SOURCE: The St. Petersburg Times DATE: Issue #792 (57), Tuesday, August 6, 2002 ************************************************************************** TITLE: Yakovlev's Focus Shifts to Third Term AUTHOR: By Claire Bigg PUBLISHER: Staff Writer TEXT: In an interview published Monday, Vladimir Yakovlev gave the strongest indication yet that he intends to seek another term as St. Petersburg governor, stressing unfinished projects as the main impetus. A mere two weeks after the governor's press office went out of its way to soften earlier Yakovlev statements that he was interested in a third term, the governor told Ogonyok magazine that choosing a new governor would bring an interruption in work projects begun under his tenure. "I would like to stay on as governor. Too many projects have yet to be completed, and any change of power will bring an unavoidable break, a pause," Yakovlev said in the interview. "Some questions urgently require solutions, and [a break] would be an unaffordable luxury." One of the projects Yakovlev cited in the interview was the St. Petersburg flood-protection barrier, a project that was kicked off in the late 1970s, but has been the victim of a number of delays due to both environmental and financial concerns. "I am the one responsible for the discussions surrounding a government-guaranteed loan [for the project]," Yakovlev said. "What if the new governor decides that it would be better to complete the restoration of the Mariinsky [Theater] first?" The possibility of a third term for Yakovlev, who was elected in 1996 and re-elected in 2000, opened up as a result of a Supreme Court decision on July 9, allowing certain presently serving governors the option of a third or, in some cases, a fourth term, if they were elected to their present term after October 1999. Yakovlev's initial public reaction to the decision was to claim that he was focusing on preparations for next year's 300th-anniversary celebrations, and that the idea of re-election was not a consideration at present. He quickly changed course, telling a meeting of Russian and Italian businesspeople on July 18 that "I hoped the city's population would help me get re-elected." But an official in the governor's press service, Svetlana Ivanova, was quick to counter the comment, telling Interfax later the same day that the governor's position remained that it was too early to think about elections. By late Monday afternoon, the press service's song was shifting toward that of the governor. "The governor hasn't officially said that he would run for a third term. He has, however, already said he didn't exclude the possibility of running again," said Yakovlev's spokesperson, Alexander Afanasyev. Afanasyev went further, commenting on the odds of Yakovlev winning a third term. "His chances are very high, because he is a very able and strong politician. To be honest, the other candidates look pale next to him," Afanasyev said. "In the last elections, Yakovlev got 73 percent of the votes, whereas [Igor] Artemyev, who was considered to be a serious opponent, garnered only 15 percent." But to be able to run in the next gubernatorial elections, slated for 2004, Yakovlev still must get support from the Legislative Assembly to amend the city charter, which limits the governor to two terms. Most political analysts say that it is unlikely that the governor would be able to garner the two-thirds majority (34 votes) in the current 50-member assembly. Elections for a new Legislative Assembly, however, are slated for December. "Yakovlev has a good chance of being re-elected, but it will all depend on the next parliamentary elections and on the level of loyalty of the new parliament towards him," said Alexei Musakov, head of the St. Petersburg Center for Regional Development. Musakov said that, while the question of votes in the assembly will come down to basic math, the real deciding factor will likely be one outside of St. Petersburg. "Ultimately it will depend on how Yakovlev builds his relations with [President Vladimir] Putin," Musakov said. "The next parliament will be less under the governor's control than this one. It is likely to be in the hands of the president, in which case the relationship between Yakovlev and Putin will determine whether Yakovlev will be able to win a third term." Relations between Putin and Yakovlev have been rocky in the past, the latest example coming in caustic comments made by the President during a June 8 visit to St. Petersburg, where Putin slammed the city's preparations for the 300th-anniversary celebrations. But Musakov says that, contrary to speculation by some analysts, it is unlikely that the Kremlin would attempt to prevent Yakovlev from running for a third term. "The federal government's influence in the region is still weak," Musakov said. "Moreover, the relationship between Putin and Yakovlev is nowhere near as bad as people have made it out to be. If it was, why would Yakovlev still be governor, and why would he be so confident now?" TITLE: Putin Urges Georgia To Hand Over Rebels AUTHOR: By Steve Gutterman PUBLISHER: The Associated Press TEXT: MOSCOW - President Vladimir Putin strongly urged Georgia on Monday to hand over armed Chechens arrested near the border, stepping up Russia's calls for action by Georgia against suspected Chechen rebels the Kremlin says are based in the country. In televised comments, Putin welcomed the arrests but said Russia would "judge the seriousness of the Georgian authorities' intention of battling terrorism" by "how fast the criminals end up in Lefortovo prison, in the hands of Russian justice." Lefortovo is the Federal Security Service's jail in Moscow. Georgian President Eduard Shevardnadze said his country would extradite detainees who are criminals or terrorists, but stressed that Russia must prove there is reason to suspect them of committing serious crimes first. "The Russians should give us the proper materials and, if they are confirmed, we will extradite them," Shevardnadze said in a weekly radio address. Russia and Georgia - the only foreign country that borders Chechnya - have long traded accusations about the movement of Chechen rebels across the mountainous frontier. Seven armed Chechens who crossed the border from Russia overnight surrendered to Georgian forces Monday, said Shalva Londavidze, a spokesperson for the Georgian border guards. Putin said the Prosecutor General's Office would demand the extradition of a separate group of seven alleged Chechen rebels detained Saturday in Georgia. After meeting with Putin, Prosecutor General Vladimir Ustinov said he planned to meet with his Georgian counterpart to discuss the request. "The Georgian authorities have no grounds to refuse to hand over Chechen rebels," Ustinov was quoted by Interfax as saying. Russian authorities said the men were part of a larger band of rebels who were based in Georgia and fled back there after a battle with Russian forces in Chechnya. The chief of the investigation department in Georgia's State Security Ministry, Malkhaz Salakaya, said the Chechens were charged with illegal border crossing and face up to 10 years in prison. According to Georgian officials, the group of seven Chechens said they had been surrounded by Russian troops in the southern Itum-Kale region of Chechnya, when they decided to escape across the Georgian border. Six of the rebels were wounded and were treated at a hospital in Tbilisi. The commander of Georgia's border-guard forces, Valery Chkheidze, on Monday questioned why the Chechens were able to slip past Russian border troops and accused Russian forces of deliberately pushing rebels into Georgian territory, Interfax reported. Russia claims many Chechen rebels are based in the Pankisi Gorge, a valley near the border in Georgia, and has called for Georgia to let Russian forces take military action against them. Georgia has strongly resisted those calls, and Shevardnadze repeated Monday that Georgia will not allow Russian or other foreign troops to take part in any operations in the area. "The participation of military forces of other countries is unacceptable," he said. Shevardnadze blamed Russia in part for the presence of Chechen rebels in the Pankisi Gorge, saying that they came from Chechnya amid thousands of refugees who fled the region because of the fighting between Russian troops and rebels. On Sunday, Georgia claimed Russian aircraft violated Georgian airspace for the third time in a week and dropped bombs not far from the border. Several attack aircraft, thought to be Russian, violated Georgian airspace and dropped bombs Sunday near Mount Chontio, not far from the Chechen border, Londavidze said. No one was injured in the raid, but authorities found three unexploded bombs at the scene, he said. A spokesperson for Russia's air force denied that Russian warplanes had crossed into Georgia. "On Sunday, the air force units flying in that zone of responsibility did not fly any missions due to weather conditions," Colonel Alexander Drobyshevsky was quoted by Interfax as saying. While rejecting Russia's requests to let its forces into the Pankisi Gorge to fight alleged rebels there, Georgia has invited U.S. military instructors to give anti-terrorist training to its troops. The first 200 soldiers completed their training Friday. U.S. officials say they believe fighters linked to the al-Qaida terror network may be in the gorge. TITLE: Vandals Hit Heroes' Graveyard AUTHOR: By Irina Titova PUBLISHER: Staff Writer TEXT: The headstones of at least 45 graves at the Serafimov Cemetery, one of the city's oldest and the resting place of many of the city's military heroes, including more than 30 who died in the Kursk nuclear-submarine accident, were vandalized on Friday night. The headstones on the graves of three firefighters who perished while battling a fire at the Leningrad Hotel in 1991 and ten sailors who perished when the merchant ship Mekhanik Tarasov sank off the coast of Newfoundland, Canada, in 1982 were among those either knocked over or smashed by the vandals. "We have never had acts of this type on such a big scale before," said Vladislav Komissarov, the general director of Agro, the company that provides burial services at the cemetery. "Unfortunately, we don't know who did this, since it took place at night and the territory of the cemetery is not guarded at night." The Primorsky District Prosecutor's Office has opened a criminal investigation into the case, but police said that there were no witnesses to the crime, which is punishable by imprisonment. "There's really no point in trying to identify a specific motive behind crimes like these," Vladimir Kretsu, the head of the district police department, said. "When people of a certain type have several bottles of vodka, they don't really care anymore about what they are damaging." Komissarov said that the cemetery periodically faces smaller acts of hooliganism, when people steal metal fencing from around the graves to sell it as scrap. The last major act of vandalism at the cemetery, which was opened in 1905, took place four years ago, when the main targets were also the headstones of firefighters killed fighting the Leningrad Hotel blaze. In April, 1998, vandals tore copper bas-reliefs off of the granite tombstones of 10 of the firefighters. Many of the 30 cemeteries located in St. Petersburg and its suburbs are victims of periodic acts of vandalism as, last year a number of graves in the town of Pushkin were damaged. Alexander Shoshnin, the director of another local cemetery, Piskaryovskoye, where more than 500 thousand people who died during the blockade of Leningrad during World War II, said that the cemetery was not often hit by such extreme incidents of vandalism, but said that last fall two teenagers stole fences from ten graves to sell the metal. Vladimir Timofeyev, the director of the Museum of City Sculpture, which is responsible for the graves at the necropolis at the Alexander Nevsky Monastery, where many famous Russian writers, actors and scientists are buried, said that the site had not suffered from such attacks, largely because there are police and dogs providing 24-hour security for the site. Timofeyev said that, prior to the beginning of the Perestroika period, all of the city's cemeteries were well-guarded, while few are able to afford the service now. TITLE: IN BRIEF TEXT: Peace Gift ST. PETERSBURG (SPT) - The French government is planning to give St. Petersburg a "Lighthouse of Peace" to mark the city's 300th anniversary next year, Interfax reported Monday. According to a press release, quoted by Interfax, from the city's Architecture and Building Committee, the monument will be up to 30 meters tall and 5 meters in diameter, and will have the word "peace" written in different languages on it. The project is being developed by France's Foreign Ministry, with help from that country's Culture Ministry, Education Ministry and Economic Relations Minister. France's Association of Artistic Actions will co-ordinate the project, with sponsorship coming from four of France's biggest firms. Planned venues for the monument include either Sennaya Ploshchad, or in front of the Pribaltiiskaya Hotel, near the Gulf of Finland. Kaliningrad Visa Plan MOSCOW (SPT) - Lithuanian President Valdas Adamkus has suggested that a system of magnetic cards be introduced for Kaliningrad residents to cross the Russian-Lithuanina border without a visa, the Russian enclave's governor said Monday. During a visit to the Lithuanian port of Klaipeda, Kaliningrad Governor Vladimir Yegorov quoted Adamkus as saying the enclave's residents would be given plastic cards with a magnetic strip like the ones used on the U.S.-Canadian border, Interfax reported. Yegorov praised the plan but said the magnetic cards should be available for all Russians travelling to Kaliningrad via Lithuania. Adamkus's plan could become a solution to the so-called "Kaliningrad issue," a dispute over the introduction of a visa requirement for Russians travelling to Kaliningrad as the enclave's neighbors, Lithuania and Poland, prepare to join the European Union in 2004. Meanwhile, Poland continues to say it will require Kaliningrad residents to have transit visas. Poland's interior minister said Wednesday the visa regime would be introduced by the time his country enters the EU, but he said the visas would be cheap and plentiful. Crash Crew Burials ST. PETERSBURG (SPT) - The funerals of the crew of the Ilyushin-86 plane that crashed while taking off from Moscow's Sheremetyevo airport on July 28 will take place on August 8, Interfax reported on Monday. A ceremony will take place at the Airworkers' House of Culture in the St. Petersburg suburb of Aviagorodok, Interfax quoted Yelena Yelagina, the press secratary of Pulkovo airport, as saying. Yelagina also said that the crew members will be interred in different cemeteries, according to their relatives' wishes. The Pulkovo Airlines plane had arrived in Moscow from Sochi at 1:43 p.m., and was due to fly on to St. Petersburg after refuelling. After taking off, the plane gained height, but then banked to the left and began to drop, before crashing and catching fire. UN Chief Inspector MOSCOW (AP) - Russia spoke in favor Monday of sending the United Nations' chief weapons inspector to Iraq for "technical talks" on the possible return of weapons inspectors to the country. Iraqi Foreign Minister Naji Sabri sent a letter to UN Secretary General Kofi Annan last week inviting Hans Blix for such talks. Annan was expected to discuss what that means when he met with Russia and other UN Security Council members Monday. Russian Deputy Foreign Minister Yury Fedotov called Iraq's invitation the "first step on the way to full-scale renewal of cooperation between Baghdad and the UN." "The sooner that happens, the better, and we will do everything we can to reinforce this positive moment," he told Interfax. "If anyone has information that Iraq is continuing to develop banned military programs, the best way to verify this information is to put international inspectors in the country." Wildfire Destruction MOSCOW (AP) - Wildfires have ravaged more than a million hectares of land from Moscow to the Pacific coast since the beginning of the year, an official said Monday. Forest, grass and peat bog fires have burned 1.04 million hectares across the country, said Viktor Beltsov, a spokesperson for the Emergency Situations Ministry. More than 380 forest fires of various sizes are now burning, with 51 new fires reported since Friday, Beltsov said. The biggest blazes are in Sakha, eastern Siberia, where 65 forest fires are now burning on 2,798 hectares of land. In the Moscow region, where forest and peat bog fires produced a smoky haze that shrouded the capital last week, the situation has improved over the last two days, Beltsov said. Helped by rain and cooler weather, firefighters have made progress against many of the blazes, and their total area was down to about 200 hectares, he said. Fake Bomb Found MOSCOW (AP) - A fake bomb marked with an anti-Semitic and a racist slogan was found in a Moscow apartment building, police said Monday, the latest in a growing series of copycat hate crimes across the country. Tenants called police on Sunday evening after finding a ticking box on top of the elevator, and officers checked it for explosives but found none. On the box, a slogan called for death to Jews and people from the Caucasus. The box contained an alarm clock, and had a watch tied to the outside, and investigators speculated that it may have been placed by one of the tenants. Russia has seen a wave of similar hate crimes - mostly anti-Semitic - since May, when a booby-trapped sign reading "Death to Jews" exploded in the face of a woman who tried to remove it from a highway outside Moscow. TITLE: Chechnya On Road to Referendum AUTHOR: By Yevgenia Borisova PUBLISHER: Staff Writer TEXT: MOSCOW - The pro-Moscow Chechen administration approved on Monday a draft constitution that recognizes the republic as a "rightful region of the Russian Federation" but not a sovereign one. The distinction was made at the request of administration head Akhmad Kadyrov, officials said. "We know what the sovereignties granted by [former President Boris] Yeltsin led to," Kadyrov told the Chechen government at a meeting Monday, according to spokesperson Ruslan Timurkayev. "For us, it turned into war, poverty and destruction." Kadyrov also insisted that the constitution give the future Chechen president the right to appoint a cabinet and the heads of local administration to five-year terms. The constitution approved Monday was chosen from five drafts and envisions Chechnya being led by a president rather than a parliament, as many Chechen politicians had suggested. A parliament will exist as an elected body, and Kadyrov said its decisions should be passed by a two-thirds majority. The constitution will now be published in the local press for the people to discuss, Timurkayev said by telephone from Grozny. The draft will also be sent to the administration of President Vladimir Putin, the State Duma, the Federation Council and to the Justice Ministry. Timurkayev said suggested amendments will be considered and a final version will be put up for a Chechen referendum at the end of the year. He said Kadyrov categorically rejected suggestions from some government members at Monday's meeting that they should also take into account the opinions of "another side," meaning those in the rebel Chechen government. It was unclear whether the constitution approved Monday included a stipulation that to be considered a Chechen resident, one must have lived in Chechnya for the past 10 years. The requirement was in a draft prepared by Bislan Gantamirov, a former aide to Viktor Kazantsev, Putin's envoy for the Southern Federal District. Kadyrov said two weeks ago that such a requirement must be woven into the final draft. TITLE: Charges Vanish in Sibur Case AUTHOR: By Svetlana Novolodskaya PUBLISHER: Vedomosti TEXT: MOSCOW - The trial of former Sibur President Yakov Goldovsky and Vice President Yevgeny Koshchits got off to a surprising start Wednesday, with representatives of plaintiff Sibur and its parent company Gazprom withdrawing their civil suits. The Prosecutor General's Office, however, is pressing criminal charges that include abuse of authority, large-scale misappropriation of entrusted property, use of fake documentation and laundering illegally gained funds. Sibur and Gazprom notified Judge Lyubov Zvyagina that they were withdrawing their civil suits. "The material harm caused to Sibur by Goldovsky was returned in full and therefore Sibur has no claim against him," said Valeria Adamova, a Sibur vice president in charge of legal affairs. Both companies said they had notified prosecutors that they were withdrawing their claims, which was unnecessary, since the prosecutor's office has no jurisdiction in civil lawsuits. If the move was "meant as a signal that it was time to wind up the criminal case," as one law enforcement official said, "the signal, so far, has been ignored." When their lawyers requested that Goldovsky and Koshchits be released on bail, prosecutor Dmitry Shokhin objected, and the judge sustained the objection. Goldovsky's lawyer, Anatoly Kleimenov, said his client was being kept in a "medical institution," while Koshchits' lawyers complained that their client was in "inhumane conditions." For a man who was supposed to be ill, Goldovsky looked particularly well. The former Sibur president arrived at the court in a civilian minibus, though guards were present. Meanwhile, a handcuffed and exhausted-looking Koshchits was brought to court in a truck used to transport prisoners. It emerged during the hearing that Goldovsky was being kept in the medical block of the ZiL car factory while Koshchits was being held in a standard cell in Butyrskaya prison. After the judge decided that both men should remain under arrest, Shokhin read the charges. In his presentation, Shokhin revealed a number of details about the accusations that had never before come to light. According to investigators, Goldovsky acted as part of a criminal group that included Koshchits; the deputy head of Sibur's corporate department, Larisa Abramenko; and an Austrian citizen named Boris Blagerman, who heads Austrian Petrochemical Trading. With their help, Shokhin said, Goldovsky organized the sale at a deflated price of shares in the Tobolsk Petrochemicals Plant to two offshore companies that resold the shares to other offshore companies (a total of 59 offshores are mentioned in the case). Eventually the shares were bought by companies controlled by Goldovsky - at a higher price. In order to make the purchase, Sibur's funds were used, which harmed the company to the tune of 3.8 billion rubles ($120 million). According to Shokhin, the money received from the sale was used by Blagerman to buy 15.74 percent of Hungary's Borsodchem, the second-largest producer of polyvinylchloride (PVC) in Eastern Europe, as well as 4.5 percent of TVK, Hungary's largest petrochemicals plant, from Irish-registered Milford. Shokhin's indictment included the tale of the now-canceled third issue of Sibur shares, which diluted Gazprom's share in the company. The prosecutor's office said that Goldovsky abused his authority when he sold 5 percent of the ill-gotten issue in October 2001, to Gazoneftekhimicheskaya Kompaniya, or GNK, which Koshchits then headed. GNK, Shokin said, belongs to Goldovsky personally via the offshore company Oxil, which he founded. Investigators also established that Goldovsky presented Gazprom with a faked shareholders register at an extraordinary general meeting of shareholders planned for Jan. 9. The trial is due to resume Monday, and hundreds of witnesses remain to be heard. TITLE: New Round Opens In Battle for Ilim Paper Mill AUTHOR: By Torrey Clark PUBLISHER: Staff Writer TEXT: MOSCOW - A battle for one of Russia's largest paper mills went into overdrive Monday, as No. 1 pulp producer Ilim Pulp brought in a team of top-notch Western lawyers and consultants. The struggle over the Kotlass Paper and Pulp Plant in the northern Arkhangelsk region has all the etchings of the disputes of the 1990s, complete with allegations of dubious court rulings, media manipulation and a possible armed takeover. This time around, however, the takeover is not as simple as winning the backing of a few judges and a squad of armed police officers. The dispute has dragged on since last fall, in what could be a sign that Russia's rough-and-tumble days of carving up property are coming to an end. "They could have swallowed us two years ago and no one would have noticed," said Ilim Pulp spokesperson Svyatoslav Bychkov. "Now it's much harder for them to work, but they don't want to believe the times have changed." The dispute went international Monday, as Ilim Pulp, a privately held company based in St. Petersburg, announced it had hired the Coudert Brothers law firm and the Fleishman-Hillard public-relations agency to step up its defense against Oleg Deripaska's industrial holding Base Element. "The situation involving Ilim Pulp and the parallel issues of shareholders [are] being watched by Western entities who may be interested in investing in the paper and pulp industry," said Jeffrey Hirschberg, a representative of Coudert Brothers in Washington. "It's an issue of reform in the Russian economy and whether courts and the rule of law are going to prevail," he said. Deripaska announced July 24 that he and St. Petersburg banker Vladimir Kogan planned to establish a forestry holding, the heart of which would be the Kotlass Pulp and Paper Plant in the city of Koryazhma. Deripaska made his intentions known following a meeting with Arkhangelsk Governor Anatoly Yefremov and Ilim Pulp officials. "They've probably gone for our assets because they're the best in the sector," Ilim Pulp Chairperson Zakhar Smushkin said. Ilim Pulp said Deripaska, Kogan and Kontinental-Management, a company affiliated with Base Element, orchestrated the seizure and resale of a 61-percent stake in the Kotlass plant in June. Ilim Pulp said 61 percent of the plant's shares were snatched up in two blitzkrieg lawsuits brought in Kemerovo courts. One 36-percent stake was immediately sold off by the northwestern division of the State Property Fund to the Baltic Finance Agency, which Vedomosti reported is close to Kogan's Banking House St. Petersburg. At the end of June, another 25-percent stake was transferred to Your Financial Trustee, or VFP, which has been accused of corporate "greenmail" by companies such as leading steel producer Severstal. Kotlass, in the meantime, has gone on the alert, barring representatives of Base Element and Kontinental Management from the plant's territory. "They are breaking the law," Base Element spokesperson Alexei Drobashchenko said. Ilim Pulp said Base Element officials attempted to enter the plant with two former police generals Friday and Monday. On Thursday, Kotlass General Girector Yury Zayats appealed to Yefremov, the regional prosecutor, the police and the presidential envoy to the Northwest Federal District, saying companies affiliated with Base Element had amassed armed forces, including private security firms, in the region and were planning an armed takeover. Ilim Pulp and Base Element signed an agreement July 24, in Yefremov's presence, pledging, that violence would not be used to bankrupt or take control of Kotlass. The fight took a twist recently, when two well-known newspapers published reports about the dispute that Ilim Pulp said were false. Nezavisimaya Gazeta ran an article and printed an alleged letter about the paper spat from Economic Development and Trade Minister German Gref to President Vladimir Putin on July 22. After an appeal from Ilim Pulp, Putin ordered the Economic Development and Trade Ministry, the Justice Ministry and the Prosecutor General's Office to review the dispute. The letter in Nezavisimaya Gazeta stated that the prosecutor's office had found court bailiffs committed no violations in a separate dispute over Ilim Pulp's pulp and paper plant in Bratsk. With regard to the situation at the Kotlass plant, the letter only stated that Ilim Pulp was being investigated for violating the terms of privatization. Konstantin Bogdanov, a spokesperson for the Economic Development and Trade Ministry, said that, while a letter exists, it differs fundamentally from the letter published in the newspaper. "Such tricks are often used when a redistribution of property is under way," he said. The byline on the article is Yevgeny Teryokhin, but no one by that name works for Nezavisimaya Gazeta. The newspaper's acting editor-in-chief, Arkady Khantsevich, was unaware of any complaints about the article and said it was the newspaper's policy not to talk about its contributors. Ilim Pulp accused Base Element of being behind the publication. It also alleged that Base Element planted a fake interview with Smushkin in last Friday's issue of the Vek weekly. Smushkin denied that he gave any interview to Vek, or the journalist under whose name it appeared, Viktoria Belyanovich. Vek deputy editor Konstantin Mikhailov said the newspaper was in talks with Ilim Pulp to resolve the matter. He said he did not know who Belyanovich was, as he had not been involved in the publication of the interview. Base Element denied that it had been behind the publication of either article. "We're not crazy," Drobashchenko said. TITLE: Budget Figures Stump Experts AUTHOR: By Torrey Clark PUBLISHER: Staff Writer TEXT: MOSCOW - Lower revenues? Higher spending? A government ploy ahead of a battle with lawmakers over the 2003 budget? All of the above? Federal-budget watchers polled Friday offered various scenarios as to why the Finance Ministry - through an unnamed official - said it had lowered its budget-surplus forecast for 2002 by nearly two thirds, while revising expenditures up by 7 percent. The official was quoted by news agencies as saying Thursday - exactly one week before the ministry was due to submit the 2003 draft budget to the government - that, due to rising expenditures, the revised surplus is now estimated to be 58.3 billion rubles ($1.85 billion), or 0.5 percent of gross domestic product. The surplus written into the 2002 budget is estimated at 178.3 billion rubles ($5.67 billion). The official also said revenues will be 2.143 trillion rubles ($68 billion) for the year, 17.7 billion higher than projected, while expenditures will increase by 137.7 billion rubles to 2.085 trillion rubles ($66 billion). The ministry's press service would not comment on the figures, but Finance Minister Alexei Kudrin's spokesperson, Gennady Yezhov, was quoted in Vedomosti on Friday as saying the downgrade was the result of lower tax collections rather than increased expenditures. Analysts on Friday were left wondering what was going on. Economists said it had been clear that the surplus would be lower than planned, because oil prices and tax revenues were lower than targeted. According to the Tax Ministry, taxes collected stood at 93.7 percent of what was planned in the first half of 2002, excluding the unified social tax, which simply flows in and out of the budget. And the average price for benchmark Urals crude was $1.80 per barrel lower than the $23.50 budget forecast. Nor were they surprised that expenditures would be higher: The federal budget had to bail out regional budgets hit hard by changes in the tax regime, a series of floods in the south and Far East, and by public-sector salary increases, including a July 1 increase for the military. Nonetheless, budget watchers reacted with some degree of alarm or skepticism at a projected 7-percent jump in expenditures. United Financial Group wrote in a morning comment that the government had intended to fund salary increases from within the planned spending limits. Estimates for flood relief, too, were also insufficient to account for such an increase, analysts said. Total expenditures are unlikely to reach 137.7 billion rubles ($4.38 billion), in part because the 2002 budget contains 68.6 billion ($2.18 billion) rubles in optional budget cuts in the fourth quarter, said Alexei Moiseyev, an economist at Renaissance Capital. "It's not surprising that [the ministry] is creating an impression of doom and gloom before the Duma budget hearings," he said. "The budget is under strain, but we're obviously far from serious difficulties." UFG took a similar view. "The government could be sending confusing signals about current fiscal conditions ahead of its 2003 budget battle with parliament in order to minimize demands for even greater fiscal loosening in the election year," it said, adding that it expected a downward surplus revision. Yevgeny Gavrilenkov, chief economist at Troika Dialog, said he was skeptical of the numbers. He warned that the revised forecast could indicate troubles ahead for the 2003 budget. Kudrin announced Thursday that the expected 2003 surplus was lowered from 99.1 billion rubles ($3.15 billion) to 77.3 billion rubles (2.46 billion), or 0.6 percent of GDP, while GDP was increased from 12.85 trillion rubles ($410 billion) to 12.98 trillion rubles ($412 billion). Peter Westin, an economist at Aton Brokerage, warned that a 58.3 billion-ruble surplus would not cover external debt amortization payments and could lead to a financing gap in 2003, although that could be covered by privatizing a 5.9-percent stake in LUKoil, which was put on hold last week. The low surplus would also leave no contribution to the financial reserve, which contradicts estimates that the reserve will reach 70 billion rubles ($2.22 billion) by the year's end, Westin said. TITLE: U.S. Plans To Fund New Oil, Gas Study in Siberia AUTHOR: By Anna Raff PUBLISHER: Staff Writer TEXT: MOSCOW - The United States will fund the exploration of oil and gas fields off the Arctic coast of eastern Siberia, the first show of energy partnership with Russia since the May presidential summit, U.S. Energy Secretary Spencer Abraham said Thursday. "Russia will play a pivotal role in ensuring global energy security," Abraham told reporters Thursday after meeting with Russia's largest oil companies. "It is reflected in the growing strength of Russia's energy sector." Abraham also reiterated Washington's opposition to Russia building nuclear reactors in Iran, saying it "remains an issue of utmost concern to us." The United States will fund a study to explore four basins in eastern Siberia and estimate their oil and gas reserves, Abraham said. U.S. and Russian geologists will pinpoint the best candidate for commercial development, after which extraction could begin. Abraham declined to say how much the study would cost and said some details have yet to be worked out. The Arctic analysis is part of the U.S. Geological Survey's Arctic Resource Assessment, an ongoing federal study. A quarter of the world's undiscovered oil and gas resources are in the Arctic, Spencer said. Many international energy companies attempted projects in Russia's Arctic offshore in the mid-1990s, but were stymied by the State Duma's slowness in approving production-sharing agreements, provisions necessary for large-scale foreign investment. Foreign oil companies deem the Arctic basin lucrative because hydrocarbons could be transported to North America via the North Pole on icebreaker tankers. The U.S. government has made energy security a top priority since the Sept. 11 attacks, which led to a shift in the relationship between the United States and its No. 1 oil supplier, Saudi Arabia. If U.S. plans to attack Iraq materialize, the Organization of the Petroleum Exporting Countries, an oil cartel made up of mostly Arab states, could cut back production in solidarity, causing the oil price to skyrocket. "The more diverse the sources of energy are, the less likely it is that disruption in one part of the planet will interrupt supplies," Abraham said. For U.S. policymakers, Russia, with enormous reserves but relatively little investment, was a logical choice. In May, presidents George W. Bush and Vladimir Putin signed a joint declaration on energy-sector cooperation, which Bush characterized as a "major new energy partnership." Yukos, Russia's second-largest oil company, took these intentions seriously enough to send the first-ever tanker of Russian crude to the United States in June. Although traders say transportation costs make the crude too expensive for the American market, Yukos sent another tanker last month and has chartered several more shipments. Energy Minister Igor Yusufov on Thursday recommended that representatives from Russian oil companies such as Yukos be included in the U.S.-Russia working group on energy, the Energy Ministry said. Both Yusufov and Abraham said U.S. companies may be interested in aiding the expansion of Russia's oil-transportation network, which is barely keeping up with increasing production. Russia last year produced about 350 million tons, 16 percent more than 1996 levels. "We should focus more of our energy on delivering more oil products," Yusufov said. TITLE: Norilsk Abandons $800M Project in New Caledonia AUTHOR: By Torrey Clark PUBLISHER: Staff Writer TEXT: MOSCOW - Norilsk Nickel said Friday it had backed out of an ambitious project to develop the Nakety-Bogota site in New Caledonia, an island off Australia's east coast famous for its nickel deposits. "We will never commit ourselves fully to projects that cannot guarantee investment returns and that do not add to the shareholder value of the company," Leonid Rozhetskin, deputy chairperson of Norilsk's management board, was quoted by Interfax as saying. Nakety-Bogota is thought to have the potential to produce 50,000 metric tons of nickel and 35,000 tons of cobalt per year for 75 years, and it would cost some $800 million to develop, according to the Canadian-Australian company Argosy Minerals Inc., which holds development rights to the Nakety and Bogota mines. Norilsk Nickel declined to discuss the specifics of the abandoned project, citing confidentiality clauses in the three-way contract it signed in October with New Caledonia's Societe des Mines de la Tontouta and Argosy's subsidiary, Balzan Investments. The agreement gave Norilsk the right to terminate its participation at any time. The agreement envisaged Norilsk performing a $15-million feasibility study by the end of 2003 in return for a 45-percent interest in the project. Argosy had also offered Norilsk the right to a majority stake by guaranteeing project financing and reimbursing Argosy for a set amount of previous expenditures. Norilsk has already invested $7.5 million in the project, Rozhetskin said. Late Thursday, Argosy's board issued a brief progress report criticizing Norilsk's pace in carrying out the work. "Progress on the bankable feasibility study by Norilsk has been slow and in Argosy's opinion is now behind schedule," Argosy said. When contacted by telephone Friday, a spokesperson in Argosy's Canadian office said the company had just heard of Norilsk's withdrawal and was not ready to comment. Vladimir Titkov, who tracks Norilsk for Renaissance Capital, applauded the company's move, saying the economics of the project were not impressive and that it seemed the New Caledonian government had not fully committed itself to making the project a success. Norilsk said it was interested in looking at other projects in New Caledonia, as well as laterite mining in Indonesia and Australia. Laterite ore lies closer to the surface and contains cobalt as well as nickel, but is more difficult and expensive to process. Norilsk has years of experience developing such deposits in Cuba. About 60 percent of Norilsk's production involves sulfide ores, while about 70 percent of the world's ore is laterite, said Norilsk spokesperson Anatoly Komrakov. "We consider it important and the future of mining," he said. New Caledonia is thought to hold 25 percent of the world's laterite deposits. TITLE: A Blind Faith In Capitalism is Being Rocked AUTHOR: By Robert Skidelsky TEXT: Today, capitalism is under attack for the first time since the fall of communism. Three reasons are mainly, and coincidentally, responsible. First, bear markets rule in the three main stock exchanges of the world. Whenever a lot of people lose a lot of money, they blame business. Second, a wave of scandals has hit the United States, affecting some of its best-known companies - Enron, Tyco, WorldCom. Scandals and bear markets are connected: Dubious accounting practices that are submerged in a tide of prosperity are ruthlessly exposed when the tide recedes. Finally, the anti-globalists have been gaining strength. Following Seattle in 1999, the anti-globalist movement has become increasingly articulate, well-organized and well-connected. Their main charge is that globalization has robbed states of the power to shape the economic future. This power, they say, has passed to the multinational companies. Big business roams the world in search of profits, subject to no governmental control. True enough, there are international organizations, like the IMF, the World Bank and the WTO, laying down rules of conduct. But these rules, it is alleged, are drawn up in the interests of the multinational corporations. The current attacks on business raise two serious issues concerning the ethics of modern capitalism that need to be distinguished, though they are often lumped together. The first concerns corporate governance and is chiefly to do with the prevalence of accounting practices that enable companies to cook their books. The second is about businesses' social responsibility - how far corporations should pursue objectives other than maximizing profits. The first is about honesty, the second about the social role of business. As Peter Martin wrote recently in the Financial Times, there has been a loss of consensus on the purposes of accounting. In the past, "it was a tool for the board to assess the performance of managers, and for investors to assess the company with its peers." Today, it is increasingly used as an instrument of "earnings management" - presenting earnings in such a way as to manage share prices - and to redistribute profits silently from shareholders to senior managers. Some of the accounting practices that enabled these things to happen were legal, others were fraudulent. Reforms aim at strengthening corporate governance by ensuring, among other things, the independence of board members and company auditors. However, this set of problems concerning business ethics, while capable of unleashing savage denunciations of corporate greed, must be distinguished from the line of attack that aims to hold business "socially accountable." Here, it is the pursuit of profit as such, not how profits are divided between different owners, that is the offense. Corporate social responsibility is big business' response to this assault. Its background is the current debate among academics and business analysts about the role of business. The division is between those who believe that firms ought to maximize profits and those who believe they should, as corporate citizens, work for the good of society. Of course, those who say that a firm should seek to maximize its profits believe it should do so honestly and legally. Managers should not steal the property of their shareholders. It is for government to put a limit to net profit through the tax system. It is also for government to protect the general interest of society as determined through the voting system. However, there is a long tradition in economics, going back to Adam Smith, that argues that in pursuing its own interest, a firm also serves the general interest of society. As Adam Smith put it in "The Wealth of Nations:" "[The entrepreneur] neither intends to promote the public interest, nor knows how much he is promoting it... [but] is led by an invisible hand to promote an end which was no part of his intention ... . I have never known much good done by those who affected to trade for the public good." The invisible hand is the most powerful metaphor in economics. But Smith recognized that the coincidence of public and private interest depended on a number of conditions, the chief of which was the absence of monopoly. The doctrine of corporate social responsibility challenges this tradition head-on. A big company exists to promote not just the interests of its owners but all those who might be affected by its decisions - its employees, its customers, its contractors, the community in which it is located, the environment. It should seek to protect and enlarge human rights, to raise standards of health and safety and to work for equal opportunities, the reduction of poverty and inequality and various other good causes. In the jargon, it should try and maximize the welfare of a large number of stakeholders - the reverse of the task set it by Adam Smith. A key point is that financial accounting should be replaced by social accounting. For example, Shell International calculates the net value that its companies add to the world in terms of sustainable development, the environment and social progress, which has led one critic, David Henderson, to remark that Shell's project is to "maximize the firm's net contribution to the welfare of the world." If the well-being of society rather than profitability is to be the main concern of business, what is the role of profits? Some proponents of socially responsible business argue that the extra tasks that social responsibility imposes on a firm will improve a business's long-term profitability - for example, by giving it a better reputation. Others seem to believe that profits should be a residual - what is left over for the owners after they have fulfilled their social tasks. The main economic objection to the doctrine, in either of its forms, is that anything that raises the cost of doing business is likely to slow down the creation of wealth. This might not matter much for rich countries, but it could be disastrous for poorer states. Corporate social responsibility also confuses the roles of business and politics. It suggests that business can (and should) take over functions of government. But why should unaccountable groups claim responsibility for social decision-making. Those involved in business are often good at making money, but there is little evidence that they are good at running countries. One can understand the appeal of corporate social responsibility, especially in a country like Russia, where for years under then-President Boris Yeltsin, the oligarchs, in effect, stole national property. It now pays for them to set themselves up as great humanitarians whose mission statements rival the Sermon on the Mount in their benevolence. But we should remember the fable of Little Red Riding Hood and the Big Bad Wolf. It will be recalled that the Big Bad Wolf, having gobbled up the grandmother, put on her clothes so as to disarm the suspicions of Little Red Riding Hood, preparatory to another satisfactory meal. Business people don't suddenly become benevolent by parading their social concerns. They still have sharp teeth. Firms exist to make profits for their owners. Governments and markets exist to channel their predatory instincts into beneficial channels. This has been the history of capitalism, and nothing has happened to change the plot. Robert Skidelsky is professor of political economy at Warwick University, U.K. He contributed this comment to The St. Petersburg Times. TITLE: Entering the Twilight of the Liberal Gods AUTHOR: By Boris Kagarlitsky TEXT: WorldCom filing for bankruptcy in the last month sent a shock wave through world financial markets that has hit Russia, causing the Russian stock market to dip sharply. To most Russians, the stock market is still a very abstract concept. The Russian market, unlike its U.S. counterpart, is hardly the engine of our capitalist system. For better or worse, the 1998 financial crisis seriously undermined the position of the capital markets. The oligarchs' strength lies not in the share prices of the companies they own, but in the oil, natural gas and mineral deposits under their control, which they have no intention of sharing with anyone. The price of crude in London and Amsterdam concerns them a lot more than stock prices in New York and Moscow - even the prices of their own stocks. Mikhail Delyagin, an economic adviser to Prime Minister Mikhail Kasyanov, recently explained to me over cups of green tea that "[the markets] are something very distant from us. Do I really need to know how many hairs are in God's beard? Even bald and cleanshaven, he would still be unfathomable to me." But mortals cannot be entirely indifferent to God's doings. And what goes on in the United States affects everyone in the world one way or another. In Russia, where some remnants of a social welfare net are still in place, few can really appreciate just how dire a threat a stock market crash poses for the American middle class. For when stock prices drop, pension funds suffer. The first to feel the pinch were the legions of Americans who agreed to work for less money in exchange for stock options in their companies. The U.S. financial system has turned a huge number of average citizens into small-time capitalists, as pension funds and insurance companies invested their money in the stock market. And now these people have lost out. More than just pensions and savings are shrinking. The myths of neo-liberalism are falling apart. Not long ago the U.S. fully-funded pension system was held up as a model for reforming "outdated" European schemes under which people still relied on government guarantees and solidarity between generations. Year after year we were told that the financial crises in Asia and Russia were the result of strictly local factors and that nothing of the sort could happen in the United States. And the Asians and Russians weren't alone. Even the Finns and the Germans were lectured on the superiority of U.S. corporate culture. All companies were supposed to restructure along the lines of Enron, WorldCom and Xerox. Indeed, these were among the very corporations held up as exemplary. The problem is that the United States became a symbol for those in Western Europe, Asia and Russia who were transforming their own countries in accordance with free-market ideology. America's success was an article of faith not only for the right, but also for social democrats. Now we learn to our surprise that U.S. corporations, freed from "unnecessary" government regulation, have not increased production as advertised. Instead, they set out to rip off consumers and small investors. The world's No. 1 free-market economy gave rise to such an orgy of cooked books and falsified audits that even Gosplan veterans could only step back in wonder. This is not to say, of course, that all is well in Western Europe (not to mention Russia), but the United States has lost the appearance of an ideological model. The United States itself was no god, but the ideologists made it into one. The New York Stock Exchange and Harvard University economics department became the Mecca of neo-liberalism. Apologists for the free market are now going through what committed communists endured after the death of Stalin and again after the Soviet Union's collapse. God has faltered. Schadenfreude is unethical, to say the least. The United States' troubles should not feed a sense of malicious pleasure in Europe and Russia. For the United States' troubles will sooner or later be our own. The collapse of the neo-liberal model is fast becoming a historical fact. The ruined middle class, stripped of its savings, will start demanding change. It might turn to the left, but there's no guarantee that it won't prove fertile ground for a new outbreak of fascism. We've been here before. At this point, there's no new Roosevelt on the horizon. Fortunately, there's no new Hitler either. Boris Kagarlitsky is a Moscow-based sociologist. TITLE: Losing Face With the Mob AUTHOR: By Steve Wilstein TEXT: THIS was the kind of dizzy scheme that could get a wise guy kicked out of the Russian mafia. Or laughed out. Smuggling, da. Extortion, da. Murder, da. Fixing figure skating, nyet. Alimzhan Tokhtakhounov, arrested last week in Italy on U.S. charges that he fixed the pairs and ice dancing in a vote-swapping deal at the Salt Lake City Olympics, is described as a Russian crime boss operating out of southern France. Didn't he ever see "The French Connection?" Bad guys deal in heroin, not tights and flouncy blouses. If he beats the rap with the feds, he better watch out for Boris the Butcher and his other mafia buddies for embarrassing them. Fixing a fight or an election is one thing. But figure skating? Arnold Rothstein must be spinning in his grave. Rothstein was a true hero to sports fixers. His 1919 World Series scam with the Chicago Black Sox was a work of art, as such things go, and he made a killing. Frankie Carbo an Blinky Palermo in boxing, Jack Molinas and Henry Hill in basketball - they were fixers who knew how to cash in, at least until they were caught. Tokhtakhounov supposedly pulled off this fix just for a French visa. He could have bought one on the streets of Marseilles or Milan for the price of a meal. Maybe it'll turn out that Tokhtakhounov is really Tonya Harding in disguise. That could make the Russian mafia think twice about bumping him or her off. Then again, there's a photo of an "Alim-Jean Tokhtakhounov" in Paris in 1999 linking arms with Marat Safin and Yevgeny Kafelnikov and Ukrainian player Andrei Medvedev on Medvedev's official Web site. Tokhtakhounov often spends time with Russian tennis players and socializes with Russian and former Soviet show-business stars, Russian Olympic Committee spokesperson Gennady Shvets said Thursday. There has to be more to this case than the feds are letting on. No legitimate crime boss could be so dumb as to risk his career for a couple of gold medals and a visa. The attorney for the French judge in the middle of the Olympic scandal, Marie-Reine le Gougne, tells an interesting story. Amid the uproar in Salt Lake City in February, an FBI agent quietly sought out le Gougne to ask if she knew a Russian mobster who lived in the south of France. The Russian's name was Alimzhan Tokhtakhounov. The agent said he was following a tip from an anonymous source in London that a deal had been reached between French skating federation president Didier Gailhaguet and Tokhtakhounov: If Gailhaguet fixed the pairs event, Tokhtakhounov would give $1 million to the French hockey team. "It sounds like science fiction to me," Le Gougne's attorney, Erik Christiansen, told the agent. Why anyone would want to give $1 million to the French hockey team is as unfathomable as why anyone would want to fix ice dancing. But, with all the loony cartoon characters in this evolving tale, anything's possible. In the official version, Tokhtakhounov "arranged a classic quid pro quo: 'You'll line up support for the Russian pair, we'll line up support for the French pair and everybody will go away with the gold, and perhaps there'll be a little gold for me,'" U.S. Attorney James Comey said, quoting conversations heard through wiretaps. Prosecutors said Tokhtakhounov hoped he would be rewarded with a visa to return to France, where he once lived. Seems like a lot of trouble for a visa. After meeting with the FBI agent during the games, Christiansen spoke with le Gougne about Tokhtakhounov. "She never heard of him, she'd never met with him, she'd never seen him, she'd never spoken with him," Christiansen said. The FBI never approached le Gougne again, and Tokhtakhounov's name didn't come up at the International Skating Union inquiry that resulted in le Gougne's suspension. Another curious theory to explain some of the shenanigans was put forth by an attorney who represents pairs referee Ron Pfenning and international judge Jon Jackson. They were key witnesses against le Gougne during the ISU investigation and at the hearing in Lausanne, Switzerland, where she and Gailhaguet were banned for three years, plus the 2006 Games. After Tokhtakhounov's arrest, the attorney, Benjamin Kaplan, said Pfenning and Jackson want to see a wider investigation by the ISU into figure- skating corruption. "I'm pleased because obviously there were a lot of suspicions that it wasn't the French alone, that the Russians were deeply involved, and this confirms it,'' Kaplan said. "Just like men in power used to have ballerinas in Russia, now the thing is to have champion skaters or other champions in other sports. The Russian mafia is deep into sport." It's a frightening thought: scar-faced Russian mobsters sipping vodka while debating whether a skater's turquoise sequined blouse clashes with his partner's mauve feathers and who should be paid off to help them win. Steve Wilstein is a national sports columnist for The Associated Press, for which he wrote this comment. TITLE: Three Terms Might Not Be Enough TEXT: WILL he run or won't he? The answer to the question of whether Governor Vladimir Yakovlev will seek a third term in office, now that the Supreme Court has said that he can, increasingly appears to be yes. Was there really ever much doubt in anyone's mind? Now that it seems safe to say that Yakovlev's gaze is fixed on a re-election bid, there are a number of other questions to be asked, including that of whether he will be able to convince the Legislative Assembly to amend the City Charter to clear the way officially and whether President Vladimir Putin and his Kremlin cohort will be interested in - or able to - stop Yakovlev should he try. It's too bad that these questions are at the forefront of the political discussion right now, because they are drawing attention away from the real questions. Ironically, paying closer attention to Yakovlev's own comments explaining his decision provides the best insight into the reasons anyone should think at least twice about voting for him if he does. The governor argues that changing masters at Smolny will endanger projects that his administration has backed, while wasting time as the new administration goes about getting its feet wet. Given that most developed democracies seem to be able to survive changes in government without entire systems collapsing, the second point is laughable. Given the record of completion for projects Yakovlev's government has backed, the first argument doesn't bear up much better under scrutiny. The governor sites as an example of projects that would be threatened were he to leave office the flood-protection barrier in the Gulf of Finland. It's hard to take this seriously. The project was begin in the late 1970s, foundered in the 1980s, and was revived in 1994. The project hasn't come much closer to completion under Yakovlev, and its difficult to understand why he stands any more of a chance of seeing it through than anyone else. The stretch of subway tunnel running between the Lesnaya and Ploshchad Muzhestva metro stations, which has been out of commission since flooding closed it in 1995, is another shinning example. Repairing the segment was one of Yakovlev's campaign promises in 1996 (and again in 2000, for that matter). The word, at least up until last month, was that the work would be finished in time for the city's anniversary. Now Smolny is talking about finishing it by the year's end. Perhaps Yakovlev running again might actually speed things up. The chance to deliver a campaign speech from the site of a finished project - either the Lesnaya or Ploshchad Muzhestva metro stations - might be something the governor will try to lock up. Too bad the gubernatorial elections aren't scheduled until 2004. TITLE: Soft on Fraud, Soft on the Causes of Fraud AUTHOR: By Matt Bivens TEXT: WASHINGTON - Did you know Microsoft's U.S. tax rate for the past two years was only 1.8 percent? Russian citizens surrender 13 percent of their income to the government, and Americans around 30 percent - while Microsoft, with $21.9 billion in profits, pays next to nothing. How about General Motors? Time was when people said, "What's good for General Motors is good for America." That's harder to argue when you look over the past three years and realize GM's tax rate was negative 1.3 percent, which means the U.S. government seized part of my salary and used it to pad the profits of the world's largest carmaker. WorldCom paid zero tax in two of the last three years, according to Citizens for Tax Justice (www.ctj.org). Enron paid zero tax in four of the last five years. They found hundreds of millions of dollars for a handful of arrogant wunderkind execs - but, rather than pay a fair amount in taxes like the rest of us, they hired some other arrogant wunderkind to open 874 shell companies in the Cayman Islands. In May, the Treasury Department of U.S. President George W. Bush surveyed all of this and issued a report blaming ... the taxes. They're too high, too complicated, too taxing. But it's no longer May, and American voters are no longer amused. So last week Bush spoke to our concerns. He signed a bill to fight corporate fraud in a grandiose ceremony, warning dishonest corporate chieftains: "You will be exposed and punished." And he criticized companies that use off-shore shell games to stiff the tax collector. "I think American companies ought to pay tax here and be good citizens," he declared. A day later, it emerged that the Harken Energy Corp., where Bush was once a director, and Halliburton, where U.S. Vice President Dick Cheney was once the CEO, had both set up Cayman Islands subsidiaries. Amusingly, the White House denies this had anything to do with tax evasion. It also says Bush opposed the creation of Harken's Cayman Islands subsidiary; but the minutes of a Harken board meeting where the new corporate daughter was first presented show director Bush sitting in silence. And how about that corporate fraud law? Just hours after the signing ceremony, the White House was already undermining it. Congress had written the law to include legal protections for whistleblowers - insiders who go public, often at much personal risk, when they find evidence of corporate or government crime. After warning corporate wrongdoers "you will be exposed," the White House quietly issued instructions the day of the bill-signing to make that less likely. The instructions specified the legal protections could only apply to whistleblowers who speak to a Congressional committee "in the course of an investigation." It's a classic Catch-22: A whistleblower can reveal corporate behavior so heinous that it throws the nation into an uproar and provokes congressional hearings - but he or she won't be protected, because the abuse would have been revealed before the official investigation, not "in the course of" it. Matt Bivens, a former editor of The St. Petersburg Times, is a Washington-based fellow of The Nation Institute [www.thenation.com]. TITLE: Global Eye TEXT: Moral Maze Never let it be said that this column doesn't have a good word to say about the bug-eyed religious extremists who have taken over the Republican Party and poisoned America's political discourse with their frothing ignorance and Talibanic zeal for barbaric repression. In fact, when it comes to their latest battle, we are proud to stand up and say: "Godspeed, you Christian soldiers!" That's because a few Congressional bug-eyes - with a bug up some other part of their anatomy about a woman's right to control her own body - are now the only thing standing between ordinary working people and the white-collar predators of the "financial-services industry," who aim to eat up the lives of those they have already crippled with their "easy-money" scams. Last week, anti-abortion extremists in the U.S. House of Representatives delayed a final vote on the great googily-moogily "Bankruptcy Bill," according to a report in The New York Times. They're not worried about the countless families that will be devastated by the bill, of course. They're in a snit over an amendment that would curtail the ability of anti-abortion terrorist groups to use bogus bankruptcies to dodge financial penalties after they've been caught burning down clinics, stalking nurses, harassing pregnant women or killing doctors. Their reasoning may be repellent, but there is some hope that these notorious mollycoddlers of domestic terrorism might be able to, well, abort the bill altogether - even though the measure enjoys, as the Times hastens to assure us, "broad bipartisan support." Of course, in mediaspeak, "broad bipartisan support" usually just means that some shady outfit has been throwing ungodly amounts of money at the ever-eager courtesans in Washington. And there has sure enough been some money thrown here - as you'd expect, when it's bankers and credit-card companies coming to call. The new bill - which was actually written by "financial-services" lobbyists - would "protect" the little lambs of Wall Street from all the vicious single mothers, unemployed fathers, ghetto scum and trailer-park trash out there who have collapsed beneath the debt they've taken on at the frantic urging of, er, Wall Street. For years, the "financial-services industry" has deliberately targeted the most vulnerable people in U.S. society - those on the economic margins, young kids just starting out in life, working parents stretching to pay the bills, sick people laden with medical costs, the luckless, the desperate, the ill-educated, the naive - and plied them with promises of "instant credit" and "pre-approved loans" in slick advertising campaigns and junk-mail bombardments. They operate like playground pushers: "Hey, kid, the first bag is free." Once the habit of life on credit is established, then the extortionate interest rates, "late charges" and "rollovers" kick in. The promised good life is gone, siphoned away into the coffers of credit giants like MBNA Corporation of Delaware, the world's biggest peddler of plastic cash, and the great banking houses, who use the profits plucked from the broken backs of grubby proles in their eminently respectable funny-money shell games with Enron, WorldCom, Harken and the boys. Millions of the Americans thus ruined have fled to the slender and humiliating protections of personal bankruptcy. In most cases, the existing laws do wipe away some debts, particularly unsecured debt. But it leaves many others on the books, while destroying the debtor's credit rating for years to come, closing the door on dreams of buying a car or house, or engaging in any of the innumerable transactions that now require ID and surety in the form of - what else? - a credit card. It's no "easy out." It's a hard step, a desperate measure, fraught with lingering doubts, agonizing decisions, and irrevocable consequences no matter what you choose - much like abortion, in fact. Now, in the Herbert Hoover-like financial nightmare that has engulfed the U.S. in the Second Coming of Bushonomics, millions of people have been thrown out of work. Millions more have seen their pensions, their nest eggs, their financial security wiped out by the gargantuan frauds of Wall Street. But even this has not stopped the "financial-services industry" from trying to gut the slim protections of the existing laws and force bankrupts to pay off credit card debts and loans - sometimes before paying for other trifles, such as alimony, medicine or groceries. Well-heeled supporters of the bill - like the insider-trading wastrel in the White House, who never risked a dime of his own money while making millions in politically-connected sweetheart deals - claim the strong-arm measure is, in fact, a Godly edict, forcing the rabble to face up to their "unhealthy values" and "irresponsibility." Indeed, Senator Charles Grassley, one of the bill's champions, says it will even stem "the eroding moral values of some people." Those would be the little people - the unconnected people - of course. Not the kind of people who rake in more than $300,000 in "hard-money" contributions to their presidential campaigns from MBNA - the largest single corporate briber to the Bush team in 2000, outpointing even Kenny Boy Lay. Or the kind of people who receive $447,000 low-interest loans from MBNA, just four days before becoming a chief sponsor of the bill - like House Democrat James Moran. Or the hundreds of other members of Congress who pocketed a total of $37.7 million in "financial-services" baksheesh in 2000 - and God only knows how much since then. No, their "moral values" are firm and uneroded. Meanwhile, as always, the weakest go to the wall - unless the bug-eyes stand fast for terrorism. Murky old world, ain't it? For annotational references, please see Global Eye in the "Opinion" section at www.sptimesrussia.com. TITLE: Israel Tightens Controls on Palestinians AUTHOR: By Nicole Winfield PUBLISHER: The Associated Press TEXT: JERUSALEM - Israel announced a "total ban" on Palestinian travel in much of the West Bank and sealed off a chunk of the Gaza Strip with tanks Monday, in response to Palestinian attacks on Israelis that killed 13 people over 24 hours. Defense Minister Binyamin ben-Eliezer said restrictions would be tightened further, and that troops were planning operations to "maintain a much bigger closure than what we are doing now." The new restrictions were imposed after a bloody 24-hour period, in which a Palestinian suicide bomber blew up an Israeli bus and gunmen carried out shooting attacks in Jerusalem and the West Bank. Thirteen people were killed in these attacks, including 11 Israelis, both Jews and Arabs, and two women from the Philippines. Three assailants also died. Israeli troops on Monday arrested Mazen Foqha, a senior Hamas activist in the West Bank, on suspicion that he supplied the explosives for Sunday's bus attack. Palestinians said Fokha headed the Hamas military wing in the Jenin district. Under the new ban, Palestinians will not be able to drive in the northern half of the West Bank, between the towns of Nablus, Jenin, Qalqiliya, Tulkarem and Ramallah, the army said. Some movement will be permitted in the southern West Bank, including the towns of Hebron, Bethlehem and Jericho. Ben-Eliezer said there was "total closure" in the northern West Bank. "Nobody enters and nobody leaves. There is no movement between the towns and villages." Palestinians trying to get to jobs and schools often use dirt roads to evade military checkpoints. The military said blockades would be strictly enforced, with exceptions made for humanitarian cases. The Palestinian attacks - which came despite Israel's occupation of seven of the eight main West Bank towns - raised questions about the army's dwindling repertoire of responses. In trying to deter attacks, the army demolished nine homes of Palestinian assailants Sunday. Ben-Eliezer said he hoped to go ahead with another intended deterrent, deporting attackers' relatives, though it is currently being challenged in court. The defense minister defended the effectiveness of the security measures, saying about 90 percent of attacks had been prevented and nearly 140 would-be Palestinian suicide bombers had been captured, though he didn't say over what period. In the latest violence, Palestinian gunmen fired early Monday on a car on the main road between Ramallah and Nablus, killing an Israeli couple. Two of the couple's children were wounded and a third, an 8-month-old baby, was unhurt. On Sunday, a Palestinian blew himself up on a crowded bus, killing nine passengers and himself and injuring 37. Hamas claimed responsibility for the attack. The bus driver, Shmuel Ronen, escaped with light wounds - just as he did six years ago when the bus he was driving in Jerusalem was bombed. About 4,000 people celebrated the bus bombing in Gaza City late Sunday, passing out sweets and praying near the destroyed house of a Hamas leader killed by Israel. In Gaza, an armed Palestinian was shot and killed Sunday as he emerged from the Mediterranean in a wet-suit and diving equipment near the Jewish settlements of Dugit and Alei Sinai, the army said. TITLE: IN BRIEF TEXT: Chen Backs Vote BEIJING (WP) - Taiwan's president, Chen Shui-bian, said Saturday that he supported legislation for a referendum on whether the island should declare independence from China. Chen also issued the clearest definition to date of his views of Taiwan's relations with China, fundamentally rejecting China's position that Taiwan and China belong to the same country. "Taiwan, China, on each side [of the Taiwan Strait] are different countries," Chen said. China has vowed that it would attack Taiwan if the island declared independence. While China's threats toward Taiwan have fluctuated, it said in late 1999 that it could also justify an attack if Taiwan went forward with a referendum on independence. Bolivia Picks Premier BUENOS AIRES, Argentina (WP) - Bolivia's Congress named Gonzalo Sanchez de Lozada, a 72-year-old U.S.-educated millionaire, as the country's president on Sunday, picking him over a controversial opposition leader and professed opponent of the war on drugs. The job of naming the president fell to Congress because no candidate won more than 50 percent of the vote when Bolivians went to the polls June 30 for general elections. Legislators Sunday had to pick between the top two vote winners - Sanchez de Lozada and Evo Morales, a leader of Bolivia's farmers who cultivate coca, the leaf used to make cocaine. Confronting mounting economic and social crises, Sanchez de Lozada has promised to create jobs through public-works projects and to provide up to 800,000 scholarships to poor students. He replaces President Jorge Quiroga, who stepped in last year for ailing Hugo Banzer, who died earlier this year after a long battle with cancer. Anglo-Druid? ST DAVID'S, Wales (Reuters) - The future Archbishop of Canterbury was made an honorary druid at a colorful pageant in his native Wales on Monday, but felt obliged to deny that the ceremony made him some kind of pagan. Rowan Williams, now Archbishop of Wales, was one of some two dozen new members inducted into the Gorsedd, Wales's main literary society, at a ceremony held in a circle of stones in a mist-shrouded field at the tip of a peninsula jutting out into the Irish channel. "The suggestion, perpetrated recently by some elements of the British daily press, that the Gorsedd is even remotely associated with paganism is deeply offensive," the archbishop said in a statement issued on Sunday. He was honoured for his contributions to Welsh culture, including translations of Welsh poetry, as well as his Christian academic theological writings. Dead Embarrassing VIENNA (Reuters) - Austrian police following up on reports of a corpse floating in Lake Constance found only an abandoned inflatable sex doll, police said on Monday. Police rushed to the lake bordering Switzerland and Germany after a boater on Friday called to say he had spotted a body. A 20-minute search turned up the female sex dummy, they said. TITLE: SPORTS WATCH TEXT: Getting Closer PITTSBURGH, Pennsylvania (Reuters) - Barry Bonds hit the 598th home run of his career, one of six by San Francisco, to help the wild card-chasing Giants to a 10-5 National League victory over the Pittsburgh Pirates on Sunday. The Giants slugger is now two homers from joining Hank Aaron, Babe Ruth and Willie Mays as the only players in baseball history with 600 career home runs. It was his 31st of the season and second in as many games. Bonds has six successive home games to reach 600 homers, but said he did not care where he reached the milestone. "It doesn't matter where 600 comes," he said. "I'm just trying to hit the ball where it goes." In other games, it was: Toronto 5, Baltimore 4; Tampa Bay 10, Chicago White Sox 3; Minnesota 5, Kansas City 4 (10 inns.); Oakland 4, Detroit 0; N.Y. Yankees 7, Anaheim 5 (12 inns.); Cleveland 10, Seattle 8; Boston 11, Texas 3; Los Angeles 4, Philadelphia 3; Houston 5, Montreal 4; Arizona 12, N.Y. Mets 7; San Francisco 10, Pittsburgh 5; Chicago Cubs 4, Colorado 1; Florida 7, Milwaukee 2; Cincinnati 15, San Diego 10; Atlanta 2, St Louis 1. Canas Triumphs TORONTO, Canada (AP) - Guillermo Canas capped his run through the $2.95 million Tennis Masters Canada tournament in Toronto by beating Andy Roddick of the United States, 6-4, 7-5, in the final on Sunday. The unseeded Canas, ranked 20th, earned $392,000 for the win and won his second title of the season - the third of his career. Canas' road to the finals included victories over No. 2 Marat Safin, No. 3 Tommy Haas, No. 5 Yevgeny Kafelnikov and No. 10 Roger Federer. Canas broke Roddick in the ninth game of the first set to go up 5-4, and finished off the set when Roddick hit a service return into the net. Roddick double-faulted twice in the first game of the second set, allowing Canas to break. Roddick tied the second set at 1-1, breaking Canas for the first time, aided by Canas' double-fault on break point. The players stayed on serve, tied 5-5, until Roddick's shots became erratic. Canas broke him for the third time in the match for a 6-5 edge. Canas served out the next game to win the title, increase his record to 42-19 and raise his earnings to $1.1 million. Zenit Back on Track ST. PETERSBURG (SPT) - Alexander Kerzhakov scored deep into injury time at the end of the second half to snatch a 2-1 Premier Division win for Zenit away at Saturn-REN TV Ramenskoye on Saturday. The win was Zenit's first in six games, and a first for new coach Mikhail Biryukov, who took over when Yury Morozov retired for health reasons just after the World Cup. Zenit took the lead at 53 minutes on a freekick by Yugoslav import Vladimir Mudrinic. Sergei Rogachyov equalized for Saturn at 68 minutes, but Kerzhakov scored from an assist by Darius Mitseika, who made his debut, in coming on as a substitute, four minutes into time added on. Elsewhere in the division, it was a weekend of few goals. In two Moscow derby matches, the league's top two teams, Moscow's Lokomotiv and Spartak, both won, 1-0, at home to Dinamo and Torpedo, respectively. Shinnik Yaroslavl continued its form as this season's surprise package, beating Rotor Volgograd, 1-0, to stay in fifth place. CSKA Moscow beat Krylya Sovietov Samara, Uralan Elista beat Torpedo-ZiL Moscow, and Rostselmash Rostov-na-Donu defeated Anzhi Makhachkala, all 2-0. Alaniya Vladikavkaz beat Sokol Saratov, 3-2.