SOURCE: The St. Petersburg Times
DATE: Issue #693 (60), Tuesday, August 7, 2001
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TITLE: Column Facing 2 Years of Repairs
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Restorers have begun an extensive examination of the Alexander Column on Palace Square as the first stage of a complete restoration of the monument that may take as long as two years.
According to Vladimir Timofeyev, director of the St. Petersburg City Sculpture Museum, preliminary research carried out by helicopter earlier this year provided an overview of the column's condition.
That study revealed that the sculpture of the angel on top of the column has multiple cracks and stains, leading restorers to believe that water has filtered down into the monument. One of the angel's wings showed signs of vibrating, which indicated that some of the welding seams might be damaged.
The second stage of the investigation, which began last week and will last approximately one month, will involve an endoscopic examination in order to determine the extent of any water damage inside the statue. And endoscope will be inserted into the hollow statue through several cracks and through a specially drilled hole in the angel's head.
Since this work is still going on, researchers do not yet have a complete picture of how much repair work will need to be done. However, the city has established April 2003 as the deadline for the entire project.
The Turkish firm Haser International, a broad-profile company with interests in construction and the entertainment industry, has donated 14 million rubles ($483,000) for the project as a contribution to St. Petersburg's upcoming tricentennial celebration.
According to Viktor Smirnov, general director of Intarsia, the company that is actually carrying out the restoration work, about one-third of that sum has already been transferred.
Intarsia has already carried out several important restoration projects in the city, most notably the "Taming of the Horses" sculpture group on Anichkov Bridge and the Rostral Columns on the spit of Vasilievsky Island. The company is also carrying out the work on the Chariot of Glory sculpture on top of the General Staff Building on Palace Square. That sculpture was badly damaged by stray fireworks last winter.
Olga Taratynova, deputy head of City Committee for the Protection and Preservation of Monuments, said that no matter how much work is ultimately involved, the project must be completed by the spring of 2003.
"Haser has signed a contract with Intarsia that says that no matter what is discovered during the research, the work will be completed on time and for the amount agreed," Taratynova said.
Intarsia's Smirnov sounded confident at a press conference last week, saying he feels comfortable with the terms of the contract. "I am sure that we will be able to accomplish the restoration well before the deadline," he said. "If there will have to be more work done than we expect, we won't ask for additional money."
According to Smirnov, the general condition of the angel appears similar to that of the "Taming of the Horses" group. Intarsia intends to apply the same techniques to the angel that it used on the horses.
Timofeyev said that he would like to see the railing that originally surrounded the column, but which was dismantled in the 1930s, put back in place as well. But the cost of rebuilding and reinstalling the railing has been estimated at 6 million rubles ($207,000), money that the city has not yet raised.
The Alexander Column was erected in 1832 to commemorate Russia's victory in the war against Napoleon. It stands 47 meters high and weighs - together with its pedestal - 650 tons. The column is cut from a single piece of granite and stands by the force of its own weight. It is not affixed to its pedestal.
TITLE: Genuine Swiss Cheese Now Made Locally
AUTHOR: By Sam Charap
PUBLISHER: Special to The St. Petersburg Times
TEXT: TOSNO, Leningrad Oblast - On the Grigoriev family farm in the sleepy village community of Novolisino, near the Leningrad Oblast town of Tosno, a revolution is brewing.
A cheese revolution, that is.
This farm is the home of Bozhya Korovka, the first high-quality Swiss-standard cheese producer to open in post-Soviet Russia. Immediately after receiving certification from the Russian Health Certification Board a month ago, the cheese-making facility - a six-man operation - produced the first wheel of Swiss-quality cheese in Russia since 1939.
Bozhya Korovka - which translates as "lady bug," an image reflected in the operation's logo, but literally means "heavenly little cow," referring to the animals responsible for the cheese - was the brainchild of Swiss journalist Andreas Schwander, who worked as a correspondent for German and Swiss papers in St. Petersburg from 1992 to 1998.
Schwander grew up in the Swiss Alps, where there are hundreds of micro cheese producers connected to small farms just like Bozhya Korovka.
"I was telling some friends when I was at home that, yeah, it would be nice to have good cheese [in Russia]," he said in a telephone interview on Sunday.
Schwander likened the cheese produced in Russia today to "salted chewing gum," which, as he explains, is a direct result of the Soviet approach to food production.
Fresh milk, Schwander explained, is an extremely unstable product, which spoils within 48 hours. Poor planning during the Soviet era created a situation where the milk-producing factories were located far away from cheese-makers. To use the milk, producers practically had to burn it to kill off the bacteria that developed in transit, a process that destroyed much of its flavor.
"They made huge factories and transported the milk a very long way. And they had a lot of tanks and pumps that basically spoil the milk," Schwander said.
But Russian cheese-making wasn't always in such a sorry state. In fact, there was a thriving community of Swiss cheese masters in pre-Revolutionary Russia, in the countryside surrounding St. Petersburg, Moscow, Samara and Smolensk. The climate here, combined with the high-quality grass for grazing cows, is ideal for cheese production, and Russia quickly became the dream of every young Swiss cheese-maker, according to Schwander.
But with the rise of Stalin, collectivization and extreme xenophobia, the era of Swiss cheese-making in Russia came to an abrupt end. In the 1930's, a state committee was organized to repatriate the remaining cheese masters back to Switzerland. The last was exiled in 1939, marking the beginning of the era of "salted chewing gum."
Schwander's plan is to return the glory of the Swiss cheese-making tradition to Russia.
"Our idea was to have decentralized production so we could buy milk from very small producers and then we only move the cheese. Milk itself is difficult to transport. It's big and heavy. But from 1,000 liters of milk you can make 100 kilograms of cheese. And this 100 kilograms you can load on the back [seat] of your Lada. And it stores for half a year or longer," he said.
But, as with many investment plans in Russia, a good business strategy doesn't always translate into quick profits.
After obtaining his copper cheese-producing vats - which date from 1930 - from Switzerland in 1996, Schwander picked a site: a monastery on the island of Konovets in Lake Ladoga.
But, as Schwander explains, "There are two problems in Russia: roads and idiots."
Konovets suffered from both. The island was too far from the milk farms, and the monks, who turned out to be recovering alcoholics, couldn't resist using the cheese-production equipment to produce moonshine.
Discouraged but not disheartened, Schwander spent two more years searching for the perfect site. Through the contacts he'd made as a journalist, he located the Grigoriev farm, and immediately knew he had found the right place.
The Grigoriev family, led by Nikolai and his two sons, Igor and Oleg, had built one of the first private farms in the country during the perestroika era.
"It's the cleanest farm in [the Leningrad Oblast] Schwander said.
After raising about $50,000 from his own savings and donations from friends, Schwander moved his equipment from Konovets and hired a Swiss cheese master, Jean-Vincent Glasse, to start production and to train his Russian staff in the art of cheese-making. With the cows grazing less than 30 meters from the cheese vats, there are no transportation problems now.
The first cheeses were produced last December and were sent off to Switzerland for testing.
According to Schwander, the Swiss inspectors not only gave their stamp of approval, but were so impressed that they claimed Bozhya Korovka cheese could even compete on the Swiss market.
Real production began this year, and the first cheeses are already being served in the restaurants of St. Petersburg's five-star hotels - the Grand Hotel Europe, the Astoria, and the Sheraton Nevskij Palace - and some of the city's other fine restaurants.
Bozhya Korovka produces three cheeses: A l'Alpage, a hard, fragrant cheese; Tomme, a soft cheese; and traditional Italian-style Ricotta. Real Ricotta is almost impossible to find in Russia, as it spoils faster than other cheeses, thus making it very expensive to import.
Bringing back Swiss cheese-making to Russia has also created new economic opportunities for the Tosno region.
"We pay the farmers much more, as it's a craftsman product," Schwander said. "It makes it possible to bring some money into areas where there is no way for a better income."
In fact, Alexander, one of the two Russian apprentices studying under the Swiss master, was working as a militia officer just two months ago and making far less.
"I like my work. It's interesting," he said nonchalantly, as he scrupulously separated the curd from the liquid milk on Saturday.
Schwander hopes to open more Bozhya Korovka sites in the region, if he can find the right farms.
"We are looking for financing for one or two more," he said.
But for now, he's happy with the 35 kilograms of cheese that the Grigoriev farm facility churns out each day. Profits, he admits, are still a far-off goal.
"It's a hobby that has not yet turned into a business," he jested.
Currently, Bozhya Korovka cheese is available only at the Nevsky (metro: Prospect Bolshevikov) and Tallinsky (metro: Prospect Veteranov) supermarkets.
But anyone can order the cheese by phone or e-mail, and Bozhya Korovka will deliver it to any destination in St. Petersburg free of charge. Delivery to Moscow and even overseas is also available.
You can reach Bozhya Korovka by e-mail at BoKoCheese@yahoo.com or by phone at 949-7042. Prices range from 200 rubles per kilogram for Ricotta to 450 rubles per kilogram for A l'Alpage. Discounts are available for orders over 10 kilograms.
TITLE: Yakovlev Decree Sets Sights on Corruption
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: Governor Vladimir Yakovlev has given his Security Department new authority to root out corruption in City Hall, according to a decree signed last month.
According to the decree, which Yakovlev signed on July 2, the Security Department is now "obliged to provide full and official investigations about the facts of abuses of power committed by [City Hall] officials."
The decree also charges the security department with "the elaboration of administrative, legal and preventative measures to fight abuse of power among authorities."
The decree has some observers believing that Yakovlev is now serious about rooting out any corruption that may exist within his administration. However, other analysts argue that the new powers merely represent an effort to deflect law enforcement bodies such as the City Prosecutor's Office, the Federal Security Service and the police, which have been showing increased interest in City Hall lately.
According to the decree, only members of the administration and the City Prosecutor's Office can lodge corruption complaints with the head of the Security Department, Viktor Sudakov.
Nonetheless, some lawmakers applauded the new decree.
"The time to check on who works at City Hall and to find out if there are people with criminal records came long ago," said Legislative Assembly deputy Leonid Romankov in an interview last week.
"Something is rotten in the state of Denmark. People have been talking about it for some time now," he said.
The administration has been the target of numerous corruption allegations, most recently against Vice Governor Valery Malyshev, head of the municipal Sports, Transport and Communications Committee. Malyshev, who will be on vacation until September and who has refused to comment on the allegations to The St. Petersburg Times, has been officially charged with taking bribes.
Last month, the City Prosecutor's Office announced that it was opening an investigation of top officials in the municipal Transportation Committee. Prosecutors suspect that 9 million rubles ($300,000) may have been misappropriated. City Prosecutor Ivan Sydoruk has already asked Yakovlev to take disciplinary measures against the committee's chairman, Alexei Chumak.
Sudakov - who was appointed to his post last October - recently ordered checks on the allegations against Malyshev. His department also looked into the Transportation Committee case.
"We checked it and found that this was not even Chumak who signed the financial documents [which are being investigated by the City Prosecutor's Office]," Sudakov commented in an interview last week.
Alexander Shchelkanov, an independent Legislative Assembly lawmaker, said the security department was granted its new mandate in order to forestall the Prosecutor's Office's moves against City Hall and to help Yakovlev cover himself.
"I don't expect any coordination between City Hall and the Prosecutor's Office, but rather a screening effect, provided by the Security Department," Shchelkanov said on Monday.
"They would collect information for the governor so he would have time to clean up in case it looks like something is going to happen," he said.
But Alexander Afanasyev, the governor's spokesperson said that the decree is "just a routine change of City Hall structure."
"They are not going to collect any files on City Hall officials. It is the police's business to investigate crime. This department, which existed before, was just restructured to operate under a different person's responsibility," Afanasyev said on Monday.
Sudakov said that the department's primary goals at present are to combat terrorism in the city and to provide any information requested by the City Prosecutor's Office if a City Hall official is charged with a crime. But he emphasized that it will not undertake investigations on its own.
"We are not going to chase any officials," Sudakov said. "We are not going to do anything by our own initiative, but only after a prosecutor's office inquiry."
The City Prosecutor's Office said it had had no dealings with the department recently.
"At this moment we have no [criminal] cases open against City Hall authorities, so no inquiries have been sent to that structure recently," said Yelena Antonova, the St. Petersburg prosecutor's office spokesperson, in a telephone interview on Friday.
"As for that structure, it was set up not very long ago and has not been of any use for us [yet]," she said.
TITLE: Putin, Kim Ink Strategic Alliance
PUBLISHER: Combined Reports
TEXT: Wrapping up official talks with Russian leaders, North Korea's Kim Jong Il arrived Monday morning for a two-day visit in St. Petersburg on the 11th day of his train travels across Russia.
Prior to his departure from Moscow, Kim and President Vladimir Putin signed a strategic alliance called the Moscow Declaration.
The document, issued at the end of their meetings, which Kim called a "great success," was full of Soviet-style language and indirect criticism of the United States, but it contained no surprises.
"The 1972 Anti-Ballistic Missile Treaty is the cornerstone of strategic stability and the foundation of further reduction of strategic offensive arms," the Moscow Declaration said.
During his meetings with Putin, Kim confirmed that North Korea will continue missile development but vowed to observe a promised missile-test moratorium until 2003.
Kim also said earlier that one reason for his visit was to develop the North Korean space program.
Kim visited the Khrunichev State Space Center outside Moscow, boarding a full-size replica of the Mir orbital space station, the Interfax news agency said. He also visited the Mission Control Center in Korolyov, also near Moscow.
The Moscow Declaration gave no clue as to whether North Korea is willing to reopen talks with the United States. North Korea has yet to respond officially to the offer for talks that U.S. President George Bush's extended on June 6.
The reclusive North Korean leader - who is rumored to fear flying - closed the official portion of his trip by traveling by train to St. Petersburg.
He arrived at 10:00 a.m. - two hours behind schedule because of a bomb scare en route - at St. Petersburg's Moscow Station. Kim visited the Hermitage Museum and the Peter and Paul Fortress later in the day.
He also met with Governor Vla di mir Yakovlev and the two discussed the ABM treaty, according to the RosBalt news agency.
The two also discussed energy exports to Kim's energy-starved land. Kim announced that he favored opening a North Korean trade representation in St. Petersburg.
According to Interfax, trade volume between St. Petersburg and North Korea was just $1.2 million last year.
Kim visited Leningrad Machine-Building Factory, accompanied by Yakovlev and Deputy Prime Minister Ilya Klebanov. There he saw the massive turbines that are being completed for a nuclear power station in China, RosBalt reported. Kim later visited the Baltika brewery in St. Petersburg and announced North Korea's intention to build a similar plant using equipment imported from England, Interfax reported.
Analysts said the Moscow Declaration and Putin's warm welcome for Kim were designed to send a message to - and indirectly to criticize - the United States. Some said it was a harkening back to the past.
"This is going back to the Soviet days, when Khrushchev and Brezhnev helped Egypt or other countries which were disliked by all other countries," Hiroshi Kimura, a Russia specialist at the International Research Center for Japanese Studies in Japan said. "Putin doesn't have any ally countries - only so-called rogue countries such as Iran, Iraq, North Korea, Cuba."
South Korea reacted positively to the talks on the belief that Putin nudged Kim to revive stalled talks with Seoul. Inter-Korean exchanges that thrived after the first-ever summit last year in the North Korean capital, Pyongyang, have come to a virtual standstill because of tensions between North Korea and the United States.
"If Chinese President Jiang Zemin also urges a resumption of inter-Korean talks when he visits North Korea in September, it will have positive effects," South Korea's Vice Foreign Minister Yim Sung-jun said.
This trip to Russia is only the third time Kim has been abroad as leader of the impoverished and isolated country. Concerns over a possible coup during any trip abroad are often cited as a key reason behind Kim's reluctance to travel.
- AP, SPT
TITLE: North Korea Exporting Slaves To Work Off Debt
AUTHOR: By Alla Startseva
and Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - North Korea is paying off its Soviet-era debt to Russia by sending indentured servants to work unpaid in labor camps across Siberia, an official from the Economic Development and Trade Ministry said Friday.
"Workers are working unpaid or for an insignificant salary," said the official, who requested anonymity. "This way they are paying off their country's debt."
The Economic Development and Trade Ministry classifies such workers as "exports," and calculates that they account for 90 percent of all "goods" imported from North Korea every year.
Pyongyang reduced its $3.8 billion debt to Moscow in this way by $50.4 million last year, the official said.
"North Korean labor holds the position of a special type of mass-quantity product that meets a real demand in Russia," the official said, quoting from the economic cooperation agreement in effect between the two countries. The official didn't say when that agreement was signed.
A press officer in the North Korean Embassy said Friday that he didn't know anything about the debt-for-labor deal. When asked if North Koreans in Far Eastern camps were working for free, the spokesperson said, "North Koreans are not working unpaid."
The details of the scheme - such as how many workers are involved, where the camps are located, the precise nature of the work they do and how payments are made - were unclear as of Sunday.
But human rights groups who have studied the scheme can answer many of the questions, and those answers suggest Russia, not to mention North Korea, is violating international law.
Russia is violating the 1951 Refugee Convention, for example, by denying asylum to North Koreans who escape from these camps - and the very existence of these camps could mean that Russia is also violating the International Slavery Convention of 1927.
"Just the way North Koreans are described in the [Economic Development and Trade Ministry] document, where the majority of exports is classified as 'labor force,' could actually be qualified as slave trade," said Alexander Podrabinek, the editor of the human rights information agency Prima.
"As the conditions under which the Korean workers are held and the specifics of the compensation packages they get for their work are unclear, it is hard to say whether the work in the camps can be qualified as slavery," said Rachel Denber, deputy director of Human Rights Watch for Europe and Central Asia.
"But we do know that Russian police are involved in guaranteeing security for those timber camps where the North Koreans are meant to stay. That means that there is an obvious element of compulsion involved," she added.
"When they come to Russia they have to work under a very strict regime. They are not free to move around. They are not free to seek asylum if they want to. It's a very prison-like environment. And it is the Russian police who are involved in guaranteeing these kind of conditions."
And the fact that Russian law enforcement agencies cooperate with North Korea's security service to hunt down those who escape "is a flat outright violation of Russia's obligations under international law," Denber said.
It is no secret that during the Soviet era such camps existed. But Podrabinek said that he and other human rights activists who campaigned against their existence in the early 1990s thought they had been closed down in 1993 when a 1967 agreement with Pyongyang expired. According to Amnesty, that agreement was renewed in 1995.
By 1996, Amnesty said the camps were still going strong and they were guarded by the North Korean secret police, the PSS, and human rights violations, including executions, were routine.
Amnesty estimated the number of miners and loggers in such camps across Siberia and the Far East in the 1970s and '80s was 20,000 - a number that shrank to about 6,000 in the early 1990s.
Many who escaped told Amnesty the prisoners were often immobilized by plaster casts put along the length of their legs, or metal devices of similar purpose. There are also reports of executions.
TITLE: Chukotka's Smitten With Roman Abramovich
AUTHOR: By Mumin Shakirov
PUBLISHER: Special to The St. Petersburg Times
TEXT: TAVAIVAAM, Far East - To many Russians, Roman Abramovich is a billionaire "oligarch" and an influential insider in the courts of both Boris Yeltsin and Vladimir Putin.
The 34-year-old Abramovich controls Sibneft, a major oil producer, through subsidiary companies. He is co-founder of Russian Aluminum, the world's second-largest aluminum producer, and owns 49 percent of the television network ORT. His personal fortune is estimated at between $1.4 and $2 billion.
Here in Tavaivaam, however, the locals call Abramovich "Governor." To his native Chukchi constituents in the bankrupt Chukchi Autonomous District, across the Bering Strait from Alaska, the oligarch looks more like a savior, a provider of humanitarian aid in the form of flour, sugar, oil, fish hooks and nets.
Abramovich is received with festive concerts everywhere he goes. He makes promises to the people, and even delivers on them. This shocks many people after a long decade of lies and inaction from local and federal officials.
The non-native population - about two-thirds of the region's 70,000 people - has also benefitted from Abramovich's largesse. Wage arrears have been paid, and a resettlement program is underway, removing retirees to the "mainland." Schoolchildren have been sent to summer camps in the south.
Strange as it sounds, this is all true.
Tavaivaam is located on the Bay of Anadyr, at the mouth of the Anadyr River. It is a run-down village like many others inhabited by the region's native people, the Chukchi. On one side lie tundra and lifeless hills, on the other the lights of Anadyr, the regional capital.
The 400-odd residents of Tavaivaam are former reindeer breeders and fishermen. They do not live in yrangy - portable huts - as their ancestors did, but in concrete three-story tenements and dilapidated shacks, hastily thrown together from warped timber and plywood. At times it can be hard to distinguish actual dwellings from rotted, abandoned barns, or stacks of firewood from trash heaps. Feral dogs roam confidently through the ruins.
Valentina Rintuvi, 51, who works in a local club, has lived here her entire life. She said that the countryside here was once awash in reindeer, some 30,000 altogether. The fishermens' coop filled the local markets with its catch.
The end of "the good old days" of socialism coincided with the dawn of perestroika, when the generous subsidies from Moscow dried up. Local agriculture collapsed for good in the mid-1990s when the Kremlin began to forget about the existence of Russia's Far North. There was only enough money to feed the local bureaucrats and police.
The last reindeer were butchered six years ago. Local fishing declined from a thriving enterprise into a means of survival. The Chukchi have few full-time jobs. Instead they are plagued with drunkenness, poverty, tuberculosis, syphillis and even AIDS. In place of wages, they receive humanitarian aid.
In the mornings young people in search of food, money and liquor gather around the local two-story club, where some semblance of social life still goes on. The club's library still functions, and "cultural workers" ready the auditorium for performances of the famous folk shaman ensemble, Ergyron. One senses the nearness of Anadyr, from which the village receives electricity, heat, and most everything else.
In more far-flung villages, where there is no electricity, heating fuel or entertainment, the Chukchi and other native peoples were long ago forced to convert their homes into barns. They slaughter reindeer in their apartments, light campfires, and salt fish in huge barrels.
Tavaivaam, in short, is far from the worst place in Chukotka. There is even work sometimes. Rintuvi, for instance, sews costumes for the performers of the Ergyron ensemble and earns a very good wage by local standards, $120 a month.
I asked her how she survives on her salary, given that the prices in the grocery store across from the club are exorbitant - three or four times higher than in Moscow. A kilogram of potatoes, for example, costs $2, a kilogram of apples no less than $5, a kilogram of sausage or cheese well over $8. The only relative bargain here is vodka. A suspect half-liter bottle costs $3, a bottle of Gzhelka from Moscow runs $4.
"You can't survive on your wages alone, of course," Rintuvi said. There's only one way to manage - strict penny-pinching. Money goes for pasta, bread, salt, matches and fishing supplies, for fishing is the main food source for the native population.
But there is still hope, local resident Irina Rychim said, and that hope has a name: Roman Abramovich, elected as governor of the Chukchi Autonomous Region last December. Before that the famous oligarch served as the Chuchki representative in the State Duma.
Campaign posters of Abramovich left over from last December still hang on the walls of offices and beauty parlors, in run-down snack bars and restaurants. Carefully cut-out pictures of the Chukchi governor are placed in the windows of buses and trucks, just like Stalin's portrait many years ago.
You don't hear the questions that baffle observers elsewhere. What does Abramovich need with Chukotka? Why is one of Russia's richest businessmen spending millions of dollars from his own pocket on humanitarian aid, tens of millions from the Sibneft and Russian Aluminum coffers on social programs?
Everyone has his own explanation. Communist Vasily Starodubtsev, governor of the Tula Region, is convinced that Abramovich has plans no less audacious than to link Chukotka with Alaska, just over 50 kilometers away.
Some accept the version offered by Abramovich's camp, according to which the billionaire who spent his childhood in stark poverty has now decided to give something back. He became fond of the people in Chukotka and has resolved to help relieve their suffering.
According to Mikhail Kruglov, a journalist at Novaya Gazeta, a weekly newspaper that regularly publishes articles hostile to Abramovich, the oligarch simply gave up Berezovsky to the government, and in exchange was allowed to serve his own time in the governor's office, rather than in a prison camp.
Others are convinced that the pragmatic Abramovich knows that Chu kotka contains no mean reserves of gold, natural gas, petroleum or fish. All this now belongs to him. "In Russia, money is the key to power," said State Duma Deputy Vladimir Ryzh kov. "For Abramovich, the governorship is all part of his business. The Kremlin in this situation can neither help nor hinder him."
Still others talk of a future public relations coup, when Abramovich will show all of Russia and the world how to drag a decimated, bankrupt region back from the brink.
The governor himself behaves something like the Queen of England: He is involved in charitable work and gives no interviews, not to Russian journalists at any rate. Abramovich's assistant Sergei Kapkov handles all contact with the press. He gives studied slippery answers to all of his guests' questions, including the central quandary: What does Abramovich want in Chukotka?
"He has achieved a great deal in his life, he has become a wealthy and influential person in Russia," Kapkov said. "For him Chukotka is an interesting new project, the fulfillment of his personal ambitions."
Two or three times a month Abra movich flies to Chukotka in his private plane and gives orders to the members of his administrative team. He used to fly out each evening to spend the night across the Bering Strait in Anchorage, Alaska. Now the billionaire has erected a modest residence in the Chukchi capital, Anadyr - a two-story wooden Canadian-style cottage with its own heating system to keep the governor warm during the long, brutal winter. Abramovich's team assures visiting journalists that soon such all residents of Chukotka will live in such relative luxury.
Nearly 100 managers, most of them transferred here from Sibneft, work in Anadyr on a permanent basis. They control daily operations in the region and try to bring local bureaucrats up to speed.
Now the all-important delivery of goods to Chukotka during the summer months, when the region's waters are navigable, will be handled by the new team. According to local journalists, Abramovich's people have taken control over the regional budget - all the money coming in from Moscow, and all expenditures.
Earlier this summer Abramovich declared Chukotka bankrupt, a symbolic slap in the face of former governor Alexander Nazarov. True, Abramovich sent Nazarov as his representative to the Federation Council, where he also runs the Chukchi organization of the Unity party. News of the region's bankruptcy did not disturb Nazarov, who is convinced that a bright future lies in store for Chu kotka, and that his 10-year reign paved the way for the peninsula's rebirth. Chukotka's total debt to commercial banks is equal to its yearly budget, some $65 million.
Abramovich made good on his first promises as governor: He saved his electorate from starvation and freezing last winter. He heaped humanitarian aid on the native population and brought in tankers filled with heating fuel.
The governor now has plans of Napoleonic proportions. After reining in spending, he decided to create state-owned companies and conduct the yearly delivery of goods to Chukotka independently of the federal government. His managers also took control of the peninsula's lucrative trade in alcohol. This monopoly on food and drink and most everything else means that Abramovich will now decide what meat, vodka, fruit and rice will be shipped in, and how much it will cost on the shelves. You could say that the oligarch has brought a little socialism back to Chukotka.
Kapkov, the governor's assistant, said that these steps were necessary in order to lower prices. Abramovich will save money by resettling pensioners and the unemployed on the mainland. Under his plan, the local population, long in decline, will be halved.
"It costs the state $6,000 a year to sustain one person in a remote settlement," Kapkov said. "A family of three costs us $18,000. Fiscally it is more sound to remove these people from the permafrost and buy them apartments somewhere in the south of Russia."
But that's not all. Abramovich pledges to help the Chukchi and other native peoples to revive reindeer husbandry. In order to pull this off, and to combat the chronic problem of alcoholism among the native population, the governor also plans to introduce a dry law in the tundra, as the state of Alaska has already done. Until then he will continue to provide humanitarian aid.
Abramovich also has more esoteric plans. He wants to open a movie theater in Anadyr with a Dolby sound system, as well as an entertainment center with bowling lanes and a swimming pool. He will encourage his electorate to get involved in sports.
For now Abramovich is spending his own money - millions of dollars - in Chukotka, along with tens of millions from his oil company, Sibneft. Only the oligarch himself knows how, or if, he will repay these millions to Sibneft.
On the other hand, Abramovich's companies Sibneft and Noyabrskneftegaz are already up and running in Chukotka, and MDM Bank - which is friendly to the governor - has opened a branch here.
But Abramovich's business plans don't worry the peninsula's inhabitants. They're just glad he's here.
Mumin Shakirov is a reporter for Radio Liberty.
TITLE: Tobin Gets an Early Release From Prison
AUTHOR: By Jim Heintz
PUBLISHER: The Associated Press
TEXT: MOSCOW - The father of John Tobin, the American Fulbright scholar released from a Russian prison last week, said Monday that his son is bouncing back from his time behind bars in a case that became an irritant in U.S.-Russian relations.
"He's not complaining now," John Tobin Sr. told a news conference at the U.S. Embassy. "In a sense, he's had a marvelous experience. It sounds a little ridiculous to say that he's seen Russia from the inside."
He and U.S. Representative James Maloney, who represents Tobin's district in Connecticut, came to Moscow on Sunday to help speed the process of getting his son an exit visa. He said Russian officials were being cooperative.
"I think my being here continues to say to both our officials here in the Moscow embassy and also to the Russian officials that this is an important matter and needs to be resolved," Maloney told a Connecticut television station on Sunday.
Maloney said he expected the younger Tobin to be able to leave Russia by the end of the week.
"He's very adaptable," Tobin Sr. said Sunday. "He needs some time to decompress. I don't think he's even thinking about that [future], really."
Tobin, 24, was arrested in January for marijuana possession, in Vo ro nezh, where he was studying political science at the local university. The arrest attracted little attention until a spokesperson for the Federal Security Service, or FSB, said Tobin was believed to be training to be a U.S. spy, noting he had studied at the elite U.S. Defense Language Institute and was in an intelligence battalion in the Army Reserve. No espionage charges were filed.
The initial charges against Tobin included allegations that he had operated a drug den and had obtained marijuana as part of a criminal gang. Those charges were later dropped.
Tobin, who had pleaded innocent, was sentenced to 37 months for possession, but a higher court reduced that sentence to a year. Tobin became eligible for parole after serving half that sentence. Local court and prison officials said he was a model inmate - but they also appeared weary of the attention and controversy the case brought.
U.S. President George Bush raised the Tobin case with Russian President Vladimir Putin during a meeting in July, and Maloney suggested Putin had pushed for a prompt release. Tobin was freed the day after authorities at the prison colony in the southern town of Rossosh recommended the move.
"I think that speaks very clearly of President Putin's concern and help," Maloney said.
"I think President Putin did the right thing by taking a part in it and expediting things," the senior Tobin said Sunday, adding that he has met several times with his son at the embassy and "it's good to see Jack without bars in front of his face."
Although his son was thin and pale, "A couple of weeks in North America with his friends, his mother, with some home cooking will do wonders."
The elder Tobin has said that his son claimed the Russian intelligence service tried to recruit him as an agent and that he believed he was arrested because he had refused.
Asked about that contention on Monday, the father said "I think I'm going to let Jack tell the story."
Since his release, Tobin has made no public comment. Maloney said he does not plan to make any statement until he returns to the United States.
Soon after the court decision to free him Friday, Tobin, appearing gaunt and with his hair cropped short like most Russian prisoners, walked out of the gates of the shabby prison in Rossosh. Flashing a brief smile, he left with his belongings in two plastic shopping bags.
He returned to Voronezh and collected other belongings, including boxes of books, and boarded an overnight train for Moscow. He unloaded the goods at Paveletsky Station, watched by a half-dozen OMON officers.
Whatever his problems with the police, Tobin appears to have impressed prison officials in Rossosh, The New York Times reported. His sentence was cut after they noted that he had been a model prisoner, learning woodworking, playing sports and attending the Russian Orthodox Church.
Among other projects, Tobin made frames for icons that were to be installed in a church the prison is building. The warden, Nikolai Kravchenko, was sufficiently impressed that he told NTV television that he planned to keep in contact with Tobin by e-mail, and that the two had discussed a joint project to create a prison rehabilitation program.
TITLE: IN BRIEF
TEXT: Development Delayed
ST. PETERSBURG - (SPT) Europe-Hotel, the parent company of the Grand Hotel Europe, may have to wait a bit longer before it begins construction on its proposed plan to build a series of elite cottage-hotels on Kamenny Island.
Taking back his prediction that St. Petersburg Govenor Vladimir Ya kov lev would have already signed the official permission by now, Alexander Shabasov, the deputy chair of the City Construction Committee, said by telephone on Monday that certain "technical issues" of the project are still being examined.
He said all issues should be resolved by the time the Investment-Tender Commission meets on Tuesday. This time around, Shabasov was reluctant to give a specific date, but he said that the governor's signature is expected in "the coming days."
4 Soldiers Killed
MOSCOW (Reuters) - ORT television on Sunday showed a young soldier saying he shot dead four colleagues in a boxcar in Siberia because they had bullied him.
ORT said police arrested private Denis Pertsov, 19, on Sunday morning in a bar in the town of Kiselyovskaya, about 300 kilometers from the train in Abakan, where the bullet-riddled bodies were found Saturday.
Pertsov, who had been in the army for eight months, told an ORT reporter he had been humiliated, beaten and made to clean up after colleagues, until he finally cracked, firing an automatic rifle at the men.
The soldiers had been accompanying a rail consignment of tanks from outside Moscow to Ussuriisk near the Pacific coast.
Still Counting Votes
PSKOV, Western Russia (SPT) - Vote counting was still underway Monday to determine the victor in Sunday's runoff election in the southeast Pskov Oblast town of Sebezh, Interfax reported.
Vladimir Afanasyev, a pensioner, was the favorite heading into the second round, with 31 percent of the first-round vote. Incumbent Deputy Mayor Afa na sy ev, cleared the first round with 25 percent.
As of 2:00 p.m., 36 percent of voters in the town of 19,000 had turned out, making the results of the election - when known - valid.
TITLE: Kasyanov Gives Aeroflot Break on Penalties
AUTHOR: By Mikhail Kozyrev and Tatyana Yegorova
PUBLISHER: Vedomosti
TEXT: Prime Minister Mikhail Kasyanov last week officially granted Aeroflot an exemption on between $600 million and $800 million in penalties it owed from the late 1990s.
Aeroflot failed to make good on a deal it had with the government to purchase domestic aircraft in exchange for receiving customs breaks on foreign-made planes it imported.
Kasyanov also instructed the Transport Ministry and the Russian Aviation and Space Agency, or Rosaviakosmos, to develop and submit a draft proposal to the tariff policy committee on reducing import duties on aircraft parts and equipment manufactured abroad.
At the end of the 1990's Aeroflot leased 10 Boeing-737s, two Boeing-777s and four A-310s that it imported to Russia without paying customs duties or VAT - a tax break, including penalties, estimated to be worth $600 million to $800 million. In return, Aeroflot promised to purchase 12 Il-96Ms, three Il-96Ts and six Il-96-300s, but it never bought a single plane. By violating the deal Aeroflot not only owed the customs and VAT payments for each plane it imported, but also a penalty of 1/300th of the Central Bank's refinancing rate for each day it didn't pay.
At the end of March, shortly after two offshore companies connected to shareholders of oil major Sibneft acquired about a 20 percent stake in Aeroflot, Science and Technology Minister Alexander Dondukov said that the airline was required to pay up.
But last week Kasyanov signed a new resolution stating that the tax breaks to Aeroflot were legal; even though the company didn't uphold its end of the bargain. The document states that in respect of the aviation equipment, "the condition of complete release from customs duty and taxes shall remain for the periods of temporary import."
Kasyanov terminated the effect of resolution No. 716 - "on additional measures for state support of civil aviation in Russia" - on which the investment agreement was based.
Aeroflot's press service would not comment on the government's decision.
A state representative on the company's board said the board had discussed "the benefits" problem several times and, as the company's main shareholder, the state concluded it would be impossible to make the company pay the debts since it didn't have the money.
Aeroflot's annual turnover is about $1.3 billion.
Therefore, the decision was made to free the company from its debts and lower the number of planes it is obliged to purchase from 21 to eight, the board member said. The purchase schedule has yet to be determined.
The board member suggested that Aeroflot's participation in a leasing scheme approved by the government in March was a done deal: Aeroflot will buy several planes from whichever company wins the leasing tender.
TITLE: Chevron Clears Way For Caspian Pipeline
PUBLISHER: Combined Reports
TEXT: MOSCOW - U.S. oil major Chevron said Friday an agreement had been reached on the terms of transporting crude through a new Kazakhstan-to-Russia pipeline, removing a final hurdle to bringing the 1,510-kilometer pipe on stream soon.
Chevron said in a statement after a meeting of shareholders in the Caspian Pipeline Consortium, or CPC, which built the $2.5 billion link, that an agreement had also been reached on an oil-quality bank, reconciling the differences in quality between Kazakh crude and Russian Urals blend that will flow through the pipe.
"All elements are now in place to commence shipping of oil from the CPC terminal near Novorossiisk, southern Russia, in the next few weeks," Chevron said, without giving a precise date.
"This decision sends a powerful signal to the world's investment community that Russia and Kazakhstan are countries in which major, long-term capital investments can be made with confidence," Chevron chief David O'Reilly said in a press release.
Another shareholder, who preferred to remain anonymous, welcomed the agreement but warned that the Russian authorities had problems understanding the quality-bank idea.
CPC said in a separate statement that the consortium would decide on a date for a formal opening ceremony after talks with the administrations of the Russian and Kazakh presidents, Vla dimir Putin and Nursultan Nazarbayev.
The shareholders last week delayed the opening ceremony, which was held on Monday. CPC said at the time that failure to agree the terms of transport was behind the delay.
"The approval of the agreement is a very positive news. But we have yet a long way to go," said the CPC shareholder.
"It took us a long time to agree on the quality bank, which has never been in place in Russia. Now we will have to explain this to the Russians," he said.
He said Russian tax officials failed to understand why some companies had to reimburse others for lower oil quality by pumping more crude at the field and getting less on export.
Russian state pipeline monopoly Transneft has long promised to introduce a quality bank, but has failed to persuade Russia's high sulfur producers to lower exports to make the Urals Blend more valuable.
As well as Chevron (15 percent), CPC includes Russia (24 percent), Kazakhstan (19 percent) and Oman (7 percent), LukArco B.V. (12.5 percent), Rosneft-Shell Caspian Ventures Limited (7.5 percent), Mobil Caspian Pipeline Company (7.5 percent), Agip International N.V. (2 percent), BG Overseas Holding Limited (2 percent), Kazakhstan Pipeline Ventures LLC (1.75 percent), and Oryx Caspian Pipeline LLC (1.75 percent).
- Reuters, SPT
TITLE: UES Plan To Restructure Threshed Out
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Prime Minister Mikhail Kasyanov over the weekend signed off on the first-stage of the planned overhaul of Unified Energy Systems, finally ending months of fierce debate over how to reform the world's largest power grid.
The plan, published Saturday on www.government.ru, fills in some of the details missing from the blueprint Kasyanov approved last month for the UES restructure. It also lays out a clearer timeline.
The general plan calls for keeping the national grid under government control while spinning off the power-generating assets to allow them to compete against each other.
The first stage is expected to take three years and entails developing the legislation needed to introduce competition to the industry. This stage is divided into two parts, each taking about 18 months to complete.
The first phase of the first stage calls for the creation before the end of the year of the Federal Transmission Company, which will be 100 percent-owned by UES. This is sooner than the blueprint Kasyanov signed last month that called for the FTC's creation in the first quarter of 2002.
Another difference from last month's version is the FTC will acquire only high-voltage lines. The blueprint did not specify which transmission assets would go to the FTC.
TITLE: Sakhalin Consortium Taking Bids for $1 Bln Plan
PUBLISHER: Combined Reports
TEXT: MOSCOW - An international consortium developing two oilfields off Russia's Sakhalin Island said Friday it had invited three international groups to bid for a $1 billion contract to build the world's largest liquefied-natural-gas plant.
The Sakhalin energy consortium said in a statement the three were French Bouygues Offshore, French Technic with U.S. Foster Wheeler, and Japan's Chiyoda Corp. with Toyo Corp.
The Sakhalin energy consortium is led by Royal Dutch/Shell.
The $1 billion-plus contract involves construction of a liquefied-natural-gas, or LNG, plant - Russia's first - with annual capacity of 9.6 million tons by 2006, the statement said.
In addition to the LNG plant, the contractor will design and build a crude- oil export terminal and related facilities on the Sakhalin's southern coast.
The contract, to be awarded in the second quarter of 2002, is part of the second phase of development of the $8.9 billion Sakhalin-2 project.
The money, which has yet to be raised, will be used to develop the two offshore fields, to build oil and gas pipelines to the south of the island, as well as the LNG plant, and oil and LNG export terminals.
The consortium is operated by Shell, which owns 55 percent, while Japan's Mitsui & Co. and Mitsubishi Corp. have 25 percent and 20 percent respectively.
- Reuters, SPT
TITLE: City's Port To Get EBRD Help
AUTHOR: By Andrey Musatov
PUBLISHER: Staff Writer
TEXT: The European Bank for Reconstruction and Development (EBRD) has reached and agreement with the Russian Transport Ministry to finance an upgrade for St. Petersburg's port and for the construction of new port facilities in Ust-Luga, about 150 kilometers to the west of the city on the southern cost of Gulf of Finland, and Kaliningrad.
According to Deputy Transport Minister Vladimir Yakunin, negotiations with bank officials began about two months ago. Friday's announcement came on the heels of meetings with the governors of St. Petersburg and the Leningrad Oblast the RosBusinessConsulting information agency reported.
The St. Petersburg portion of the credit is targeted at improving the infrastructure of the port, including deepening the bottom and broadening and reinforcing the walls of its chanels, bolstering its ability to handle ocean-going traffic.
Beside the work on the ports in St. Petersburg, Ust-Luga, and Kaliningrad, the credit will also go toward the establishment of ferry service linking the three cities with the German city of Mukran.
According to Yakunin, the Transport Ministry estimates the cost of project at about 200 million rubles (about $6.8 million) without including the price for the ferry ships themselves. He said that the investment in the project would take about 15 years to recoup.
Roy Knighton, director of the Transport-Infrasctructure Development Department with the EBRD said that exact figures for the entire credit won't be known until the beginning of 2002, when the bank will receive the final, detailed plans for the project. Preliminary estimates are for 40 million euros (about $35.3 million) to be earmarked for the Ust-Luga and Kaliningrad portions and from 5 to 10 million euros (from $4.4 million to $8.8 million) for St. Petersburg.
All three projects are being touted as part of a larger undertaking by the Ministry: The Program for Modernisation of the Transport Sector.
"Presently, the majority of international transport routes in the region pass around Russian ports," a document posted on the ministry's Web site reads. "Right now this traffic passes through Finnish and Baltic Sea ports, taking away profits from Russian carriers, and lowering revenues for regional and federal budgets."
"The Northwest Region is part of the northern sea route providing the shortest connection between Western Europe and the countries of the Asian-Pacific region," the site says. "The region should develop good conditions for the transportation of goods across its territory as well as the conditions for healthy competition between carriers."
The only ferry service operating out of the port of St. Petersburg at present is TransRussiaExpress, which operates between the city and Kiel, Germany. It was opened in 1997 by Baltic Transport Systems and operates five ships carrying trucking transport and one carrying both cargo and passengers.
According to Knighton, the EBRD and the Transport Ministry are also researching projects for airports and road development. He added that the bank is considering credits of about 250 million euros (about $220 million) in conjunction with these projects.
"This program will be just one in a list of projects to modernize Russian facilities and develop the north-south transport corridor," he said Friday.
TITLE: Government Leaders Split Over Tariff-Freeze Debate
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Two of the country's most powerful officials gave conflicting statements last week over governmental policy on one of the linchpins of the economy: tariffs on the so-called natural monopolies.
On Thursday, Economic Development and Trade Minister German Gref announced that there would be no new tariff hikes for the rest of the year, except in the case of "emergency situations."
But on Friday - one day before he left for Sochi for a two-week vacation - Prime Minister Mikhail Kasyanov apparently overruled Gref. "The government does not intend to freeze tariffs on natural monopolies until the end of this year," said Kasyanov. "There won't be any freezing of tariffs," he was quoted by Prime-Tass as saying.
Economic Development and Trade Ministry spokesperson Alexei Saukh said Friday that Kasyanov was "probably softening Gref's wording in case a tariff increase is needed during regional preparations for winter."
A Federal Energy Commission official was quoted by Interfax as saying Friday that "the situation about tariffs remains unclear because no official directive from the government has been received [while controversial announcements are being made by top officials]."
Unified Energy Systems, which operates the national power grid, has lobbied aggressively for higher tariffs so it can raise the money it needs to stockpile enough fuel to prevent a repeat of last winter's energy crisis in the Far East.
Ensuring heat and electricity throughout the winter is a daunting task and a political time bomb that can topple politicians, as was the case with ex-Primorye governor Yevgeny Nazdratenko, who was forced from office in February after thousands of residents in his Far East region experienced week-long blackouts.
But while Kasyanov said there would be no tariff freeze, he didn't say there would definitely be another tariff hike before next year.
"Tariff increases have always been the easiest method," he said, adding that a rate hike would only be considered after it was clear that UES and another natural monopoly, the Railways Ministry, had done all they could to reduce expenses.
Kasyanov has said that the government is working on measures to make sure the economy stays healthy, including the formation of a single body to set tariffs for heat, gas, electricity and water, which are currently decided by a range of bodies.
President Vladimir Putin has set a Sept. 1 deadline for proposing a plan to create a new regulatory body for setting tariffs, and currently there are two proposals being considered - one from Gref's ministry and one from the FEC.
Analysts are paying close attention to the battle for tariff-setting powers and tariff rates because of their effect on the economy.
"There's definitely a fight going on between [Kasyanov and Gref] about this single tariff authority, which in theory should be moving towards Gref, but it looks like Kasyanov is resisting that," said Troika Dialog's Tom Adshead.
"From an economic standpoint, [Gref's] approach may make more sense," NIKoil said in a research note. But the FEC has the advantage, as the current law regulating tariffs gives it control over policy, it said.
TITLE: IN BRIEF
TEXT: China Trade Up 28%
MOSCOW (SPT) - Russia is No. 8 on the list of China's main trading partners, with bilateral trade up 28 percent to $4.5 billion over the first five months of the year, Itar-Tass quoted the Chinese customs service as saying Monday.
Chinese customs said China imported $3.56 billion worth of products from Russia during the period, up 32.6 percent over the first five months of 2000. Chinese exports to Russia amounted to just over a billion dollars, up 17.2 percent.
Japan is China's top trading partner, with $42 billion worth of goods exchanged between the Asian giants in January-May. The United States comes next with $37.54 billion, followed by the European Union.
Metals Exports Down
MOSCOW (SPT) - Ferrous metals exports fell 10 percent in the first half of 2001 year on year, said a Science and Technology Ministry official, citing preliminary figures, Interfax reported.
The official attributed the decrease to higher customs duties on scrap that hurt metals exports to Western Europe and to antidumping sanctions imposed by various countries against Russian steel producers.
He said flat roll and ferroalloy exports to countries outside the Commonwealth of Independent States plunged 21 percent and 17 percent respectively in the first half of the year, year-on-year, and the average contract price for these products fell 18 percent and 5.5 percent respectively. Exports of finished roll dropped 7.4 percent to 12.5 million metric tons.
But exports of ferrous metals to the CIS increased, largely due to increases of pig iron, ferroalloys and flat-roll exports, he said.
Cuts to Aviation Duties
MOSCOW (Reuters) - Russia will work out cuts in customs tariffs within two months for imported planes and aviation spare parts that are not produced locally, the government said in a statement Friday.
Russia's aviation industry is in a desperate state due to low demand at home and abroad.
Annual aircraft output is in single digits from a Soviet peak of 2,500.
Earlier this year, parliament asked the government and the president to support the ailing industry, with some deputies calling for an outright ban on Western aircraft or tax breaks for foreign aircraft deals.
However, aviation officials say Russian planes are not as reliable as Western aircraft and, as a result, are more expensive to maintain and operate.
Sibir-Vnukovo Stalled
MOSCOW (Vedomosti) - A Moscow arbitration court has halted the merger of top airlines Sibir and Vnu kovo after ordering the former to pay a debt of 4 million rubles ($136,000) to Vnukovo's former ticket agent, the company Yuridicheskaya Aviatsionnaya Sluzhba (Legal Aviation Service).
When Sibir took on Vnukovo's debt obligations as part of the merger procedure it failed to settle with Yuridicheskaya Aviatsionnaya Sluzhba.
Sibir plans to dispute the ruling.
"The amount was for less," said Mikhail Koshman, head of Sibir's advertising and public relations department.
TITLE: When a Major Transaction Is a Big Deal
AUTHOR: By James Hitch and Igor Makarov
TEXT: AN unusual aspect of Russian corporate law is the concept of the "major transaction." According to Article 78 of the Law "On Joint-Stock Companies", a major transaction is defined as any transaction connected with the acquisition or alienation (sale or transferring) of property, the value of which is more than 25 percent of the balance value of a company's assets, or connected with the placement of common stock with a value exceeding 25 percent of the joint-stock company's common stock, which has already been placed. The reason why major transactions are so important is that under this law all members of the company's board of directors must unanimously approve those transactions with a value of from 25 to 50 percent, while three-quarters of the votes at a general shareholders meeting are required to approve transactions where the value of the assets is more than 50 percent of the assets of the company.
Because major transactions are, by nature, problematic for joint-stock companies, they have finally come to the attention of the Higher Arbitrage Court of the Russian Federation, which recently issued Information Letter No. 62 of March 13, 2001, which reviews the practices of the arbitrage (i.e., commercial) courts with regard to major transactions. This information letter was issued to review and analyze the most typical cases handled by the court and, in particular, the mistakes made by those courts.
The Higher Arbitrage Court has ruled in the past that any major transaction that a joint-stock company concludes in breach of the mandatory requirements of Article 78 is null and void and subject to challenge by any interested party. In Information Letter No. 62, the court provided a very interesting commentary on the criteria by which two different contracts of the same type - loan agreements, for example - may or may not be declared to be major transactions. A loan agreement may be declared a major transaction if the aggregate total of the principal and interest of the loan totals more than 25 percent of the value of the borrowing company's assets. However, if the loan agreement is concluded in the normal course of the company's business activities - an example being the support of its trading activities - then the agreement does not fall into the "major transaction" category.
Further, according to Article 77 of the Law "On Joint-Stock Companies," the determination of the market value of property in a transaction is within the competence of the board of directors. However, in the information letter, the Higher Arbitrage Court concluded that the board of directors does not have exclusive competence in this area. Since the board of directors is competent to make decisions concerning the approval of major transactions only where the market value of the property is from 25 to 50 percent of the company's assets, the company's general director is officially competent to determine the market value of the property in a transaction where this value is below the 25 percent level.
Another important determination of the information letter concerns the voting procedures to be followed by the board of directors in approving a major transaction. There has long been general agreement that a member of the board may not delegate his voting rights to a third party. There has, however, been some uncertainty as to whether another member of the board may take part in voting on the behalf of an absent member under a power-of-attorney agreement. The Higher Arbitrage Court has now expressly stated that every member of the of directors must personally take part in voting, and voting rights may not be delegated under a power-of-attorney agreement to any third party. Apparently, the court based this decision on the premise that participation in voting is the personal obligation of a member of the board. As a collective body, the board of directors should consider the opinions of its individual members in arriving at a proper decision. Consequently, the performance of the functions of a member of the board by another person, even another board member, pursuant to a power-of-attorney agreement would damage the entire purpose for the creation of the board as an executive body of the company.
Finally, the Higher Arbitrage Court has established in the information letter a new rule concerning the procedure for approving major transactions. Since, historically, this law was designed for large companies with many shareholders, a long procedure preceding the signing of a protocol of a general shareholders meeting was required to conclude a major transaction, ostensibly to meet the interests of every shareholder. The court now says that this requirement is unnecessary in the case of a sole shareholder of a joint-stock company and determined that only the written consent of the shareholder holding 100 percent of the company's stock is required to conclude a major transaction. It is expected that this rule will significantly simplify the procedure for concluding major transactions. More importantly, it demonstrates that the Higher Arbitrage Court is willing take the initiative to address the logic of economic realities in case where the court runs into the formalism of a literal interpretation of the law.
James Hitch is the managing partner at the St. Petersburg office and Igor Makarov is a senior associate at the Moscow office of the Baker & McKenzie law firm.
TITLE: Profit Tax Will Lower Revenues For Regions
AUTHOR: By Robert Orttung
TEXT: PRESIDENT Vladimir Putin will soon have the opportunity to sign draft legislation now making its way through the legislature to reduce corporate profit tax from the current 35 percent to 24 percent. This would reduce the tax burden on Russian enterprises and clarify the Tax Code.
The impact this reform will have on state revenues is not clear, however.
Some estimates suggest that the reform will cut the tax burden on Russian enterprises by 160 billion rubles ($5.5 billion) and deprive the state budget of this income. Other observers believe that by reducing the overall tax rate and closing existing loopholes that allow some companies to avoid paying taxes, state revenues will increase. The idea here is that Russian firms will have more incentive to comply with the law, and then pay their taxes and that lower taxes will stimulate business activity. When income taxes were reduced to the 13 percent flat rate, revenues rose, but the overall sum collected from this tax is still very small (it comprises just 0.17 percent of all federal revenues).
Observers believe that the new profit tax will be fairer and more transparent than the current version.
Regional governments, which receive 60 percent of the revenues from the profit tax, have the most to win or lose from the new measure. Under the old 35 percent profit tax, the federal government kept 11 percentage points of the total 35 percent collected, while regional budgets kept up to 19 percentage points and local governments kept up to 5 percentage points. Regional and local governments also had the discretionary power to lower the portion of the tax collected earmarked for their budgets to almost zero if they wanted to favor certain enterprises.
Under the 24 percent tax these numbers have changed. The federal budget now will receive 7 1/2 percentage points of the revenue, while the regional governments will receive between 10.5 and 14.5 percentage points and local governments get 2 percentage points.
If the tax cut does have the effect of reducing state revenue, the regions will be the main losers. It is not clear where the regions would find new sources of income to compensate for this lost money. If the tax cut stimulates business and Russia works aggressively to improve its poor tax collection rate, the regions would benefit through higher tax revenues.
Under the new system, the regional governments will lose the ability to reduce firms' profit taxes to nearly zero. In the past, some governors have implemented such policies to turn their regions into tax havens. If the new legislation is adopted, regional governments will only be able to reduce the tax rate from 14.5 percent to 10.5 percent.
It is the local governments that stand to lose the most from the new reform. The new distribution of the tax among the federal, regional and local governments means that local governments will lose about 5 percent of the income they once received, while regional governments will gain this income.
Robert Orttung is the editor of the EastWest Institute's Russia Regional Report.
TITLE: Workers' Rights Are Not Just Protectionism
AUTHOR: By Lance Compa
TEXT: LINKING workers' rights to international trade is an idea whose time has come and stayed, despite the best efforts of free-trade ideologues to chase it away. In U.S. congressional debates about "fast track" negotiating authority, President George W. Bush's administration and Congress confront powerful demands from U.S. workers, trade unionists and a wider public for rules protecting human rights and labor rights, not just corporate investments, in trade agreements.
"That's protectionism" is a stock reply of government officials, international economists, multinational executives and many pundits trying to make a labor rights-trade link go away. Their one-dimensional argument goes like this:
. Expanded trade spurs investment, growth and wealth creation in developing countries;
. after they can afford it, developing countries and companies operating in them will stop violating workers' rights and share the wealth.
The first proposition is plausible, leaving aside debates about long-term versus speculative investment and sustainable versus destructive growth. But the conclusion doesn't follow. After wealth has been created, respecting workers' rights and paying them fairly is still a choice, one that doesn't always depend on economics. Instead, choosing justice for workers is driven by organizing, bargaining and political action, increasingly on an international scale.
In Sri Lanka a few weeks ago, I met dozens of young women from factories in that country's fast-growing free-trade zones who explained that the government's Board of Investment sets up company-controlled "worker councils" and gets rid of workers who try to form real unions.
China's economy has grown impressively in recent years, but workers trying to form independent unions there are dismissed, harassed and jailed. The rate of fatal factory fires keeps pace with the booming apparel export sectors of Bangladesh and Thailand. When Malaysia tried to pass a law allowing independent union formation in its burgeoning electronics sector, U.S.-based multinationals successfully mounted a collective threat to decamp for Indonesia unless the law was reversed.
In Central America's rapidly growing export processing zones, owners trade blacklists of workers - those who weren't killed by death squads - identified as "agitators" because they ask for improved conditions. Employers install "protection" unions, so called because they protect owners from authentic unions that could bargain for higher wages reflecting workers' higher productivity.
Workers in poorer countries want decent workplaces. They do not seek U.S. or European-level wages any time soon. They want fundamentally fair conditions, such as having freedom of association and not working in death traps.
With a human rights dimension, more trade and investment are a potential source of great good for working people. Genuine comparative advantage for lower-wage countries is something the international community can accept, if it helps poorer countries develop, if wages and conditions can rise, and if workers have a voice in society. But artificial advantage based on human rights violations is something the international community should stop.
No country or firm should gain a competitive edge in international trade by jailing and killing trade-union organizers, outlawing collective bargaining and strikes, ignoring life-threatening workplace hazards, exploiting vulnerable children, discriminating against women and minority groups, or forcing workers to labor at the point of a bayonet. Neither should they gain from subtler forms of repression, such as systematically firing worker leaders, favoring government-run unions or deliberately holding wages below productivity levels. That's why working people must keep pressing for the strongest possible social dimension in trade agreements.
Trade-labor links should start with dialogue, oversight, publicity, technical assistance, diplomatic chiding and other "soft" measures to promote respect for workers' rights. But at the end of the day, a social dimension in trade must be backed by hitting hard at the pocketbooks of governments and corporations that abuse workers.
Social justice is not a byproduct of economic growth. We must choose it and build it into the architecture of trade and investment systems. We must decide if we want to be objects of impersonal trade and investment forces, or if we want to make worker and human rights a priority for the global economy.
Lance Compa teaches international labor law at Cornell University's School of Industrial and Labor Relations in Ithaca, New York. He submitted this comment to The Washington Post.
TITLE: IMF Standby Credit To Dodge Meltdown
AUTHOR: By Martin Crutsinger
PUBLISHER: The Associated Press
TEXT: WASHINGTON - The International Monetary Fund is moving quickly in an effort to keep economic troubles in Argentina, Brazil and Turkey from worsening and triggering a repeat of the 1997-98 Asian financial crisis.
The IMF announced plans to create a $15 billion standby credit line for Brazil and accelerate a $1.2 billion planned loan for Argentina.
In addition, the IMF's executive board announced approval for an additional $1.51 billion loan to Turkey, another country that has been embroiled this year in worsening economic troubles.
The flurry of activity, disclosed late Friday after U.S. financial markets had closed, was viewed as an aggressive effort by the 183-country lending agency to demonstrate that it was on top of developments and would do what it could to prevent troubles in the three countries from spreading to other developing countries.
In its statements, the IMF praised all three countries for efforts they are making to reform their economies.
Economists applauded the IMF's actions. They said the agency had recognized the need to provide reassurance to global financial markets that it was prepared to try to prevent a repeat of the Asian crisis, in which plunging currencies and stock prices in one country quickly spread to other developing countries.
"The moves by the IMF were important to avert what could have been another negative and sizable risk to the global economy," said Lynn Reaser, chief economist at Bank of America Capital Management Inc. "It should help shore up investor confidence."
The IMF actions were announced after U.S. President George W. Bush spoke by telephone Friday with British Prime Minister Tony Blair, traveling in Latin America, and Spanish Prime Minister Jose Maria Aznar.
IMF Managing Director Horst Koehler, who took over the agency last year, said he was recommending an accelerated disbursement of $1.2 billion in loan money for Argentina to be made this month, instead of waiting until September.
Koehler also said he would propose that the first loan of the credit line for Brazil, $4.6 billion, be provided by the executive board in September.
"The Brazilian authorities are strengthening fiscal and monetary policies and implementing their structural reform agenda in the face of a difficult external environment," Koehler said in a statement.
The accelerated loan for Argentina was being made in an effort to bolster the country's resources as it struggles to avoid defaulting on $128 billion in foreign debt.
There has been growing concern in Washington that a default by Argentina or a forced devaluation of that country's currency would send shockwaves throughout Latin America.
A $1.6 billion austerity program approved by Argentina's Senate failed this week to calm investor anxiety.
Koehler's recommendations for both Argentina and Brazil were expected to win easy approval by the IMF's 24-member executive board.
The board earlier Friday announced approval of another $1.5 billion loan for Turkey, bringing to $10 billion the amount of support the IMF has extended to that country.
During the Asian currency crisis, which began in Thailand in 1997, the IMF assembled more than $100 billion in emergency rescue packages for Asian countries and Russia.
However, the support was not enough to keep Russia from defaulting on billions of dollars in foreign debt in August 1998. That sent Wall Street and other stock markets into a nosedive that was arrested only after the Federal Reserve started cutting interest rates to bolster investor confidence.
TITLE: US Airways Target of Takeover Offer
AUTHOR: By Matt Moore
PUBLISHER: The Associated Press
TEXT: NEW YORK - A New York-based holding company that tried but failed to buy Trans World Airlines earlier this year is launching an offer for US Airways, which called off its $4.3 billion merger with United Airlines on July 27.
Global Airlines Corp. said Sunday it will offer $1.8 billion, or $27 a share in cash and stock, for Arlington, Virginia-based US Airways and assume nearly $8 billion in debt. The offer represents a 60 percent premium for US Airways.
"This is a real deal," John Scott, a spokesperson for privately held Global, said on Sunday.
US Airways had no comment on Global's offer, said spokesperson David Castelveter.
Michael Boyd, president of The Boyd Group, an Evergreen, Colorado-based aviation consulting firm, said Global's offer falls short of US Airways' true worth.
"The company is worth $16 billion or $17 billion in hard cash. Not half in cash and half in wallpaper," he said. "The whole thing sounds like a high-school investment class doing a term paper."
Global had offered to buy TWA in March, but analysts dismissed the bid as irrelevant.
Under the offer's terms, Global would acquire all 67.1 million outstanding shares of US Airways for $10 cash plus $17 in Global nonvoting class B stock.
The offer was valid until midnight Monday, but Scott said it could be extended. He said that if US Airway's board of directors doesn't respond Global would make a tender offer to US Airways' shareholders.
The Justice Department said United's proposed merger with US Airways would have given United a monopoly or duopoly on nonstop service on over 30 routes and substantially limited competition on numerous other routes.
TITLE: WORLD WATCH
TEXT: Japanese Drop
TOKYO (AP) - Japan's index of economic indicators in June suggests that the country's 11-year economic slowdown will continue in coming months, the government said Monday.
The so-called "leading indicators''-which compare various aspects of the economy with three months ago - stood at 37.5. A reading above 50 is considered a sign of economic expansion.
The government was also concerned about the coincident index, which measures the current state of the economy. That index was 31.3 in June, the sixth-consecutive month it was below 50.
Orders Down
BERLIN (AP) - German manufacturing orders declined more sharply than expected in June after rising in May, the government said Monday. The fall was due mainly to weak domestic orders.
The volume of manufacturing-industry orders in June fell a seasonally adjusted 2.5 percent on the previous month and an unadjusted 2.5 percent in year-on-year terms, the Finance Ministry said in a preliminary report.
Echostar Offer
LITTLETON, Colorado (AP) - EchoStar Communications Corp. made an unsolicited $32 billion bid to buy Hughes Electronics Corp., kicking off a potential bidding war with News Corp. for the DirectTV owner.
The stock-for-stock swap, dubbed a "bear hug'' proposal, comes only weeks after General Motors Corp., Hughes' largest shareholder and corporate parent, nixed a previous offer from EchoStar.
Hughes' DirecTV, with more than 10 million subscribers, is the country's largest satellite-television broadcaster. EchoStar's satellite service has nearly 6.1 million subscribers.
Fugitive Dies
CANBERRA, Australia (Reuters) - Australia's most-wanted white-collar fugitive, Christopher Skase, has died on the Spanish island of Majorca after a battle with cancer but the Australian government vowed to continue pursuing his missing millions.
Attorney General Daryl Williams said Skase, 52, died on Sunday evening after a decade-long fight against extradition to Australia where his Qintex media and property empire collapsed in a $780 million meltdown in 1990.
Williams said a list of more than 60 criminal charges would be withdrawn, but the government would continue its hunt to recover $91.3 million owed to Skase's creditors.
Turkey Pegging Lira
ANKARA, Turkey - Turkey plans to start basing its monetary policy on an inflation target in the fourth quarter of 2001, according to a letter of intent to the International Monetary Fund published on the IMF's Web site at the weekend.
Turkey was forced to float the lira on Feb. 22, abandoning a crawling currency peg that had been the centerpiece of a three-year IMF-backed disinflation program. The lira has since lost nearly 50 percent of its value against the dollar.
TITLE: Why Did Belgium Delay Issuing Those Visas?
TEXT: In response to "Visas Denied to NGO Employees," July 31.
Editor,
In this important article nothing was said about the refusal of Western governments to issue visas to Russians in similar circumstances.
The latest case was in July when a delegation of Russian youth and trade-union activists applied to the Belgian Embassy for visas to attend a summer school in Belgium. Those who applied included the organizers of June's anti-Chechen-war meeting in Pushkin Square and activists from campaigns against the new Labor Code, the new law restricting political parties and against racism and discrimination against women.
Russian delegations have attended the summer school for 10 years now, and was this year to have discussed the stepping up of an international campaign against the war in Chechnya.
In fact, the Belgian Embassy did not actually refuse visas, but spitefully delayed issuing them until the last day of the school! They claimed that they could not issue visas without the approval of a ministry in Belgium.
The written instructions currently on display at the Belgian Embassy in Moscow state explicitly that a business visa "can in principle be issued within 72 hours," but that in some cases "the embassy may seek advice and confirmation from the competent organs [i.e. a ministry]." Three timescales are referred to: three working days, 10 calendar days and from one to three months.
When we phoned the ministry in Belgium, they explained these instructions more fully. A visa for someone who has been in the Schengen Zone and who has not breached any regulations would normally be issued within three days without referral to Belgium. If the embassy considers it necessary to refer the applications to Belgium, it may request an answer within 10 calendar days. It can then issue visas at the end of this 10-day period if the ministry has not informed them of a refusal. Fourteen calendar days after our application, we were phoned from the ministry in Belgium saying they had asked for the visas to be issued.
The embassy, however, refused to issue visas. After our original application, they told us to phone after three days for "a decision." Then they told us there was no decision yet and to keep phoning. After one week, they said it would take two weeks. Three days later, they said it would take two to three weeks. When two weeks had passed they denied that we had been told two to three weeks since the "absolute minimum is one month." Even after the ministry phoned us on the July 12 to say the visas would be issued, the embassy refused to issue them for another week, thus ensuring our delegation's seats were left empty.
It is no coincidence that in the week that the Belgian Embassy delayed the visas, The St. Petersburg Times was exposing the latest waves of "cleansing" in Chechnya. One of the delegates was to address a press conference in Belgium criticizing the G-8 and the European Union for taking no action. The next week President Vladimir Putin met with the G-8 leaders in Genoa, and there too no real criticism was voiced.
The 20 youth organizations from all over Europe, the trade-union leaders and activists who were at the school were unanimous in condemning the failure of the embassy to issue visas in time. This indicates a worrying change in policy by some Western governments. No longer do they just maintain their own silence about the anti-democratic measures taken by Putin and in particular about the brutal war, but now they are becoming partners in crime by attempting to silence those Russians who are prepared to criticize Putin openly.
Fortunately, however, these young Russians will not be silenced and are redoubling their efforts as a result of the Belgian Embassy's actions this summer.
Robert Jones
Delegation Coordinator
Moscow
NGO Spies?
Editor,
There is a very good reason for tightening up restrictions for the entry of NGO workers into Russia and other countries. NGOs are supposed to work in the name of noble ideals and many do. But in an increasing number of cases documented around the world, the NGO tag is being used as a cover for criminal activities that range from the illicit arms shipments, trafficking in women and drugs, money laundering, espionage and terrorism.
This is an extremely worrying development, and the Russian authorities are correct to take every precaution, especially around Chechnya where tempting offers of money by bandits can turn well-intentioned aid workers into self-seeking smugglers who do untold damage to the peace and stability of the region.
James Whitwell
London, England
After the Party
In response to "City Gets Ready For 2003 Sponsors," Aug. 3.
Editor,
As a reader of The St. Petersburg Times, I would like to ask the following question: What happens after the 300th anniversary? All efforts now are concentrated on the jubilee. The city will look good. The money will be spent. But what about after that? Post-jubilee syndrome.
After the jubilee, everyone will be tired. The city coffers will be empty. There will be no energy left to renovate, organize, clean. And the result will be that the city starts little by little to get worse again.
I hope you will remind your readers that there will still be life after the jubilee. Save some energy. Don't live as if the 2003 jubilee will be the last day in St. Petersburg's life.
Esa Tuominen
Tampere, Finland
How To Globalize
In response to "The New Populists," a comment by Tatyana Filippova, Aug. 3.
Editor,
Tatyana Filippova's article on the "The New Populists," presents an interesting view on the pre-communist Russian radical movement and compares it with today's "anti-globalization movement."
However, like most journalists, Filippova confuses the critics of globalization with those opposed to globalization. After all, probably none of the protesters in Prague, Genoa or Seattle are opposed to globalization.
Look at the slogans of the protesters, and listen to what they want. Reduction of poverty, freedom of movement and human rights are also globalization!
The struggle is not for or against globalization. The struggle is about what kind of globalization, and who will shape the future. Will it be democratically elected institutions or multinational corporations and nontransparent institutions like the International Monetary Fund and the World bank?
Einar Wilhelmsen
Oslo, Norway
Gay Activism Lives
In response to "A Walk on the Queer Side," July 27.
Editor,
It is not difficult to find out about our organization. Thanks to your kind support, each "Community Bulletin Board" in The St. Petersburg Times gives information including the e-mail address and contact numbers of the Krilija Center. Hundreds of Gays and lesbians from all over the world call and e-mail us annually.
It is fine for some Oleg to say that he does not need "some organization like Krilija" today, after our long-term struggle against the anti-sodomy statute in the old Criminal Code and in favor of the new version of Chapter 18, which made the legal position of gays and lesbians in Russia one of the best in the world. Now, only rape is punishable and the penalty is the same for gays, lesbians and heterosexuals, and the age of consent is only 14 for all sorts of sexual activity.
Next, Oleg's assertion about "the local gay community as decentralized and small" is absolute nonsense. Like everywhere else, it is around 10 percent of the city population, although its active part is about 20,000 to 30,000 people.
Finally, there are many "lazy" gay fellows, like Oleg, who are "not going to join marches." But there are also many people like the ones this May at our candlelight memorial service at the Kazan Cathedral for those who have died from AIDS and at the city march after it.
Alexander Kukharsky
President
Krilija Center
St. Petersburg
Klezmer Comes Home
In response to "Comeback for 'Jewish Jazz,'" by Sam Charap, July 6.
Editor,
Charap writes that "while klezmer is thriving in America and Western Europe, it hasn't yet caught on again in its Eastern European birthplace." Although he goes on to write that musicians from at least five newly independent states would be in attendance at the St. Petersburg Klezfest, the trend has been even more reversed than Charap knows.
We are proud supporters not only of the St. Petersburg Klezfest, but also of a spin-off, now in its second year, which takes place in Evpatoria, Ukraine, on the Black Sea, from Aug. 28 to Sept. 1. From the very first Klezfest in1996, young (and not-so-young) Jewish musicians came from all over the former Soviet Union, expanded their repetorie in the wider context of Yiddish culture and returned home to become centers of musical life in their home countries.
This year Alex Frenkel informed us that there were 170 applicants for the 40 available slots at Klezfest St. Petersburg. We expect a similar response for Ukraine. The interest is clearly there, and that these wonderful klezmer festivals are flourishing proves that klezmer's return to Eastern Europe is no longer a dream, but a reality.
Martin Horwitz
Director Jewish Community Development Fund in Russia and Ukraine
New York City, New York
Monarchy's Answer
In response to "Russia Needs Real History, Not Therapy," a column by Boris Kagarlitsky, July 3.
Editor,
This article has provoked some comments and questions. For instance, Kagarlitsky writes that history should teach, not heal, and that a "therapeutic" history is a false history. To my understanding, a teaching history is the healing one. A false history is a painkiller, not a cure.
Then Kagarlitsky claims, "The problem is that 'imperial' propaganda requires us to take pride in what we should be ashamed of and to forget those who could truly inspire national pride. We have to revere tsars and generals and not to say a word about those who resisted them, rebelled and defended human dignity." I do not want to argue here who is better - tsars or revolutionaries - but it seems the Bolsheviks solved that problem in exactly the way proposed by Kagarlitsky. And what has happened to Russia? Whatever it is, Kagarlitsky does not like it himself.
Of course, anyone can see advantages of democracy. To see its dangers takes some understanding. Unfortunately, only socially and spiritually mature people appreciate legitimate hereditary monarchy. Totalitarian democracy is rather hopeless; meritocratic democracy is too prone to willfulness and self-indulgence.
I would say that monarchist democracy is the most promising way to cultural, economic, and spiritual development. Alas, too often, monarchy is only a faraway ideal for democracy.
Anatoly Zaverniayev
St. Petersburg
Enlightened
In response to "Power Sector Shedding Its Light on Result of Reform," a column by Boris Kagarlitsky, July 31.
Editor,
Thank you for this informative article! I knew that deregulation in California did not work. I did not know of Brazil's or Russia's deregulation problems. The proponents of deregulation push for more and faster progress in the United States. Some segments are best strictly regulated by the government, no matter if there are inefficiencies. Our electric system has worked by and large very well in the United States. I do not look forward to deregulation.
Kevin Gallagher
Highmore, South Dakota
Great Snapshots
In response to "Take a Good Look at Vyborg," a photo essay on July 31.
Editor,
This photo series was excellent. I enjoyed it very much and hope that you will publish similar series about other places in and around St. Petersburg.
Jerry Lee
Bremerton, Washington
TITLE: Another High-Profile Local Heads for Moscow
AUTHOR: By Sam Charap
PUBLISHER: Special to The St. Petersburg Times
TEXT: If you happened to see a modestly dressed, soft-spoken, bespectacled man boarding the midnight express train to Moscow Sunday night, you probably wouldn't have guessed that he is the second-ranking U.S. diplomat in Russia.
But this man, Paul Smith, who left his post as U.S. consul general in St. Petersburg to become deputy chief of mission at the U.S. Embassy in Moscow this weekend, has - despite his inauspicious appearance - left a significant mark on the northern capital. After two years as the top American in St. Petersburg, Smith took up the No. 2 spot in Moscow on Monday morning.
According to those who know him and have worked with him here, Smith, 56, has effected a sea change in the visibility and activity of the American Consulate here.
"He's taken the American Consulate here from a sleepy, ill-run backwater to an active member of the business, governmental, and educational communities. No one before has done that," said Douglas Boyce, the general director of the Lomonosov Porcelain Factory, who has spent the last 10 years on and off doing business in St. Petersburg.
The U.S. State Department has recognized his accomplishments here by naming him to the highest-ranking post for a non-political appointee in the Moscow embassy. Smith, however, had a more self-effacing view of the promotion.
"We have an new ambassador down in Moscow [Sandy Vershbow], and he asked me to change roles. I had not planned to go to Moscow. The decision was based on the need to have someone there who had been around Russia for a while," he said Sunday, taking time out from packing to give an interview to The St. Petersburg Times.
And Smith certainly has spent quite a while here, logging 11 years in Russia, five since the fall of the Soviet Union.
But 30 years ago he could never have guessed that he would have ended up in Russia. Smith graduated with a degree in journalism from the University of Missouri and planned to continue on for his masters at the University of Illinois.
"I'd never studied a foreign language," he said. "One day, I saw a poster in the graduate lounge. It was an advertisement for a poetry reading of [Alexander] Pushkin that was going to be in Russian that evening. I went to that, and not understanding a word of what I was hearing, I was nevertheless just fascinated with the rhythm and the tonal quality of the language. So I took a course in Russian and fell in love with it immediately."
Switching gears from journalism to Russian, he went on to a master's degree in Russian but stopped before getting his doctorate to take a job as an exhibition guide in Russia for the official U.S.-Russian cultural exchange program. He got to travel with the exhibitions, living in faraway and exotic (especially for the time, 1973) places such as Ufa. And he loved it.
"So I stayed on for another exhibit, and in the meantime I took the Foreign Service exam," he said.
He joined the Foreign Service in 1976, touring what was then Leningrad, as well as Kiev, Moscow, Warsaw, East Berlin, and Bonn.
In August of 1999 he made it back to St. Petersburg as consul general, responsible for all of northwest Russia, from Novgorod to Arkhangelsk.
Asked about his tenure as consul general, Smith points to two areas where he felt he had particular impact: investment and cultural exchange.
"The most visible is what we've done in investment. What I try to do is to bring people together so that they can weigh the opportunities and the risks," he said, pointing to successful projects such as the Caterpillar, Ford and Gillette factories just outside of St. Petersburg.
"The bottom line is to develop an investment base that invests back into this country. We're not there yet. There's still reluctance among Russian companies to put earnings back into infrastructure. But the [American] folks that are investing up here aren't investing for export. They're producing for the Russian market and they're reinvesting."
Smith has also been instrumental in organizing a vibrant U.S.-Russian cultural exchange in St. Petersburg, putting together a wide-ranging program of lectures, seminars and exhibitions. He's most proud of the Andy Warhol exhibition last fall at the Hermitage and an exhibition of U.S. and Soviet state-sponsored photography from the 1930s, which was also in town last fall. He also pointed to a recent staging of George Gershwin's "Porgy and Bess" in Arkhangelsk
Smith has also been able to start the flow of exchange back to the United States, organizing the Maly Drama Theater's production of "Brothers and Sisters" in New York's Lincoln Center. That show got rave reviews.
"We don't have a lot of government money to spend on those kinds of things. So what we try to do is to work closely with American investors here and other sponsors," Smith said.
Smith has also become quite involved with St. Petersburg personally. He and his wife, Christine, were regularly seen at major cultural events, charitable functions, or just strolling along the streets of the city.
"My wife and I have been involved in this city as much we possibly could be. We're going to miss that," he said.
"The cultural environment in St. Petersburg is a kind of cohesive element that really is the glue of this city, and you can't say that about Moscow. That's what I think makes the city so different. It's not so much the beautiful palaces or the old imperial sites as it is that th people are definitely different [from] any other place I've been in Russia. It's a much more civilized pace of life."
Smith's dedication to St. Petersburg has been recognized by the city's cultural leaders.
"During all his term as consul general, Paul Smith was available for interview, comment or conversation with a journalist who wanted to know his opinion on important issues," wrote Anna Sharogradskaya, director of the Press Development Institute, in a statement to The St. Petersburg Times. The Press Development Institute regularly receives funding from the U.S. government.
"He never just spoke to us; he communicated with us. It is this communication that contributed to creating an atmosphere of trust and mutual understanding," Sharogradskaya wrote.
Smith promises that he will visit regularly and has even made sure that incoming U.S. Ambassador Vershbow will make his first trip outside of Moscow to St. Petersburg in September.
He also said that he is "confident" that U.S. President George Bush would make a stop in St. Petersburg during his first official visit to Russia, which is planned for next year. "I would be very surprised if he didn't," he said.
Smith said that thanks to President Vladimir Putin's efforts to bring foreign dignitaries here, St. Petersburg is rapidly becoming the new "Camp David of Russia."
But he warned that all the hoopla surrounding the rebirth of St. Petersburg, thanks to Putin's efforts and the tricentennial of the city, must translate into concrete projects that can benefit the city.
"I think that they're on the right course for 2003. [But] I hear lots of spectacular talk that this will be the complete turnaround of St. Petersburg," Smith commented. "It will really depend on St. Petersburgers themselves."
Smith and his wife will be settling in Moscow with his 21-year-old daughter Larissa, a music major at Oberlin College; his 15-year-old son Andre; their dog and cat.
TITLE: Protecting Shareholders
AUTHOR: By Eugene Shvidler
TEXT: AS Russia's market economy approaches its 10th birthday, the debate over corporate governance continues to rage just as intensely as in previous years. Yet it is often forgotten that the issues now being debated by investors, company executives, government officials and a host of others are far from being unique to Russia. Indeed, we can learn a lot by studying the track records of other countries that have been tackling the same issues.
For example, in Asia the ill-defined concept of Asian values was for many years used as an excuse to pass off the gravest abuses of minority shareholder rights in the region. The perpetrators of these abuses talked about everything from Confucian values of family loyalty to the challenges of managing a diverse portfolio of assets. The only thing they didn't talk about was corporate governance.
While the Asian economic miracle was in full swing and stock markets were booming, investors were prepared to turn a blind eye to these shortcomings. But when the Asian boom turned into Asian bust, investors began to take a closer look at the companies they had been funding. This was enough to persuade them to become a lot more discerning. Many Asian companies have since been busily trying to patch up their corporate governance records, and the successful ones have seen their access to capital greatly improved.
A similar process has been under way in Russia, only progress has been somewhat slower. Over the years, most of Russia's largest companies, including Sibneft, have been accused of failing to respect the rights of their minority shareholders in one way or another. At the time when Russia was home to the world's best-performing stock market, few investors seemed concerned that some of the companies they had invested in were bleeding profits faster than they were raking them in. When the stock market nosedived in 1998, investors were quick to point the finger at poor corporate governance as the source of their woes. While this struck many Russian companies as a touch insincere, the warning was nevertheless a timely one.
Rather than pointing the finger at those companies that they felt had been ripping off minority shareholders, investors were simply saying that they wanted adequate controls in place to prevent abuses from taking place in the future.
We responded with Russia's first corporate-governance charter in July 1998, drawn up by a panel of independent experts. It introduced hitherto exotic notions, such as independent directors, management accountability, and audit and remuneration committees. In the process of drawing up the charter, we had to grapple with the problem that there was no adequate Russian translation for the term corporate governance.
In the interim, many other firms have followed suit. With a few exceptions, most large Russian companies have managed to achieve basic standards of corporate governance. But in future, investors will increasingly seek out companies thatnot only meet minimum standards, but that outperform their peers. In other words, sound corporate governance will become a major competitive advantage for those companies with the foresight to implement it.
Many Russian firms became public companies more by accident than by design. New companies issued shares in order to consolidate majority-controlled subsidiaries, and overnight metamorphosed into public corporations.
But these companies were public in name only. In reality, they were still run as the private fiefdoms of their majority owners. Only with the passage of time have some Russian businessmen come to understand what it means to be a public company. Others have yet to catch on.
In order to improve standards of corporate governance, Russian companies need both a carrot and a stick. A carrot of sorts exists in the shape of easier access to capital. But the carrot is not a particularly tempting one, given that equity markets continue to place extremely low valuations on Russian stocks.
And there is still nothing resembling a stick. Some of the most notorious shareholder abuses, such as the sale of commodities to offshore affiliates at hugely discounted prices, have been stamped out by Russian authorities. But penalties for lax standards of corporate governance are still almost nonexistent. And too many Russian companies still believe that best practice in the field of corporate governance carries an unnecessarily high cost.
Changing this situation hinges on reforming Russia's weak and ineffective legal system. If Russia cannot protect the rights of individuals as citizens, there is little hope that it will protect their rights as shareholders.
But reform of public institutions will take infinitely longer than the reform of corporations. It is part of a wider transition underway in Russia from a system based on relationships to one based on the rule of law. It is also worth remembering that developed economies took decades to put in place the controls necessary to keep their businesspeople in check.
In the absence of a strong legal framework, a group of major Russian companies has teamed up to draft its own corporate-governance code. Unfortunately, not all of them understand the need for such a code to be mandatory.
Russian companies are slowly coming of age, but they have yet to catch up with their peers in other emerging markets. Until this happens, capital will continue to take a detour around Russia, instead heading for other, safer havens. Sound corporate governance must no longer be regarded as a luxury, but instead as a necessity. For that to happen, all Russian companies must be forced to play by the same rules.
Eugene Shvidler is president and CEO of Sibneft, one of Russia's largest oil companies. He contributed this comment to The St. Petersburg Times.
TITLE: Corruption Battle Must Be in Earnest
TEXT: IT would be pretty hard to count up the anti-corruption efforts that have been launched since the collapse of the Soviet Union, both on the federal and the local levels. None of them, unfortunately, have had much impact in a country where a corruption investigation is more often a fearsome weapon for dealing with political enemies than a powerful tool for saving taxpayer money and bolstering public confidence in the institutions of government.
Unfortunately, City Hall's latest initiative, described on Page 2 today, is not likely to represent a break with this sorry record. Under a decree signed last month, Governor Vladimir Yakovlev has charged the City Hall Security Department with investigating corruption complaints and with complying with requests for documentation from the Prosecutor's Office.
Unfortunately, the department will evidently respond only to corruption complaints from the administration itself. It will neither initiate its own investigations nor respond to queries from outside bodies like the Legislative Assembly or the Audit Chamber.
Moreover, although Yakovlev's signature on the decree would seem to indicate that he takes the corruption problem with at least some degree of seriousness, the quiet way that the decree was announced and the insistence by City Hall representatives that it represents nothing new do much to create the opposite impression.
No doubt, a bold statement from the governor against corruption and against the appearance of corruption in his administration would be a significant start and - if followed up by forceful action - would help reassure citizens that Yakovlev does not tolerate the squandering of scarce public resources through corruption. Instead, we have had little more than silence from the governor as a litany of serious accusations have been leveled against administration officials.
Virtually everyone agrees that the existing mechanisms for overseeing budgetary spending are clearly inadequate, a fact that itself no doubt tempts officials toward corruption. This problem will become worse as money flows into city coffers to fund projects surrounding the city's 300th birthday in 2003. Responsibly managing those funds under existing conditions will be impossible.
Yakovlev should understand that correcting this situation is in his own best interest. The corruption scandals, real and imaginary, that will inevitably arise over the next few years will - in one way or another - be laid at his doorstep. Ambiguity in the budget process will some day come back to haunt him.
A functioning and disciplined budgetary-oversight mechanism that includes the Legislative Assembly would be the best legacy of Yakovlev's years in office.
TITLE: Stop Looking For Excuses To Make Trouble
TEXT: THE Russian Ministry of Foreign Affairs does not like Estonia. It is always finding some reason or another to blame that country's officials for violating the rights of their Russian-speaking citizens.
Of course, it would be wrong to say that no such problems exist in Estonia. There are indeed difficulties for ethnic Russians who want to be full-fledged citizens there. However, the reasons for protest that the Russian government keeps coming up with generally strike me as strange.
I remember a couple of years ago reading a Foreign Ministry protest against a decision to close four Russian-language schools in Tallinn. Any Russian citizen who read this protest could naturally only have one reaction. "Those Estonians are too big for their boots. They want to get rid of the Russians," I remember someone remarking to me.
The truth of the matter was that those in the Foreign Ministry responsible for propaganda were too big for their boots. The complete information from the Estonian Education Ministry, which the Russian Foreign Ministry neglected to report, was that they were closing down a total of 11 Tallinn schools, including seven Estonian-language ones. Why? The birth rate had dropped there.
Just last week, a similar story came along. "On the morning of July 24, about 30 soldiers from a peacekeepers' training base located in Paldiski beat up some civilians who did not speak Estonian," Interfax reported. This was, of course, immediately interpreted by the Foreign Ministry as another sign of heightened ethnic tensions. But what really happened?
As some local officials and local Russian-speakers told me, the conflict started on July 24 after four soldiers were approached by a group of about 10 local residents, who began beating them and stole a mobile phone from one of them. That soldier, from a Russian family by the way, was sent to the hospital with a fairly serious head injury, according to Peter Taili, a spokesperson for the Estonian Defense Forces.
That's when his friends from the base, both Russian and Estonians, went out for revenge.
"This is not an incident based on ethnic grounds," said Pino Maiber, a spokesperson for the Estonian Foreign Ministry. "It has happened many times there that soldiers are beaten up [by locals]."
Oleg Kalabugin, a former dissident from Tallinn, said that conflicts with Russian-speaking locals have become a really serious problem for Estonia in recent months. "I don't have a single friend who has not been beaten up or robbed on the street. Including me," he said.
Kalabugin recalled an incident last month when three locals attacked an employee of the American Embassy. They didn't know that the guy was a marine, and two of them were hospitalized.
Of course, there is a difference between this American defending himself and the peacekeepers who went out looking for trouble. I can understand how hotheaded young guys would feel in such a situation, but they should have shown a better understanding of the tensions in the country and a higher level of professionalism as soldiers.
Taili didn't say whether the soldiers only beat up civilians who didn't speak Estonian. But he did say that all of them would be punished.
"We want to find out everything that happened there as soon as possible," he said. "All of those who are found guilty will be discharged."
That sounds about right to me.
TITLE: Putin Is Playing a Risky Game
AUTHOR: By Yevgenia Albats
TEXT: THERE is a little doubt that President Vladimir Putin, more than any other top-ranking politician of the last decade, is motivated by the idea of the country's national interests. At least, as he understands those interests.
Of course, politicians like Communist leader Gennady Zyuganov have expressed this kind of rhetoric many times, but none of them - unlike Putin - has ever been in a position to realize this idea in the realm of real politics.
Putin, though, has. And he tries hard on many different fronts, sometimes creating odd paradoxes. Less than a month after his latest meeting with U.S. President George Bush, Putin this weekend sat down with North Korean dictator Kim Jong Il.
By now, though, the logic of the Putin's actions seems pretty clear.
First, Putin would like to restore Russia's position as a power capable of challenging the United States. This goal serves well both domestically and internationally. At home, it helps to bolster the self-esteem of a country that had come to view itself as lost and downtrodden. By playing on the widespread desire to restore Russia's greatness, Putin will be able to maintain his high popularity rating until the next election in 2004.
Internationally, this idea works as well. Obviously, the poor state of Russia's economy does not allow the country to position itself the way the Soviet Union did. However, many countries are profoundly dissatisfied with U.S. superiority around the globe. Many are eager to delegate to Putin's Russia a role as a sort of mediator or even representative of those who by no means see the United States as an ally.
As of now, the range of these countries varies from former Soviet republics both in eastern Europe and in Central Asia to Cuba in Central America, Iraq and Iran in the Middle East and China and North Korea in Asia. If Russia proves successful in that role, the ranks of those countries seeking Russia's mediating capacities (or more) may increase dramatically.
Putin's second goal is to give Russia's economy some life so that it will finally start gaining strength, including boosting the country's military might. By bargaining over the U.S. proposal on missile defense, Russia may hasten its acceptance into the WTO and help remove obstacles to its economic development such as the so-called Jackson-Vanik amendment.
Putin's third goal is pragmatic as well. The structure of the old Soviet economy left Russia with a number of goods that were marketable internationally, most especially natural resources and military production. A decade of reforms has done little to change that and the list of Russia's internationally attractive commodities remains the same as it was in 1991 (except for the fact that the commodity "human capital" was more or less exhausted after the first couple years of reform).
Unfortunately, the prices of oil and gas - Russia's primary exports - are beyond Putin's control and may take a turn for the worse at any time. Thus, Putin is eager to develop the market for military goods that have been in storage since Soviet times and for new production upon which the economy depends.
To some extent, then, Putin finds himself trapped. In order to regain Russia's status as a global power, it must rebuild its military might. In order to do that, Russia needs favorable economic conditions from the West and an expanded market for its military goods in parts of the world that the West fears - China, North Korea, Iran and so on. Clearly, Putin is walking a very fine line and the game he is playing is a risky one.
In fact, it may even be impossible. On the one hand, Russia wants membership in the European Union. On the other, it is positioning itself as the friend of exotic regimes. However, China's example suggests that even if this approach is hard, it may turn out to be quite profitable. China's hard-line domestic policies have not prevented a huge in-flow of foreign investments, accelerated admission to the WTO or favorable trading status with the United States. All this, in turn, has made China much more powerful than it was previously, and now the United States sees that country as its main rival in the medium-term future.
No doubt, there is logic in Putin's actions in the field of international relations. The real question is whether or not his understanding of Russia's national interests corresponds to the country's actual national interests. And if it turns out that he is wrong, how high will the price be for his mistake?
Yevgenia Albats is an independent, Moscow-based journalist.
TITLE: The Long and Bumpy Road to a Civil Society
TEXT: EVER since perestroika, the problem of building a viable and vibrant civil society has been discussed, although not with the degree of energy and seriousness that the matter plainly deserves. The Russian government and Western assistance agencies regularly pay lip service to the notion of an independent, diversified civilsociety, but they equally regularly adopt policies that trivialize the issue or even undermine whatever beginnings may be achieved.
The Soviet system systematically destroyed civil society, taking everything under the firm control of the state. As a result, citizens developed the habit of dependence on the state, and the state developed the habit of expecting and demanding that no one would take any action, no matter how small, without the permission of some bureaucrat.
Citizens have been quick to move beyond their Soviet mindset, but the government and the bureaucracy- at all levels - have not. Civic initiatives, such as the effort to compel a national referendum on the government's nuclear-waste importing scheme, are routinely and gleefully quashed. Civic-minded groups such as, for example, the Salvation Army, are harassed rather than embraced.
As a result, civil society remains underdeveloped, fragmented and underfunded.
Recent "efforts" to remedy the problem are most likely to be equally ineffective or counterproductive. In June, President Vladimir Putin met with a select group of civic organizations and promised to set up a liaison group that would connect these groups to the government.
Earlier, self-styled dissident Boris Berezovsky created a foundation dedicated to this problem, while simultaneously announcing his intention to create an opposition political party.
Most recently, The Moscow Times reported Wednesday on a camp sponsored by the Yukos oil giant that supposedly instills healthy civic values in children.
All three of these projects represent Soviet-style, top-down initiatives that are most likely to result in a managed society, rather than a civil society.
Ironically, the problem isn't really so vexing. If the state allowed companies and individuals to take tax deductions for donations to organizations, funding problems would be reduced.
If the state - at all levels - stopped persecuting, controlling and "liaising" with civic organizations, people would feel that their efforts are appreciated and their limited resources could go into their causes rather than to their lawyers.
The only thing really missing in the effort to solve the civil-society problem is the will to do so.
This editorial was published in The Moscow Times on Aug. 1.
TITLE: Israelis Vow To Continue the Practice of Targeted Killings
AUTHOR: By Mike Rotem
PUBLISHER: The Associated Press
TEXT: TEL AVIV, Israel - A Palestinian opened fire on soldiers in front of the Defense Ministry on a busy Tel Aviv street Sunday, injuring 10 people in the first mass shooting in an Israeli city since the fighting began last September. The gunman was hit by return fire and died in the hospital.
Hours later, Israeli helicopters fired missiles in the West Bank town of Tulkarem, killing Hamas activist Amer Mansour Habiri, 23, as he traveled in a car, witnesses said.
The Israeli Army claimed Habiri was named as a "senior terrorist" during "the interrogations of Hamas activists" in the area. Israel alleged that he was responsible for multiple bombings and shootings, and was organizing suicide attacks that were to take place within days.
In a day filled with violence, an Israeli woman was killed and four more Israelis wounded when Palestinian gunmen fired on their car in the West Bank. Also, a Palestinian trying to plant a bomb near a Jewish settlement in the West Bank was shot and killed by Israeli troops, the army and Palestinian security officials said.
Israel has come under international criticism for its targeted killings of suspected Palestinian militants. But Israeli Prime Minister Ariel Sharon says the policy will remain in place unless Palestinian leader Yasser Arafat reins in militants.
"One must understand that Arafat could avoid it," Sharon told "Fox News Sunday." Israel sent the Palestinians a list of "about 100 terrorists" it wants arrested, Sharon added. "What [Arafat] has to do is just to stop them," he said.
The Israeli Defense Ministry later published a list of what it called the seven "main terrorists" whose arrests it has demanded from the Palestinian Authority.
Sharon also reasserted his strong opposition to the Palestinian demand for international observers in the Middle East conflict. "We will not be able to accept international forces or international observers," he said.
The Palestinians say they want monitors to keep tabs on Israel's military. But the Israelis have long resisted such calls, saying that such a force would not be effective and may be biased against Israel.
Palestinian gunmen carry out daily shooting attacks against Israeli targets, but most take place in the West Bank or the Gaza Strip. Sunday's shooting in Tel Aviv was the first mass shooting in an Israeli city since the Mideast fighting began 10 months ago. Tel Aviv is Israel's largest city.
The gunman, Ali al-Julani, was traveling in a black car and opened fire with an M-16 automatic rifle as large numbers of soldiers were leaving the Defense Ministry building for lunch. Of the 10 injured, eight were soldiers. The wounded suffered light to moderate injuries.
Soldiers and police fired back and hit al-Julani, critically wounding him in the chest, police said. His car crashed into a nearby lamppost and he died later in a Tel Aviv hospital, family members said.
Al-Julani, a 30-year-old from east Jerusalem, had no previous record of involvement in violence, Israeli security forces said.
Tel Aviv was the scene of a Palestinian suicide bombing on June 1 that killed 21 young people outside a disco. That was the deadliest single attack in the Israeli-Palestinian fighting. But Tel Aviv, on the Mediterranean coast, is regarded as safer than most cities because of the large presence of security forces and its distance from the Palestinian territories.
In another incident early Sunday, Israeli helicopters fired rockets at Palestinian police offices in Rafah, in the southern part of the Gaza Strip. The Israeli raid followed repeated mortar attacks by the Palestinians.
TITLE: Macedonia Peace Plan Appears Imminent
AUTHOR: By Misha Savic
PUBLISHER: The Associated Press
TEXT: OHRID, Macedonia - A final peace deal for Macedonia is within reach after the country's majority reached a compromise with ethnic Albanians on jointly running the police forces.
European Union security chief Javier Solana announced Sunday that the two sides had struck a deal on the contentious issue, hours after he pressed negotiators to accept a Western plan to avert a full-blown civil war.
Solana wouldn't give details of the deal, but other Western officials, who have been mediating the peace talks, said the number of ethnic Albanians on the police force would grow. The Macedonian-dominated government, however, would retain central control over police.
Solana said only a few technicalities stand in the way of a comprehensive peace settlement. "I think we can say that the parties have agreed on the document on police," Solana said, adding that this opened the way for Macedonia to become "stable and prosperous."
Dozens have died and thousands have been displaced since the ethnic Albanian insurgency began in February. The rebels say they are fighting for broader rights and influence for ethnic Albanians, who make up nearly a third of Macedonia's 2 million people.
"It's a major step forward ... and it is a basis for democratic change in the country," U.S. envoy James Pardew said.
Ethnic Albanian politicians have been representing their entire community in the talks, including the militants fighting the government forces in the volatile northwestern part of the country.
Hours before Solana's announcement, a commander of the guerrillas, speaking on condition of anonymity, said in a telephone interview that his fighters would not recognize the deal.
He said they want a broader "international conference," presumably to get a better deal. Asked what would happen if the rebels refuse to accept the agreement, Solana said, "They will comply."
Macedonians regard the ethnic Albanians' demands as part of a strategy to carve off territories and break up the country. So far, however, the majority has agreed to an expanded official use of the Albanian language, a minimum of minority votes needed to pass laws in the parliament and state funds for higher education in the Albanian language.
Western officials, speaking on condition of anonymity, say police reforms will make the forces "reflect the ethnic composition" of the country. A census later this year will determine the exact figure.
The aim is to create "a more balanced police force," because the ethnic Albanians now account for only 5 percent of Macedonia's 6,000 policemen, Western sources said.
The officials also said the police plan envisioned the deployment of dozens of international police experts to Macedonia to help carry out the reforms. In addition, about 3,000 NATO troops would help disarm the ethnic Albanian rebels.
The breakthrough came the same day Solana brought Ukraine's foreign minister, Anatoly Zlenko, to the resort town of Ohrid, where the talks are taking place, to discuss his country's arms sales to Macedonia.
The United States has been pressuring Ukraine to halt the sales, fearing more weapons would prolong the conflict and undermine peace talks.
TITLE: WORLD WATCH
TEXT: Castro Lauds Protests
HAVANA (Reuters) - Cuban President Fidel Castro on Sunday praised the large protests at meetings of world leaders in recent years and joked that the heads of rich countries may soon have to meet on the International Space Station to avoid them.
Castro, in a short but militant speech to 600 young people who will attend an international youth and student gathering next week in Algeria, urged them to fan the flames of world rebellion against "imperialism," which he said threatened humanity's survival.
Castro said the demonstrations proved "the growing consciousness of thousands and thousands of leaders and representatives of the whole world" that "imperialism" was leading humanity to the brink of extinction, and the awakening of "left and progressive forces after the terrible blow" they suffered with the collapse of the Soviet Union.
Iraqi Ship Sinks
DUBAI (Reuters) - A ship apparently smuggling Iraqi oil sank in the Gulf, with all 12 crew rescued, after it was intercepted by a U.S.-led naval force monitoring UN sanctions against Baghdad, a force spokesperson said on Monday.
The Multinational Interception Force spokesperson said by telephone from Bahrain that the Honduras-flagged Georgios went down on Sunday in international waters some 60 nautical miles off the coast of Kuwait while trying to evade the navy ships.
A U.S. ship rescued all 12 crew members, who were "oil- soaked but in good condition," she added without giving further details.
An official at the Bahrain-based Marine Emergency Mutual Center (MEMC) said the ship had been carrying around 900 tons of crude, but added that the resulting oil slick posed no danger to any nearby countries.
Banzer To Resign
SUCRE, Bolivia (AP) - Battling cancer, Bolivian President Hugo Banzer held last-minute meetings with his cabinet and other politicians in preparation for the handover of power to his vice president.
Vice President Jorge Quiroga has filled in for Banzer ever since the retired general left the country July 1 for Washington and began treatment for lung cancer that has spread to his liver.
Banzer, 75, was officially to resign Monday - Bolivia's Independence Day - in the colonial town of Sucre, the country's constitutional capital. Quiroga, 41, will be sworn in as president Tuesday.
A dictator from 1971 to 1978, Banzer re-entered politics and ran in every democratic election in the 1980s and 1990s, finally winning the presidency in 1997. His term was to have ended on Aug. 6, 2002.
UN: Shooting Justified
DILI, East Timor (AP) - A UN investigating team found that the actions of peacekeepers were justified in the fatal shooting of an Indonesian soldier last month, an UN official said Monday.
The Indonesian soldier, a 21-year-old sergeant, was shot to death on July 28 in a clash with about 30 New Zealand troops.
The soldier, who was out of uniform, fired at least two shots at the peacekeepers from the Indonesian side of the unmarked border before they returned fire. The exchange occurred about 4 kilometers southwest of the town of Tilomar, near East Timor's southern coast.
"The investigating team consisting of United Nations military observers concluded that the UN peacekeepers had acted within reasonable grounds in engaging a man who they believed had fired on them from over the border," said peacekeeping spokesperson Captain Isabelito Sanchez.
Police Find Body
ADELAIDE, Australia (Reuters) - Australian police searching for missing British tourist Peter Falconio said on Monday they had found an unidentified body in outback desert scrubland but had not linked the two cases.
A police spokesperson said the body of a Caucasian man had been found by local people on Sunday at a roadside rest stop in scrubland about 65 kilometers south of the central Australian town of Alice Springs.
"We need to determine cause of death and identity but it's not being treated ... at this stage as part of that [Falconio] investigation,'' the spokesperson said.
Police fear Falconio, 28, who was traveling around Australia with his girlfriend Joanne Lees, 27, was shot dead by a gunman who tricked the couple into pulling over on a lonely stretch of highway between Alice Springs and Darwin on July 14.
Asylum Blaze
MADRAS, India (Reuters) - Fire swept through a mental asylum in southern India in the early hours of Monday killing at least 25 patients, many chained to their beds, police said.
The victims at the private home, attached to a mosque in Erwadi, about 560 kilometers south of Madras, had no chance of escape, a police official said.
There were at least 45 patients in a row of dormitories when the blaze broke out just before dawn, he said.
"Investigations are on and we have yet to ascertain the exact cause of the fire, though it appears an electrical short circuit could have triggered it," a government official said by phone from Ramanathapuram, near Erwadi, a Muslim religious center.
Officials said five patients had been rushed to a local hospital with burns.
Thara Srinivasan, director of India's Schizophrenia Care and Research Foundation, said most of the patients were likely chronic schizophrenics who had been abandoned by their families.
She said the religious homes considered mentally ill patients as being possessed by evil spirits and that they required spiritual treatment.
"They are just left in chains for months or years on end and only the slightly less violent among them are taken to attend some kind of daily prayer ritual.''
Condom Use Urged
ABUJA, Nigeria (AP) - Nigerian President Olusegun Obasanjo urged his country's military brass to distribute free condoms to the armed forces to help fight the spread of AIDS, a newspaper reported Sunday.
"We must not allow HIV/AIDS to ravage our armed forces," the independent Guardian newspaper quoted Obasanjo as telling military commanders and troops Saturday in the southwestern city of Ibadan.
An estimated 5.4 percent of Nigeria's 120 million people are infected with HIV, the virus that causes AIDS. The figure is believed to be far higher in the military.
Obasanjo also urged authorities to draw up a code of conduct for the military and step up AIDS education and awareness programs to educate soldiers about "illicit and unprotected sex."
Nigerian soldiers returning from peacekeeping operations in Liberia and Sierra Leone are believed to have been at particular risk of contracting the virus.
TITLE: Gordon Struggles Early, Wins 3rd Brickyard 400
AUTHOR: By Michael Marot
PUBLISHER: The Associated Press
TEXT: INDIANAPOLIS, Indiana - Thirty-five laps into the Brickyard 400, Jeff Gordon wasn't sure what was wrong with his car.
It was sliding in the corners and struggling in the straightaways, and he was losing positions fast on the Indianapolis Motor Speedway oval.
Gordon's solution: Get in front of the traffic.
One hundred laps later, the three-time Winston Cup champion cut inside Sterling Marlin on a restart and zipped into the lead. Gordon never trailed again Sunday, going on to win by about 10 car lengths over Marlin.
"The car wasn't very good in traffic," said Gordon, the race's first three-time winner. "I knew we were making adjustments, and I didn't think the adjustments were doing too much. I thought all we really needed was to be up front."
Officially, the victory margin of Gordon's Chevrolet was 0.943 seconds over Marlin's Dodge, but the win appeared much more impressive.
Gordon started 27th, farther back than any previous winner in the event's eight-year history. The poor handling of his No. 24 in the early going also forced Gordon, who celebrated his 30th birthday on Saturday, to rely on experience and instinct to earn a win he didn't think possible at the start.
I didn't feel good, not good at all," Gordon said, referring to his Hendrick Motorsports car. "I was falling back at times in the beginning and the car started to slip and slide around. I didn't know what to tell them."
Finally, Gordon told Robbie Loomis, his crew chief, to stop working on the car and that he would work on gaining track position.
That strategy sent Gordon, the series points leader, to Victory Lane for the fourth time this season, matching Dale Jarrett's season high.
Marlin congratulated Gordon for what proved to be his winning gamble - taking on only two tires during a pit stop just before the restart on Lap 135.
Jeff had done the right thing pitting there at the end," said Marlin, who has six top-five finishes but no victories this season. They made the right calls."
Gordon's strategy worked flawlessly once his handling problem was solved.
After moving to 19th early in the race, then sliding back to 27th, Gordon methodically moved through the field. He went from 25th to fourth in 30 laps, thanks to timely caution flags.
Drivers such as Marlin, Steve Park, Dale Earnhardt Jr. and Tony Stewart took turns in the lead while Gordon moved steadily toward the front.
Gordon wasn't the only driver who had problems in the early stages of the 160-lap race on the 4-kilometer track.
Rookie Andy Houston's car spun on the second lap of the race, igniting a six-car melee that knocked Houston and Matt Kenseth out of the race.
On Lap 33, rookie Ryan Newman slammed into the wall after getting a tap in the rear from pole-winner Jimmy Spencer and, on the restart two laps later, Dave Blaney ran into the rear of Elliott Sadler's car, hit the wall and caught on fire. All of the drivers escaped injury.
Meanwhile, Gordon bided his time, trying to find the right combination for his Chevy.
Finally, on Lap 109, when the leaders pitted, Gordon moved in front - for three laps.
Marlin regained the lead for the third time when the seventh caution flag waved on Lap 132, but it was short-lived.
When Gordon pitted for the new tires, he made up three spots - going from fifth to second, putting him right behind Marlin for the restart and exposing the only problem Marlin encountered all day.
It took our car a couple of laps to get going on restarts," Marlin said. I'm not really sure why."
Gordon took advantage, faking outside, then slipping inside after lightly tapping the rear of Marlin's Intrepid.
He'll usually wait for you to tap him and then he'll take off," Gordon said. This time, as soon as I tapped him, I stepped on the gas and it was like my car was in another gear."
Gordon swept past and led the final 25 laps.
Jarrett, with a handling problem late in the race, fell to 12th, but still took over second place in the standings. With the victory, Gordon stretched his lead to 160 points over the 1999 series champ.
Ricky Rudd, who started the day in the runner-up spot, 45 points behind Gordon, slid to third after finishing 39th. He trails by 179 after 21 of 36 races.
Marlin, hoping to give Dodge its first victory since its return to NASCAR's top series after a 16-year absence, wound up matching John Andretti for the best finish so far by the new Intrepids. He remained fourth in the standings, 232 points behind the leader.
Gordon, who won the first Brickyard in 1994 and again in 1998, earned $428,452 from the purse of $6.75 million. He averaged 210.57 kilometers per hour in a race slowed by 28 laps of caution.
Johnny Benson and Rusty Wallace, who also took only two tires on the last stop, finished third and fourth, followed by rookie Kurt Busch and Ward Burton.
Park, who was leading before the last stop and appeared to have the strongest car most of the day, wound up seventh.
TITLE: SPORTS WATCH
TEXT: Zenit Remains 2nd
MOSCOW (Reuters) - Zenit St. Petersburg beat Dinamo Moscow 3-1 on Sunday to move within a point of the Russian Premier Division leaders Spartak Moscow.
Ukrainian winger Alexander Spivak and fullback Alexei Katulsky scored second-half goals to give the visitors a well-deserved victory.
Eighteen-year-old striker Maxim Astafyev put Zenit ahead with a 42nd-minute strike, but Dinamo's Lithuanian defender Daividas Shemberas levelled seven minutes later.
Zenit has 38 points after 20 matches.
Defending champions Spartak earned a comfortable 2-0 win over city rivals and Premier Division newcomers Torpedo-ZIL on Saturday.
Last season's runners-up Lokomotiv Moscow and Krylya Sovietov Samara both have 35 points after their 1-1 draw on Wednesday.
Anna Withdraws
MANHATTAN BEACH, California (Reuters) - Anna Kournikova, who has only just returned to competitive action after a 5 1/2-month injury layoff, pulled out of this week's Los Angeles Classic on Sunday.
Her agent, Phil de Picciotto, said the 20-year-old Russian was withdrawing with a sore foot after Kournikova and Martina Hingis had lost to Cara Black of Zimbabwe and Russian Elena Likhovtseva 6-4, 1-6, 6-4 in the Acura Classic doubles final in San Diego.
De Picciotto, though, did not indicate whether it was an injury to the same left foot that required surgery and had a pin placed in it to speed the healing process back in April.
Kournikova made an inauspicious return to singles action last Wednesday, losing to Australian Nicole Pratt in three sets in the second round in San Diego.
Asylum Seeker
EDMONTON, Canada (AP) - A male track athlete competing in the World Championship has sought refugee status in Canada.
"An athlete got in touch with people at the [housing facility],'' Edmonton police Sergeant Jeff Anderson said Sunday. "We provided him with a bit of sanctuary until we got in touch with immigration."
Immigration spokesperson Ann Lawler confirmed an individual made a refugee claim.
TITLE: Greene Retains Title of 'World's Fastest Man'
AUTHOR: By Bert Rosenthal
PUBLISHER: The Associated Press
TEXT: EDMONTON, Canada - Maurice Greene has been the world's fastest human for the past four years - and he left no doubt about it Sunday night.
The always confident Greene shook off false starts by three of his opponents and won his third-consecutive world title, in 9.82 seconds - the third-fastest time in history. He also owns the two fastest times - his world record of 9.79 and 9.80, both set in 1999.
Greene grimaced and hopped gingerly after crossing the finish line because of pain in his left quad and left hamstring, which he felt in the final 10 to 15 meters.
He also has been troubled by tendinitis in his left knee this year, and with all the injuries he said he would not defend his 200 world title later in the championship. He also said he was uncertain whether he would run in the 400 relay.
"If I'm not 100 percent, I'm not going to run," he said. "I'm not going to jeopardize the U.S. relay with my ego."
In winning, Greene led a 1-2-3 U.S. finish, with Tim Montgomery second at 9.85 and Bernard Williams third with a career-best 9.94. He also became the second to win three-straight 100 titles, joining Carl Lewis, the winner in 1983, 1987 and 1991.
"The most important thing is I finished the race," the ailing Greene said. "I would have to hurt all the muscles in my body to stop."
Before the race got underway, false starts were called on Kim Collins of St. Kitts, Ato Boldon of Trinidad & Tobago, and Montgomery.
Greene never wavered or became ruffled.
Keeping his focus, he waited patiently for a clean start, then burst out of the blocks with his customary ferociousness, and at the end he held off the fast-closing Montgomery.
Montgomery blamed the false start for not winning.
"I knew I had a 9.75 in me," he said, "but the false start cost me the race."
Greene's ascent into international prominence began in 1997 when he won his first world title. He added another in 1999 - along with the 200 title - then won the Olympic 100 last year.
Earlier, Marion Jones showed why she hasn't lost a 100 final in four years by winning her heats in rounds one and two, then predicted a sensational time in her final.
Greene won his semifinal heat in 10.01, the fastest of the two heats, and oozed confidence going into the final. "I'm good," he said.
After a false start charged to his training partner Boldon, the unflappable Greene won handily, easing up in the final 15 meters. Although his time wasn't as impressive as his 9.88 in Saturday's quarterfinals, Greene beat a high-class field, including former world record-holder Donovan Bailey of Canada.
Bailey, who came into the championship with a torn ligament in his left knee, finished sixth in his final international appearance. He is retiring this year.
"I've been prepared to retire for a long time before today," Bailey said. "I was very happy to come back and show the world I could still do it.
"One of the greatest decisions I made was finishing my career in Edmonton."
Cheered warmly by the crowd at Commonwealth Stadium when introduced before the race, Bailey was given a standing ovation afterward. He then got a Canadian flag and took a farewell lap around the track as the crowd continued to applaud.
Afterward, Dr. Anthony Mascia examined Bailey and said he also had fluid behind his kneecap and fluid in his knee, and should have had surgery already.
"It was like a time-bomb," Mascia said of Bailey's knee.
The other world-class Canadian sprinter, Bruny Surin, pulled up lame during his semifinal.
Jones, the Olympic gold medalist blazed to victory in 10.93 in a first-round heat - a time that no other woman in the world has bettered this year, and followed that by winning her quarterfinal heat in 10.97.
Jones' fastest this season is 10.84 in Paris last month, and her career best is 10.65.
"Ten-seven, 10.6 might be possible," she said of Monday night's final, when she will be seeking her third-consecutive world title. "I have a lot left."
"I nailed my start for the first time all year," Jones, whose last defeat in the 100 was in the final race of the 1997 season, said after the opening round. Since then, she has won 42-consecutive finals.
In winning her opening-round heat, Jones had to overcome a false start. She said the starter was slow firing the gun.
"He's holding everybody an extremely long time," Jones said. "Before the race, I tried to time him, but it didn't work. You just have to adjust.
"Everywhere in the world it's different, but this is definitely the longest time I've ever been held in the blocks."
Jones adjusted so well that she was nearly two-tenths of a second faster than anyone else in the first-round heats.
Second-fastest was Greece's Ekaterini Thanou at 11.12. Thanou matched Jones' 10.97 in winning her quarterfinal heat.
TITLE: Pak Outplays Compatriot for 3rd Major
AUTHOR: By Robert Millward
PUBLISHER: The Associated Press
TEXT: SUNNINGDALE, England - Se Ri Pak charged past Karrie Webb on Sunday in the Women's British Open for her third major title.
"There was nothing to lose and I was trying to go for it," the 23-year-old South Korean star said. "It was the last day and the last chance for me. I just played and played. I thought that if I finished the last three holes perfect I'd be in good shape."
She did, closing with a par and two birdies for a 6-under-par 66 and a two-stroke victory over compatriot Mi Hyun Kim.
Pak also moved into position to top Webb as the youngest female player to complete the career Grand Slam.
Winner of the LPGA Championship and U.S. Open as a rookie in 1998, Pak will have three chances to make more history. If she wins the Nabisco Championship in any of the next three years, she'll break Webb's record as the youngest - at 26 years, 6 months - to win all four majors.
The Australian, who flopped on Sunday to slide 10 places from fifth, set the mark by winning the U.S. Open and LPGA Championship this summer.
Pak, who began the round four strokes behind Scotland's Catriona Matthew, eagled the first hole and added birdies on Nos. 10 and 12 en route to an 11-under 277 total.
Pak earned $221,650 for her fourth victory of the year to pass Annika Sorenstam and Webb for the top spot on the money list with $1,248,575.
"I can't guarantee it but, hopefully, every year four or five tournaments is enough to win, I guess," Pak said. "I feel like my game is getting much stronger.
"In the first two years I played pretty well, but didn't have time to think about anything else. In 2000, I didn't play well and didn't improve. It got me a lot of stress, getting mad, upset because I'd had a great two years before.
"This has been a perfect time to learn more about my game, mentally and physically, to give me more time to grow up a lot better than in the first two years. So, after that, 2001 is just starting to be really great."
Kim gave South Korea its first 1-2 finish in a major, closing with a 71. American Laura Diaz (67) tied for third with Matthew (73), Scotland's Janice Moodie (71) and Denmark's Iben Tinning (68) at 8-under 280.
Pak went ahead for the first time when she holed a 3-foot putt at the 17th to move to 10-under. Her tee shot on No. 18 found light rough to the right, but she dropped a 7-iron shot within 4 feet of the flag and made the birdie putt.
After her completing her round, a smiling Pak hugged her mother and then waited for the 10 players behind her to finish.
Webb began the round two strokes back, but faded with a 75 to tie for 15th at 5-under.
While Matthew failed to improve her 9-under score in sunny, almost windless conditions, Pak and Diaz made up ground quickly.
Starting six strokes behind, Diaz played the first six holes in 19 shots to wipe that out before the Scot had even gone to the first tee. But Diaz dropped a stroke at the 16th to slip back.
TITLE: Lots of Tears in Cooperstown For Hall-of-Fame Inductions
AUTHOR: By Alan Robinson
PUBLISHER: The Associated Press
TEXT: COOPERSTOWN, New York - Yes, there really is crying in baseball - Bill Mazeroski broke down during his Hall of Fame induction, and some of baseball's greats cried along with him.
Mazeroski, the former Pittsburgh Pirates fielding whiz who waited 29 years for Hall of Fame selectors to recognize that defense is as integral to the game as hitting and pitching, was overcome by emotion and began crying a few minutes into his speech Sunday and couldn't continue.
In a moment as poignant and as moving as any in the memory of many of the Hall of Famers who make the annual pilgrimage to Cooperstown, Mazeroski said the long wait and the thrill of receiving an honor he never thought he would get proved too much.
"This is going to be hard," Mazeroski said, wiping tears from his eyes barely 90 seconds after his speech began. "I thought having my Pirates number retired was the greatest thing that ever happened to me ... I didn't think I would make it into the Hall of Fame."
Then, pausing, the tears welling and his emotions getting the best of him, Mazeroski held up his prepared speech before a now-hushed crowd of more than 20,000 and said, "I think you can kiss these 12 pages down the drain."
Wiping away more tears, he cut short his talk after barely three minutes of speaking, tucked his speech into his jacket pocket and said, "I don't think I'm going to make it."
Mazeroski's unrehearsed breakdown - in contrast to Dave Winfield's skillfully delivered, polished but lengthy speech - clearly touched a nerve with his fellow Hall of Famers, some of whom were seen wiping away their own tears.
Kirby Puckett, the former Minnesota Twins star who was cheered on by busloads of fans who traveled nearly a full day to attend, didn't cry during his own speech but said afterward he began crying once Mazeroski did.
"I felt it for Maz," Puckett said. "I cried for Maz. If you can't cry for a guy who couldn't even start his speech before he started crying, you don't have an emotional bone in your body."
At a post-ceremony news conference, Mazeroski said he has always been emotional - he once said, "I even cry at sad commercials" - and he feared for months he would break down with so many friends, family and former teammates in attendance.
About 15 to 20 of Mazeroski's teammates sat within clear view of Mazeroski in a special section just off to the side of the stage.
"That's the way I am and it's not going to change," said Mazeroski, who turned more double plays than any second baseman in history and is widely considered the best fielder ever to play the position. "I've done it my whole life. I knew it was going to happen."
A few minutes after he finished, Mazeroski asked ceremony host George Grande to thank his wife, two sons, the Pirates and his former teammates after failing to mention them during brief remarks that began, "I think defense belongs in the Hall of Fame."
Puckett, the last player to be inducted, sensed many in the crowd were getting restless during the 2-hour, 40-minute ceremony on a hot sunny day, and delivered his speech in about half the time that Winfield did.
Puckett, whose 12-year career was cut short at age 34 because of glaucoma, talked of wanting to do nothing but play baseball in the Chicago housing project where he grew up after watching Ernie Banks and Billy Williams play for the Cubs when he was 5.
"I'd be walking down the street, my bat and glove over my shoulder and my books in my other hands, and the drug dealers and the gang members would say, 'Hey, Puck, don't you want to hang out with us, drink a little?'" Puckett said. "I told them I had a higher calling."
Puckett, who had more hits in his first 10 seasons than any player ever, said he was spanked innumerable times by his late mother for breaking windows or furniture while playing ball.
"But I'm sure she'd be smiling now, saying, 'My baby's in the Hall of Fame,'" he said.
Unlike Puckett and Mazeroski, who played for only one team each during their careers, Winfield played for six and took time to mention former teammates on every team, plus many of the 40 Hall of Famers who were in attendance.
Winfield, one of only seven players with at least 3,000 hits and 400 home runs, even thanked Yankees owner George Steinbrenner, with whom he feuded for years even while being a perennial All-Star during his 8 1/2 Yankees seasons.
"He's said he regrets a lot of things that happened," Winfield said. "We're fine now. Things have changed."
Still, Winfield chose to wear a San Diego Padres cap on his Hall of Fame plaque - he spent his first eight seasons with the Padres - rather than a Yankees cap, even though he enjoyed much of his success in New York.
Also enshrined was the late Hilton Smith, a Negro League star who enjoyed considerable success despite pitching in the shadow of teammate Satchel Paige. Los Angeles Times baseball writer Ross Newhan received the J.G. Taylor Spink award for writers, while Rafel "Felo" Ramirez, who has broadcast games in Spanish since the 1940s, received the Ford C. Frick award for broadcasters.