Once the project is completed, Baltika will have seven breweries operating in CIS countries. 
 Baltika's parent company, Baltic Beverages Holding, also controls breweries in the Baltic states and Ukraine.
 Tlekhurai said each of the four new breweries in Rusasia will cost about $60 million.
 Last week, the company announced that construction on a $50 million plant in Samara would start at end of this year and be completed in 13 months. 
 &quot;We needed the Central Russia market, and have chosen the Samara Region as potentially one of the most interesting regions,&quot; Tlekhurai said. 
 Baltika president Taimuraz Bolloyev and Samara Regional Governor Konstantin Titov reached an agreement on the brewery last week, he said.
 The Samara Region has a per capita consumption of 31 liters a year, an amount that corresponds with the country's average, but is half that of St. Petersburg and Moscow, according to Baltika.
 The plant is initially to produce up to 100 million liters a year, and capacity will be increased to 300 million liters if sales still prove brisk.
 Negotiations are under way for the sites of the other three plants planned for Russia, but they will be located in Siberia and the Far East, Tlekhurai said.
 In Belarus, reconstruction work is going at full speed at the Minsk-based Krinitsa brewery, while the Central Asia site is still being decided upon.
 Baltika, which is 75 percent owned by the Scandinavian-controlled Baltic Beverages Holding, currently has three plants in Russia - in St. Petersburg, Rostov-na-Donu and Tula.
 BBH, according to Business Analytica data from April, controls 32.6 percent of the national beer market, followed by Sun-Interbrew with 14.7 percent, Ochakovo with 8.1 percent, Bravo International with 6.1 percent and Red East with 5.8 percent.
 Sun-Interbrew has five plants in variousregions of Russia.
 Smaller rivals are also cobbling together expansion plans.
 Three months ago, Ochakovo said it would invest $100 million into a brewery with an annual capacity of 230 million liters in the Central Russian town of Penza.
 Breweries are expecting strong growth in the regions, especially in Central Russia.
 &quot;There should be space for everyone,&quot; Ochakovo President Alexei Kochetov said earlier this year.
 &quot;We are very optimistic. We understand human psychology, we have Western experience and we have studied the market,&quot; Tlekhurai said.
 Some experts warn, however, that consumption growth, which has jumped by up to 15 percent peryear for the past three years, would likely weaken.
 &quot;It is very unlikely that Russian consumption will increase even by 10 percent in the following three years,&quot; said Andrei Sterlin, director of Business Analytica.
 Beer consumption is about 6.5 billion liters a year, while breweries are trying to boost production by 15 percent, he said.
 If consumption tops out, the increase in production will put strong pressure on small, local producers, analysts said. But consumers in the regions tend to pick traditional local brands and they could be hard to win over to the national brands.
 &quot;It will not be easy for Baltika to compete with Kazan-based Red East in the Samara region,&quot; said Andrei Ivanov, a consumer analyst at Troika Dialog. &quot;Red East produces beer of the same category, has already no less than a 20 percent market share and is very aggressive.&quot;

TITLE: Land Code Gets Nod in Pivotal 2nd Reading
AUTHOR: By Yevgenia Borisova

PUBLISHER: Staff Writer
TEXT: MOSCOW - With extraordinarily heavy-handed lobbying, the government succeeded in winning the State Duma's approval Saturday for a new Land Code that allows Russians and foreigners to buy and sell commercial and residential land.
 Duma deputies passed the controversial code after an exhausting, 11-hour second reading on the final day of their extended spring session. The code will come up for a third reading, usually a formality, in the fall.
 The Communists, who fiercely opposed the legislation, said they would file a complaint to the Constitutional Court asking it to look into what they said were several violations of legal procedures resulting from the speed at which the Land Code was pushed through. In a last-ditch bid to stop the bill, Communist Party leader Gennady Zyuganov warned: &quot;We are creating a war for land like this country hasn't seen for a long time. Please think twice - tomorrow it will be too late. Let's create a conciliatory commission and discuss the bill there.&quot;
 Pro-government and liberal deputies, however, said the bill was too important to delay. The vote was 253-152 with six abstentions.
 It was a big victory for the government and especially for Economic Development and Trade Minister German Gref, who lobbied hard for the code. He said it allows for sales of only 2 percent of Russia's land, but that this land attracts 75 percent of all foreign investment.
 Finance Minister Alexei Kudrin told reporters after the vote that the government expects foreign investment to double in the next two years from the current level of $4 billion to $5 billion a year, and to increase to up to $30 billion in the next five or six years.
 &quot;This is the most significant land reform since the times of [Prime Minister Pyotr] Stolypin's agrarian reforms,&quot; Kudrin said, referring to early 20th-century reforms giving land to the peasants. &quot;It opens a new epoch in the industrial development of Russia by allowing commercial sales of industrial lands.&quot;
 The Land Code does not deal with agricultural land, an even more sensitive issue for the Communists and others. The government is expected to submit separate legislation on sales of agricultural land by the end of the year.
 The Land Code also excludes the sale of forests, rivers, streams, lakes, national parks and land occupied by secret enterprises and military units.
 The deputies had been expected to discuss as many as 540 amendments proposed after the first hearing on June 15, but in the end they took up 200. The remainder either were withdrawn or their authors did not turn up to present them.
 The deputies, who had worked until 11 p.m. the night before, were apparently so tired and anxious to finish up that they largely ignored a bomb threat announced by the building guards, and continued the debates.
 The hardest debates concerned land sales to foreigners. Having initially rejected amendments that allowed foreigners to buy commercial land, deputies were pressured by pro-government colleagues to return to the same vote as many as six times.
 In the end, Article 15 says, &quot;Foreign citizens, stateless persons and foreign organizations cannot own land plots in border regions that are listed by the president in accordance with the federal law 'On the State Border of the Russian Federation' and in other special territories in accordance with federal laws.&quot;
 It is not clear how those limitations will be implemented, Gref said.
 The hearings were often interrupted by demands by the Communist and Agrarian factions to postpone the vote, yet it was clear from the very beginning that the bill would get through. The Duma is dominated by pro-government deputies, who rejected all amendments that did not have government support.
 Gref and his deputy Alexander Maslov were present in the Duma and were asked by Speaker Gennady Seleznyov to comment on every amendment after it was introduced. They were joined in the government balcony in the afternoon by Kudrin and Deputy Prime Minister Ilya Klebanov.
 The bargaining that took place showed Gref's influence. Deputies who wanted to get their amendment through came to Gref and, after a discussion right in the chamber, insisted on another hearing for their amendment, saying that it now had the government's support.
 Before crucial votes on foreigners' rights, Gref asked for a 10-minute break and invited the leaders of Unity, Fatherland, Union of Right Forces and Yabloko to a &quot;consultation.&quot;
 Russia's Regions head Oleg Morozov, looking insulted, said, &quot;If you frame the invitation this way, you will get zero support from Russia's Regions.&quot;
 Gref immediately corrected himself: &quot;I was mistaken. Of course I am inviting the leaders of all of the factions.&quot;
 The biggest compromise involved Articles 15 and 22 on land sales to foreigners. The government version did not include foreign organizations, only individuals, which legally would have allowed these organizations to buy commercial land virtually without limits. In exchange for a positive vote, Gref agreed to include foreign organizations.
 Zhores Alfyorov, a Nobel Prize winner in physics and Communist member of the Duma, said the Land Code will have &quot;worse consequences than [Anatoly] Chubais' privatization.&quot;
 Outside the Duma on Saturday morning, it was quiet, compared to June 15 when hundreds of protesters gathered in front of the Duma. This time, police completely blocked off the street.
 A crowd of protesters was crammed onto the sidewalk on the other side of Okhotny Ryad from the Duma. They threw a stone and a 500-gram weight at Liberal Democratic leader Vladimir Zhirinovsky as he approached them, and he brought the objects into the Duma to show the chamber.
 He was asked to remove the objects by Communist Deputy Tatyana Astrakhankina, who said she was afraid of what &quot;a man with an unstable nature&quot; might do with them at such an emotionally charged hearing.
 Zyuganov said that next week Communists and Agrarians will file a complaint to the Constitutional Court, which has been signed by 105 deputies, 15 more than required.
 The Duma's biggest violation, he said, was in neglecting the opinion of the 35 regional legislatures that formally objected to the Land Code. The Duma also allowed only 29 and not the required 30 days between the first and second readings and gave deputies three and not four weeks to submit their amendments to the property committee, he said. Many deputies received copies of the amendments only on Saturday when they should have gotten them three days before the hearing, he added.
 &quot;Putin used to say that we will have dictatorship of the law in this country. What we have now is the dictatorship of arbitrariness,&quot; Zyuganov said.

TITLE: Draft Law Gives Tax Police Access to Audit Information
AUTHOR: By Natalya Neimysheva

PUBLISHER: Vedomosti
TEXT: MOSCOW - Auditors could be obliged to divulge clients' commercial secrets under a draft law making its way through the State Duma.
 The new law on auditor activity, which the Duma approved in its second reading last Wednesday, would in some cases require auditors to hand over a client's financial documents to tax police or investigating bodies.
 The draft law has still to pass its third and final reading. However, since the third reading is largely concerned with editorial corrections, the only real threat to the law is a presidential veto.
 Under the draft law, a client's documents could be transferred to an unspecified &quot;federal body&quot; that would check the quality of the audit. This federal body could then instruct an accredited auditing organization to recheck it.
 Secondly, the draft stipulates that, by court decision, a client's documents may be transferred to a &quot;state body&quot; such as the Tax Police or Tax Ministry, or to &quot;individuals authorized by the given court decision,&quot; who in turn would be obliged to maintain the confidentiality of the information.
 Sergei Ischuk, audit partner for Ernst & Young, said members of the auditing organizations accredited to the unspecified federal body would gain access to working documents including &quot;information on who a bank may prefer when issuing credits, the price paid when buying a factory, and the cost of services.&quot;
 Dan Kokh, general director of Deloitte and Touche CIS, said that controlling bodies can only be admitted to auditors' working materials by court decision alone and with the consent of the client.
 Deputies insist that secrecy is protected in the law, which states that controlling bodies must maintain confidentiality and that clients and auditors alike would have the right to claim compensation if a leak occurs.
 Local auditors aren't complaining.
 &quot;If some kind of financial pyramid has robbed its investors, its management has been arrested and all financial documents are suddenly burned up, then copies kept by the auditors could be of great use,&quot; said Nikolai Remizov of audit firm FBK.

TITLE: Pension System Part of Duma's Hearings Blitz
AUTHOR: By Torrey Clark

PUBLISHER: Staff Writer
TEXT: MOSCOW - The State Duma passed in the first reading Friday a package of pension-reform bills aiming to keep the pension system from going broke as well as boosting payouts to retirees.
 The bills, which deal with state pensions, labor pensions and compulsory pension insurance, were approved despite strong opposition from Communists. More than 100 people protested the legislation outside the Duma.
 The three bills attempt to avert a looming cash crunch by replacing state-guaranteed pensions of about $35 a month with a combination of a state pension - funded by a flat-rate tax - and flexible privately financed pensions.
 Under the current pay-as-you-go system, tax money paid into the State Pension Fund is pooled and redistributed almost immediately as pensions. But there is not enough money, since the work force is graying at a faster rate than young adults are joining up.
 The reforms also look to earn interest on at least part of the pension money. Surplus pension money now sits in the federal treasury losing value to inflation.
 Critics say that the new bills, however, do not provide mechanisms to fight inflation on the State Pension Fund or set out how to invest in private pension funds. They also point out that the bills leave a number of other vital questions open, such as where the Pension Fund fits into the government structure.
 Pension Fund chief Mikhail Zurabov said Friday that reforms were urgently needed.
 &quot;The pension system has nearly exhausted its resources,&quot; Zurabov was quoted by Interfax as saying.
 The first bill, on state pensions, contains no drastic changes, but it does increase the base component of pensions from 180 rubles to 450 rubles.
 The bill on labor pensions splits retirement and disability pensions into three parts: state, insurance, and invested funds. The State Pension Fund would pay pensioners a base amount of at least 450 rubles. Special insurance funds would pay out an amount proportional to insurance contributions paid in. A private investment account would pay a return on whatever amount an individual contributes.

TITLE: NTV Head Talking of Revamp
AUTHOR: By Anton Charkin

PUBLISHER: Vedomosti
TEXT: After Gazprom became the owner of a 65 percent stake in NTV, having wrested a 19 percent stake from Media-MOST through the courts, it proceeded - on April 3 - to change the station's managment. Now, with several months' experience under their belts, the new managemers have become ever more confident and bullish. 
 The new general director of NTV, Boris Jordan, is not intimidated by the company's multi-million dollar debts or its depressing audit results. Over the past three months, NTV's average audience in Moscow has grown by 5 percent according to Gallup data, and Jordan expects the company to turn a profit by the end of the year. 
 
 <i><strong>Q:</strong></i><i> Do you regret your decision to head up a company that has more than $100 million in debts and shareholders who are literally fighting amongst each other?
 </i><strong>A:</strong> On the contrary, despite all of its problems, the company has great prospects. Since my appointment at NTV, my interest in this business has only grown. I enjoy building a media company, and I think we will be successful. I am certain that over the next three years, it will be possible to rebuild NTV in an entirely Western style as a national network that will produce very large revenues. It's simply necessary to understand that television is not only art but also a business. I hope we will be at NTV for a long time.
 
 <i><strong>Q:</strong></i><i> How can you be so optimistic when Gazprom representatives and you yourself say NTV is on the verge of bankruptcy?
 </i><strong>A:</strong> When we came to NTV that was the situation. The company's losses last year totaled $70 million. Ratings dropped. Why did the channel's prospects fall? Sometime in the middle of last year, investment in the channel simply stopped. The same films and television series were re-broadcasted over the last eight months. As a result, in May we lost our rights to Western and Russian films. Since last year, the company has made only minimal investment into providing quality broadcasting. Somehow news programs were still supported, but outside producers were not paid, satellites were not paid for, and rent was not paid. As a result, the company's standing debts amounted to $20 million at the moment of our arrival. If we had continued to follow the previous policies, then NTV would have collapsed completely. We had to expend a lot of effort to square our relations with outside producers and suppliers. We have begun to invest in quality broadcasting once more and for the first time in recent years, ratings have begun to rise.
 
 <i><strong>Q:</strong></i><i> You just signed an auditor's report from PriceWaterhouseCoopers. Did the results surprise you?
 </i><strong>A: </strong>For two years, there were no official outside audits of NTV. PriceWaterhouseCoopers conducted audits using Russian and Western accounting standards of the company for 1999 and 2000. The Western-standard audit for 2000 indicated NTV had negative debts of $70 million and losses of $22 million. 
 Take a look at how the previous management operated. They spent $6 million on a Russian television series. That is a very large sum for a Russian television channel. But instead of buying broadcasting rights with that money, they acted in the capacity of a sponsor, giving the money to Media-Most. NTV simply gave the money to Media-Most as a gift and was not granted any rights whatsoever to broadcast the television series. The programs can be shown on any channel. Now programs made with NTV money are being shown on TV-6.
 In another example, taken from the auditor's report for 2000, an offshore company called NTV-BV was set up. It received a license from the Central Bank to invest $15 million in the company. I still do not have the slightest idea why. So far, we have discovered a transfer of only $1 million. That NTV money was invested offshore and from there went into some illegal contract. The only result for NTV was the loss of $1 million. We are now beginning an audit for 2001. I hope we will find out what happened to the remaining $14 million. It's financial &quot;operations&quot; like these that stripped the channel.
 Now look at what happened to NTV's ratings in recent weeks. For the first time in a year, they are rising. And why? Because a professional management team is working here. We've started to upgrade the channel's video technology and to invest in production. We built a more rational network. We compiled a 300-page business plan. Every program was analyzed: what is its audience share, what are its earnings. Now, 40 percent of our expenses are from information programs. The time spent broadcasting news programs is 20 percent, and [these informational services] generate only 19 percent of our earnings.
 
 <i><strong>Q:</strong></i><i> Does this mean you intend to reduce the number of news programs or perhaps cancel them altogether?
 </i><strong>A:</strong> Of course not. Neither. James Rosenfield, the former president of CBS, recently visited me. He made news a profitable business there. We will also make our news programs profitable.
 
 <i><strong>Q: </strong></i><i>Certain programs based solely on establishing a certain profile put NTV on the map. Do you intend to broadcast only those programs that produce profits?
 </i><strong>A: </strong>Why do you say profile programs don't make money? It's because of this attitude that it doesn't occur to people that it is necessary to choose appropriate advertisements for every program. Look at what the NTV advertising department did before I came. They sold advertisements for the entire year all at once, and very cheaply. Now it is July and already all of my [advertising] time is sold. ... The ingenious management of NTV not only sold all of the advertising space at the beginning of the year for low prices but sold 30 percent more time than the channel has. And now I am forced to work things out with advertisers. Unquestionably, NTV was built as a very strong channel in terms of its content. But its business was not conducted well.
 
 <i><strong>Q: </strong></i><i>How do you evaluate the current condition of NTV? 
 </i><strong>A:</strong> The company has been stabilized. We've established control over finances. The majority of the $20 million debt load has been restructured.
 
 <i><strong>Q:</strong></i><i> But there remains the debt of $90 million. What will be done with that?
 </i><strong>A:</strong> That is our main problem. NTV owes that money directly to Gazprom and Media-MOST. I want to resolve this problem by the end of the year.
 
 <i><strong>Q: </strong></i><i>NTV has long been perceived as a rich, stylish channel. Are you hoping to preserve all of that while minimizing expenses?
 </i><strong>A:</strong> First of all, I want to clarify: It is not the case of &quot;minimizing expenses,&quot; but of establishing basic financial order. And secondly, we want not only to preserve [what existed before], but to improve on it. The money we save will be used to improve our broadcasts. Time does not stand still. What was good yesterday isn't enough to keep you on top tomorrow. I hope we'll do everything better than it was done in the past.

TITLE: Chretien Visit Focuses on Siberian Oil Co. Struggle
AUTHOR: By Anna Raff

PUBLISHER: Staff Writer
TEXT: MOSCOW - Canada's prime minister consulted top government officials over the weekend on the scandal brewing around Tyumen Oil Co. and a Canadian oil company, setting the stage for high-level intervention in the dispute.
 President Vladimir Putin hosted Canadian Prime Minister Jean Chretien on Friday, and Chretien met with Prime Minister Mikhail Kasyanov on Saturday.
 In both meetings, the fate of Yugraneft Corp., a Siberian joint venture financed with guarantees from the Canadian government, was discussed, said Duncan Fulton, Chretien's spokesperson, who declined to give details.
 Yugraneft was founded in 1992 as a joint venture between Norex Petroleum - formerly a division of Canadian oil services giant Nowsco - and Chernogorneft, an oil production unit now controlled by Tyumen Oil Co., or TNK. The creation of the venture was included in an agreement signed by President Boris Yeltsin, and Yugraneft was financed by millions of dollars in Canadian government guarantees.
 At the project's inception, Norex had 60 percent of Yugraneft and Chernogorneft controlled 40 percent.
 TNK took operational and financial control of Yugraneft after a June 28 extraordinary shareholders meeting that was called after the Khanty-Mansiisk arbitration court froze Norex's shares.
 TNK claims that $5.8 million in &quot;know-how&quot; Norex brought to Yugraneft as charter capital is worth substantially less. The oil giant plans to prove its case July 31, when a commission is to determine what Norex's &quot;know-how&quot; was worth at the time.
 Vladimir Kuznetsov, a lawyer for TNK working on the case, says he knew nothing about guarantees proffered by the Canadian government.
 &quot;I don't particularly think that a civilian dispute should call for government intervention,&quot; said Igor Maidannik, head of TNK's legal department.
 Meanwhile, the TNK-installed Yugraneft general director denied allegations he signed a contract to sell crude to TNK for a third of the market price.
 &quot;Have you seen such a contract?&quot; said Alexander Berman, general director of Yugraneft. &quot;No? It's because it doesn't exist. Those are all lies.&quot;

TITLE: IN BRIEF
TEXT: Budgetary Woes
 

MOSCOW (Reuters) - The government faces defeat in parliament on its 2002 budget draft unless it is overhauled to allow for greater expenditures, the chairman of the State Duma Budget Committee said Monday.
 Alexander Zhukov said the booming economy was set to overshoot this year's target figures for inflation and GDP growth and thus pave the way for increased 2002 spending.
 "I expect the government to correct the budget outline and redraft the structure of expenditures in 2002," Zhukov told a news conference. "If this is not the case, the draft may provoke waves of discontent from deputies from all factions when they sit down to examine it." 
 The draft 2002 budget presented in June saw revenues at 1.64 trillion rubles and spending at 1.51 trillion, giving a budget surplus of 1.26 percent of the gross domestic product.
 
 
50 for a While
 

MOSCOW (Reuters) - The new compulsory level of 50 percent of dollar earnings that exporters must sell domestically will be maintained for the next six to 12 months, Economic Development and Trade Minister German Gref said Monday.
 On Friday, the State Duma passed a bill to cut to 50 percent from 75 percent the amount of hard currency that exporters have to repatriate, one of a set reforms proposed by President Vladimir Putin.
 "There will be no possibility to reduce further the volume of obligatory sales of hard-currency proceeds in the next half year or year," Gref told reporters. "This regulation should be eased, but gradually. One cannot just lift it altogether."
 Mandatory export revenue sales were introduced shortly after the 1998 crisis, when Russia defaulted on billions of dollars in domestic debt as the government aimed to fight capital flight.
 Analysts have said the cut in the sales would benefit exporters, major contributors to the state coffers, and would help the government reduce rising inflation.
 
 
Ruble Dips to 29.23
 

MOSCOW (Reuters) - The ruble sank Monday, hit by last week's parliamentary approval of a law easing currency rules, and the Central Bank intervened to prevent a sharper fall, but dealers saw further losses for the ruble.
 The ruble's weighted average for today settlement dipped to 29.2309 per dollar in a unified session of eight exchanges from 29.2011 per dollar on Friday. The volume was a medium $125.08 million.
 Based as usual on the results of the unified session, the Central Bank cut its official next-day rate to 29.23 per dollar after 29.20 rubles per dollar Friday.
 "There are rubles on offer, there is a will for a dollar rise. There is a positive news background that the share of obligatory dollar sales [by exporters] will be cut," said Dmitry Ivlyushin, head of currency-market operations at Absolut bank.
 
 
Gref: Inflation Higher
 

MOSCOW (Reuters) - Economic Development and Trade Minister German Gref has raised the government's estimate for inflation this year to 16 percent to 18 percent.
 Gref issued the estimate Saturday in the closing stages of a debate that culminated in the passage of a land code overturning a Soviet-era ban on land sales.
 Original government forecasts for inflation this year were put at 12 percent to 14 percent, but have since been revised upward. Prime Minister Mikhail Kasyanov last week said it would exceed 14 percent but stand below last year's 20.1 percent.
 
 
Fishing Deal Defended
 

MOSCOW (AP) - Russia on Friday rejected appeals by Japan to back out of a deal awarding South Korea fishing rights off the disputed Kuril Island chain, a news report said. "I don't see any reasons for Japan's statements. Our position is legally substantiated," Itar-Tass quoted Deputy Foreign Minister Alexander Losyukov as saying.
 The agency reported that Japanese Foreign Minister Makiko Tanaka had invited the Russian ambassador in Tokyo, Alexander Pankov, and gave him a request to cancel the fishing contract with South Korea.
 Under the contract, 26 South Korean boats may start fishing July 15 in the waters off the islands, which are claimed by Japan.
 Japan has had a long-running dispute with Russia over possession of the four southern Kuril Islands since the Soviet Union seized them after World War II. The sale of fishing rights to another nation in December irritated Japan, which calls the islands its Northern Territories. 



TITLE: Is This Good-Bye for Sheraton?
TEXT: IT seems that the local hotel market is about to lose one of its three international operators. If negotiations presently underway bear fruit, Malta-based Corinthia Hotels International will take over ownership of the Nevskij Palace Hotel, and Sheraton Hotels and Resorts will lose its present role managing the property.
 It's a classic good news, bad news situation.
 First, the good news: The city will finally get a $150 million monkey off of its back.
 The history of Nevskij Palace, which was opened eight years ago, can be broken down into two basic eras, with Sheraton taking over management of the hotel in 1997 serving as the dividing line. But these two eras are essentially the same when judged by the most important criterion: profitability. Lack of profitability is more accurate from the city's standpoint as Smolny, which holds a controlling interest in the hotel, has never been paid a dividend on its stake- not before Sheraton took over and not since.
 Added to these woes is the fact that the city guaranteed a $100 million loan for the hotel's construction from Austria's Creditanstalt Bank and this money has not been paid back. The matter is big enough that Austrian officials are said to have broached the subject with President Vladimir Putin during his visit to Austria earlier this year. With interest, the value of the loan has already grown to $150 million.
 Last summer City Hall announced its intention to restructure the debt and, if necessary, sell its controlling interest in the hotel, as well as two neighboring run-down buildings on Nevsky Prospect. Enter Corinthia.
 According to Gennady Tkachev, who chairs City Hall's External Relations Committee, the details of the deal are almost finished. Perhaps more importantly, he also said that Corinthia will be the sole owner of the hotel, meaning that Hermitage and ABV-Hotel Invest - who also hold stakes - will have to sell as well.
 If so, Corinthia, which owns and manages 18 hotels in Central Europe and Africa, will recieve for its roughly $40 million one of the city's most prestigious hotels, the two buildings on St. Petersburg's highest-profile thoroughfare and the $150 million debt. Cornithia wins on the first two counts, and the city on the third.
 Now, the bad news: This will mean the end of Sheraton's participation in the St. Petersburg hotel market - at least for now. The Sheraton trademark is owned by Starwood, an American company. As an American company, Starwood and its subsidiaries are prohibited by U.S. State Department guidelines from trading or having economic dealings with certain countries. One such state is Libya and Corinthia has some Libyan investment.
 According to The Malta Independent newspaper, U.S. visitors to the IMF and World Bank conferences held in Prague last year were told to avoid two hotels owned by Corinthia in Prague. If paying for a room or for dinner in a hotel restaurant is off-limits, then providing management services for such a hotel would surely be taboo.
 So if the deal with Corinthia does go through, Sheraton will be forced to pull out, to the detriment of the market here. Corinthia is nowhere near in the same league as Sheraton.
 This month, another international chain - Radisson-SAS - will open a hotel here. This will bring the number of major hotel players in the city back to three. The sad part is that it could have been four.
 
 <i>Anna Shcherbakova is the St. Petersburg bureau chief of Vedomosti newspaper. </i>

TITLE: Kremlin's New Land Laws Have Civil-Code Ancestry
AUTHOR: By James T. Hitch and Maxim Kalinin

TEXT: MUCH has already been written about land reform in Russia. But it continues to be one of the country's most controversial concerns. Historically, land questions have been at the center of Russian political and legal debates.
 The government is now working very intensely on determining its land policy, and the adoption of the Federal Land Code is certainly one of the most important problems for Russia today.
 A new Federal Land Code is necessary to establish the key principles of land ownership at the federal level, as required by the constitution. A Land Code is necessary to clarify such issues as the ownership of land by foreign individuals and entities, and the types of land that they can own.
 Most readers will be aware of the most recent developments in the process of adopting the Federal Land Code. The first State Duma hearing on the draft code took place in the middle of June. On Saturday, the Land Code passed in the second reading in the Duma, despite some harsh opposition to its contents. The third hearing, which is of editorial nature and does not substantially influence the draft law, is slated to take place at the beginning of the parliament's autumn session.
 Though nobody has yet seen the draft code as amended by the Duma during the second reading, indications are that this law is going to be rather liberal, containing, among others, provisions allowing foreigners to own land in Russia.
 Nevertheless, it is necessary to take note of the existence of one very important interim step in the development of Russian land legislation. In April, 2001, Chapter 17 of the Civil Code of the russian Federation, which clarifies a number of substantive and procedural issues connected with questions pertaining to the ownership of land, was passed by the Duma and entered into force.
 Chapter 17 applies only to non-agricultural land. Furthermore, it does not regulate the privatization of land. Chapter 17 deals only with civil-law land transactions, where the land in question is already owned by individuals or legal entities. This means that the Civil Code is applicable to land questions only in such cases where the land is in &quot;civil circulation.&quot;
 The Civil Code lays out the basic principles which regulate the ownership of land. Persons, who have land as part of their property may sell it, give it as gift, mortgage, lease, and otherwise use it, unless the land is excluded from or limited in civil circulation. The Civil Code specifies that agricultural land may be used only for that purpose.
 Establishing the rules for the development of land, Chapter 17 provides that owners of land may construct buildings and other projects on their land, may renovate or demolish them, and may also permit other persons to build on their land.
 All of these rights are exercised in compliance with the relevant construction rules and regulations, as well as in strict accordance with the purpose of the land. The owner of the land acquires a proprietary right to any buildings or any other real property which it erects on its land for their own use, unless otherwise provided for by law or contract.
 Chapter 17 of the Civil Code also regulates the rights of individuals and legal entities that own real property (i.e., buildings, constructions, etc.), but which are not the owners of the land on which such property is situated.
 The Civil Code here restates the provisions of the old Land Code, which established the rule that the rights to the land follow the rights to the building. Thus, Article 271 provides that, in the case of the purchase of a building, the new owner acquires the same type and scope of rights to the relevant land and on the same conditions.
 However, Chapter 17 now introduces a rule, which should regulate the situation, whereby the owner of the building loses the right to use the land beneath the building. In the case where the land is owned by one part, but the building by another, this can create an interesting situation, which is covered by the provisions of the Civil Code.
 If one party owns a building, but only has the rights to the land on which it stands by way of an agreement with a second party - the land's owner - then the termination of the agreement creates a potential problem.
 The Civil Code stipulates that the two parties should attempt to resolve the problem between themselves, either by the signing of a new agreement, which may be a new lease agreement, or the building owner's purchase of the land or the landowner's purchase of the building. If the parties cannot reach an agreement, then the courts will solve the dispute.
 It is necessary to point out that the Civil Code defines, for the first time, the concept of private &quot;easement&quot; - the right of limited usage of somebody else's land.
 According to the Civil Code, an easement is established by contract between the person requesting the easement and the owner of an adjoining piece of land and is subject to registration. Thus, by an easement contract, a person becomes bound, but not the land.
 In the case of the alternation of the owner of the land bound by the easement, the easement remains. But it remains unclea, whether the easement will continue in the case where the person requesting the easement sells the land.
 Finally, Chapter 17 regulates in general the order of the appropriation of land, inter alia, for state and municipal needs, the rights of the owner in the case of such an appropriation, and the procedures for compensation for damages resulting from such an appropriation. The Federal Land Code will establish more detailed regulation related to these questions.
 Although the entrance into force of Chapter 17 of the Civil Code has filled a huge gap in Russian land legislation, various fundamental questions on land ownership remain to be resolved by the new Federal Land Code.
 
 <i>James T. Hitch is managing partner and Maxim Kalinin senior associate at Baker & McKenzie law firm's St. Petersburg office. </i>

TITLE: Vertical Integration: Free-Market Substitute
AUTHOR: By Yulia Latynina

TEXT: IN 1916, Lenin wrote &quot;Imperialism, the Highest Stage of Capitalism.&quot; In it, he describes imperialism as a capitalist monopoly that arose &quot;when certain of capitalism's fundamental characteristics began to change into their opposites, when the features of the epoch of transition from capitalism to a higher social and economic system had taken shape.&quot;
 What Lenin called imperialism is now referred to as &quot;vertical integration.&quot;
 Russia is caught up in an epidemic of vertical integration. Aluminum magnate Oleg Deripaska bought automaker GAZ. Steel giant Severstal's head, Alexei Mordashev, took control of automaker UAZ. Metals producers are snapping up raw-materials suppliers like hot cakes. This is hailed as a renaissance of Russian industry.
 In reality, the more of a free market you have, the less vertical integration there is. Vertical integration means that a company buying or selling raw materials, equipment or parts won't be aiming to clinch a deal with the most competitive bidder; instead, it will do business with its own subdivision, even if it pays less, is poorly managed, etc. And if vertical integration has more benefits than disadvantages, then the country doesn't have a free market but something very different.
 First of all, companies need vertical integration to conceal profits. Vertically integrated oil companies, for example, evade taxes levied at the site of oil production by selling the parent company cheap &quot;liquid from the well&quot; instead of expensive crude. 
 Second, companies need vertical integration to stop themselves getting eaten alive. Ever since aluminum producer SibAl wiped out aluminum holding TWG by blocking aluminum deliveries to KrAZ, and the Urals Ore Mining Co. marched on Nizhny Tagil by way of the Kachkanar mining complex, coal mines and mining enterprises have turned into strategic heights where a company sets up garrison if it doesn't want OMON troops bursting through its doors.
 Third, vertical integration is tied to an environment where businesses buy what's cheap, not what's needed. As noted by heavy-machinery producer Uralmash's head, Kakha Bendukidze, there are two types of money in Russia: rubles and &quot;administrative currency&quot; (or government connections) - and the latter retains its value only as long as it remains close to its place of emission. As a result, instead of buying an expensive aluminum plant somewhere in New Zealand, SibAl buys GAZ on the cheap.
 Ideally, vertical integration of this sort provides for a merger with the source of the administrative currency. Observers have noticed, for instance, that the Federal Bankruptcy Service undertakes any investigation suggested by Alfa Group, while GAZ got a visit from the Tax Police and an audit<i> </i>just before SibAl took control. Of course, vertical integration of this kind results in dismissals, like those of former Interior Minister Vladimir Rushailo or ex-Tax Police chief Vyacheslav Soltaganov, the most vertically integrated and valuable assets of all. Such dismissals are tantamount to the instantaneous loss of seniority revenues - revenues from emission of administrative currency.
 Hence, the epitome of vertical integration in Russia is the governor's seat: Take Roman Abramovich in Chukotka or Norilsk Nickel head Alexander Khloponin in Taimyr. The &quot;new&quot; secret service agents in the Kremlin seem to approve. &quot;Let them collect as much as they can,&quot; say some members of the administration. &quot;The more water a sponge soaks up, the easier it is to wring out.&quot;
 Here's the paradox. Major Russian companies become quasi-states: They don't pay taxes, they buy state officials and base their investments on military rather than economic logic. But the more protected a company is from competitors, the more tempted the state becomes to take over. As Lenin wrote, &quot;capitalist monopoly is a transitional epoch leading to a different system.&quot;
 
 <i>Yulia Latynina is a journalist with ORT. </i>

TITLE: Footlights Beckon Berlusconi
AUTHOR: By Candice Hughes

PUBLISHER: The Associated Press
TEXT: ROME - Italian Premier Silvio Berlusconi has a lot riding on the Group of Eight summit this week in Genoa. It's his big chance for a comeback on the stage of world affairs.
 The media-baron-turned-politician is playing host to the leaders of the world's largest industrialized democracies - France, Germany, Britain, Japan, the United States and Canada - plus Russia, from Friday through Sunday.
 It could be a tough test for Berlusconi's new government. Anti-globalization activists are vowing to show up in force, and violence seems inevitable.
 The prospect has kept Italian officials nervous for months - so nervous that some people thought Berlusconi might move the summit once he took office on June 10.
 Instead, his government has tried to reach out to peaceful anti-globalization groups. At the same time, it has promised to deal harshly with any violence.
 This will be Berlusconi's second turn as host to the industrialized democracies. In July 1994, long before the era of violent anti-globalization demonstrations, what was then the Group of Seven met in Naples.
 That summit gave Berlusconi a brief respite from the domestic problems that finally brought down his government after seven stormy months. But even that occasion was tarnished when word came that his brother, Paolo, had been indicted on corruption charges.
 The Genoa summit could give Berlusconi a chance to redeem himself after a less-than-flawless initial foray on the world stage.
 In 1994, Berlusconi found himself snubbed at international meetings because his political allies included the successor to Fascist dictator Benito Mussolini's party.
 The low point came at an international crime summit in Naples when prosecutors humiliated Berlusconi by notifying him that he was the target of a corruption investigation.
 Seven years have passed. Berlusconi still has the same right-wing allies. His legal woes linger, as do worries about conflicts of interest that might arise when a country's richest man also runs its government.
 But Berlusconi has surprised even some critics with his restrained performance so far.
 At the NATO and European Union summits in June, Berlusconi managed to reassure European allies, and at the same time reach out to another newcomer on the international stage, U.S. President George Bush.
 Berlusconi has made no secret of his desire for a close relationship with Bush, a fellow conservative whom he sees as a natural ally. He was quick to invite Bush to Rome when the two met for the first time at the NATO summit. Bush will visit the capital after the Genoa summit.
 Berlusconi was also effusive in his praise of the American president, telling reporters he found Bush &quot;very likable and down to earth.&quot; Bush, for his part, made no public comment about Berlusconi.
 Italy and the United States have long enjoyed a warm relationship - evinced in part by the large number of U.S. and NATO bases on Italian soil. Berlusconi has said that he intends to nurture that relationship and make Italy &quot;America's biggest ally and friend in Europe.&quot;
 Although Bush agreed to visit Rome after the G-8 summit, there are suggestions that Italy may not be a top priority for his administration. It has yet to choose an ambassador to Italy - the only major European or G-8 country to be so snubbed.
 The influential Italian newspaper Corriere della Sera complained about that lack in a recent front-page editorial entitled &quot;The Phantom Ambassador.&quot; It urged Bush to &quot;pull an ambassador out of his hat like a magician&quot; for Genoa.
 The Bush administration said in March that it would nominate California investment banker Rockwell A. Schnabel as ambassador, but hasn't submitted a name to the Senate. The nomination seemed to stall when Italian-Americans began pushing for one of their own instead.
 There are also some lingering trade differences between Washington and Rome. Italy, which imports almost all of its oil and natural gas, has not shied away from doing business with Iran and Libya, which are both targets of U.S. sanctions.

TITLE: Argentina's Budget Cuts Get Alfonsin Backing
AUTHOR: By Kevin Gray

PUBLISHER: The Associated Press
TEXT: BUENOS AIRES, Argentina - President Fernando De la Rua moved Friday to clinch support for an austerity plan he hopes will stave off an economic crisis that is putting a strain on emerging markets across the globe.
 In the face of protests from union and political leaders, De la Rua won the backing of a key leader within his own Radical Party, raising hopes he can lock up enough political support to take the unpopular step of cutting spending some $1.5 billion this year.
 The pledge of support from former president Raul Alfonsin, an influential leader of the Radical Party, is considered crucial to the plan's success. Unions and initially balked at the measures, the president's seventh major cost-cutting effort since he took office in 1999.
 &quot;The Radicals will support the president in this effort,&quot; Alfonsin said after a late-night meeting at Olivos, the presidential residence. But he said its support would be contingent on the cuts not hurting the &quot;most vulnerable&quot; Argentines.
 Hoping to erase a projected $1.5 billion deficit this year, Economy Minister Domingo Cavallo announced cuts of up to 10 percent in public workers' salaries and pensions, along with additional tax hikes.
 With significant cuts aimed at Social Security and health-care spending, the measures have drawn the ire of unions and politicians mindful of midterm congressional elections set for October.
 Some Argentines are wary of the plan, which comes on the heels of previous tax hikes and several pay reductions over the last two years. Argentina is in its third year of recession.
 &quot;It's hard to support these policies when in less than three months I've had to deal with a new banking tax, and now I've just lost 10 percent of my salary,&quot; said Eva Spinillo, a 36-year-old public-school administrator.
 Hundreds of state workers gathered outside the Economy Ministry to protest the plan, banging drums and chanting slogans against new austerity measures.
 Cash-strapped and desperately seeking money to finance itself in the coming year, Argentina must bring its budget deficit under control or risk missing the targets set for its continued access to more than $40 billion in international bailout funds.
 The country's financial problems have unsettled markets and currencies across Latin America and reverberated across emerging markets in Europe and Asia.
 In a further sign of investor concerns, the credit-rating agency Moody's downgraded Argentina's sovereign debt Friday, saying the proposed cuts would stifle the economy.
 The International Monetary Fund, which in December led the $40 billion bailout plan for Argentina, on Friday voiced support for the government plan to put its financial house in order.
 &quot;We support the government's objective in dealing with very critical fiscal situation,&quot; spokesperson Thomas Dawson said. &quot;The actions that they have proposed demonstrate a very clear commitment to try to tackle this problem.&quot;
 Argentina, South America's second-largest economy, fell into recession in mid-1998. Investor concerns about the country's debt load were heightened last fall by a Senate bribery scandal that raised questions about the strength of De la Rua's government.
 The problems persisted this year after De la Rua's government churned through three economic ministers in three weeks, settling on Cavallo.

TITLE: IN BRIEF
TEXT: EC Questions Plan
 

BRUSSELS, Belgium (AP) - The European Commission said Monday it is considering opening a formal probe into the Belgian government's 100 million euro ($85 million) contribution to a rescue plan for flag carrier Sabena to see if it violates competition rules on state aid.
 The European Union's executive body could decide as early as July 25 to begin the investigation, spokesperson Gilles Gantelet said.
 As part of a deal announced last January, co-owner Swissair would also put up 150 million euros ($128 million) for the recapitalization plan. But if Swissair pulls out, as it has indicated it wants to do, the EU's competition watchdog could deem the Belgian government's cash infusion as illegal state aid.
 
 
Chinese Growth
 

BEIJING (AP) - China's economy grew by 8 percent in the first half of this year, the state-run Xinhua News Agency said Monday.
 Strong domestic demand was one of the main factors boosting the growth rate, which was in line with official forecasts, the report said.
 The first-half growth rate was slightly lower than the 8.1 percent recorded in the first quarter.
 Industrial output increased by 11 percent, and export volume was valued at $124.57 billion - up 8.8 percent from the same period last year, the report said.
 
 
Dresdner Takeover
 

MUNICH, Germany (AP) - German insurer Allianz AG said Monday it holds more than 92 percent of shares in Dresdner Bank AG after its $20 billion takeover offer for Germany's third-largest bank closed at the end of last week.
 Allianz said it expects to hold more than 95 percent of Dresdner Bank and added that the merger should be completed by July 23. The Frankfurt stock exchange confirmed that Dresdner will be dropped from the DAX index of Germany's 30 biggest blue-chip companies on that date.
 Allianz announced in April the nearly 24 billion euro takeover, which will create a new European financial giant. Dresdner shareholders had until last Friday to accept the Allianz offer.
 Last week, the insurer's finance chief said Allianz expects the European Union to approve the takeover this week.
 
 
BP in German Gas Swap
 

FRANKFURT, Germany (AP) - German utility group E.On AG said Monday it has reached a multibillion-dollar deal with British oil giant BP PLC in which the companies will swap stakes in their gas and oil subsidiaries to expand E.On's core gas business while extending BP's oil operations.
 Under the deal, BP will pay 6.5 billion euros ($5.5 billion) for a 51 percent stake in Veba Oel, an oil and gas unit of E.On that owns Aral, Germany's leading chain of gas stations.
 BP will have an option to buy the remaining shares beginning in April, and said it expects annual savings and revenue increases totaling $200 million if it buys the entire company.
 BP will also assume $950 million in debt from E.On.
 At the same time, E.On will pay 1.63 billion euros ($1.4 billion) for a 51 percent stake in BP's Gelsenberg AG, which owns a large stake in Ruhrgas, Germany's largest gas importer. E.On will also have an option to buy the remaining stake at the beginning of January. 



TITLE: 'I Am Lost and I Do Not Know What To Do'
TEXT: <strong>Letter of the Law</strong> 


TITLE: The Suburban Invasion
AUTHOR: By Irina Glushchenko

TEXT: BACK when I was a schoolgirl, I read in a paper about affluent Parisians preferring to commute from the suburbs rather than live in Paris. I remember how surprised I was. Why would anyone want to live in the countryside?
 Back then, we all knew that food supplies and amenities were found only in Moscow. It was hard to imagine that one could find decent stores - or even hot water or toilets - in the outskirts of Paris. Of course, the article noted that it was the pollution of capitalist Paris that was driving the people away. 
 Nowadays, Moscow too is becoming an unfit place to live, and Muscovites are also looking for ways out. City suburbs have changed rapidly. Would it be fair to say that the Moscow region is living through a golden age? Or perhaps it is a golden age for some people and a season of decay for others?
 For the past 15 years that I have been going to my dacha, so many things have changed there that it seems like going to another country. As the money increases, supermarkets, gas stations, restaurants, clubs and motels are mushrooming, and roads are even being repaired. Local &quot;radio taxis&quot; are emerging - only six months ago no one had heard of this in our area. This year, all cellular-phone providers are waging an advertising campaign aimed at the suburbs. Even the Internet is proliferating.
 Life in Moscow's suburbs is cheaper. Many well-off people have settled outside of town and send their children to the local kindergartens. The fee here is about 300 rubles ($10) per month - compared to up to 7,500 rubles in Moscow. The influx of &quot;new children&quot; has had a positive effect on these kindergartens: Parents donate money and buy toys. Many elite schools are also located in the suburbs, but that is a separate story. Local kids usually don't go there.
 The concept of suburban dwelling has also changed. In Soviet times, people usually brought their worst possessions to the dacha. Old sofas, chairs, tables and cupboards, no longer worthy of the city apartment, lived out the rest of their useful lives in wooden shacks. 
 Today's dachas are furnished in a different way. Even people on average incomes are trying to make their homes look nicer, especially since everything is available on the spot. There are plenty of furniture stores in Moscow's suburbs now that carry better - and cheaper - furniture than in town. Not to mention the markets for construction materials. Plus, there are magazines dedicated to suburban development. They tell about interiors, furniture, gardening - you name it.
 What I am describing here are no longer &quot;dachas&quot; in the old sense of the word. People don't come here to rest. They live here and come to Moscow to work. 
 Many locals also work in Moscow. In the morning, both rich and poor commute to work - the one in foreign cars and the other in overcrowded buses and trains.
 Thanks to the economic upsurge in the suburbs, the locals are also gaining something. But people are not making money where they used to. Mainly they work as servants. Some clean houses for their wealthier neighbors, walk their children and wash their cars. Others have been lucky enough to find a job in a more organized service sector.
 Yet the sharp social contrast that has ben sparked by the suburban development generates mixed feelings. With changes obviously present everywhere, one can hardly say that the countryside has been developing. Somewhere between a half and two-thirds of all cattle have been slaughtered. Although the law forbids turning agricultural land into dacha plots, it is done all the time. If someone with enough money comes along, finding a legal loophole is not a problem. It is no surprise that so many rural people are afraid of the complete privatization of the land. Dacha plots are much more expensive than agricultural land, but there will soon be no place to grow crops, at least around major cities. So far, the rural economy is still disintegrating, while a new, suburban type of economy based on construction and services comes into being. The village is turning into an appendix to the dachas.
 The relationship between <i>dachniki </i>and the &quot;indigenous population&quot; is sometimes akin to that between colonizers and aborigines. I know one family in the village that lives in a barracks - a long, one-story apartment building. There is only cold water, and the outhouse is in the yard. The house is in terrible condition, and they have no prospect at all of getting better housing. A young woman, the mother of a little girl, lives alone. After the baby was born, her husband started to drink and doesn't help at all. Some time ago, she got a job in the laundry shop of an elite resort. A hard, low-wages job, but one that is very easy to lose. She can be fired any day for a wrong word or misplaced question, because there are plenty of people eager to take her place. And recently, she told me a story that reminded me of elementary-school lessons about the horrors of capitalism.
 One guest at a vacation resort sent a shirt to the laundry. After cleaning, it was covered with a white film. The guest said the shirt's price was $400 and demanded that the guilty laundress pay the full amount. The woman, who earned about 2,000 rubles ($70) a month, had never seen that much money, so the entire staff had to chip in. When the guest had been compensated for the shirt, the laundress was fired anyway.
 
 <i>Irina Glushchenko is a freelance journalist based in Moscow. She contributed this comment to The St. Petersburg Times. </i>

TITLE: Deputies in a Spin at Rush For Reform
TEXT: WHEN you look back on the latest session of the State Duma, which takes off for its summer vacation this week, it is hard not to be impressed by the quantity and the range of the bills adopted. From taxes, the Land Code, and the Labor Code to legal reform and money laundering, the Duma weighed in on a stunning array of crucially important issues. 
 And that, as our local deputies have learned, is exactly the problem. At a press conference on Monday, two St. Petersburg representatives complained that the rapid pace of considering so many complex laws left them lost and unable to really contribute to the process. While analysts have criticized the Duma for being cowed by the Kremlin, the fact of the matter may well be that it has simply been overwhelmed.
 The Duma passed no fewer than 130 bills this session, most of them extremely complex and, to be frank, not very well written. Some bills, as Yabloko Deputy Sergei Popov said, were presented to the chamber just a few days before the vote was scheduled. Almost all of the bills were authored by the Kremlin.
 The results of this process - even if the laws themselves were impeccable, which they are not - are lamentable. Deputies rightly feel blocked out. The Kremlin grows ever bolder, perhaps even impudent, in its relations with the Duma. Checks and balances are undermined, and the public is entirely excluded. Independent Deputy Konstantin Sevenard said, &quot;I ... could not defend the interests of my constituents.&quot;
 Obviously, something is wrong here. The reforms that are being passed - reforms that are intended to &quot;turn Russia into a different country,&quot; according to Prime Minister Mikhail Kasyanov - are vital. But the <i>process </i>of crafting those reforms is even more important. In fact, a country where legislation emerges from the bowels of the Kremlin to be rubber-stamped by a parliament doesn't really seem very &quot;different&quot; at all.
 The real question is: What are the deputies going to do about it? When the Duma reconvenes for the next session in the fall, the frustration our deputies vented yesterday should be at the top of the agenda. 
 By rights, the deputies should be the link between the ongoing process of reform and the public. They should be able to articulate the goals of each piece of legislation to their constituents, and they should be accountable before the public for their votes. 
 In such a system, reform may be slower than it has been this year. But its roots will be much deeper.

TITLE: On the Verge of 'Managed Democracy'
TEXT: I visited Kazakhstan last month and had a chance to catch a glimpse of what may become of Russia in a few years. I have seen &quot;managed democracy,&quot; that nebulous concept that Russian politicians have been discussing ever since Vladimir Putin became president. 
 Businesspeople, journalists and ordinary citizens in Kazakhstan are not really afraid to discuss their country's problems. But they never mention the name of the man whom they elected president, and who took an oath on the country's constitution to serve the people, rather than vice versa.
 You see pictures of Kazakh President Nursultan Nazarbayev everywhere in the former capital, Almaty: on posters and billboards placed throughout the city. In Russia, you can only find portraits of Vladimir Putin for sale in a few stores. There, the president is much better represented. He hugs children on some posters. On others, he wears a hard hat and shakes hands with construction workers. 
 Nazarbayev's daughter, Doriga Nazarbayeva, owns Khabar, the country's largest information holding, which includes the two main national television channels KRK and NTK. It is nominally a private company, but allegedly receives generous state financing. It comes as no surprise that Nazarbayev gets good press. The television tells people that he cares about the country. &quot;Journalists are a fourth power that rules the minds of the people,&quot; said a host of the Kazakh Media Day event, which was being held directly opposite the central office of Khabar in Almaty.
 One day, I was reading an article about radioactive contamination in the weekly Novosti Nedeli. They printed quite an informative map of defense facilities throughout the country that had been connected with the Soviet nuclear program, including places where nuclear weapons had been tested. The author of the article concluded that the country's territory, including its underground waters, is heavily polluted and the government is not doing anything about it. Worse, some of them want to import nuclear waste. The author was quick to point out that he doesn't think Nazarbayev is aware of the situation and that he is being misled by his underlings.
 Yes, there are a lot of foreign banks and a huge number of foreign companies - mostly dealing with oil and gas - operating in Kazakhstan. Yes, many people in Almaty live much better than they did 10 years ago. But what about the millions of people who live in the Kazakh provinces, in desert and steppe towns, half-decayed and nearly covered with sand? 
 Will they get their share of the oil money the state collects? Or will it end up in the pocket of the person whose name is mentioned only on sycophantic posters? Nazarbayev says they will: He has issued a plan to raise the national standard of living by 2030. You see this date everywhere, hanging above ruined provincial buildings and seemingly mocking people who can barely earn enough to survive. 
 &quot;Kazakhstan is a corporate state,&quot; a local banker told me. &quot;We know exactly whom we should pay and that's why it is much easier to do business in Kazakhstan than in Russia. There are so many different interested parties in Russia that doing business is very confusing.&quot;
 I told him not to worry. Russia will soon be a lot easier too. As soon as we get our own version of &quot;managed democracy.&quot;

TITLE: Loyalties in the Place of Policies
AUTHOR: By Yevgenia Albats

TEXT: IT can be difficult when your country's leader pursues views and policies that are considerably different from yours - as America's Democrats are discovering under the administration of George Bush.
 Things can be really tough when the leader represents the views of a decided minority, as was the case with Chile under Augusto Pinochet.
 But things become virtually intolerable when the leader of your country does not actually have any views or beliefs of his own. This is the case with President Vladimir Putin.
 Early last week, for instance, Putin suddenly condemned the death penalty, saying that the state has no right to take away what the divine power has given. This is the kind of statement for which liberals like myself have been waiting from our leaders for quite a while. After all, our state has committed so many crimes and killed so many people - from the repressions of the '30s to the present-day atrocities in Chechnya - that it has forfeited any rights over life and death.
 Two days later, however, Putin made a move that undermined the very essence of his anti-death-penalty statement. During a meeting with Duma leaders, he outlined his dissatisfaction with his own Pardons Commission, which has de facto abandoned the death penalty at least since the spring of 1996.
 I was a member of that commission from its creation in 1992 until I resigned in the summer of 2000. I can attest that this commission is a rare example of a strong civic organization that managed to avoid both corruption and sycophancy toward the state. By instituting the message of clemency in the context of Russia's intolerable society, it has performed a great service to the country.
 Now, though, the commission is on the verge of being dissolved and replaced with a Soviet-style analog. Putin has virtually shut it down. Since last autumn, he has signed only eight clemencies, as opposed to the several thousand that former president Boris Yeltsin signed each year at the commission's request.
 Union of Right Forces leader Boris Nemtsov, who attended the meeting with Putin, explained his hostile attitude toward the commission as the result of influence from the former KGB bureaucrats who now form a significant part of the president's entourage.
 Perhaps then, we should just consider Putin's statement on the death penalty as a pubic relations run-up to the upcoming G-8 summit in Genoa.
 Consider another example. Early in his presidency, Putin became dubiously associated with the phrase &quot;dictatorship of law.&quot; Back then, I raised the question of whether that meant law and order, or just order without law. Recently, the Duma passed the long-awaited judicial reform, which, although limited, was a Kremlin initiative.
 Several days later, however, federal troops killed, tortured and robbed dozens of innocent civilians in Chechnya, clearly demonstrating the concept of order without law even to the extreme extent of inflicting the death penalty without due process. Putin has not said a word about these incidents. Just as he has said virtually nothing about any other atrocities committed in Chechnya over the last two years.
 And let's add Putin's promise to free the state from the control of the oligarchs to the list. Two of them have been kicked out, but others have been luckier, and the Kremlin has given them the chance to create some non-budgetary, non transparent funds to help the families of those who died aboard the Kursk and to support the families of soldiers and officers killed in Chechnya. Payments into these funds have ranged from $5 million to $8 million from owners of major oil companies, to a mere $300,000 from smaller enterprises. In the ensuing months, the press reported that various state agencies had made decisions favorable to the chosen oligarchs.
 Judging by his deeds rather than his words, Putin seems to have no political beliefs, but loyalties instead. One loyalty is toward his former KGB colleagues. Another is toward the former colleagues with whom he worked in St. Petersburg's democratic government. And a third is toward those in the Kremlin (and outside it) who made him president.
 If he were just an ordinary man with loyalties toward his family, teachers and colleagues, it wouldn't matter much. However, it is important when the president of a country in transition tries to substitute loyalties for coherent political views. Knowing the president's real views might not make some people very happy, but at least it would foster predictability and certainty.
 Swinging wildly from one loyalty to another does exactly the opposite.
 
 <i>Yevgenia Albats is a freelance journalist based in Moscow. </i>

TITLE: Will China Be Infused With Olympic Spirit?
TEXT: After much debate, deliberation and fancy PR footwork, Beijing has been designated the host city for the 2008 Summer Games.
 Opponents of the IOC's choice of venue cite China's abysmal human rights record, while supporters of the bid say selecting China will subject it to international scrutiny and force it to grant broader freedoms.
 Observers find it difficult to say whether the costly but prestigious Games will do the impoverished country more harm or good.
 But the historical precedent of the 1980 Summer Games, hosted by Moscow and marred by a U.S.-led boycott, challenges the logic that international scrutiny will force China to clean up its act on human rights.
 Moscow's preparations in 1980 involved creating the illusion of well-being typical of the Communists' reception of foreigners. Undesirables such as prostitutes and the homeless were rounded up and hidden from view. Parents were &quot;encouraged&quot; to send their children to summer camps. The capital was closed off to visitors from other cities - with the exception of additional intelligence agents to monitor the crowds of foreigners.
 China took similar measures in preparing for inspections in 1993, when its bid to hold the 2000 Games was ignominiously rejected - largely due to the massacre of unarmed protesters on Tiananmen Square in 1989.
 More importantly, in 1980, Moscow showed no special concern for civil liberties, despite the presence of Western European countries such as Britain and France.
 The Nobel Prize-winning physicist and fearless human rights advocate Andrei Sakharov, jailed six months before the Games, was released from exile only at the end of 1986. Dozens of other dissidents were jailed in the early 1980s on political charges.
 If there was anything about the 1980 Olympics that did help precipitate change in the Soviet Union, it was the influx of never-before-seen consumer goods. Muscovites learned the mysterious word &quot;yogurt;&quot; they got their first sips of Coca-Cola and their first drags of Marlboro. The black market boomed, and Soviet-made soft drinks, <i>papirosy </i>and jeans no longer seemed as tasty or fashionable in comparison.
 While the repressive regime in contemporary China is not far behind its Soviet prototype, its consumer landscape differs greatly from Moscow in 1980. McDonald's and Coke are old hack for the Chinese and can hardly be expected to foment enough discontent to nudge along a Chinese perestroika.
 We can only hope that the 2008 Summer Games will introduce some new catalyst for change in China - even if it is not as exalted or obvious as the humane ideals of the Olympics.
 
 <i>This comment appeared as an editorial in The Moscow Times on July 16. </i>

TITLE: Spicing Up Kids' Summer Fun
AUTHOR: By Sam Charap

PUBLISHER: Special to The St. Petersburg Times
TEXT: Cheers of <i>Davai!</i> (Come on!) rang out from the crowds of smiling young faces Friday afternoon, as Renart made a valiant attempt to complete one last pull-up. 
 Although the children, who spend all except a few short summer months at St. Petersburg's children's homes Nos. 14, 40 and 31, are always happy to be in the great outdoors, today was a special day.
 On Friday, at one summer camp in the Leningrad Oblast town of Ushkovo, located about 70 kilometers northwest of the city, these city kids were treated to a day of athletic competition, with prizes provided by the St. Petersburg-based Perspektiva Center charitable organization, which also organized the event.
 The summer provides a chance for the children, aged between 3 to 16 years old, to play, have fun and relax. Their lives at home - before the shelters took them in - are characterized by stress and emotional trauma, according to Galina Prokhorova, the general director of Perspektiva Center. Prokhorova says that only 30 percent of the children here are orphans. The rest come from broken homes, and many are sick or disabled.
 And while the kids enjoy their summer fun, Sergei Kalinin, Perspektiva's managing director, says that by and large the kids from any of the children's homes who go to the oblast for the summer are left to amuse themselves. &quot;The state provides them with adequate food, clothing, and education, but there is no money for special programs,&quot; he says.
 So Perspektiva has set out to provide more than just good weather and an outdoor environment. The organization, working exclusively with children's homes, organizes events such as arts and crafts fairs, educational programs, talent shows, and, like the event last Friday, sports competitions. 
 &quot;We want to bring [summer camps] to another level, so that the kids can participate in competitions. There should be rewards for every kid - independent of how they do in the competition, they should receive a gift,&quot; said Kalinin.
 Friday's competition brought together the children of two of the homes to compete in mini-soccer, basketball, table-tennis, jump rope, pull-ups and relay-race competitions. The kids were particularly excited about the prospect of receiving prizes, which included hula-hoops, books, T-shirts, compasses and balls. Some of the most special prizes were reserved for winners of the competitions.
 But even those who couldn't participate enjoyed the events. &quot;This is cool!&quot; commented Sasha, 13, whose heart ailment prevented her from playing. She watched on the sidelines, and, along with the others, joined in support of those competing.
 Renart, 7, after winning his bracket in the pull-ups competition, granted a post-game interview. What does he think about the program? &quot;I like it.&quot; Why? &quot;Because playing sports makes you strong!&quot; (Like many great sportsmen, however, he was reluctant to give further comment.)
 At the end of the event, all of the children came to a large table to receive their prizes. &quot;These children don't need us jsut to give them food,&quot; said Prokhorova as she handed out the presents. &quot;They need to receive something that is their own.&quot;
 Perspektiva was founded five years ago, and although it works directly with the administrations of several of the city's children's homes and the city government itself, it receives all of its funding from private companies and individuals. &quot;We don't take money from the city budget. ... We want to add something,&quot; said Kalinin. 
 
 <i>Those wishing to contribute to Perspektiva's programs can call 113-32-67, or send a page by calling 053 (subscriber No. 33543). The organization's office is located at 15 Razyezhaya Ulitsa (Metro: Dostoevskaya/Vladimirskaya). </i>

TITLE: Testimony to a Poet and The 'Tears of Socialism'
AUTHOR: By Thomas Rymer

PUBLISHER: Staff Writer
TEXT: It is a monument to the enthusiasm and energy to change society that characterized the years after the 1917 October Revolution, as well as to the determination and suffering of Leningraders in the 900-day siege during World War II.
 The building on which the above words are inscribed is at 7 Ulitsa Rubinshteina, and today, as well as apartments, it houses Special Education School No. 18. It was constructed in the 1930s by a group of artists and engineers as the realization of the communal ideal. From kitchens to coat racks, everything was shared.
 Officially called &quot;The Communal House of Artists and Engineers,&quot; within a few years Leningraders were refering to it as the &quot;Tears of Socialism.&quot; Joking about the extreme form of collectivism the building was designed to promote, city residents used to say that in the &quot;Tears of Socialism,&quot; not even families were permitted.
 By the time of Nazi Germany's invasion of Russia, two decades of communal living and the terror associated with the collectivization campaigns and the purges of the '30s had destroyed much of the zeal for radical social engineering.
 The poet Olga Berggolts (1910-1975) typified the spirit of this time. A child of the Revolution who initially supported the Communist regime, she fell victim to Stalin's purges, spending 1937-1939 in a number of prisons and labor camps. Just two years after returning to her apartment on Ulitsa Rubinshteina, she was subjected to the trials of hunger, cold, disease and bombardment during the blockade. Both her grandmother and her husband, Nikolai Molchanov, a literary scholar, died during the siege.
 For many blockade survivors, the voice of Olga Berggolts remains one of the few warm memories of the period. Berggolts read her poetry and other works on Radio Leningrad, one of the last links between the city and the outside world. Berggolts' works from this period - the collections of lyrical poems &quot;Leningrad Notebook&quot; (1942), &quot;Leningrad&quot; (1944) and &quot;Your Road&quot; (1945), along with a collection of her radio commentaries, &quot;Leningrad Speaking&quot; (1946) - are a poignant testimony to the blockade.

TITLE: Kashmir Conflict at Forefront of Summit
AUTHOR: By Beth Duff-Brown

PUBLISHER: The Associated Press
TEXT: AGRA, India - The leader of Pakistan insisted on Monday that the disputed Himalayan province of Kashmir must be resolved before it could fully restore relations with nuclear rival India.
 Before his second day of formal talks with Indian Prime Minister Atal Bihari Vajpayee, Pakistani President General Pervez Musharraf surprised journalists with a long statement on Kashmir - where Muslim guerrillas are fighting for independence - and dreams of better ties with his longtime South Asian foe.
 &quot;The public should be told that the main issue between Pakistan and India is Kashmir,'' Musharraf told senior editors from the Indian media. &quot;I have never said that I would not talk on other issues. All I have said is that Kashmir is the main issue ... and I will carry on saying it because this is what we have killed each other for.''
 The 57-year-old military ruler, who fought in two wars against India, said: &quot;I have fought the two wars. I know.''
 Even as he spoke, the violence in Kashmir continued. Fourteen people were killed in confrontations between soldiers and militants on Monday, raising the death toll during the three-day summit to 72.
 Rebels had threatened to step up attacks in Kashmir during the summit, which they oppose, and the casualty figures were higher than normal.
 For the first time in six months, Indian and Pakistani forces also fired at one another across the border of Kashmir on Saturday and Sunday.
 The two countries and nuclear rivals - India and Pakistan conducted nuclear tests in 1998, provoking U.S. sanctions - are holding their first summit in two years. After the first round on Sunday, Indian officials insisted the wide-ranging talks were &quot;frank and constructive.''
 &quot;A number of issues were thrashed out. These included the issue of nuclear risk reduction,'' said Sushma Swaraj, India's information minister. She said the two touched on trade, cross-border terrorism and the return of Indian war prisoners. Kashmir has ignited two of their three wars, the last in 1971.
 Pakistan denies holding any Indian war prisoners, but Musharraf told the editors he would &quot;personally look into it,'' aiming to set the matter to rest.
 Another Indian official said that confidence-building measures to prevent an accident with nuclear weapons and to build a proposed natural gas pipeline between Iran and India, via Pakistan, were also discussed.
 But Musharraf's comments on Monday indicated otherwise.
 &quot;I keep talking about Kashmir, and you keep talking about cross-border terrorism and confidence-building measures,'' or CBMs, Musharraf told the Indian editors. &quot;Is a CBM possible if you are shooting across the border, killing each other?
 &quot;I can't live in this make-believe world,'' he added.
 Nonetheless, Musharraf appeared hopeful that the stage had been set for improved relations and continued dialogue. &quot;I personally feel that at this stage, we shouldn't get bogged down in solutions,'' Musharraf said. &quot;Step one was the initiation of dialogue, and I would like to give all the credit to Prime Minister Vajpayee for his statesmanship.''
 Acceptance of Kashmir as the No. 1 issue dividing the two countries, he said, was step two.
 &quot;Certain things have to be ironed out and I believe they can be ironed out by me and the prime minister,'' he said. &quot;I am an optimist. Let's hope for the best.''
 On Sunday, with the white marble domes of the Taj Mahal a symbolic backdrop to their landmark summit, Vajpayee accepted an invitation by Musharraf to visit Islamabad.
 The two leaders resumed talks Monday morning.
 In the afternoon, Musharraf and his wife, Sehba, were scheduled to fly to Ajmer to visit the shrine of a Sufi saint before heading home.
 Both leaders must appease hard-liners at home, and neither can appear to give away too much. Vajpayee heads up a powerful Hindu nationalist party that is part of his governing coalition, while Musharraf needs the backing of Pakistan's army to retain power.
 In a possible show of goodwill, India pulled out 20,000 troops from Kashmir ahead of the summit, according to media reports. A defense ministry spokesperson refused to confirm or deny the report in the Indian Express daily newspaper on Sunday.
 India has between 300,000 and 600,000 forces deployed in the northern state of Jammu-Kashmir along the Pakistan border.
 Since Muslim Pakistan was carved out of Hindu-majority India following independence from Britain, both have claimed the entire Jammu-Kashmir region. A cease-fire line from the 1971 war divides it between them, with two-thirds in India and the remainder under Pakistan's control.
 India accuses Pakistan of arming and aiding Islamic militants who have fought since 1989 for an independent Kashmir or merger with Pakistan. Islamabad says it gives only moral support. As many as 60,000 people have died in the conflict.

TITLE: Croat Government Squeaks Through War-Crimes Debate
AUTHOR: By Snjezana Vukic

PUBLISHER: The Associated Press
TEXT: ZAGREB, Croatia - Croatia's government survived a no-confidence vote on Monday after a marathon debate in parliament on the issue that prompted it - a plan to extradite two suspects to the UN war crimes court.
 The government of Prime Minister Ivica Racan, which had asked for the legislative vote, got support from 93 deputies in the 151-seat chamber, while 36 voted against it. The others were absent.
 If the motion had passed, early elections would have been called.
 The legislature is dominated by parties in Racan's ruling coalition. Still, the issue had initially driven a wedge in that coalition, opening up the possibility that it would lose any no-confidence vote.
 Racan had requested the vote to see whether his cabinet, which took power 18 months ago, still had the chamber's backing following last week's decision to hand over two wartime commanders charged by the court in The Hague, Netherlands, with atrocities against Serbs.
 The decision had triggered fierce protests from the veterans of Croatia's 1991 war for independence and the nationalist party of the late president, Franjo Tudjman.
 The issue was so divisive that nearly every lawmaker insisted on commenting on it, leading to debate that began Sunday morning and continued into the early hours on Monday.
 Many Croats are still unprepared to accept that their compatriots might have committed war crimes during the struggle for independence that began when minority Serbs rose against the former government's decision to split from Yugoslavia.
 &quot;It is hard for one nation to face dark pages of its history - even harder for a small nation,'' Racan told lawmakers just before the vote. &quot;But we have to give a chance to the world to respect us, while also fighting for our truth.''
 Earlier, he said that his government remains firmly committed to cooperation with the UN war crimes court, warning that the noncompliance would prompt international isolation and possibly sanctions.
 Racan was hoping to get national consensus the sensitive issue, but members of the former governing party remained adamant in rejecting the extradition plan. &quot;It's still you and us, and we'll fight for our beliefs for as long as it takes,'' said Ivic Pasalic, a member of the nationalist Tudjman party, during debate.
 Critics want the government to give up the extradition plan and reject, or reduce, cooperation with the court, arguing that prosecution of the country's generals tarnishes the whole independence war.
 Croats remained divided over the issue, with many fearing the prosecution of Croats would diminish war crimes committed by some of the Serb rebels in 1991.
 The indictments remain sealed until the men are brought before the trial. But government sources earlier said they stem from country's 1993 and 1995 offensives to regain lands seized by the rebels. More than 150,000 Serbs fled the 1995 offensive and hundreds of those that stayed were killed.
 On Sunday, Racan said that his government will challenge some of the charges in the indictments, which apparently blame Croat troops for aiming to purge Serbs from Croatia. &quot;But we'll do it in the Hague courtroom, not in conflict, in isolation,'' he said.
 Croatia is under additional pressure to cooperate after Serbia recently extradited its ex-president, Slobodan Milosevic, to The Hague.
 One of the suspects, General Rahim Ademi, agreed to surrender voluntarily and is to fly to The Hague next week.
 An arrest warrant was issued on Friday against the other suspect, widely believed to be retired General Ante Gotovina, a local commander during the 1995 offensive.
 Gotovina, 46, has said earlier he is unwilling to face the court. His whereabouts remain unknown, and some of his fellow fighters have vowed to protect him against extradition.

TITLE: SPORTS WATCH
TEXT: 'Canes Sign Top Pick
 

RALEIGH, North Carolina (AP) - The Carolina Hurricanes signed Igor Knyazev, the club's top draft pick, to a three-year deal Sunday.
 Knyazev, an 18-year-old defenseman, was chosen 15th in the first round of last month's NHL entry draft. He said he would return to his native Russia to play for Division I Spartak if he didn't sign by Sunday.
 "We are very pleased to sign Igor," assistant general manager Jason Karmanos said. "This will give him the opportunity to make our team. This will also get him acclimated to North America as soon as possible."
 Knyazev played for Spartak of Russian Division I last season, scoring six goals and assisting on three others in 43 games for the first-place team.
 He was the captain of the gold-medal-winning Russian team at the 2001 under-18 World Championship in Finland, leading the tournament with a plus-13 rating in six games.
 
 
Umpires' Grievance
 

NEW YORK (AP) - Baseball umpires filed a grievance to keep the commissioner's office from pressuring them to call more strikes and reduce pitches, saying management's move "threatens the integrity of the game."
 The grievance, filed late Saturday, says the commissioner's office violated the umpires' labor contract by keeping track of the average number of pitches in games worked behind the plate by each umpire and ranking each umpire in that category.
 "If you have good pitchers pitching, there will be fewer pitches thrown, but if the pitchers are struggling, we can't control that," umpire Randy Marsh said. "If the pitch is a strike, it's a strike, and if it's a ball, it's a ball."
 Larry Gibson, a lawyer for the umpires, notified baseball of the grievance in a three-page letter he faxed Saturday to the commissioner's office.
 Gibson wrote that umps have been told to "call more strikes," "be aggressive" and to "hunt for strikes." 



TITLE: U.S. Open Champ Claims Another Title
AUTHOR: By Doug Ferguson

PUBLISHER: The Associated Press
TEXT: LOCH LOMOND, Scotland - For Retief Goosen, the next best thing to a U.S. Open championship was winning again.
 He took care of that Sunday in the Scottish Open with a performance so dominant that he could afford a few mistakes at the end. Despite bogeys on the final two holes, Goosen closed with an even-par 71 at Loch Lomond to win by three shots over Thomas Bjorn.
 &quot;It's great for my confidence,&quot; Goosen said. &quot;If people say I was lucky winning [the U.S. Open], maybe I've proved myself a little bit this week in a strong way.&quot;
 John Daly was impressive in his own right. He had a 70 on Sunday and tied for third, his best finish since he won the British Open at St. Andrews in 1995. He has shot par or better in eight-straight rounds, and 12 of his last 13.
 &quot;I had my chances,&quot; said Daly, who finished four strokes back. &quot;I can't hit the ball any better. I just need to find a way to get the ball in the hole.&quot;
 Still, the outcome was never in doubt.
 Goosen's lead was five strokes when he rolled in a 30-foot birdie putt on the second hole, and no one got any closer until he made bogey from the bunker on the par-3 17th. He also hit into the bunker on the final hole.
 &quot;I knew once I got it on the green, I had it in the bag,&quot; Goosen said with a twinkle in his eye, joking about his three-putt from 12 feet on the 72nd hole at Southern Hills that nearly cost him his first major championship.
 Instead, he recovered by blitzing Mark Brooks in the 18-hole playoff, and Goosen has been sailing along ever since.
 He finished at 268 for a wire-to-wire victory, just like Southern Hills only without the pressure or the thrills. Goosen picked up $517,211, giving him more than $1.5 million in his last three tournaments and a massive lead on the European tour money list.
 &quot;You've got to take your hat off to him. He's on a huge confidence high,&quot; said Bjorn, who closed with a 67.
 Goosen is aware how much different it might be had he not recovered from his gaffe at Southern Hills. He could have fallen into the same class as Jean Van de Velde, Scott Hoch, Doug Sanders and others who blew a chance to win a major and haven't had another chance.
 &quot;It could have gone the other way,&quot; he said of his two-stroke victory over Brooks. &quot;But I won, and now it's going my way.&quot;
 Paul McGinley (70), Barry Lane (68) and Adam Scott (72) also finished at 272 with Daly, while Darren Clarke had a 69 and finished another stroke back.
 There were a few consolation prizes. Lane and Scott qualified for the British Open, while McGinley moved up to eighth place in the Ryder Cup standings for Europe.
 With warm and windless conditions, Goosen figured he would have needed a 67 to win, especially when he saw that British Amateur champion Michael Hoey of Ireland had birdied seven of his first nine holes and wound up with a 64.
 Surprisingly, no one made a serious run at Goosen. Scott was the only contender, and that didn't last long.
 The Aussie was down three strokes at the start of the round and was poised to cut into that immediately when Goosen missed a 12-foot birdie and Scott had about 10 feet for birdie on the opening hole.
 But his putt went 3 feet by and he missed it coming back, slapping his putter in disgust. Goosen picked up another stroke with his birdie on No. 2, and Scott knew he was doomed when his second shot into the par-5 third hole came to rest against a tree stump.
 Scott, who turns 21 on Monday, has broken 70 in the final round only once in eight attempts this year. It was his third time playing in the final group in his past four events.
 &quot;I have to work on my game,&quot; he said. &quot;It's not holding up when I get in contention.&quot;
 Goosen has no such worries.
 From the time he tied the course record with a 62 in the opening round, he never gave anyone a chance.
 The Scottish Open is not even close to the prestige of the U.S. Open, didn't contain as much pressure and didn't have Tiger Woods. Still, it was important to Goosen.
 He didn't have to hit his driver - the one weakness in his game - at Southern Hills because of the dry, fast conditions. It was in play throughout the week at soggy Loch Lomond, and Goosen used it to his advantage.
 Plus, Goosen did not want to join a short list of players - Paul Lawrie and Mark Brooks in the last five years - who won their first major and have not won anything since then.
 &quot;It's nice to win and give myself a pat on the back and say, 'Well done,'&quot; Goosen said. &quot;I proved something to myself.&quot;
 The next test starts Thursday at the British Open.

TITLE: Rogge Selected as New President of IOC
AUTHOR: By Stephen Wilson

PUBLISHER: The Associated Press
TEXT: MOSCOW - Jacques Rogge, a Belgian surgeon with a pristine reputation and consensus-building style, was elected president of the International Olympic Committee.
 Rogge won easily in the second round of a secret ballot, defeating four other candidates. He succeeds Juan Antonio Samaranch, who is stepping down after 21 years in office.
 Rogge defeated Kim Un-yong of South Korea, Dick Pound of Canada, Pal Schmitt of Hungary and Anita Defrantz of the United States. Defrantz was eliminated in the first round of balloting.
 Rogge becomes the eighth president in the 107-year history of the IOC and the second Belgian to head the committee. Henri de Baillet-Latour served from 1925 to 1942.
 &quot;My first words are for my IOC colleagues. I thank them for having shown their confidence and electing me,&quot; Rogge said, speaking in Moscow's ornate Hall of Columns, with Samaranch standing beside him.
 &quot;My second thoughts are for my four fellow competitors. We had a long and very dignified campaign,&quot; he said. &quot;In every competition, there is going to be one winner. In this competition, there is no loser.&quot;
 Rogge was elected to an eight-year term. After that, he will be eligible to seek a second four-year mandate.
 Rogge's victory reinforced the European-dominated nature of the IOC. Except for Avery Brundage, an American who served from 1952 to 1972, all IOC presidents have been Europeans.
 Rogge benefited from a powerful support base in Europe, which has 57 members.
 His shortage of political enemies, linguistic skills (he speaks five languages), non-confrontational style and quiet charm, were other advantages.
 The urbane Rogge enjoys a &quot;Mr. Clean&quot; image, unscathed by the bribery scandal involving Salt Lake City's successful bid for the 2002 Winter Games. He boasted that he has never visited bid cities.
 Rogge, a three-time Olympian in sailing, is a relative newcomer to the IOC, having been appointed in 1991. But he rose rapidly through the ranks and was elevated to the ruling executive board in 1998.
 Rogge is head of the European Olympic Committee and also has held high-profile roles as IOC coordinator of the 2000 Sydney Olympics and 2004 Athens Games, and as vice chair of the IOC's anti-doping panel.
 His victory appeared locked up after a final day and night of intense lobbying and negotiations in the lobbies and corridors of the IOC hotel.
 &quot;I'm feeling very calm,&quot; he said before the vote.
 Just after midnight on the eve of the vote, Kim and Pound - considered bitter rivals - had a series of private discussions in front of the hotel and in the lobby and bar area.
 The activity fueled speculation that the two men might strike some sort of election agreement, but apparently no deal was struck.
 &quot;I told him I would be in it until the end,&quot; Pound said.
 The presidential election came three days after another landmark IOC vote: the awarding of the 2008 Olympics to Beijing.
 The result damaged Kim's chances, with the IOC reluctant to give two major prizes to Asia.
 Kim's chances appeared to fizzle out for good Sunday after he became caught up in an ethics investigation of alleged financial incentives offered to voting members.
 Kim, among those reprimanded in the Salt Lake City scandal, denied promising that members would be given at least $50,000 a year in Olympic-related expenses if he was elected.
 Asked for an explanation by the IOC ethics commission, Kim said he never proposed any specific sum and had only recommended providing delegates with enough funds to maintain offices in their own countries.
 While some members suggested the promises amounted to a form of bribery, Kim accused his rivals of leaking information to undermine his campaign.
 &quot;This is fiction, they're making fiction,&quot; he said. &quot;They will do everything they can to get one more inch. Timing is very important to them.&quot;
 The 70-year-old Kim was given a severe warning in 1999 after an internal IOC inquiry into the vote-buying scandal in which Salt Lake City was awarded the 2002 Winter Olympics. His son was accused of accepting a sham job funded by bid-committee officials. Kim denied any wrongdoing.
 The ethics commission, set up in the wake of the Salt Lake case, said Sunday it received a letter from an unidentified member concerned by reports that Kim was offering minimum annual payments of $50,000 for work-related expenses.
 The panel said such a promise would violate election campaign rules. But the commission said it considered the case closed after receiving a letter from Kim in which he attached a copy of his confidential election program and stated, &quot;I never proposed any figure in this matter.&quot;
 By tradition, IOC members are volunteers. They receive no salary but get travel, hotel and per diem expenses when attending Olympic meetings.
 Pound described Kim's offer as an affront to members and &quot;totally contrary to any tradition we have as a volunteer organization.&quot;
 But Kim said he never suggested members receive a salary, only legitimate office expenses.
 &quot;IOC members must be granted the status and privilege they deserve,&quot; he said. &quot;The IOC will provide members with the logistic support required to fulfill their mission and maintain their prestige. That's all I'm saying. The IOC will grant members financial support for office expenses. Somebody is exploiting this.&quot;

TITLE: China: We'll Be Ready To Host a Great Olympics in 2008
AUTHOR: By John Leicester

PUBLISHER: The Associated Press
TEXT: MOSCOW - Let the building begin!
 Still bathed in the afterglow of its selection as the 2008 Olympic host, Beijing turned its attention Saturday to the massive task of preparing for the world's biggest sports extravaganza.
 Chinese Olympic official He Zhenliang promised his colleagues on the International Olympic Committee that China's capital would be ready.
 &quot;We are fully aware of the heavy task and responsibilities that lie ahead,&quot; he said. &quot;In seven years' time, Beijing will make you proud of the decision you took.&quot;
 The challenge facing Beijing is daunting. Less than half its planned 32 Olympic venues are built. Traffic clogs its roads and its air is polluted.
 &quot;Too much hard work, I'm beginning to realize that!&quot; Beijing bid official Wang Wei said, only half-jokingly.
 But Chinese pledges to spend billions of dollars on roads, subways, pollution control and stadiums helped sell Beijing to IOC members. They awarded the Games to the world's most populous country for the first time, sparking delirious celebrations on the streets of Beijing.
 In a letter to IOC President Juan Antonio Samaranch, Chinese President Jiang Zemin thanked the committee for &quot;its trust in and support of China.&quot;
 &quot;The Chinese government and people will go all out to support Beijing ... to carry forward the Olympic spirit, promote world peace and enhance friendship,&quot; Jiang wrote.
 Delighted Chinese tourists converged Saturday by the busload to snap souvenir photos outside the trade center in Moscow where Samaranch declared, &quot;The games of the 29th Olympiad in 2008 are awarded to the city of Beijing.&quot;
 &quot;China's Really Cool&quot; read one banner held up by the crowd of about 100 cheering tourists who said they came to Moscow for the vote. They made V for victory signs and waved red Chinese flags.
 &quot;The decision of the IOC and the joy into which this plunged the people of Beijing and the whole of China will be in our memories forever,&quot; said He, the top Chinese Olympic official.
 Critics of Chinese human rights abuses accused the IOC of having rewarded a repressive regime. But IOC members clearly believed Chinese arguments that the Games would boost the country's economic reforms and opening to the world, spurring rights improvements.
 &quot;People talk about human rights. But what about the right of 1.2 billion Chinese to hold the Games?&quot; said Zhou Yuan, chief editor of China Sports magazine.
 Beijing's Games will be centered on an &quot;Olympic Green&quot; to be built in the north of the city. Now mostly fields, Beijing says the site will have an Olympic village with 17,600 beds, state-of-the-art sports facilities, press centers and lush woods in 2008.
 Beijing's selection for 2008 has helped salve its pain at losing the bid for the 2000 Olympics to Sydney, Australia, by just two votes in 1993. Memories of the Chinese government's brutal crackdown on pro-democracy protesters on Tiananmen Square just four years earlier contributed to that loss.
 &quot;Eight years ago, the Chinese felt so rejected. This time we really reached out for approval,&quot; said Timothy Fok, a Hong Kong Olympic official. &quot;It's going to be a terrific Games.&quot;