SOURCE: The St. Petersburg Times
DATE: Issue #731 (98), Tuesday, December 18, 2001
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TITLE: Oblast Poll Seen as Blow to Yakovlev
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: More than half of the deputies in the Le ningrad Oblast Legislative Assembly were re-elected in voting on Sunday, in a development that analysts see as a defeat for Governor Vladimir Yakovlev and a victory for Leningrad Oblast Governor Valery Serdyukov.
 
According to preliminary results, 31. 69 percent of the electorate turned out for the vote and 30 of 50 incumbent lawmakers won re-election, including speaker Vitaly Klimov.
 "The voters demonstrated their wisdom and responsibility by voting for worthy candidates. Ninety-nine percent of those elected are on the Leningrad Oblast governor's team," said Serdyukov, according to a statement issued by his press office on Monday.
 "This is a positive tendency, and I am pleased with it," he said.
 Local political analysts saw the results as blow to Yakovlev, who was believed to be supporting his own slate of candidates for the assembly. Officials in the city administration have repeatedly denied any involvement in the elections.
 In an interview with The St. Petersburg Times earlier this month, however, an official in the oblast administration claimed that unnamed "City Hall structures" had gathered signatures in support of certain candidates.
 Alexei Musakov, head of the St. Petersburg Center for Regional Development, who worked for Serdyukov during the elections, claimed on Monday that City Hall had assisted at least 15 candidates and had spent a total of $5 million to support them.
 "It was their goal to elect at least five candidates in oblast districts nearest to St. Petersburg," Musakov said. "But none of them were elected. None! I feel really good about how my team worked."
 Musakov said that the key issue was Yakovlev's proposal to combine the city and the oblast into a single subject of the Russian Federation, an idea that Serdyukov opposes. Musakov noted that President Vla dimir Putin, who met with Serdyukov shortly before the elections, spoke out against the idea as well.
 "At that meeting, Putin said that St. Petersburg and the Leningrad Oblast could not be united, so that was what we were saying during the election campaign," Musakov said.
 "Such a region would not be in Putin's favor. It would be an obstacle for him in the next presidential campaign," Musakov said.
 Putin's press service could not be reached for comment on Monday.
 So far, three criminal investigations have been launched in connection with the elections, according to officials at the Leningrad Oblast Election Commission, and the results of two races may be suspended pending investigations of two candidates who won mandates. Additional cases may yet be initiated, officials warned.
 Vladimir Zhuravlyev, deputy head of the commission, said Monday that Andrei Rybkin in the Vsevolozhsk District and Andrei Nilipidov in the Shlisselburg District were under investigation for allegedly paying voters 100 rubles ($3.33) to vote for them.
 "At present, three criminal cases have been initiated, but the number of cases may increase as a number of facts are still being examined by law enforcement officials," Vladimir Pylin, head of the Leningrad Oblast Election Commission, told Interfax on Monday.
 Officials said that they had recorded many incidents in which anonymous leaflets were illegally distributed targeting specific candidates.
 Olga Pokrovskaya, a spokesperson for the St. Petersburg Yabloko faction, stated that the elections were "a nightmare."
 "There were so many dirty tricks used there. It is absolutely clear that a lot of money was involved and targeted to defeat certain candidates," Pok rov skaya said.
 She added that she believed Ya kov lev was behind this effort, but admitted that she had no proof of City Hall's involvement. Pokrovskaya cited the case of Sergei Gra chev, a Yabloko candidate who lost in the Volkhovsky District.
 "Grachev was called a drug dealer and as a result of this and other groundless accusations, he came in second. The victory went to some local doctor that no one had heard of before," Pok rov skaya said.
 Alexander Afanasiev, Yakovlev's spokesperson, spent Saturday in the oblast town of Luga, 150 kilometers south of St. Petersburg, "watching how everything was going."
 Asked once again about the alleged involvement of City Hall in the election, Afanasiev said Monday: "This [accusation] is not news at all. It is just rubbish that the governor would have anything to do with this."

TITLE: Regional Elections Pass Quietly
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - Against a backdrop of high drama in the leadup to presidential elections this Sunday in Sakha Republic, polls held over the weekend in three Russian republics and seven regions passed almost unnoticed.
 
In the Volga-region Republic of Chuvashia, incumbent President Nikolai Fyodorov was re-elected for a third term with 40.73 percent of the vote, against Communist candidate and State Duma Deputy Valentin Shurcha nov's 37 percent. 
 Fyodorov - called "a consistent democrat" by many analysts - was former President Boris Yeltsin's first justice minister in 1991, and helped write post-Soviet democratic laws. Less than a year ago, he said he did not plan to run for re-election. 
 Hundreds of kilometers to the north, the Republic of Komi's incumbent head Yury Spiridonov lost his third-term re-election bid to Vladimir Torlopov, head of local legislative assembly. With the backing of Yabloko, the Union of Right Forces and the Kremlin, Torlopov received 40 percent of the vote against Spiridonov's 35 percent.
 Complaints of campaign regulation violations made the participation of Spiridonov, who ran one of Russia's richest regions for the entire post-Soviet decade, uncertain until the day before the election when the republic's Supreme Court confirmed his right to run.
 While in Komi and Chuvashia a simple majority of votes in favor of one candidate is enough to make the result valid, local laws in the Western Siberian Republic of Altai require a candidate to receive 50 percent of the vote for a first-round win - and the race there is far from over.
 Agrarian party head Mikhail Lapshin and incumbent President Semyon Zubakin emerged as the front runners after Sunday's first round, and go on to the second round Jan. 6.
 One of the most outspoken opponents of land reform, Duma Deputy Lapshin took 23.45 percent of the vote while Zubakin received 14.9 percent, according to the local Election Commission.
 Elections to local legislative assemblies were also held in Altai republic and the Tyumen, Tambov, Tver, Tomsk, Stavropol, Leningrad and Mos cow regions.
 In Leningrad oblast, incumbent speaker Vitaly Klimov and at least half the incumbent deputies were re-elected. At least two attempts of to bribe voters were registered and in one case a criminal investigation was opened, Interfax reported. Low turnout invalidated two referendums on proposed construction projects. 
 Local legislative assembly elections also took place in Moscow region, but the outcome remains undecided in 12 of the 50 districts due to low voter turnout. Overall turnout was 28 percent, just above the required 25 percent.

TITLE: Doctors Give Yeltsin Clean Bill of Health
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: MOSCOW - Former President Boris Yeltsin made a flying visit to Berlin for a heart checkup over the weekend and is expected to be back in Moscow on Tuesday after getting a clean bill of health.
 
The abrupt trip once again cast the spotlight on health of the former president, whose series of heart attacks in the mid-1990s and fragile health since then have kept tongues wagging in Russia.
 Barbara Nickolaus, spokesperson for the Rudolf Virchow Clinic, where Yeltsin was examined, said the visit was to make a five-year checkup of Yeltsin's heart after his quintuple bypass operation in 1996.
 "It showed that everything is still in order," Nickolaus said by telephone from Berlin. 
 Yeltsin aide Vladimir Shevchenko said that Yeltsin was feeling well and would return to Moscow on Tues day, Itar-Tass reported.
 "The doctors in the clinic conducted important analyses, took all his vital signs and checked how the bypass valves were working," Shevchenko said. 
 He said the valves "were all functioning normally and doctors said no operation was necessary."
 According to Berlin newspaper the Tagesspiegel, Roland Hetzer, the head of the center, has worked closely with U.S. colleague Michael De Bakey, who was the chief adviser on Yeltsin's heart operation Nov. 5, 1996.
 "The result of the operation can still be assessed as excellent and the health of the president as very good," Reuters quoted Hetzer as saying after Yeltsin had checked out Monday.
 The former president, who will turn 71 on Feb. 1, arrived Saturday with a small entourage at Berlin's main airport of Tegel, the Tagesspiegel said. He spent one night as a guest of the Russian Embassy on Berlin's prominent Unter den Linden. He was expected to spend Monday night there as well.
 Embassy spokesperson Viktor Kozlikin said Monday that Yeltsin felt in the best of health and described the purpose of the former president's visit as a routine medical examination. 
 "Of course, in Moscow some examinations were also carried out, but a second opinion was also sought here," Kozlikin said in a telephone interview.
 "The visit had no link to any worsening of his health," he added.
 The first knowledge Kozlikin had about Yeltsin's visit had come Friday, but this did not mean that it had not been planned earlier, he said.
 Yeltsin's wife, Naina, accompanied him to Berlin, Kozlikin said.
 Interfax reported Saturday that Yeltsin and his wife had cast an early vote in Moscow City Duma elections before heading off for Germany.
 Asked whether Yeltsin had received any visitors during his stay, Kozlikin described Yeltsin's visit as private and said that he did not know Yeltsin's schedule. 
 Yeltsin suffered a series of heart attacks in 1995 and 1996. He took a lot of flak from the media after his supporters hushed up one of those attacks during his successful re-election campaign bid.
 In 1996, Renat Akchurin headed a team of 12 Russian doctors to perform Yeltsin's bypass operation at Mos cow's Chazov Cardiology Research Center. The president was later shifted to the Kremlin's Central Clinical Hospital. Two German cardiologists, specialists in intensive care for heart patients with post-operative complications, advised Ak chu rin's team.
 Yeltsin's second term, which ended with a dramatic resignation on New Year's Eve 1999, was punctuated by bouts of ill health and absence from the public eye. 
 Since his retirement, he has spent most of his time at his villa at Barvikha on the outskirts of Moscow. His occasional departures are often to receive hospital treatment. 
 Yeltsin spent his 70th birthday in a clinic, supposedly for a harmless virus infection. 
 In May, Yeltsin visited China for a 10-day vacation that was to include unspecified traditional Chinese medical treatments.
 Yeltsin's last public appearance in Russia was at a Kremlin reception on Constitution Day last week.

TITLE: SPS Congress Shows Conservative Shift
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Union of Right Forces, or SPS, a political faction formed last year by nine liberal groups that often haven't seen eye to eye, projected an image of increased unity and conservatism as its delegates gathered for a congress Friday.
 
Although some members - mainly those from Yegor Gaidar's Democratic Choice of Russia - are likely to leave later this month for an opposition liberal party backed by Boris Berezovsky, SPS founders praised the party's progress over the past year and its growing influence on Kremlin policies.
 The tone of the speeches reported by Russian media signaled a shift toward greater conservatism on the part of SPS politicians, once considered the country's liberal reformists. 
 Gaidar said he is looking forward to the time when the "system reform" of Russian economics is over and SPS can "become a normal conservative party." 
 Boris Nemtsov, who was re-elected chairperson of SPS's political council, said the party "should not be ashamed of being a patriotic party."
 The party's co-chairs - Nemtsov, Chubais, Gaidar, Irina Khakamada and Sergei Kiriyenko - were all re-elected to their posts, Interfax reported from a resort outside Moscow where the congress took place. 
 Gaidar touted the party's economic platform, saying the government is, in fact, carrying out SPS's economic policy. 
 "When a government emerged willing to and capable of doing something, our [reform] projects turned out to be in demand," Gaidar said. 
 A display of discord came when Nemtsov criticized some of President Vladimir Putin's picks for government positions and state-run companies, saying the president was appointing the "St. Petersburg mafia." 
 "Dear Vladimir Vladimirovich [Putin], there are good people not only in St. Petersburg," Nemtsov told the congress, Interfax reported.
 Speaking after Nemtsov, Chubais - who is himself from St. Petersburg - said that despite obvious "mistakes," both Gryzlov and Miller are "decent people."
 "Boris Yefimovich [Nemstov], not everybody in St. Petersburg is a complete idiot, either," Chubais said.
 Chubais singled out "Russia's place in the world" as the major issue for the country for the next five to seven years. 
 He said Putin's increasingly pro-Western policies are likely to create major internal tensions that will require SPS's support.
 "There will be a huge, historical turnaround in this field that will change the country's political landscape, the president's domestic policies and his ratings," Chubais said.

TITLE: Berezovsky Offers To Hand Over His TV6 Shares
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - With just a month to go before shareholders are to be asked to start the liquidation of TV6 television, station owner Boris Berezovsky made a last-ditch effort Monday to keep the channel alive by offering his 75 percent as a gift to TV6 journalists.
 
Berezovsky's announcement came as U.S.-owned investment fund TPG Aurora said it was ready to buy out TV6 in a bid to retain its independence.
 And state-connected oil giant LUKoil, which is trying to bankrupt TV6, suggested that it is ready to work out a compromise to keep the station open - provided Berezovsky step out of the picture.
 TV6 is fighting for survival after its license holder, MNVK, lost a bankruptcy suit last month brought by the LUKoil-Garant pension fund, a subsidiary of LUKoil and owner of a 15 percent stake in the channel.
 TV6 supports say the suit, which sought the channel's liquidation on the basis of a little-used and soon-to-be abolished article of the Civil Code, is politically motivated. But TV6 is still obligated to follow the court decision and, although two legal complaints are still pending in different courts, the channel's board of directors decided last week to hold a general shareholders meeting Jan. 14 to set the liquidation process in motion.
 Berezovsky said in an interview published in Kommersant newspaper Monday that he was ready to bow out from TV6 to keep it from folding.
 "I have made the definite decision to delegate responsibility to the TV6 team led by [TV6 general director] Yevgeny Kiselyov," Berezovsky said. "I am ready to give them officially the entire portfolio as a present."
 Kiselyov said Monday that Berezovsky was probably making the offer in an attempt to keep TV6 independent of the government.
 "As far as I know, the main motive of this plan is to preserve TV6 as a company independent from the state, to relax the tense political situation around the channel," Kiselyov was quoted by Interfax as saying. "I would not like to comment any further at this time."
 Kiselyov told Monday's edition of Kommersant that the offer was "absolutely unexpected."
 Over the weekend, TPG Aurora said it has sent official offers to all TV6 shareholders - Berezovsky, LUKoil (15 percent) and Moscow city government-connected MKNT Co. (10 percent) - to buy the channel. On Sunday's "Itogi" program on TV6 anchored by Kiselyov, TPG Aurora managing director Boris Karlov confirmed the plans and said the ball is now in TV6's court.
 TPG Aurora is a $225 million fund and part of U.S. investment fund Texas Pacific Group, which has about $10 billion in investments. TPG Aurora has shares in MTV Russia and leading commercial radio station Russkoye Radio, Kommersant said.
 In November, TPG Aurura teamed up with the European Bank for Reconstruction and Development to invest $20 million in Versatel, a multichannel paid television station that is to begin broadcasting in 2002.
 In the Kommersant interview, Berezovsky described the TPG Aurora offer as a "profitable deal" and said he had spoken with Karlov about it. 
 But he stressed that, since his main goal is to maintain TV6's independence, Kiselyov's team will be the one to decide.
 Last Thursday, LUKoil Vice President Leonid Fedun said that his company is ready to work with Kiselyov's team but not with Berezovsky. Fedun told a news conference that the bankruptcy suit was filed in reaction to an attempt by Berezovsky earlier this year to issue additional shares in TV6 that would have diluted LUKoil's stake. 
 "They stepped on our throat and we responded," Fedun said, news agencies reported.
 If TV6 is liquidated, LUKoil will take part in a tender for its license and is ready to launch a new channel with Kiselyov's team, Fedun said.
 On Saturday, Kiselyov said he could not comment on the Fedun and TPG Aurura offerings. Speaking on Ekho Moskvy radio, he would only say that LUKoil was "counting its chickens before they hatched" because rulings on the two lawsuits against TV6's liquidation are still pending.
 TV6 spokesperson Tatyana Blinova said that offers from Fedun, TPG Aurora and Berezovsky are independent of each other, but that they point to the possibility that the TV6 crisis could be resolved.
 
 
q
 Kiselyov's private life came under the spotlight last week when an Internet site created to release compromising materials on public figures posted several short videos of a man resembling Kiselyov engaged in group sex with partners other than his wife.
 
The site, kompromat.ru, claimed the videos were provided by Media-MOST's security service in retaliation for months of wage arrears. The Izvestia.ru Web site reported that all the major Russian television channels collectively decided not to broadcast the videos.
 Kiselyov, speaking on Ekho Moskvy radio on Saturday, did not deny being in the videos but protested the posting as an intrusion into his private life. 
 "My private life is my private life. What I eat, whom I see, with whom I sleep and how I spend my money does not concern anyone other than myself and my family," Kiselyov said. 
 "As for the people who have been following me and my colleagues for years, eavesdropping on our telephone conversations and peeking at us through keyholes, they'd be better off fighting terrorism."

TITLE: IN BRIEF
TEXT: Yakovlev Lashes Out
 

ST. PETERSBURG (SPT) - Governor Vladimir Yakovlev views the recent criminal investigations of Vice Governor Valery Malyshev and former acting Vice Governor Alexander Po tek hin as attempts to "create a negative image of the governor," according to an interview published Monday in Kommersant.
 "Everyone knows that there is a group of people who would like to change the government of the city," Yakovlev said. "But they don't talk about it openly. But the press writes about it freely. For example, there are stories about how [Northwest District Governor General Viktor Cherkesov] sits and thinks about how to force the governor to resign. I'm not making this up. It is in the papers."
 The newspaper also asked Yakovlev whether the St. Petersburg politicians who have moved to Moscow are providing assistance in preparing for the city's 300th anniversary in 2003.
 "I don't understand what is keeping them from doing so," Yakovlev responded. "Most likely they never really grew to love the city and only used it as a trampoline for the jump to Moscow."
 
 
School Blaze
 

ST. PETERSBURG (SPT) - A fire Monday destroyed the only school in the Vologda Region village of Botyz noye, Interfax reported.
 According to officials, the fire that completely consumed the one-floor wooden structure was caused by an unattended water heater.
 No one was injured in the blaze and damages are estimated at 60,000 rubles ($2,000), Interfax reported.
 
 
Volodin Dies
 

ST. PETERSBURG (SPT) - Playwright Alexander Volodin died in St. Petersburg Sunday evening while in intensive care at a local hospital following an operation, Interfax reported.
 The playwright, best know for his plays "A Factory Girl," "Five Evenings and "The Older Sister" and for his screenplay "Autumn Marathon," was born in Moscow in 1919. He was a veteran of World War II. In 1997, Volodin was awarded a Golden Mask award.
 
 
Romanovs in Moscow?
 

ST. PETERSBURG (SPT) - The Russian imperial family is considering opening a representative office in Moscow, Interfax reported Monday.
 According to officials at the International Center for Cultural and Business Contacts, the main tasks of the office would be to preserve cultural landmarks, improve Russia's international image, carry out charity projects and educate the young in the spirit of patriotism, the news agency reported.
 The head of the royal family, Maria Romanova, her daughter Leonida and her grandson Georgy arrived in Moscow on Monday to discuss the project. Maria Romanova also plans to present military awards to outstanding Russian soldiers and officers, Interfax reported.
 
 
Totsky in Town
 

ST. PETERSBURG (SPT) - The director of the Federal Border Guard Service, General Konstantin Totsky, arrived in St. Petersburg on Monday to participate in a meeting of the Border Committee of the Russia-Belarus Union, Interfax reported.
 The committee will discuss and affirm a joint action plan for 2002 and plan for the creation of a legal framework for a unified system of border controls for the union's external borders, according to Interfax.
 The chairperson of the Belarussian State Committee of Border Forces, General Alexander Pavlovsky, will also participate in the meeting, Interfax reported.
 
 
Judicial Bills Signed
 

MOSCOW (AP) - President Vla di mir Putin signed three judicial-reform bills into law Monday, taking the country a step closer to what he called a "truly adversarial" trial system. 
 The reform project removes some powers from prosecutors, including the authority to authorize arrests, strengthens judges' independence and guarantees the right of jury trials, which are to be made available throughout Russia beginning in 2003. 
 
 
Pedophilia Accusation
 

MOSCOW (AP) - Moscow police have detained a U.S. citizen accused of molesting a 13-year-old boy, the press service of the Moscow Interior Department said Monday. 
 The 56-year-old suspect was identified only by his first name and initial, Yevgeny G., a resident of Illinois. He was accused of molesting the boy in a banya, or steam bath. 
 
 
Nuclear-Waste Crisis
 

MOSCOW (AP) - Russia is facing a crisis in the storage and disposal of nuclear waste, the Audit Chamber said Friday. 
 Over the past 50 years, Russia has accumulated waste with a combined radioactivity of more than 6 billion curies that it does not have the capacity to store and dispose of, the parliamentary watchdog said in a press release. That is about 120 times the radiation released in the 1986 Chernobyl disaster, it said. 
 The Audit Chamber said the country's system of nuclear storage facilities was on the verge of collapse due to a lack of government attention, funding and legislation. It said a 1996-2000 government program for nuclear-waste disposal received only 10.7 percent of the necessary funding. 
 
 
Voloshin off the Hook
 

MOSCOW (SPT) - A cross-party resolution calling for Prosecutor General Vladimir Ustinov to investigate allegations against presidential chief of staff Alexander Voloshin failed to garner enough votes in the State Duma on Friday, Interfax reported.
 Communist deputy Yury Nikiforenko said an investigation should be mounted into media reports of alleged illegal activities by companies associated with Voloshin, so that "a shadow falls not on the Kremlin, not on the head of the state," Interfax reported.
 With 226 votes needed for the resolution to pass, the resolution could only muster 171 votes in favor, with one against and one abstention.
 
 
Debts to UN Paid
 

UNITED NATIONS (AP) - Russia said it has paid off all its debts to the United Nations' regular operating budget and separate peacekeeping budget a year early. Russia pledged in November 1995 to pay off the debts within seven years.
 But Russia's UN Mission said Moscow cleared the debt Thursday with a payment of $39.9 million to the peacekeeping budget. 
 
 
Treatment for Danilov
 

MOSCOW (SPT) - The Krasnoyarsk region court has ruled that physicist Valentin Danilov, who stands accused of passing classified space technology to China, must receive hospital treatment, Kommersant quoted his lawyer as saying last week.
 Yelena Yevmenova said Danilov, 53, who has spent nearly 10 months in a local jail, is in poor health and had requested treatment as recommended by his doctors, who had diagnosed heart problems, the report said Thursday. 
 It was not clear if he would be sent to a prison hospital or to a civilian one. 



TITLE: Rumsfeld Sees Strong U.S.-Russia Relations
AUTHOR: By Sally Buzbee
PUBLISHER: The Associated Press
TEXT: BRUSSELS, Belgium - U.S. Defense Secretary Donald Rumsfeld said Monday the relationship between the United States and Russia continues to improve despite U.S. President George W. Bush's announcement he is pulling out of an anti-missile defense treaty.
 
Rumsfeld said leaders of the two countries nevertheless will have to talk about "the importance of transparency and predictability, which both countries recognize ... as important for our respective populations to feel comfortable as we make that dramatic change."
 In Moscow, Defense Minister Sergei Ivanov also signaled Russian acceptance of Bush's decision. Rumsfeld conferred Monday with Ivanov before a NATO defense ministers' meeting in Brussels.
 Russia has said it was disappointed by Bush's announcement last week that the United States will pull out of the 1972 Anti-Ballistic Missile treaty. But President Vladimir Putin also said the move does not threaten Russia.
 Bush tried to strike a deal with Putin to allow the United States to expand testing for such a system. But Russia, which can't afford a national missile defense, has said it views the ABM pact as the basis of all nuclear-reduction treaties.
 Rumsfeld has robustly defended the decision. He told the leaders of former Soviet republics he visited over the weekend that the U.S. decision would not create an arms race, but help stabilize the world.
 U.S. Secretary of State Colin Powell also said Sunday that good relations with Russia will continue despite the ABM pullout decision.
 Russia and the United States have announced plans to cut their nuclear-warhead stockpiles significantly. The United States says it will reduce its number of warheads to 2,000 or fewer from the current 6,000. Russia has made a similar pledge.
 Rumsfeld said he would explain the basis of the president's decision to Ivanov, and that he also expected the two to discuss terrorism.
 Russia has worked closely with the United States on fighting terrorism since the Sept. 11 attacks, and Putin has made it clear that he expects that close relationship to continue.
 Bush's top foreign-policy advisers said Sunday that relations with Russia will weather the United States' pulling out of an arms-control treaty and moving ahead on a missile defense. They rejected predictions that the withdrawal will lead to a new arms race. 
 Secretary of State Colin Powell and national security adviser Condoleezza Rice said Bush had gone out of his way to build strong ties to Putin. By doing so, withdrawing from the Anti-Ballistic Missile Treaty of 1972 would amount to a minor bump in relations, they said. 
 "Guess what? Both we and the Russians see that we have mutual interests that will keep us working closely together,'' Powell said. Powell said he had met 16 times this year with his counterpart, Foreign Minister Igor Ivanov. 
 "This simply did not cause the rupture, because the president spent the time to build a broad relationship with Russia,'' Rice said.' "Even though there is a disagreement here, we'll survive. That's quite an achievement.'' 
 Bush announced Thursday that the United States would withdraw from the treaty, which bans national anti-missile shields. Many countries fear that a U.S. missile defense shield would start a new arms race with Russia and China, and lead to more nuclear instability. 
 "There's not going to be an arms race,'' Rice said. "Sorry to disappoint those who've been predicting an arms race.''
 Rumsfeld, in a hopscotch tour of Azerbaijan, Armenia and Georgia, offered closer U.S. military ties in return for help fighting terrorism in Afgha ni stan and elsewhere. 
 Rumsfeld told the leaders of Azerbaijan and Armenia that he endorsed action by the U.S. Congress to lift sanctions that bar some U.S. military relations with the two countries. 
 In Georgia, criticized for not cracking down hard enough on terrorism, Rumsfeld said he discussed with President Eduard Shevardnadze "our desire to see that we cooperate fully with respect to the probe of terrorism." 
 Shevardnadze, at a joint news conference, said he told Rumsfeld, "We must keep in mind that the sources feeding and fostering terrorism, such as nationalism and violent separatism, exist in the world." 
 "Building a broad coalition to fight global terrorism is the highest priority in Georgia," Shevardnadze said. 
 The small countries Rumsfeld visited occupy a strategic spot next to Russia, the Middle East and central Asia. 
 All three have offered to let U.S. warplanes fly over their countries during the fighting in Afghanistan. American military planes have gassed up in Armenia on the way to the war front, a U.S. official said. U.S. officials were vague about what the United States might seek in the way of future military cooperation. 
 "Stability in this region is as important to us as it is to you," Rumsfeld told Azeri President Heidar Aliyev at a meeting in Baku. "We are all concerned about the problems of terrorism, drug trafficking and proliferation of weapons of mass destruction."
 The United States imposed penalties against Azerbaijan in 1992 that prohibit any military cooperation because of the fighting between Azerbaijan and Armenia over the disputed regiono f Nogorny Karabakh. 
 The Bush administration has asked Congress for a waiver that would let Bush offer military aid to Azerbaijan if it contributes to the fight against terrorism or to help the country protect its borders.

TITLE: Military Will Not React On ABM
AUTHOR: By Judith Ingram
PUBLISHER: The Associated Press
TEXT: MOSCOW - Russia's defense minister said Monday that the military will not take any major steps in response to U.S. President George W. Bush's announcement of the U.S. withdrawal from the Anti-Ballistic Missile Treaty. 
 
"The Russian Defense Ministry will not take any drastic direct or indirect steps," the Interfax news agency quoted Defense Minister Sergei Ivanov as saying. 
 The statement was the latest signal that Russia will grudgingly accept the U.S. withdrawal from the 1972 treaty, which top Kremlin officials have repeatedly called the cornerstone of international security. 
 Bush gave six month's notice on Dec. 13 that the United States will abandon the pact in order to pursue plans for a national missile defense, which is prohibited under the treaty. 
 Russian President Vladimir Putin called the decision a "mistake" but said it was no surprise - after months of negotiations on the issue - and stressed it would not endanger Russia. 
 Ivanov reiterated that the U.S. withdrawal would not affect Russia's security. In a statement that appeared aimed to back up that assertion, Ivanov said that Russia had plans to develop its Strategic Missile Forces "which were drafted long before" the U.S. decision. 
 Ivanov also repeated that Russia plans to compensate for the U.S. withdrawal by negotiating deep and specific strategic arms cuts. 
 President Bush's decision "creates a certain vacuum from the point of view of strategic stability," Iva nov said. "We hope this vacuum will be filled, in particular, with a Russian-American treaty on radical cuts of strategic offensive armaments under strict international control and verification." 
 Russian calls to push ahead with nuclear-weapons cuts despite the U.S. withdrawal from the ABM treaty mark a major shift from earlier this year. 
 In an interview published in Britain's Financial Times newspaper Monday, Putin said that the abrogation of the ABM treaty gave Russia the theoretical right to fit its missiles with multiple warheads. 
 "But this is not to say we will actually do that," he was quoted as saying. "Because in the foreseeable future there is no point, no sense for Russia to do that." 
 While Russia is confident the size of its nuclear arsenal means U.S. plans for a missile defense will not weaken its security, China is worried the system would undercut the deterrent value of its small arsenal. 
 An editorial on the English-language Web site of the Communist Party's official People's Daily newspaper accused the U.S. administration of turning a "deaf ear to the just voice of the international community."

TITLE: New Instruments on Investment Horizon
AUTHOR: By Victoria Lavrentieva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Following the successful launch of futures trading on two indexes, new investment instruments are expected soon on the local stock market, along with the country's first index funds.
 
The Russian Trading System launched trading of futures contracts on RUIX and RUIX-oil on Dec. 3 - and was startled by their success.
 "After nine trading days, the volumes of total opened positions reached $1 million, which is second place after deals with UES shares," RTS President Ivan Tyryshkin said at a news conference Friday. 
 "We were surprised to see so much interest in the new products," he said, adding that RTS expects the new instruments to be No. 1 in volume. 
 The indexes, calculated by the RTS-Interfax index agency, consist of RTS's most liquid stocks. RUIX-oil is made up of LUKoil, Surgutneftegaz, Tatneft and Yukos, while RUIX consists of those four stocks along with Unified Energy Systems, Mosenergo and Rostelekom.
 Although the Russian stock market, still relatively young, suffers from a lack of instruments, it is moving fast to develop new products, such as index funds.
 "In the U.S., index funds have always been one of the easiest ways to reach the stock market," said Leo O'Neill, president of Standard & Poor's rating agency. 
 According to Tim McCarthy, chief investment officer with Troika Dialog Asset Management, 40 percent of funds in the United States are indexed.
 Troika runs the Russia Index Fund, which is based on the S&P Russia Index. The New York-based fund is mostly targeted at U.S. investors. Since its launch in April 2000, it has attracted roughly $2 million.
 But market participants expect index funds to begin appearing in Russia itself next year following the approval of a law allowing asset-management companies in Russia to form such funds. 
 "Several managing companies have already turned to the RTS for advice on how to organize these funds, and we expect the first index funds to appear in Russia in the first half of next year," Tyryshkin said.
 "I hope that S&P's presence in the market will make it more transparent and will give potential investors more information on Russian stocks," O'Neill said.
 Troika's McCarthy said that in the future, he would like to launch an index fund for Russian investors, adding that Russian pension funds should be interested in investing. 
 "Going forward to the future, when pension funds will be privatized, they will be required to invest somewhere, and index funds are probably the best opportunity, as they are the least risky," he said.
 Some analysts, however, argue that index funds are only good for markets that function effectively, such as in the United States.
 "If this market was efficient, it would make a lot of sense, but it is not yet," said James Fenkner, chief strategist with Troika Dialog.
 "You can make real money in Russia only by looking deep into the stocks. In the case of index funds, it's just a one-way shot."

TITLE: Alrosa Inks Positive Deal With DeBeers
PUBLISHER: Combined Reports
TEXT: MOSCOW - Alrosa, which mines 20 percent of the world's diamonds, clinched a five-year, $4-billion trade agreement with international behemoth De Beers on Monday.
 
Analysts said the new deal was slightly less favorable to De Beers than the existing three-year marketing contract, but much better than the world's No. 1 diamond producer might have expected to win as the Russians flex their muscles.
 Under its terms, De Beers will market half of the annual rough diamond output from Alrosa, of which $500 million per year will be stones straight out of the ground and $300 million will be an assortment picked for export.
 Alrosa will supply the remaining 50 percent to Russia's own growing cutting industry, which it has been keen to boost.
 De Beers controls about 65 percent of the world's $8 billion market in uncut diamonds. Its current three-year marketing agreement with Alrosa, which expires on Dec. 31, obliges the Russian firm to sell at least $550 million worth of uncut stones to De Beers, but not more than 26 percent of De Beers' sales.
 The new agreement was signed in the Sakha Republic by top De Beers officials and Alrosa head Vyacheslav Shtyrov at a ceremony attended by Deputy Prime Minister Alexei Kudrin.
 "The agreement insures that Russia will earn stable revenues from diamond sales independent of global market fluctuations," said Kudrin.
 Alrosa officials praised the agreement for being "more commercial" than its predecessor, in part because the company, rather than the government, was the signatory for the first time in the company's history. This also frees the government to sell its own diamond reserves - the volume of which is classified as a state secret - on the open market.
 Alrosa expects to mine $1.6 billion worth of diamonds in 2002, the same as in 2001. Company officials hope the agreement will help attract investment and increase production to $2 billion per year by 2006.
 The new agreement will need approval from the European Union, which analysts said was not guaranteed. The EU will study the arrangement as part of its investigation of De Beers' marketing plans and deals with other producers around the world.
 South African-based De Beers has cooperated with the Russian diamond industry for more than 40 years, despite official hostility between the two countries under the apartheid system.
 "I think De Beers are probably going to be very grateful that they've been able to put a deal together, but it's probably not as attractive as they were looking for," said Nick Hatch, of Investec Henderson Crosthwaite Securities.
 "Increasing your influence over marketing as opposed to production is probably the way to do things, so I think it's probably as good as they were going to be able to achieve."
 David Hall, an analyst at Merrill Lynch in Johannesburg, called the deal good for De Beers, saying current market conditions helped the company get a fair contract. 
 "I think Sept. 11 added to the [already] weak market and helped their position in negotiations," said Hall. "The Russian government, particularly, would look at it and say at least this way we get a hard payment every month."
 Analysts said the structure of the deal also gave some flexibility in determining which stones got to market, depending on prevailing conditions. At times of poor prices, the miners would be able to keep back some of the best stones, to get a better price when demand improved. 
 Hall said that the "export assortment" part of the deal marked a change from De Beers' previous position. 
 "Before, De Beers always insisted that it wanted run-of-mine only, because otherwise, what the Russians couldn't get rid of themselves, they could always palm off onto De Beers."
 
 <i>- Reuters, SPT </i>

TITLE: Gazprom Brings Purgaz Back Under Its Umbrella
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Gazprom's board voted to buy back a 32-percent stake in the Purgaz gas producer from Itera, a decision that appears to be the first concrete step made by the new management showing its commitment to change the natural gas monopolist.
 
&quot;We were given one small Christmas gift from Gazprom with this Purgaz solution,&quot; said Boris Fyodorov, a Gaz prom board member who represents the interests of minority investors and a fierce critic of the previous management, whom he claimed engaged in asset-stripping.
 &quot;At least something is happening, and we should keep our optimism despite the discussions about weakness of the management,&quot; Fyodorov said in a conference call with investors.
 Purgaz was not penciled into Mon day's board-meeting agenda. Instead, Fyodorov said, Gazprom CEO Alexei Mil ler caught the board by surprise by bringing up the issue.
 Purgaz supplies about 70 percent of the gas extracted by Florida-registered Itera, which was once a Gazprom subsidiary.
 Initially, Itera obtained 49 percent of Purgaz in exchange for agreeing to develop the Gubkinsky gas field. But in 1999, Gazprom sold a further 32 percent stake to Itera for 32,000 rubles (about $1,300 at the time), keeping a mere 19 percent to itself.
 Purgaz, meanwhile, turned out to be Itera's main extraction firm.
 In 1999, the sale went on with a clause granting Gazprom the right to repurchase Purgaz for the nominal price, but only until January 2002. The matter became something of a litmus test for the new management team led by President Vladimir Putin appointee Miller in the eyes of investors, who were eager to see if Miller would be able to rein in the old Gazprom crew, who masterminded the Purgaz deal and a number of other deals that led Gazprom to have less control over some of its assets.
 According to Fyodorov, the repurchase will cost Gazprom some 5.7 billion rubles ($188 million). The additional expenses will come from debts generated by Itera, which is presently a major Purgaz creditor.
 Itera, for which the loss of Purgaz is likely to be a serious blow, will not be able to argue the decision, Fyodorov said, citing an assurance given by Miller at the meeting.
 Fyodorov said that the deal is likely to be completed not by direct cash payments but through mutual debt and asset offsets between Gazprom and Itera.
 Also at the meeting, the Gazprom board discussed the company's financial and asset management strategy. According to Fyodorov, the presentations lacked concrete details but nevertheless suggested positive trends.
 &quot;There were a lot of the right words in the right context,&quot; Fyodorov said.
 Gazprom's main programs aimed at increasing production are now in the hands of the government, because the state must decide whether to raise gas tariffs, a vital source of funding for Gazprom, Fyodorov said. Of the $5 billion needed to finance production-boosting projects, $3 billion has yet to be found, he said.
 Last month, Miller said Gazprom wants a 24-percent tariff hike for domestic deliveries, which are several times lower than global rates. The cost of gas in Russia is a politically sensitive issue because much of the country depends on Gazprom supplies for heating.
 Miller, however, said raising prices 24 percent would only increase inflation by six-tenths of a percent. The cabinet is to look at the tariffs Thursday.
 Fyodorov said borrowing may be considered to finance the projects, while in the worst-case scenario management will have to slash some of the programs in favor of the more needed ones.
 Gazprom's board, however, failed to tackle the matter of the board's own restructuring, which is to include a cut from the current 23 members to betweem 10 and 13. Miller asked for the vote to be delayed until Gazprom's next board meeting, scheduled for Jan. 25.

TITLE: Domestic Developer Looks to Foreign Cash
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: MOSCOW - Financial holding AFK Sistema is considering launching a corporate bond or even floating shares in its real-estate arm, Sistema-Gals, Sistema vice president Levan Vasadze said last week.
 
Speaking at the official opening of the Hals Tower office center in Moscow last Tuesday, Vasadze said Sistema-Gals will need to raise $500 million to build the projects that it has planned for the next three or four years.
 &quot;That's without taking into account new projects that may arise,&quot; he said.
 However, Sistema-Gals is operating in a market that has no system of long-term financing or mortgages, he said. Although there are positive developments - including the passage of the Land Code - in the realization of a Russian real-estate market, and a lot of talk about mortgages, the situation is unlikely to change soon, he said.
 Sistema-Gals occupies about 14 percent of the class-A office market in the country, is a significant builder of residential dwellings and is one of the largest developers in Russia, he said.
 Inspection of other emerging markets showed that many had several large construction companies raising money in the West, he added.
 &quot;Sistema has had to fund construction from the corporation's own finances,&quot; Vasadze said. &quot;If we could raise money in the West, we could lower our financial involvement in construction from 100 percent to perhaps 30 percent or 40 percent.&quot;
 Although Sistema has no specific plans on how to attract Western investors, Vasadze said it should be possible to raise $100 million or $200 million per year.
 Sistema is no stranger to raising money on Western financial markets. In June 2000, an initial public offering in its subsidiary cellular operator, Mobile TeleSystems, raised $305 million on the New York Stock Exchange through an issue of American Depositary Receipts. It was the first initial public offering by a Russian company on global markets since the 1998 financial crisis.
 Michael Lange, managing director of Jones Lang LaSalle, welcomed Sistema-Gals' interest in finding new ways of funding its developments.
 &quot;It is something that is a must in a rapidly developing real-estate market,&quot; he said.
 The advent of corporate paper in the real-estate sector was inevitable in the maturing Moscow market, which is increasingly resembling advanced markets, he said.
 &quot;I've come across the idea before, and I'm pleased that local players such as Sistema-Gals are pursuing it,&quot; Lange said. &quot;There are other players as well, including foreign financial institutions that are pursuing such alleys as well.&quot;
 How successful such funds would be would depend on how they were presented and what restrictions and risks were attached to them, Lange said.
 Letitia Rydjeski, a fixed-income analyst with Aton brokerage, said Vasadze was right to say that there is no long-term financing on the Russian market and that it is likely to take several years before the banking system is reformed and able to provide such financing.
 At the same time, Western investors are interested in the Russian market, she said.
 &quot;With very low dollar interest rates in developed markets and if Russia's creditworthiness and corporate credibility continue to increase, then there will be a good appetite for corporate debt,&quot; Rydjeski said.
 She suggested a two-year bond would most likely attract Western investors, while few would be likely to have enough confidence to buy into a 10-year bond.
 Jack Kelleher, managing director at Noble Gibbons/CB Richard Ellis, said Sistema-Gals has good, high-value sites that could be developed into excellent properties. However, to date, the company has sold its best projects, he added.
 &quot;Investors will want to know what the strength of their cash flows are and what assets they own,&quot; he said. &quot;They are going to need to concentrate on the quality of their projects, the quality of their development, the whole construction-procurement path, and marketing and their developments will have to be underwritten by demand.&quot;
 Created in 1990, Sistema-Gals has constructed or reconstructed about 20 large buildings in Moscow and St. Petersburg. These projects required about $150 million in investment.

TITLE: IN BRIEF
TEXT: Pension Laws Signed
 

MOSCOW (SPT) - President Vla di mir Putin has signed into law three landmark pension-reform bills, Prime-Tass reported the the Kremlin press service as saying Monday.
 The bills include the law on labor pensions, the law on state pensions and the law on mandatory pension insurance.
 Out of Putin's package of pension- reform bills, the State Duma and the Federation Council have yet to approve the law on individual pension accounts, the law on managing pension funds, the law on the pension system and the law on professional pension systems.
 Russia's current pension system is based on a distributive "pay-as-you-go" system inherited from the Soviet Union.
 Under Putin's reform plan, Russia's pension system is to be transformed into a fully-funded one, with individuals progressively accumulating their own future pension funds.
 Putin said Monday he was satisfied with the progress of the pension reform, Itar-Tass reported. "The work was intense and in the end we have received a very high-quality set of drafts," he said.
 Putin said he believed the pension reform was an important step in modernizing Russia.
 
 
$25M IMF Payment
 

MOSCOW (SPT) - Russia has paid $24.61 million to the International Monetary Fund as due, Prime-Tass reported a Finance Ministry official as saying Monday.
 Russia's next debt payment to the IMF, about $25 million, is due Dec. 27.
 Earlier this year, Deputy Prime Minister and Finance Minister Alexei Kudrin said Russia would pay a total of $1.448 billion to the IMF this year, reducing Russia's debt to the fund to $7.69 billion by the end of December.
 Russia stopped borrowing from the IMF in the summer of 1999. Russian officials have repeatedly said the government was unlikely to resume borrowing from the fund, unless the foreign economic situation deteriorates sharply. 
 
A Weekend Off
 

MOSCOW (Reuters) - Energy Minister Igor Yusufov did not meet over the weekend with fellow non-OPEC producers Mexico and Norway despite reports to the contrary, an official for the Energy Minister said Monday.
 
 
Sibur's Pantyhose Plans
 

MOSCOW (Vedomosti) - Sibur has signed a contract to purchase $38.3 million worth of manufacturing equipment in a bid to open up production this year as the country's No. 1 producer of pantyhose. 
 Italian company Matec will supply the Sibur-Volozhsky synthetic-cloth factory with the equipment.
 Sibur is hoping to begin production in 2002 at 30 million pairs of stockings a year and hike output to 100 million pairs in 2003. 
 Sibur hopes to conclude talks to buy a brand license from a large Western producer within a month, a company spokesperson said. 



TITLE: Norway Concessions Might Budge OPEC
PUBLISHER: Combined Reports
TEXT: LONDON - As markets waited nervously, OPEC officials on Monday mulled whether Norway's promise to reduce oil output by 150,000 barrels per day was enough to justify the cartel's proceeding with a 6-percent cut in its own crude production.
 
Even with Norway's pledge, the Organization of Petroleum Exporting Countries is still more than 50,000 bpd shy of the total cut in production it insists on securing from independent crude suppliers.
 The cartel, which pumps about 40 percent of the world's oil, expects to announce Tuesday whether the pledges it has received so far are adequate to justify planned cuts of 1.5 million bpd in its own production, an OPEC official said.
 A senior OPEC delegate said that the group would not argue about the shortfall in cuts that leaves non-aligned countries just short of the 500,000 bpd demanded by OPEC to trigger 1.5 million barrels daily of cartel cuts from Jan 1.
 &quot;We are not going to argue about that,&quot; he said. &quot;The volumes are enough for a done deal.&quot;
 However, the group's members might postpone such a decision until an extraordinary meeting they've scheduled for Dec. 28 in Cairo, the official said, speaking on condition of anonymity.
 Norway was the last major independent oil supplier to specify the cut it plans to make as a contribution to an OPEC-led effort to trim crude output and therefore bolster weak oil prices.
 February contracts of North Sea Brent crude dropped to $18.65 a barrel before rebounding, but light profit-taking pushed the market down to $19.03 by the close, a 12-cent loss on the session, as traders waited to hear a formal announcement of the production cut on the International Petroleum Exchange in London.
 On the New York Mercantile Exchange, contracts of light, sweet crude for January delivery were trading 11 cents higher at $19.34 a barrel.
 Futures prices on the Nymex have tumbled 30 percent since Sept. 10, the day before the terrorist attacks on the United States.
 &quot;Norway is aiming at an oil price that is reasonable for both oil importing and oil exporting countries,&quot; Norway's Oil Minister Einar Steensnaes said in a statement.
 The Norwegian Ministry of Pet ro leum and Energy warned it would suspend its pledge if other countries failed to put their announced cuts into effect. Norway is the world's third-largest oil exporter after Saudi Arabia and Russia, producing about 3.17 million bpd.
 OPEC's lack of a formal response to Norway's announcement added to uncertainty caused by the group's irritation with Russia for not agreeing to remove more than 150,000 barrels from Russian supplies.
 OPEC agreed in November to slash production beginning Jan. 1 but only on the condition that non-OPEC countries chipped in cuts of 500,000 barrels a day. Norway and Russia have each pledged to cut daily supplies by 150,000 barrels, while Mexico has promised to cut by 100,000 barrels, Oman by 25,000 barrels and Angola by 22,500 barrels.
 The resulting total - 447,500 barrels - is still 52,500 barrels less than the minimum OPEC has asked for. OPEC Secretary General Ali Rodriguez must now determine if this is close enough to the sought-after &quot;magic number&quot; of barrels, the OPEC official said by telephone from Vienna, Austria, where the group has its headquarters.
 OPEC tries to maintain oil prices between $22 and $28 a barrel. It has curtailed its output targets by 3.5 million barrels this year in that effort, but the slowing economy has badly eroded demand for crude, especially since Sept. 11.
 At the same time, Russia has increased its market share at OPEC's expense, and the cartel decided last month to risk a price war in an effort to persuade Russia to share the burden of a strategic cut in production.
 Russia pumps 7.2 million bpd and has increased output this year by 520,000 barrels a day. OPEC had hoped Russia would trim supplies by 200,000 barrels, and the refusal of Russian companies to do so has generated unusual ill will between Moscow and several cartel members.
 <i>- AP, Reuters </i>

TITLE: WORLD WATCH
TEXT: Raising Hopes
 

LONDON (Reuters) - Royal Dutch/Shell on Monday paved the way for the extra oil and gas output growth its investors want by relaxing self-imposed financial constraints on project viability.
 In an annual strategy review that shifted its ambitions clearly toward the raw materials end of the energy industry, the giant Anglo-Dutch energy company said it would in future measure its underlying performance against a long-term crude price assumption of $16 a barrel for Brent blend, up from $14 previously.
 The higher baseline price will allow the world's second-largest oil-and-gas group to commit to riskier projects and acquisitions without technically breaching another of its constraints - a 13 to 15 percent return on average capital employed at benchmarked prices.
 The higher the assumed price, the higher the assumed return. Actual returns will of course continue to depend on actual prices, which have fallen sharply in recent months, and Chairperson Phill Watts was happy to acknowledge this.
 
 
Making Footprints
 

NEW YORK (AP) - Vivendi Universal is absorbing the movie and television businesses of USA Networks Inc. in a $10.3-billion deal that will give the French conglomerate a wider footprint in the U.S. market and catapult media executive Barry Diller back into a leading position in Hollywood.
 Together with an accord announced last week to acquire a 10-percent stake in satellite-television provider EchoStar Communications Corp., the deal marks the latest twist in Vivendi Universal's rapid transformation from a sleepy water-and-utility conglomerate into a global media player.
 Jean-Marie Messier, Vivendi's chief executive, told reporters Monday at a news conference in New York that the pair of deals "address our relative weakness of integration and distribution in the U.S. The goal is to make Vivendi the global media leader of the future."
 
 
Liquid Energy
 

HOUSTON, Texas (AP) - Energy marketer Dynegy Inc. unveiled a $1.25 billion capital-restructuring plan Monday in a bid to strengthen its balance sheet.
 The move comes as the entire energy sector continues to reel from disintegration of energy trading giant Enron Corp., which has sent investors fleeing from companies they believe may face similar risks.
 Dynegy said it will gain about $750 million from asset sales and reductions in capital expenses and will raise another $500 million from a stock offering next year.
 The company also anticipates growth of about 12 percent in 2002, lower than previous expectations of up to 25 percent, as the changes are put in place. 



TITLE: Big Profits and Bad Memorie Attracting More Foreign Banks
TEXT: With interest rates at their lowest level fn 40 years in the West, Russian banks are struggling to compete with their foreign counterparts in the lending market. </i><strong>Victoria Lavrentieva</strong><i> reports on the increasing presence of foreign banks in Russia and the implications this has for the banking sector. </i>

With the Russian lending market still one of the most risky, yet most profitable in the world, more foreign capital has poured into the coffers of Russian companies than ever before. But because of their shady behavior in the aftermath of the August 1998 financial crisis, Russian banks have hardly seen any of it.
 
The government and the Central Bank have worked tirelessly to protect the troubled banking sector from foreign competition - by limiting the scope of foreign presence in the market and delaying the reform process. However, they have been powerless to stop the increasing interest-rate margins between the United States, Europe and Russia, which has meant that Russian banks have found it difficult to compete with foreign banks in the lending market.
 Despite a 12-percent limit imposed by the Central Bank on the participation of foreign capital in Russia's banking sector, the real scope of foreign activity - if measured by lending volumes - is already twice as large.
 As a result, Russian banks, with comparatively small asset bases, are losing the battle for the largest and the soundest local borrowers to their foreign rivals.
 
 
Foreign Invasion
 
According to the Interfax Rating Agency, or IRA, the accumulated volume of outstanding loans provided to Russian companies by banks from 19 highly developed countries reached $14.5 billion through July 1, 2001. 
 
&quot;This is roughly 27 percent of all outstanding loans ever provided to Russian companies,&quot; said Mikhail Matovnikov, deputy director general of IRA. &quot;This means that Russian banks already account for less than three-quarters of all loans to local borrowers.&quot;
 The explanation is simple.
 After nine rate cuts by the U.S. Federal Reserve, the base interest rate in the United States is down to 2 percent from 6.5 percent at the beginning of 2001. And the annual LIBOR - the main interbank lending rate in the United States and Europe - is currently just 2.5 percent in dollar terms, a record low for the last 40 years.
 At the same time, the average annual lending rate in Russia for dollar loans is currently 16 percent to 18 percent.
 As a result, Russian banks cannot compete with foreign banks on credit costs.
 &quot;The spread between the lending and deposit rates in Russia is enormous,&quot; said Christof Ruehl, World Bank chief economist for Russia. &quot;This means that the Russian financial-intermediation system is not functioning properly.&quot;
 Renaissance Capital recently identified the continued increase of interest-rate margins between the United States, Europe and Russia as a potential &quot;catalyst&quot; for a new crisis in, or even a collapse of, the Russian banking sector.
 &quot;Russian banks will have difficult times competing with foreign banks for domestic companies, especially for those that foreigners want to lend to,&quot; said Renaissance banking analyst Kim Iskyan.
 Matovnikov said foreign banks are lending mostly to the largest Russian companies, such as Gazprom, Lukoil, Transneft and Rosneft.
 &quot;These companies are interested in foreign loans, as they need to compete on the world markets and can't afford to pay twice as much for Russian loans,&quot; he said.
 But as Ruehl pointed out, &quot;One good thing about foreign banks coming to Russia is that they will bring rates down.&quot;
 &quot;Capital markets are international, and you have only two choices: either to close off the banking sector completely, or to open it,&quot; he said.
 
Going Direct
 
Syndicated loans have always been the most popular and least risky way of lending to Russian borrowers. There are no official statistics showing the real volume of such loans and it is also hard to tell which foreign banks are lending most, but the numbers that are available are impressive.
 
If measured only by figures made public in the first half of 2001, syndicated loans from foreign banks have already reached more than $1 billion. Austrian-owned Raiffeisenbank and the 80 percent foreign-owned International Moscow Bank (IMB) are the leading lenders. IMB was formed after German Hypo-und Vereinsbank bought Bank Austria, seized its activities in Russia and merged it with IMB, where the German bank is the major shareholder.
 &quot;I can say that foreign banks are competing to lend to large-scale Russian companies now,&quot; said a banker with one foreign bank, who asked not to be named.
 &quot;Almost any Russian company could get any money it wants if it comes out with a concrete project and sound financial statements under International Accounting Standards,&quot; he said.
 Life would be easier for Russian banks if they could attract syndicated loans from abroad as easily as they did before the 1998 financial crisis.
 As analysts say, it makes more sense for foreign banks to lend money to Russian banks than to companies because this way, their risk is more diversified.
 However, analysts say foreign banks have no intention of doing this because they remember the way they were &quot;repaid&quot; by Russian banks after 1998.
 &quot;Russian banks should have thought twice before ripping off their creditors after the [1998 crisis],&quot; Matovnikov said.
 Not much has changed since the crisis to make lenders feel more comfortable in Russia, Iskyan said.
 &quot;The Russian banking system is still considered a minefield by most foreign banks,&quot; he said. 
 Michel Perhirin, chairperson of the board at Raiffeisenbank's Russian subsidiary, said that his bank, with a total lending volume of $450 million, had not written off any loan provided to Russian companies since 1996.
 However, Perhirin said he still can't forget the way some Russian banks behaved in forward-contacts disputes that were a question of &quot;life or death&quot; for many foreign banks in Russia in 1998.
 According to foreign bankers' estimates, Swiss-owned Credit Suisse First Boston, or CSFB, lost $2 billion after the 1998 crisis, French bank Societe Generale $600 million and Raiffeisenbank $150 million in GKOs, nondelivery forwards and syndicated loans to Russian banks.
 Kurt Firmetz, chairperson of the supervisory council of Hypo-und Vereinsbank, said in an interview with Vedomosti in November, &quot;It goes without saying that banks have not forgotten the losses they suffered in Russia. We lost several credits given to Russian banks.&quot;
 As a result, he said, &quot;Western banks prefer to participate in syndicated credits to companies. The situation with the organization of credits to banks is more complicated, because after the 1998 crisis, Western banks are very cautious.&quot;
 
 
Moving into Retail 
 
Although foreign banks are well represented in Russia's corporate sector, only a few of them are working with retail customers, citing large costs, high risks and the low profitability of the business.
 
Most of them prefer to work within so-called &quot;salary schemes&quot; with large, mainly foreign-owned companies working in Russia, whereby employees of the foreign companies have access to all retail-banking services while they work for the companies.
 Raiffeisenbank and IMB have been the only foreign banks to actively work with Russian retail customers. Raiffeisenbank leads with $153 million in deposits and five branches in Moscow and one in St. Petersburg, while IMB now has roughly $150 million in deposits.
 Before the merger with Bank Austria, IMB did not consider retail business a priority, but has since changed its concept to follow Bank Austria's experience.
 IMB spokesperson Sergei Levskoi said IMB had 8,000 retail customers before merging and got an additional 12,000 from Bank Austria. 
 &quot;Now we are left with six Bank Austria branches in Moscow and one in St. Petersburg, and we intend to seriously develop our retail activities,&quot; he said.
 Other European banks, such as Dutch-owned ABN AMRO and ING Barings, with individual deposits of $20 million and $29 million respectively, feel comfortable with salary schemes and don't plan to increase their retail activity in the near future. They say they want to know their clients and are not interested in large-scale retail operations, due to high operating costs. 
 Foreign banks that have plans to launch retail business in Russia some time in the future include U.S.-owned Citibank and Germany's Deutsche Bank. 
 &quot;We will be launching some level of retail activity in Russia within the course of next year, as we are positive about Russian market,&quot; said Allan Hirst, Citibank regional head for Russia and the CIS.
 As for Deutsche Bank, its Russian subsidiary is still convincing its headquarters to move into retail banking and is reluctant to give any concrete dates. 
 &quot;We don't usually decide on a specific country, but rather on a region as a whole, which takes time,&quot; said Hubert Pandza, CEO of Deutsche Bank's Russian subsidiary.
 &quot;The reason for such a delay is not because the Russian market is not ready yet, but more because our headquarters are not ready to make this decision,&quot; he said.
 
 
Foreign Expansion
 
According to the Central Bank, there are currently 23 licensed foreign banks in Russia.
 
When banks decide to start operations in another country, they take into account many factors, but first of all, they consider the external trade volumes between the two countries and the number of their clients already working with that country.
 In the case of the four German banks represented in Russia, for example, the benefits of moving into Russia are clear, as Germany accounts for almost 40 percent of Russia's foreign trade.
 Trade volume is not an overriding factor, however. There are also four Turkish banks in Russia, even though Turkey is not one of Russia's main trade partners.
 &quot;In this case, you should not judge only by total [trade volume],&quot; Andrei Ivanov, banking analyst with Troika Dialog, said. &quot;The number of small Turkish companies working with Russia exceeds that of Germany.&quot;
 In addition, he said, &quot;They are represented in a variety of sectors, starting with trade and finishing with the cement industry.&quot;
 Although the number of other European banks and U.S. banks in Russia is low - Citibank and J.P. Morgan International are the only two U.S. banks that have subsidiaries in Russia - their importance to Russia's banking sector is evident if one looks at financial statistics.
 Citibank has the largest assets of all foreign banks, with $1.3 billion through Oct. 1, 2001. It is the 11th-largest bank in Russia in terms of assets, according to the Interfax Rating Agency. Citibank also leads among foreign banks in lending volumes, with $581 million in outstanding loans to Russian companies.
 &quot;In contrast to most U.S. investment banks, we like to be very involved in the domestic financial system,&quot; Hirst said. &quot;Our strategy here is to serve both multinational and Russian companies, which currently account for an equal share of the bank's activities in Russia.&quot;
 The banking activity in Russia of the second U.S. bank, J.P. Morgan International, which recently merged with Chase Manhattan, is far behind that of Citibank, while Morgan Stanley and Goldman Sachs still prefer to work through representative offices. Bank of America, which was given a license by the Central Bank in 1998, closed its Russian subsidiary soon after the 1998 crisis.
 As for the expansion of European banks, Renaissance's Iskyan said, &quot;It is quite logical, because Austrian and German banks have a limited scope of expansion in Europe, so they have to look at Russia as their closest neighbor.&quot;
 Austria's Raiffeisenbank is in 15th place among the top 100 banks in Russia, with $835.2 million in assets, half that of Citibank.
 Matovnikov said that the high activity of Austrian banks in Russia can be explained by the fact that &quot;the only way for Austrian banks to survive is either to merge with other European banks, which we see in the case of Bank Austria, or to develop their business outside the country.&quot;
 &quot;External growth is the most important, if not the only factor of growth for them, and Raiffeisenbank chose the second way,&quot; he said.
 Raiffeisenbank's Perhirin agreed, although he said that Russia is just one opportunity among many.
 &quot;But Austria always served as a link between Western Europe and the eastern European bloc, so we know this region better than others,&quot; he added. &quot;We also proved that a medium-sized bank on the global scale can be as big as Citibank in Russia.&quot;
 Other European banks, such as Deutsche Bank, ABN AMRO, CSFB, Dresdner Bank and Commerzbank, are servicing both their international and Russian clients in Russia and are very active in organizing syndicated loans.
 They received more Russian clients after the 1998 crisis and the 1999 Bank of New York scandal - in which top bank employees were accused of laundering money through Russian accounts - after which many U.S. banks closed correspondent accounts to Russian banks.
 However, foreign bankers say that in general, it is more complicated to do banking business now than it was several years ago.
 &quot;We all live in a different environment now, and we have very strict requirements with regards to money laundering and financial transactions in general,&quot; Hirst said.
 
 
Look Small
 
Most analysts agree that in the current environment, with increased foreign competition, Russian banks will have to diversify their business in favor of small and medium-sized companies to survive.
 
&quot;There is nothing left for the Russian banks, other than to look at medium- and small-size enterprises,&quot; Ma tovnikov said.
 According to Troika's Ivanov, &quot;Russian banks will inevitably diversify their business and start lending to medium-size companies.&quot; 
 &quot;This will bring down the risk of the high concentration of loans, that we see now and also act as an engine of future economic growth,&quot; he added.
 Currently, small companies suffer most from a lack of bank loans. As analysts point out, this negative impact will become increasingly apparent over the next two years, as real ruble appreciation continues to run its course, and as commodities prices - and oil prices in particular - eventually return to their long-term averages.
 There are at least two banks with mixed foreign ownership ready to fill this gap.
 Small Business Credit Bank, or KMB Bank, an arm of the European Bank for Reconstruction and Development, has been lending money to micro, small and medium-sized Russian enterprises since 1999. KMB specializes in micro and small loans, ranging from $100 to $500,000.
 &quot;We started two and a half years ago, but we are still unable to satisfy the permanently growing demand in the market,&quot; said Reiner Mueller-Hanke, head of KMB Bank.
 Since 1999, when the bank was founded, KMB has made over 15,600 small and medium-sized loans worth $201 million.
 DeltaBank, the small-business arm of the U.S.-Russia Investment Fund, is running a similar type of business. The bank, which started operations in June, mainly works with companies whose annual turnover ranges from $1 million to $50 million, and loans range from $100,000 to $1 million.
 DeltaBank plans to approve $10 million in loans by end of this year and a further $20 million in the first half of 2002.
 &quot;This business is not for people looking for hot money,&quot; said Sergei Boyev, president and CEO of DeltaBank. &quot;You should build it on a long-term basis.&quot;
 Both KMB Bank and DeltaBank are ready to share their experience with Russian colleagues and have seen a lot of interest in their work already. 
 Analysts say that one reason Russian banks prefer to stay away from this sector is that they don't have enough experience or a good methodology in the field.
 In addition, Ivanov said, &quot;Russian banks need to change their overall approach and diversify their business, which is currently focused on servicing cash flows of a dozen export-oriented companies.&quot;
 &quot;There is an attitude problem in Russia that big is good and small is bad,&quot; Ruehl said. 
 However, he was optimistic that there was room for both Russian and foreign banks in Russia.
 &quot;In general, Russia's financial needs are so enormous that there is a niche for everyone, both Russian and foreign banks,&quot; he said.

TITLE: Let's Rebuild the World Trade Center Together
TEXT: Editor,
 </i>After World War II, the United States of America helped to rebuild the destroyed infrastructure and economies of the defeated countries of Europe and Japan. Since then, our government and the people of the United States of America have been very generous in helping other countries and peoples.
 
Therefore, I would like to suggest that the rebuilding of the World Trade Center in New York should be not just an American undertaking; but also an undertaking for the entire world. The terrorists attacked the World Trade Center building because it is a symbol of the global community and its economy. The rebuilding of the World Trade Center should be a global effort. 
 This would show the perpetrators that the world does not support their attempts to destroy the cherished freedoms of the world. It would send a signal to any person or group that would try to impose their will on the rest of us.
 I would suggest that governments and businesses worldwide participate by giving advice as to how to reconstruct the building, by giving of materials and by providing labor. This would be an international effort and a statement of world cooperation.
 It has been suggested that the building should be redesigned to look more modern. I believe that it should be rebuilt to its original form. It should be a symbol against hatred and terror. The skyline of New York should say to any terrorist that it will not be destroyed by hatred and terror. Of course, the inside should reflect the changes in modern technology as to security, energy etc.
 In addition, I believe that part of the towers should contain chapels for the major religions of the world. This attack was not just on the economies of the world; but also on the faiths of the people of the world. Not only does the world do business together; but also we respect the religions of others.
 These chapels could help the families and friends of those who perished. The towers should not be just a monument to death and destruction; they should be a monument to life and renewal. The chapels would provide a place for the survivors' families as well as others to celebrate the blessings of babies, weddings, religious holidays and the words of God.
 There should also be a memorial for those lives martyred in the destruction of the building. Instead of just the names or pictures of those who died, I would suggest a photograph of each person with their family or friends. The families or friends could choose the photograph. Have two copies of the photo, one as given by the families, and one with the deceased person blacked out. This would show that the person is no longer here as a person, and also that they are not here as a father, mother, husband, wife, grandfather, grandmother or friend. They were not just lone people. Their death also affected the lives of others.
 Outside the buildings should be a monument. I would suggest a large pool with a statue of the three firefighters hoisting up an American flag. Around the fountain would be the flags of only freedom-loving countries. No country that harbors or supports terrorism should have a flag on display.
 <i>Benyamin Abrams
 Carthage, Missouri
 </i>
 <strong>
A Dose of Realism
 </strong><i>
In response to &quot;Some Ideas To Improve St. Petersburg Tourism,&quot; a letter to the editor by David Phillips, Dec. 11.
 
 Editor,
 </i>As a long-term foreign resident of St. Petersburg, I am frankly tired of the tirade of abuse that has been levied upon the local police force on your letters' pages. The latest polemic surely takes the biscuit.
 
Phillips' letter displays naivete and arrogance throughout and offers a host of impractical &quot;solutions&quot; to the problem of the city's heavy-handed policing. One needs to adopt a more balanced and understanding approach to the question under discussion. Such balance can only come into play when one better appreciates the reality of the Russian situation.
 Admittedly, no one in his right mind can deny that a segment of the St. Petersburg police force occasionally acts in an overly zealous manner. I frequently regale friends with my own modest experiences at the hands of the local constabulary. These include a couple of fines for dubious reasons, a bruise or two sustained by the blows of a police officer's baton at a local football match, and an episode when I was head-locked and dragged half-conscious across a field for looking at the wrong person in the wrong way. Most long-term foreign residents of St. Petersburg have similar tales of woe to bore their friends over pints of Botchkaryov.
 While such treatment is not ideal, it happens to be a fact of life at times in Russia. The main reasons for this are the depressed state of the Russian economy, and the historical absence of checks on the behavior of a powerful police force. On a human level, I cannot begrudge the few dollars that a young law enforcer makes from his haul of illicit fines. This money supplements a meager salary of perhaps $70 per month and possibly puts food on the table of his wife, young son and parents. If I were in his position, I would undoubtedly behave in exactly the same way and feel few scruples.
 In addition, there a few instances of foreign residents and tourists being beaten up by police for no apparent reason. Police harassment usually ends with a document check, a pocket search, a small fine and perhaps a missing 500-ruble note. A beating is usually the result of striking a police officer or calling him a &quot;goat&quot; or other such nicety. Victims should treat police stop-and-search situations in a calm and confident manner. They should take obvious precautions such as keeping large sums of money in secret pockets, having documents with them at all times, and catching taxis home at 3 a.m.
 Police heavy-handedness will only decline as Russia ambles its way along its economic-development curve. Only with greater economic prosperity will the country be able to afford luxuries such as proper salaries for its police, tourist information booths and Auckland-style tourist wardens. Only then will the temptation to rip-off foreigners, tourists and Russian citizens decline. Potential visitors to Russia should be aware of this, and should accept things that they are powerless to change. Phillips and his ilk actually have a couple of other choices - either vacation in safer countries such as Australia or come to Russia as part of a carefully guided tour. It is unwise to jump into a fire and then complain about getting burned.
 This advice becomes especially pertinent if Phillips decides to pursue the investment possibilities in the city of which he writes. The investment climate in the region actually has very little to do with the way the city treats its guests from overseas. Successful entrepreneurs in the current business environment are largely individuals and companies - both Russian and foreign - who have expended huge amounts of energy, resourcefulness and initiative to overcome the obstacles thrown up by the city. This fighting spirit, rather than complaining letters to The St. Petersburg Times, is what is needed to build a successful business in the St. Petersburg business world.
 In Russia's defense though, the country is not unique in having a far-from-ideal police force. Common nicknames for the British police include &quot;pigs&quot; and &quot;filth,&quot; and rarely is this fine institution far from a brutality- or racism-related scandal. U.S. law enforcement agencies do not have a reputation for their softly-softly approach. I well remember an English friend of mine receiving a baton in the stomach to punish his crime of falling asleep in a Greyhound bus station. One could quote similar examples from all &quot;civilized&quot; countries.
 St. Petersburg can be a great place to live and a superb tourist destination, but anyone considering visiting should be forearmed with realistic rather than utopian expectations. Visitors should show some appreciation of the circumstances that have shaped negative parts of the tourist infrastructure such as variable restaurants, shoddy hotels, poor service and corrupt police officers. Accept things as they are, and one will thrive here. Rest assured that these things are improving slowly over time.
 Besides, one is only likely to be troubled by the police if one drinks ten pints of lager and decides to stagger home at some ungodly hour of the morning.
 <i>Stephen Ogden
 St. Petersburg
 </i>
 <strong>
Great Profile
 </strong><i>
In response to &quot;The Ballet Is 'Expressiveness, Drama, Emotion,'&quot; an interview with Altynai Asylmuratova, Dec. 4.
 
 Editor,
 </i>Thanks to the wonders of the Web, I have been alerted to this fine interview with Altynai Asylmuratova. I am most grateful to you for conducting this fine exchange with a great ballet artist about a great tradition. 
 
Many thanks to you for publishing this informative look at a leading light of Russian ballet and at one of the world's most treasured ballet academies.
 <i>Robert Greskovic,
 Brooklyn, New York
 </i>
 <strong>
Mad About Putin
 </strong><i>
In response to &quot;Feel-Good Summit Draws to a Close,&quot; Nov. 16.
 
 Editor,
 </i>As an American, I am very disappointed in my fellow citizens. The arrival of President Vladimir Putin in Washington, D.C., was barely noticed. I know this because I was the only one who showed up to see him! And I was found to be a suspicious person for doing so. 
 
I am a Russian linguist and thought it would be a great honor to go to my country's capitol to see the Russian president. I am from a small town in Ohio and decided to make the eight-hour drive to Washington.
 The night Putin was due to arrive, I kept a steady vigil in front of Blair House. I sat quietly on a bench across from the premises as ranting homeless people passed me cursing at anyone who would listen. The police kept an eye on me and eventually asked why I was hanging around. I replied that apparently I was the only American who showed up to see the Russian president. I stayed until 10 p.m. and then quietly walked back to my hotel room.
 The next morning, I came back at 7 a.m. and - lo and behold - the entourage of limousines and security vehicles was parked in front of the Blair House. I resumed my vigil on the bench for an hour until security agents (both American and Russian) began appearing. Thinking the president was due to head to the White House (which, incidentally, is just across the street), I moved to the barricade directly in front of Blair House. This barricade was on the opposite side of the street, and the street was full of police officers and Secret Service agents.
 People continued to pass along Pennsylvania Avenue, occasionally glancing over at Blair House, and those who stopped wanted to know who was staying there! The Russian flag waved proudly in the wind, yet the residents of Washington had no idea that Vladimir Putin was starting a three-day summit with our president.
 Eventually I was approached by a police officer. He asked why I was hanging around, and again I replied I came to see the Russian president. He frowned at me so I explained that I was a Russian linguist. He relayed this information to President Putin's security service, and I began a 2-hour stare-down with all the security people in front of Blair House. 
 I suppose I seemed out of place because no one else was standing there. I actually began to feel sorry for Putin. He was on his first official visit to the capitol of the United States, and I was the only one who came to see him. I assumed students from Georgetown University, well known for it's prestigious Russian program, would be there in droves. I expected family members of the Russian embassy staff and even peacenik protesters from the old school to make an appearance. 
 Shortly before the president left for the White House, numerous security vehicles with sirens blaring and obviously well-armed men inside arrived. This aroused the curiosity of the passers-by, and they now joined me at the barricade. At this point, the police announced we all had to move off of Pennsylvania Avenue onto the cross street beside it. Needless to say, I was highly disappointed. I drove 8 hours to an unfamiliar city, got lost in the bad part of town and spent a total of six hours waiting just to get a glimpse of him, and now I had to move to a spot where visibility was severely limited. I was able to see the top of his head as he got into his limousine.
 I was waiting again near Blair House when the president returned from the White House. This time more people were there, and they pushed us further back on the street as his entourage left for Capitol Hill. I saw the top of his head again as he entered his car. 
 But the catch this time was that I was detained for questioning by the Secret Service. I explained that I speak Russian, and I came from Ohio to see Putin. After searching my purse, requesting my life history and phone numbers for employers and even my mother, they wanted to know if I have ever been hospitalized for mental illness! They made me feel as if I had done something wrong for wanting to see the Russian president. I explained that I thought other people would be there, that I would not stick out as I did. They wanted to know if I was on medication for depression or any other psychological problems.
 I left Washington ashamed. I was made to feel like a criminal for wanting to see the Russian president. Yet I assume that in other countries that George W. Bush or past American presidents have visited, thousands of well-wishers greeted them. I was embarrassed by the lack of enthusiasm of my fellow Americans and offended at the implications that something was wrong with me for wanting to see Vladimir Putin.
 I am happy that he received a warm welcome from the people of Crawford, Texas. I would not want him to think that the entire country is as ambivalent as the capitol. And I would venture to guess that none of the well-wishers in Texas were asked if they had a history of mental illness or asked to go see the sights rather than stand there waiting to see the Russian president. 
 <i>Jackie Slabaugh
 Canton, Ohio
 </i>
 <strong>
Raft of Errors
 </strong><i>
In response to &quot;Elite Housing Responding to Growing Demand,&quot; by Claire Bigg, in The St. Petersburg Times' Real Estate Catalogue, Issue No. 6, Oct. 2001.
 
 Editor,
 </i>On Page 8 of your Real Estate Catalogue, you published an article with information about the Zolotaya Osen residential project. 
 
Despite the fact that all the information about this project was presented to your reporter in writing, four very important errors appeared in this article.
 1. The company that is executing the reconstruction project is called The Real Estate Fund of Promstroibank LO. Your article says &quot;Promstroibank,&quot; which attracted the attention of licensing and tax authorities.
 2. Mr. Dmitry Semyonov is the investment director for The Real Estate Fund of Promstroibank LO, not for Promstroibank. This mistake seriously concerned the management of Promstroibank and created problems for Mr. Semyonov in his further career with our company.
 3. There are no apartments &quot;500 square meters or larger&quot; in the Zolotaya Osen project, as your article claimed.
 4. Nine apartments in the project have not been sold to foreign citizens. All contracts are still being finalized.
 I will be grateful to you if you would print these corrections.
 <i>I.N. Petrov
 General Director
 The Real Estate Fund of 
 Promstroibank LO, St. Petersburg
 </i>
 <i>
The staff of The St. Petersburg Times regrets the errors. </i>

TITLE: Can Our Friendship Survive the End of ABM?
AUTHOR: By James Klurfeld
TEXT: CALL it Daisy-Cutter Diplomacy. The &quot;daisy-cutter&quot; bomb, as we've learned recently, is a huge, 6,775-kilogram explosive that the United States has been dropping in the Afghanistan mountains to destroy the caves and bunkers in which Osama bin Laden's forces have been trying to hide. It destroys everything anywhere near where it's detonated. The other day, one obliterated an entire hilltop.
 
As a military tool against terrorism, it's appropriate and effective. That is not the case, unfortunately, when it comes to diplomacy.
 The diplomatic equivalent of the daisy-cutter bomb is the decision that the Bush administration has made to unilaterally withdraw from the 1972 Anti-Ballistic Missile Treaty with Russia. It will be the first time in modern history that the United States has withdrawn from an international agreement.
 It's a huge decision with wide-ranging diplomatic fallout that is going to change the international landscape - and not necessarily for the better. But, as is the case with the weapon, the United States is so large and so powerful that nobody can do anything to stop it.
 It is a wholly unnecessary decision. President George W. Bush says that the treaty is a relic of the Cold War and is preventing the United States from doing something it must do: develop a national missile-defense system. The truth is that the treaty is not a relic of the Cold War and that the feasibility of a missile-defense system is technologically so far from certain that there is no reason now to break the treaty.
 Some form of mutual assured destruction is now, and will be into the foreseeable future, the reality of how the United States must prevent a nuclear attack. It is a description of reality, not a doctrine of choice. For Bush to say it's obsolete is just not accurate.
 And the Russians were ready to find a way to adjust the treaty to allow the Bush administration to continue to test aspects of a missile-defense system but still keep the treaty in force. In fact, many Russian experts felt an amendment to the treaty was the one concession Russian President Vladimir Putin was looking for in exchange for increased cooperation and a much stronger relationship with the United States.
 The Russians are weak and understand they cannot prevent the United States from taking this action. They will put the best face on it, rather than be humiliated each time the United States goes to test an aspect of missile defense. The agreement to reduce each nation's arsenal of nuclear missiles to about 2,000 from the current 6,000 and put that into a written agreement at a summit meeting between Bush and Putin next year is a sop to the Russians. But Russian experts I talked with this week believe the Bush administration is blowing a golden opportunity to build a new and different relationship with Russia.
 The truth is that the radical right wing of the Republican Party has vehemently opposed the ABM Treaty since it was signed by President Nixon in 1972. It became a matter of Republican orthodoxy after President Reagan introduced his &quot;Star Wars&quot; missile-defense concept in 1983. The right believes the treaty dangerously limits the United States' ability to do whatever it wants, whenever it wants. That is to say, withdrawal from the treaty now is a decision steeped in ideology, not in national security.
 The decision will almost surely cause China, which has a very small nuclear arsenal, to start building up. The Europeans will also be upset by the decision. To them and others in the world, it's yet another example of the United States' disturbing tendency to act unilaterally. This country is so big and so powerful that it can do almost anything it wants. Or so it seems. But, sooner or later, there will be a negative reaction against United States hegemony.
 Domestically, there will be only minor objections to Bush's decision. The success of the military campaign in Afghanistan provides the administration with political cover. The Democrats are reluctant to oppose the administration on a foreign-policy matter after Sept. 11 and with the president's popularity so high.
 But, in the longer run, abrogating the treaty is a divisive action that will undercut some of the bipartisan support Bush's effective war on terrorism has earned him. That is, at a time when he needs and deserves all the international and domestic support he can gather, Bush is inviting controversy for an action that did not have to be taken now.
 This is not a wise decision.
 
 <i>James Klurfeld is editor of Newsday's editorial page. He contributed this comment to Newsday.</i>
 
<style auhtor>By Pavel Felgenhauer 
 
THE war in Afghanistan against the radical Muslim Taliban militia, Osama bin Laden and his al-Qaeda terrorist organization seems to have been won. U.S. forces have established bases inside Afghanistan, and Russian aid in securing bases in central Asia is no longer essential.
 
Since the Sept. 11, attacks close relations with Moscow have been considered an issue of paramount importance in Washington. Now the emphasis has clearly shifted and the decision was made that it is time to announce officially the United States' unilateral withdrawal from the 1972 Anti-Ballistic Missile Treaty.
 Last month, President Vladimir Putin's chief of staff, Alexander Voloshin, told reporters: &quot;Our military experts have calculated that the existing ABM Treaty allows the United States to continue its missile-defense testing program for five to seven years; if there are obstacles, we are ready to discuss how to change the treaty.&quot; The only response from Washington has been to scrap ABM unconditionally.
 Even a limited missile defense will not be ready for deployment for a decade or so. ABM abrogation by the United States is not a military-strategic move per se, and in Russia many see it as a deliberate slap in the face for Putin. The Russian military establishment will draw encouragement from seeing Putin's pro-Western foreign-policy endeavor rewarded with such a public humiliation. They will surely say, &quot;We warned you never to trust the Americans,&quot; and proceed to ask for more weapons-procurement money.
 The U.S. military will presumably be as glad as their counterparts in the East to see Russia's attempts to integrate into the Euro-Atlantic community of countries discouraged. The U.S. Navy is now lobbying for money to build a new series of nuclear attack submarines; the only possible enemy that could warrant the building of these new submarines is Russia with its nuclear submarine fleet.
 If Russia becomes a true ally of the West, large parts of the Pentagon's armed forces will become redundant and may be cut. If a new generation of attack submarines is not procured, some U.S. nuclear submarine-building yards may have to be closed down. In a generation we may all be living in a world where there are virtually no nuclear submarines left at all.
 The U.S. and Russian militaries will surely unite in coordinated opposition to such a threat. Recently, the Pentagon and its chief, Defense Secretary Donald Rumsfeld, did their best to stop NATO countries approving a &quot;NATO at 20&quot; (meaning the 19 members plus Russia) decision-making committee. &quot;NATO at 20&quot; was, in the end, approved in principle, but stripped of any true decision-making role. Russian military chiefs, in turn, have been stating recently that there is no need for Russia to join NATO - that &quot;NATO at 20&quot; does not add anything new and that it will be unproductive.
 It is obvious that there are powerful special interest groups in the West - maybe even more powerful than anti-Western influence groups in Moscow - that want to keep Russia out.
 At the same time, the war in Afghanistan has lost the ability to promote an alliance with Washington. As different former anti-Taliban Afghan factions feud over the spoils of victory - primarily over control of narcotics production and the heroin trade - Russia and the United States may also start to squabble, as they find themselves backing opposing warlords.
 Russia, however, needs an alliance with the West more than the West needs an alliance with Russia. It's possible that Putin may continue his drive toward the West despite the ABM Treaty. The Kremlin may play down the termination of the treaty, wait for the fallout to settle and continue business as usual, emphasizing there is no imminent threat in a nonexistent missile-defense system.
 Putin has clearly made a long-term decision to Westernize Russia. The multipolar-world concept has been abandoned by the Kremlin, and its author - former Prime Minister Yevgeny Primakov - will effectively be leaving public politics now that he has been elected president of Russia's Chamber of Commerce and Industry.
 Even the maverick leader of the Liberal Democratic Party of Russia, Vladimir Zhirinovsky, has announced that his party is abandoning anti-American and anti-Western elements in its ideology.
 If this pro-Western drive is rejected, will there be another chance?
 
 <i>Pavel Felgenhauer is an independent defense analyst. He contributed this comment to The St. Petersburg Times. </i>

TITLE: Somewhere on the Road to Nowhere
TEXT: THE other night I was in a car with a group of Russian businesspeople driving from Tallinn to Narva. All of these men have business interests in Estonia, and I was surprised to hear their attitudes toward doing business there. Listening to them was like sitting in on a Monopoly game, one that actually has rules - in this case, set up by the Estonian government - and they actually seemed to enjoy playing along.
 
At first I couldn't get over it. I couldn't get used to people speaking about business in Russian without using words like <i>krysha </i>(protection) or discussing various schemes to bribe officials in order to avoid paying taxes. Instead, they were loudly discussing all sorts of projects and thinking out loud about various completely legal ways of doing business using existing incentives and procedures.
 &quot;This may seem like a silly question,&quot; I finally asked, &quot;but is it hard to deal with the mafia if you've just started a business?&quot;
 &quot;That isn't an issue anymore. Those bad times have passed [in Estonia],&quot; I was told. &quot;If someone opens a cafe or a store, it is, of course, useful to sign an agreement with a security company. But it is just a security company, which installs security equipment and provides other services instead of just collecting money.&quot;
 There were, of course, hard times in Estonia too a few years back. Then, the highway from Tallinn to the Russian border was one of the most dangerous places in the region. Cars and trucks were stopped and robbed along this stretch of road practically every day.
 But not anymore. Now the road is safe and comfortable, lined with nice cafes and restaurants. 
 &quot;You know what? They recently passed a law mandating that owners of restaurants and cafes install European-standard restrooms by 2003,&quot; one of the men said. Then he turned to one of his friends and said, &quot;How much would that cost?&quot;
 &quot;About 100,000 kroona, I suppose. That's a lot of money, but what else can we do?&quot; came the reply.
 These words came back to me a few hours later when we stopped for a bite at a cafe on the Russian side of the border. As we got out of the car, I noticed that the road was totally covered with snow as far as I could see. I was offered a frozen sausage, but chose a pre-packaged sandwich instead, which seemed to me a bit closer to &quot;European standards&quot; than the sausage.
 On the way to St. Petersburg, we stopped by to visit a friend of the businesspeople, an ethnic-Russian farmer in Estonia who had recently bought a huge old country house, a building that is on the state registry of historical monuments. By the time he'd bought it, the building was in pretty poor shape because the state, of course, has no money to put into it. But this farmer does, and he has developed some grand plans.
 There are lots of interesting buildings around St. Petersburg that are slowly rotting away for only one reason: They cannot be sold because they are &quot;protected.&quot; 
 &quot;What is wrong with this place?&quot; I thought to myself.
 People say that the Moscow authorities don't want to give the local authorities the right to sell these buildings, fearing that local mafia types will bully the local authorities into practically giving them away. It would seem that there is little hope of seeing nicely refurbished estates in the country around St. Petersburg anytime soon.
 With one exception, of course. The Konstantinov Palace in Strelna, which is currently being rebuilt to become President Vladimir Putin's northern residence, a sort of Russian Camp David.
 Well, that's one. But what about the others? Rather than following the good example of our neighbor, our officials prefer to blaze their own trail. And judging from the state of our roads, that is definitely a mistake.

TITLE: Chris Floyd's Global Eye
TEXT: <b>Smoking Gun</b>.
 

 
&quot;If it were done, when 'tis done, then 'twere well it were done quickly.&quot;</i>
 - Shakespeare's Macbeth,<br> plotting murder.
 

 
Like everyone else in the world, we here at the Global Eye were shocked and horrified last week by the release of damning material that confirmed the complicity of terrorist leaders in the deaths of thousands of innocent people. 
 
We refer, of course, to the release of declassified documents showing that U.S. President Gerald Ford and Secretary of State Henry Kissinger gave their O.K. to Indonesia's invasion of East Timor in 1975 - an act of &quot;state-sponsored terrorism&quot; that killed more than 200,000 people. The documents were obtained through the Freedom of Information Act - in June, <i>before </i>George W. Bush gutted the law - but only reported last week by the Washington Post.
 Kissinger and Ford had long denied any prior knowledge of the murderous assault, even though they'd been feasting with the genocidal Indonesian tyrant Suharto the day before the troops went in. However, in a secret State Department cable, Ford and Kissinger actually told Suharto before the attack that &quot;we understand the problem you have and the intentions you have&quot; and &quot;we will not press you on the issue.&quot;
 Kissinger, ever mindful of the media angle, added in another love note: &quot;We understand your problem and the need to move quickly, but I am only saying that it would be better if it were done after we returned.&quot;
 The murders were carried out with U.S. weaponry. Congress had restricted their use to defensive purposes only, but Kissinger blithely brushed this aside, assuring Suharto that America would &quot;construe&quot; the invasion as &quot;self-defense rather than a foreign operation.&quot; Kinda like Hitler did with Poland.
 Naturally, this story was buried by the usual bull-roaring of Bush praise in the media. In fact, in the same issue of the Post in which it appeared, you might've been diverted from its revelations by a fascinating piece on the editorial page, a long disquisition on the new ordering of the world, penned by one of our most revered elder statesmen: Henry Kissinger. 
 
 
Blood of the Lamb 
 <i>
&quot;You cannot serve both God and Mammon.&quot;</i>
 - Jesus of Nazareth, <br> Koranic prophet and founder of Christianity, from <i>The Gospel According to Matthew.</i>
 
 
Who says? Why, wherever fundamentalists frolic, funny money is sure to follow. Take, for example, those two birds of a zealous feather, the Reverend (sic) Pat Robertson and holy (sic) warrior Osama bin Laden.
 
These pampered sons of privilege - Ozzie the offspring of a Saudi merchant prince; Patty the spermic spawn of a U.S. senator - have long been nose-to-nose in the same African trough, gobbling up bloodstained cash to fund their &quot;faith-based organizations&quot; under the benevolent eye of a shared patron: Liberian strongman Charles Taylor.
 The Washington Post reports that, before the recent unpleasantness in Afghanistan, Ozzie was reaping millions from the illicit trade in African diamonds. The rocks are sold at bargain prices by rebel forces in Sierra Leone, led by Taylor protege Foday Sankoh, whose Liberian-backed gang of marauders has terrorized the nation for years. Ozzie then re-sold Foday's stolen gems at a huge markup to European dealers.
 Ozzie's diamond dealers operate out of Monrovia, the capital of - you guessed it - Liberia. That's where the actual transactions take place, in a safe house protected by Taylor's security forces. Naturally, Chuck takes his cut - a cool 10 percent, his standard slice of all business operations in Liberia.
 Now enter Pious Pat - founder of the Christian (sic) Coalition, healer of goiters over the airwaves, belcher of virulent anti-Semitic filth, panting obsessor over homosexuality, and political partner of the anointed, appointed fundamentalist president (sic) of the United States. Robertson once dabbled in &quot;blood diamonds&quot; himself, shacking up with that old mass murderer, Mobutu Sese Soko, to mine gems in Zaire. But when the Lord called Mobutu to be a sunbeam in Heaven, Pat found a new best buddy: Taylor.
 Leaving diamonds to his soul brother Osama - and they say there's no honor among thieves! - Pat now concentrates on gold mining. Robertson's &quot;Freedom Gold Ltd.&quot; is a for-profit partnership with Taylor - no need for that &quot;Christian charity&quot; crap when there's real money to be made. In return for Taylor's blessing, Pat uses his Christian (sic) Broadcasting Network to peddle pro-Liberian propaganda in its news (sic) reports. To hear CBN tell it, there's no corruption, no repression, no murder, no fomenting of war or trafficking with terrorists going on in Taylor's utopia; it's just a plucky &quot;Christian nation&quot; shining God's light on the Dark Continent.
 Amnesty International, Human Rights Watch and the U.S. State Department tell a different story, of course - but they're all just a bunch of godless, goiter-ridden Jewish homosexuals anyway, right? They can never understand what men of true fundamentalist faith like Pat and Ozzie and George all know: the cross is a stiletto, the crescent is a scythe - and the Lord helps those who help themselves.
 
 
American Pie 
 
We get a goodly amount of mail here at the Global Eye each week - transported by mule team to our secure, undisclosed location. 
 
Some of it's not printable in a family publication, of course - not even one published by Larry Flynt's family. 
 That's because the majority of these irate interlocutors take exception to the column's calm and dispassionate analysis of the Bush administration and its penetratingly impartial disection of U.S. foreign policy. So, following their Master's highly Christian example, they respond to the tightly reasoned argumentation of the Global Eye with the kind of schoolyard obscenities that he displayed on the campaign trail last year, when he was caught on tape mouthing petulant vulgarities about a reporter he didn't like.
 These angry ejaculations are hardly of any intrinsic interest, of course (although some of the spelling and grammar that they manifest deserve attention), but over time it's become clear that many of our more vituperative correspondents believe that the column's author is Russian: a misapprehension that only adds to their Bushian bile. &quot;We don't need no commie losers tearing down our great president, so shut your commie pie hole you dirty commie bastard&quot; is a typical (expurgated) observation.
 (For alas, it is still an article of faith among vast multitudes in the American &quot;Homeland&quot; that every Russian is a communist - a mistake no doubt resulting from the same carefully cultivated public ignorance that leads good and decent people to believe that a deeply corrupt elitist mediocrity and his gang of corporate bagmen are great American statesmen doing the work of the Lord.)
 Anyway, it occurred to us that we might be contributing in some small way to ill will between nations by not clarifying the author's background. Why should the whole Russian people be forced to shut its pie hole when the offending pie hole actually belongs to another nationality altogether? 
 Therefore, let us here declare that the author of the Global Eye is in fact a citizen of the United States - as American as apple pie, anthrax and air strikes. His family has been in America since the 1640s; one of them even signed the Declaration of Independence. The author himself was born and raised in the rural South. He is not now nor has he ever been a member of the Communist Party - or the Democratic Party, or the Green Party or indeed of any political or ideological organization whatsoever, with the exception of the First Baptist Church in his old hometown in the &quot;Homeland.&quot;
 We trust most sincerely that this will satisfy all those slavish devotees of the Dear Leader who seem congenitally unable to grasp the fact that a down-home, red-blooded, common-as-dirt fellow American could find fault with that <i>faux</i>-Texas jackanapes now strutting and fretting his hour upon the world stage.

TITLE: Novgorod the Great
TEXT: Less than 200 kilometers from St. Petersburg lies one of Russia's oldest and lovliest cities, Novgorod the Great.
 Founded in the ninth century, this city was Russia's most advanced political and cultural nexus for about 600 years, before being brought to heel by Ivan the Terrible. Although the city was virtually destroyed during World War II, it was methodically restored and today - despite a population of nearly 200,000 - retains its old-Russian charm. Of particlar note is the Cathedral of St. Sophia, completed in 1050. Novogord is an easy day trip by bus or suburban train from St. Petersburg. </i><strong>Photos by Alexander Belenky. </strong>

TITLE: Bin Ladin Still Elusive as Last Strongholds Fall
AUTHOR: By Geoff Spencer
PUBLISHER: The Associated Press
TEXT: TORA BORA, Afghanistan - Tribal fighters and U.S. special forces chased al-Qaeda guerrillas through the mountains of eastern Afghanistan on Monday after conquering their complex of caves and tunnels. Some tearful al-Qaeda fighters surrendered, pleading with their captors not to turn them over to the Americans.
 
More than 200 foreigners from al-Qaida, Osama bin Laden's terrorist network, were killed in battles culminating nine weeks of attacks by American warplanes in the air and eastern alliance forces on the ground. Hundreds more were believed to be on the run, and there was no word on the whereabouts of bin Laden after some reports had placed him in the area.
 &quot;Until we catch him - which we will - we won't know precisely where he's been,&quot; Defense Secretary Donald Rumsfeld told reporters while flying to Brussels, Belgium.
 He said any number of al-Qaeda members remained free.
 &quot;It's going to take time and energy and effort, and people will be killed in the process of trying to find them,&quot; he said. Asked if senior leaders of the network have escaped, he added: &quot;We're still trying to sort out who we have, and who we don't have, and who has been killed. It is not an easy process.&quot;
 There was fresh information on another fugitive on the American wanted list: Taliban supreme leader Mullah Mohammed Omar. Haji Gulalai, the intelligence chief for Kandahar's governor, said reports indicated the one-eyed cleric was holed up with hundreds of fighters in the town of Baghran, northwest of Kandahar.
 Around Tora Bora, air strikes were less intense Monday than in the previous weeks, but bombs still exploded deep in the forests on the snowcapped mountain range where al-Qaeda fighters were believed to be fleeing. Cannon fire from helicopter gunships gave an orange tint to low-lying clouds over the mountains.
 The Eastern Alliance said misdirected U.S. bombs killed three of its fighters overnight, repeating charges leveled earlier in the conflict that the Americans weren't taking enough care to avoid hitting their allies.
 Some alliance fighters said U.S. special forces were working with them as they searched the caves and tunnels left behind by fleeing al-Qaeda troops.
 Auzubillah, a commander of the Eastern Alliance, said his forces clashed early Monday with retreating al-Qaeda fighters, killing two and capturing five. He reported finding ammunition and food stores in abandoned caves.
 Several local fighters said women and children were among the al-Qaeda dead, adding credence to reports that some foreign fighters had brought along their families. Their accounts could not be independently verified.
 Captured al-Qaeda members were led down the mountainside on mules amid intermittent snow. Many were crying. One faction paraded 18 men - nine Arabs and nine Afghans - through the streets of a village. Several appeared to be slightly injured, and one man's head was bandaged. Some had their hands tied behind their backs with red nylon ropes. They were not allowed to speak to reporters.
 The men pleaded with their captors not to turn them over to U.S. forces. Khudaifa, a 17-year-old fighter from Kuwait, said he came with his father to fight with al-Qaeda, but that an American bomb killed his father and wounded him.
 &quot;I haven't had a drink for two days. If you don't give me water, I will die,&quot; Khudaifa begged.
 The prisoners said they knew of 64 more al-Qaeda hiding in the forest. They said they had seen bin Laden in the area a month ago, but weren't sure where he was now. It was unclear what would happen to the captives. Commanders spoke alternately of handing them over to U.S. authorities or of letting Afghanistan's interim governmen deal with them. U.S. Marines in southern Afghanistan have built a prisoner-of-war facility capable of holding 300 people.
 The area around Tora Bora was the last major pocket of al-Qaeda resistance in Afghanistan. The Eastern Alliance - a collection of fighters under tribal leaders in Afghanistan's east -said Sunday that it had captured the foreign fighters' defensive positions.
 In southern Afghanistan, a marine who stepped on a land mine at Kandahar's airport was flown to a hospital outside Afghanistan. Marine spokesperson Captain David Romley said Corporal Chris Chandler lost his foot in the explosion. Two other marines - Sgt. Adrian Aranda and Lance Corporal Ni cholas Sovereign - suffered minor injuries to their hands and arms.

TITLE: U.S. Reopens Embassy In Afghanistan's Capital
AUTHOR: By Laura King
PUBLISHER: The Associated Press
TEXT: KABUL, Afghanistan - The American flag that was taken down when the U.S. Embassy was abandoned nearly 13 years ago rose again Monday, inaugurating what envoy James Dobbins promised would be a long commitment to rebuilding Afghanistan. 
 
&quot;Today's ceremony symbolizes the return, after more than a decade of absence, of the United States to Afg ha ni stan,&quot; said Dobbins, the special U.S. ambassador to Afghanistan, as he presided over the rain-soaked ceremony in the embassy's dilapidated front courtyard. &quot;We are here, and we are here to stay.&quot; 
 To the strains of the national anthem piped over a sound system, a four-man Marine honor guard bore the flag forward and then carefully raised it - the same flag that had flown over the embassy when it was evacuated on Jan. 31, 1989. 
 For now, the embassy building will be used as a liaison office, housing a small group of American diplomats. A charge d'affaires will be appointed in coming weeks, and then an ambassador in coming months, Dobbins said. 
 Representing the new Afghan government at the ceremony were incoming Defense Minister Mohammad Fahim and Interior Minister Younous Qanooni. In the small crowd of invited Afghan guests, some waved tiny paper American flags. The embassy was one of many long-abandoned diplomatic outposts in the capital being rushed into service before Afghanistan's interim government is inaugurated Saturday. Turkey, NATO's only Muslim member state, also reopened its embassy on Monday. 
 Like Kabul itself, the U.S. Embassy has stood silent witness to years of violent upheaval in Afg ha ni stan - the Soviet invasion, the bloody civil war that left much of the capital in ruins, the harshly repressive Taliban era. 
 The last U.S. ambassador in Kabul, Adolph Dubs, was kidnapped by Islamic militants in 1979. He was killed by cross fire in a botched rescue attempt by Afghan security agents. 
 The embassy functioned without an ambassador until the last of its staff left in 1989. After that, Afghan custodians - who were honored at Monday's flag-raising ceremony - kept watch over the deserted compound. 
 On Sept. 26, with Taliban police looking on, protesters attacked the embassy in a carefully choreographed display of anti-American sentiment, ripping down the U.S. seal, setting vehicles ablaze and burning a guardhouse.
 Dobbins was a key architect of the UN-brokered agreement setting up Afghanistan's interim government, and has long experience in troubled venues like Haiti, Somalia, Bosnia and Kosovo. 
 The re-establishment of an American diplomatic presence in Kabul is laden with symbolic significance - but is also seen as an important practical move to help keep the transfer of power on track. 
 The new post-Taliban government is headed by hereditary Pashtun tribal leader Hamid Karzai, and key Cabinet posts are held by members of the Northern Alliance, which seized most of Afg ha nistan's territory, aided by a massive American air offensive.

TITLE: Arafat's Speech Raises Cautious Optimism
AUTHOR: By Scott Lindlaw
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Bush administration officials expressed wary optimism following a new call from Palestinian leader Yasser Arafat for an end to all terrorist activities in Israel, especially suicide bombings. 
 
U.S. Secretary of State Colin Powell said such attacks by the Palestinians had &quot;blown up&quot; an American peace initiative last week. 
 Arafat called Sunday for a halt to all &quot;terrorist activities&quot; in a televised speech to mark Eid al-Fitr, a three-day celebration that follows the Muslim holy month of Ramadan. President Bush was honoring the holiday with remarks Monday at the White House. 
 &quot;Chairman Arafat spoke constructive words, but what's important is that it be followed up by concrete actions, and that's what will be measured, and that's what the president will wait to see,&quot; White House spokesperson Ari Fleischer said Sunday. 
 &quot;The words imply that he has made the decision to exercise his leadership in stopping terrorism,&quot; State Department spokesperson Richard Boucher said. &quot;Now [Arafat] must turn these important words into effective and sustained action against terror and violence.&quot; 
 Powell spoke to Egypt's foreign minister, Ahmed Maher, after Arafat's speech, an Egyptian official said. Maher asked Powell to support the Palestinian leader, saying Arafat had done everything asked of him by the United States and others, said the official, speaking on condition of anonymity. 
 Maher said he hoped U.S. envoy Anthony Zinni - summoned back to Washington on Saturday - soon would return to the region, the official said. 
 The State Department declined to comment on the conversation. 
 The Bush administration sought for most of this year to be evenhanded in its dealings with Israel and the Palestinians, often calling for restraint from both sides. On Sunday, however, the U.S. criticism and calls for restraint were directed at the Palestinians. 
 Powell explicitly defended Israeli reprisals for Palestinian attacks that have killed 40 Israelis in recent days. The retaliations left more than 60 Palestinians dead. Prime Minister Ariel Sharon &quot;has a responsibility to defend the people of Israel,&quot; Powell said. 
 The spiraling violence coincided roughly with the arrival of Zinni, a retired Marine Corps general who went to the Middle East on Nov. 26 seeking to broker a peace agreement. 
 He pledged to stay in the region &quot;as long as it takes,&quot; but the administration pulled him back amid the escalating death toll. 
 &quot;All of that was blown up by these terrorist organizations on the Palestinian side,&quot; Powell said. 
 &quot;The failure is not General Zinni's, it's not the United States government's,&quot; he said. &quot;The failure is with the parties in the region, especially, I have to say, on the part of the Palestinians for not getting the violence under control.&quot;

TITLE: Gunmen Attack National Palace in Haitian Coup Bid
AUTHOR: By Michael Norton
PUBLISHER: The Associated Press
TEXT: PORT-AU-PRINCE, Haiti - Armed commandos stormed the National Palace on Monday, taking over radio communications and killing at least two police officers and two passers-by before police recaptured the building, officials said. 
 
President Jean-Bertrand Aristide and his wife were unharmed in their suburban home in Tabarre about nine kilometers from the palace, said National Palace spokesperson Jacques Maurice. Aristide did not immediately appear on television or radio, and no statement was issued in his name, although government officials said he would make a statement later in the day. 
 Hundreds of his supporters, wielding machetes, surrounded the palace, shouting, &quot;We'll never accept another coup d'etat.&quot; Aristide was first elected president in 1990 and stayed in power only eight months before the army ousted him in a coup that began Sept. 30, 1991. He started his second term in February. 
 In apparent retribution for the palace attack, Aristide supporters torched the headquarters of the Convergence opposition alliance in the capital as well as the headquarters of the National Congress of Democratic Movements, a socialist party that is a member of Convergence. 
 Mischa Gaillard, a spokesperson for the 15-party Convergence, declined to comment on the palace shooting. 
 Government officials described the attack as an attempted coup, but by midmorning the police retook the palace and the situation was under control, said Guy Paul, Minister of Culture and Communication. 
 At least six police officers were wounded in the attack, he said. It wasn't immediately clear what happened to gunmen who authorities said had remained inside the palace for hours. Others had reportedly fled earlier. Before attacking the national palace, the commandoes in three pickups and a jeep attempted to assault the national penitentiary, Maurice said. When they were rebuffed, they then went on to the palace. 
 The gunmen lobbed a grenade at the National Palace about 2 a.m. and then began firing as they entered, Paul said. They killed two police officers guarding the palace, Maurice said. 
 The presidential mansion is protected by hundreds of guards, and it was unclear how the gunmen penetrated the security. 
 &quot;This is an attempted coup d'etat,&quot; Maurice said. &quot;This is not a staged event.&quot; 
 The attackers stole a National Palace radio system and used it to communicate among themselves, some in Creole and others in English and Spanish, Maurice said. A pickup truck, apparently carrying some of the gunmen, sped out of the palace in the morning and escaped despite the many barricades erected in the capital, according to national radio. The men in the truck shot and killed two passers-by as they fled, the radio report said. 
 A government official, speaking on condition of anonymity, said the attackers identified their leader as the former police chief of the northern city of Cap-Haitien, Guy Philippe, who fled to the Dominican Republic earlier this year. Philippe's whereabouts weren't clear. 
 Flaming tire barricades were burning on several corners in downtown Port-au-Prince while cars were diverted away from the palace. Personnel from the U.S. Embassy were told to stay at home. 
 Since Aristide's Lavalas Family party swept parliamentary and local elections in May 2000, Haiti has been mired in unrest, with the main opposition group calling the elections fraudulent and foreign donors refusing to release desperately needed aid until results are revised. 
 Protesters have accused Aristide of failing to deliver on promises of basic services such as sanitation and electricity. Aristide says his mandate has been hampered by lack of aid. 
 A government communique that aired early Monday on Radio Caraibes called on Haitians to &quot;block the way&quot; to anyone who wants to destabilize the government. 
 Aristide, in a speech to police in June, called for a crackdown on rampant crime, urging &quot;zero tolerance.&quot; 
 Human-rights groups have denounced the slogan, saying some have interpreted it as license to kill thieves and government opponents.

TITLE: WORLD WATCH
TEXT: Arabs 'Astonished'
 

CAIRO (Reuters) - The Arab League voiced astonishment and concern Sunday at the U.S. decision to veto a UN resolution calling for international monitors to help curb violence between Israel and Palestinians.
 Arab League Secretary General Amr Moussa "expressed his astonishment and intense concern that the United States employed its right of veto," the Cairo-based League said in a statement.
 The resolution, sponsored by Egypt and Tunisia and amended by France, encouraged "all concerned to establish a monitoring mechanism" to help ease conditions in the West Bank and Gaza.
 The resolution also condemned all terrorist acts, executions without trial, excessive use of force and the destruction of property. The vote in the 15-member council was 12 to 1 with 2 abstentions, Britain and Norway. The other two European countries on the council, France and Ireland were among the "yes" votes.
 The U.S. veto was the second this year on a Palestinian-backed resolution. In March, Washington killed a tougher measure that called for an international observer force, which Israel opposes.
 
 
Suharto Hospitalized
 

AKARTA (Reuters) - Indonesia's ailing former President Suharto, who lost consciousness over the weekend while carrying out his Ramadan fast, was hospitalized Monday evening after his condition worsened, a family lawyer said. Suharto, accused by critics of amassing a multi-billion dollar fortune during his 32-year rule of the world's largest Muslim nation, has had several strokes since being swept from power in 1998 amid mass riots.
 He was fitted with a pacemaker in June while spending a week in hospital and the Supreme Court said last week he was too sick ever to go to court. Earlier this year, the same court rejected a government plea for a Suharto trial, also ruling he was too ill.
 Tampubolon said earlier in the day Suharto's condition had been aggravated by fasting during Ramadan.
 
 
Guterres To Resign
 

LISBON (Reuters) - Portuguese Prime Minister Antonio Guterres will offer his resignation to President Jorge Sampaio Mon day afternoon, a presidential spokesperson said.
 Guterres' Socialist Party suffered a sweeping defeat on Sunday at the hands of the opposition Social Democrats in local elections.
 Guterres said early Monday that he would offer to resign. His resignation would set the stage for early elections in Portugal, one of the European Union's poorest countries.
 
 
China Pushes Stability
 

BEIJING (Reuters) - China on Monday urged the United States to safeguard global stability, after talks with U.S. diplomats and China on President Bush's decision to abandon the Soviet-era Anti-Ballistic Missile treaty.
 Chinese officials "stressed the importance of safeguarding international military control and the disarmament system and the stability of global strategy in the current circumstances," the Foreign Ministry said in a statement.
 "We hope that the United States will earnestly take into account the opinion of the majority of the world's nations," it said. 



TITLE: SPORTS WATCH
TEXT: Fab Figo
 

ZURICH, Switzerland (Reuters) - Luis Figo of Real Madrid was crowned FIFA's World Play er of the Year on Monday when he narrowly out-scored Manchester United's Da vid Beckham in a poll of national team coaches.
 "It is a privilege for me to stand here and accept this trophy," said Figo, the 29-year-old Portuguese international forward.
 "But this is an award not just to me, but to my team, my teammates at my club and with my country. I think it is a great reward for all the players around me in all the world.
 Figo, runner-up last year behind Frenchman Zinedine Zidane, scored a total of 250 points to beat United midfielder Beckham, with 238, into second place.
 But the England captain, who was runner-up in 1999, gathered more votes for first place than any of his rivals - 30 against Figo's 27.
 Figo won, however, because he had 35 coaches' votes for second place compared to 23 for Beckham.
 Another Real Madrid player, Raul, the Spanish international striker, was third.
 
 
The Ruiz Wrestle
 

MASHANTUCKET, Connecticut (Reuters) - John Ruiz retained his World Boxing Association heavyweight title with a draw after 12 rounds against Evander Holyfield in an ugly fight on Saturday.
 The fight featured almost as much wrestling as boxing as the two men grappled and pushed each other around the ring, especially in the first few rounds.
 The first round caused some controversy when Holyfield broke Ruiz's nose, which Ruiz's corner claimed had been done by an elbow that the four-time former world champion often held pressed against Ruiz's throat.
 Holyfield countered by complaining to referee Steve Smolger, who had his hands full trying to prise the fighters apart, about Ruiz's holding.
 Holyfield appeared to have an exhausted-looking Ruiz in trouble in the 11th and 12th rounds, but could not finish him off despite Ruiz, who at 29 is 10 years younger than Holyfield, literally hanging on in the last round.
 Judge Julie Lederman scored the fight 116-112 for Holyfield, Don O'Neill had it 115-113 for Ruiz, and Tommy Kaczmarek scored it even at 114-114.
 
 
Friendly Environs
 

CLEVELAND, Ohio (Reuters) - The Cleveland Browns' final home game of the season nearly ended prematurely in a hail of beer bottles and debris on Sunday.
 A controversial call against the Browns in the final minute that cost them a chance of victory over the Jacksonville Jaguars, and probably any shot at the playoffs, set off the ugly and dangerous scene at Cleveland Browns Stadium.
 Fans began pelting the field with plastic beer bottles and other debris and referee Terry McAulay decided that it was too dangerous to continue and declared the game over with 48 seconds left with Jacksonville leading 15-10.
 Jaguars players had to dodge objects flying out of the packed stands as they left the field, and on-field officials were pelted with beer, plastic cups filled with ice and other debris as they sprinted for safety surrounded by security.
 While the teams were in the locker rooms with the contest apparently over, NFL commissioner Paul Tagliabue contacted game supervisor Dick McKenzie and ordered the final 48 seconds to be played.
 The teams took the field to complete the game after a delay of nearly 30 minutes.
 
 
Manager Knows Best
 

LONDON - Leeds United manager David O'Leary has accused his players Lee Bowy er and Jona than Wood gate of bringing the English Premier League club into disrepute following their trial on assault charges.
 The pair was cleared by a jury at Hull Crown Court on Friday of causing grievous bodily harm to a 19-year-old student. Woodgate was found guilty of the lesser charge of affray and sentenced to 100 hours community service.
 "What did they think they were doing, boozed up and running through the streets?" O'Leary told the Sunday People newspaper. "They were inviting trouble. And, boy, did they get it.
 "They have brought the good name of this club into disrepute.
 "Should they have been running through the streets of Leeds, after a boozy night out at the Majestyk nightclub? Absolutely not."
 O'Leary also criticized the drinking culture he said was still prevalent in British soccer.
 "British players should ask themselves, why is it that you never see foreign players getting drunk, abusing their bodies and hogging the headlines for misbehavior?
 
 
Made for Him
 

THOUSAND OAKS, California, (Reuters) - Tiger Woods proved an ungracious host by winning his own event, the Williams World Challenge, by three strokes over Vijay Singh on Sunday.
 The world No. 1 carded 10 birdies, including five in a row from the 10th hole, in an eight-under-par 64 round to overtake third-round leader Singh and capture the $1 million top prize, which he donated to the Tiger Woods Foundation.
 Woods was four shots back with 10 holes to play, but began the back nine with five birdies and capped the day with his 10th birdie on 18 for a 15-under-par 273 total.
 "I'm pretty excited to win my tournament," he said.
 "I was not hitting the ball well this week, just chipping and putting," he said. "It was all smoke and mirrors until today."
 Singh finished second at 276 after a one-under final round, with Scott Hoch third at 279 in the elite 18-player field.
 Bernhard Langer and Mark O'Meara ended up tied for fourth at 281, eight strokes off the pace set by Woods.
 
 
Twice the Trick
 

RIO DE JANEIRO (Reuters) - Striker Alex Mineiro, who scored a hat-trick in last week's semifinal win over Fluminense, hit another three goals as Atletico Paranaense beat Sao Caetano 4-2 in the first leg of the Brazilian championship final on Sunday.
 His goals all came in the last 35 minutes as Atletico came from 2-1 down to take a solid lead into next Sunday's second leg against last year's runners-up.
 In the 55th minute, he finished off a counter-attack by sliding the ball under goalkeeper Silvio Luiz.
 In the 80th minute, he played a one-two with substitute Souza and burst through the defence for a brilliant second before adding an injury time penalty.
 Neither club has won the title before and and their progress in the competition has been welcomed as a breath of fresh air in the decaying Brazilian game. 



TITLE: Russians, Canadians Dominate the Ice
AUTHOR: By Salvatore Zanca
PUBLISHER: The Associated Press
TEXT: KITCHENER, Canada - Russia's Irina Slutskaya edged American star Michelle Kwan in the Grand Prix finals for the third consecutive season Saturday night.
 
Following the first two Grand Prix losses, Kwan rebounded to beat Slutskaya in the world championships. The American will have another chance to top the Russian in the Salt Lake Olympics.
 &quot;I am so tired. I didn't feel well today and in practice. I didn't skate well,&quot; Slutskaya after finishing her third program in 36 hours. &quot;I won, but I need to work on my skating.&quot;
 Kwan fell on her final jump, an improvised triple toe loop after she cut down a triple-triple attempt to a triple-double earlier in the routine.
 &quot;You can't afford those stupid mistakes,&quot; Kwan said. &quot;That's what I get for winging it.&quot;
 In the men's competition, Alexei Yagudin handed world champion and rival Yevgeny Plushchenko from St. Petersburg his first loss in nearly two years.
 Canadians won the other two events. Jamie Sale and David Pelletier took the pairs and Shae-Lynn Bourne and Victor Kraatz won the ice-dance event.
 Slutskaya barely won the free skating over Kwan. Slutskaya's routine was a bit off technically, but she still received four first-place votes from the seven-judge panel.
 Kwan had six triples in her routine to &quot;Scheherazade&quot; compared to Slutskaya's four in her skate to &quot;Tosca.&quot;
 However, Kwan fell on her last attempt at the triple jump and her technical marks showed the error, mostly 5.6 and 5.7s with one 5.8. Slutskaya had three 5.8s among the technical marks. The presentation scores for both were mostly 5.8s and 5.9.
 American Sarah Hughes had seven triples in a routine with various classical selections. She came in a close third and even outscored Kwan technically.
 In the men's event, Yagudin's emotional program beat Plushchenko's technical ability.
 Yagudin won the final free skate, worth 50 percent of the total mark. They were tied after the second free skate, but a 4-3 judges' decision in the second free program was the tiebreaker in Yagudin's favor.
 Yagudin's routine to the &quot;Man in the Iron Mask&quot; soundtrack lacked the number of difficult jumps performed by Plushchenko, who had two quadruple jumps and seven triples. Yagudin ended with two quads and five triples.
 &quot;Of course I made mistakes. I didn't try the combination on the second quad,&quot; said Yagudin, who has won three world titles.
 &quot;Plushchenko has been first for so long, and I have been waiting for this.&quot;
 Pluschenko's last loss came in the 2000 world championships, won by Ya gu din. Since then he has beaten Yagudin at the Russian championships, Europeans, 2001 worlds and Grand Prix finals.
 Plushchenko used his Olympic routine for the first time to music from &quot;Cirque du Soleil&quot; and &quot;Moulin Rouge.&quot; Although Plushchenko completed all the jumps, he failed to display the same passion as Yagudin.
 Plushchenko, nursing a sore ankle injured in a fall during practice on Thursday, said he took injections on Friday and Saturday before competing.
 Americans Tim Goebel was third and compatriot Todd Eldredge finished fourth.
 Sale and Pelletier earned 6.0 marks from the Canadian and U.S. judges for presentation in their routine to music from &quot;Love Story.&quot; They did not make a mistake while the Russians Yelena Berezhnaya and Anton Sikharulidze had one when she fell awkwardly on a throw triple salchow.
 Canadians Shae-Lynn Bourne and Victor Kraatz upset the current and former world champions to win the ice- dance titile.
 Marina Anissina and Gwendal Peizerat of France, the 2000 world champions were second, and reigning world champions Barbara Fusar-Poli and Maurizio Margaglio placed fourth.