SOURCE: The St. Petersburg Times
DATE: Issue #750 (16), Tuesday, March 5, 2002
**************************************************************************


TITLE: Third Vice Governor Facing Charges
AUTHOR: By Vladimir Kovalyev
PUBLISHER: Staff Writer
TEXT: Vice Governor Anatoly Kagan, head of the City Hall Health Committee, was formally charged on Friday with criminal negligence, making him the third vice governor to face criminal charges in the last five months.
The St. Petersburg Prosecutor’s Office claimed that Kagan’s policies led to a misappropriation of budgetary funds intended for the purchase of insulin for the more than 12,000 local residents suffering from diabetes. On Friday, prosecutors also formally asked Governor Vladimir Yakovlev to suspend Kagan pending his trial. Kagan and City Hall both vehemently deny the accusations.
Last October, Yakovlev suspended Vice Governor Valery Malyshev after prosecutors filed abuse-of-office charges against him. On Nov. 21, prosecutors filed a criminal case against then acting Vice Governor Alexander Potekhin, accusing him of engaging in illegal commercial activity. Potekhin maintained that he was innocent of wrongdoing, but resigned his position later that month.
“The prosecutor’s office thinks that we are idiots,” Yakovlev’s spokesperson, Alexander Afanasiev, said on Friday, commenting on the Kagan case. “If they had been really working, they could have investigated everyone in City Hall by now. Instead, all they do is spread information through the media. Why have they asked us to suspend such a nice and honest person as Kagan, who incidentally used to be a pediatrician?”
However, Afanasiev added that the governor would comply with the prosecutor’s request as soon as a replacement can be found.
Yelena Ordynskaya, a spokesperson for the prosecutor’s office, said Monday that the charges were based on the results of an inspection last year by the St. Petersburg Audit Chamber, which found that Kagan had signed an agreement in March 2000 with a local firm called Kovi-Farm to purchase insulin for 9.3 million rubles ($300,000). The Audit Chamber found that the price stipulated in the contract was 2.6 times the prevailing market rate.
Kovi-Farm could not be reached for comment on Monday.
Kagan told the Interfax news agency on Friday that the contract was legitimate and was based on a tender conducted by City Hall “in accord with presidential and Russian government decrees.” He added that Kovi-Farm was the only company to participate in the tender because it was the only firm in the city dealing with insulin at that time, Interfax reported.
“As an official, I don’t care who the insulin was purchased from or what company produced the medicine. My main goal is to provide insulin to all those in the city who need it,” Kagan said, according to Interfax.
Kagan also stated that “the situation with insulin in the city is stable now,” Interfax reported.
Oleg Sergeyev, a Legislative Assembly deputy from the Unity faction who oversees health-related issues, said that Kagan is wrong.
“I can’t say anything about these charges in particular, ¾ but the situation in the city did get worse after Kagan was appointed to head the Health Committee and after he liquidated a special commission that oversaw the flow of insulin,” Sergeyev said in an interview on Friday.
“People often call me and say that they can’t buy insulin,” he added.
Marina Shipulina, head of the St. Petersburg Diabetic Society, said that no cases of insulin-related comas had been registered in the city, but added that shortages of insulin have been a recurring problem for local diabetics.
“Insulin was developed in 1927, so it would be quite surprising if a coma case happened in St. Petersburg. Even countries like Uganda don’t have such incidents. However, the situation with insulin locally has definitely gotten worse in the the last two years,” Shipulina said on Monday.
Shipulina said that the city annually allocates about 450 million rubles ($14.5 million) for the purchase of subsidised medicines. About one-third of that is spent for insulin. 
“We have bags of letters from people complaining that they have trouble finding insulin or must use types other than what they need,” she said.
“I was not able to get ¾ insulin in my local drug store from September 2001 through January 2002 because it appears and disappears. It’s as if it is there and it isn’t,” reads one letter, signed simply “Ivashchenko,” provided by the Diabetic Society. 
“At the City Hall Health Committee, they say that insulin is purchased every week and distributed to 23 local drug stores,” the letter continues. “But it is impossible to get because people buy it immediately, within 20 or 30 minutes. Those who don’t get any, have to get by however they can. I don’t know whom I should ‘thank’ for that.”
Another letter from a 65-year-old diabetic in the Krasnogvardeisky District dated October 2001, reads:
“It is impossible to get insulin with a special prescription. I am fed up with calling the information service and the drug stores and being told that there is no insulin. This is hard on the health of any diabetic. How many tears have I cried because of this?”

q
The case against Malyshev is expected to be handed over to the courts “as soon as Malyshev and his lawyers have examined the case materials,” according to Vladimir Gotsmer, a spokesperson for the prosecutor’s office. He declined to say when a hearing might take place.
“There are about 25 volumes of materials and this will take time to read. I can’t say anything until I’ve finished,” said Semyon Heifets, Malyshev’s lawyer, on Monday.
Malyshev, a long-time close political ally of Yakovlev, was charged on Oct. 25, 2001, with “receiving a particularly large bribe.” 
Goltsmer added that the investigation into the charges against Potekhin would be extended until “at least” March 21. He refused to say when the case would be handed over to the courts.
Potekhin and his former deputy, Dmitry Solonnkov, were charged on Nov. 21, 2001, with engaging in commercial activity while serving as public officials. Potekhin has denied the allegations. 
On Dec. 29, 2001, Potekhin’s wife, Irina Potekhina, was appointed by Yakovlev to replace her husband.
“I can say officially that neither Potekhin, nor Malyshev, nor Kagan are guilty,” Afansiev said.

TITLE: Locals Remember the Forgotten Winter War
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: “It probably sounds strange, but I dream about those Mannerheim pill boxes practically every other night,” says Roman Petrov, a 27-year-old social-insurance manager.
Petrov has never fought in a war and never wants to. But he is passionate about his hobby — the study of the brief Winter War between Russia and Finland fought from November 1939 to March 1940.
Along with a few dozen other local enthusiasts, Petrov spends many of his weekends crawling around the muddy trenches and decaying fortifications of this little-known conflict fought on the Karelian Isthmus, a 200-kilometer long stretch of forest that extends from St. Petersburg to the Finnish border.
Vladimir Smirnov, 56, has been making such outings each year since he was a child.
“I’ve been through all 120 kilometers of the line, and I know every pill box by heart,” he said, proudly showing off his detailed, hand-drawn map of the famed Finnish fortifications.
Until December 1917, Finland was a province of the Russian empire. After the revolution, it was granted its independence, but its relations with the Soviet Union were always tense. The border between the two countries at that time was just 30 kilometers from Leningrad.
During the 1930s, the Finns, under the command of Field Marshal Karl Mannerheim, constructed an intricate series of fortifications — the so-called Mannerheim Line, 135 kilometers long and 90 kilometers deep — along the border.
In November 1939, Stalin ordered the Red Army to attack the line in an effort to push the border back. Although badly outnumbered, the Finns put up a stubborn defense along the Mannerheim line for nearly three months. The Soviets suffered tremendous casualties before finally breaking the line and signing a peace agreement that moved the border behind Vyborg and Sortavalla.
Today Smirnov heads a local club called Karelia, which gathers together enthusiasts in order to research this war. Karelia members come from a wide range of walks of life — from workers to professors and tourism operators — but they are united by their passion for the Winter War.
They spend their free time ambling around crumbling fortifications, combing the forests for old ammunition, weapons and equipment. They find and bury the remains of fallen Russian soldiers and arrange to have the remains of Finns sent back to their homeland for burial. They erect monuments to commemorate the war and spend hours arguing over the most minute historical details.
“Studying this issue gives me enormous intellectual pleasure,” said Vladimir Chekunov, 39, a mechanic who has been immersed in this hobby since he was 12.
“It is especially exciting because there is such a great opportunity to touch and see it for yourself,” he said as he posed in a genuine, Finnish officer’s uniform in front of a snow-covered bunker on a field trip to the Mannerheim Line on Saturday. In all, Chekunov has spent nearly $1,000 on his equipment.
Karelia members are quick to point out that their interest in the war has nothing to do with animosity toward Finland. Many club members hold Finnish visas, know the rudiments of Finnish and have Finnish friends who are also passionate about Russian-Finnish history.
Chekunov says that his study of the war has increased his respect for the Finns.
“Finns have excellent taste. Just look at how gracefully they combine their fortifications with the landscape, how much they care for nature,” he said.
Chekunov’s interest began in childhood when his family spent the summers at a dacha on the Karelian Isthmus. Playing with other children, he would discover fortifications and find war-related artifacts, which prompted his interest in the conflict and the history of Karelia in general.
“The history of Karelia is the history of the world. This rather small piece of land has witnessed many wars. It used to belong to the Swedes, then the Russians, then the Finns again and the Russians and so on ¾.” he said.
Like many club members, Chekunov also confesses an admiration for Mannerheim. He opens his wallet and shows a worn picture of the Finnish commander next to a portrait of his own three-year-old son.
“Mannerheim was a great historical personality. First, he successfully served tsarist Russia for part of his life. Later, when the Bolsheviks drove him from the country, he did his best to serve to Finland. Keep in mind, though, that he always tried to minimize Russia’s sufferings from the Finish side,” Chekunov said.
Smirnov’s father served in the Red Army during the Finnish campaign and Smirnov’s interest in the war stems from listening to his father’s stories.
That interest grew into a passion that was so intense it was partially responsible for his being dismissed from the mathematics department of Leningrad State University.
In the 1970s, Smirnov was a student, who occasionally wrote for samizdat publications. He was also intensely involved in the study of the Winter War and the Mannerheim Line.
“Such an unhealthy interest in the Russian-Finnish war, as well as the samizdat stuff wasn’t much appreciated at that time,” Smirnov said. “So the university authorities called me in and said that I should leave the school because I was a ‘politically unreliable element.’”
Now Smirnov works as a tour guide, taking groups of children to visit site associated with the Winter War during their vacations.
When the first Finnish tour groups were allowed to visit the region in 1989, Dmitry Shitov, another club member, organized special “nostalgia” tours for them. Former residents of the region flocked back to see their former homes.
“They went to see the houses that they used to live in before the war and to meet the people who had come to live there. They were so happy,” Shitov said.
About 300,000 civilians were forced to leave the region after the war ended in 1940, and the Soviet authorities settled Russians there.
Since that time, Shitov has worked with numerous Finnish groups coming to the area for various commemorations and for the dedications of monuments related to the war.
Shitov also has a large collection of slides and photographs showing the Finnish churches, buildings, bridges and other structures of the region.
In addition to being a member of Karelia, Chekunov heads another group called Northern Front, which unites three groups — Red Army, German Army and Finnish Army — that specialize in reenacting Winter War battles. 
These groups strive for meticulous historical accuracy, with members sporting authentic uniforms and equipment. They study the history of the conflict in detail and reenact the battles, often inviting Finnish and Russian veterans to observe.
“Normally we only reenact battles that actually took place,” Chekunov said.
Smirnov, whose passion is normally limited to studying the fortifications, once participated in a reenactment.
“They gave me a non-working rifle and told me to shoot a Red Army soldier. So I did. Suddenly, I saw how the man instantly fell on his back,” Smirnov recalls. “For about five seconds, I was frozen. I thought that I had really killed him. It was a perfect performance.”
Blair Irincheyev, a 24-year-old student at St. Petersburg State University, is also passionate about the Winter War. He has created one of several Russian Web sites devoted to the subject: www.mannerheim-line.ru. 
“In my research, I try to stay away from any political views about the Winter War. It is important not to take sides. I’m equally sorry for both the Russian and the Finish soldiers who died in that war,” he said. Irincheyev’s Web site is largely in English.
Irincheyev emphasized that participating in the reenactments helped give him a better understanding of the war. 
“Just look at how awkward these Red Army greatcoats were for attacks in deep snow,” he said. “Finnish soldiers had a big advantage with their short, warm uniforms.”
Chekunov regrets that his organization is not better known and sometimes has problems with the authorities.
“Sometimes the police suspect us of keeping old weapons illegally, even though we have licenses for them. The stuff we use for the reenactments is not in working order,” he said.
“We could also provide lectures on war history for our youth,” he says, “ to fill that gap of knowledge that has recently emerged in the young generation.”

TITLE: Director Resigns Over Lenfilm Restructuring
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: A little less than one year after President Vladimir Putin signed a decree on the reorganization of Russia’s 36 state-owned film studios, Viktor Sergeyev — filmmaker and director of Lenfilm — has submitted his letter of resignation in protest against a reform that he feels will bring nothing but ruin.
“I do not want to take part in something that I see as nothing other than destruction,” said Sergeyev, whose films include “The Hangman” (1990), “The Genius” (1991) and “Schizophrenia (1997).
Sergeyev plans to leave Lenfilm — the country’s oldest film studio, which was founded in 1918 — as of May 1.
According to the reorganization scheme developed by the Culture Ministry and approved by Putin last April, Lenfilm will be divided into two independent structures in the course of the next three or four months. The film studio will be turned into a joint stock venture that will eventually be privatized, and a separate state-controlled organization will be set up to manage Lenfilm’s vast film archives.
Sergeyev, though, argues that this arrangement would separate the film studio from its primary source of revenue. According to him, 80 percent of Lenfilm’s income comes from the sale of rights to show films from its collection.
In 1998, the studio signed a deal giving Media-MOST the rights to broadcast its films for 10 years in exchange for $7 million. In all, the lease of broadcast and distribution rights brought the studio 260 million rubles ($8.7 million) over the last four years. 
That revenue enabled the studio to purchase 120 million rubles ($4 million) worth of new equipment, raising the studio’s production standards to European levels.
“Lenfilm is a profitable studio,” Sergeyev said. “In February, we earned 1 million rubles [$33,000] in profit.”
He added that Lenfilm currently has five films under production.
Sergeyev further argues that now is not yet the time to privatize Russia’s studios. He points, in particular, to the lack of interested investors.
“The country’s economy has not yet risen to the level where it is possible to invest in sectors other than energy and the like,” he said. “In my opinion, Russia doesn’t have enough investors to provide for the film industry.”
As a result, the proposed new joint stock company will remain state-owned. But without its own source of revenue, it will be completely dependent on meager state subsidies. In 2001, the studio received just 3 million rubles ($100,000) from the state.
Theater and film critic Tatiana Tkach shares Sergeyev’s concern that reorganization will seriously harm Lenfilm and other studios.
“The current scheme allowed state film studios to buy equipment and to finance the production of some films with the money raised through the lease of rights to show films from their collections. The state will ruin this functioning mechanism without offering an adequate replacement,” Tkach said.
“In the contemporary Russian film industry, entertainment already heavily prevails over art. Intellectual cinematography will be killed,” she added. 
“Producers will support only the big names. It is already difficult for a beginning actor or director to start a career. With this reorganization, it will become incredibly tough,” Tkach said.
Leonid Romankov, chairperson of the Legislative Assembly’s Commission for Culture and Science, called the Culture Ministry plan an attempt to fill state coffers at the expense of the film studios.
“The film collections of the country’s greatest studios are an impressive source of income,” Romankov said. “Officials realize what the loss of this money means for the studios, but the temptation to manage these handsome sums has won out.”
According to Sergeyev, advertisments sold during the screening of a popular Soviet or Russian film on national television during prime time bring in from $100,000 to $150,000. 
The controversial reform was first conceived in 1998, the brainchild of Culture Minister Mikhail Shvydkoi — who was then the head of the VGTRK state-owned broadcast company — and Press Minister Mikhail Lesin, who was then the head of Video International, a private company that enjoys virtual monopoly control over national television advertising.
Sergeyev has been unable to meet with Putin to explain his position. 
“I am convinced that our president had been misinformed or under-informed by his advisers when he signed the decree,” Sergeyev said, adding that he is pessimistic that the order can be changed.
“The president has been lax in reacting to the situation so far, and he is not the kind of person who would ever cancel his own decree,” Sergeyev said. “This tells me that the reorganization can’t be stopped. However, I did have a list of proposals for the president that would prevent the ruin of the studio, while not meaning the cancellation of the decree. I can’t elaborate because the president hasn’t seen the proposals. They didn’t reach him.”
Although pessimistic about Lenfilm’s future, Sergeyev is looking forward to a return to filmmaking.
“The five years I’ve spent in this office have indeed eaten into my career as a director,” he said. “I am hoping to fight back as a professional filmmaker.”

TITLE: TV6 License Tender Fostering an Unusual Consortium
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW — With two days left to register for the highly politicized tender for Channel 6, a consortium of businesspeople backing the ousted TV6 team scrambled Monday to finalize its composition as two unlikely new participants entered the fray.
Former TV6 General Director Yevgeny Kiselyov said that the consortium is holding 11th-hour negotiations with Arkady Volsky, chief of the Russian Union of Entrepreneurs and Industrialists (RSPP), and former Prime Minister Yevgeny Primakov, who now heads the Russian Chamber of Commerce. 
The two men unexpectedly decided last week that they wanted to join forces with the consortium or independently bid for the frequency license on March 27, Kiselyov said.
“The situation with Primakov and Volsky is not quite clear to me,” Kiselyov said at a joint news conference with Oleg Kiselyov, the former head of the Metalloinvest holding company and a member of the consortium backing the TV6 team.
“We welcome the participation of any public organization, including those representing business,” he said. “But so far I don’t understand the configuration in which both individuals and public organizations would take part [in a television company].”
Without identifying any sources, Russian media reported late last week and Monday that Volsky and Primakov planned to take part in the tender — and that they had President Vladimir Putin’s blessing. 
Neither the Chamber of Commerce nor the RSPP — which have become the most powerful business lobbying groups in the country in recent months — have confirmed their interest. Primakov hastily called a news conference Monday and then abruptly cancelled it. Representatives from neither organization could be reached for comment. 
But a high-level source in the Press Ministry confirmed Monday that the ministry has received an application from the RSPP and the Chamber of Commerce to register a noncommercial mass-media organization called Media-Socium, and planned to approve it. 
A noncommercial organization consists of partners who each get one vote on the board and are obliged to re-invest any profits into the business.
Such a registration is necessary to apply for the March 27 tender. 
The Press Ministry source, who did not want to be identified, said that Media-Socium intended to bid for the Channel 6 license together with Yevgeny Kiselyov’s team, just like the consortium of businesspeople that formed ZAO Shestoi Telekanal together with the TV6 journalists’ company OOO TV6.
Primakov’s entry presents a serious challenge to the delicate balance of power in the consortium behind the TV6 team. During his tenure as prime minister, Primakov proved to be very aloof to journalists, and he publicly proposed using criminal investigations as a tool to force businesspeople to bring back to Russia the capital they had channeled aboard.
The two Kiselyovs, who are not related, said Monday that despite the wrench thrown into the works by Primakov and Volsky, weeks of complicated and often dramatic negotiations within the consortium have produced a list of businesspeople who will participate in ZAO Shestoi Telekanal. 
They said the businesspeople, most of whom are acting as private individuals, are: Oleg Kiselyov; Unified Energy Systems head Anatoly Chubais; banker Alexander Mamut; MDM-Bank chairperson Andrei Melnichenko; metals and media mogul Roman Abramovich; United Heavy Machinery chairperson Kakha Bendukidze; Vimpelcom founder Dmitry Zimin; SPI Group vodka exporter shareholder Yury Shefler; low profile oil businessperson Igor Linshits; aluminum baron Oleg Deripaska; Sistema holding head Vladimir Yevtushenkov; and EvrazHolding metallurgical company shareholder Alexander Abramov.
OAO TV6, founded by several dozen former TV6 employees, owns 10 percent of ZAO Shestoi Kanal, and each businessperson has an equal share of the remaining 90 percent. 
Oleg Kiselyov said that the consortium should eventually have about 30 shareholders, each holding an equal stake, with OOO TV6 keeping 10 percent.
The main preconditions for participation are “basic values of liberal economy and basic values of open information society,” he said.
The businesspeople, who plan to come up with what Oleg Kiselyov said could be “several tens of millions of dollars” of investment in the project, signed, on Feb. 18, a memorandum with Yevgeny Kiselyov’s team, under which the station’s chief editor will be elected by the journalists and the general director will be nominated by journalists. A vote has already determined that the posts will go, respectively, to Yevgeny Kiselyov and former TV6 chief producer Alexander Levin.
Levin stepped in after former TV6 Executive Director Pavel Korchagin, who had been tipped for the general director post, threw in the towel last week. Korchagin is expected to bid for the frequency with the backing of another investor — U.S.-owned investment fund TPG Aurora. 
The Press Ministry said four applications for the tender have already been filed. The bidders are the little-known Vysshaya Liga television company, run by former TV6 chief producer Ivan Demidov; LUKoil-Garant pension fund-backed ZAO TV-VI, run by Viktor Merezhko, Sergei Moskvin and Stanislav Kucher; former TV6 news chief Mikhail Ponomayov, who is still looking for an investor; and the Mir television company, whose financial backer is also unclear. 
By Wednesday morning, the Press Ministry expects to receive applications also from TPG Aurora, ZAO Shestoi Telekanal and Media-Socium, as well as the ATV production company and the 7TV sports channel.
Yevgeny Kiselyov was calm about Korchagin’s departure. “The reason is his personal doubts and hesitations [about the consortium’s success], to which every person has a right,” he said. 
He did not rule out working with Korchagin in the future.
The TV6 consortium, which Yevgeny Kiselyov jokingly referred to as Kiselyov, Kiselyov & Partners, met Monday with Press Minister Mikhail Lesin, and received assurances that it would be granted a mass-media registration by Tuesday at the latest, thus meeting the Wednesday deadline, Yevgeny Kiselyov said.
Oleg Kiselyov was upbeat about the consortium’s chances of winning the tender. 
“The list of founders shows that these are people who are successful in business,” he said. “We are facing a struggle and, I hope, a fair one. We have no intention of failing.”

TITLE: Efforts Redouble To Clear White Officers
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: MOSCOW — After a major setback last year, efforts to clear the names of several White Army leaders are again gaining pace, with supporters writing to the president and pushing plans to re-inter the remains of two White officers in the Kremlin wall.
Cossacks, nobles, monarchists and 14 admirals appealed last month to President Vladimir Putin, Prime Minister Mikhail Kasyanov and navy chief Vladimir Kuroyedov to rehabilitate Admiral Alexander Kolchak, who led White forces in Siberia during the Civil War after the Bolsheviks took power in 1917.
The legal battle to rehabilitate Kolchak, who became an embodiment of evil in Soviet propaganda, reached the Supreme Court but was rejected by its military arm last fall. In the meantime, the Nobles’ Assembly, one of the groups spearheading the Kolchak campaign, also wants to have the remains of White generals Anton Denikin and Pyotr Wrangel, who both died in exile, placed in the Kremlin Wall — although not on the side of Red Square, where the Whites’ former enemies lie, but on the side facing Alexandrovsky Sad and the Tomb of the Unknown Soldier.
Prince Andrei Golitsyn, who heads the Nobles’ Assembly, said the Defense Ministry and the Moscow city government have agreed to the return of the remains, according to a report in Noviye Izvestia. He also said Denikin’s 83-year-old daughter Marina, who lives in Versailles, France, thought her father “would be very pleased if his remains were returned to Russia,” but added that “it is unlikely he would want to lie next to Wrangel, with whom he did not get on.”
Denikin’s remains are in a Russian cemetery in the United States, in New Jersey, while Wrangel is buried in Belgrade, Yugoslavia.
Some 80 years have passed since the bloody Civil War that cost the lives of millions. But the Bolsheviks’ vilification of the Whites, many of whom went into exile after their defeat, has yet to be reassessed in a systematic way.
The legacy of the White movement — perceived very differently at home and abroad — has been a touchy issue for the Russian leadership. However, in a gesture of reconciliation, Putin in 2000 paid a visit to the Russian cemetery at Saint-Genevieve-des-Bois outside Paris where many prominent White emigres are buried.
One report in the Italian newspaper Il Tempo, picked up by the Russian press, said last month that Putin supports the move to return Denikin and Wrangel’s remains. The presidential press service declined to comment on the report.
But Andrei Ryabov of the Moscow Carnegie Center said he would not be surprised if Putin supported the gradual restoration of the White leaders to a position of honor.
“I think, even if there isn’t a legal rehabilitation, some moves to rehabilitate them politically and morally are likely,” he said in a recent telephone interview.
Putin’s team is interested in finding elements in Russian tradition that are not Communist but not the pro-Western dissidents of the 1960s through the 1980s, Ryabov said.
“One of the problems of the last decade has been the difficulty for Russians of shedding their identity as Soviets. When they removed the Soviet identity there was nothing left of the Russian identity,” he said. Ryabov added that a figure like Denikin could be attractive because “he offered to support Russia in its war against Hitler.”
“We want to do what has already been done in France, Spain and the United States when they finished their civil wars — to restore brotherly relations and begin building one country,” said Alexander Smirnov, a St. Petersburg lawyer who has been working to rehabilitate Kolchak since 1994.
Smirnov, a member of the biographical society at the Russian Academy of Sciences, argued that Kolchak’s achievements before the Civil War, which included polar expeditions, were worthy of recognition.
Attempts by Smirnov and other Kolchak supporters in May of last year to mount a memorial plaque at St. Petersburg’s Museum of the Naval Corps were rebuffed by officials when the event was called off at the last minute due to “technical problems.”
About 10 books have been published recently based on Kolchak’s interrogation in Irkutsk, Smirnov said, and in early February residents of that Eastern Siberian city erected a memorial cross on the spot where Kolchak was shot before his body was thrown into the icy Ushakova river.
According to the Nobles’ Assembly, the campaign to rehabilitate Kolchak has the support of Nobel prize winner Alexander Solzhenitsyn. But so far that has done the admiral’s supporters little good. A rehabilitation request filed by Smirnov with the prosecutor’s office of the Transbaikal military district in 1997 was rejected in January 1999, and the Military Collegium of the Supreme Court upheld the decision last November.
While versions of Kolchak’s death vary, prominent U.S. historian Richard Pipes writes that Kolchak was captured and executed without trial on Lenin’s order in early 1920.
Before he was shot, a commission interrogated him about his past and his activities as “supreme ruler” of the Whites.
“Kolchak behaved with great dignity,” Pipes writes in his book “Russia Under the Bolshevik Regime.” “The minutes of the testimony reveal a man in complete command of himself, aware that he was doomed, but confident that he had nothing to hide and that history would vindicate him.”
History might. But military prosecutors are not planning to.
Izvestia quoted Alexander Kolomin, prosecutor of the Transbaikal military district, as saying that Kolchak is ineligible for rehabilitation “because he did not stop the terror committed by his counterintelligence service against the civilian population.”
Alexander Yakovlev, chairman of the presidential commission for the rehabilitation of victims of political repression, has said Kolchak’s name should be cleared.
In an interview after last year’s Supreme Court decision, Yakovlev attributed the ruling to a skewed historical view of the October Revolution of 1917, when the Bolsheviks took over.
“In fact, it was a counterrevolution when compared with the February Revolution,” Yakovlev told Ekho Moskvy radio.
The February Revolution of 1917 was a revolt by soldiers and workers to which Tsar Nicholas II responded by dissolving parliament and ineffectually trying to suppress the workers by force. Soon after, he was forced to abdicate power, and the Duma appointed a provisional government.
“If the October events are considered a revolution, then everything else is considered counterrevolutionary, including Kolchak, peasant uprisings, revolts by workers against Soviet power and the battles in the Civil War,” Yakovlev said.
“Kolchak wanted to restore the legal authority of the Provisional Government that had been overthrown by the October counterrevolution,” he said.
In a separate interview with the Izvestia daily, Yakovlev also said that refusing to rehabilitate Kolchak on the grounds of his counterintelligence terror is illegitimate, considering that Stalin was not judged nearly so severely for the acts of his counterintelligence.

TITLE: IN BRIEF
TEXT: Pasko Ruling Slammed
VLADIVOSTOK, Far East (AP) — The New York-based Committee to Protect Journalists on Monday called the treason conviction for Russian military journalist Grigory Pasko unjust and embarrassing to Russia. 
Terry Anderson, the committee’s vice chairperson and a former AP correspondent who was held hostage for seven years in Lebanon, told a news conference in Vladivostok that Pasko’s imprisonment was “unjust, cruel and wrong.” 
“Shooting the messenger never solves the problem,” he said. 
The Committee to Protect Journalists is lobbying international lending organizations to limit aid to Russia to protest the Pasko case, Alexander Lupis, the group’s program coordinator for Europe and central Asia, said Monday. 

Kursk To Be Moved
MOSCOW (AP) — The hull of the Kursk nuclear submarine will be taken to a dismantling plant next month and will be scrapped by the end of the year, shipyard officials said Monday. 
Prosecutors had said the Kursk would be sent to the Nerpa plant in the northern Murmansk region for dismantling only after investigations inside its hull are complete. Top officials said last month the probe was over, but that it had not determined for certain what prompted the explosions that sank the Kursk. 
Captain Vadim Churikov, director of the Defense Ministry’s 82nd Ship-Repair Plant, was quoted by Interfax as saying the Kursk would be removed from the floating dock in the northern city of Roslyakovo in April and moved to the Nerpa plant. Nerpa director Pavel Steblin said the painstaking processing of taking apart one of Russia’s most modern submarines would be finished by the end of the year. 

Plane Bomb Threat
MOSCOW (AP) — A passenger plane carrying 214 people abruptly cut short a flight and returned to its departure point after receiving a bomb threat, emergency officials said Monday. No explosives were found and all aboard were unharmed. 
The Il-96 was bound for Moscow when it took off Sunday afternoon from the airport in the city of Yuzhno-Sakhalinsk on Sakhalin Island, just north of Japan, a duty officer at the regional emergencies department said. 
Shortly into the flight, the crew was warned there could be a bomb on board, the duty officer said. He would not elaborate on how the threat was passed on and would not give his name. 
The pilots decided to return to Yuzhno-Sakhalinsk and landed there safely, the officer said. The plane was examined for explosives and found to be safe. The flight took off again for Moscow on Monday, he said. 

U.S. Criticizes Russia
WASHINGTON (AP) — The U.S. State Department’s annual human-rights report contains strong criticism of China, Russia and Saudi Arabia, saying all three nations violated rights of their citizens during 2001. The report was submitted to key members of Congress on Sunday evening in preparation for its public release Monday. 
Russia is accused of using torture against rebels in Chechnya and of killing secessionists outside normal legal bounds. There were numerous reports of arbitrary arrests in Chechnya. 
The findings in the annual report are the result of canvassing of U.S. diplomatic posts around the world and information provided by human-rights groups. 
Secretary of State Colin Powell reviewed the findings closely before the report was sent to Congress, where it could have an impact on foreign-aid outlays and policies toward the various countries cited for violations.

TITLE: Russians Buck Trend On New Forbes List
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW — Oil baron Mikhail Khodorkovsky has been named the richest man in Russia for the second year running by Forbes magazine, which released its annual list of the world’s billionaires Friday.
Khodorkovsky, 38, the head of the Yukos oil giant, saw his personal wealth grow by $1.3 billion over the past year to $3.7 billion, earning him the No. 101 spot on the list of 497 billionaires.
Microsoft co-founder Bill Gates, who has topped the list since 1998, lost an amount almost double Khodorkovsky’s net worth but held on to the title of the world’s wealthiest person with $52.8 billion.
Six other Russians are on the Forbes list, which suggests Russia’s wealthy bucked the global economic slump that chipped away at the fortunes of most billionaires. The Russians managed either to maintain or increase their wealth.
Oil and media tycoon Roman Abramovich was named the second-wealthiest man in Russia, with $3 billion that put him in 127th place. Abramovich’s fortune more than doubled from last year, when Forbes ranked him No. 363 with $1.4 billion.
Alfa Group’s Mikhail Fridman leapfrogged to 191st place with $2.2 billion, up from No. 387 with $1.3 billion last year.
Abramovich, who is the governor of Chukotka, and Fridman overtook Interros head Vladimir Potanin, whose fortune of $1.8 billion remained unchanged from last year. He ranked No. 234.
Last year’s newcomer to the Forbes billionaires’ club Vladimir Bogdanov, who heads Russia’s fourth-largest oil producer Surgutneftegaz, took 277th place with $1.6 billion, and LUKoil President Vagit Alekperov rang in at No. 327 with $1.4 billion.
Aluminum magnate Oleg Deripaska made the list for the first time, with $1.1 billion in 413th place.
This year’s list of seven Russians is one less than the eight named last year. Gone are two gas executives, former Gazprom CEO Rem Vyakhirev and former Prime Minister Viktor Chernomyrdin, who last year ranked 336th and 452nd with $1.5 billion and $1.1 billion, respectively.
Vyakhirev, who is widely thought to have amassed a fortune during his years at Gazprom, was fired from the post in May amid accusations that he had been involved in asset stripping at the state-controlled company. He was immediately named chairperson of the board.
Chernomyrdin, once the head of the Soviet gas industry, was appointed Russia’s ambassador to Ukraine shortly before Forbes released its list last year.
It was unclear why the two men had been dropped. Forbes did not respond to requests for comment.
Kommersant cautioned that such an exclusion did not mean that the list was the last word on Russia’s billionaires. “It should be noted that the data used by the magazine’s analysts is quite relative,” the daily wrote. “So the indices [used to define billionaires] do not always correspond to reality.”
With the list, Forbes profiles Khodorkovsky’s climb from the rags of a tiny communal apartment to the riches of Menatep Bank, and then Yukos.
“Khodorkovsky has an earnest demeanor and a high-pitched voice that is often difficult to hear, but appearances are deceiving,” the story says. “This is a tenacious and ruthless businessman.”
Forbes revisits the collapse of Bank Menatep in 1998, which led foreign creditors to claim a 29-percent stake in Yukos for $266 million in debt. The creditors later dumped those shares — analysts say at a steep loss — when Yukos announced a share issue that would have diluted their stake to almost nothing.
Forbes also re-examines Khodorkovsky’s acquisition of Yukos during the notorious loans-for-shares auctions of the mid-1990s in which many businesspeople snapped up assets for a song.
The magazine goes on to point out that that was then. “The financial free-for-all is yielding to an ethic of reinvesting in your business. And among the old-time oligarchs, Khodorkovsky is leading the charge,” Forbes said.
Yukos is Russia’s No. 2 oil company, with a market capitalization of about $15 billion. Yukos is also the fastest-growing oil firm. Khodorkovsky said in January that the company increased output by 17 percent in 2001 and plans to boost it by another 17 to 20 percent this year.
Abramovich’s Sibneft oil company was also a growth leader in 2001.
Russians first appeared on the Forbes list in 1997, with Boris Berezovsky in the No. 1 spot with $3 billion. As a result of the 1998 crisis, no Russians made the list in 1999 and 2000.
The billionaires on this year’s list were all but mum about the report, and the Russian press did little more than sum up the rankings.
Asked what he thought about the country’s billionaires, Anatoly Aksakov, deputy chairperson of the State Duma Committee on Economic Policy and Entrepreneurship, told the Izvestia newspaper Saturday that he harbored no “negative feelings.”
“The most important thing is that they bring some benefit to the country and use their wealth in its interests rather than just their own,” he said.

TITLE: Russian Stock Index Continues Climb
AUTHOR: By Victoria Lavrentieva
PUBLISHER: Staff Writer
TEXT: MOSCOW — Unexpectedly positive economic news on both sides of the Atlantic and the anticipation of stable oil prices brought fresh Western money Monday into Russia’s stock market, which joined a global rally to hit a level last seen nearly four years ago.
“Sooner or later, the stars should allign — so finally they aligned for Russia and the market began to grow,” said Andrei Galperin, head of Prospect brokerage.
The Russian Trading System index rose more than 6 percent in intraday trading, before falling off slightly to close 4.45 percent higher at 319.05 on turnover of $30.6 million — double the average volume in February. The ruble-denominated MICEX index finished 3.21 percent higher at 278.72 on turnover of some $170 million, meaning that at present volumes the two bourses are handling a combined $1 billion a week in transactions.
The RTS, the best-performing market index in the world in 2001, has gained 50 percent in the last six months and 19 percent since the start of the year — a level of performance six times higher than the global emerging-market average, according to data from the Troika Dialog brokerage.
Leading the charge was Sibneft, which surged 19.2 percent, Yukos, up 4.6 percent, and non-RTS component Gazprom, which rose 4.2 percent.
“These three stocks, along with UES, were driving the market Monday, but the trading in general was more relaxed than on Friday, when everyone was nearly shocked by the market growth,” said Dmitry Kuliashenets, a trader with Renaissance Capital. The RTS jumped 5.06 percent on Friday. 
In the last week, major gainers include Sibneft, which is up 43 percent, Norilsk Nickel, up 31.5 percent, Gazprom, up 28 percent and Yukos, up 27 percent. 
“Major trading is done only in five stocks, which account for almost 70 percent of RTS index capitalization,” Kuliashenets said. 
Those stocks are UES, Yukos, LUKoil, Surgutneftegas and Norilsk Nickel.
Stephen O’Sullivan, head of research at United Financial Group, said the market was rising on a combination of positive news, including oil prices hovering comfortably above the $20 a barrel mark, despite Russia’s reluctance to offer OPEC any support on requested export cuts.
“The market is not really expecting Russia to expand the export cuts [it promised OPEC] in the next month or so, as the medium-term outlook for oil prices is comfortable enough,” O’Sullivan said.
Energy Minister Igor Yusufov told Reuters on Monday that, despite heavy pressure from visiting OPEC senior officials to extend oil export curbs, a decision was unlikely soon.
European shares hit one-month highs after Japanese and U.S. stock indices scaled six-month peaks in the wake of surveys showing stronger-than-expected rebounds in the key manufacturing sectors in the United States and euro zone, Reuters reported.
While investment choices are limited, overall market liquidity is growing, as fresh Western money is entering the market alongside domestic cash.
“Russia is increasingly becoming a normal investment destination as compared with other emerging markets,” O’Sullivan said. “We see people coming and buying who have not done Russia for a while. And those who already own Russia are broadening their exposure.”
Analysts said that spring has traditionally been a good season for Russian equities and — provided no unexpected bad news appears — the rally is likely to continue.
“Assuming that OPEC does not raise any objections to Russia’s non-adherence to its promised cutbacks in the past or moving into the second quarter, then we would expect the RTS to continue its drive into new territory,” Renaissance said in its morning monitor Monday.

TITLE: Chicken Prices Jump After Import Ruling
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: Fueled by a looming ban on U.S. imports, wholesale prices for poultry have shot up 30 percent over the past five days, the U.S.A. Poultry and Egg Export Council said Monday.
The government on Friday suspended issuing import licenses for U.S. fowl, which accounted for 70 percent of all domestic poultry sales last year, and said it would introduce a temporary ban on the imports begining March 10. It said U.S. authorities had failed to provide sufficient information about the antibiotics, preservatives and other substances used in the poultry industry and accused U.S. exporters of violating Russian veterinary rules.
Agriculture Minister Alexei Gordeyev called the license suspension a “warning” to U.S. officials who have not divulged sufficient information about the antibiotics, preservatives and other substances used in the poultry industry.
“Russia is not the world’s garbage dump for low-quality food,” Gordeyev, who is also a deputy prime minister, was quoted by Interfax as saying.
In addition to reflecting health concerns, the ministry’s move was widely seen as an attempt to protect the domestic poultry industry and, possibly, to gain leverage in shaping Washington’s decision on Russian steel imports, which the White House is due to issue this week.
In the meantime, seven ships arrived in the St. Petersburg port Sunday and Monday, each carrying 5,000 tons to 8,000 tons of frozen poultry.
“It is absolutely unclear now what is going to happen to those ships,” said Albert Davleyev, head of the Russian office of the U.S.A. Poultry and Egg Export Council, or USAPEEC.
“What will happen does not depend on us but on the political situation,” said Alexander Volkov, general director of the Bely Fregat poultry importer.
“We are hostages of this situation,” Volkov said.
Gordeyev and other ministry officials said they had submitted at least two requests, beginning in January, asking for detailed information on chemicals used in poultry production and had not yet received “exhaustive” replies.
“Until the American side provides a list of these substances and their formulas, the issue of allowing imports will not be considered,” First Deputy Agriculture Minister Sergei Dankvert told Interfax.
Davleyev said the Agriculture Ministry had given U.S. producers a clean bill of health two weeks ago, saying they met the veterinary service’s requirements.
However, the head of the veterinary service, Mikhail Kravchuk, said Friday that American poultry exporters had frequently violated safety regulations, failing to provide proof of the veterinary service’s approval for import, improperly labeling packages and even supplying meat from enterprises that did not have salmonella checks.
In a letter to the Agriculture Ministry, a group of scientists who had compared industry regulations in the two countries called for more stringent controls on U.S. poultry imports, Interfax reported.
The scientists said antibiotics allowed in U.S. poultry production included penicillin-based drugs, as well as sulfonamides and other antibacterial substances, which could cause allergic reactions or diminish the effect of such drugs during medical treatment. They also expressed concern over the longer storage periods permitted in the United States for frozen chicken — six months as opposed to three in Russia — saying this could indicate the use of preservatives and antioxidants banned domestically. Finally, the scientists complained about the excessive use of chlorine in U.S. poultry processing. The date of the letter was not clear from the Interfax report.
The Agriculture Ministry’s request for information from its U.S. counterparts came soon after a Jan. 1 ban on U.S. poultry imports by Ukraine, which said the use of artificial ingredients in poultry production was illegal. Prior to the ban, nine-tenths of Ukraine’s chicken imports had come from the United States. The European Union has also restricted American poultry imports, and China blacklisted several U.S. exporters and implemented tougher sanitary inspection standards in January.
After the Ukrainian ban, Gordeyev and other Russian agriculture officials expressed alarm that the ousted U.S. companies would be searching for a market for their products in Russia, whose own inefficient poultry industry has been floundering for years.
While domestic production grew 13.3 percent last year, it was still only half of what it was in 1990, according to Agriculture Ministry data. Some farms posted healthy profits in 2001, but 30 percent either lost money or barely broke even. Of 166 large and medium-sized poultry farms registered in Russia, only 29 are working at full capacity.
Domestic producers said Friday’s decision to suspend U.S. poultry import licenses was justified.
“The point is not to rid the market of American meat, but ¾ to safeguard consumers from possible negative consequences,” Nikolai Averyanov, head of the Russian Poultry Union, told Interfax. Averyanov also lamented the problems faced by Russian producers because of cheap imports. He added, however, that domestic producers would be unable to meet national demand for poultry.
The domestic market reacted quickly to the possible shortage.
“Domestic wholesale prices on poultry sharply rose to $1.20 per kilogram as of Monday from $0.92 per kilogram in less than a week,” Davleyev said.
He warned prices in Moscow and St. Petersburg could soon reach $1.50 per kilogram.
It was not immediately clear how prices were faring elsewhere.
“I am deathly afraid of what will happen when American markets open,” Davleyev said.
The U.S. poultry prices, the benchmark for world poultry prices, were likely to drop as a result of Russia’s ban. 
USAPEEC President Jim Sumner protested the ban Monday, saying U.S. poultry exporters had been following the Russian rules to the letter.
“If Russia has changed its veterinary rules, then the American side was not informed in time,” Sumner said, according to Interfax.
U.S. Secretary of Agriculture Ann Veneman and U.S. Trade Representative Robert Zoellick announced in a joint statement Friday that they would send a delegation of experts to Russia this week to push for resuming imports, which amounted to more than 1 million tons last year.
However, the Agriculture Ministry said Monday that there was nothing to negotiate.
“There is nothing at all that we can talk about until March 10,” an Agriculture Ministry source told Interfax. “Negotiations might be possible only after Russian experts analyze all the American documentation about the use of antibiotics, preservatives and other substances in poultry production.”
Poultry exports make up 20 percent of overall U.S. exports to Russia, according to the USDA statement, and one-half of all U.S. poultry export sales are to the Russian market.

TITLE: Finns Mull $1.8Bln in Investment
PUBLISHER: Combined Reports
TEXT: MOSCOW — Russia and Finland are discussing $1.8 billion in investment projects for the timber industry and are looking to form a joint working group to develop relations in the sector.
Prime Minister Mikhail Kasyanov pushed for investment in Russia’s timber industry during a visit by Finnish Prime Minister Paavo Lipponen.
Kasyanov said, however, that Russia must change its trade relations with Finland, a major buyer of Russian wood.
Russia must cease being merely a supplier of raw materials for other countries’ timber industries and should instead seek investment for its own timber-processing plants, Interfax reported Kasyanov as telling a conference attended by Finnish businesspeople.
Finnish investment in Russia’s timber industry over the past decade was a mere $79 million, Kasyanov said. Meanwhile, several plants have been built just over the border in Finland to process Russian wood, he said.
Russia and Finland are discussing investment projects, including three paper mills and a lumber factory, Interfax reported the Economic Development and Trade Ministry as saying.
Finland and Russia are also planning to form a working group for cooperation in the timber industry. The group is expected to “monitor and carry out projects to develop cooperation in the timber sphere,” Itar-Tass reported Kasyanov as saying.
Russia exported 11.7 million cubic meters of lumber to Finland last year, accounting for 82 percent of the country’s wood imports, the ministry said.
About one-fourth of the world’s forest grows in Russia, and the country accounts for three-fourths of Europe’s 15 million to 20 million hectares of pristine forest.
Lipponen arrived in Moscow on Thursday for the three-day visit. He told President Vladimir Putin that exploring further cooperation in the timber industry was a major goal of his visit.

— SPT, AP

TITLE: Telecoms Earnings on the Rise
AUTHOR: By Larisa Naumenko
PUBLISHER: Staff Writer
TEXT: MOSCOW — The country’s telecommunications companies generated revenues of 186 billion rubles ($7.6 billion) in 2001, 40.4 percent more than in 2000, according to Communications Minister Leonid Reiman.
Speaking at the final meeting of the Communications Ministry on Monday, Reiman said the revenues of traditional operators totaled 85 billion rubles ($2.74 billion), while alternative operators’ revenues came to 101 billion rubles.
Svyazinvest’s net profit increased by 18 percent and reached nine billion rubles ($290 million) according to the preliminary results, said the holding’s General Director Valery Yashin. Revenues grew by 24.8 percent and totaled 91.6 billion rubles ($3 billion). The biggest increase — by 42.1 percent — was seen in the revenues from services offered to individuals.
Sales profit totaled 22.1 billion rubles ($712 million), a 22.1 increase over 2000.
Analysts said the results for the telecommunications industry performance looked good. 
“These figures show that this is one of the fastest growing industries in the country,” said Nadezhda Golubeva, an analyst at Aton investment group. “In real terms, according to the data by Goskomstat, the industry grew 20 percent in 2001, while GDP grew 5 percent.”
Golubeva said Svyazinvest’s preliminary results were quite predictable. “The figures show that Svyazinvest grew more slowly than the industry, and it means that they continue to lose their share of the market to alternative operators,” she added.
Yevgeny Golosnoi of Troika Dialog said the rate of growth of Svyazinvest’s revenues is comparable to that of 2000.
“The only way to increase profitability is to bring the tariffs up at least to the level of covering costs,” he said.
According to the Anti-Monopoly Ministry’s estimations, tariffs for local telephones in most of the regional fixed-line operators cover the costs, Deputy Minister Anatoly Golomzin told the meeting. However, he added that this was not the case with 20 of the operators.
But the Communications Ministry said the figure was higher. According to its data, 57 out of 87 regional operators still don’t have their costs covered by the current tariffs.

TITLE: Illarionov Speaks Out On Cuts
AUTHOR: By Torrey Clark
PUBLISHER: Staff Writer
TEXT: MOSCOW — Russia has no obligation to dance to OPEC’s tune and should not reduce oil exports, Andrei Illarionov said Monday.
Speaking at a seminar on real exchange-rate appreciation and economic growth, President Vladimir Putin’s top economic adviser said cutting crude exports would hurt the economy.
Illarionov’s remarks came as visiting OPEC Secretary General Ali Rodriguez and President Rilwanu Lukman met with Prime Minister Mikhail Kasyanov and other top officials in an effort to convince Russia to reduce crude exports to boost sagging prices.
Crude-oil prices have recovered by 20 percent since last year when a stand-off between OPEC and Moscow drove benchmark North Sea Brent crude below $17 per barrel, but the cartel is pushing for non-OPEC members to extend the cut beyond the first quarter.
“We are hopeful,” OPEC Secretary General Ali Rodriguez told reporters on arrival in Moscow, when asked about the prospects for continued curbs on exports into the second quarter.
“We have common goals, and common problems, with Russia. And we have to continue our dialogue to strengthen our cooperation.
Oil was one of the best-performing sectors of the economy in January and February, with 8.7 percent production growth over the same period in 2001, according to industry sources. Illarionov said agreeing to second-quarter crude-export cuts would endanger an already fragile economy, with real ruble appreciation — a measurement of inflation and the currency’s strength compared to the currencies of Russia’s main trading partners — a main factor in slowing rate of growth in industrial production observed over the past three months.
The real ruble exchange rate is at 81 percent of the level it was at in July 1998, the month before the government devalued the currency and defaulted on its debts. The benefit — import substitution, as domestically produced goods become price competitive with foreign goods — has been evaporating as the real rate climbs upward. Imports grew 19 percent in 2001, according to State Statistics Committee figures.
For every 1 percent the real rate rises, GDP growth is expected to slow by 0.5 percent, and it has already reached a point where the economy could start shrinking, Illarionov said, based on analysis of the past 2 1/2 years. However, he said any talk of recession before September would be premature. 
To keep inflation within the government’s forecast of 12 percent to 14 percent for the year and fight real ruble appreciation, the government should rein in tariffs of the “natural monopolies” — Unified Energy Systems, Gazprom and the Railways Ministry, Illarionov said.
In February, the government set tariff rates for the first half of the year, hiking natural-gas prices by 20 percent as of March 15, power rates by 20 percent begining March 1, and railway cargo rates by 16 percent as of Feb. 15. Inflation had jumped to 3.1 percent in January.

TITLE: Charity To Compensate Crash Victims’ Families
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: MOSCOW — Five months after a Tu-154 airliner was shot down by a Ukrainian missile over the Black Sea, the families of the 78 victims are fighting for compensation.
The Sibir airline, which operated the flight, is being sued and, as a result, saw some of its accounts frozen by court bailiffs last week.
But the first payouts are expected to come from a charity fund for the families that is largely financed by tennis player Yevgeny Kafelnikov, said Novosibirsk lawyer Sergei Araslanov, who represents many of the 56 families of victims. Kafelnikov donated the $120,000 that he won in the Kremlin Cup tournament to the fund.
The distribution of the money has been determined, but payouts have stalled because Siberian tax authorities were trying to tax them, Araslanov said Thursday in a telephone interview.
However, regional tax authorities recently waived the tax, and payouts are to begin within a few days, he said.
Seventy-eight people, including 12 crew, were killed when the Sibir plane flying from Tel Aviv to Novosibirsk exploded in midair on Oct. 4 during Ukrainian air-defense exercises on the Crimean peninsula. Most of the victims were former Russian citizens who had emigrated to Israel.
The Ukrainian government repeatedly denied responsibility for the deaths, but ultimately accepted the conclusions of a commission that found that an S-200 missile fired during the exercise had downed the aircraft. Kiev is still carrying pout an investigation int who should be held responsible for the accident.
Sibir has said that once a guilty party is determined, it will seek recovery of the cost of the aircraft, all expenses on behalf of relatives and relating to the recovery of bodies, and loss of profits. It has valued the aircraft at $4 million to $7 million.
Araslanov has sued Sibir, claiming almost $20,000 for each victim, the amount he said the airline was insured for for each passenger. Last week, he succeeded in a move to freeze the airline’s accounts as security for his claim before Sibir’s lawyers managed to get court bailiffs to transfer the freeze to the airline’s property.
Sibir spokesperson Igor Volkov said the property frozen represents just two claims valued at 600,000 rubles ($19,400) each.
“It’s a negligible amount and will have no effect on the airline’s operations,” he said Thursday in a telephone interview.
Volkov said the company’s insurance covers only cases in which the airline is liable and its lawyers would try to get all claims against the airline lifted.
“We are not to blame. We ourselves are victims in this case,” he said.
However, speaking after a meeting of lawyers involved in the families’ suit on Thursday, Volkov said that local laws contradict each other on liability.
Araslanov said he accepted that Sibir was not to blame for the deaths but that in all such air disasters, victims’ relatives went to the airline first.
A Novosibirsk court is to rule on Araslanov’s suits on March 19.

TITLE: Local Projects To Play Cannes
AUTHOR: By Andrey Musatov
PUBLISHER: Staff Writer
TEXT: The city administration’s Construction Committee announced Thursday plans for its participation at the MIPIM-2002 international real-estate investment exhibition to be held in Cannes, France, from March 12 to March 14.
The event is expected to attract 15,000 representatives from the international real-estate sector, developers, investors and government officials.
Representatives from St. Petersburg firms and the city administration will be participating in the event for the fifth time, with 12 specific investment projects and 12 companies, along with the city administration, to be represented.
The projects on display will include Sennaya and Piter retail centers, which are planned for locations near Sennaya Ploshchad and are being developed by the Piter Commercial Center, the State Russian Museum’s Mikhailovsky Hotel project, and the Vladimirsky Passazh retail-and-hotel center presently being built by the Elis Construction Company.
According to Alexander Shabasov, the City Hall Construction Committee deputy chairperson, the main value of participation in the exhibition is not to do with attracting investment now.
“We are also going to help improve the city’s image for the future,” Shabasov said. “so when real sums of money start to come to Russia, St. Petersburg will be the first place they go.”
He also said that the budget for the participation at the exhibition is about $250,000, of which $50,000 will come from the city budget.
The volume of investment involved in the projects being represented is about 195 million euro ($170 million).

TITLE: Gazprom Needs More Than Cosmetic Changes
AUTHOR: By Boris Fyodorov
TEXT: Last May, the administration of President Vladimir Putin sent a strong signal to investors regarding its commitment to improve corporate transparency and the investment climate in this country when Gazprom CEO Rem Vyakhirev was replaced by Alexei Miller — a St. Petersburg man with no connection to the entrenched “Gazprom clan” that had ruled the public company as its own personal fiefdom for the previous decade.
What has changed since then?
After a relatively slow start Miller has, since October, started to gain momentum despite resistance from the old guard.
There have been several milestones to date.
First were the actions undertaken vis-a-vis Purgaz and Sibur, in both cases attempts to recover stripped assets: Purgaz was a former Gazprom subsidiary that was sold to Itera for a laughable, nominal sum, and Sibur a petrochemicals group of which Gazprom lost control.
Second has been the presentation of a major program to divest the company of non-core assets, with plans this year to dispose of assets that stand on the balance sheet at 9 billion rubles ($290 million) but, in reality, are worth much more. There are more than 100 companies in which Gazprom has significant stakes and which are priorities for sale, including stakes in Media-MOST and the National Reserve Bank.
Third has been the change of management in all key departments of Gazprom and its main subsidiaries — in particular Gazprombank, Mezhregiongaz, which handles domestic sales, and Gazexport, the principal export-sales subsidiary.
Fourth has been the investigation of gas exports, which are a huge black hole. We now have data from an internal audit showing that numerous suspicious intermediary companies in Poland and other countries benefited to the tune of hundreds of millions of dollars per year from our gas exports.
Fifth has been the fairly successful lobbying of the government to raise tariffs on gas. It is all well and good to say that costs should be cut, but freezing tariffs for years while inflation continues effectively means providing a subsidy to other companies, such as Unified Energy Systems, in the form of cheap gas, while Gazprom itself is bled dry. The tariff increase of 20 percent that was granted is not enough, but is better than nothing.
These and a number of other actions have contributed seriously to improving the efficiency of Gazprom and, for this reason, I would assess the performance of the new management team as being better than satisfactory.
However, it is still early and it would be premature be to draw any definitive conclusions as to the effectiveness of the new team.
There have been a number of articles in the press of late questioning PricewaterhouseCooper’s record auditing Gazprom’s books.
First of all, a review of the choice of auditor is already under way at Gazprom and has nothing to do with the recent noise in the press. Second, my position on this issue was stated in detail last year, and now the analysis is being repeated.
What is interesting is that certain people, such as William Browder, the managing director of the Hermitage Capital Management Fund, who kept quiet during my fight with the Gazprom management team last spring, have suddenly started to shout about the shortcomings of PwC. I would like to remind people that Browder refused to contribute when Deloitte & Touche was hired by minority shareholders last year in an attempt to conduct an independent audit of the relationship between Gazprom and Itera. And he has never contributed anything to the expense of defending minority shareholders’ rights in general at Gazprom. This is why I view Browder’s recent “campaign” as an attempt at self-promotion that has nothing to do with the genuine promotion of shareholders’ interests or those of the company.
As far as PwC is concerned, I am not enthusiastic about the results of its auditing work, and indeed, nobody has done more than I have to publicize asset-stripping and other serious problems at Gazprom. I think that a fresh look is needed from a new auditor. In fact, regular changes of a company’s auditor are standard practice. Even the government was not particularly keen on uncovering the truth last spring. It did not support my fight to change auditors and ignored clear incidents of mismanagement for too long. We did not see the Prosecutor General’s Office acting on the Sibur case before now. And let’s be honest: Only the personal intervention of President Vladimir Putin changed the course of events. One thing is clear: The best way to prevent a change of auditors is to demand it publicly, in the form of an ultimatum and with the threat of lawsuits.
Finally, my advice to Western accounting firms would be that, if they are not sure management wants full disclosure, they should not undertake to audit a company in the first place. Everybody wants to earn fees, but there should be a point beyond which it becomes a question of losing one’s reputation.
So far, my views of Gazprom’s corporate strategy coincide with those of the management and the government board members, the major exception being the issue of the board’s composition.
I think that now that we have got rid of the old management, the government should not insist on total control of the board. Ministers are busy and do not have time to properly analyze company issues. Moreover, the majority of them have no clue about how to manage a commercial company. That is why Gazprom would be more efficient with more independent directors, and it is in the government’s interest to get such people elected using its votes. If it did this, I estimate the capitalization of the company — and the wealth of the state as as hareholder — would increase by at least $1 billion immediately.
Furthermore, I believe a more aggressive approach is needed in the following areas:
First, the liberalization of domestic trading of Gazprom shares and the abolition of the two-tiered system that limits foreign investors to buying American Depositary Shares. So far, virtually nothing has been done. However, strictly speaking, this is the responsibility of the government, and I intend in the immediate future to make a formal request to the government to explain why progress on this issue has been so slow.
Second, waste in the company should be cut ruthlessly. The main areas here are: eliminating the theft of exports (by cutting out intermediaries and making public the terms of trade); the disposal of non-core assets; cutting staff, etc. Something is being done here, but not enough.
Third, the initiation of radical tariff reform is necessary to make the company better insulated from the vagaries of government policy. There should be some kind of formula linked to the general inflation level, world gas prices, etc., that would lead to the automatic adjustment of tariffs on a quarterly basis. So far, nothing of this kind has been proposed, and without serious pressure and lobbying from Gazprom, our government will most probably do nothing.
Fourth and finally, it is very important to begin preparations for major restructuring of the company in two to three years’ time. This means hiring consultants today, and opening discussion with experts and investors so that the ground will be properly prepared. In this area, unfortunately, I do not see other people agreeing with me as yet.

Boris Fyodorov is a former finance minister and a member of Gazprom’s board of directors. He contributed this comment to the St. Petersburg Times.

TITLE: It’s Nice To See Times Have Changed
TEXT: WASHINGTON — Imagine a magazine article three years from now about Ken Lay’s exciting new pig-farm-and-movie-theater holding company. “Lay leads a new generation of responsible CEOs, who renounce the free-wheeling excesses of the past,” the article intones — without mentioning the name of Lay’s old company, Enron.
Absurd? Not at all. Merely the latest Western business journalism out of Russia.
When the ruble collapsed a few years ago, journalists, academics and Big Five auditors were plunged into 30 seconds of introspection: It seems all had been too busy composing odes to the debt market to notice it was a Ponzi scheme. (Sound familiar?)
In those dark days of 1998 and 1999, Russia’s leading banks were stiffing clients — and laughing about it. Uneximbank became the first Russian institution ever to default on a Eurobond, but founder Vladimir Potanin just shrugged, telling The Wall Street Journal, “We like to be first.” Uneximbank changed the sign out front to “Rosbank” and left the problems (i.e., the desperate depositors lined up out front) behind in “Uneximbank.” Next Potanin threw an elite party in the French Alps for friends and employees. “I understand the perception that people are spending money when they are not paying debts,” Potanin told the Journal about that soiree. “But look, let’s be realistic here. This does not mean you can’t live a normal life.”
Ugly behavior? Sure. But nothing new. The same oligarchs in 1995 paid laughable sums for oil fields and nickel mines bought at rigged auctions. 
So now it’s 2002. Journalists in the United States are upset over misreading Enron; colleagues in Moscow are doggedly misrepresenting the oligarchs.
Forbes, for example, on Feb. 2 profiled mover-and-shaker Potanin, freshly elected to the board of New York’s Guggenheim Museum. Forbes puts Potanin’s worth at $1.8 billion. (For comparison: wage arrears across Russia are still estimated at $1 billion.)
Potanin in November sold the Sidanko oil company for $1.1 billion, and he still controls the nickel and platinum mines of Norilsk — all courtesy of rigged auctions. But Forbes insists Potanin has turned his attention from oil and nickel and toward businesses “that add value by producing goods and services for long-suffering local consumers.”
As examples, Forbes quotes Potanin talking about a $100-million investment into a pig-and-poultry farm, some vague investments into “retail” and investing into an unnamed outfit that plans to open movie theaters. Forbes also tells us Potanin is “researching” the tourism business. (For those keeping score: So far, we’ve got a pig farm and some vague talk.) Forbes sniffs that tourists won’t visit Russia, “a country known for crime, surliness and bad food.” But Potanin reassures Forbes that Russia may lack a “culture of service” — but “the desire to serve exists.”
Forbes is not alone in shilling for an oligarch. The Times of London in a Feb. 2 article tells us that Mikhail Khodorkovsky of Yukos “came to oil via banking, seizing his chance to consolidate his holdings.” That’s like saying: that “German troops came to the Sudetenland via marching.” And what sort of tortured logic could equate wresting wealth away from the public to “consolidating his holdings?” (His?)
Khodorkovsky, we are told, was one of the “freewheeling tycoons of the Yeltsin era.” But happily, “that era is rapidly coming to an end,” and “now Khodorkovsky is held up as an example of the new breed of [businesspeople].”
Neither article describes the “free-wheeling Yeltsin era,” even as both breathlessly insist it’s over. In fact, neither the profile of Potanin nor that of Khodorkovsky includes a single mention of their failed flagships. Uneximbank and Menatep were as mighty in their day as Enron, yet they are lovingly airbrushed away: “Ken Lay, patron of the arts, fights for honesty and transparency.”
Then there’s the Financial Times, which cuts to the chase. A Feb. 1 article begins: “It was scandalous. Grotesque. The looting of a nation. Or so said many people when Russia privatized much of its oil industry in the mid-1990s, letting a clique of financiers grab the best bits for next to nothing.”
“But,” the article continues, “a few years on, the results are looking quite respectable. The proprietors have learnt how to manage their assets. They have discovered corporate governance... .”
So let me get this straight: The looting of a country is starting to look “respectable” — because those who engineered it are (supposedly) doing a better job managing the loot?
Does all this carping make me “a Russophobe”? Well, in 10 years of living in Russia I never wrote of it as “a country known for crime, surliness and bad food.” I never found cause to characterize cleanliness and taste as “distinctly un-Russian.”
To write such things requires a distinctly un-Russian source of inspiration. From The Times:
“The foreign multinationals prowling round the carcass of the old Soviet oil industry during the chaotic days of privatization in the mid-1990s found themselves up against a man whose soft-spoken manner and rimless glasses hid [blah blah blah, Khodorkovsky].”
This is the only nod to the Great Oil Field Robbery: When they were stealing the oil companies, those evil oligarchs didn’t give BP Amoco a turn!
And now, the foreigners’ turn is here. Potanin has sold Sidanko; the FT notes rumors that Yukos itself might be for sale, and suggests foreign oil majors are ready to buy out the oligarchs.
The emerging story line: The oil field “auctions” were once, ahem, troubling, if only because foreign oil majors were snubbed. Yet today, as foreign majors move in, suddenly it’s “Oil Oligarch Finds Jesus” — oligarchs recast as champions of honesty and transparency, cleanliness and taste, good food and good service, pork and poultry, fine art and foreign managers.
Gee, how did we miss that Enron story?

Matt Bivens, a former editor of The St. Petersburg Times, is a Washington-based fellow of The Nation Institute [www.thenation.com].

TITLE: Petersburgers Aren’t Cutting the Mustard
TEXT: After two years with Vladimir Putin at the helm, freedom in Russia is on the wane, yet order is not on the rise. Putin’s main lever for maintaining control over society has been a war waged by several groups close to the president.
This is perfectly natural in a country where the remaining institutions of government and control — the State Duma, the Prosecutor General’s Office and the Interior Ministry — are for sale to the highest bidder. A ruler can only really rely on a single team in a democracy. In an authoritarian society, the leadership needs at least two. In Putin’s case, they are the St. Petersburg network and the “family.”
The Petersburg clan notched its biggest victories in the corridors of power: Its members are installed throughout the “power ministries.”
The battle for major power requires major financial resources, however, and here the Petersburg clan comes up short. Its successes in the business world are negligible. This point was hammered home last year during the bare-knuckle brawls for control of natural-gas producer Rospan International, the Nosta metals plant and Kuzbasugol.
In each case, shareholders or creditors, fed up with one group of oligarchs, went cap in hand to other oligarchs instead of to the siloviki. This choice was apparently determined by the level of service provided by the new Petersburgers. To my knowledge, some of the parties involved in these property fights did in fact turn to the siloviki for help, but the officials they encountered were hopelessly incompetent. They couldn’t master any of the economic issues involved, instead suggesting a “radical solution to the problem” or asking those lodging the complaint to track their opponent’s offshore accounts, since they didn’t have the wherewithal to do it themselves. When the dissatisfied clients went elsewhere, all the information they had provided was handed over to their opponents.
It’s not surprising that only those Petersburgers who have had their hand held by the president have managed to put down roots — Alexei Miller at Gazprom, Sergei Zivenko at Rosspirtprom and Valery Yashin at Svyazinvest. However, these appointees have scored as few successes as humanly possible in their new posts.
The siloviki in short, are not a rope around the neck of enterprising oligarchs, just a run-of-the-mill muzzle meant to keep them from biting.
The regime’s economic strategy seems more dangerous. The decision to replace Rem Vyakhirev with Alexei Miller at Gazprom, rather than making the company transparent, shows that the Kremlin is happy with the way Gazprom does business. The only thing the Kremlin wasn’t happy about was the issue of whose pocket was being lined.
A system like this obviously makes real reform impossible. No one is interested in restoring order to the natural monopolies, because they are the most effective means of milking the business community. No one is interested in straightening up the legal system, because, when laws contradict one another, the only real law is the will of the ruler.
This system was created by the oligarchs to satisfy their slightest needs. Nationalizing this system — rather than eliminating it — has been the new administration’s greatest success.

Yulia Latynina is a journalist with ORT.

TITLE: China May Be Answer to Japan’s Complacency
AUTHOR: By Charles Wolf Jr.
TEXT: In Japan, economic stagnation is compatible with comfort. Far from being in a “crisis” condition, Japan remains one of the world’s wealthiest countries, with its standard of living among the world’s highest. Japan’s current-account surplus ($117 billion in 2000) is the world’s largest, and its $400 billion in foreign-exchange reserves is almost twice that of second-place China, at about $203 billion.
Japan’s generally high comfort level is a legacy of the 1970s and 1980s, when its economy was the wonder of the industrial world, recording the highest annual growth rate — averaging about 4 percent — among all developed economies. During this time, Japan became the world’s second-largest economy. The miracle fostered predictions that Japan’s economy would either surpass that of the United States or that Japan would own substantial parts of it.
Japan’s protracted stagnation has evoked hardly less wonder over why the country can’t restart its economy. It’s a debate tinged with irony. Many of the commentators who previously extolled Japan’s economic system and confidently predicted that it would overtake that of the United States are now equally adamant about their diagnoses of Japan’s failures.
To better understand Japan’s stagnation in the 1990s, it helps to recall the factors that accounted for the miracle of the 1970s and 1980s: high rates of savings and (although government “guided”) private investment; a skilled, vigorous and growing labor force; a positive rate of productivity growth for both capital and labor; and a monetary policy that provided credit on favorable terms to aggressive, export-oriented industries and firms, especially in the automotive and electronics fields. Taken together, these factors masked the economy’s accumulating inefficiencies caused by a protected domestic market and an industrial policy in which government and bureaucracy, rather than competitive markets, determined how and to what purposes resources were allocated. As a result, Japan’s economy is marked by an unbalanced industrial structure, financial institutions warped by huge nonperforming loans and heavy-handed regulation.
Since Japan’s consumers and political elites seem content to languish in comfort, pressures to deregulate the economy, weed out or consolidate unprofitable firms and precarious banks and create a new business environment to encourage Japanese entrepreneurs, as well as foreign investors, are unlikely to build. Instead, China may be the stimulus that gets Japan’s economy growing again.
China has long-standing grievances against Japan, stemming from Japan’s aggression and oppression in Manchuria in the 1930s and in World War II. Periodically, Japan’s reluctance to acknowledge and make amends for its culpabilities — for example, by amending the history texts used in Japanese schools — reignites Chinese animosity. If these grievances remain, and if China’s economic and military power provide strong and increasing evidence that the country will eclipse Japan in the Asian region, the resulting shock in Japan may have consequences equivalent to those that occurred following the Meiji restoration in the late 19th century, when the threat of foreign domination fostered a dramatic political realignment and a drastic redirection in national policy.

Charles Wolfe Jr. is a freelance journalist who contributed this comment to the Los Angeles Times.

TITLE: Gates Tops Smaller Forbes List
AUTHOR: By Hope Yen
PUBLISHER: The Associated Press
TEXT: NEW YORK — Not even a $5.9-billion loss could topple Bill Gates as the richest person on the planet.
The Microsoft co-founder topped Forbes magazine’s rankings of the world’s richest billionaires for the 8th straight year, even as his net worth fell 10 percent from a year ago to $52.8 billion.
Gates remained comfortably ahead of Warren Buffett, who held the No. 2 spot with $35 billion, according to the 16th-annual ranking released Thursday.
It was a list most notable for its losers.
The number of billionaires dropped 83 members this year to 497 as recession and fallout from the terrorist attacks reduced their wealth. The group’s combined worth fell to $1.54 trillion from $1.73 trillion last year.
Among the missing: AOL Time Warner Chairperson Steve Case, whose company’s stock has declined by about half since last year, and Gary Winnick, chairperson of Global Crossing, which filed for bankruptcy protection in January.
They led a second year of decline in the number of billionaires since the tech downturn began pressuring the world economy in 2000. The largest drop, of 91, came last year.
“Talk about churn, creation and destruction at work,” said Louisa Kroll, who edited Forbes’ March billionaires issue, which hits the newsstands Friday. “For two years in a row, it’s been falling fortunes.”
German retailers Theo and Karl Albrecht climbed two notches to No. 3, with a net value of $26.8 billion. They pushed Microsoft co-founder Paul Allen, ranked third last year with a value of $30.4 billion, to No. 4 after he lost $5.2 billion, partly in the stock market bust.
Oracle Corp. founder Larry Ellison had the fifth spot, while five heirs of the Wal-Mart fortune created by founder Sam Walton rounded out the top 10.
Only 25 on the list are under 40, led by 37-year-old computer founder Michael Dell at No. 18. The highest-ranking woman was No. 8, Alice Walton, with assets of $20.5 billion.
The list was set using stock prices and exchange rates as of Feb. 4.
Among the countries, the United States led the list with 243 billionaires, down from 272 last year, and their combined net worth fell by $111 billion. One of the bigger losers was CNN founder Ted Turner, now a vice chairperson at AOL Time Warner, who lost 50 percent of his net worth to $3.8 billion. He dropped 62 places on the list to No. 97.
New York Mayor Michael Bloomberg, founder of the financial information company Bloomberg, spent $70 million of his own money to win his first political campaign last fall. Still, he saw his ranking move up 10 places to No. 72, despite losing a total of $100 million to have assets of $4.4 billion.
Europe had 121 billionaires, headed by the Albrechts and Germany’s Johanna Quandt and family, whose 46-percent ownership of automaker BMW helped put them at No. 12.
Japan’s Yasuo Takei and family dropped 14 places to No. 51 as the country battles deflation and a decade-long economic slowdown. Japan accounted for five of Asia’s 15 former billionaires who dropped from the list this year.
Saudi Arabia’s Prince Alwaleed Bin Talal Alsaud was No. 11.
Of the 497 total billionaires from 43 countries, 260 inherited some or all of their wealth, and the rest made their money themselves. Twenty-seven are college dropouts.

TITLE: Russia’s Brush With Enron’s Scheming
TEXT: In response to “Code Could Have Done Enron Some Good,” a comment by Matthew Murray and Anna Ossipova on Feb. 26.

Editor, 
I enjoyed your article on Enron. Probably few in Russia realize that the seriousness of Enron’s problems has been years in the making. Probably fewer realize that, four years ago, Enron was trying to import its game to Russia.
I was then working and living with my family in St. Petersburg then. I was a vice president in Enron’s engineering and construction company, and was heading Enron’s involvement in Lentransgaz’s Severnaya Compressor Station. It didn’t start this way, but the cult that created this financial Jonestown gained control over Enron’s business in the Russia in late 1997.
Against my strongly worded advice, the leaders of this Enron cult did a seriously foolish thing. We all know that “seriously foolish” in Russian business can also be seriously dangerous. I had a fierce argument with these people, who were based in London, and it was there that they explained their “brilliance” to me in some detail.
They explained how they had just “built” a “virtual power plant” with a 20-year project life. And, in a further stroke of brilliance, they had just claimed all 20 years’ profits on the first day of the project — “profits” meaning on paper, and “project” meaning agreements were signed.
They went on to describe how they would exploit some of the prospective projects I was working on in Russia and some neighboring countries. Their idea — the world’s first virtual power plant — was ludicrous.
My response to them was especially interesting in light of their demise and is, I believe, a tribute to the intelligence and good sense of the people I was working with. In response to their demand to do business the Enron way, I told them, “There is no one I know of who would understand what you just described. And if they did understand it they would bring the men in the white jackets to carry you away.”
The only person who could change things was Ken Lay — and he cared about being in Russia — so I jumped over everyone’s head and went to him. I quickly got an order to “immediately cease communicating with Mr. Lay.”
After that I became persona non grata, so I went back to the United States, left Enron, liquidated all of my stock and options and didn’t look back until recently, and then only to thank God for protection back then.
I thought this might be an interesting inside peek at Russia’s brush with Enron. For my friends there who wondered about my hasty departure, now you know the rest of the story.
Jim Hagberg 
Tomball, Texas

Editor,
Matthew Murray and Anna Ossipova imply that, in more regulated systems such as the United States, the market evaluates a company’s corporate-governance performance more efficiently than regulatory bodies. The Enron case shows the exact opposite conclusion. The rapid tumble of Enron stock price in late 2001 was only a correction after years of overvaluation.
Once all the facts are out, the market generally tends to get it right, but in the case of Enron, the market — including the investment and analyst community — got it all wrong.
Government regulation is exactly the cure to help prevent another Enron. Although in this case the Enron board bore some of the blame, the misconduct of Arthur Andersen was most responsible for the debacle. Regulation is needed to reverse the generally lax accounting standards and practices for public companies and effectively counter the natural tendency of these firms to cater to their clients, at the expense of shareholders.
John Garris 
San Mateo, California

Updating the Stats
In response to “Government Rewriting the Stats” on Feb. 19.

Editor,
The accusation that the State Statistics Committee, or Goskomstat, has rewritten economic history is unfounded.
The statistical agency is responsible for producing new estimates of the gross domestic product as better data become available. This is not a Russian invention but a standard international methodology widely used around the world.
Goskomstat’s methodology is correct. Revisions of estimates of GDP are normal. If there are no revisions, that is cause for suspicion. The Soviet Union, for example, never officially revised its statistics.
There have been enormous improvements in the quality of Russia’s statistics in the past 10 years, though some statistics still need further improvement.
In 1996 and 1997, we had bitter discussions with International Monetary Fund staff about Russia’s GDP numbers. Some people at the IMF had tried to rewrite Goskomstat’s estimates. Then we spent hours with then-IMF First Deputy Managing Director Stanley Fischer going over the statistics. Finally, the IMF agreed that Goskomstat’s methodology is correct and ceased to produce its own time series for Russian GDP.
Andrei Illarionov 
Economic adviser to President Vladimir Putin 
Moscow
A Good Read
In response to “The Real Sale of the Century,” a book review on Dec. 28.

Editor,
The old Bolshevik Alexander Barmine, who defected at height of Stlain’s purges, wrote a book called “One Who Escaped.” Barmine was soldier-diplomat who spent over decade in trade missions. His book, probably not widely known in Russia yet, is quite good on the need for foreign exchange. Incidentally, Barmine married into family of U.S. President Theodore Roosevelt. 
Ray LeRoux,
Melbourne, Florida

Visa Quagmire
In response to “Local Tourist Operators Push To Boost Off-Season Tourism,” Jan. 29.

Editor,
I am a former resident of St. Petersburg, and have been a frequent off-season visitor of the city over the last 10 years.
One more aspect that could contribute to the increase of foreign visitors is resolving the problems with visas.
It seems to be getting worse. It used to take two months to get the invitation from your relatives. Today the application process through a district OVIR office takes four months. 
On arrival to St. Petersburg with a duly authorized visa, you have to spend three days of your short visit registering your residency in the city.
It is very sad that a simple visit to your friends and relatives becomes almost impossible to accomplish due to the enormous growth of bureaucracy in this process.
 Alex Gantverg
Tel-Aviv, Israel

Duelling Faiths
In response to “Church Relations Hit New Low” on Feb. 15.

Editor,
The recent Vatican decision to elevate the status of Roman Catholic organizations in Russia to the status of dioceses is both sad and disappointing. It is one of many provocations made by Rome against the Orthodox Church over the years that, like the Greek Catholic issue, the Vatican could but does not resolve. It now leaves the Orthodox Church no choice but to cut all ties with the Vatican and establish a similarly elevated church structure in Rome. Perhaps then the Vatican will realize the error of its ways.
John Kakos 
Melbourne, Australia

Editor,
As an American of Russian decent, I felt it necessary to respond to this article. I grew up in the Russian Orthodox Church, and the more I learned about Christianity the less comfortable I felt in a religion that appeared to be steeped in rituals, hierarchy and hypocrisy. Unfortunately, as with many religions, it appeared that there were too many people arrogantly professing the dominance of their religion over another. I found it steeped in racism, nationalism and the type of aggressiveness that is usual for Moscow’s metro rush hour.
I suspected these problems might be isolated to the immigrant community in the United States. But, having traveled to Russia, I found these distasteful traits to be even more pronounced there.
The recent behavior and statements of Patriarch Alexy II and church authorities have been an embarrassment for anyone who grew up in the Russian Orthodox Church. In response to the recent visit of Pope John Paul II to Ukraine and the Catholic Church’s intention to raise its status in Russia, the Russian Orthodox Church has treated this whole issue like a mafia turf war.
The bullying and primitive behavior of the Orthodox “faithful” protesting in the Ukraine, the Patriarch’s presumption of veto power over the Pope’s visit and the accusations that the Catholic Church was intruding upon the territory of the Russian Orthodox Church has put Russian Orthodox Church officials on the world stage in a manner that discredits their pretensions to being true Christians.
Although I am not Catholic and am not a great supporter of Catholicism, I must give the Pope credit for showing unprecedented humility and trying to make amends for the Vatican’s sins against peoples and religions throughout the centuries.
Over the same period, the Russian Orthodox Church has:
• Rebuilt the beautiful Christ the Savior Cathedral in Moscow at an estimated cost of $400 million, while beggars were being chased away from its front steps;
• Filled its coffers by trading in alcohol and cigarettes;
• Shown no remorse or discomfort by being associated with — and publicly praising — underworld and authoritarian figures;
• Embraced its “faithful” mobs in the Ukraine while they protested the Pope’s visit and presumed to have a veto over his visit to any foreign country that it deems “its territory”;
• Supported a Russian law on religion that ensures discrimination and xenophobic reactions to any group the Church deems a “cult”; and
• Entered into politics and received assurances that the Pope would not be allowed to visit Russia unless the church approved.
Personally, the conduct of the Russian Orthodox Church and many of its defenders has made me ashamed of the faith and culture that was an integral part of my upbringing.
If the Russian Orthodox Church wants simply to build beautiful architectural monuments, enforce rituals that are not mentioned anywhere in the Bible — requiring women to wear a head covering, for example — insert itself into politics and commerce and quash any form of belief that threatens its “interests,” then please go ahead. But I ask that it at least be honest about it.
This is not Christianity. This is religion in the worst sense of the word.
Dimitri Klimenko 
Fairfax, Virginia

What Is To Be Done?
Editor,
What is one to do with the Russian police? From what I’ve seen they are thieves in uniforms.
I have read things about how to deal with them — act normally, show your documents, etc. — but recently I had my stag party in Moscow and had trouble not once but twice, and without good reason.
The first time, the police came and asked for documents. They returned mine but asked my friends to go with them to the station. They didn’t say why. I acted quickly, snatched the passports from them and ran back inside the pub.
The next incident was on the Arbat. As we were walking to our final destination, a police van pulled up and again asked for our documents. We showed them, and the police promptly threw us in the back of the van and took us to a police station. We were beaten up, and my friend had $100 stolen from him.
We spent eight hours answering stupid questions like “Are you bandits?” despite the fact we were dressed in smart shirts and trousers.
What is one supposed to do with these idiots? All our documents were in order — registration, visa, etc. Where can you go to file a complaint? I’ve been here eight months, and the sooner I leave this country the better.
Nicholas Ryan 
Moscow

Amber Glories
In response to “Rebirth Nears for World’s ‘Eighth Wonder” on Feb. 22.

Editor,
I am delighted that this glory has been restored. St. Petersburg is my favorite city, and I have been to Pushkin several times. In fact, I recited some of my poems in the great room where Pushkin studied. The history of the siege of Leningrad is well known to me, and I have just submitted a novel on the subject. 
I hope that further glories are restored and that the great artistic and intellectual talents of Russia will be made known to the world. 
Michael Mullen.
County Mayo, Ireland

Editor,
This is a wonderful article. I am going to give it to the various community organizations in my hometown. We have a strong interest in the art of Russia, its music and people.
A suggestion: This restoration would make a beautiful television program for public broadca0sting in the United States. The United States needs more television showing the art and beauty of Russia. Art, music and Russia’s wonderful culture trancend the everyday articles in the press. 
Minette Streeter 
Pensacola, Florida

TITLE: How Is the Milosevic Trial Playing in Serbia?
AUTHOR: By Louise Branson
TEXT: As Slobodan Milosevic, the former Serbian dictator nicknamed the “Butcher of the Balkans,” has gone on trial in The Hague on 66 counts of war crimes, he has brought to the process the evil, manipulative cunning with which he once shattered and divided the former Yugoslavia. The danger now is that he may deepen the ethnic anger and hatred, setting the stage for more conflict.
I believe a different form of justice would better serve the long-term interests of the Balkans. South Africa healed its wounds by bringing apartheid’s killers and criminals forward to tell the truth for the record in a Truth and Reconciliation process. Public confession was their punishment. The Hague trial, by contrast, is becoming a venue for a Milosevic to stage a fifth, psychological Balkans war.
The 60-year-old former dictator, wearing a dapper suit and tie in red, white and blue (the Serbian colors), and acting as his own lawyer, made it clear in his marathon 10 hours of opening statements that he would accept nobody’s judgment against him — and that he would do all he could to make his a trial of the whole Serbian nation. He wants to be seen as having fought a noble fight for a greater Serbia, portraying himself and the Serbs as the victims of foreign enemies, including NATO, rather than as a defendant who could be found guilty on his own.
“This accusation [against me] is a terrible fabrication and manipulation,” he said, glaring intimidatingly at Richard May, the British presiding judge, and the prosecutors. “They want to ascribe to me crimes that they perpetrated themselves, and this is an outrage to the whole Serbian people and an insult to a whole nation.”
Prosecutors called Mahmut Bakalli, an ethnic Albanian politician from Kosovo, as their first witness. Milosevic played to Serbs’ long-held view that Kosovo, now mainly populated by ethnic Albanians, is their ancient homeland. He aggressively challenged Bakalli’s description of a massacre of Albanian women and children by Serbian forces, contending that those who had surrendered had not been harmed. And Milosevic described the Albanians as “terrorists.” Serbs know these tactics well, as do I, from my days covering the Balkan wars in the early 1990s. Back then, Milosevic used his Orwellian media to muddy issues to the extent that it became hard for Serbs to know what was true and what was not.
For most outsiders, it is all too easy to roll our eyes dismissively. We understand the importance of hearing both sides of the argument to make sure that justice is indeed being done. The trial, for us, is designed to prove that Milosevic indeed fomented murderous ethnic wars in Slovenia, Croatia, Bosnia and Kosovo in the 1990s and to punish him. It is also a landmark event — the first time a former head of state has been charged with war crimes committed while in office. 
But for Serbs in whose name those crimes were committed, it is far less clear that justice will be done. This trial by outsiders is taking place far from Yugoslavia; Serbs feel disconnected and powerless. Ljubisa Rakic, an astute political observer and professor of medicine at Belgrade University, has been sounding out their views in recent weeks. His conclusion, endorsed in my conversations with Serbs, is that “more than 80 percent want Milosevic tried, but for crimes committed against Serbia and his own people.”
The Hague process, according to Rakic’s informal poll, provokes far more ambivalence. About 20 percent support it, around a third agree with Milosevic that the court is illegitimate, and the rest are undecided. Hardly a ringing endorsement. Milosevic understands this only too well. He knows that Serbia — psychologically and physically — is ripe for his brand of exploitation, which targets Serbs’ psychological vulnerabilities, setting them further against their ethnic neighbors and binding them to him as partners in guilt. In charging that the court is NATO’s “victors’ justice,” for example, he plays on continuing Serb resentment of the NATO bombing.
Realistic solutions are far from easy, of course. The court in The Hague will pass judgment on criminals across the former Yugoslavia. But it cannot try all of them: Many of the indicted are at large. Many others have not been indicted, making the court seem selective. All this will do little to heal the root causes of the wars. In fact, it is likely to exacerbate them, preparing the ground for future conflict.
Ways need to be found for Serbs themselves to also judge and punish their former dictator, to come to terms with what was done in their name and, in that way, begin the process of healing. The United States should take the lead in strengthening Serbian political and judicial institutions.
That, in turn, could pave the way for the establishment there of national war crimes courts, in which local judges should play a major role, under strict international standards and supervision. Such courts could constitute a sort of justice version of the standard IMF prescriptions for getting countries back on their feet economically: They could serve as a blueprint for countries to establish their own, internal means for dealing with war criminals. The South African model could be one.
Not that Serbia, right now, is in any state to stage an effective trial of Milosevic. Its economy is in shambles. Unemployment is around 50 percent. Political life is dominated by a split between the moderately nationalistic President Vojislav Kostunica and the more Western-looking but less popular Prime Minister Zoran Djindjic. Added to this, the police and army, Milosevic’s tools of repression, are virtually unchanged. Efforts at democratic reform have largely stalled.
In short, most Serbs see little way forward. Against this background, the potential for the Hague trial to perpetuate the Yugoslav wars on a psychological level is great. Millions of people across the region are glued to their TV sets as the trial, which could last two years, unfolds. The detailed evidence of massacres and murder, rape and torture will certainly deepen anti-Serb hatred among Croats, Muslims and Albanians throughout the Balkans.
Serbs could well gradually side with Milosevic, becoming swayed by his arguments that the case is part of an anti-Serb witch-hunt and that the evidence is flimsy. Many of them resent the fact that Milosevic was “bought” from them: His transfer out of the country came only after the Europeans and the United States made it clear an aid package would not be forthcoming without it.
The evidence most likely to convince Serbs of Milosevic’s guilt, which presumably would be brought by some former members of his entourage, may not be heard in The Hague at all.
Most of the men with the “goods” on Milosevic were assassinated or disappeared in an apparently systematic campaign while he was still in power. Those with the most evidence — the warlord known as “Arkan” whose forces carried out much of the ethnic cleansing in Croatia and elsewhere, former Defense Minister Pavle Bulatovic and Deputy Police Minister Radovan Stojicic-Badza — were all gunned down in the late 1990s in Belgrade restaurants.
Among potential witnesses, the most damning would be Milosevic’s former secret police chief, Jovica Stanisic, the former military intelligence chief, General Alexander Dimitrijevic, and former chief of staff General Momcilo Perisic. The three grew disenchanted with Milosevic’s Kosovo policy and were fired shortly before the war started. But there are all kinds of reasons for them not to testify. They, too, may see the court as illegitimate; they may fear that Milosevic would reveal their secrets and fear for their safety, particularly if the Serbs side with him. The tough chief prosecutor herself, Carla del Ponte, has conceded it would take “courage” to testify.
It may be difficult to convince Serbs of Milosevic’s guilt. Serbs are unlikely to accept the court’s standard of “command responsibility” — in other words, that Milosevic could be held responsible for crimes committed by his subordinates even if not directly involved. The United States and Europe could eventually create the conditions in Serbia to bring Milosevic back to face his own, strengthened, people and the charges they would bring against him — charges that, whether in a war crimes court or a truth and reconciliation court, would be better brought against him at home.

Louise Branson was Balkans correspondent for London’s Sunday Times from 1990 to 1996. She contributed this comment to The Washington Post.

TITLE: All These Ideas Are Making Me Dizzy
AUTHOR: By Vladimir Kovalyev
TEXT: It would seem that Governor Vladimir Yakovlev is never at a loss for an idea. He’s always thinking. Take, for instance, his visit to Copenhagen last summer. Our sharp-eyed leader noticed some “young girls” on the streets there and still can’t forget them. Now he’s convinced that St. Petersburg should hire similar girls to collect money for parking.
It would seem that he didn’t notice that most of Europe is using parking meters for this purpose.
“When young girls collect the money, it doesn’t provoke such a negative reaction among drivers and doesn’t lead to conflicts,” Yakovlev said recently following a government session at City Hall.
The governor’s plan might not work as well as he hopes during the winter months at least. I was noticing, for instance, the women who sell ice cream near my metro station the other day. They are just big balls of winter clothes jumping up and down with big, beautiful blue eyes peaking out from between scarf and hat.
We’ll have to wait until summer, I imagine, before the full beauty of the governor’s plan becomes apparent.
Having proposed this innovation, Yakovlev at least showed the good sense to admit that the real traffic problem in St. Petersburg is caused not by a lack of “young girls,” but by the rapidly growing number of cars on city streets.
According to Alexander Dedyukhin, head of the City Hall Maintenance Committee, the number of cars increased 36 percent in 2001. There are now approximately 1.2 million of them. He said that the city made a serious mistake when it forecast an increase in traffic volume of around 10 or 12 percent.
Yakovlev responded to this news by stating that if traffic continues to grow at this rate, he will consider declaring the entire downtown area to be a pedestrian zone. 
Almost in the same breath, though, he said that he also thought it would be a good idea to eliminate all the parking on Nevsky Prospect, Obvodny Kanal and other downtown areas. Presumably, the city wouldn’t need “young girls” for these areas either. He urged the Legislative Assembly to consider adopting this measure.
Well, Yakovlev may have a penchant for chopping off the branch that he is sitting on, but I’m pretty sure that our lawmakers aren’t going to follow suit by passing such a measure with only a year left before they must face the voters. They know that the people want to take their cars everywhere and to be able to park where they want to. That’s why the park on the sidewalk, isn’t it?
So far, the only solution that City Hall has been able to come up with is the construction of multi-level parking garages. They opened a 285-slot garage near the Ice Palace on Prospect Bolshivikov and another just off of Bolshaya Konyushennaya near the DLT department store. A third is nearing completion on Dumskaya Ulitsa next to Gostiny Dvor.
A good start, I suppose, but not much when one imagines the 1.2 million cars that are out there trolling for empty parking spots.
OK. So Yakovlev’s idea about the parking “girls” isn’t so bright. And his proposal to eliminate downtown parking isn’t going to fly. Doesn’t he have anything useful to say on this topic?
He does. As an aside while making his comments the other day, Yakovlev joked that the traffic problem was getting so bad that he might have to start walking to work at Smolny. Now there’s an idea, and I think he came up with it all by himself.

TITLE: Chris Floyd's Global Eye
TEXT: Flower Power
The St. Petersburg Times won a great victory this week when the Pentagon and White House were forced into a most craven climbdown over their plans to launch a new propaganda operation, designed to manipulate the foreign and domestic press with secret spin and outright lies. Obviously, the heat generated by the Times’ plucky “Global Eye” column — which excoriated the “Bush Liars” in print last week — wilted the Washington power structure like so many daisies drooping in a drought.
What’s that? Oh, all right, it’s just possible that the Regime was slightly more affected by the New York Times breaking the story, the Washington Post hammering away at it, and editorialists across America lambasting the program. At any rate, Daisy Bush and Daisy Rumsfeld were both backtracking like crabs on a hot plate, crying that they never, ever intended to deceive a soul.
So it’s a victory for the watchdogs of the press, right? Perhaps, but let’s parse a bit before we crow. First, take the statement of the Great Daisy himself, the usual two-minute muttering uttered during the course of his primary means of communicating with his subjects — a photo op. “We’ll tell the American people the truth,” Bush declared, adding that Rumsfeld was “just as amazed as I was about reading some allegation that somehow our government would never tell the American people the truth.”
Bush’s easily-evoked amazement aside, the statement is notable for its careful elision. Daisy says he’ll tell the American people the truth — when of course, planting false stories in the foreign press was the heart of the plan. Rumsfeld’s non-denial denials were along similar lines. 
And both men carefully omitted another key element of Mission Mendacity: the use of non-governmental sources to plant supposedly objective stories — laced with lies if need be — in reputable foreign outlets.
Indeed, a close reading shows that the operation has not even been shelved; its various elements have just been “privatized” or parceled out to existing agencies. For even as Rumsfeld was ostentatiously closing the “Office of Strategic Influence,” the Pentagon quietly announced that it was retaining the private PR firm it had hired — at $100,000 a month — to “help” the OSI in its work. This work, we might note, includes “coercing foreign journalists and opinion-makers” and “punishing” those who peddled the “wrong” line, according to classified Pentagon documents.
The Bush regime already has experts at this in place. Take Otto Reich, newly appointed assistant secretary of state. He’s an old Iran-Contra hand who once ran the “Office of Public Diplomacy” for Ronald Reagan and Daddy Bush. The OPD was officially condemned for, er, planting stories and black op propaganda in the American and world press, and for “punishing” journalists who peddled the “wrong” line.
Meanwhile, the Joint Chiefs of Staff — last noted in this column for plotting a terrorist campaign on American soil to whip up panicked support for an invasion of Cuba — assures us this week that its long-running task force for “developing, coordinating, deconflicting and monitoring messages to targeted international audiences” is still firmly in place.
So to sum up: the Office is dead but its operations are still very much alive — and its most nefarious elements have not even been denied by the denier-in-chief and his handlers.
That’s the kind of “victory” normally associated with Pyrrhus, isn’t it?
Salted Fish
Anyway, establishing a formal office to tell lies is just gilding the lily big-time, as Dick “The Disappeared” Cheney might say. The great fish of truth has rotted from the head of government for lo these many years now, from the days when Republican Senator Arthur Vandenburg told Democratic President Harry Truman he’d have to “scare the hell out of the American people” to get funding for the “National Security State”: that great googily-moogily conglomeration of state-corporate power, operating largely in secret — or, like Enron, “off-shore” — to funnel trillions of dollars to favored special interests while “projecting dominance” all over the world. 
To help with the hell-scaring, a succession of “useful idiots” have duly appeared — Castro, Gadhafi, Khomeini, Ortega, Noriega, Saddam, bin Laden (the last three were nurtured by the googily-moogily itself, of course; if you want reliable enemies, it pays to DIY) — and the duly panicked people have continued to fork over.
So who needs an official Department of Deception? Besides, when it comes to perpetrating black ops, Bush already has that crack team in place, recruited from Daddy’s criminal conspirators in the Iran-Contra gang. In addition to Reich, just two weeks ago Rummy hired John Poindexter, convicted felon, liar and obstructer of justice, to head yet another new Pentagon snoop patrol: the “Information Awareness Office,” tasked with “developing high-tech systems to provide government officials with new surveillance and information-analysis systems.” He’ll be reading your e-mail and logging your phone calls, in other words.
Poindexter helped warlord Oliver North run guns to Khomeini and wage terrorist campaigns in Nicaragua. When the jig was up, Poindexter insisted he was just following orders. Reagan himself testified at the trial, where he contradicted — under oath — sworn statements he had previously made — under oath — about the terrorist operation. Elsewhere, Daddy Bush also swore — under oath — that he knew nothing of the operation; a lie exposed by his own diaries, where, as the initial Iran-Contra stories were breaking, he confessed “I’m one of the few people who fully know the details.” Guess that’s why Junior has sealed those Reagan-Bush presidential records, huh?
So pardon us if we take the Daisies’ protestations of veracity with several tons of salt. These boys breed lies like a dead fish breeds maggots.

TITLE: France Ruins English Grand-Slam Dream
AUTHOR: By Robert Millward
PUBLISHER: The Associated Press
TEXT: LONDON — France outplayed favored England 20-15 to charge to the top of the Six Nations championship on Saturday and wreck yet another English Grand Slam campaign. 
Early tries by Gerald Merceron and Imanol Harinordoquy opened up a 17-0 French lead at the Stade de France as Bernard Laporte’s team, inspired by the returning Fabien Galthie, made Clive Woodward’s England look like the underdog, despite its elevation to world No. 1, above Australia. 
It was the first time France has beaten England in four matches. Its last victory dated back to February 1998, and it was thrashed 48-19 in their Six Nations encounter last year. 
“It’s an unforgettable moment,” said flanker Serge Betsen, who had an outstanding game in the French defense. “It’s full of emotion.” 
Woodward was unable to hide his disappointment. “We knew we had to be at our best to win today, and we weren’t,” the England coach said. “You don’t become a bad team with one performance, but I cannot overestimate the disappointment we are all feeling. 
“We were always chasing the game. We turned over too much ball and gave them far too much possession, which meant that we spent the whole of the first half defending.” 
England, favorite with the bookmakers to win the Grand Slam, having come so close three seasons in a row, was stunned as it was completely outplayed in the first quarter of the game. 
Merceron scored a 10th-minute converted try after a great buildup by scrum half Galthie and back row Harinordoquy. The French then found more holes in the English defense for Harinordoquy to go over in the corner. 
New Zealand-born former rugby-league star Henry Paul made his England debut as a second-half replacement for Mike Tindall, and England finally got on the scoreboard in injury time of the first half after a strong period of pressure put Jason Robinson over for a try. 
Although Ben Cohen scored a second England try deep into the second half, it was too late for England, as the French were already celebrating a brilliant victory. France is now the only country which can win the Grand Slam.
At Lansdowne Road, a superb Brian O’Driscoll scored three tries and set up another as Ireland overpowered Scotland 43-22.
Scotland’s New Zealand-born fullback Brendan Laney, who scored 24 points in its 29-12 victory over Italy, kicked the Scots into a 9-3 early lead before O’Driscoll took over.
One of the finest centers in world rugby, O’Driscoll scored two tries before setting up one for winger Shane Horgan, as Ireland went into half time 22-12 ahead. 
Although Martin Leslie scored a pushover try for the Scots and Laney kicked two more penalties, O’Driscoll and Simon Easterby crossed the Scottish line after the break, while David Humphreys’ four penalties and two conversions took him past Tom Kiernan as Ireland’s leading all-time points scorer. 
At the Millennium Stadium, Cardiff, a resurgent Wales scored its first championship points with a five-try, 44-20 victory over Italy.
The Welsh charged into the lead after only two minutes through winger Craig Morgan and never looked like getting caught. Daffyd James, Rhys Williams, Scott Quinnell and South African-born Andy Marinos also crossed the Italian line, as the Welsh bounced back from earlier losses to Ireland and France for their first points of the campaign. 
Carlo Checchinato and Francesco Mazzariol both scored tries for Italy but, by the time of the second score, the Italians were behind 44-13 and the Welsh were cruising to a morale-boosting victory.

TITLE: SPORTS WATCH
TEXT: Chievo Striker Dies
ROME (Reuters) — Chievo forward and Democratic Republic of Congo international Jason Mayele died on Saturday in a car accident on his way to team practice in Verona, the Italian club confirmed.
Sunday’s Serie A match between Chievo and Parma was postponed until March 13 “as a mark of respect in this time of mourning,” Italian football league Vice President Adriano Galliani said.
“[Mayele] had integrated himself into the group well,” Chievo coach Luigi Del Neri said. “The game with Parma has no importance at this point and I will suffer this tragedy all my life. We have lost a great deal on a personal level and this makes us understand something important — football is just a game.”
Mayele, 31, joined Chievo from Cagliari last October and made 10 Serie A appearances for the club this season. His death comes less than two months after Brescia defender Vittorio Mero was killed in a car crash.

Els Finally Does It
MIAMI (AP) — A duel that Ernie Els never wanted turned into a much-needed victory — his first in 18 months on the PGA Tour — on the Blue Monster at Doral, when the 32-year-old South African withstood relentless pressure from Tiger Woods, who put on a dazzling display of big drives and crucial putts.
Els had to watch Woods, in the group ahead, work the gallery into a frenzy. “He has wiped out leads like that before,” Els said. “When he gets on a roll, it’s hard sometimes for him to hit a bad shot. It’s not a very comfortable feeling.”
The comeback was so swift and shocking that Woods had a 13-meter eagle putt for a share of the lead on the 12th hole. He settled for birdie, and finally ran out of magic. He never made another birdie, although he had three chances inside 5 meters. Woods closed with a 66, playing the final 42 holes in blustery conditions without a bogey.
Els, who finished at 271 and earned $846,000, won for the first time on the PGA Tour since the International in 2000. More importantly, he was finally staring down Woods, even though it was an occasion he could have done without. Els has finished runner-up to Woods six times — three more times than any other player.

TITLE: Manchester Slips Up, Valencia on Top Again
PUBLISHER: Combined Reports
TEXT: If Manchester United’s stars fail to win an unprecedented fourth straight premier-league championship, they will remember the name Malcolm Christie, as the young Derby striker scored both of his team’s goals in a 2-2 draw with United on Sunday to leave the title chase wide open.
Second-place Arsenal trails United by just one point and has a game in hand after beating Newcastle 2-0 Saturday on goals by Dennis Bergkamp and Sol Campbell.
Christie gave the home side the lead after just eight minutes at Pride Park, before United hit back with goals from Paul Scholes and Juan Sebastian Veron.
Alex Ferguson’s team, which hit the woodwork three times and repeatedly brought the best out of Derby keeper Andy Oakes, appeared to be cruising to a victory that would have restored its three-point Premiership lead. But Christie returned to haunt the team he supported as a boy, pouncing at the near post 13 minutes from time to turn in a cross from Luciano Zavagno.
In the dying seconds, the England under-21 international put the ball in the net again after robbing United keeper Fabien Barthez, but referee Steve Dunn decided that Christie had kicked the ball out of the France international’s hands.

Italy. Inter Milan retained its one-point lead at the top of Serie A on a 78th-minute goal from Christian Vieri, which gave it a 1-0 victory over city rival AC Milan on Sunday.
Second-placed Juventus kept in touch with a 2-1 win over Bologna, but it was handed victory by an 88th-minute own goal from Bologna defender Massimo Tarantino. AS Roma, the third of the trio chasing the title, slipped up as it was held to a 1-1 draw at lowly Lecce.
It was a deserved victory for Inter against a Milan side that again failed to sparkle. It almost made it 2-0 when Cristiano Zanetti saw a late shot pushed against the post by Abbiati.
Juve fell behind on a Lamberto Zauli goal in the 36th minute, but drew even almost immediately with a header from prolific French striker David Trezeguet.
After Zauli and Juve’s Cristian Zenoni had been sent off following an off-the-ball clash, Tarantino headed a cross from Gianluca Pessotto into his own net to hand Juve a vital win.

Spain. An early goal from Francisco Rufete was enough to give Valencia a valuable away victory at Real Zaragoza, and move it a point ahead of Real Madrid at the top of the Primera Liga, while Barcelona moved back into a Champions League place as Patrick Kluivert notched a hat-trick in their 5-1 win over Malaga.
Barcelona’s victory over Malaga marked a return to form, following defeats by Valencia in the league and AS Roma in Europe. Philip Cocu converted a Rivaldo corner in the third minute to give Barca the lead, and Javier Saviola made it 2-0 with his 11th of the season at 25 minutes.
Saviola was then brought down in the area, and Kluivert beat the unfortunate Contreras from the spot, the ball striking the goalkeeper’s foot and shooting up into the roof of the net.
Ivan Leko scored with a well struck left-foot shot from the edge of the box to reduce the deficit in the second half, but Barcelona always looked capable of scoring more. Saviola was fouled again at 77 minutes to give Kluivert his second goal from the penalty spot and the Dutch international forward completed his hat-trick in the final minute, sweeping the ball home from Rivaldo’s layoff.

(Reuters, AP)

(For other results, see Scorecard)

TITLE: Game Turns Physical as Stars Start To Shine
PUBLISHER: The Associated Press
TEXT: DALLAS — The Dallas Stars are right back in thick of the playoff chase.
Pierre Turgeon and Jamie Langenbrunner scored 37 seconds apart in the first period as the Stars beat San Jose 4-1 in a physical game Sunday to move within five points of the Pacific Division-leading Sharks.
Less than a week ago, the Stars — who have won five straight division titles — had dropped to 10th place in the Western Conference after a 5-1 loss at Phoenix. Now they’ve won three in a row, including consecutive wins over division leaders.
“It’s what we’ve been talking about for a while,” said coach Rick Wilson, who replaced the fired Ken Hitchcock on Jan. 25. “We are heading in the right direction. There’s a good feel for figuring out again how to be a good team.”
Turgeon scored at the 8:23 mark of the first period when his shot popped over goalie Evgeni Nabokov and trickled past the line. Turgeon almost missed while taking a hard swipe at the puck, but got just enough of it to score his 11th goal. Langenbrunner scored on a rebound, giving the Stars a 2-0 lead.
Defenseman Darren Hatcher gave Dallas a 3-1 lead when he scored from the lower circle with 2:07 left in the second period. Joe Nieuwendyk’s unassisted backhander with 10:13 left closed out the scoring.
Play turned physical after the Stars took their early lead.
Stars’ scoring leader Mike Modano strained his right knee three minutes into the second period when he was flipped by Sharks winger Alexander Korolyuk while skating toward the net with the puck.
He didn’t return to the game, but could be back Wednesday.
There were also several fights.
San Jose defenseman Bryan Marchment fought with Hatcher in the final minute of the first period. Marchment was given a game misconduct and faces a mandatory two-game suspension from the NHL after his third fight-instigator penalty of the season.
“That was an awful call. There were five or six blatant calls that were missed or they made the wrong call,” Sharks coach Daryl Sutter said. “How can a blown call cost a player two games? That’s ridiculous.”
That came soon after San Jose’s Todd Harvey slammed Brad Lukowich into the boards and then fought with John Erskine, who also duked it out with Scott Thornton in the second period.

(For other results, see Scorecard)

TITLE: Iverson’s 40th 40 Paces Philadelphia
PUBLISHER: The Associated Press
TEXT: TORONTO — Allen Iverson has the Philadelphia 76ers on a roll. Vince Carter has the Toronto Raptors playing their worst basketball in four years.
Iverson topped the 40-point mark for the second game in a row and 40th time in his career, and the 76ers dealt the Raptors their 11th straight loss, 96-84 Sunday.
Iverson scored 42 points, 24 in the second half, on 16-for-37 shooting for the Sixers, who won their third consecutive game. He had 43 in Friday’s victory over the New Jersey Nets, and has scored at least 40 points seven times this season.
“Allen got hot and carried us the whole way,” Philadelphia’s Matt Harpring said.
Carter, playing his fourth game since coming off the injured list, had just 12 points for the Raptors, who are in their longest losing slide in four years. Toronto is nearing the franchise record of 13 straight defeats, set from March 20 to April 12, 1998.
“I couldn’t do anything on the offensive end, whether it was an open shot or a free throw,” Carter said. “It’s hard to cope with when the team is in this situation.”
The Raptors, booed throughout the game, have lost eight straight at home to fall to three games below .500 overall (29-32).