SOURCE: The St. Petersburg Times
DATE: Issue #733 (100), Tuesday, December 25, 2001
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TITLE: Unflappable Putin Faces His Public
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin declared that the year had treated Russia well during an unprecedented call-in show Monday in which he fielded questions about poverty, drugs, U.S.-Russian relations and Chechnya.
Putin, with the occasional assistance of a computer display on his desk, demonstrated an incredible command of statistics and data about the economy and different regions as he answered 47 of the 2 million questions submitted for the live broadcast on the ORT and RTR television stations and two radio stations.
Russians from Kaliningrad in the West to Vladivostok in the Far East and from a small village in the southern Kras nodar Region to the northern port of Murmansk put forward their concerns by telephone, e-mail and television link-ups from 10 locations during the broadcast, which lasted two hours 26 minutes.
"Despite many problems and living standards remaining very low, the dynamics are very positive," Putin said. "One can say today that the departing year 2001 was a good year for Russia."
He said that the economy had grown by 5.2 percent and that the average salary, discounted for inflation, had increased by more than 20 percent.
The government's goal for next year is to enforce the many reform laws adopted in 2001 and make sure that more people feel the impact of the country's "confident strides forward," he said.
The president, who looked tense during the first 30 minutes of the show, loosened up as he delved into the social and economic issues of day-to-day life, sometimes resorting to his trademark dry wit to drive a point home.
When a young man from Yekaterinburg asked how Putin, a former KGB officer, felt about spending a night at U.S. President George W. Bush's ranch, Putin replied: "He should have been concerned about what might happen when he let a former Soviet intelligence officer into his home. But the U.S. president is the son of former CIA director. So one can say that we were in a family circle."
Putin took a more serious tone when he turned his attention to matters such as a war veteran from the Volgograd Region who complained about his 1,000 ruble pension and an 11-year-old schoolboy from the Irkutsk Region who wondered if he would have to repeat his grade because his school had been shut down for a lack of heating. He said adults in Irkutsk and all the way up to the federal level should work to restore heat.
Several Russians expressed concern about the proliferation of drugs and growing numbers of homeless children.
"Russia has de facto become a country without borders, especially in the south," Putin said, referring to the lack of controls on the borders between Russia, Afghanistan and the central Asian countries.
A special drug police may be established, while the powers of existing law enforcement bodies will be strengthened and more emphasis will be placed on medical and educational efforts, he said.
Putin also said he has asked Deputy Prime Minister Valentina Matviyenko to draft a special program to tackle the problem of besprizorniki - the children who leave their usually drunk and impoverished families and resort to petty crime to earn a living on the streets of big cities.
He ruled out prohibitive measures akin to the prohibition launched by Soviet leader Mikhail Gorbachev in 1985. "To distract a person from the bottle, one has to increase his well being and form his interests so that his spiritual needs are met by financial possibilities," Putin said.
He said that destroying drug operations in Afghanistan is one of the goals of the international fight against anti-terrorism, which Russia backs, and he reiterated that Moscow will not ship peacekeepers to Afghanistan.
Asked by a Kazan man about his feelings toward Muslims, Putin stressed that Russia is a unique country where Christianity and Islam have always gotten along peacefully.
In response to the only question aired about the war in Chechnya, Putin denied that Moscow was dragging its feet on capturing rebel warlords Shamil Basayev and Aslan Maskhadov. He said that even if the military knew where they were hiding, it could not risk the lives of thousands in the course of a mop up operation.
"We cannot send heavy bombers to villages like in Afghanistan - they are Russian citizens," Putin said. It was not clear whether he was referring to the Soviet war in Afghanistan or the current U.S. military operation there.
In comments to Interfax after the show, Putin said he was surprised that the public's interest in the Chechnya problem appeared to have decreased.
Another surprise for the president came from Pavel Zelinsky, a Kaliningrad student who asked him to comment on a rumor that the region, formerly East Prussia, would be handed over to Germany for Russian debts.
Putin said that if it was not for his upbringing, he would show "a combination of three fingers into the camera."
Promptly switching into a serious tone, he said that Russia is working closely with Poland and Lithuania to settle the issue of how the enclave would be treated once its neighbors join the European Union.
Putin offered some comfort over the most burning issue on the show - the low standard of living for many Russians. He said the government has been concentrating over the past year on paying back 1990s wage arrears and has whittled them down from 3.5 billion rubles ($117 million) to 1.5 billion rubles ($50 million).
Raising the salaries of the country's 10 million government employees will be the next task in January.
When a navy lieutenant from Murmansk asked whether he could hope to become a member of the middle class, Putin recalled that in 1975, when he began to serve as a KGB lieutenant, his salary was 180 rubles per month - a pretty good living at the time.
"The income of service personnel has to be 25 to 30 percent higher than that of the equivalent civil servants," Putin said.
A bigger problem, he said, is the 90,000 officers who do not have apartments. Government spending on military housing will double next year.
Stanislav Zadonsky, a doctor from the southern city of Rostov-na-Donu, asked what Russia could do to deal with the large number of immigrants in the region.
Putin said Russia needed to switch to an immigration policy under which immigrants from CIS countries could settle in labor markets where they were needed, adding that the period when former Soviet citizens could be treated as Russian citizens is over.
"We should not be perfecting the law on refugees but developing immigration laws that are beneficial for Russia," he said.
Putin said he advocated shifting some federal agencies to St. Petersburg and other large cities but ruled out "revolutionary" steps such as moving the capital to St. Petersburg, his hometown.
One term that came up at least twice was krysha, or roof, in reference to the protection rackets run by police officers. Putin said he was aware of the problem, but the "overall situation in the society" has to be changed to root out the corruption.
From a typed list of earlier submitted questions, Putin singled out one from a boy named Vanya who complained that his family's house had burned down. The boy wrote that his family had been forced to rent a house and now he rarely sees his hard-working mother.
"Perhaps it is a mistake to read out this question," Putin said. "I don't have legal right to solve this problem instantly. But the world is not without kind people. We have many charities, and I am sure that you will be helped."
Despite fielding a number of personal questions and New Year's greetings, Putin revealed little about his private life. He said that he squandered his first paycheck - 1,000 rubles he earned as a student working on construction projects in the north - but refused to specify how. He said that his two teenage daughters have not made up their minds about their careers and that it was not clear what his wife, Lyudmila, would serve for New Year's dinner.
"There will definitely be a glass of champagne, and I will not leave hungry," he said.
TITLE: Hermitage Film Makes History
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: "You can find almost everything in the movies - intrigue, drama - but not the breath of time. And this is what I am trying to capture," said director Alexander Sokurov of his new film "The Russian Ark," a 90-minute movie that was shot in a single take in the State Hermitage Museum on Sunday.
"Doing a single take was a tool, an instrument," Sokurov said. "It suits our goal of understanding the breath of time. This is the only reason for deciding to shoot the film non-stop."
The director prefers to emphasize the artistic values of the $2.5-million project, which is being jointly produced by Hermitage Bridge Studio and Germany's Egoli Tossel Film AG.
"An ark is a place where one can survive and hide," the director said. "As long as we have the Hermitage, we have a refuge, and we are safe."
The 50-year-old Sokurov is best known for his 1999 film "Moloch," about the relationship between Hitler and Eva Braun, and last year's "Taurus," about the last days of Lenin's life. He has also created several documentaries.
"The Russian Ark" develops as its main character, French aristocrat Marquis de Custine, makes a 1.5-kilometer journey through the halls of the museum, encountering myriad Russian historical figures from the 18th century to the present day.
The historical de Custine is the author of scandalously critical memoirs about his life in Russia and, particularly, St. Petersburg, which were written in the early 19th century. Although de Custine has been accused of being a Russophobe, the actor who portrayed him in "The Russian Ark" disagrees.
"Marquis de Custine is the very person to provide an independent and unbiased look at these historical events," said St. Petersburg actor Sergei Dreiden. "De Custine, indeed, is not objective. His are very subjective judgments. However, he was not at all a time-server or a dodger."
The massive project involved months of intense preparations. More than 900 actors and extras were used, and about 13,000 costumes were produced.
Casting Director Tatiana Komarova had the unenviable task of finding hundreds of people capable of portraying 18th- and 19th-century Russian aristocrats.
"The manner of moving, walking, wearing clothing [during these periods] was completely different. And modern actors have difficulty adjusting to costumes from the 18th century," Komarova said. "During some of the photo shoots, I could see that some actors were thinking about picking up their children from kindergarten rather than focusing on getting ready for a ball!"
Virtually the entire cast of the film came from St. Petersburg. Komarova choose not only actors, but teachers, doctors and others with "refined" features.
In the end, it took three tries before the film was successfully shot on Sunday. The first attempt was aborted when the lighting failed and the second came to an abrupt end when some equipment malfunctioned.
Renowned German camera operator Tilman Buttner, best known for his acclaimed steadicam work in Tom Tykwer's "Run, Lola, Run" (1997), faced the most difficult task, wielding the 35-kilogram steadicam for the entire shoot.
The film was shot digitally on a hard disk and will later be transferred to film, said the project's German co-producer Jens Meurer. It was shot using the latest high-definition digital technology and some of the equipment was produced especially for this project.
"The idea of shooting such a film emerged about five years ago, when the most likely associations with Russia were the war in Chechnya and the new mafia," Meurer said. "Fortunately, now these vicious stereotypes are gone. I believe this beautiful idea will have a lasting resonance."
Hermitage Museum Director Boris Piotrovsky has a speaking role in the film, playing himself in conversation with actor Sergei Chaban - playing Piotrovsky's father, also named Boris, who was the Hermitage's director from 1964 To 1990 - and David Giorgobiani, playing Josef Orbeli, who was the Hermitage's director from 1934 to 1951.
"I could see [Piotrovsky's] initial embarrassment during the first rehearsal," Komarova said. "It was obviously a tough and trying experience. But he composed himself quickly, smiled and everything went smoothly."
Mariinsky Theater Artistic Director Valery Gergiev also appears briefly in the film.
The film is tentatively scheduled to be completed in March. The producers expect to premier the result at one of next year's prestigious European film festivals. "The Russian Ark" will most likely make its St. Petersburg debut sometime around the celebration of the city's 300th anniversary in May 2003.
Links: www.russianark.spb.ru and www.sokurov.spb.ru.
TITLE: Gorbachev Reflects on Exit From Power
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Ten years ago, as much of the Western world was opening Santa's presents or sitting down to Christmas dinner, Mikhail Gorbachev decided to close the final chapter in the history of the Union of Soviet Socialist Republics.
"Dear fellow countrymen and citizens," Gorbachev began his televised address to the Soviet people. "In light of recent events and the formation of the Commonwealth of the Independent States, I hereby resign the office of president of the U.S.S.R."
The announcement was a formality. The Soviet Union was an empty shell following a parade of independence declarations by the republics and the creation of the CIS by Russian President Boris Yeltsin and the presidents of Ukraine and Belarus on Dec. 8. Nine more Soviet republics joined the CIS later in December. By Dec. 25, all that remained of the defunct state was its president.
Gorbachev has never explained why he chose to step down on Dec. 25 - perhaps because what was Christmas Day in the West was an ordinary Wednesday in Russia, falling about a week before the big New Year's holidays.
In a documentary shown Dec. 13 on RTR television, Gorbachev said that after it became clear the Soviet Union was gone, he needed time to think over what he should do.
The documentary, called "Nash Gor bachev," or "Our Gorbachev," was part of a series dedicated to Nobel Prize winners from Russia. But instead of paying tribute to the winner of the 1990 Nobel Peace Prize, it follows the Soviet president during his final week in office in 1991. The footage - some of which had never before been released - was combined with shots of Gor bachev reflecting on that time a decade later.
Looking back, Gorbachev accepts part of the blame for the collapse of the Soviet Union, saying the reforms he launched in 1985 moved too slowly and could not match the speed of historical change. "We were late. I think my darned self-confidence got in the way," Gorbachev said in recent weeks.
His address to the nation on Dec. 25, 1991, lasted only a few minutes. While he was still speaking, with the red Soviet flag at his side, the red flag above the Kremlin was being replaced by the Russian white-blue-red tricolor.
The new masters of the Krem lin took his departure so literally that they moved in the next day. "They gathered in my office and drank a bottle of whisky for their 'victory,' " Gorbachev said with contempt at a news conference on Friday, The Associated Press reported. "I have never spoken to Yelt sin again."
FILMING HISTORY
Igor Belyayev, a filmmaker who spent whole days with Gorbachev during that last week in the Kremlin, directed the new documentary.
"This is a film about a man whom Russia failed to understand and appreciate," Belyayev said in an interview last week. "I want him to be loved by the people while he is still alive. I want him to be appreciated and loved as a person."
The original filming was initiated by Yegor Yakovlev, who had taken over as chief of Gosteleradio, the state television and radio company, after the previous management was fired in the aftermath of the failed August 1991 coup.
According to Belyayev, Yakovlev felt the need to somehow record history. That was not easy, given that at the time, Russia's leadership was extremely sensitive to any attention paid to Gorbachev. A solution was found in the form of a joint Russian-American project by CNN and Gosteleradio to film Gorbachev's exit.
The actual filming was done by Belyayev and his crew, but the plan was for CNN and the Russians to come up with two different films. While CNN showed the film around the world soon after the events, the Russian part of the project stalled.
"I was left with all these tapes, which I promptly took home and stuck under a sofa, where they remained for 10 years," Belyayev said. "I wasn't even sure that the footage hadn't deteriorated."
When RTR asked Belyayev, a veteran documentary director, if he wished to pick a Nobel Prize winner from Russia to do a film about, the answer was obvious.
"I had a debt [to Gorbachev] that I needed to repay. And I am very happy now that I've done it," Belyayev said.
Belyayev has warm memories from those days with Gorbachev. "I sensed that Gorbachev liked being with me. He relaxed when he spent time with me. I was a person very close to him, I felt like his ally, that I was helping him," Belyayev said.
LAST KREMLIN DAYS
Gorbachev's last days in the Kremlin appear uneventful. With no country to rule, he is left only with the nuclear suitcase and an office with a plaque that says: "President of the Soviet Union Mikhail Sergeyevich Gorbachev."
In Belyayev's film, he is shown holding talks with officials, receiving visiting diplomats and taking care of unfinished business, such as passing over to fellow Nobel Prize winner Alexander Solzhenitsyn the KGB documents related to his persecution in the 1960s and 1970s.
Gorbachev said he would not resort to force to stay in power.
"If I'd ever wanted to remain in the structures of power, that wouldn't have been too difficult," he said in 1991. "I care little about prestige. If that were the case, if that were in my nature, I wouldn't have started the reforms and wouldn't have given up the power I had."
He continued on the same theme 10 years later. "There is no power tougher and stricter than the power of democracy," Gorbachev said. "And the nomenklatura failed the test of democratic power. The intelligentsia failed this test, too."
At Friday's news conference, he accused Yeltsin and the leaders of the other republics of ruining the Soviet Union out of personal ambition.
"I was shocked by the treacherous behavior of those people, who cut the country in pieces in order to settle accounts and establish themselves as tsars," Gorbachev said, The Associated Press reported.
He said he couldn't oppose their action because of fear that would push the country toward chaos. "I couldn't choose the path that might have led to rift and civil war in a nation brimming with nuclear weapons," Gorbachev said.
As unappreciated as he is in Russia, Gorbachev remains optimistic that the world will remember him well.
"I still don't know what happiness is," he said in the documentary. "But on the other hand, look at how fate has rewarded me. It allowed me to fulfill myself to lead such a process of renewal that went so far and involved the whole world. God! What other happiness could there be."
TITLE: Kasyanov: Navy a 'Priority'
PUBLISHER: The Associated Press
TEXT: Prime Minister Mikhail Kasyanov said in St. Petersburg on Friday that modernizing the navy was one of the government's top priorities, and he symbolically launched construction of the first new Russian surface warship to be designed in the decade since the Soviet collapse.
"The modernization program of the Russian navy is currently one of the most important tasks of the state," Kasyanov said at a ceremony at the Severnaya Verf shipyard, dedicated to the start of construction of the navy corvette Steregushchy.
The navy has struggled to find funds to maintain and repair its ships and has had to scale back its modernization program. An estimated 70 percent of the fleet needs overhauling.
The decline was underlined by the August 2000 sinking of the submarine Kursk when it became public that the navy got rid of rescue equipment to cut costs. President Vladimir Putin has vowed to boost funding.
Kasyanov told naval chiefs Thursday that Russia has turned "a sad historical page in recent years, during which the country's naval potential was deteriorating," Interfax reported.
Kasyanov and Governor Vladimir Yakovlev attached a brass plaque marking the new ship's construction on the wall of the plant. Kasyanov said that the Steregushchy project "is a good sign of the activation of the Russian shipbuilding industry."
Alexander Ushakov, the plant's production director, said the new ship is one of the most modern in the world.
"In a rather small body, it has a lot of modern equipment and can carry a large amount of weapons," he said.
TITLE: IN BRIEF
TEXT: Faster Rails
ST. PETERSBURG (SPT) - Testing on the new-generation Sokol high-speed train will be completed early next year, Interfax reported Monday.
The train, which is being built by the Transmash factory in the Lenin grad Oblast town of Tikhvin, completed the penultimate phase of testing this week, the news agency reported, citing officials at the plant. The train completed the Moscow to St. Petersburg run in four hours and forty minutes without any technical difficulties, at an average speed of about 200 kilometers per hour.
The Sokol train is 323 meters in length and consists of 12 cars. It carries 800 passengers and each train costs approximately $20 million, Interfax reported.
Mikhailovsky Named
ST. PETERSBURG (SPT) - Governor Vladimir Yakovlev nominated Vice Governor Mikhail Mikhailovsky as his representative in the Federation Council, Interfax reported Monday.
Mikhailovsky was born in Le nin grad in 1961 and graduated from the law department of St. Petersburg State University. He was elected to head the local self-government of the Kalinin District in 1993 and was named vice governor in 2000.
Mikhailovsky's nomination must be approved by the Legislative Assembly.
On Thin, Slippery Ice
ST. PETERSBURG (SPT) - More than 150 people were treated over the weekend in St. Petersburg and the Leningrad Oblast with cold-related injuries, Interfax reported Monday.
Two oblast tractor drivers were killed on Saturday when they attempted to drive across a frozen river near the village of Ovragi, the agency reported.
In St. Petersburg, 131 people have been treated, including 11 people suffering from severe frostbite. About 120 people have been treated for sprains, broken limbs or concussions caused by falling on slippery streets.
An additional 12 people were treated on Monday, Interfax reported.
Not Over Yet
ST. PETERSBURG (SPT) - Former Leningrad Zoo Director Ivan Korneyev intends to contest his dismissal in court, Interfax reported Sunday.
According to the news agency, the order dismissing Korneyev was signed by Vice Governor Vladimir Shitarev, who is acting chairperson of the City Culture Committee, on Dec. 20. The same decree named Nikolai Konotovsky, deputy chairperson of the City Culture Committee, as acting director of the zoo.
Interfax reported that anonymous sources within the city administration had said that the firing was based on "new facts indicating that the director was not coping with his responsibilities."
The conflict between Korneyev and the city administration has been brewing since spring 2000. The city has accused Kor neyev of mismanagement and administrative violations, while Korneyev claims that the attacks against him are motivated by his opposition to efforts to remove the zoo from its downtown location and re-establish it on the edge of the city.
Governor Vla dimir Yakovlev has stated that the current zoo does not meet contemporary standards and that the noise and pollution of the city are harmful for the animals.
Volodin Buried
ST. PETERSBURG (SPT) - The funeral of famed playwright Alexander Volodin took place Saturday at a cemetery in the Leningrad Oblast village of Komarovo, Interfax reported.
At a ceremony attended by Culture Minister Mikhail Shvydkoi, Volodin was laid to rest in the same cemetery where poet Anna Akhmatova and historian Dmitry Likhachyov are buried.
Volodin is best known for his plays "A Factory Girl" and "Five Evenings" and for the screenplay to the film "Autumn Marathon."
No Problem
ST. PETERSBURG (SPT) - Defense Minister Sergei Ivanov, a St. Petersburg native, told reporters Monday that he believes that the conflict between the so-called "Moscow" and "St. Petersburg" groups in government was "largely made up" and aggravated by the mass media, Interfax reported Monday.
"I believe that this problem is for the most part made up by the media itself, the owners of which are pursuing their own ends," Ivanov was quoted by Interfax as saying.
"Some people do not like stability in Russia, the fact that everything is predictable and that the leadership does not make any radical moves," Ivanov said.
Ivanov added that he also saw a certain ill will in media criticism of his own performance.
"But I haven't reacted in any way and I won't react," the defense minister said. "There must always be criticism and one should listen to it. Unless, of course, it is a provocation or conscious disinformation."
Auditing Together
MOSCOW (SPT) - Russia and the United States have agreed to a joint audit of Russia's chemical-weapons stockpile management program, Audit Chamber head Sergei Stepashin said in Washington last week.
Stepashin said he had agreed to the joint audit in talks with U.S. General Accounting Office head David Walker, to bolster confidence that the program has been managed wisely, The Washington Times reported.
The investigation is to look into the efficiency of the equipment provided to destroy the chemical weapons and into how U.S. money for the program is being spent.
Stepashin also suggested that the Soviet Union's debt to the United States could be reduced by a sum equivalent to Russia's expenditure on implementing the program. This year, Russia allocated $100 million for the program, and $200 million has been budgeted for 2002.
The invitation for U.S. auditors to look into the program's expenditures is significant because a large proportion of a $260 million sum that the United States contributed to the program, to build a facility to destroy nerve agents in Shchuchye in the Kurgan Region, seems to have vanished into thin air.
Ship Hits Rusting Sub
MOSCOW (AP) - A Russian vessel collecting spent nuclear fuel collided with a mothballed Northern Fleet nuclear submarine in the Arctic Kola Bay, but there has been no radiation leak, a marine spokesperson said. The Imandra waste carrier bumped into a submarine from which it was supposed to unload spent nuclear fuel, said Vla dimir Blinov, spokesperson for the Merchant Marine service in the port of Murmansk.
Radiation experts were rushed to the scene, but an inspection showed that neither vessel had leaked radiation or suffered any damage, Blinov said Friday in a telephone interview.
Blinov wouldn't name the submarine's type or say when the accident happened. ORT television said the collision occurred Dec. 13.
Busy Day at Duma
MOSCOW (AP) - The State Duma last week approved legal amendments intended to bar the propagation of terrorism through the media and a separate bill to impose a five-year ban on human cloning.
The Duma voted 371-4 to approve the amendments to the media law in the first of three readings. The legislation bans the use of media for "the propaganda or justification of terrorism and extremism." The draft legislation follows repeated demands by government officials for the media to stop carrying statements by rebel leaders in Chechnya.
The Duma voted 272-6 with four abstentions to pass the cloning bill in the first of three readings. The legislation says that cloned human embryos cannot be brought into Russia.
The Duma also voted to soften an earlier move barring foreigners from owning a controlling interest in national television stations. The television bill obliged foreign broadcasters that had set up their business in Russia before the bill was passed to sell their business. The Duma decided Thursday the retroactive demand was excessive and withdrew it.
Candy for Chechnya
VLADIKAVKAZ, North Ossetia (AP) - More than 100 tons of New Year candy have been handed out to thousands of children living in refugee camps in Chechnya, an official said Sunday.
About 3,500 children living in tent camps within the region were given some 110 tons of candy donated by Mos cow factories, Chechnya's deputy prime minister, Amnat Batyzheva, said, according to Itar-Tass.
TITLE: A Quality Development - JTI in Russia
TEXT: Over 15 percent of all tobacco products sold in Russia are made by JT International (JTI), the international arm of Japan Tobacco Inc, which is among the world's top three tobacco manufacturers. Ninety-nine percent of these products are made at the company's Petro production facility in St. Petersburg. Cigarettes in the medium and premium price range make up an ever growing part of Petro's output.
Petro has received a number of awards this year, including taking first place among Russian tobacco manufacturers in the prestigious Expert-2000 economic ratings. The ratings ranked Petro among the top ten companies in Russia's northwest on the strength of a third-place ranking in terms of labor productivity and a seventh-place finish in terms of sales. Petro also finished first in a field of more than 70 companies in the food and processing sector in St. Petersburg. But accolades are nothing new for Petro, and the motto "Look Forward!" in the advertisements for charcoal-filter Peter I Super Lights, the factory's newest product, can rightfully be applied to both the enterprise and all of its products.
In a short period of time, JT International has converted the former Uritsky tobacco factory into a modern facility manufacturing high-quality cigarettes. The $400-million production facility on Petergofskoye Shosse occupies an area of 75,000 square meters, making it not only the largest in Russia, but one of the largest and most modern tobacco factories in the world. The factory's former site, located on Sredny Prospect on Vasilyevsky Island, which housed tobacco production for almost 150 years, is about to change its profile, as all of the old equipment has already been dismantled, making room for a modern trade center, which will soon be opened there.
Petro produces about 125,000 cigarettes a minute, or 50 billion per year. The modern equipment used at the factory can do some unique things. One example is the laser used in filter perforation, which provides an additional guarantee of the consistently high quality of Petro products.
The factory has a multi-tiered system of quality controls. Every 20 minutes an operator runs quality checks; every hour laboratory tests are performed; and once a month all parameters of the product are analyzed in Cologne, Germany.
Petro, which passed a milestone last year when it produced its 100 billionth cigarette, is the largest taxpayer in Russia's Northwest Region, paying more than 1.3 billion rubles ($48 million) in taxes to government budgets of all levels last year. In the first 11 months of this year alone, tax payments exceeded 2.15 billion rubles ($75.4 million) - including 1.53 billion rubles ($53.7 million) to the St. Petersburg budget. Petro has paid more than $500 million in taxes to federal and regional budgets since it began operations in 1992.
The company has also created 2,000 new jobs in the city, and the average wage at the factory is much higher than that paid at other enterprises in St. Petersburg. Further, each new job at the factory creates 20 more jobs in related industries. Each dollar of Petro sales creates a profit for Russia of $3.24 through suppliers, contracts and other activities.
In 1995, Petro became the first company in Russia to begin making high-quality, American-blend cigarettes made to international standards, but at affordable prices. A year later, the factory launched Russia's first domestically-produced international-class filtered-cigarette brand, Peter I, making quality cigarettes affordable for the average smoker for the first time. Peter I remains the most popular medium-priced filtered-cigarette brand in Russia. Having won last year's prestigious national "People's Brand" competition for consumer products, Peter I is the only Russian brand to have seized a large share of the market from foreign brands.
In 1996, the factory began producing Peter I Lights, the first Russian cigarette brand with a low level of tar and nicotine. Over the first year alone, sales of the cigarettes increased by one-third, and both light and regular Peter I cigarettes were on the list of goods sold in the country's network of duty-free shops, the only Russian brand to be included.
The company then introduced Russian Style, the only Russian brand of premium cigarettes in the country, while simultaneously launching production of the regular and light versions of three leading international brands - Winston, Camel and Salem. The Russian-produced version is, of course, identical to those made in other countries. The only difference is a more affordable price, which is the reason why Winston is posting record sales numbers in Russia.
Not only has Peter I brand been able to compete successfully with similar foreign-made products, but it has undermined the dominance of imported products in the medium-price cigarette market. As the first Russian tobacco factory to start producing international-class cigarettes, Petro started a chain reaction in the creation of similar facilities across Russia. JTI's success in Russia sets an example for other world tobacco leaders, and major foreign investors in general. But most importantly, Petro's operations have made world-class cigarettes affordable in Russia.
Petro's product portfolio includes over 30 brands in various classes to satisfy every taste and budget. Although the factory has traditionally maintained a balance in manufacturing products to satisfy the demands of traditional smokers, the factory is focusing on increasing the share of light versions of popular cigarettes in its output. The introduction of each new product is determined by analyzing the changing preferences of consumers and responding by developing a product that is going to be in increasing demand. In other words, production anticipates consumer demand, which is moving from strong tobacco products to high-quality filter cigarettes in their light versions, with low tar and nicotine levels. Coupled with a flexible price policy, this helps adult smokers switch to products of better quality.
This is the essence of the development strategy JT International and Petro are pursuing in Russia.
By Andrei Vyalov
TITLE: International Paper - 3 Years in Russia
TEXT: In December of 2001 the International Paper Company is celebrating its third anniversary in Svetogorsk, Russia. Each of these years has been marked by the completion of large capital projects at OAO Svetogorsk, involving enormous investments into the development of the mill.
The first of these was the construction and start up of a sheeting plant, with an automated sheeting and packaging line for A4-size paper now in operation.
The wood yard was also renovated and a wood debarking and chipping line with a de-icing conveyor installed to reduce losses during the wood-handling process. There have also been upgrades to the paper-producing machinery at the fine-paper-production section, including the installation of the latest headbox model and computer-control system to ensure compliance with the paper-production-process parameters at all manufacturing stages and with product-quality targets. 2001 was the year in which the factory put into production additional sheeters for A3- and A4-format paper. In the fall, a multi-fuel solid-waste boiler began burning bark, sludge, and wood and pulp waste.
As a result of this activity, we have achieved very high production-quality levels. The Company has received ISO 9001-96 certification confirming its compliance with international offset and office-paper quality standards. Improvements to and the development of the quality-control system at the Mill continue, and preparations for the implementation of ISO 9000:2000 and ISO 14 000 standards have begun.
In recent years, Svetogorsk's share of its own forest-harvesting operations and long-term forest leases has increased. The company has successfully completed the ISO 14001 certification process for its environmental-protection system for the company's logging activities on state lots.
Because of these achievements, we are able to speak proudly of the successful development of Svetogorsk and, although the world paper market is unstable, the company's financial outlook is optimistic.
Shortly we will see in the New Year, and celebrations and seasonal festivities are all the more pleasant when one can feel proud while looking back at the past. We get deep satisfaction from the fact that today our company is treated with equal respect by its partners and competitors alike. Svetogorsk is the leader in the Russian market in office-paper, liquid-packaging board, and white-top liner-board production.
Svetogorsk is convinced that our company's main asset is our people. The latest state-of-the-art equipment and technologies are only efficient when they are operated by trained specialists. At present there are 3000 employees working at Svetogorsk. Our aim is not only to use this high level of professionalism efficiently, but also to further strengthen and develop it. We want our workers to feel proud of and want to work at the Svetogorsk mill.
The management at OAO Svetogorsk extends the warmest wishes of the holiday season to our business partners, colleagues, and employees, and wishes all a Merry Christmas and a Happy New Year. We thank everyone for their productive cooperation with our company and for the confidence that you have in us. We hope to see our common business grow and prosper in the coming year. We wish success, well-being and happiness to you and your families.
OAO Svetogorsk Management
17, Zavodskaya Ul., Svetogorsk, Leningradskaya Oblast, 188991;
phone: +358 5 688 400;
fax: +358 5 688 4902
e-mail: info@svetogorsk.com
TITLE: MiG Watches Business Take Flight in 2001
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - In what one industry watcher called a "miracle" turnaround for a company considered by many to be unsalvageable just two years ago, Russian Aircraft Corporation MiG said Friday it had sealed deals worth $1 billion this year, up tenfold compared with 2000.
"We have signed $1 billion worth of contracts for MiG-29 jets and services this year," Nikolai Nikitin, general director of state-owned RSK MiG, told reporters.
Nikitin said 2001 was the best year for MiG since Soviet times, adding that it had not received a single order from the Defense Ministry in nine years, relying on scant exports for 90 percent of its revenue.
Prior to 2001, MiG hadn't signed a big export contract since 1995, when it delivered 18 MiG-29s to Malaysia for $650 million, part of which was paid in palm oil.
This year, MiG signed five major contracts for a total of 36 jets, as well as several smaller contracts for support services and spare parts, Nikitin said. The largest contract- a $437-million deal with Yemen for 14 MiG-29s-has been widely reported, although MiG has refused to confirm it.
It did confirm, however, that it had signed a $150-million, 10 MiG-29 deal with Myanmar earlier this year. Nikitin said one major contract was signed Dec. 15, but he wouldn't elaborate.
Nikitin said MiG expects to get contracts worth a total of $7 billion this decade, more than half of which will come from military exports.
Rival Sukhoi already has secured $7 billion worth of orders in the last three years alone.
"We are seeing the beginning of a miracle," said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies, an independent defense think tank. "In 1998 to 1999, MiG was lying in ruins," he said. "[The new management] has done the most important thing: they stopped theft."
A new team including top managers Nikitin and first deputy Vladimir Barkovsky, both former employees of Sukhoi, took over the debt-ridden enterprise after its accounts were frozen two years ago.
"When we came in 1999, the production line was fully grounded, wages hadn't been paid for up to eight months," Nikitin said. "We had a choice of either [going out of business] or diversifying."
MiG chose diversification, branching into civil aviation, including working on the development of the 100-passenger Tu-334. MiG hopes to certify the plane in 2003 and start mass production in 2004.
Eventually, Nikitin said, as much as 70 percent of MiG's production capacity will be dedicated to civil craft.
Nikitin lamented the fact that MiG is still largely a one-product company, although it plans to continue to produce and upgrade versions of that product, the MiG-29, through 2030.
With more than 1,000 MiG-29s worldwide outside of Russia, MiG is also hoping to continue winning modernization contracts. Earlier this year, Hungary chose it to update half of its fleet of 27 MiG-29s, and MiG is currently bidding to upgrade 21 Bulgarian MiG-29s.
Makiyenko said there is little chance or little money for MiG to cash in on upgrades elsewhere in eastern Europe but that it shouldn't miss an opportunity to refit India's fleet of 70 MiG-29s.
With Russia finalizing a contract to retrofit and deliver its Admiral Gorshkov aircraft carrier to India, MiG is expected to get up to $1.5 billion to build a batch of MiG-29Ks as part of the contract.
But the biggest prize for MiG-and Sukhoi-is Russia's next-generation fighter, the winning bid for which is expected next year.
TITLE: Ministry Counters Reports of Steel Cuts
AUTHOR: By Torrey Clark
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russia will cut neither steel production nor capacity, contrary to media reports last week that producers would slash output by 10 million tons, Deputy Economic Development and Trade Minister Maxim Medvedkov said Friday.
At the Organization for Economic Cooperation and Development meeting of 39 leading steel-producing countries in Paris last week, European, Asian and U.S. producers agreed to reduce surplus and inefficient capacity by up to 6.5 million tons by the beginning of 2003, by 9.5 million tons by 2005 and by 23 million tons by 2010.
"We have practically no inefficient capacity, which all other countries are planning to reduce. Almost all of our capacity is profitable," Medvedkov said at a news conference Friday, responding to media reports that Russia would slash production by 10 million tons.
Instead, the country's steel producers played the same card oil producers used with OPEC - promising what was likely to happen anyway.
Domestic producers pledged at the OECD meeting to restructure 10 percent of existing capacity over the next eight years, continuing a process that has been under way since about 1995.
"Russia is among the few countries in the world that restructured capacity from 1995 to 1999," said Medvedkov, who is also the government's chief negotiator with the World Trade Organization. Total Russian steel production dropped from 77 million tons in 1991 to 59 million tons in 2000, according to the OECD.
The pledge foresees obsolete capacity being either modernized or closed without setting out the breakdown.
"Russian enterprises have 'sufficient' inefficient capacity to comply with the possible agreement over the next 10 years, as they would have gotten rid of it anyway," according to Raiffeisenbank's weekly analysis.
Many of the other major steel countries, however, also have significant capacity lying idle, so capacity cuts may not alleviate the severe overcapacity of up to 200 million tons that has pushed prices to their lowest level in almost two decades.
Furthermore, the measures are purely voluntary. Governments cannot force companies to make cuts but can refuse to keep loss-making enterprises afloat, Medvedkov said.
For the first time, the delegates agreed on the need to drop trade-restrictive measures and keep a vigilant eye on governmental support for industry.
"Delegations ... indicated that they are committed to play a full role in the discussions and address the issues identified at the September meeting and that the exercise could only be successful if it tackled excess and inefficient steel capacity wherever it may be located, with a goal of promoting free and open trade in steel," reads the OECD summary of the two-day meeting.
TITLE: Part of Downward Pressure on Ruble Result of Gazprom Loan
PUBLISHER: Combined Reports
TEXT: MOSCOW - The Central Bank ran the ruble presses in early December to provide a 15 billion ruble ($500 million) loan to gas monopoly Gazprom, leading to a micro-devaluation of the ruble and playing a role in the $2.6 billion fall in hard-currency reserves.
The loan - one of the largest ever from a Russian bank to a domestic company - was granted by Vneshtorgbank (VTB) for a period of more than a year "at lower rates than Western banks," Gazprom Deputy Chairperson Vitaly Savelyev told Vedomosti.
Gazprom apparently needed help paying its taxes by year end, after government representatives on Gazprom's board of directors blocked a proposed $750 million Eurobond issue.
On the eve of the transfer on Dec. 4, the Central Bank deposited $700 million in VTB, according to the Investor Protection Association, which has Central Bank authorization to disclose information on major events at commercial banks.
"The Central Bank deposited the money in a currency account at VTB. The same day VTB sold the dollars back to the Central Bank. Then Gazprom received the loan and paid its taxes, and the money ended up in Finance Ministry's accounts at the Central Bank," a source close to the Central Bank said.
The currency market got hit twice in the process. In preparation to buy the $700 million from VTB, the Central Bank had been soaking up ruble liquidity for a week, causing the monetary base initially to shrink and the Central Bank's gold and currency reserves to drop by $1.2 billion as of Dec. 14.
The Central Bank's interventions also sparked a speculative attack on the ruble. The Finance Ministry provided ammunition by "distributing [Gaz prom's tax] money to budget recipients, which inflated the monetary base" by 16.7 billion rubles from Dec. 3 to Dec. 7, a source close to the Central Bank said.
Many dealers believed the Central Bank was intervening to keep the ruble below 30 rubles to the dollar. The ruble dropped below this mark Dec. 10 and headed south until the Central Bank orchestrated new interventions last Friday.
A VTB representative would said nothing about the Gazprom loan except "having a client like Gazprom is a dream for any Russian bank."
Central Bank Chairperson Viktor Gerashchenko on Monday laid the blame for the decrease in its gold and foreign-currency reserves on debt repayments and the decision to lower mandatory sales of hard-currency export earnings from 75 percent to 50 percent, Interfax reported.
Since September, the Central Bank has made $2.8 billion in early repayments to the International Monetary Fund, and the Finance Ministry has repaid almost $2 billion on Eurobonds and credits. "Of course, all this could not help but affect decreases in the reserves, but it does not worry us," Gerashchenko said.
"Debt payments were to some extent to blame for the decline in reserves," said Alexei Moisseyev, an economist at Renaissance Capital. "But I don't believe the decline is tied to the change [in mandatory sales of hard-currency export earnings]. If the Central Bank wanted to replenish its reserves, it could."
- Vedomosti, Reuters
TITLE: New Land Code Creates Pressure To Register Lots
AUTHOR: By Yevgenia Borisova
PUBLISHER: Staff Writer
TEXT: MOSCOW - With the Land Code in force and more than a third of eligible land already privatized, Russia's cash-strapped federal land service, Ros zem kadastr, is struggling to accurately take stock of the country's land supplies.
Last week's First Land Congress, organized by Roszemkadastr, heard that the service has been charged with preparing a registry and valuation of all land parcels, which amount to a total of 1.7 billion hectares, including details of any constructions on them. And a new federal program is to be launched next year to computerize the land and real estate registration systems, with planned funding of 1.8 billion rubles next year and about 33 billion rubles over the next six years.
"In the next six years we will put everything that exists in Russia in one register," Roszemkadastr's deputy head, Viktor Kislov, said in an interview, adding that it would probably be called the Registry of Land and Real Estate.
However, the mood of the 1,100 participants of the Òongress, who gathered at Moscow's Academy of State Management from all 89 regions of Russia, was far from positive, with many expressing doubts that the service would be able to carry out its ambitious projects.
The service's regional staff said targets are almost impossible to achieve for two main reasons: resources are inadequate; and Roszemkadastr has become too weak to properly take charge of the job, which has been split between too many government agencies.
Some land inspectors at the Congress complained that they cannot afford to buy pens and paper for their work, and don't have the fuel needed to travel within their districts. Federal land inspectors' salaries are 1,500 rubles a month.
"The situation is just awful," said Sergei Sai, head of Roszemkadastr, speaking at the congress. "Since 1993 we have been given not a single kopek for capital investment."
Most of all, Roszemkadastr's staff complained about non-stop changes at the service, and that it had been downgraded even though its workload has been increasing. In 1990, land staff at the Agriculture Ministry were split off to form the Land Resources Committee, which was later elevated to the rank of State Committee before gaining Ministry status in 1998 - but in May 2000 it was renamed Roszemkadastr and reduced to being a federal service, a mere executor of the government's decisions and unable to form its own policy.
During the past five years the service prepared a basic Land Registry, but it suffers from serious deficiencies due to inadequate funding, as it received only 16.7 percent of the 48.62 billion rubles allocated to the program. Its broad-brush approach mostly gives general information on large land areas, taking no account of variations between the smaller plots within them, experts at the congress said.
TITLE: Higher Duties on Used-Car Imports Ahead
AUTHOR: By Elizabeth Wolfe
PUBLISHER: Staff Writer
TEXT: MOSCOW - Russian roads might soon take on a new, more uniform, look.
Over the protests of consumers who love second-hand foreign cars, the government is pushing ahead with a hike in import duties set for early next year.
Encouraged by a mix of outright and veiled support from domestic automakers and additional nudging by foreign producers and official car dealers, the government has proposed substantial increases in import tariffs on used cars, especially older models.
The rate hikes, partially designed to protect the homeland's ailing auto industry, have not been welcomed by many consumers, who in recent years have favored used imports over their brand-new domestic counterparts from AvtoVAZ or GAZ.
In the meantime, however, the industry pressure and government moves to install protective measures seem to have backfired: Imports of second-hand cars were up 350 percent in the first nine months of this year compared to the same period in 2000, according to the State Customs Committee, an increase experts say is partly due to people snatching up the cars before the expected price hike.
And some foreign automakers operating locally say a dip in their sales growth in recent months might be partly attributed to a greater interest in second-hand cars.
The government committee on protective measures, responsible for approving the new tariffs, in late November stunned the industry by delaying its decision on raising duties until January, which is when the hike was expected to go into effect, or February.
"When someone has to pay a few thousand more for a car, it's going to spoil his mood," said Alexei Se re zhen kin, deputy minister in the machine-building department of the Ministry of Industry, Science and Technology.
The government has proposed more than doubling import tariffs for cars older than seven years and raising by some 30 percent - depending on engine size - tariffs on cars three to seven years old.
A 1991 to 1994 Toyota Corolla, for example, which now costs $2,500 to $3,500 on the Vladivostok market, would go up to $4,200 to $5,200, according to the Web site, http://auto.vl.ru/protest, devoted to halting the increase. A Nissan Safari jeep now costing $8,900 would jump to $16,000, the Web site said.
Few would contend that the auto industry, which accounts for an estimated 3 to 4 percent of the gross domestic product and with related industries employs some 5 million people, does not deserve the government's attention. In what form and how far that support should go remains open to debate.
At the end of November, demonstrations in the Primorye region and Vladivostok, a popular import route for Japanese cars, involved protesting drivers keeping their headlights on all day, with some stopping traffic by blocking intersections, said an aide to Duma Deputy Victor Cherepkov, who opposes the new tariffs and whose Web site has collected a few thousand e-mails of protest to forward to the government.
"As soon as drivers stop along the roads, life will stop - and Putin will have nowhere to go," said Cherepkov.
Obviously unpopular measures, any tariff increases would have to be approved well ahead of 2003 elections or they would likely be dropped altogether, analysts say.
While consumers aren't expected to win out entirely in the end, the noise they've made in recent months in the media may encourage the government to reduce the size of the increase, said United Financial Group transport analyst Yulia Zhdanova.
Initial propositions were much higher - a 45-percent to 80-percent tariff hike for cars three to seven years old and up to 160 percent for older cars.
Lowering the increase would also slash the potential upside for AvtoVAZ and GAZ, according to Zhdanova, who considers the increase a Band-Aid approach to helping the industry.
"There are no incentives for improvements," she said.
Troika analyst Andrei Kormilitsin agreed that such measures would provide only a short-term boost to Russian automakers.
Tariff hikes on second-hand imports "will create additional time for domestic automakers to restructure and come up with a more competitive product, comparable to Western automakers," Kormilitsin said. "But in the long term, strong protectionism will discourage domestic automakers from investing in quality."
For now, Russian cars are advantageous chiefly in price, which in Russia is often more important to customers than quality.
But with ruble appreciation and the cost of components, energy and metals rising faster than inflation, the gap between domestic and the cheapest foreign imports could in a couple of years "shrink to an absolute minimum," Kormilitsin said, which would force Russian cars to compete on quality.
No. 2 carmaker Gorky Automobile Plant, or GAZ, says that while raising tariffs for a few years will help Russian automakers get their act together, it is not the only answer.
"We're not lobbying for tariff increases only. We think that there should be a set of supporting measures for five to seven years," said Maxim Remchukov, an adviser to GAZ's general director.
"Including creating an even playing field for foreign and Russian investors," he added, pointing out how Russian industrial groups are now turning their attention to the auto industry. Oleg Deripaska's Siberian Aluminum has a controlling stake in GAZ.
Russian automakers need a five-to-seven-year period to up the competitiveness of their products, Remchukov said, and to be able to earn enough to invest in new technology and development of new cars.
In the meantime, GAZ would like to protect its territory.
"For us the major threat to our cars are cars older than seven years," Remchukov said. "This is the price niche of GAZ," which produces the popular Volga midsize sedan.
TITLE: IN BRIEF
TEXT: Interros Light
MOSCOW (SPT) - The Interros holding has shed one of its portfolio investments, New Programs and Concepts, which holds large stakes in several military-industrial enterprises.
The holding sold its 50-percent stake to management for an undisclosed sum.
The sale allows Interros to "free up additional funds for new direct and portfolio investments" and "support real strategic investors in the military-industrial complex," Interros said in a press release Monday.
Diamond-Feud Lawsuit
MOSCOW (SPT) - Arkhangelskgeoldobycha - the largest diamond-mining company in northwest Russia - has filed suit in the Arkhangelsk Region to cancel a 1993 partnership with Colorado-based Archangel Diamond Corp., or ADC, to jointly explore the diamond-soaked region of Verkhotina, Moscow-based law firm Blishchenko&Partners said Monday.
The lawsuit comes less than a month after ADC filed suit in the United States against Arkhangelskgeoldobycha and LUKoil, a major shareholder in Arkhangelskgeoldobycha.
ADC is seeking to recover $4.8 billion in damages for harm caused during their failed seven-year partnership.
Both companies accuse the other of breaking the 1993 agreement.
RTS Still Climbing
MOSCOW (Reuters) - Russian shares rose by midday on Monday with Mosenergo in the lead as traders said a serious buyer could have bid up the utility, but rises on the broader market were exaggerated by tight liquidity.
The RTS index breached 250, the most ambitious prediction for the dollar-denominated bourse's year-end level. The RTS was at 253.55 at 1100 GMT, up 2.04 on volumes of $8 million. The Reuters Russian Composite was up 1.64 at 1,747.47.
Reuters' index for the ruble-denominated MICEX bourse was up 1.83 percent at 1,228.62 on volumes of 1.35 billion roubles.
Mosenergo, the volume leader at nearly $2 million in turnover, was up 5.09 percent at $0.0413. The share is up 73 percent from the beginning of the year.
Troika Buys Insurance
MOSCOW (SPT) - The Troika Dialog investment house bought a 39-percent stake in insurance giant Rosgosstrakh for 1 billion rubles ($33.3 million) at a Property Ministry auction Saturday.
Troika purchased the stake on behalf of an unnamed client. Troika bought a 9-percent stake in Rosgosstrakh in September, also on behalf of an unnamed client, for 205 million rubles.
Troika is expected to name the client of both auctions Wednesday after a 1- percent share is offered at the third and final Rosgosstrakh auction.
More LUKoil Exports
MOSCOW (SPT) - No. 1 oil major LUKoil plans to start oil exports to the northwest United States by the end of 2002, Prime-Tass reported the company's president as saying.
The oil is expected to be supplied by small tankers from the port of Varandei in the north to Murmansk, where an oil- storage facility with a capacity of 240,000 tons is currently under construction.
A large tanker is expected to bring oil to the United States from Murmansk on a monthly basis, LUKoil president Vagit Alekperov said Saturday, adding that LUKoil had not yet decided on acquiring a U.S. oil refinery.
TITLE: Switch to Euro Draws Closer
AUTHOR: By David Mchugh
PUBLISHER: The Associated Press
TEXT: FRANKFURT, Germany - Its potential is awesome: one currency linking the buying power, skilled labor and business know-how of 303 million people in 12 countries - fully one-sixth of the world's economy.
On the eve of the Jan. 1 introduction of euro notes and coins, supporters hope the euro has only begun to show what it can do, predicting historic dividends in growth and trade - and even in peace and security, on a continent where two world wars were fought.
Economists say the shared currency already has had clear benefits since it was launched three years ago, not in the form of paper bills and coins but as a peg to which national currencies were fixed.
Since then, it's been the euro zone's real currency, although for many people the psychologically important moment is the addition of bills and coins next week.
It has eliminated the problems of exchanging money for businesses trading across borders. But the more expansive hopes - such as a measurable, long-lasting boost to growth and a political push to loosen stifling labor regulations - have yet to appear.
The idea behind the euro is simple: End fluctuations between national currencies, and cross-border trade grows. Competition is increased, pushing countries to further liberalize their economies and become more cost-efficient.
The euro has eliminated currency risk - the chance that a sudden shift in the exchange rate will sap business' profits or balloon their costs. And they no longer pay the commissions and costs of exchanging money.
For instance, before the euro, if an Italian bank wanted German bonds, it had to bundle the purchase with a currency swap - a time-consuming foreign-exchange deal guaranteeing they could repatriate gains without losing their shirts.
New cross-border bond markets have blossomed, providing sources of credit that businesses across the zone can tap into to expand factories and production.
When the notes and coins arrive, cash-carrying tourists will reap some of those same benefits, speeding from aircraft gate direct to the taxi without paying a 3-percent commission at the foreign-exchange booth. And prices will be instantly comparable across borders.
TITLE: Nomads No More, Kazakhstan Now Riding Economic Boom
TEXT: As Kazakhstan marked the 10th anniversary of its unsolicited independence a week ago, it had lot to celebrate. Having grown from a poverty-stricken backwater intoa foreign-investment magnet, it boasts double-digit growth, single-digit inflation and a stable economy grounded on an efficient and transparent financial system that Russia, which controlled Kazakhstan for two centuries, can only envy. Christopher Pala reports from the country's business capital, Almaty.
Kazakhstan has had its share of highs and lows over the past 10 years. Hyperinflation, collapsing oil prices and political scandals involving President Nursultan Nazarbayev and his family have all hit the country hard. But a series of financial reforms, the introduction of the tenge as the national currency and foreign investment in the oil industry have lifted the country out of the doldrums and into a position where it can approach the future with optimism. And even though a worrying poverty gap remains, the autocratic president enjoys wide spread support.
The reforms Kazakhstan has carried out in the last 10 years have given it the most prosperous economy of the Commonwealth of Independent States countries and put it in the league with central Europe and the Baltic states.
This year, the economy grew 12 percent and inflation was just 7 percent. The average monthly salary, according to the State Statistics Office, rose 17 percent in real terms to $101, the highest level in the CIS and $15 more than Russia's.
"That's pretty remarkable considering Kazakhs were nomads less than a century ago and had no experience in either business or democracy," said Michael Wilson, a lawyer who heads the local European business association.
Unlike in Russia, the government's decisions are carried out throughout the country, an advantage that foreign investors cite frequently, said a senior lawyer who asked not to be identified.
"Kazakhstan is more investor-friendly than Russia," she said.
At a meeting on Dec. 15 of the Foreign Investors Council, Jean Lemierre, the president of the European Bank for Reconstruction and Development, noted that Kazakhstan had built "the best banking sector in the Commonwealth of Independent States."
Furthermore, Kazakhstan had the added merit of doing so without outside pressure, said Grigory Marchenko, the widely respected governor of the Central Bank.
"The Central Europeans were motivated to reform their banking systems because of the accession game - accession to the European Union," he said. "The Baltics started by themselves, but now their banking sector is controlled by foreigners. Here foreigners control only 26 percent of it. We're the only ones who did it on our own."
Russia is now moving in the same direction, but Kazakhstan started in 1996 and is now reaping the benefits, Marchenko said.
"They started late because Russia is a big country, and they viewed themselves as a special case that could get special treatment," he said. "Kazakhstan didn't have that luxury."
Hard Road to Success
Kazakhstan's road to financial health wasn't easy.
In the chaos that followed independence, banks sprouted like mushrooms, peaking at 230 in 1993 - more than twice as many as in the Netherlands, which has a similar population but an economy 20 times larger.
With little regulation, the banks mostly lived off speculative business. No provision was made for dodgy loans, risk management was minimall, and most banks made their money speculating against inflation. When they did make commercial loans, they were small, short-term, high-interest and without adequate collateral.
Many of Kazakhstan's early problems stemmed from its close economic links with Russia.
Nazarbayev, a steel engineer-turned-apparatchik with little knowledge of economics, stuck with the Russian ruble for several years and ended up with imported hyperinflation that reached 1,600 percent in 1993.
"Until 1994, there was no difference with Russia," Marchenko said.
Then Nazarbayev introduced the tenge as the national currency and set up a Central Bank.
To head the new bank, the National Bank of Kazakhstan, Nazarbayev appointed a diminutive, gravel-voiced central planner and deputy prime minister named Daulet Sembayev.
"It was Michel Camdessus who persuaded me to take the job," Sembayev recalled in a recent interview, referring to the then head of the International Monetary Fund. "I told him I was a macro-econonomist, not a banker, but he said I shouldn't worry."
Sembayev assembled a team that became legendary. It included Mar chen ko and several other bright young reformists who now hold high positions in the government.
"The financial reforms attracted the best people in the country," said Kanat Au bakirov of the EBRD's Almaty office. "And Sembayev was extremely popular because he was honest and modest."
"The Central Bank became something of an incubator," Sembayev said.
By 1996, inflation was curbed and efforts to create a world-class banking and financial sector began.
Nazarbayev, politically authoritarian, chose to "sacrifice some power by privatizing and delegating," as one local banker put it.
"There was a lot of open resistance from the banking sector," said Mar chen ko, who was deputy governor of the Central Bank at the time.
Dozens of banks were closed when the Central Bank imposed strict capital requirements.
But Nazarbayev maintained his political support, without which, Mar chen ko said, nothing is possible in Kazakhstan.
Today there are 40 banks in Kazakhstan, all private except for a state import-export bank and a state development bank, along with five credit unions.
When the Asian and Russian financial collapse sent shock waves around the world in 1998, Kazakhstan's banks did not suffer greatly because the government was not a big borrower at the time and because they had stayed away from the Russian government-securities market.
However, production dropped and trade fell with the dramatic collapse of oil prices of 1999. In the same year, Kazakhstan's currency plunged when the government allowed it to float.
In 2001, as oil prices rebounded before dropping again in the fall, the economy picked up again. Oil production edged toward the million-barrel-per-day mark, the tenge stabilized at around 150 to the U.S. dollar and banks are awash in liquidity.
"Our biggest challenge is finding projects we want to take part in," said Jan Willem van den Bosch, head of the ABN-AMRO subsidiary in Kazakhstan. "It isn't always easy because here there's a culture of secrecy, and some companies prefer paying more to borrow from a local bank that won't ask a lot of questions."
"The entrepreneurial class here is very undeveloped," added Ray Webber, chief executive officer of HSBC Bank Kazakhstan.
This year, a new banking law put an end to the habit of several government agencies - most notoriously the tax police - of freezing bank accounts first and asking questions later.
"The tax police would just walk in, pull out a file and walk out," van den Bosch recalled. "The client goes, 'Hey, what are you doing? This is confidential information.' It happened quite regularly."
The tax police were notorious for asking for bribes in exchange for unfreezing bank accounts suspended because of technicalities. Now, only a judge can authorize the tax police to obtain bank records, and only in the case of a criminal investigation, not tax-dodging.
"We used to get a lot of calls from government officials," said Yerzhan Tatishev, chairperson of the executive board of Bank TuranAlem, the country's second-largest bank. "We don't any more. The culture has changed."
Turning Oil Into Cash
Although the financial reforms have been Kazakhstan's biggest achievement since independence, its partnership with Western oil companies has brought far greater profit.
Soviet oil professionals knew there were huge deposits of oil in the North Caspian, but it was much more difficult to lift than the crude coming out of Siberia and Azerbaijan. The oil lay much deeper, came out under very high pressure and was laced with highly poisonous hydrogen sulfide. And the biggest deposits were in the shallows of the Caspian Sea, where thick, drifting ice for five months a year posed another challenge.
So in the early 1990s, while Russia continued to eye Western oil companies with suspicion, Nazarbayev saw only that they had the capital and the know-how to go after the North Caspian oil. He persuaded them to gamble that pipelines to world markets could be built to make the world's biggest inland deposits commercially viable and that his government would be a stable and reliable partner.
Kazakhstan turned over the shore-side Tengiz field, then producing a paltry 25,000 barrels per day, to a consortium called Tengizchevroil, then led by Chevron, now ChevronTexaco.
Eight years and $2 billion later, Tengiz is producing more than 10 times that much and Tengizchevroil head Tom Winterton said recently he hoped to end the decade lifting 700,000 bpd. Most of the oil will fill the just-completed pipeline to a terminal near Novorossiisk, on Russia's Black Sea coast.
Meanwhile, an even larger field called Kashagan, probably the world's fifth-largest and the only one in the top five outside the Middle East, is being developed by a consortium led by Agip SpA of Italy.
Agip KCO, the operating company, expects to be lifting 300,000 bpd by 2008. Oil experts believe there is a high likelihood that when Kashagan and its satellite fields mature, they will produce 2 million bpd.
Experts say that, all told, Kazakhstan's oil exports should rise from 800,000 bpd this year to at least 3 million bpd - Russia's current export level - by 2015, propelling it into the ranks of the world's top five exporters.
Many Left Behind
It's hard to imagine that everyone won't benefit from this bonanza, since Kazakhstan is a country of just 15 million people, a tenth of Russia's population. However, the last decade has been cruel to many Kazakhs.
"There are enormous pools of poverty with no connection to the economy," said an international economist who asked not to be identified.
Much as in Russia, he said, Kazakhstan - relatively egalitarian a decade ago - has seen a deep chasm grow between those who have skills and whose salaries are rising, and those who have no skills and whose lives have descended into poverty and misery.
While around 1 1/2 million Germans and Slavs have left the country since 1991, putting Kazakhs in the majority for the first time in a century, the disintegration of the Soviet safety net has left 39 percent of the population below the poverty line - defined as having of income of $23 or less for a family of five.
"That's better than two years ago, when it was 43 percent," said Fikret Akcura, the UN coordinator in Almaty.
There is no single socio-economic reason for the poverty gap.
"In the south, poverty is rural," Akcura said. "In the north, it's around the industrial centers that have closed down."
The government was slow to address the problem, he said.
"In the beginning, the government didn't want to even admit there was real poverty," he said. "But in 1999, we finally were able to sit down with them and elaborate a real anti-poverty strategy."
Marchenko said he hopes the economy will grow back to its 1990 level within four years.
Still Popular
After 13 years in power, President Nazarbayev remains relatively popular, is widely perceived to be irreplaceable and has maintained harmony between Kazakhs and Russians.
Appointed by Mikhail Gorbachev in 1988 as party leader in Kazakhstan, Nazarbayev remained a staunch defender of the Soviet Union to its end, and was the first to ask to join the Commonwealth of Independent States after the leaders of Russia, Belarus and Ukraine founded it in 1991.
He has kept good relations with the United States, the country's biggest foreign investor, and Russia, its powerful neighbor.
The U.S.-led war against the Taliban may help Nazarbayev enhance ties with Washington. Because of its location north of the other former Soviet republics bordering Afghanistan, Kazakhstan has not taken an active role in the war, but it has offered the United States use of its airfields, an offer that has not yet been taken up.
The elimination of the Taliban government would also remove the biggest threat to the stability of Kazakhstan and its neighbors, said Bu rik han Nurmukhamedov, deputy director of the Kazakhstan Institute for Strategic Studies.
"Drugs, arms and fundamentalism - that's what we getting from Afghanistan," he said.
The picture is not all rosy, however.
Although U.S. Ambassador Larry Napper recently said Kazakhstan had the best human-rights record in central Asia, it is still far from a true democracy. The opposition is tiny and frequently complains of heavy-handed harassment, while the antics of Na zar ba yev's business-minded family breed widespread cynicism.
Last month, Nazarbayev had to fire one of his son-in-laws as deputy head of the local FSB because his propensity for secretly acquiring media holdings had antagonized many in the economic and political elite.
Another son-in-law manages the country's pipe line system and is widely believed to have covert stakes in the country's largest commercial bank and other businesses.
Nazarbayev himself has had to contend with corruption investigations in the United States and Switzerland, where several accounts of his were frozen.
But for all his faults, analysts and ordinary Kazakhs say Nazarbayev is steering Kazakhstan in the right direction.
Whether the transition to a successor will be smooth remains an open question. But at 61, Nazarbayev appears in good health and shows no sign of wanting to relinquish power.
TITLE: U.S. Readers Weigh In on ABM Withdrawal
TEXT: In response to "U.S. Renounces 1972 ABM Treaty," Dec. 14.
Editor,
Many Americans, perhaps most, disagree with U.S. President George W. Bush when he cavalierly junks treaties such as the one that covers ballistic-missile defense. It is good to know that much of the rest of the world joins in my disappointment over his actions. He too will pass, but it will be a long four years.
Frank Bredell
Lincoln Park, Missouri
Editor,
Your president, Vladimir Putin, revealed his knowledge of U.S. history by "not being surprised" with the U.S. withdrawal from the ABM Treaty.
The United States has a long history, dating back to its "dealings" with the American Indians, of not honoring treaties because of its own "interests."
Also, let's not forget that New York's Manhattan Island, a.k.a. Gro und Zero, was wrangled from the Indians with a handful of bobbles, bangles and beads.
Michael Pinchot
Anaheim, California
Editor,
I'm an American and a regular reader. I would like to know if the Russian people really do think the American withdrawal from the ABM Treaty poses a threat to anyone, not just Russia. It seemed to be implied in your article that Russia has nothing to worry about, but others might. What does this mean? Do people think that if we develop a missile-defense system, it will turn into a missile-offense system because we can attack someone without the fear of retaliation? This is ridiculous. The United States is not an aggressor. Any military conflict we have had over the last century has been at the defense of countries - not an attempt to take anyone over. It is unfortunate that some will perceive the withdrawal from the treaty as a humiliating incident for Putin, as mentioned in the article. Bush tried to come to a consensus on the issue so that it wouldn't have happened this way.
My hope is that people will understand why this move was made. We have crazy people in this world gaining access to some sophisticated weaponry. Unfortunately, we can no longer rely on the legal and the political system to ensure that there is a fair playing field in the world. Some choose not to play by the rules, and we have to be able to defend ourselves against them. Thank you.
Steve Ward
St. Louis, Missouri
Editor,
I do not understand Russia's objections to the U.S. withdrawal from the ABM Treaty. Far from resisting, I think you should also be looking at missile defense. Even at 2,000 warheads each, there is no way either of our countries would risk even one warhead getting through to its target. So, what added stability is there by not having the ABM Treaty?
Beyond that, Russia and the United States have the same aims, the same worries, the same goals for our peoples. We are ecstatic that President Vladimir Putin wants to Westernize. We love Russians and want them to come into the fold!
Our ABM system is supposed to be designed to prevent missiles from countries like Iraq from getting through. And, by the way, why does Russia keep on defending that criminal Saddam Hussein? If Russia were to pull its support, I think his government would crumble. Ditto North Korea. These two are led by dangerously unstable regimes that could cause headaches for Russia as much as for us.
Reid Reynolds
Herndon, Virginia
No Slap
In response to "Can Our Friendship Survive the End of ABM?", a comment by Pavel Felgenhauer on Dec. 18.
Editor,
I very much enjoyed reading Felgenhauer's article. I don't claim to be familiar with Russian domestic politics, but I was struck by the notion that the U.S. withdrawal from the ABM Treaty would be seen as a slap in the face for President Putin. It is clearly a victory for us both.
The ABM Treaty was designed for a world in which the United States and the Soviet Union were staring at each other over loaded guns, with NATO and the Warsaw Pact lined up behind their respective allies, ready for what would likely be a disaster regardless of who won or why it started. When the Soviet Union died, and we in the West were sure not only that it was dead, but that it wasn't going to be replaced by something just as threatening or worse, something wonderful happened. The Cold War died also.
The West no longer sees any reason to fear a flood of hostile soldiers driving westward. Additionally, for those who may not have kept up with recent events, the collapse of the Soviet Union was not followed by a flood of Western armies driving toward Moscow. The West is not hostile to Russia.
What is the point? Withdrawing from the ABM Treaty is not about getting an advantage over Russia. It is about protecting ourselves and our allies from the kind of people who crash passenger jets into American buildings or use explosives, like the Chechens, to blow up Russian apartment complexes. It is about being able to stop some lunatic national leader from behaving like a lunatic national leader.
This protective shield would cover our allies, so I'm sure the United States would be willing to offer protection to Russia as well, if Russian national pride would allow for such a thing. Imagine that, the American taxpayers financing a missile shield that could help protect Russia, and that is a slap in the face to Putin? We help protect a friend, and Russia gets some protection from a friend. I see no down side to this.
The Cold War is over and has been for some time now. The external danger to Russia does not lie to the west of Moscow, or across the Bering Straight, but to the south.
Anthony Neal
Buena Vista, Virginia
Cheap Gas
Editor,
All of us in the United States, and in the West in general, owe the Russian government a huge thank you for its actions in continuing to sell oil and gas to world markets instead of joining the OPEC cartel in driving the prices of oil and gas up by "shorting" the world's supply of same.
Faced with a new worldwide war on terrorism that has dampened consumer spirits and harmed the general world economy by its negative psychological impact, the single most important thing we in the United States could have hoped for was holding down the price of gas and oil. Had the Russian government done otherwise, a severe economic disaster for both the United States and the world at large was in the offing, exactly what the heretic Muslim terrorists were hoping for.
I, for one, will long remember the wise and brave action of the Russian government in keeping your oil and gas taps open to worldwide sales.
We also appreciate your military and foreign-policy support of our now joint actions in freeing Afghanistan. I certainly appreciate more than most your need for stability on your southwest Asian front, having lived two years in Pakistan and visited Afghanistan some years ago.
On behalf of myself and my family of 5, we wish all the Russian people a very blessed Christmas and all the best for the year 2002.
George L. Singleton
Colonel, U.S. Air Force, Retired
Birmingham, Alabama
Help the Kids
In response to "Abandoned Children Haunt the City's Attics," Dec. 21.
Editor,
This was an excellent article. When I am in St. Petersburg, I always notice these children. They need a lot of help from the city, and social programs that must be developed from public and private funds. Also, poor mothers need a lot of help in St. Petersburg.
If the mothers were helped, the children would not be as likely to go to the streets to live. It is less expensive to help the mother and child at home, than to help the mother and child in separate conditions.
Larry Freeman
Sterrett, Alabama
Visa Poll
Editor,
From the perspective of one who has visited your country several times and the opinions of others who have done likewise, I know that many others who might otherwise have done so are deterred by the requirement for an invitation and a visa to visit Russia.
European Union citizens, as you know, now enjoy the ability to travel widely without a visa and may also visit the Baltic States under a visa-waiver program.
From my viewpoint, which seems to be shared by many others, it might be a good idea to bring this to the attention of your government by offering readers the opportunity to comment in some way. Perhaps a Web-site poll or a forum where it would be possible to measure the extent to which the process of visa invitation and registration has influenced the eventual decision to travel elsewhere.
Jeff Mowatt
London, England
Visas and Hotels
Editor,
Easier visas will help - perhaps one issued upon entry - but a country must control its borders and, until internal passports are no longer used, some method of tracking will be required. Accommodations can be scarce during tourist season, but it is my understanding that lack of true land privatization and the difficulty of obtaining authorizations for building or property conversions will restrict the hotel rooms.
Not every foreigner is rich and there are few budget accommodations. Why not have a tourist pass available that would allow tourists to the same entry fee paid by Russians? Its fee could be shared with part going to fund an English "Travelers Aid Organization."
Personally, I was comforted by the presence of armed police, but then, I usually am not out late at night. I am sure that higher pay combined with no tolerance for corruption would help raise the level of police professionalism.
My impression of St. Petersburg is that is a very safe city, compared to others of its size in the world. Generally city dwellers are reserved, perhaps Russian more so, but I found the natives of St. Petersburg generally helpful and friendly, especially once they got over a suspicious nature. But then I am not a typical tourist because I seek to experience what the average citizen does.
From this viewpoint I was disappointed that the "public servants" do not yet realize that their job is to make it easier and quicker for the public to receive service from their servants.
Thomas Owens
Midland, Texas
Change of Plans
In response to "Having a Good Time Doing Good Things," Dec. 4.
Editor,
I am a student studying in business and Russian in Dublin, Ireland. After having spent a while in St. Petersburg last year, I was aware of the St. Andrew's Ball. But stumbling upon this article, haphazardly, evoked in me a great sense of sadness and longing. It made me realize how much I miss the country. Battles effortlessly captivates the mood and life of the St. Petersburg social scene. She has made me seriously reconsider travel plans for this Christmas. Keep up the good work.
Jean-Bernard Isabelle
Dublin, Ireland
Which Comes First?
In response to "A Dose of Realism," a letter to the editor by Sephen Ogden, Dec. 18.
Editor,
I read Ogden's reply to my letter with interest. I definitely plead guilty to his charges of "Utopian thinking," idealism and some "naivete." I hope I can retain these aspects for many years to come, including during my times in Russia. The advent of spring, in the face of a time of winter, is a way in which nature teaches me that anything is possible. For things to change in human terms, I can learn much from the traditional spring-cleaning. Sometimes this relates just as much to my own resolve to change my thinking as it does relates to physical things.
On the other hand, his charge of arrogance baffles me. All I can say is that I held no such intention. Rather I was presenting an individual's view of how I saw tourism and foreign investment jointly being stimulated in this fine city. I think overall that St Petersburg represents the most attractive city in the world, but this is not reflected in tourism or foreign investment figures when compared with many other international cities.
Ogden states himself that "only with greater economic prosperity will the country be able to afford luxuries such as proper salaries for police ... etc." Two ways to achieve this greater economic prosperity are through tourism and increased foreign investment. These subjects are interlinked. In New Zealand the standard of living (prosperity)would be considerably lower if the country's business of tourism was not as actively encouraged as it now is.
My view is that billions of new dollars could flow into St Petersburg if some basic (and I still contend straightforward) changes are made in the approach to tourists. But I guess the dilemma is always what comes first.
Although there will always be some who don't want foreigners in the city, the fact remains that for several fundamental reasons the potential of the business of tourism is nowhere near its possible maximum in this city. This represents a loss of prosperity to all living here. If any private business made it as difficult or risky for its customers (as it is in a few instances now for tourists in St Petersburg), then that business would soon fall behind its competitors in any marketplace.
But that assumes tourism is looked at as a business with huge earning potential for this city. I really believe those in leadership positions in this city are now looking at tourism in this light. I look forward to more changes that incorporate learning from the West without losing the existing beauty of Russia and without repeating the major (especially ecological) mistakes of the West.
David Phillips
Auckland, New Zealand
TITLE: Strange as It May Seem, NATO Needs Russia
AUTHOR: By Eugene Rumer and Jeffrey Simon
TEXT: RUSSIA does not belong in NATO. The Russian people and their leaders are ambivalent about membership in the alliance, and the North Atlantic Treaty Organization is not ready to fully embrace its former enemy and commit to its defense, which could include, for example, a pledge to defend Russia against China.
But unless NATO gives Russia a more meaningful seat at the table and a real vote on select issues of mutual interest, the alliance cannot retain its claim as the mainstay of European security.
The current arrangement of 19+1, whereby the alliance's 19 members consult Russia, but make decisions without it, maintains Cold War-like divisions in Europe and constrains NATO's already-limited capabilities to address the two biggest threats to the continent - terrorism and the proliferation of weapons of mass destruction. By denying Russia a vote on these issues, NATO runs the risk of consigning itself to irrelevance. Next year will be crucial for NATO. At the Prague summit in November, the alliance is all but certain to admit new members - including, over Russian objections - the three Baltic countries of Lithuania, Latvia and Estonia.
But expanding membership is not enough for the alliance to fulfill its new goals. The vision embraced by NATO leaders at the end of the Cold War was that of an alliance transformed and adapted to bring stability to Europe's east and address new challenges to the security of all Europe. This transformation was never intended to mean only geographic expansion. Nor was it supposed to draw new dividing lines in Europe.
As a military and political alliance, NATO has two fears when contemplating Russian involvement in its affairs: that the alliance's ability to act militarily might suffer and that its status as an alliance of democratic nations with shared values would be compromised. Neither fear is justified. In fact, the war on terrorism necessitates closer cooperation between NATO countries and Russia.
It would not be an exaggeration to say that Russia, with its political and military support for the war on terrorism and its willingness to stay out of the way of U.S. deployments in Central Asia, has made a greater contribution to the war effort than most of the United States' NATO allies combined (with the notable exceptions of Britain and Turkey, both of which enjoy special relationships with Washington).
The alliance's invocation of its mutual-defense clause on behalf of the United States after Sept. 11 underscored the fact that NATO's strength is no longer primarily military: It's political. Beyond such support, the allies have few means to help the United States defend itself. NATO's ability to act militarily is increasingly dependent on the dwindling group of members with more than token military capabilities and the political will to use them.
Poland, Hungary and the Czech Republic, the first batch of new NATO members after the Cold War, have struggled to meet the military commitments inherent in their membership. Judged in terms of military capabilities alone, alliance strength has, so far, been diluted by expansion. The candidates for the second round of enlargement - Slovenia, Slovakia, Romania, Bulgaria, Albania, Macedonia and the Balkan states - are unlikely to reverse this trend.
But new and prospective NATO members do not deserve to be singled out for criticism. Most older NATO members, eager to reap the post-Cold War peace dividend, have not kept up with their defense commitments, either. If NATO has turned a blind eye to the military failings of its current members, why would it consider Russia a threat to NATO defense?
Nor is there a credible argument that NATO's political cohesion will be at risk if Russia is given a real voice and a vote on key European security issues. Does anyone really believe that Moscow will have more clout in a gathering of 20 or more European nations, most of which have a long-time relationship with and commitment to the United States, than Washington? If so, the United States ought to rethink its commitment to the alliance. Anyone who fears that Russia will exert disproportionate influence in alliance deliberations has no faith in NATO cohesion.
There are likely to be crises - in the Caucasus, for example - during which Russia could obstruct alliance moves and decisions. But there are likely to be times when Russian involvement - also in the Caucasus - could prevent a crisis.
In the end, greater Russian involvement in NATO is likely to have more influence on Russia than vice versa. The likely result of Russia receiving a vote on select NATO decisions is that it will face, in some instances, the choice between isolation or union with the rest of Europe. It is a safe bet that Moscow will not want to be the odd man out.
Arguments that Russia is politically incompatible with NATO do not stand up to scrutiny, either. True, its democracy is young and highly imperfect, its treatment of ethnic minorities often appalling and its relations with neighbors frequently contentious. But when Russia sits down with NATO, it will be sitting at the same table with Turkey, whose ill treatment of Kurds is well-known; with France, whose hands and nose were bloodied in a violent colonial war in Algeria and whose top government officials are routinely implicated in corruption scandals; and with Germany, whose post-Cold War founding father ended his political career in disgrace after an embarrassing investigation into his party's slush fund. None of this excuses Russia's failings, but they are hardly reason enough to disenfranchise Russia in all matters of European security.
When NATO embarked on the path of post-Cold War transformation, it committed itself to do for Europe's east what it had done for Europe's west. Its mission cannot stop at Russia's borders. Russia most likely will choose not to join the alliance formally. But NATO's self-interest dictates that Russia be given a vote on select issues. Practically speaking, this would mean that on issues selected in advance by NATO and Russia - including such things as the deployment of peacekeepers, proliferation controls and anti-terrorist operations - Russian representatives would sit at the table and forge common decisions with NATO members. They would be involved in the crafting of plans instead of being presented with them after the fact.
The alliance can use Russian help - its intelligence information and airlift capabilities could prove useful in the war on terrorism, certainly, and Russian cooperation in efforts to combat the spread of weapons of mass destruction and missile technologies will be essential.
By bringing Russia into its decision-making, NATO will push Russia in the right direction. A seat at the NATO table for Russia represents an essential step for the organization to renew itself to face the real challenges of the new century.
Eugene Rumer and Jeffrey Simon are senior fellows at National Defense University's Institute for National Strategic Studies. The views expressed here are their own. They contributed this comment to the Los Angeles Times.
TITLE: Are We Paying Too Much for Stablity?
TEXT: "THE Russian Federation is a democratic, federal, law-governed state with a republican form of government." "The branches of legislative, executive and judicial power shall be independent."
Don't laugh. This is the Russian Constitution, Article One and Article Ten.
Of course, anyone could be forgiven for laughing, especially in the wake of the recent election of Serge Mironov to be speaker of the Federation Council. The process of his selection by the pro-Kremlin Federation group of senators shows that separation of powers is an illusion here and that key questions of state are decided within a narrow circle of people surrounding President Vladimir Putin. The president has denied his involvement repeatedly, but his protestations are hardly convincing.
Now, I certainly wouldn't say that most of the laws adopted by the State Duma during the years when the Communists and their allies had the biggest group of deputies were sensible. Neither would I say that the senators in the Federation Council always acted responsibly before the Kremlin pushed through its fundamental reform of that chamber earlier this year.
But I would say that both those bodies at least acted with a modicum of independence in those days, an independence that now is nothing but a memory.
I should also at least mention the Prosecutor General's Office, which has always served as an executive-branch tool for punishing anyone who is not in favor. Some observers have said that prosecutors have begun fighting corruption in earnest with their recent investigations of certain customs officials, by interrogating Railways Minister Nikolai Aksyonenko and the like. But when, for instance, a disgraced customs official is quickly replaced by a deputy to Northwest District Governor General Viktor Cherkesov - as happened last week - such anti-corruption efforts look suspiciously like the age-old practice of using law enforcement to put one's own people in key state positions.
Consider Mironov's case again. According to a recent investigation in Novaya Gazeta, Mironov's political star was backed from the beginning by Yury Molchanov, who served as the external-affairs dean of St. Petersburg State University back when Putin was his deputy.
Novaya Gazeta reports that Molchanov's son, Andrei, is the head of Lenstroirekonstruktsia, a local construction company that last year picked up a $1 million contract to renovate Cherkesov's headquarters. Maybe this company won some kind of secret tender. Who knows?
There seems to be no limit to the Kremlin's authority now that the Unity faction - united with the Fatherland-All Russia movement - holds a majority in the Duma. And the Federation group controls the Federation Council. And the Prosecutor General's Office is diligently perusing the president's agenda. And most of the national media is afraid to say a word that might offend the main man in the Kremlin.
Earlier this month, many Russian publications refused to print excerpts from the Russian edition of a book called "The Piquant Friendship," which was written by a German friend of Putin's wife, Lyudmila.
Igor Zakharov, the book's publisher, told the ntvru.com Web site that the weekly magazine Ogonyok was one of those that declined
"We won't print it. Don't be offended, but we won't. We were told that we shouldn't print [it]," Ogonyok editor Vladimir Chernov said, according to Zahkharov.
So this is what we've come to after two years of Putin's regime. Managed democracy. Some experts say that the current union between the Kremlin and the Duma is necessary in order to pass reforms such as the Land Code and the Tax Code that are needed to get the economy going. Apparently the economy only works with full efficiency when democracy is trimmed back. Call it the Kazakhstan model.
TITLE: Chris Floyd's Global Eye
TEXT: What kind of sick and twisted men could sit around calmly, in safety and comfort, while planning the murders of thousands of innocent people, all to further their own extremist faith, which holds that no other system but their own should be allowed to exist on earth? Men with no conscience and no soul, coldly calculating the number of deaths it would take to goad their enemy into action and set the world aflame in a holy war between the righteous and the infidels - where could you possibly find such degraded minds?
Why, on the U.S. Joint Chiefs of Staff, of course!
Yes, America's shiniest military brass have at times been given to Osamic convulsions of terrorist fervor, drawing up plans to sink American ships, shoot down American planes and launch terror campaigns in American cities, "even in Washington" - all to create "pretexts to provide justification for U.S. military intervention in Cuba."
This was the gist of "Operation Northwoods," devised by America's top military leaders and presented to President John Kennedy in 1962, ABCNews.com reports. The existence of Communist Cuba 150 kilometers off the coast of God's country was an intolerable affront to the honchos of the military-industrial-mafiosi complex (MIM), which had formerly gorged itself on the rich corruption of the right-wing Batista regime.
Their outrage was compounded by one of the CIA's rare fiascos in nation-gutting: the failed Bay of Pigs invasion a few months before, a "humiliation" that left the hard Right - and its many sympathizers in the military - howling for Kennedy's head on a platter. Hoping JFK would now seek to restore the lost national manhood, the brass drew up a full-scale plan for the invasion and military occupation of Cuba.
That's where the "pretexts" came in. The boys in braid evinced a devilish imagination worthy of al-Qaeda as they plotted terrorist campaigns complete with assassinations and bombs in American cities, blowing up American ships in Cuban harbors - "casualty lists in U.S. newspapers would cause a helpful wave of national indignation," they wrote - even contemplating the explosion of America's first manned space flight - all to be blamed on Castro, of course.
A few days after the head of the Joint Chiefs, General Lyman Lemnitzer, presented the plan to the White House, Kennedy told him he would never authorize a U.S. military invasion of Cuba. A few months later, in the midst of a Senate investigation into right-wing extremism in the military, Kennedy removed Lemnitzer from the military's top spot.
A few months after that, the president was dead - killed by a "Cuban sympathizer" in the streets of Dallas.
Someone got that head on a platter after all.
Washed in the Blood
Naturally, we only hear of such things 40 years after the fact - it wouldn't do for the rabble to know the terrible burdens of murder and deceit their betters must bear for the greater good. Because for every "Northwoods" plan quashed by simpering liberals, a dozen other patriotic programs have been put into practice over the years.
Take, for instance, the macabre "bodywashing" operation directed by the affable front man Ronald Reagan and his CIA control, George H.W. Bush. Throughout the 1980s, these red-hot Cold Warriors waged secret war in Central America, wherever the vested interests of the MIM complex were threatened.
In El Salvador, Reagan-Bush dispatched a small number of "advisers" to train the local military in their battle against leftist insurgents. Publicly, the advisers were forbidden to take part in combat operations; na levo, however, U.S. troops were in the thick of battle - and some began coming home in body bags, Consortiumnews.com reports.
It would not do to have the Great Communicator and his spyboy-toy shown up as liars, of course. So the American soldiers killed in El Salvador were subjected to the process of "bodywashing": "We'd ship the body back home and have a jeep roll over him," a former officer said. "Or we'd arrange a chopper crash or wait until one happened and insert a body or two into the wreckage. It's not that difficult."
No indeed, not when you have the full power of the White House behind you. Any reporters who caught wind of the secret combat were subjected to intensive "discrediting" by the Reagan-Bush team and their helpful operatives in the media, particularly the Wall Street Journal. The worst offender was Raymond Bonner of The New York Times, who reported that the American-"advised" Salvadoran military had massacred 1,000 men, women and children in the town of El Mozote in 1981.
The White House dispatched assistant secretary of state Elliot Abrams to Congress, where he swore under oath the massacre had never happened. The trembling Times then removed Bonner from Latin America, banishing him to the business desk. The secret war went on.
That's all ancient history now, of course. Bonner was eventually restored to favor - after a UN forensic team confirmed the El Mozote massacre in 1991, digging up hundreds of skeletons: men, women and children hacked to death by America's proxies. As for Elliot Abrams, the old villain was finally brought to justice, convicted of lying to Congress about another big-time MIM operation, Iran-Contra.
But never let it be said the MIMers don't look after their own. Abrams was then pardoned by President Bush, and now serves as a top adviser to another President Bush, a dictatorial secrecy fanatic who has committed America to wars covert and overt all over the world. So what does Abrams - abettor of massacres and breaker of oaths - advise the Dear Leader about?
International human rights, of course.
Let the bodywashing begin.
TITLE: U.S. Arrests 58 People For Anthrax Hoaxes
AUTHOR: By Karen Gullo
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Postal worker Clarence Lindsey allegedly scrawled "ANTRAX INCLOSED" on a package at his job as a joke, but authorities found no humor in the misspelling or the deed. The Illinois man was indicted and, if convicted, could face up to 5 years in jail.
Lindsey is one of 58 people around the country arrested and charged in connection with anthrax hoaxes or threats since the anthrax scare began after Sept. 11, the postal service says. Many are alleged to have taken advantage of the public's fear of the deadly bacteria to either settle a score or pull off a prank.
It's no laughing matter, authorities say.
"It's kind of like yelling fire in a crowded theater," said Dan Milhalko, U.S. Postal Service inspector. "There's been too many warnings for people to say, 'I was just kidding."'
Five people have already been convicted, said Milhalko.
On Friday, the FBI released the names of 14 people charged in what the bureau considered "notable" anthrax hoax cases, and added a warning: "We will not tolerate these serious violations of federal law," said FBI Director Robert Mueller.
Those arrested for anthrax hoaxes have been charged with obstructing the mail, threatening to use weapons of mass destruction and using the mail to send threatening communications. The maximum penalty carried by each charge is 5 years in jail and a $250,000 fine.
Lindsey, 52, of suburban Bellwood, Illinois, had been a postal worker for 31 years when he was indicted on charges of placing threatening material in the mail.
The indictment said another mail carrier tried to deliver a package containing books to a resident on Oct. 18. The intended recipient was not home and the package was returned to the post office.
When the resident visited the post office to pick up the package the next day, a clerk at the customer service window retrieved the package and saw "ANTRAX INCLOSED" written on it in large capital letters. The package did not contain anthrax.
Lindsey pleaded not guilty. His attorney, James Graham, could not be reached.
The Postal Service has received more than 15,800 anthrax incident reports and it averaged about 500 to 600 calls a day in the early days of the anthrax scare. That has slowed to about a dozen a day, said Milhalko.
The FBI has had to chase down over 2,300 reports of incidents or suspected incidents involving anthrax. Most have been false alarms or practical jokes.
Separately, in the terrorism investigation, federal prosecutors have developed several leads after questioning 5,000 foreign men of mostly Middle Eastern descent.
The U.S. Justice Department said on Friday that most of those interviewed were cooperative and forthcoming. A small number declined to be interview "and their wishes were respected," the department said in a statement.
TITLE: Officials Wonder How Bomb Suspect Got Aboard Plane
AUTHOR: By Pamela Sampson
PUBLISHER: The Associated Press
TEXT: PARIS - French police are investigating how a man who was turned away from a flight to the United States after arousing suspicions was allowed to board the same flight a day later with a questionable passport and almost no luggage.
American Airlines Flight 63, escorted by fighter jets, made an emergency landing in Boston on Saturday after the passenger, identified by French police as Tariq Raja, 28, allegedly tried to ignite explosives hidden in his shoe. He was subdued by flight attendants and fellow passengers.
An official of the French Border Police, which opened an investigation into the incident, said the Sri Lankan national was traveling on a British passport under the name Richard Colvin Reid.
The passport appeared to be valid, although an Interior Ministry spokes person said authorities were trying to determine whether Raja obtained the document using false papers.
French authorities want to know how he managed to get on board Flight 63 to Miami, given the heightened security at Charles de Gaulle airport outside Paris since the Sept. 11 terrorist hijackings in the United States.
"For the moment, we do not know how this man got through," said a spokesperson for the French Border Police, which shares responsibility for security at all airports in France with the Interior Ministry.
French police said Raja - who also goes by the name Abdel Rahim -had tried to board the same flight on Friday but missed it because police pulled him aside for questioning.
Police interrogated Raja because he was acting "a bit strangely," the Interior Ministry spokesperson said. Raja also attracted attention because he had a one-way ticket, his passport was new and he had no luggage other than one small carry-on bag. He said he was traveling to Antigua to visit family, police said.
After questioning, Raja was given the green light to board because his documents were in order, the Interior Ministry spokesperson said.
"He had to be released. He hadn't committed any crime," the spokesperson said on condition of anonymity. Raja missed Friday's plane but was allowed to board the same flight Saturday.
The substance Raja had in his shoes tested positive for explosives, U.S. law enforcement officials told said on Sunday. Further tests were being conducted to identify it.
French anti-terrorism prosecutors also opened an investigation.
About a dozen dogs trained to detect explosives are stationed at Charles de Gaulle airport, and French Border Police have asked for up to 100.
However, an air transportation expert said that it is "practically impossible" to have enough dogs to ferret out explosives that might be hidden among the tens of thousands of passengers who board flights daily.
TITLE: WORLD WATCH
TEXT: Justice Murdered
ABUJA, Nigeria (AP) -Nigeria's justice minister was shot and killed by one of several unidentified attackers who broke into his home in the southwestern city of Ibadan, government officials and family members said Monday.
Nigerian President Olusegun Obasanjo canceled a planned visit to Zimbabwe and called an emergency cabinet meeting, an aide said.
The motive behind the slaying was not clear, but the Lagos daily newspaper ThisDay speculated the killing could be linked to a violent political feud between the governor and his deputy in the southwestern Osun State.
Ige, 71, was one of the most outspoken campaigners for democracy under Nigeria's former military rulers.
Japan Defends Sinking
TOKYO (AP) - Japanese Prime Minister Junichiro Koizumi defended the shooting of a suspected North Korean spy ship and said Monday that the incident underlined the need to bolster national security.
An unidentified fishing boat sank late Saturday after trading machine-gun fire with Coast Guard vessels after a six-hour chase that began when it ignored orders to stop for inspection off Japan's coast, Japanese officials said. The bodies of two crew members were recovered and 13 others were believed missing at sea. Two Coast Guard sailors were slightly wounded.
Japan Coast Guard officials released night-vision video footage that seemed to depict the unidentified ship firing a rocket at Japanese gunboats. They said one Japanese ship was hit by gunfire 132 times in the encounter.
Diplomat Expelled
NEW DELHI (Reuters) - India said on Monday it had expelled a member of the Pakistan high commission in New Delhi for what it called activities that were "inconsistent with the legitimate sphere of activities."
"A Pakistani high-commission staffer has been asked to leave the country," foreign ministry spokesperson Nirupama Rao told reporters.
Tension between the two South Asian rivals have been running high since the Dec. 13 attack on India's parliament which New Delhi blamed on two Pakistan-based separatist groups.
New Delhi, which accuses Pakistan of fomenting a decade-old revolt in Kashmir, recalled its envoy from Islamabad on Friday, accusing Pakistan of failing to act against terrorism.
Somali Compromise
AKURU, Kenya (Reuters) - Somalia's shaky transitional government signed a peace deal on Monday with several opposition factions and vowed to cooperate in the fight against terrorism.
The transitional government signed the accord after coming under pressure to cooperate in the U.S. war on terrorism, amid fears the country could become a possible target after Afgha ni stan for U.S. military action.
The Kenyan-brokered Somali peace deal calls for the establishment of an "all-inclusive government" in the capital Mogadishu in one month's time that would share power between all Somali clans.
Kenyan President Daniel Arap Moi, who hosted the signing ceremony at one of his official residences in the town of Nakuru, urged Somali politicians to continue with the peace process and act against terrorism in the Horn of Africa country.
"You hear in Afghanistan, they have set up a government, they are moving on. You should not be left behind," Moi said.
TITLE: Czechs Top Russia 4-0 for Title
PUBLISHER: The Associated Press
TEXT: MOSCOW - Jaroslav Balastik scored two goals as the Czech Republic whitewashed defending-champion Russia 4-0 to win the Baltika Cup international hockey tournament in Moscow on Saturday.
The world and Olympic champion dominated the match to win its first tournament in this year's European Ice Hockey Tour.
Six minutes into the game, right wing Balastik opened the scoring off a pass from linemate Petr Leska. Center Tomash Kucharcik made it 2-0 1:26 later.
Balastik missed an empty net before scoring his second at 12:34 to give the Czech Republic a comfortable 3-0 lead in the first period.
Seconds later, Russia's head coach Boris Mikhailov substituted goalie Yegor Podomatsky for Maxim Sokolov.
Podomatsky, who plays for Lokomotiv, was named a backup for Russia's Olympic team No.1 goalie, Nikolai Khabibulin of Tampa Bay.
"Maybe it's a black day for us. We played a hell of a game. I couldn't even foresee such a result," Mikhailov said after the match.
Russia failed to capitalize on 10 power-play minutes before right wing Pavel Rosa silenced the sellout crowd of 8,500 at Luzhniki Indoor Arena by adding the final goal at 36:21 on a pass from center Petr Cajanek, who was named to the Czech Olympic roster Friday.
The Czechs collected 7 points. Russia finished second with 5 points, followed by Sweden with 3 and Finland at the bottom with 2.
TITLE: SPORTS WATCH
TEXT: Neuheisel Says 'No'
SOUTH BEND, Indiana (AP)-The search for Notre Dame's next football coach has produced plenty of rumors.
Rick Neuheisel spent Sunday denying the latest one.
"I'm really intrigued by all the people who have been offered the job as I kind of pay attention to the media," Notre Dame athletic director Kevin White said on his radio show. "It's amazing. I'm really spellbound by that part of it.
"It seems like everybody we talk with or if we talk about somebody, one or two people removed, automatically they assume they were offered the position. To this point, one person has been offered the job, and he was with us for five days."
George O'Leary resigned less than a week after accepting the job, admitting he lied on his resume.
White says no one else has been offered the job, and Neuheisel said he is not negotiating with Notre Dame, despite reports to the contrary.
The Washington coach refused to say whether he had been contacted by Notre Dame.
White did not specifically comment on Neuheisel or any other possible candidate during the radio program, aired on ESPN Radio 1000 in Chicago.
Rangers' New Park
ARLINGTON, Texas (Reuters) - South Korea's Chan Ho Park, the prized starting pitcher of this year's free- agent class, has signed with the Texas Rangers, the team said on its Web site on Saturday.
The right-hander, who was 15-11 with a 3.50 ERA for the Los Angeles Dodgers last season, is believed to have agreed to a five-year deal worth an estimated $70 million.
The Rangers opened the door for Park to become their ace starter after not offering a 2002 contract to Rick Helling, their no. 1 starter last season.
During his eight seasons with the Dodgers, the 28-year-old Park was 80-54 with a 3.80 ERA and tallied 1,080 strikeouts while issuing 560 walks in 1183.2 total innings pitched.
Park, who became a full-time major league player in 1996, has averaged 15 wins a season from 1997 to 2001.
Ronaldo Limps Off
MILAN, Italy (Reuters) - Twice World Player of the Year Ronaldo was substituted in the 67th minute of Inter Milan's 3-2 win at Piacenza on Sunday after suffering what appeared to be a thigh strain.
Ronaldo left the field holding his thigh and Italian media reports said he had suffered a light strain.
The Brazilian scored twice in Inter's 3-0 defeat of Verona on Wednesday - his best performance since he began his comeback from nearly two years out with injury.
Twice this season Ronaldo has suffered thigh injuries unrelated to the knee trouble which sidelined him for the best part of two seasons.
Beer Ban
NEW YORK (AP) - A week after bottle-tossing fans disrupted two NFL games, the league directed teams to cut off beer sales at the end of the third quarter.
NFL spokesperson Greg Aiello said Saturday that the memo was sent to teams Friday, but added that most teams already were ending beer sales after the third quarter. Only five of the 31 teams had been selling beer in the fourth quarter, Aiello said.
The memo also suggests that beer be poured into cups from bottles and asks teams to identify anyone who throws objects on the field and go after them aggressively in ways ranging from court action to revoking season tickets. And it suggests frequent announcements of the policy as well as the inclusion of the policy in mailings.
Blake Memorial Held
AUCKLAND, New Zealand (AP) - Peter Blake, the yachtsman slain by bandits on the Ama zon River, was honored Sunday during a memorial service in front of an estimated 30,000 people.
Blake, killed Dec. 5, was remembered in the service that was attended by his England-based immediate family - wife Lady Pippa Blake and children Sarah-Jane and James and mother Joyce.
Speakers praised the man who won the Whitbread around-the-world race, brought the America's Cup to New Zea land and then led the first successful defense of the Cup outside the United States.
With all that accomplished, he decided to take on the international fight to save and protect the global environment.
Angered by Aussie
LONDON, Dec 24 (Reuters) - New castle United's Greek international Ni cos Dabizas has condemned Leeds United's Australian international Mark Vi duka after the two players clashed twice in a premier-league game on Saturday.
Striker Viduka escaped punishment after Dabizas sustained a broken nose in an aerial collision and later in the match the Leeds player was shown a yellow card for a high tackle.
"[Viduka] should have got a yellow card for the first incident, when he broke my nose with his elbow," Dabizas was quoted as saying in The Mirror on Monday. "There's a difference between being physical and being violent.
"The tackle was bad. It was above my knee and I was playing the ball on the ground. His studs were over a foot above the ground. I thought it was my cruciate ligament. It was a nasty kick above the knee.
Punt, Pass, Dunk?
KANSAS CITY, Missouri (AP) -Tony Gonzalez, who plays football for a living and basketball for a passion, is once again making noises about giving the NBA a try. A report on CBS television Sunday quoted unnamed sources that Kansas City's All-Pro tight end hired a special trainer and hoped to be in contact with NBA teams after the season.
Reports that Gonzalez might pursue an NBA career first surfaced last summer. He said then it "probably isn't going to happen."
Gonzalez, who averaged 6.4 points and 4.3 rebounds in three seasons at the University of California, caught two passes for 22 yards in the Chiefs' 23-20 victory over San Diego on Sunday.
Soviet Skater Murdered
MOSCOW (AP) - Figure skater Kira Ivanova, a bronze medalist in the 1984 Olympics, was found dead in her apartment, the chairperson of the Russian Figure Skating Federation said. She was 38.
Ivanova's neighbors found her covered with knife wounds, figure skating official Valentin Piseyev said Friday. He said police told him she was killed several days ago.
She had been battling alcoholism in recent years, he said.
"It's shocking," said Yelena Valova, who won three pairs world titles and the 1984 Olympic gold medal with partner Oleg Vassilyev. "We used to be really good friends. Best friends, I'd say.