SOURCE: The St. Petersburg Times
DATE: Issue #744 (10), Tuesday, February 12, 2002
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TITLE: Putin Focuses on Brutal Crime Stats
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin ordered law enforcement agencies Monday to intensify their efforts to battle a crime rate in which one of every two serious crimes went unpunished last year.
More than 7,000 murderers are roaming the country after escaping punishment last year, and 30,000 people went missing without trace, Putin said at an annual Kremlin meeting of high-ranking prosecutors from across the country.
"Murders, kidnappings, assaults and robberies are becoming virtually everyday occurrences in our lives," Putin said.
He said about 3 million crimes were registered in 2001.
"These are factors suitable not only for the self-reproduction of crime but for the formation of a social atmosphere that allows crime to replace justice," Putin said.
The stern remarks about crime appear to mark the launch of the latest Kremlin-backed initiative to tackle social ills. In recent weeks Putin has ordered that measures be drawn up to deal with the country's growing number of homeless children and decline in health and interest in sports.
Last month Putin also voiced concern about the slow development of small and medium-size businesses - the very companies that experts at the World Bank and European Bank for reconstruction and Development say are vital for the extended strength of the Russian economy.
Putin singled out small and medium-size businesses Monday as victims of organized crime and corrupt police officers.
"There is, by the way, a category [of people] that experiences this problem with special acuteness," Putin said.
"I am talking about entrepreneurs, because they find themselves between a rock and the hard place. On one side there is crime, on the other - sadly very often - they face unlawful actions by the state representatives, including law enforcement agencies."
"Furthermore, entrepreneurs by now habitually take it as an unavoidable evil," he said.
However, Putin ruled out imposing harsher penalties as a means to crackdown on crime.
"The relatives of murder victims have appealed to me to lift the moratorium on the death penalty," Putin said.
"People are moved to do this not only because of the cruelty of a crime but also because of the frequent powerlessness of the law enforcement organs.
"But what sense is there in tougher punishment if we can't guarantee the main factor - the inevitability of punishment?"
Prosecutor General Vladimir Ustinov echoed Putin's concerns and provided more alarming figures.
Ustinov said local police stalled investigations into nearly 122,000 crimes last year, Interfax reported.
He also said that regional crackdowns against corruption often end up with no results.
Even worse, Ustinov said, is the fact that law enforcement agencies often have reams of evidence on corrupt high-ranking officials but do not attempt to take action, Interfax reported.
Immediately after Putin's lecture, Ustinov was quick to issue sweeping orders to tackle crime and corruption.
Ustinov ordered a large-scale investigation into the armed forces' compliance with official regulations, particularly the combat readiness of its divisions.
"Violations in the organization of combat training, irresponsibility by officials that borders on criminal negligence, and the eternal reliance on chance are characteristic of many military units," Ustinov said.
Ustinov also demanded a full checkup of the army's spending. A notorious excuse by top army brass for failures and accidents is that they did not have enough funds.
"The Kursk tragedy had brought to light many things, including our sloppiness," Ustinov said.
The Kursk nuclear submarine sunk in the Barents Sea in 2000, killing all 118 crewmembers. Although a number of high-ranking Northern Fleet commanders have lost their jobs over the accident, the events that led to the disaster remain a matter of speculation. Navy officials have said an onboard torpedo detonated, setting off the submarine's powerful arsenal.
Despite Putin's dressing down of the prosecutors, Prime Minister Mikhail Kasyanov signed an order Monday boosting their salaries by 160 percent this year, a move meant to boost their morale. With the pay hike, however, prosecutors will lose perks such as discounts on utilities and housing.
Roland Nash, chief strategist at the Renaissance Capital investment bank, said Putin's remarks about crime suggested some change was in the works.
The president's track record shows that whenever Putin focuses on something - like the tax system, land issues and red tape - improvements have followed, Nash said.
Andrei Ryabov of the Moscow Carnegie Center said last week that Putin's interest in the activities of prosecutors is broader than just a crackdown against crime.
Ryabov said prosecutors have attained a key role in the way political decisions are made under Putin, as opposed to the less-important role they had under his predecessor, Boris Yeltsin, when corruption allegations were rarely investigated.
As a result, the Prosecutor General's Office and other investigative agencies are at the center of a power struggle between interest groups eager to manipulate them.
"For every conflict there are institutions that must look into the conflict - arbitration courts, regular courts, prosecutors, the Audit Chamber and the Tax Police," Ryabov said. "The problem is that the main interest groups in Russian politics very quickly understood that - some of the aforementioned bodies now play a big role in decision-making. So for these interest groups the key goal became the ability to monopolize influence over these institutions."
Having understood this, "the president seems to be trying to use his influence to push these groups away from such vitally important institutions," Ryabov said.
TITLE: Media Executives Jockeying for Inside Track
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - It could have been an ominous sign of new media battles on the horizon, poor organization, or both.
When top media executives met Saturday for the closing panel of a two-day conference on thorny relations between the state and the media, there was not enough room on the stage. So the heads of the country's two biggest television companies - Konstantin Ernst and Oleg Dobrodeyev, of state-controlled ORT and VGTRK respectively - had to take turns at the presidium table, one was always relegated to the background.
Press Minister Mikhail Lesin, also among the 13 media bosses at the table, announced that the government plans to "reduce its presence on the media market" - a euphemism for scrapping or privatizing ORT or RTR - and that his ministry will soon start consultations with private and state-owned industry players on how to proceed "with maximum correctness."
"By May, it will become clear," Lesin said.
However, TV6 was the more pressing issue at the conference, titled "The Power of the Press and the Pressure of the Powers" and organized by the Union of Right Forces, or SPS, together with Harvard University's Davis Center and Moscow State University's journalism department.
The fate of the station, which was shut down under a court order last month, dominated the often monologue-like discussion groups in which participants had little time to do more than voice their concerns.
The tender is scheduled for March 27, and Lesin reiterated Saturday that it would go ahead as scheduled.
On Friday, Ekho Moskvy head Alexei Venediktov, who is providing temporary refuge for some TV6 journalists on his radio station's airwaves, threatened to resign in protest of a proposal by Gazprom-Media to take a majority on the station's board. The attempt, he said, was lawful but contrary to previous verbal agreements.
Gazprom-Media General Director Boris Jordan said the proposal had nothing to do with changing the station's management or its editorial policy. "We are very happy with the programming," he was quoted by The Washington Post as saying.
With such complicated issues developing in the media world, the weekend conference could do little more than provide participants a chance to vent their feelings.
Boris Nemtsov, conference chairperson and leader of SPS, said he was pleased the meeting even came off.
"Only half a year ago the people sitting now in the presidium did not want to see each other, to say nothing of speaking to each other," Nemtsov said. "The fact that the conference took place shows that the situation is changing."
The conference was first planned in May by SPS, Gazprom-Media - which had just taken over NTV - and Ekho Moskvy, which was in talks with Gazprom-Media about its own future. But as talks between Gazprom-Media and the radio station crumbled, so did the conference, which was called off with two days' notice.
Still, several pledges emerged from the conference. Nemtsov promised to form a public commission on free press that would first meet March 28 to assess the results of the TV6 frequency tender.
He also said SPS would lobby for a bill banning any company, individual or the government from controlling more than 25 percent of the national television market. Such an amendment would force the state to get rid of ORT or RTR.
Jordan called for a financially solid, and thus independent, media to form a lobby to push its interests - a lower tax on advertising and a fair playing field in which state media have no privileges.
"Russia is a unique country where private channels have to compete against state channels that receive government subsidies and consume about 70 percent of the advertising market," Jordan said. "The media forgot that they were businesses, did not form a constructive relationship with their shareholders and did not learn to make money. As a result, they became very vulnerable to political and economic pressure."
Several speakers agreed that the answer to current problems can only be found by looking back to when most media organizations allied themselves with various government clans in their struggle for power and property.
TV6 founder Eduard Sagalayev recalled how he was summoned in 1996 to a meeting soon after the Russian oligarchs agreed at Davos, Switzerland, to make sure President Boris Yeltsin was re-elected. "De facto we appointed the president as a top manager of the Russian Federation Corp. who had to be accountable to that board [of oligarchs]," Sagalayev said Friday.
Another issue was the personal responsibility of journalists - many of whom actively took part in the past decade's media wars - for what is happening on the media market today.
"We all grew up with a Soviet background and retain the Bolshevik thinking in which there are two viewpoints - one is mine and the other is wrong," said Alexei Simonov, head of the Glasnost Defense Foundation, a press-freedom watchdog. "Society has begun to overcome this mindset, but the press is lagging behind. The press has to turn to society."
Yet Simonov agreed with Sergei Dorenko - a former ORT anchor whose show played a key role in destroying former Prime Minister Yevgeny Primakov's presidential ambitions - when he declared Friday that the "romantic" revolutionary period is over and the media have to get organized to protect themselves from state pressure.
"Grumbling by journalists that the authorities have fallen out of love with them is very much like the grumbling of an abandoned mistress," Dorenko said.
TITLE: Party Aims at Elections Revamp
AUTHOR: By Gregory Feifer
PUBLISHER: Staff Writer
TEXT: MOSCOW - The pro-Kremlin Unified Russia Party has prepared a bill to revamp the country's election laws by making it harder for gubernatorial and regional parliamentary candidates to win office.
The party's legislators say their changes would level the political playing field and encourage voter participation, but critics claim the initiative would do just the opposite and represents another attempt by the Kremlin to bring politics under its control.
"A very alarming situation has arisen," Vladislav Reznik, a member of the party's general council, told reporters at a Thursday news conference. "The will of the majority isn't reflected, and that makes the organs of power completely independent of the voting public."
On Monday, Unified Russia's general council, which coordinates the activities of the party's four State Duma factions, hammered out amendments to existing legislation that would require winning candidates to land an absolute majority of the vote - 50 percent plus 1 ballot - among all registered voters.
Current election laws are less stringent: Most regional candidates need only a simple majority to win and only among those voters who come to the polls, provided that the turnout is above the regions' required minimum.
Unified Russia's plan stipulates that at least 50 percent of all eligible voters must show up at polling stations to make gubernatorial elections valid. Such a requirement will be tough to meet. According to the party's figures, Of 15 gubernatorial elections held last year, nine saw less than a 50-percent turnout.
In the event an election is invalid, new elections would be held repeatedly until an absolute majority shows up to vote.
"We're trying to increase the responsibility of candidates and their parties," Reznik said.
"Someone can get 5 or 10 percent of the vote and become leader of a region," said Vyacheslav Volodin, another Unified Russia general-council member and head of the Fatherland-All Russia faction. "That person then has access to power and budget money and can influence people's lives. That's just not right."
Local election laws are now set by regional authorities, something Unified Russia says allows for manipulation.
"Candidates with access to money and image makers think all they need to do to win is get a few more votes than the next guy," Volodin said, adding that his party's plan would "force candidates to earn voters' respect."
A key question left unanswered is who would hold power in a region if an election is invalidated. Unified Russia officials did not provide a final answer, saying the issue involves changes to other legislation, but they said the president should be able to appoint governors - something the Constitution prohibits.
Critics denounced the proposals as a Kremlin-orchestrated threat to democracy.
"I think it's very dangerous. It's an attack on the democratic elections process as a whole," said Duma deputy Viktor Pokhmelkin, who co-heads the opposition Liberal Russia Party.
"Unified Russia does nothing without the agreement of - or an order from - the Kremlin," he said. "The top level of authority is responsible - Putin himself."
Pokhmelkin said the proposals show Unified Russia members are worried about their prospects in future elections.
"The party leaders are scared they won't win in regional elections - or, for that matter, the presidential ones," he said. "So they're proposing changes that would make elections impossible or artificial."
Anvar Amirov, a political analyst at the Panorama think tank, agreed Putin was most likely behind the initiative. "The ideology is vertical-power building," he said. "In reality, it's an attempt to influence regional elections."
Amirov said the Duma would most likely sink the proposals. "I don't think the Kremlin will actively push it," he added. "It's probably a trial balloon to gauge society's reaction."
Central Elections Commission chief Andrei Veshnyakov also condemned the proposals. "The amendments could lead to a situation in which elections take place, 90 percent of voters take part, but there aren't any results," Lenta.ru quoted him as saying Wednesday.
Other elements of the bill include creating a 25-percent barrier in elections to regional legislatures and other local bodies and change the schedule so that Duma elections won't coincide with presidential votes, but alternate every two years.
TITLE: Yakovlev Backs TRK On TV6-Tender Bid
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: Governor Vladimir Yakovlev called for the local City Hall-controlled television station, TRK-Petersburg, to take part in a March 27 tender for broadcast rights on the frequency formerly held by TV6 and promised to support the station's bid, the governor's spokesperson said Friday.
Yakovlev discussed the station's bid with President Vladimir Putin during a visit to the capital earlier in the week, his spokesperson Alexander Afanasiev said.
"I spoke to the president about the injustice that took place several years ago when St. Petersburg lost access to a nationwide audience," Yakovlev was quoted by the Strana.ru Web site as telling reporters in St. Petersburg on Thursday.
The "injustice" refers to the 1997 ouster of the Petersburg station, which is controlled by Yakovlev's office and the government of the Leningrad region, from its spot on channel 5, one of six VHF frequencies that cover the entire country. The frequency was taken over by the state-run Kultura channel and broadcasting by its predecessor, known at the time as Petersburg-5th Channel, became relegated to St. Petersburg and the surrounding region. In recent years, the Petersburg station has been balancing on the brink of bankruptcy.
In addition to pledging his support for a bid by TRK-Petersburg, Yakovlev also criticized the performance of the advertising-free Kultura, which he called "unsuccessful."
TRK-Petersburg has not officially stated its intention to take part in the tender. Company officials could not be reached for comment Friday.
Afanasiev said Yakovlev's conversation about the station's bid with Putin, also a Petersburg native, did not mean the station would get a license without a tender. "The governor discussed it with the president, but this does not mean some decision was made," he said.
The frequency that will go up for grabs next month - formerly a slot for Boris Berezovsky's TV6 - fell empty when the Press Ministry revoked the station's license after a politically charged legal battle to declare the station's parent company bankrupt.
At least eight other contenders are believed to be angling for the license, including: the ousted team of TV6 journalists; the privately owned ATV production studios; two minor stations, Mir and Klass!; the 7TV sports station, which has links to the Interior Ministry and presidential envoy Georgy Poltavchenko and broadcasts on a UHF frequency; the Russian Olympic Committee; and oil giant LUKoil, which controlled 15 percent of TV6 and won the station's liquidation in court.
TITLE: Journalist Supporters Aiming At New Rules
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW - Lawyers and supporters of jailed military journalist Grigory Pasko hope this week to chip away at classified Defense Ministry regulations that have led to a rash of high-profile espionage cases but have been called unconstitutional by human-rights advocates.
At hearings set for Wednesday and Thursday, the military collegium of the Supreme Court is to consider the validity of two orders issued by the ministry and never made publicly available: Order No. 55, issued in 1996, which lists categories of data the ministry considers classified, and Order No. 10, issued in 1990, which prohibits military personnel with access to classified information from having contact with foreigners. The violation of these regulations was part of the basis for charges against Pasko, environmental whistle-blower Alexander Nikitin and defense analyst Igor Sutyagin, among others.
Speaking to reporters Monday, human-rights campaigners and defense lawyers for Pasko - who is serving a four-year prison sentence in Vladivostok and was not permitted to attend hearings in Moscow - expressed confidence that the court would rule in their favor, saying the ministry's orders clearly violate the Constitution and international law.
"These orders were never published in the press and the Russian Constitution does not allow restrictions on citizens' rights to be imposed by secret normative documents," said Ivan Pavlov, Pasko's lawyer.
Pavlov called Order No. 10 a "legacy of the cold war," which was "used for the selective persecution of officers."
"When we debunked all the charges at the trial in Vladivostok, the court came up with this order and charged Pasko for having informal contacts with Japanese journalists," Pavlov said, adding that the court could not prove Pasko had divulged any classified information to the journalists.
Under last year's ruling, Pasko was convicted for illegally attending a secret meeting of Pacific Fleet commanders and of possessing notes he made there. Pasko was initially charged with treason in 1997 for giving information about the fleet's dumping of old ammunition to Japanese journalists. He was acquitted on these charges in 1999, but convicted on lesser charges of abusing office, which his lawyers and prosecutors appealed.
Pasko's defenders are optimistic in part because 10 of the 650 articles in Order No. 55 were ruled illegal by the Supreme Court last fall in a case launched by Nikitin, a former naval officer and spy suspect who was acquitted last September. Some of those articles overlap with the ones cited in Pasko's case.
"Order No. 55 is absurd because its last article declares the text of the order itself a classified document," said Alexei Simonov, head of the Glasnost Defense Foundation. "If the collegium acknowledges the order as illegal, the prosecution's case in the spy cases will be ruined."
The Defense Ministry has promised to make changes to the orders, but only in the remote future.
"Legal work on these documents is constantly underway," a ministry spokesperson said by telephone Monday. "Some articles of the orders are being softened, some toughened. ... But these orders are not for open publication."
TITLE: Ex-Senator Nunn Outlines Plans For Russia Weapons Aid
PUBLISHER: Combined Reports
TEXT: DATELINE, Arizona - Former U.S. Senator Sam Nunn unveiled a package of private initiatives Friday worth nearly $6 million to help Russia minimize threats from nuclear, biological and chemical weapons - the first installment of an ambitious risk-reduction plan.
Nunn, who co-chairs the Nuclear Threat Initiative foundation with CNN-founder Ted Turner, said the project should assist efforts to secure and dismantle weapons of mass destruction, prevent their spread and aid cooperation between scientists on anti-terrorism issues.
"Our governments have to deal with the threats of chemical, biological and nuclear programs," Nunn, who once led the Armed Services Committee and retired in 1997, said during a briefing at the U.S.-Canada Institute. "Our job is to help identify the threat and stimulate our governments to do more."
The announcement came after CIA Director George Tenet told Congress on Wednesday that Russia remains one of the leading suppliers of nuclear technology and missiles to countries hostile to the United States and is "the first choice of nations seeking nuclear technology and training."
The CIA report, covering the first half of 2001, said the Russian government's "commitment, willingness and ability to curb proliferation-related transfers remain uncertain." The Foreign Ministry angrily dismissed this.
Russia is engaged in a $800-million deal to build a nuclear power plant in Iran, assistance the CIA report said "enhances Iran's ability to support a nuclear weapons development effort." Russian and Iranian officials have fiercely denied the claim, saying the project serves strictly civilian purposes.
Nunn said that "in the spirit of new partnership," the United States could share some intelligence data with Moscow to back its demand that Russia drop controversial export deals.
"There are some serious problems with their export policies, and I believe they themselves don't see it that way," Nunn said.
Defense Minister Sergei Ivanov, who met Nunn later Friday, acknowledged that the spread of weapons of mass destruction remains a "major threat." "We are ready to work together with the United States to prevent the spread of any weapons," he said.
Along with Senator Richard Lugar, Nunn authored a 1991 law that launched a program that made some $4.7 billion of U.S. government funds available to Russia to help it destroy and safeguard its arsenals of mass-destruction weapons.
The new initiative would follow up on the government program by taking further efforts to engage scientists who lost their jobs in the weapons sector and could become potential prey for rogue regimes shopping for mass destruction weapons.
"Nothing is more important for the security of the U.S., Russia and the world than keeping weapons of mass destruction out of the hands of terrorist organizations," Nunn said.
The initiative is also considering a proposal that the United States and Western European countries write off a portion of Russia's foreign debt on condition the money is spent on securing mass-destruction weapons, Nunn said.
(AP, SPT)
TITLE: Gazprom Aiming To Bankrupt Subsidiary
AUTHOR: By Anna Raff
PUBLISHER: Staff Writer
TEXT: While lawyers for two detained Sibur officials were making their case with the public on Monday, Gazprom announced that it has sued to bankrupt the giant petrochemical subsidiary.
"We have filed to bankrupt Sibur," Gazprom deputy CEO Alexander Ryazanov told journalists on the sidelines of parliamentary hearings on the country's gas sector. "We hope it will help us get some assets back."
The bankruptcy hearing is scheduled for March 11 at the Salekhard Arbitration Court. Salekhard is in the Yamal-Nenetsk Autonomous District, a Gazprom stronghold rich in natural-gas reserves.
By trying to bankrupt Sibur, Gazprom hopes to regain control of assets that disappeared from the balance sheet of the petrochemical holding. Gazprom - of which 38 percent is held by the government - also hopes to recoup $942.8 million it says it is owed by Sibur.
Federal prosecutors opened a criminal case against Sibur board chairperson and former Gazprom deputy CEO Vyacheslav Sheremet, Sibur President Yakov Goldovsky and Sibur Vice President Yevgeny Koshchits last month. Goldovsky, Koshchits and Sheremet were initially charged with abuse of authority, and Goldovsky was later charged also with embezzlement and forgery.
The Tverskaya Intermunicipal Court on Sunday ruled to extend the detention of Goldovsky and Koshchits at the Butyrka jail. Sheremet was released shortly after his January arrest and remains free.
Genry Reznik, Goldovsky's lawyer, told reporters Monday that the Prosecutor General's Office's actions - from the initial arrest to the filing of charges - was illegal to the point of being criminal. Reznik said he may file a petition requesting that all charges be dropped as early as Tuesday.
Reznik also represented NTV founder Vladimir Gusinsky when he was arrested amid a debt dispute with Gazprom in 2000. Gusinsky subsequently fled Russia, and creditor Gazprom successfully took over NTV and other Gusinsky-controlled media outlets.
Referring to the Sunday court decision, Reznik said the order was based on uncorroborated evidence collected by the Federal Security Service and offered up by federal prosecutors. The evidence - which was deemed classified and thus could not be copied - stated that there was a likelihood Goldovsky would flee the country if released because he owns property abroad, he said.
"What we're beginning to see is a repetition of the Soviet Union in the 1930s," Reznik said. "The triumvirate of the NKVD, the courts and the prosecutors has reunified. If we can't depend on the objectivity of the courts, I have no power to defend the rights of my client."
Reznik said prosecutors had no grounds to charge Goldovsky with abuse of authority because, according to the Criminal Code, he did not act against the interests of his own company.
At issue is a share emission approved by Gazprom's board of directors in May in which Sibur shareholder Gazoneftekhimicheskaya Kompanya, or GNK, bought 5 percent of the new shares. Because Gazprom's original controlling 51 percent stake in Sibur decreased temporarily, top Gazprom managers requested intervention. Vedomosti business daily reported that GNK owners had earlier agreed unofficially not to participate in the share emission.
GNK is widely thought to be an investment vehicle for Sibur management. Koshchits is its general director.
"Can you imagine what it would mean for joint-stock companies if one shareholder can open a criminal case against another because the first shareholder doesn't like the outcome of a share emission?" Reznik said. "The situation would be completely schizophrenic."
Instead of promptly releasing evidence to the defense lawyers, prosecutors delayed the process by a week, said Koshchits' lawyer Mikita Voskanyan.
"For international organizations, this is an indisputable example of what our legal system looks like," Voskanyan said. "Any hopes of real reform have been dashed."
A Prosecutor General's Office spokesperson would not comment on the lawyers' accusations but noted that they had every right to voice their displeasure.
"A lot of this is really not up to us," the spokesperson said. "We just submit our evidence to the court and the judge makes the decision."
It was unclear how the Sibur bankruptcy case might affect the criminal investigation of Sibur managers.
"It's their last resort," said Vladislav Metnyov, an oil analyst at the Renaissance Capital brokerage. "Gazprom couldn't find common ground with Sibur. It's a way of possibly reversing earlier deals that stripped Sibur of its original assets."
However, success isn't completely guaranteed, Metnyov said. In addition to Gazprom, other Sibur creditors include oil majors LUKoil and Surgutneftegaz. And it is possible that some assets have served as collateral for more than one loan.
"It will take years to figure it all out," he said.
Gazprom's tenuous situation was underscored Monday by an announcement by Ryazanov that the company's profits were expected to slide in 2002. Taking an expected tariff increase into account, net profit under Russian accounting standards is expected to fall to 73 billion rubles ($2.37 billion) from an estimated 100 billion rubles last year, Ryazanov told Duma lawmakers.
Gazprom is also having trouble collecting $1.4 billion in debt from Ukraine for siphoning off gas traveling to Europe through Ukraine's pipeline system. Last year, Russia and Ukraine agreed to restructure the debt, ending a long-running and delicate dispute.
Ukrainian Prime Minister Anatoly Kinakh said technical issues were holding up a $1.4 billion Eurobond issue by state oil-and-gas company Naftogaz to cover the debt. Ukraine had planned to issue the bond Feb. 4, but Ukrainian Energy Minister Vitaly Gaiduk said Gazprom had objected to this kind of bond. Gazprom on Friday denied it was blocking the issue, saying it was waiting for paperwork from the Ukrainian side.
Ryazanov said Gazprom hopes to alleviate its financial woes through the creation of a limited free gas market in Russia, where domestic gas prices are not entirely under government control.
Ryazanov said the company supported the foundation of a natural gas trading exchange through which it would be willing to sell 50 billion cubic meters of gas a year. Independent producers would sell the same amount.
"That way, 100 billion cubic meters could be sold at unregulated prices and [the exchange] would give us an idea where the price should be," Ryazanov said.
The Kremlin currently sets domestic gas prices for Gazprom. It is allowed to charge domestic industrial customers about $20 for 1,000 cubic meters, compared to more than $80 per 1,000 cubic meters in Western Europe.
"I don't have in mind European-level prices," Ryazanov said.
"We should aim for $35 to $40 per 1,000 cubic meters in four to five years," he said, adding that "it will be good for investments in the sector."
Independent gas producers are not restrained by government price regulation, but they are prohibited from exporting gas and face limitations in the domestic market. They have also faced obstacles getting access to the pipeline system, which is controlled entirely by Gazprom.
TITLE: Wimm-Bill-Dann IPO Pulls In $207M
AUTHOR: By Victoria Lavrentieva
PUBLISHER: Staff Writer
TEXT: Having secured $207 million in fresh capital from its successful debut Friday on the New York Stock Exchange, leading dairy and juice producer Wimm-Bill-Dann now faces a new challenge - holding on to its market share.
Despite being Russia's top advertiser in 2001 - according to marketing agency RBRG, it spent $26 million to promote its brands - Wimm-Bill-Dann, or WBD, will have to work hard to keep its dominant but slipping position in Russia's booming juice and dairy markets, analysts said Monday.
An unexpected development that illustrates increasingly fierce competition for WBD, analysts said, was Group Danone of France's decision Friday to snap up 4 percent of the company - 16 percent of the initial public offering - for $33 million.
A source who worked on WBD's IPO said the company was well aware of Danone's intention to do so, but both sides gave differing accounts of what it will mean in the long term.
"This is the financial way for Danone to enter the Russian market," Diane D'Oleon, head of international communications for Group Danone, said by telephone from Paris. "We feel very confident about the economic development of Russia and are very interested in participating in it," she said, adding, however, that "it is too early to say what Danone will be doing with its WBD stake in the future."
D'Oleon stressed that Danone does not see itself as a direct competitor to WBD in Russia because Danone is mainly targeted at middle-class consumers. "We also have our own distribution network across Russia," she said.
"The fact that Danone bought WBD shares through the IPO and not on a secondary market means that both sides found common interests," said the WBD source. However, "any takeover is out of question," the source said.
Some analysts said that WBD could not have stopped Danone from buying a stake during the IPO even if it had wanted to. And although the 4-percent stake is less than the 11 percent Danone needs for a seat on WBD's board of directors, it is large enough to create trouble for the company in the future.
"It would not be good for WBD to have a rival on its board," said Alexei Krivoshapko, retail and consumer-goods analyst with United Financial Group. "Also, I don't see any reason for Danone to financially support its competitor by buying its shares on the open market ... now it has to sacrifice its independence."
Kim Iskyan, retail analyst at Renaissance Capital, said WBD could benefit from Danone's global expertise if the French giant elects to play an active role in the company.
Danone said in a statement that it "intends to offer the European Bank for Reconstruction and Development a chance to participate in this investment within the context of their $100 million partnership program in Eastern Europe and Russia, which was set up in 1995."
Contrary to earlier reports, an EBRD spokesperson said "the bank would give due consideration to such an investment proposal once it receives the full details from Danone."
TITLE: Putin Talks Low Prices For Crude
PUBLISHER: Combined Reports
TEXT: LONDON - Oil markets rose then fell slightly Monday in a tepid response to President Vladimir Putin's stated goal of selling the country's crude at prices that aren't "excessive."
Putin told The Wall Street Journal Europe that Russia aims to sell its crude for $20 to $25 per barrel, which is lower than the goal of $22 to $28 per barrel set by OPEC when it pressured Moscow into making output cuts late last year.
Putin also urged the United States to look on Russia as an alternative source of oil. Russia offers an alternative to "traditional sources ... located in areas of conflict in the Middle East," he said.
OPEC suspended its target range for prices last autumn when it became clear that the global economic slowdown was denting oil demand. Various OPEC oil ministers have said that they, too, would support prices as low as $20 a barrel.
A barrel now costs just under $20.
Meanwhile, Russian seaborne oil-product exports leapt by over 30 percent in January, raising suspicions that Moscow lifted sales to compensate for the cuts, a leading tanker tracker said.
Russian refiners may also have maximized deliveries after the government pledged to cooperate with OPEC and cut crude exports in the first quarter, industry sources said.
(AP, Reuters)
TITLE: IN BRIEF
TEXT: Trading Tradition
MOSCOW (SPT) - Russian and Chinese trade soared 33.3 percent year on year to a record high of $10.671 billion in 2001, Itar-Tass reported Chinese customs authorities as saying Monday.
Deputy Foreign Minister Alexander Losyukov said earlier the actual Chinese-Russian trade turnover last year was at $20 billion, with half represented by unregistered border trade.
EU Steel Exports
MOSCOW (SPT) - Russia will be able to export 1.075 million tons of steel to the European Union in 2002, up 28 percent from 840,000 tons in 2001, Interfax reported Deputy Economic Development and Trade Minister Maxim Medvedkov as saying Monday.
Russia and the EU drew up a preliminary agreement on steel quota volumes for 2002 last week in Paris, Med vedkov said, adding that he expected the government to sign the deal in two weeks.
Under the agreement, the EU will increase the export quota for Russian steel by 2.5 percent annually in 2003 and 2004, Medvedkov said. The export quota could be raised by as much as 12 percent if Russia cuts its 15 percent export duty on ferrous scrap metal, he added.
"We have come up with a proposal to lower export duties for ferrous scrap metal, but we aren't talking about lifting them entirely," Medvedkov said.
The government is currently considering lowering the export duty to 10 percent.
Arms for Kuwait
KUWAIT (Reuters) - Oil-rich Kuwait, on Monday welcomed a Russian proposal to organize arms deals between the two states.
Defense Minister Sheikh Jaber al-Hamad al-Sabah said he discussed the proposal Sunday with visiting Deputy Foreign Minister Alexander Saltanov, but did not say whether they had reached any agreements.
"They proposed a treaty to organize the arms-procurement relationship, and we welcomed it. I will also visit Russia," the minister said.
Nickel Tariffs Lowered
MOSCOW (Reuters) - Prime Minister Mikhail Kasyanov has signed a resolution halving the export tariff on nickel, nickel matte and other intermediate products for nickel smelting to 5 percent, the government said Monday.
It said in a statement published on its Web site, www.government.gov.ru, that the resolution would become effective one month after its official publication in the government gazette, Ros sis kaya Ga zeta. It did not say when the publication would take place, but normally it happens within days of the announcement.
The government Commission for Protective Measures in Foreign Trade, responsible for setting customs tariffs, recommended the cut in early January due to weak international nonferrous metals prices.
A spokesperson for the commission's head, Deputy Prime Minister Alexei Kudrin, has said that the panel planned to discuss the tariff rate again in the second quarter of this year.
TITLE: Capital Flight Isn't Always as it Seems
TEXT: ON Feb. 1, the Financial Monitoring Committee under the Finance Ministry - a new government agency to fight money laundering and capital flight - commenced operations.
There already exist a bunch of other agencies responsible for this: the tax inspectorate, the Tax Police, the economic crimes division, etc. Their outstanding achievements in this area can be neatly summed up by a quote from one of my friends - let's say he is a supplier of plastic cups. He told me: "Only three organizations pay exclusively in 'black cash': the Tax Police, the tax inspectorate and the Interior Ministry." I presume that he doesn't supply plastic cups to the presidential administration.
According to expert estimates, over the past year more than $20 billion has fled the country and, over the past five years, as much as $170 billion. The authorities conclude from this that they must fight capital flight.
Well, they shouldn't. First of all they should look at what is fleeing and how.
Let's take the example of a major computer or furniture retailer. It imports its goods from abroad and, thus, has to transfer money to a foreign bank account in payment for the goods. Let's say, the well-known firm Ivanov is to pay the company Sony.
In actual fact, Ivanov doesn't transfer any money to Sony, as in this case it will automatically have to clear the goods through customs legally and, as a result, it will no longer be competitive vis-a-vis Petrov and Sidorov.
So, Ivanov does not transfer any money abroad and doesn't import any goods at all. It buys goods in rubles from a front company, Vaskin & Kot, which exists only on paper and carries all the risks associated with "improper" customs declarations, inaccurately stating the value of the computers, etc. Vaskin & Kot in turn transfers money to the foreign-registered firm Vaskin & Cat and then Vaskin & Cat pays Sony the real price for the goods.
Furthermore, Vaskin & Kot transfers money to its foreign-registered sister company not in full, but in line with the lower price for the computers stated in the customs declaration. The difference then has to be transferred as payment for God knows what - for example "for the purchase of sand from the Sahara desert."
As can be seen, the entirely inoffensive activity of importing computers into this country involves a completely bogus firm (Vaskin & Kot) transferring money abroad on the basis of blatantly bogus contracts.
Common sense tells us that this cannot be capital flight if everything returns to the country in the form of computers. However, from the point of view of the FMC, this is capital flight and money laundering.
Another example is the purchase last year by Roman Abramovich of 26 percent of Aeroflot shares for $120 million. The deal was carried out through two offshore firms, Carroll Trading and Nimegan Trading. If this $120 million returned to Russia, it means that prior to that, it left the country at some point.
In this country, the mechanisms for the functioning of a criminal company laundering drug money are indistinguishable from those of a firm quietly importing computers.
So what service is it that the FMC will be providing exactly, apart from also buying plastic cups from my friend?
Yulia Latynina is a journalist with ORT.
TITLE: Russia's Detractors Ignore Success Story
AUTHOR: By Anders Aslund
TEXT: NOTHING is as easily taken for granted as success. Only a decade ago, the Soviet Union collapsed. Walking around Moscow at the time, I found people fearful, as if they expected the sword of Damocles to fall upon them at any moment.
Prophecies of impending disasters abounded. Civil war was widely predicted. The West mobilized food aid to avert famine, expecting that millions of starving Soviet citizens would flee to the West. Would the 30,000 Soviet nuclear warheads fall into the hands of criminals? Soon, worries about a communist resurgence, or a fascist rise, emerged.
The problems appeared insurmountable. Many argued that Russia's dour history precluded the possibility of democracy or a market economy in the foreseeable future. The most pessimistic alleged that Russia suffered from a unique form of genetic degradation because of Stalin's purges and environmental devastation. The country seemed condemned to ever-worse horrors.
The contrast between those premonitions and the current reality could hardly be greater. Today, Russia is a stable, if imperfect, democracy with a popularly elected president, parliament and local governments. About 70 percent of the economy originates in the private sector, and inflation is under control at below 20 percent a year. The foreign debt has dwindled from over 100 percent of GDP to only 40 percent. The concerns about Russia's debt repayment in 2003 are exaggerated and indicative of how few economic problems there are left to really worry about.
As the rest of the world sinks into recession, Russia booms. It has enjoyed an average growth of 6 percent during the last three years. There is good reason to believe that Russia has attained high sustainable economic growth driven by structural economic reforms. However strong Russia's recovery is, the cost of communism remains high, and Russia will need decades to reach a Western economic level.
But rather than grumbling about remaining problems, such as a weak legal system, inefficient public health care and the dearth of small enterprises, we need to take stock of the truly amazing achievements. How were they possible?
Russia's first democratically elected president, Boris Yeltsin, averted civil war by initiating the dissolution of the Soviet Union in December 1991. Thus, he let the other 14 Soviet republics go their own way. Never has an empire ended so peacefully. Later on, Yugoslavia illustrated a bloody alternative.
The fears of famine abated in early 1992 after chief economic reformer Yegor Gaidar freed prices. The shortage of food was never absolute, but the communist state had ground to a halt and could no longer distribute essentials. As anywhere else, free markets could take care of that. Within days, millions of Russians were out trading hoarded surpluses in the streets, showing their entrepreneurial spirit.
Amidst a multitude of collapsing states, loose nukes posed an obvious danger. Fortunately, the four former Soviet republics with strategic nuclear arms welcomed cooperation with the West. Two U.S. administrations have cooperated deftly with them to disarm that threat.
The threat of red-brown revanche was arguably most intimidating. The first Russian parliament was elected in a not-very-democratic way in March 1990 before actual democratization. Absurdly, it could change the Constitution instantly by a simple majority. When President Yeltsin finally dissolved this unrepresentative body, red-brown forces launched an armed uprising in October 1993 that was quashed.
Since then, democratic forces have managed to hold their own in Russia's many free elections. The Communists' popularity is dwindling, and Russian nationalism has never become much of a force. President Yeltsin's liberalism was actually incredible.
Contrary to common prejudice, Western assistance to Russia has been minute. In the 1990s, Russia actually paid back more to Western governments on old Soviet loans than it has received in grants or loans from Western governments, the IMF or the World Bank.
Yet Western advice has been useful. The three main economic aims of Western assistance have been accomplished. Russia has become a market economy; financial stabilization has long been attained; and Russia has undertaken the greatest privatization the world has ever seen in less than a decade. But the achievements are Russian. The West could only be effective when it tried to assist the country's reformers with their programs.
Russia's success was by no means inevitable. Its Western neighbor Belarus failed to liberalize and privatize early. Not surprisingly, its humble reforms have crumbled, and it is now the only remaining dictatorship in Europe. Ukraine chose Russia's reformist road - but later on - and its population is still suffering from that unfortunate hesitation.
The lessons from the Russian transformation are plain. If people get freedom and property, markets and democracy start working. Now, new private entrepreneurs are demanding ever-better legal regulation, driving an impressive reform wave. Next, the rule of law is likely to be imposed, and small enterprises will probably mushroom. It is time to realize that Russia is a country that solves its problems with an efficacy and speed that the West can only envy.
Anders Aslund, a senior associate of the Carnegie Endowment for International Peace and author of "Building Capitalism: The Transformation of the Former Soviet Bloc," contributed this comment to The St. Petersburg Times.
TITLE: Skilling's Testimony Paints Him as Clueless
AUTHOR: By Floyd Norris
TEXT: THERE were no problems at Enron while Jeffrey Skilling was running the company. Or at least none that he noticed.
In short, Mr. Skilling earned the nickname he was awarded by one member of congress as his congressional testimony was nearing an end last Thursday: the Sergeant. Hans Schultz of Enron. Like the character in the 1960's sitcom "Hogan's Heroes," he saw nothing and he heard nothing about any dubious goings on at Enron.
"Not to my recollection," he said when asked whether he had been involved in one decision. "I do not recall saying that," he said a minute later about another statement attributed to him by the report of the special committee of Enron's board, which was harshly critical of his role.
Among the things Skilling did not recall hearing was an assurance, given to a committee of Enron's board that he was reviewing every transaction with the LJM partnerships run by Andrew Fastow, then Enron's chief financial officer.
That assurance was given by Fastow to the board's finance committee on Oct. 6, 2000. As the minutes of that meeting reflect, Fastow reported that the procedures required Skilling, as well as two other Enron officials, to "approve all transactions with the LJM funds."
How did Skilling miss that? He explained that at one point in the meeting the power went out and people were walking around in the dark.
"You never heard?" asked Representative Billy Tauzin of Louisiana, sounding more than a bit incredulous.
"I was in and out of the meeting," he said. "I don't recall if I was there specifically at the time" that Fastow spoke.
Directly after Fastow spoke, the minutes state, Skilling "then discussed the benefits to the company of having the ability to transact with the LJM funds."
At another meeting, in May 2000, the secretary taking notes wrote that one transaction with the Fastow partnerships "does not transfer economic risk," but instead was supposed to make Enron's profit report look better. Skilling recalled hearing no such thing, and had no doubt that the transactions really transferred risk, as they had to do for Enron's financial statements to be accurate.
"Contrary to the refrain in the press, while I was at Enron I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability," he said. Given what has since been revealed about what was going on at Enron, he does not appear to have been a very observant chief executive.
When Skilling testified about things he did know, his recollection could be seen as a bit selective. "I did not dump any stock in Enron because I knew or even suspected that the company was in financial trouble," he said. Had he done so, of course, there might be a question of violations of the insider trading laws.
"In fact," he added, "I left Enron holding about the same number of shares that I held at the beginning of 2001. On Jan. 1, 2001, the start of my final year at Enron, I owned approximately 1.1 million shares of Enron stock. On Aug. 14, the day I left, I owned about 940,000 shares of Enron stock."
He did not mention that on Jan. 22, 2001, Enron's board awarded him, at no cost, 125,562 shares of Enron stock.
It took him three months to get rid of all those shares. From Jan. 3 through June 13, according to his Securities and Exchange Commission filings, he sold 10,000 shares of Enron every Wednesday, a total of 240,000 shares. He received $15.6 million, collecting an average price of $64.80 a share. In September, a month after he resigned, he raised about $15 million more by selling another 500,000 shares. Enron shares closed Thursday, the day of his tesimony, at $0.349.
All told, he realized about $30 million last year from selling stock, even though he was never aware of any problems at the company.
Skilling may not have persuaded many listeners. But he did make it clear to those who are investigating Enron at the Justice Department and the S.E.C. that they will have to work to prove he was aware of anything at all during the period he was running one of America's largest companies.
Floyd Norris is a columnist with the New York Times, to which he contributed this comment.
TITLE: Mordovian Beer and Milk Afloat in Investment
TEXT: Like a number of Russian regions, Mordovia has introduced a number of investment incentives aimed at attracting much-needed capital to its industries. In the final article in a four-part series on regional investment, staff writer Torrey Clark takes a look at the investment climate in this largely agricultural region.
SARANSK, Mordovia - Ask most Russians what Mordovia is famous for and they are likely to say "prison camps." Ask a local, and the answer could be the birthplace of Nikolai Erzya, Russia's Rodin, or the home of the country's largest light-bulb factory.
It's also the birthplace of Tolstyak Beer ("Gde ty byl?" "Pivo pil.") and host of the world championships of motorcycle racing on ice.
But the local government also wants the republic to be better known for its innovative taxation programs and its openness to investors. Officials say that their goal is to turn a small agricultural region into a big economic success.
Mordovia, located 600 kilometers southeast of Moscow, faces the uphill struggles typical of small regions with few natural resources to plump their coffers or attract big players. At 26,200 square kilometers, Mordovia covers an area roughly one third the size of the Leningrad Oblast. With less than 1 million residents, it has about half the population.
Government officials, however, try to put a good face on the lack of natural resources.
"We have to think, plan, innovate and economize. We have to work to prove ourselves," said Nikolai Kalinichenko, the republic's foreign-economic-relations minister.
And, he says, the region's salvation may lie in providing human resources and in the government's commitment to economic and infrastructural development.
The region needs investors to modernize Soviet-era equipment and bring in know-how and technology. With an annual budget of about 4.5 billion rubles (about $15 million), the region's own sources of capital aren't sufficient. The regional banks are underdeveloped, and the big banks banks do not show much interest in small agricultural areas.
Foreign investment has only trickled into the area. Mordovia has attracted $23 million over the past four years, of which $8.5 million came in 2000 and only $1 million in the first half of 2001. Nonetheless, the republic hosts projects by several big names, such as Sun-Interbrew and Cebeco, as well as domestic investors such as Interros' new agricultural holding, Agros.
The land is the republic's main resource. Agriculture makes up about 21 percent of the republic's gross regional product, whereas industry accounts for about 28 percent. With help from the government, cattle and sheep farms have seen milk and meat production inch up in recent years. Grains - including beer's base ingredient, barley - are another promising area.
At last year's annual three-day trade exhibition - one of the government's endeavors to promote the republic - row upon row of local dairy, meat and grain products, candies, beer and spirits were laid out in a gleaming hall in the republic's capital, Saransk.
After sampling sausages from the Atyashevsky Meat Plant, a pensioner berated the marketing manager. "This is delicious. So why can't we find it in stores?" she said, her wrinkled face scrunched up in perplexion.
The manager shrugged. The meat plant can't keep up with demand, he explained. Production is constrained by a lack of funds to acquire modern equipment and technology.
To attract money, Mordovia has offered generous tax breaks to both foreign and Russian investors. Profits on production growth of more than 7 percent are tax exempt.
But the federal Tax Code that went into effect at the start of this year has shaken up the tax breaks. While leveling the playing field by lowering corporate profit tax to 24 percent, the code also revoked the regions' right to offer tax breaks.
"There will be a transition period in which we will continue to offer tax benefits for investments," Mordovian Governor Nikolai Merkushkin said in an interview. "We are working on a strategy to continue to stimulate investment and production."
The region's investors praise the local government for its efforts to stimulate the area's economy.
"We consider the republic as a very stable partner," said Ton Verhoeven, managing director of Cebeco International Group, part of Dutch agribusiness giant Cebeco Group. The group has an annual turnover of about $5.5 billion. Verhoeven did not say how much the group's investments in Russia earned, but said the profits they generate are keeping the group interested.
"We get a lot of support from the local government ... creating the proper infrastructure for us to continue our activities," Verhoeven said.
"The tax holiday is only one aspect in operating properly: It is not crucial," he added. "Mordovia is one of the best examples of a republic where this has worked out very well."
Cebeco has invested between $5 million and $7 million in Mordovia in dairy and grain and farm equipment.
With 40 percent of the republic's population living in rural areas, agricultural reforms top the government's list of priorities. Merkushkin would not spell out his stance about the sale of agricultural land, which is not yet allowed under Russian law. But he suggested that renting land would be better then selling it, as long as the leases were secure.
The government ties the salaries of the heads of collective farms to their financial performance and makes the farms accountable for developing their own infrastructure.
"Nowhere else do they provide money to the rural areas like we do," Vladimir Volkov, head of the Mordovian Cabinet, said at a recent meeting with U.S. business executives. "Freedom is determined by the independence of the financial resources. And the head of a village gets financial resources."
The government promises to match expenditures on schools, gas networks, roads and other infrastructure needs.
"We have to spend a ruble from the republic's budget for every ruble of their own money spent by the local authorities on developing the village infrastructure," Volkov said.
Despite the government's best efforts, Mordovia is finding it difficult to hold on to its best and brightest. Although the republic boasts one of the country's largest universities - Mordovia State University with 25,000 students - it faces a brain drain since low wages and a limited job market have sent many packing.
"It is hard to find a good job - 2,000 to 3,000 rubles per month is considered a good salary," said Anton Kostritsa, 27, a computer programmer. He left Saransk nine years ago.
"There is a middle class, but they are people who travel to Moscow and other cities in connection with their work," Kostritsa said.
The average monthly wage in Mordovia is about $60, half the average national wage of $120.
Not everyone who leaves stays away. Andrei and Irina Abashchenko lived in Moscow for a year, but returned because of family, friends and work.
"I am devoted to my school and my work," said Irina Abashchenko, 35, a computer-technology teacher at a local high school. "It may be old fashioned to say, but, despite the salary, I love to teach."
Leading companies in the republic have embarked on the painful process of increasing production with a more efficient - read smaller - workforce.
Russia's No. 2 brewer Sun-Interbrew, owner of the Tolstyak brand, plans to increase production capacity at its Saransk Brewery by 30 percent next year through a $4 million automation project. The project will also allow about 100 jobs to be cut.
The Saransk Brewery is the republic's largest foreign-investment project. It provides about 10 percent of the republic's tax revenues, even after tax holidays, said Pyotr Zaichenko, general director of the plant.
Zaichenko, a Mordovia native, said the brewery has gotten a boost from the local government, which has pushed the development of the local production of glass bottles and supports local barley production. Much of the brewery's barley comes from Cebeco.
"We are brewers. We can't also focus on farming. So the authorities in Mordovia are taking steps to ensure that first-class barley is grown in Mordovia," Zaichenko said.
The brewery intends to buy all its barley locally.
Cebeco and its Moscow-based partner, Planeta Management Service, have also invested in the Saransk Milk Factory, where a recently installed Tetra Pak line steamed and hummed during a recent visit. Quality-control director Lyubov Vasilyevna, wearing a white lab coat, extolled the qualities of the milk and poured samples.
The dairy has gone into outsourcing, packaging milk and dairy products for other companies such as Dutch company Campina's Moscow plant. In addition, the dairy launched its own brand of sterilized milk this month.
Financing and raw materials are the dairy's two major problems. A hard-currency loan taken out before the 1998 default nearly put the company under. The new general director, Anatoly Kolbov, credited the government's loans guarantees and "moral support" for the company's current financial stability.
But with only half of the republic's 254 large and medium-sized businesses generating a profit, the government has a long way to go toward making the republic a poster-child of economic achievement.
TITLE: Argentinians Rush To Dump Floating Peso
AUTHOR: By Bill Cormier
PUBLISHER: The Associated Press
TEXT: BUENOS AIRES, Argentina - Argentina's government fully uncoupled the peso from the U.S. dollar on Monday for the first time in more than a decade, and exchange houses overflowed with anxious Argentines seeking dollars.
The peso, already sharply devalued on Jan. 6 from its 11-year peg of 1-to-1 with the dollar, traded lower in the first hours after the change. Currency houses reported the peso at between 2.2 and 2.5 to the dollar - down from about 2 to the dollar last week on the open market.
The free-floating peso is a key test for the caretaker government of President Eduardo Duhalde, who took office Jan. 2 under pressure to ease Argentina's worst economic crisis in a decade.
Days after he took power, Duhalde set an official exchange rate of 1.4 pesos per dollar for limited export and import transactions and allowed the peso to devalue nearly a third on the wider open market from its 1-to-1 peg.
The International Monetary Fund and others, however, called on Argentina to scrap the dual exchange system as unwieldy. Argentina is reportedly prepared to seek $15 billion or more from the IMF in fresh bailout aid in the months ahead, but is also under pressure to come up with an economic recovery plan.
At the Cambio America currency exchange, a line of at least 100 people spilled out onto the sidewalk and down the street. One of those waiting was Pascual Giancavelli, an advertising company employee who yanked 1,500 pesos from his bank account Monday to buy dollars.
"There's too much uncertainty; I'm looking to dump my pesos as fast as I can," said Giancavelli, 37.
Argentines also lined up at banks around the capital after the easing of banking restrictions limiting currency exchanges last week.
Duhalde's government has made clear it would use all the resources at its command to keep the peso from tumbling. Analysts say any dramatic weakening could signal a return to the high inflation of the 1980s.
Duhalde indicated in a weekend radio address that the government would use its international reserves, if necessary, to defend the peso.
The Central Bank has imposed a host of restrictions on currency trading, including a ban on unlicensed and independent sellers. It also has said currency trades can only be made in cash, not with checks or debit cards.
The floating peso comes a week after Economy Minister Jorge Remes Lenicov announced a new economic plan for the country, now wrestling with a four-year-old recession, double-digit unemployment and $141 billion in debt on which it has suspended repayment.
The economic problems have provoked weeks of upheaval. The last elected president, Fernando de la Rua, was forced out in December by riots that claimed 26 lives.
TITLE: Deutsche Deal May Backfire On Euro Rate
PUBLISHER: The Associated Press
TEXT: BRUSSELS, Belgium - Germany looked set Monday to wriggle out of an embarrassing European Union reprimand over its ballooning budget deficit, a fudge that analysts say may be bad news for the chronically weak euro down the road.
The EU's currency has been appreciating recently - to a two-week high of almost $0.88 Monday - despite the very public bickering between Berlin and the EU head office over what would be an unprecedented rebuke.
Analysts said Germany's budget woes, hardly secret, have already been factored into the market. Yet good news about prospects for Europe's economic recovery, coupled with unease over the Enron fiasco in the United States, were pushing the dollar down and the euro up.
Analysts warned a move enabling Germany, Europe's biggest economy, to escape a formal warning at Tuesday's meeting of EU finance ministers could undermine confidence in the euro's fiscal underpinnings and prolong its weakness.
"It's extremely bad news and extremely stupid," said Wolfgang Hager at the Centre for European Policy Studies in Brussels.
European Central Bank president Wim Duisenberg also reiterated his support for the European Commission's recommendation to send an "early warning" over the weekend.
Ironically, the commission seeks to enforce rules the Germans themselves insisted upon when the single currency was in the planning stages in the 1990s.
Those rules require countries not to allow their budget deficits to go above 3 percent of gross domestic product. Due to an unexpected recession, Germany's is estimated to reach 2.7 percent this year.
TITLE: WORLD WATCH
TEXT: VAT Spat
KIEV, Ukraine (Reuters) - Prime Minister Anatoly Kinakh said on Monday that Ukraine and the International Monetary Fund had failed to agree on a key tax issue as an IMF mission wrapped up its visit and gave no indication when fresh funds may be disbursed.
The IMF wants the government to pay more than six billion hryvnias ($1.1 billion) of value-added tax refunds to exporters. The government says it is short of cash to repay the funds after parliament wrote off companies' debt to the state budget.
Exporters say the delays have become unacceptable and are hitting business. The IMF says the problems mean other companies balk at paying the tax upfront, aware that the unresolved issue could deprive them of a major slice of their revenues.
The issue has stopped Ukraine from unfreezing a stalled $2.6-billion IMF loan program. So far, Kiev has received only $1.3 billion under an Extended Fund Facility three-year program approved in 1998 and which will expire in September.
E-VAT Spat
BRUSSELS, Belgium (Reuters) - European Union ministers will on Tuesday back a law that will oblige non-EU suppliers to levy value added tax on digital sales to EU retail buyers, removing a competitive handicap for EU companies, the EU Commission said.
The planned law, to apply to online sales of software and computer games as well as some radio and television services, has irked the United States, which accused the EU last week of unilaterally trying to impose its own standards.
The European Commission, which drafted the law, said new rules were needed to eliminate competitive distortions and that they would affect only a small share of total sales.
Taking the Fifth
WASHINGTON (AP) - Former Enron chairperson Kenneth Lay is asserting his right against self-incrimination and will refuse to answer questions when he appears before Congress under subpoena this week.
"Under the instruction of counsel, Mr. Lay will exercise his Fifth Amendment rights at the Tuesday hearing," Lay's spokesperson, Kelly Kimberly, said Sunday night from Houston. She declined further comment.
Lay, who resigned from his post Jan. 23, was a friend and political backer of U.S. President George W. Bush and moved easily within the corridors of power in Washington. He has not spoken publicly about Enron's collapse since the company entered the biggest bank ruptcy in U.S. history in December, and lawmakers had hoped for his testimony.
Market Maneuver
BERLIN (AP) - The Frankfurt Stock Exchange is confident that U.S. officials will soon ease regulations preventing its expansion into the United States, its chief executive said in remarks published Monday.
Werner Seifert said he expects the new head of the U.S. Securities and Exchange Commission to allow Deutsche Boerse to set up its Xetra computer trading systems in the United States, a move that is currently prohibited, according to the Handelsblatt business daily.
"The United States is a major topic for us," Seifert told the paper. "I hope we can set up Xetra screens in the United States soon. Harvey Pitt, the new SEC boss, seems to want to ease the ban."
TITLE: The Mussorgsky: An Aria From an Old Opera
TEXT: Editor,
Recently I had a jolly reminder of one of Russia's finest traditions - honoring foreigners with the opportunity to grease the palm of a "poor" worker or two.
My companion and I (for "companion" read: Russian friend) on Jan. 18 went to the Mussorgsky Theater to see a performance of "Swan Lake." However, the performance the theater's staff treated us to has probably been staged even more frequently than Tchaikovsky's well-loved ballet.
I had been to a piece of fine opera several nights before at the same theater and had paid for a standard ticket the sum of 100 rubles ($3.33).
This time, my companion was sold two tickets at 100 rubles each. Five minutes before the opening curtain, I was turned back from entry as a foreigner and asked to pay 1,000 rubles ($33.30) for a "foreigner"ticket. The administrator on duty, a certain Olga Ivanova, suggested that my Russian was not adequate to merit a standard price, but as a favor she would accept 400 rubles ($13.33) to let me in.
Being an old ex-Africa hand, I was using to hearing about petrol being siphoned off, but here my own idealistic feelings about civilized St. Petersburg were being siphoned off.
So we rejected this generous offer and asked for a refund for our 100-ruble tickets. "No" said the sign; "No," said the cashier; and "No," said the administrator.
"Either accept my offer or don't go in. You're a wealthy foreigner, so what's 200 rubles to you," she added prettily.
Instead, we dined out on righteous anger that evening.
And where were the chiefs when the indians were grafting a solution to our problem?
Deputy Director Gennady Kolufkov was not at the theater that Friday evening, and that other "poor" Russian worker, General Director Viktor Kush, happened to be in Japan that night, drinking sake and slicing tender Kobe beef, no doubt.
More tender, I think, than the performance at his theater's entrance.
Andrew Kops
St. Petersburg
Stalin's Sins
In response to a photograph of the Korobitsyno downhill-skiing facility, Jan. 11.
Editor,
As a frequent visitor to the Karelian Peresheek, I stopped to wonder which downhill center is in "Korobitsyno"?
Finnish citizens will never forget nor forgive Stalin's crimes since 1939. As a peaceful country, Finland had to endure 105 horrendous days of the aggressive Winter War, from Nov. 30, 1939, to March 15, 1940, as well as a humiliating peace treaty and the traumatic inflow of some 420,000 citizens of Finnish Karelia who were made refugees. This area includes the place that is today called "Korobitsyno" in Russia.
Stalin started this war, but was never punished for this crime against humanity.
There never was any "Korobitsyno" on the Karelian Peresheek. The village was called Sakastila for centuries, if not a millennium. Always inhabited by Finnish-speaking Finns, the Karelian Peresheek consisted of 900 inhabited, flourishing villages from Aherikko to Ylaurpala, until Stalin sent more than 1 million Soviet troops to conquer Finland and to send its people to labor camps in Siberia.
In 1948, that aggressive, criminal Soviet state renamed all villages in Karelian Peresheek from Aleksandrovka to Zverovo, including such stupid names as Komsomolskoe, Traktornoe or Krasnoflotskoe. What a shame for the Soviets to attack a small, peace-loving country, to steal and rob other people's property, to rename those villages and to pretend that they have always been Russian. Nothing could be farther from the truth.
These 900 villages have been Finnish-inhabited and Finnish-named for hundreds of years, and today's Soviet-sounding names bring only Stalin's crimes to my mind.
What is this country Russia? The world's largest country, which has always attacked its smaller neighbors and taken other people's property, land and buildings.
Who could trust the Russians after these crimes and broken promises? In 1920, the Finns and Soviets signed a peace treaty that included a provision saying that the Karelian Peresheek belongs to Finland. In 1932, the Finns and Russians signed a non-aggression pact that reconfirmed the 1920 borders. Then, enter Stalin, that criminal dictator from Georgia. Is Russia still a Stalinist country?
If Russia intends to become a normal country with friendly diplomatic ties with its neighbors, it should return this stolen land and property, withdraw from Finnish territory and - not merely apologize for its war crimes and obnoxious attitudes toward its smaller neighbors - but also start to pay back damages for the suffering of 420,000 innocent refugees, the destroyed property and other crimes.
Today the once-wealthy Karelian Peresheek is all in ruins.
So, when you write about "Korobitsyno," you should be aware that you are referring to a Finnish village called Sakastila, which has been illegally, aggressively occupied by a criminal, human-rights-violating Soviet Union since 1940 and since 1991 by the Russian Federation.
Many Finnish people want to get back what they legally own in the Karelian Peresheek and in the Finnish territory within Karelian Republic and Murmansk Oblast. The Russians ignore international agreements and codes of conduct at their own peril.
Markus Lehtipuu
Helsinki, Finland
And More Sins
In response to "Economy Focus of Poland Trip," Jan. 18.
Editor,
My father was one of the Polish officers who were executed by the NKVD in 1940 in prison camps near Starobielsk. There were about 15,000 of them, taken prisoners by the Soviet Army in mid-September 1939 when Stalin ordered the invasion of Poland from the east while the country was fighting for its life following the Nazi invasion from the west.
The brutal murders were discovered - how macabre! - by advancing Nazi troops in 1941. In the late 1980s, Soviet President Mikhail Gorbachev presented then-Polish Prime Minister Wojciech Jaruzelski with all the pertinent documents, admitting the fact that the assassination took place by Stalin's orders. Thus Stalin managed to get rid of 15,000 highly educated and professional Poles.
My father was Jewish. There were quite a few Jewish officers in the Polish Army. At the time, he had been one of the highest officials in the Polish Ministry of Justice. My late mother was smart and lucky enough to take my younger brother and me in January 1940 by train to Italy.
In June we arrived in Palestine - later Israel, our ultimate and historical motherland. Although there are memorials in Katyn, Belarus, where the officers were buried, and in Warsaw, where they came from, I have never heard a Russian leader offer remorse, forgiveness or reparations for the brutal act that was ordered by Stalin.
It is not too late to say or do something about it even now, 62 years later. The offspring of the assassinated officers are still alive.
Gavriel Strasman
Ganey Tikva, Israel
Supply and Demand
In response to "Looking Back at Another Wasted Year," a comment by Mikhail Delyagin on Jan. 15.
Editor,
Mikhail Delyagin, an economic advisor to former Prime Minister Yevgeny Primakov, claims that bureaucrats have been granted carte blanche to do whatever they please. As evidence, Delyagin notes that the price of bribes for influencing government decisions has reportedly doubled since Vladimir Putin became president.
The logic behind this argument seems reversed. For the price to double, elementary economics suggests that demand would have to go up, or the supply down, or some combination of the two. Therefore, the evidence cited might rather attest to a reduction in the supply of "bribeable" bureaucrats - in other words, just the opposite of the purported conclusion.
Or perhaps this is one of the natural monopolies that Delyagin is so concerned with, and the government is withdrawing supply so as to drive the price for bribes up? Plausible, if unlikely, but this still does not prove Delyagin's point. At any rate, let's hope that we can agree that more competition is not needed in this domain. The existence of a price for bribes is a troubling enough sign, and I for one could do without any intrusive marketing of such services.
Greg Alton
Moscow
Building Castles
Editor,
A year ago I was cheering Vladimir Putin on. A year ago I even used the term "congress of victors" when the oligarchs were being shown their place. Now government reshuffling appears to resemble an act of balancing the interests of entrenched bureaucracies and political factions - with wave upon wave of rumors and speculation that the rest of us are meant only to try to interpret and probably get wrong.
The rhetoric of reform and restructuring is often used by officialdom to explain "uncomfortable" personnel changes. Recent changes make one wonder just what exactly Putin means by reform. More often, reform appears to be about the who rather than the what.
The castle Putin is creating is designed to protect his personalized concept of the Russian presidency, which he has confused with a program to strengthen Russia. Having trustworthy and loyal people close at hand is reasonable, even expected.
However, Putin has yet to build (or allow to come into being) sound institutions to make his agenda reality. Putin is not building a federal republic or a unitary one. He is not inviting public initiative; he still relies on security organs to inform him of society's condition and not its interests. The president says he wants a free media built on proper financial foundations - whatever that means.
Putin has made a reasonable start, although unleashing Russia's potential will take much more than personal friendship and loyalties. The oddest thing about Putin is that the closer he appears to the people, the more his presidency in fact moves away from the people he so often claims to represent - people who so greatly need to be represented.
He seems to be building a "Friends of Putin" castle. Castles protect those on the inside from the rabble on the outside. Castles can also be stormed. The lofty castle Putin is making for himself, populated with his personal guard, will neither make much progress in reforming Russia or integrate the country into the international community the president very much desires to join. Strong and respected institutions are what Russia needs most.
Such institutions will assure Putin the greatest memory a Russian leader could ever hope for - some of his friends might be remembered as well.
Peter Lavelle
Head of Research
IFC Metropol , Moscow
TITLE: Our Samurai in The State Duma
TEXT: At times it seems that Irina Khakamada must have cloned herself. To say that the State Duma deputy speaker wears a lot of hats is an understatement. Khakamada serves as co-chairperson of the Union of Right Forces and as a Duma deputy from St. Petersburg who frequently visits her constituents here.
She is a regular on the television talk-show circuit and a mother of two. In 1999, the newspaper Moscow News named her person of the year.
The child of a Japanese communist and a Russian schoolteacher, Khakamada seemed to come out of nowhere when she was picked to head the Small Business Committee under former Prime Minister Viktor Chernomyrdin. Her Japanese surname literally means "samurai trousers in a rice paddy," but her colleagues in Russia's political elite call her the "samurai tongue in the fields of the Duma" for her sharp, precise and intelligent manner of speaking.
Q: Three years ago, you said that Russia was really two countries. In one of them, the Constitution, parliament and the government held sway, while in the other reigned bribe-taking bureaucrats, racketeers and oligarchs. Has your view changed?
A: Nothing has changed. When reforms are implemented and people are not hindered from making independent decisions, it will be possible to raise a new generation that will in turn reform the institutions of power in Russia. In this regard, things are just starting to change for the better.
But nothing has changed regarding the bureaucracy. Our laws are passed at the federal level, but every government agency at the regional and local levels then invents its own rules. We need an iron will to standardize the country's laws and defend the rights of the average person, the middle class, across the country. Otherwise things will continue as they are now, the people on one side, the state on the other.
Q: In the mid-1990s, you said that the liberals had earned the hatred of all those who had enjoyed hard-to-get sausage, caviar and all sorts of other privileges under the Soviet system. But that animosity remains today. Why?
A: The Russian dislike of government is a strange thing. We hate it, while at the same time we submit to it, rather than taking things into our own hands and creating the sort of government we want. It's a mix of hatred and fear, obedience and envy. I think this is left over from three generations of life under dictatorship. You can't change a whole country's mindset just like that.
On top of that, we democrats made a big mistake as we carried out our reforms: We didn't get our message out to the whole country, explain why the reforms were necessary or create jobs.
The government should have created a network of small businesses immediately. Then young people and pensioners would have found their niche, and the intelligentsia would not have been reduced to selling mittens in the markets.
Q: A recent poll asked people which branch of government they disliked most. The State Duma came first, the government last. Does that surprise you?
A: Not at all. It's a paradoxical thing: The more closed and secretive government is, the higher its poll numbers. The Duma loses out because it's so open. But government should be open; otherwise it stagnates and surrounds itself with lackeys. Government in this country is built on loyalty, fealty and mediocrity.
The Duma also depends a great deal on the professionalism of our mass media. When we have scandals and brawls, journalists write about us. But when something positive and important happens, we get a few lines on the back page. The only way forward is for the Duma to remain as open as possible and for the press to report objectively on the value of the laws we pass. The Duma has passed some landmark legislation recently.
Q: Such as?
A: To give just a few examples: the 13-percent income tax, pension reform and the social-salary tax.
Q: Galina Starovoitova once said that she did not aim to reform the government, but had higher ambitions. By this, she meant the presidency. But you do seem to want to reform government, do you not?
A: In Russia, people become president when they are supported by the oligarchs or the current administration. My ambition is to change society and the rules of the political game, so that the people can nominate and elect their presidents. To this day, no candidate has been nominated at the grass-roots level. The political elite spits out candidates of its own. Even Yeltsin emerged from the same elite from which his supporters defected. We need 10 to 15 years of democratic development before Russia will elect a real people's president. Who that will be doesn't matter.
Q: Are there people whom you trust entirely and whose opinion you truly value?
A: My husband Vladimir. I honestly can't name anyone else. He used to be an engineer, and now he's in business. His interests include history, art and religion, especially Buddhism. I love him dearly, and that's why I bore him a second child at the age of 42 - our daughter Masha. I have a son from my first marriage, Danila. He's 24 now, already a husband and practically a father, since he married a woman who already had a child. I didn't object, because I understood that they were in love. And that's the most important thing.
My husband is my lover and my adviser. He understands everything about me. And he is the only man who has no complexes about being with me. He had no trouble accepting the role of "Khakamada's husband." We are the best of friends.
TITLE: Enron May Well Become Bush's Teapot Dome
AUTHOR: By Kevin Phillips
TEXT: ENRON'S spectacular collapse has put scores of politicians on the defensive because of their pro-Enron voting records and their war chests full of Enron dollars. Even some U.S. cabinet officials are squirming over their past relationships with the energy company. It's all an unsettling echo of Teapot Dome, the government oil-reserve loan scandal during the presidency of Warren G. Harding that became a symbol of the financial and political abuses of the 1920s.
In 1921, the U.S. Interior Department rigged the leasing of California's Elk Hills and Wyoming's Teapot Dome naval oil reserves after Interior Secretary Albert Fall received "loans" from oilmen Edward Doheny and Harry Sinclair. The loans of cash and stock were in the $400,000 range, with a "gift" of $100,000 from Doheny.
Both Teapot and Enron involved energy policy, privatization and corruption. And, like Teapot Dome's "Ohio gang" of ethically loose Harding cronies, oilmen and administration officials, energy deregulation during the first Bush administration, through the Clinton years (and George W.'s time as governor of Texas) up to today has been warped and feasted upon by a Texas-led "Enron gang."
In both scandals, some Democrats were involved, but the power-centers of misbehavior were Republican. Yet, there has been nothing quite like the rise and fall of Enron in U.S. history, certainly no plausible comparison since the late 19th-century heyday of railroads and robber barons. The sums in Enron's collapse certainly overshadow those in Teapot, much as a space shuttle does a Model T Ford. More important, not in memory has a single major company grown so big in tandem with a presidential dynasty and a corrupted political system. Indeed, the Bush family has been a prominent and well-rewarded rung in Enron's climb to national political influence.
In retrospect, it's unclear whether the Bush dynasty built Enron or vice versa. In 1985, when Enron was formed, the Bushes were an important political family. George Bush, as vice president, headed the Reagan administration's task force on energy policy. But in terms of Texas oil money and stature, the Bushes were third echelon. When George W. ran for governor of Texas in 1994, Ann Richards, the Democratic incumbent, joked that of the oil companies he had started or been involved with, none had made a profit. Enron's rise, with the Bush family's help, in the 1990s rearranged the energy power structure in Texas and the country and put the Bush entourage in clover.
As early as 1988, when his father was president-elect, George W. Bush lobbied the Argentine government on behalf of an Enron pipeline proposal. Bush, through his staff, has denied making a telephone call on Enron's behalf, but Rodolfo Terragno, the Argentine minister of public works and services at the time, insists he did. When newly elected President Carlos Menem made a sweetheart deal with Enron, freeing the corporation of certain Argentine tariffs and taxes when doing business in the country, lawmakers demanded an investigation, and a special prosecutor undertook the task. But since his Justice Department was already "investigating," Menem fired the prosecutor.
From 1988 to 1992, Bush the elder collected hefty political contributions from Enron. When president, it was his ambassador in Buenos Aires who had pushed for favorable tax treatment for Enron in Argentina. Bush asked Enron chief Kenneth Lay to co-chair a host committee for the July 1990 economic summit in Houston of the Group of Seven leading industrialized countries, and appointed him to his export council in late 1990. A year earlier, Bush energy officials began work on the 1992 Energy Policy Act. Its provisions obliged utility companies to carry and transmit Enron-generated electricity, which contributed to the company's subsequent huge growth. In 1992, Lay was named co-chairperson of the Bush reelection campaign and chairperson of the host committee of the Republican National Convention in Houston.
In December 1992, Bush's Commodity Futures Trading Commission, chaired by Wendy Gramm, wife of Texas Republican Senator Phil Gramm, created a legal exemption that allowed Enron to begin trading energy derivatives - another growth enhancer for the company. When Bush left the White House in 1993, Enron made Wendy Gramm a company director and signed a joint consulting and investing agreement with James Baker III, Bush's secretary of state, and Robert Mosbacher, his commerce secretary. The two were to do Enron's global deal-making for natural gas projects.
How much the Bush family and its close political entourage actually collected from Enron and its executives since the company was organized is a matter of definition - reportable political contributions, soft money for the Republican Party, finders' fees, joint investments, inauguration funding, presidential-library donations, speech money, capital gains, consulting fees, directors' fees.
If you combine what the multiple Bush generations received with what loyalists Vice President Dick Cheney, Baker, Mosbacher, political adviser Karl Rove, economic adviser Lawrence Lindsey and U.S. Trade Representative Robert Zoellick got, you certainly have $6 million to $8 million, and, depending on the success of the Baker-Mosbacher-Enron joint investments, perhaps $20 million to $30 million.
On top of which, 29 top Enron executives and board members (and its accounting firm, Andersen), the majority of whom were significant Bush contributors in 2000, are being sued by Enron shareholders to recover $1.1 billion made by the 29 in alleged insider trading of Enron stock.
But let us return to Texas in 1995. George W. Bush has been elected and inaugurated as governor. Enron chairperson Lay and Joe Allen of Vinson & Elkins, Enron's Houston law firm, are his top fundraisers. Lay also chairs the governor's business council, and press reports have Lay writing regularly to Bush, seeking favors, recommending appointments and asking the governor to receive visiting dignitaries from places where Enron hoped to do business.
Bush began pushing Enron-backed deregulation in his first year as governor. In 1997, he urged then-Pennsylvania Governor Tom Ridge to support an Enron-backed energy-deregulation plan for the state. Then in 1999, Bush succeeded in getting a kindred deregulatory blueprint enacted in Texas.
When the 2000 presidential election ended up in the Florida courts, Enron helped fund the Bush campaign's expenses, a fitting gesture because the effort's captain was Baker, the old Enron deal-maker, with Enron advisor Zoellick back as first lieutenant. Then when the U.S. Supreme Court decided the election, Lay and his fellow power brokers popped the figurative champagne cork with a $300,000 contribution to the Bush-Cheney inaugural gala.
In Washington, the Enron gang also included Gramm and Texas Representatives Dick Armey, the House majority leader, and Tom DeLay, House majority whip. All received large Enron contributions - Gramm collected $100,000 over 12 years, the second-largest draw in Congress - and their voting records were supportive of Enron causes.
The drafting of a Bush federal energy policy fell into the vice president's lap. A previous Enron shareholder and a friend of Lay's, Cheney had run the Halliburton Co. One of its divisions built Houston's Enron Field, the new home of the Houston Astros baseball team. Cheney's chief of staff, Lewis Libby, was an Enron stockholder. Cheney refuses to say what he and Lay discussed in their private meetings, and the General Accounting Office, an investigating arm of Congress, is suing the vice president to obtain that information.
Enron's largesse has even compromised law enforcement. U.S. Attorney General John Ashcroft has recused himself from Enron-related matters because of large Enron political contributions he received while a Missouri senator. Deputy Attorney General Lawrence Thompson, from the Enron-representing Atlanta law firm of King & Spalding, is also under pressure to follow his lead. The office of the U.S. attorney for the Southern District of Texas, which includes Houston, has had to recuse itself en masse.
In the months and years ahead, as the congressional and criminal investigations fill in the details of the Enron story, the collapse of Enron may, like Teapot Dome, come to symbolize an era of financial and political excess. If so, there is even some chance that it could do for the memory of Bush what those California and Wyoming oil leases did for the memory of Harding.
Kevin Phillips, whose forthcoming book is "Wealth and Democracy: A Political History of the American Rich," contributed this comment to the Los Angeles Times.
TITLE: Our Officials Run When They're Told To
TEXT: I'M not really very athletic, although I do enjoy swimming, cross-country skiing and cycling on occasion. Imagine my surprise when I learned that two of my favorite sports have suddenly leapt to the top of the country's political agenda as a result of President Vladimir Putin's initiative to whip us into shape. Ever since, all sorts of officials have been urging us to make sports a priority.
In St. Petersburg, it turns out, this means skiing and cycling. At least, that's what Governor Vladimir Yakovlev said the other day. He suggested opening Kirov Stadium so that people could cycle there. He also mentioned that it would be a good idea to open places where people could borrow bicycles for free.
Of course, many will remember that this is the same governor who, in 1999, issued a decree banning cyclists from riding in the downtown area. The point was to make the city safer for drivers. A lot of people - me among them - were pretty angry about this stroke of genius and Yakovlev earned himself the title of Enemy No. 1 among cycling enthusiasts.
"Every city in Europe and the United States does everything to promote bicycles as an ecologically clean type of transportation," said Christian Courbois - owner of WestPost mail services, a company that hires bicycle couriers in the summer. "I am outraged. If the roads are dangerous, it is the fault of those drivers in big black Mercedes, which police don't stop because they scared of them. The traffic police must have found out that people on bicycles also have money they can take from them."
So what has changed since then?
For one thing, the tennis-loving Boris Yeltsin has left the political stage and all our regional leaders have fired their tennis coaches. Just a couple of months ago, Yakovlev was presenting the St. Petersburg cup tennis trophy, and he referred to the country's leading tennis player, Marat Safin, as "Renat." In Yeltsin's time, such a faux pas would have been enough to end his political career.
But now there are new fashions.
For instance, City Hall is now pushing the idea of creating a "world-class" downhill-skiing resort in the rugged mountains on the outskirts of St. Petersburg. Given the terrain out there, the only surprising thing is that no one has come up with this idea before.
The highest peak in Leningrad Oblast is 80 meters, which would take an amateur less than 10 seconds to ski. On the bright side, though, they wouldn't really need to invest in expensive lifts.
The only local politician that I know of who really goes in for sports is Legislative Assembly deputy Leonid Romankov. Every spring, Romankov goes out into the country and swings from a rope into a lake.
Unlike Yakovlev - who played tennis until Putin became president and who now loves downhill skiing - Romankov was swinging and jumping in the Yeltsin era and I'm pretty sure he'll be swinging and jumping next year too. He really likes it.
On the other hand, our City Hall officials will soon be fighting the battle of the bulge by running laps around the garden behind Smolny. At least, this is what City Hall spokesperson Alexander Afanasiev said after Putin called upon St. Petersburg bureaucrats to shape up.
Afanasiev said that, although the garden was perfect for exercise, there remains one problem. There aren't enough showers in Smolny for all those sweaty officials to soap off in. I'm not joking. That's what he said.
No one seems to have asked the officials themselves. It is taken for granted that they will run, if they are told to run. For one thing, they don't have a choice. For another, they probably don't have anything else to do with their time.
TITLE: Chris Floyd's Global Eye
TEXT: The state of California killed Stephen Wayne Anderson earlier this month. Quietly, with little fanfare, Governor Gray Davis turned down international appeals for a death-row reprieve and sent the Black Needle of American jurisprudence into Anderson's veins.
Who was Stephen Anderson? A nobody, of course. His parents - poverty-stricken, mentally ill - beat him and abused him, almost killed him before finally kicking him out of the house when he was a teenager. He was left to fend for himself in the wild - literally, living outdoors in the hills of New Mexico. He survived by scrounging, stealing, pilfering.
He ended up in Utah - God's country, ruled by the self-proclaimed "saints" of the Mormon Church - where he fell into a life of petty crime and violence. He went to jail; killed a man in a prison brawl; ran off from a furlough program. He went to Las Vegas - ruled by the well-connected, well-protected warlords of the Mob - where he worked as hired muscle for a time.
At last he came to California, where again he lived rough, sometimes in the wild. Finally, one night in 1980, he broke into the house of Elizabeth Lyman, an 81-year-old retired piano teacher. He thought the house was empty. He was grubbing for loot when he heard a noise, someone stirring in the dark. He jumped, he panicked, he fired his gun. (You can always get one, no matter how poor you are; that's the American way.) Elizabeth Lyman fell dead to the floor.
That was the end of the road for Stephen Anderson. He knew it. This was the prestupleniye, the stepping-over. He covered the body with a blanket, turned on all the lights in the house, sat down at the kitchen table and waited for the police to come. He waited three hours; he wasn't going anywhere. There was nowhere else to go.
At his trial in 1981, Anderson readily confessed his crime and expressed his remorse; the only thing at issue was the nakazaniye. It was "morning in America" then, the early days of the Reagan-Bush administration, and a new zest for death was in the air. While running guns and poison gas to Saddam Hussein, cutting deals with the murderous Ayatollah Khomeini, arming Islamic terrorists in Afghanistan and teaching assassination techniques to Latin American tyrants, Reagan and Bush were also pressing the American courts for more executions. Death was of the essence, death gave meaning to their power, it sealed their wealth and privilege with blood.
Anderson's prosecutors were glad to oblige. They asked for the death penalty, and they got it. At the sentencing hearing, the destitute convict was represented by court-appointed attorney Donald Ames - a notorious incompetent who was later described, by a judge no less, as "deceptive, untrustworthy and disloyal to his clients." Ames' own daughters testified against him in another case, saying he had abused them physically and emotionally. This learned counsel called no witnesses on Anderson's behalf, offered no mitigating evidence - not even the violence inflicted by his parents. (Maybe that cut too close to the bone for Ames.)
So Anderson began the long death-row wait. But something strange happened. With access to education for the first time, he began to read. He began to write. He used his words to dig deep into the nature of his guilt. His remorse - raw and broken at first - grew into a vessel of understanding. It laid bare the agonizing truth of transgression: there is no redemption, no recovery of what it destroys. There is only the broken light of acknowledgement, of recognition, and the threadbare atonement this brings.
He wrote poems; they were published and won awards. He wrote a play; it was performed. As the years went by, there were growing calls for clemency. He would never be free again, that was certain, he deserved it and knew it - but let him not be killed, his new friends asked. They were joined in this plea by the family of Lyman, who told the court they "did not want or need" Anderson's death. The family of the man killed in the prison fight also opposed the execution.
But the machinery ground on, and the final date was set. It all rested with the governor - with Gray Davis, the smooth, sophisticated "moderate" Democrat. His word could do what Anderson failed to do on that horrible night in 1980: spare a life from the eternal darkness, from the loss of the world and its broken light. He could display the deeper sense of humanity that Anderson discovered far too late.
But Davis is ambitious. He wants to be president. He wants to challenge George W. Bush - the greatest convict killer in American history. So Davis needs a body count to pluck those "Heartland" strings. No moderate Democrat can afford to look "soft on crime" - not if he wants to join that world of wealth and privilege sealed with blood.
In that realm, mercy has no place. The wielders of state power float like gods above the common ruck, untouched, untouchable, wadded in honors and adulation. Somewhere there is a body - or a dozen bodies, or a thousand - blown to pieces on their order, hacked in two at their remote command, smothered in rubble at their casual nod. But what of that? The wielders will go on, holding their great offices, writing their dull books, collecting their handsome speaking fees, making their profitable investments.
The poor, the penitent, touched at last by conscience, burning with remorse - they are the ones who must die.
TITLE: Israel Hits Palestinian Security
AUTHOR: By Ibrahim Barzak
PUBLISHER: The Associated Press
TEXT: GAZA CITY, Gaza Strip - Israeli warplanes and helicopter gunships attacked the Palestinian security headquarters in Gaza City on Monday, in retaliation for unprecedented Palestinian rocket fire and a shooting attack on Israeli civilians.
More than 30 people were injured by shrapnel in the second air strike in Gaza City in two days. The Israeli military warned that it "will not tolerate the continued firing of rockets" at Israel and at Jewish settlements.
The Islamic militant group Hamas claimed responsibility for firing a homemade Qassam-2 rocket toward an Israeli communal farm on Sunday - a first in 16 months of fighting. The Qassam-2 has a range of two to four kilometers, enough to hit Israeli towns from the West Bank and Gaza Strip. In the past, Hamas has fired several shorter-range Qassam-1 rockets that caused no damage.
In Monday's air strike, six missiles hit the large walled Saraya compound in downtown Gaza City, setting buildings ablaze and sending black smoke into the sky.
Doctors said the injured included three Palestinian journalists and news photographer George Kochaniec, a photographer for Denver's Rocky Mountain News. Kochaniec was treated for a hand injury.
The attack came at a time of changeover between morning and afternoon shifts at nearby schools, and streets were crowded with youngsters who ran away from the explosions, some screaming in panic.
The missiles were fired several minutes apart, and one hit the compound while firefighters were in the area trying to douse the flames.
Hundreds of Palestinians ran to the compound demanding that suspected Islamic militants held there be released immediately. Some threw stones at officers who fired in the air to keep back the crowd. Palestinian police said all prisoners were moved from the compound shortly after the Israeli attack.
Israeli Prime Minister Ariel Sharon convened a meeting of senior cabinet ministers and security officials late Sunday at his farm in southern Israeli to decide on a response to the firing of the Qassam-2 rockets, which fell in an open field and caused no damage. "This constitutes a very serious escalation," government spokesperson Avi Pazner said of the rocket fire.
Israeli media reports said Sharon and his advisers decided on a new type of retaliation, but did not specify. Commentators suggested Israel might reoccupy Palestinian areas close to Israel for an extended period to push rockets out of range.
"Sharon must take into consideration the clear American interest in preventing a total conflagration between Israel and the Palestinians, at a time when Washington is constructing its campaign against Iraq," wrote Hemi Shalev in the Maariv daily.
Hamas said it was not intimidated by Israel's warnings. "Hamas will not change its strategy and we will go ahead ... until the final liberation of our Holy Land," a Hamas leader, Abdel Aziz Rantisi, said Monday.
Arafat aide Ahmed Abdel Rahman accused Israel of exaggerating the threat posed by the rockets in order to escalate strikes against the Palestinians.
There was no claim of responsibility for Sunday's shooting attack in the southern Israeli town of Beersheba.
In the attack, two Palestinians sprayed automatic fire at Israelis sitting in a cafe and a nearby restaurant outside a military base, killing two women soldiers and seriously wounding five people before being shot dead by troops.
"Suddenly someone from outside opened the blinds and began to spray the restaurant with gunfire," Liza Cohen, 65, one of the diners at the restaurant, said.
"We all panicked. People lay on top of each other. It was horrible," said another customer, Morris Levy.
TITLE: IN BRIEF
TEXT: Avalanches Hit Canada
JASPER, Alberta - Three people were killed in two separate avalanches, one in Jasper National Park, the other in the Rocky Mountains, authorities and news reports said.
A snowboarder was killed when he was caught in an avalanche in the back country of Jasper National Park near the popular Marmot Basin ski area, park officials said Sunday. Two others survived the avalanche and tried to find the buried snowboarder but were unable to locate him for about 20 to 25 minutes, said Steve Blake of the park's warden service.
They finally found him buried under about two meters of snow but were unable to resuscitate him, he said.
The three snowboarders, all in their mid-20s, were fully equipped with avalanche safety equipment, including transceivers and shovels.
The slide occurred in an area known as Whistler Creek. The avalanche danger was rated as considerable at the time, he said. The two others were killed in another avalanche near Revelstoke, British Columbia, BCTV in Vancouver reported. Two others survived. No other details were available.
Turks Shut Down TV
DIYARBAKIR, Turkey (Reuters) - Turkey's broadcasting watchdog on Monday suspended broadcasts for one year by a local television station that played Kurdish-language music videos, despite a constitutional amendment to allow Kurdish broadcasts.
Turkey altered its constitution in October to allow Kurdish-language television and radio broadcasts, part of a drive to meet European Union human-rights standards, but it has yet to change the relevant laws.
"Broadcasts by Gun TV have been stopped for 365 days for playing music pieces with Kurdish lyrics," Turkey's Radio and Television High Council (RTUK) said in a statement.
"[Gun TV] was in violation of [laws] barring broadcasts that incite society to violence, terrorism and ethnic separatism and incur feelings of hatred in society," the watchdog said.
An RTUK spokesperson said the watchdog expects Gun TV to file an appeal once lawmakers make Turkey's legal code conform with the consitutional changes, but said the ban could still stand.
TITLE: Johansson Sees Swedes Past Britain
PUBLISHER: The Associated Press
TEXT: LONDON - Australian Open champion Thomas Johansson beat Greg Ru sedski in four sets Sunday, completing Sweden's comeback victory over Britain to reach the Davis Cup quarterfinals.
Spain advanced to meet the United States when Morocco's Karim Alami quit during the deciding fifth match while losing 6-3, 6-0 to Alex Corretja. Alami received treatment for a muscle injury.
In Oklahoma City, the United States took an insurmountable 3-0 lead against Slovakia on Saturday.
In Birmingham, England, where Sweden entered the day trailing the series 2-1, Thomas Enqvist tied it by defeating Tim Henman 6-4, 6-2, 6-4. Johansson, who didn't play singles Friday because of a groin injury, then rallied to top Rusedski 4-6, 6-3, 7-5, 6-4.
Sweden next plays Russia, which got past Switzerland 3-2, when Australian Open finalist Marat Safin beat Michel Kratochvil 6-1, 7-6, 6-4 at Moscow's Olympic Indoor stadium.
In Metz, France, the hosts took an insurmountable 3-1 edge when Sebastien Grosjean rallied from 2-0 in the fifth set to defeat Sjeng Schalken 6-2, 1-6, 7-6, 2-6, 6-3. France's next opponent is the Czech Republic, which eliminated visiting Brazil 4-1.
Reigning Wimbledon champion Goran Ivanisevic beat Rainer Schuettler 6-4, 7-6, 7-6 to help Croatia get past Germany and set up a quarterfinal meeting with Argentina.
TITLE: SPORTS WATCH
TEXT: Olazabal Holds On
SAN DIEGO (AP) - Jose Maria Olazabal backed into the Buick Invitational title when J.L. Lewis three-putted on No. 18 to blow a shot at a playoff. It was Olazabal's first win on the PGA Tour since winning his second Masters in 1999.
His 7-under-par 65 held up when Lewis bogeyed the finishing hole on the Torrey Pines South Course on Sunday to blow his shot at a playoff.
Olazabal finished with a 72-hole total of 13-under 275. He birdied three of his first six holes and played the front nine in 4-under. He knew he was in contention after birdies on the par-5 13th and the par-4 14th and 15th holes to go to 13-under. He said he didn't look at the leaderboard until after the par-4 15th, when he hit a 6-iron to 1.3 meters.
Williams Walks Over
PARIS (AP) - Venus Williams claimed her second title of 2002 when Jelena Dokic withdrew from Sunday's final of the Gaz de France tournament with a strained right thigh.
Fourth-seeded Dokic said she was hurt during Saturday's 6-3, 3-6, 6-4 semifinal victory over Monica Seles and aggravated the injury in a doubles match later that day.
The tournament's doubles final also was canceled because Elena Dementieva, whose partner was Janette Hu sa rova, withdrew because of bronchitis. That gave the title to American Meilen Tu and Nathalie Dechy.
With both finals called off Sunday, spectators who didn't cash in their tickets were treated to an exhibition mixed doubles match with Williams and Mansour Bahrami against Mauresmo and retired French star Yannick Noah.
Midway through, the players switched teams to make it men vs. women. "It was strange," Williams said, "but it was fun."
TITLE: Kobe the Hero in All-Star Game, but Not for Local Fans
AUTHOR: By Chris Sheridan
PUBLISHER: The Associated Press
TEXT: PHILADELPHIA - The booing began when Kobe Bryant was introduced, continued after he made a series of game-turning plays, and reached a crescendo when he was handed the All-Star MVP trophy.
Back in his hometown where the fans show him no love, Bryant received none Sunday. Instead, he was practically treated like a traitor by the notoriously harsh Philadelphia fans.
"I was pretty upset," Bryant said. "The boos were hurtful, but it's not going to ruin this day for me."
Bryant scored 31 points - the most in an All-Star game since Michael Jordan had 40 in 1988 - in the arena where he walked off the court last June with his second championship, leading the Western Conference over the East 135-120 on Sunday.
Bryant, who grew up in Lower Merion, Pennsylvania, and whose father, Joe, played for the 76ers, played with tremendous hustle and flashes of flair in helping the West build a big halftime lead that they never surrendered.
But he was booed nearly every time he touched the ball, and when the game ended and he was given the MVP trophy, they let him have it long and loud one last time.
"What made me feel good though, at the end, was that the more people booed, some people started clapping and cheering even harder. That made me feel good," Bryant said.
Bryant became the first player to reach 30 points since Jordan did it in 1993, and he relegated Jordan, hometown hero Allen Iverson and every other All-Star into an afterthought by thoroughly dominating the game nearly every moment he was on the floor. He also had five rebounds and five assists, shooting 12-for-25 from the field.
Bryant got off to the best start of anybody, scoring eight points in the first six minutes and getting an assist by going around Jason Kidd with a deft crossover move and then feeding Tim Duncan for a dunk. Bryant also showcased some impressive ballhandling, dribbling through his legs as he came upcourt practically squatting.
Jordan was the next to reel off a series of spiffy plays, going baseline for a driving dunk, following with a fast-break layup and feeding a no-look alley-oop pass to Antoine Walker that he failed to convert.
Jordan was all alone ahead of the field a few moments later but blew a one-handed dunk, causing his Eastern teammates to rise off the bench laughing in unison. Jordan laughed off the moment, too.
Tracy McGrady had a spectacular dunk early in the second quarter, banging a pass to himself off the backboard, zipping past three players and slamming the ball through with such authority that the crowd didn't stop buzzing for a good 30 seconds.
McGrady scored 11 points in the quarter to keep the East in it, but Bryant had a three-point play immediately after checking back in, then made four more baskets over the final 1:47 of the quarter - including a layup just before the halftime buzzer - as the West closed the half with a 24-7 run for a 72-55 lead.
The East chipped away at the lead during the third quarter, but Bryant wouldn't let them get too close. He scored one basket on a putback after the ball bounced over the top of the backboard, then had another bucket off an offensive rebound with 4:20 left to restore a 20-point lead, 88-68.
The boos for Bryant were fairly loud after both of those buckets. As the quarter progressed, Bryant was booed every time he touched the ball as it became clear that the West was headed for a lopsided victory.
The teams combined for 23 3-pointers, an All-Star game record.
TITLE: Gannon Pro Bowl MVP for 2nd Time
AUTHOR: By Janie Mccauley
PUBLISHER: The Associated Press
TEXT: HONOLULU, Hawaii - This might not make up for a snowy overtime loss to New England in the playoffs.
Still, Rich Gannon came away with more than just a win in the Pro Bowl.
He became the first two-time MVP after leading the AFC to a 38-30 victory over the NFC on Saturday.
"You look around and you've got the best receivers, the best tight end, and the best line," said Gannon, also the MVP last year.
"It's like a dream come true for a quarterback. If I could have this every week, we'd be in business."
Gannon threw two touchdown passes, including a 55-yard strike to Marvin Harrison for the squad's first score after trailing 10-0.
He completed 8 of 10 passes for 137 yards and the teams combined for 34 first-quarter points, the most points in a quarter in the Pro Bowl.
Oakland receiver Tim Brown knew Gannon would make an impression no matter how limited his playing time.
"He just gets the job done and makes plays," Brown said.
One member of the Super Bowl champion did dazzle. Ty Law intercepted Donovan McNabb's pass late in the game and ran 31 yards before pitching the ball to Ray Lewis, who went 13 yards for the AFC's final touchdown.
It's not just the pretty plays that make a Pro Bowl.
Gannon raised his throwing arm into the air to celebrate an ugly 30-yard completion to Troy Brown in the first quarter. Gannon handed off to Priest Holmes, who pitched the ball back to Gannon.
He threw a wobbly pass downfield that was so underthrown that Brown had to run several yards back toward the line of scrimmage to haul it in. Holmes went on to score on the drive.
Green Bay's Ahman Green quickly became part of Pro Bowl history in what was his first-ever appearance.
His 2-yard touchdown run for the NFC 27 seconds into the game was the fastest score in the game's existence.
"I did my job, something I've been doing well all year for my team," Green said.
"I'm just doing my job here in the Pro Bowl."
Philadelphia kicker David Akers made field goals of 41 and 49 yards before coming up short on a 62-yard attempt in the fourth quarter.