SOURCE: The St. Petersburg Times
DATE: Issue #828 (93), Tuesday, December 17, 2002
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TITLE: LUKoil's Iraq Plans Hit by 'Politics'
PUBLISHER: Combined Reports
TEXT: MOSCOW - No. 1 oil major LUKoil's dreams of being the lead operator of a vast Iraqi oil field have been slapped back because Baghdad is fuming over Russia's support for the United Nations campaign to disarm Saddam Hussein's regime, a top LUKoil executive said Sunday.
Moscow turned up the heat on Baghdad on Monday, with Foreign Minister Igor Ivanov demanding that Iraq open talks to resolve a roiling dispute over a cancelled contract with Russia's largest oil company.
During a visit to Manila, Ivanov said he had sent a message requesting that the Iraqi leadership reconsider its decision to break the 1997 contract with LUKoil and open negotiations, Interfax reported.
The negotiations should be aimed at finding "a mutually acceptable settlement of the situation, which does not damage the interests of the Russian company," Ivanov was quoted as saying. He said the message was "toughly worded."
LUKoil's vice president for production, and the leading architect of the $3.7-billion Iraqi deal, Dzhevan Cheloyants, said Sunday that Baghdad's surprise move last week to break off the accord on the West Qurna field was part of a would political game and would be corrected in international courts.
"This is pure politics. The Iraqis are trying to raise a lot of noise because they are not happy with Russia's position on the UN Security Council," Cheloyants said.
"No Iraqi government, either old or new, can legally unilaterally break the contract," Cheloyants said, adding that the government in Baghdad was well aware that a provision of the contract made clear it could only be scrapped through the decision of an international court.
In an interview with Reuters on Sunday, LUKoil President Vagit Alekperov echoed the claim that politics were behind the move, saying "there were no economic grounds" for breaking off the contract.
But Iraqi's oil minister, Amir Muhammad Rasheed, hastened on Sunday to reassure Russia it was not breaking off ties with all Russian oil companies and could yet offer the West Qurna field to another Russian company. Rasheed said Russia remained "an important economic partner" and "a very important friend for Iraq."
The move came amid the strongest indications yet that LUKoil had been negotiating directly with the United States for guarantees it would retain its stake in the field in a post-Hussein regime. Analysts said Sunday that these negotiations could have been the final straw for Hussein, who has watched its former ally strengthen ties with Washington in the wake of Sept. 11 and then back the Bush administration in a UN Security Council vote last month that could leave the way open for a U.S. attack on Iraq.
Russian oil majors have feared for months now that they could lose their leading edge in Iraq's vast oil patch, which contains the second biggest reserves in the world, to richer U.S. giants if Washington installed a U.S.-friendly regime following a successful attack.
Russia has long been Iraq's largest trading partner, enjoying the benefits of being Hussein's biggest supporter on the Security Council. Russia has won more than 40 percent of contracts to export Iraqi oil under the oil-for-food program since it began in 1996. And LUKoil's 1997 contract to develop the West Qurna field, which is expected to produce 600,000 barrels per day, had been the biggest deal signed by any international oil major in Iraq so far, with an estimated worth for LUKoil of $20 billion.
In the first confirmation LUKoil has been talking directly to the United States to gain guarantees, Cheloyants said Sunday that leading LUKoil executives met with U.S. senators just over a week ago to discuss the issue.
"They [the senators] said Russia's interests would be protected in Iraq," he said. "Since LUKoil is a Russian company, that means LUKoil's interests."
Alekperov also met with U.S. First Deputy Energy Secretary Kyle McSlarrow on Nov. 22, but LUKoil would not confirm Sunday whether guarantees for the contract were discussed at that meeting.
"It turns out that Russian oil magnates have been negotiating with the U.S. - Saddam's potential murderer - for a piece of the man's property when he is dead," said Sergei Markov, a Kremlin-connected political analyst.
The Iraqi government's move came just days after Nikolai Tokarev, the head of Zarubezhneft, a state-owned oil company with substantial interests in Iraq, alleged in an interview with Vremya Novostei that several Russian companies had taken up U.S. proposals to finance the Iraqi opposition in return for guarantees. He said Zarubezhneft had declined such proposals as "dishonorable." He did not, however, name the companies undertaking such deals.
He was unavailable for further comment Sunday. Zeb Sethna, an advisor to a leading Iraqi opposition movement, the Iraqi National Congress, which has support in the U.S. Congress and the Pentagon, denied in a telephone interview last week that the organization had received any financial support from Russian oil companies and said no contacts had been made.
After a press conference Sunday, the Iraqi ambassador to Russia, Abbas Khalaf, said Baghdad had no concrete information such talks had been taking place. He did say, however, that, if these negotiations had been conducted, "Iraq would not welcome this - if these companies are working against our country."
He said Iraq had cancelled the contract purely for business reasons. He said the move came following years of warnings to LUKoil it was not meeting the conditions of its contract, but he did not specify which. LUKoil has said it could not develop the West Qurna field because a UN embargo against Iraq means such activity is against international law.
"We value our reputation," Cheloyants said Sunday. "We made clear that we would not and shall not violate the UN embargo."
He rejected Khalaf's claims that LUKoil had not met the conditions of the contract by not developing the field. "Everything that is written in the contract [on extraction and investment] is only valid when the embargo is lifted," he said.
Khalaf said the Iraqi government would be ready to support its move against LUKoil should the company carry out its intention to defend its contract in an international arbitration court in Geneva.
(SPT, AP)
TITLE: Budanov Likely To Avoid Jail After Report
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW - Psychiatrists from Moscow's Serbsky Institute on Monday made it easier for the court in Rostov-na-Donu to spare Colonel Yury Budanov a prison sentence by declaring that he was temporarily insane when he killed a young Chechen woman.
It was the fourth psychiatric evaluation in the politically charged case, which has been dragging on for nearly two years.
Human-rights activists said the psychiatrists' report reflects a change in the public mood since the "Nord Ost" hostage crisis, which has emboldened those in the military and political establishment who want to see Budanov freed.
The latest evaluation was presented to the court on Monday at a closed hearing, attended only by participants in the trial and a panel of psychiatric experts from Moscow.
Budanov, shown on television wearing a black leather jacket and sporting a new, neatly trimmed beard, was removed from the courtroom at the request of the head of the psychiatric team, Valery Krasnov, reports said. Krasnov, who heads the Psychiatric Scientific Research Institute of the Russian Academy of Medical Science, said the evaluation could affect Budanov's condition.
The Serbsky Institute psychiatrists recommended to the court that Budanov be sent to a psychiatric hospital for compulsory treatment.
The court must now decide how to proceed. The charges against Budanov carry a prison sentence of up to 20 years but, if the court accepts that he was temporarily insane, it could considerably reduce the sentence or follow the psychiatrists' recommendation and send him to a hospital instead. Or the court may disagree with the assessment and consider that Budanov was in full possession of his senses when he strangled 18-year-old Elza Kungayeva in March 2000.
"We hope the court will have nowhere to escape," Budanov's lawyer, Alexei Dulimov, told Interfax after Monday's hearing. "It will have to decide the question of releasing Budanov from custody and providing him with the necessary medical help."
Abdulla Khamzayev, the lawyer for the Kungayev family, was shown on TVS television saying he questioned the psychiatrists' conclusion. "The man was excused for what he did after having pleaded that he was insane for five minutes," he said.
It was unclear when the court's decision could be expected. Testimony in the trial was to resume.
The trial had been in recess since July, when Judge Viktor Kostin agreed to a new prosecutor's request and ordered a fourth psychiatric evaluation.
While the first two evaluations had found Budanov mentally competent, the third - the first conducted at the Serbsky Institute - had concluded that he was temporarily insane.
The prosecutor's request for another evaluation indicated that someone had wanted to see Budanov held responsible.
The latest evaluation was completed earlier this fall. But, several days after the group of armed Chechens seized the Moscow theater in late October, the Health Ministry withdrew the sealed psychiatric evaluation from the court, saying that some technicalities needed fixing.
"We can only guess what was done in that unprecedented move but, right at that moment, it became clear to all that, if the case against Budanov collapsed, there would be no harsh public reaction," said Lyubov Vinogradova, the executive director of the Independent Association of Psychiatrists of Russia.
Budanov has admitted killing Kungayeva, but said he did it in a fit of anger while questioning her at his military base. He was said to have been drinking with his soldiers the night of March 27, 2000, to celebrate his daughter's second birthday. Budanov testified that a Chechen informer came to tell him about Kungayeva being a sniper who had killed several of his men.
Kungayeva was at home with her family in the village of Tangi-Chu when Budanov and some of his soldiers barged into the house about midnight and took her away in an armored personnel carrier, according to her father and neighbors. She was left in the hands of Budanov. The next morning, he told his subordinates to bury her body.
The psychiatrists' latest assessment drew a bitter reaction from the pro-Moscow leadership in Chechnya, which has persistently called for Budanov to be punished. "It will be difficult for the republic's leadership to explain to the people why Budanov, if he was really sick, was sent to command a counter-terrorist division," the deputy head of the Chechen administration, Taus Dzhabrailov, told Interfax.
Budanov has found support throughout the trial from various corners. NTV television on Monday showed a group from the ultra-nationalist organization Russian National Unity, or RNE, picketing the court and elderly women holding a homemade poster that read "Freedom for a Russian Officer."
TITLE: Duma Paves Way for Delay Over Jury Trials
PUBLISHER: The Associated Press
TEXT: MOSCOW - The State Duma has approved amendments that would postpone the introduction of jury trials by up to four years, a setback to efforts to reform the country's legal system.
By a vote of 236-120, with four abstentions, in the third and final reading, the Duma last Wednesday approved Kremlin-backed changes in the new Criminal Code that call for staggered introduction of trials by jury.
The 1993 Constitution provides for jury trials, and President Vladimir Putin signed a law a year ago that called for the introduction of trial by jury in all regions by January 2003.
But the government has since asked lawmakers for more time. Yelena Mizulina, deputy chair of the Duma legislation committee, said introducing jury trials countrywide in January is impossible for financial and technical reasons, Itar-Tass reported.
Under the amendments, which are likely to be approved by the Federation Council and Putin, jury trials would begin in the Leningrad Oblast on Jan. 1 and in Moscow on July 1, Itar-Tass said.
Other regions would introduce jury trials later. In Chechnya, where the second war in a decade is in its fourth year, they would not begin until 2007.
Jury trials were introduced in several regions as an experiment beginning in 1993.
TITLE: Electoral Commission Focusing on Finances
AUTHOR: By Claire Bigg
PUBLISHER: Staff Writer
TEXT: The City Electoral Commission (CEC) released the official results of the Dec. 8 vote to fill the 50 seats of the city's Legislative Assembly last week, but comments from politicians and analysts - as well as a couple of statements by the CEC itself - show that there are questions yet to be answered.
Yelena Rakhova, the head of the CEC's Control and Inspection service, said on Monday that a possible voting irregularity in one polling station could lead to further examination of the results there.
"At polling station number 138 in the second electoral district, the total number of ballots in the box was 20 higher than had been registered," Rakhova said. "The CEC is presently deciding whether to carry out a recount."
The official vote count, released last Tuesday, declared Vladimir Barkanov of the Science, Industry and Education bloc to be the winner in the district, after garnering 25 percent of all votes cast.
The electoral commission for the second district voted on Monday against holding a recount, Interfax reported. The CEC, however, is responsible for making the final decision.
Later on Monday, Rakhova said that initial investigations by the CEC had uncovered financial irregularities in the campaigns of five of the winners in the vote for the assembly.
"Evidence of these types of violations had been detected earlier in the cases of 44 of the candidates, but the courts did not disqualify them from running at the time," Rakhova told Interfax. "Five of these candidates ended up being winners in the election marathon."
Although candidates have 30 days from the publication of the official results to submit official reports of their campaign finances, Rakhova said that her service had already been looking into a number of cases.
"The Control and Inspection Service is already examining, with the help of their banks, the legality of the campaign financing for those five deputies, so we will already have information by the time they submit their reports," she told Interfax.
Candidates in the election were limited to spending of 300,000 rubles ($9,400). The result in a district can be annulled if the winning candidate is determined to have exceeded this amount by more than 5 percent.
While the CEC is sorting through questions pertaining to finances and vote counts, analysts have been left to sort through the political ramifications of the election.
Most analysts and politicians agree that the new assembly will contain more supporters of Governor Vladimir Yakovlev than its predecessor, but not enough to help him push through the necessary changes to the City Charter that would allow him to run for a third term.
"According to my calculations, there are 22 deputies in the new assembly who will vote against the amendment to the City Charter, enough to prevent Yakovlev from running a third time," Mikhail Amosov, the leader of the Yabloko faction in the assembly, said on Monday. "This figure, however, is lower than in the previous assembly."
An amendment to the City Charter's two-term limit for the governor would require the support of 34 deputies. Lev Savulkin, a senior analyst at the Leontieff Center for Socio-Economic Research, agrees that Yakovlev would not be able to raise this number.
"I think that the city administration can be satisfied with the results, but I wouldn't say that it is a complete victory for Yakovlev either, because he still doesn't have the support of 34 deputies in the present assembly," Savulkin said on Monday. "There will certainly be attempts by the governor to attract deputies to his side, but I doubt that 34 deputies can be found to vote for the amendment."
Savulkin added that the drop in support for candidates opposed to the governor was not a surprise.
"The results were predictable," he said. "They have no relation to the political platform on which the candidates ran."
"Electors cast their votes for candidates who came across as their patrons - who promise to put up benches, fix roofs, hand out medicine and food packages and clean courtyards," Savulkin said. "That is why SPS+Yabloko [candidates] did as badly as they did in the elections. Their ideas did not interest anybody."
Three high-profile Union of Right Force (SPS) incumbents - Mikhail Brodsky, Mikhail Tolstoi and Leonid Romankov - lost their re-election bids.
The fact that Yury Shutov - who spent most of his term of office in prison on charges of murder and conspiracy to commit murder in connection with a number of contract-style killings in the city - was one incumbent who was returned to the assembly didn't come as a surprise to Savulkin either.
"Electors don't care about the morality of the candidate, as long as the candidate offers to take care of their everyday problems," he said.
THE WINNERS
District, Deputy % of Votes Term Party
1./Alexei Kovalyov /29.69 /3rd /SPS+Yabloko
2./Vladimir Barkanov /25.18 /1st /Science, Industry and Education
3./Sergei Andenko /66.11 /2nd /Independent
4./Yury Savelyev /40.18 /1st /Science, Industry and Education
5./Igor Timofeyev /70.35 /2nd /Independent
6./Vladimir Kucherenko /24.70 /1st /Independent
7./Alexander Redko /37.15 /2nd /Independent
8./Vladimir Golman /40.78 /3rd /Independent
9./Yury Shutov /32.58 /2nd /Independent
10./Mikhail Amosov /43.19 /3rd /SPS+Yabloko
11./Andrei Chyornykh /34.65 /1st /SPS+Yabloko
12./Zoya Zaushnikova /72.74 /2nd /St. Petersburg Will
13./Pavel Soltan /20.12 /2nd /St. Petersburg Will
14./Sergei Nikeshin /74.10 /3rd /Independent
15./Vadim Tyulpanov /75.99 /2nd /Independent
16./Sergei Andreyev /50.92 /3rd /Independent
17./Vadim Lopatnikov /16.31 /1st /Independent
18./Oleg Koryakin /21.60 /1st /Independent
19./Stanislav Zhitkov /27.74 /2nd /Independent
20./Gennady Ozerov /37.31 /1st /Independent
21./Alexander Morozov /64.91 /2nd /Independent
22./Igor Rimmer /49.66 /2nd /Independent
23./Alexei Timofeyev /38.53 /2nd /Independent
24./Alexander Kushchak /52.04 /2nd /Independent
25./VladimirBelozerskikh/38.78 /2nd /Independent
26./Yury Gladkov /34.79 /3rd /SPS+Yabloko
27./Stanislav Zybin /68.21 /2nd /Independent
28./Sergei Gulyayev /38.06 /1st /SPS+Yabloko
29./Arkady Kramarev /51.22 /2nd /United Russia
30./Vitaly Martynenko /20.63 /1st /SPS+Yabloko
31./Vadim Voitanovsky /49.44 /2nd /Independent
32./Vatnyar Yagya /59.05 /3rd /Independent
33./Viktor Yevtukhov /73.78 /2nd /Political Center
34./Natalya Yevdokimova /31.29 /2nd /SPS+Yabloko
35./Andrei Lovyagin /31.95 /3rd /Independent
36./Igor Vysotsky /28.07 /1st /Independent
37./Igor Matveyev /32.84 /2nd /St. Petersburg Will
38./Konstantin Serov /51.15 /3rd /United Russia
39./Sergei Tarasov /53.50 /2nd /Independent
40./Alexei Belousov /47.30 /2nd /United Russia
41./Yury Rydnik /38.95 /1st /Independent
42./Andrei Nikitin /45.33 /2nd /Independent
43./Denis Volchek /37.41 /1st /Independent
44./Konstantin Sukhenko /59.73 /2nd /United Russia
45./Oleg Nilov /80.87 /3rd /Independent
46./Nikita Ananov /53.33 /3rd /Independent
47./Igor Mikhailov /34.35 /2nd /Independent
48./Igor Artemyev /50.08 /2nd /SPS+Yabloko
49./Vladimir Yeryomenko /48.92 /2nd /Independent
50./Oleg Sergeyev /47.38 /3rd /Independent
Source: Interfax
TITLE: Chechnya To Get Referendum
PUBLISHER: The Associated Press
TEXT: MOSCOW - President Vladimir Putin has signed a decree calling for a referendum on a constitution and elections in Chechnya, part of a Kremlin effort to promote stability and bolster its control over the war-ravaged republic.
The decree, signed Thursday, gives Chechnya's Moscow-backed administration one month to organize a plebiscite in which voters would be asked to approve a draft constitution and bills on electing the republic's president and parliament.
The referendum's aim is to "realize the constitutional rights of citizens of the Russian Federation living in the Chechen republic," the decree said.
Critics of the plan, which has been under discussion for months, argue that a constitutional referendum is meaningless without an end to the fighting and that the results are likely to be falsified.
Boris Nemtsov, leader of the Union of Right Forces party, said on NTV television that any referendum in Chechnya now would be "a complete farce."
The Federal Security Service said Saturday that Chechen separatists were distributing leaflets aimed at disrupting the constitutional referendum, Itar-Tass reported.
The rebels "are opposed to passing a Chechen constitution because that will bring about the normalization of the situation," an unidentified FSB official was quoted as saying. "The bandits plan to conduct several actions to disrupt the upcoming referendum."
Putin's decree did not set a timeframe, but Central Election Commission chief Alexander Veshnyakov said the referendum could be held in March. Officials have said the elections could follow later in 2003.
The plan for a referendum is the Kremlin's answer to calls for a political solution to the conflict in Chechnya, where the second war in less than a decade is now in its fourth year and Russian service personnel die nearly every day.
Putin has been unable to end the war by force and has ruled out talks with separatist leaders.
If the referendum succeeds, the Kremlin will be able to point to it as evidence that most Chechens oppose the militants and favor peace over independence from Russia.
Putin noted that he chose Russian Constitution Day to sign the order. The constitution, approved by referendum in 1993, enshrined many basic freedoms won after the 1991 Soviet collapse, but critics say it vested too much power in the presidency.
"The Russian Constitution has noticeably broadened the horizons of freedom and human rights in Russia. But, unfortunately, people still very often encounter arbitrariness, lawlessness and heartlessness," Putin said at a Kremlin reception Thursday.
q
A Chechen people's congress in Moscow that was expected to draw representatives from across the republic, including those with close ties to separatists, has been postponed until next year, Interfax reported Friday.
Aslanbek Aslakhanov, who represents Chechnya in the State Duma, was quoted as saying that the Moscow gathering, originally scheduled for Monday, will not be held until Feb. 27.
The meeting, expected to draw some 1,100 people, would have come less than a week after a similar gathering in Chechnya organized by the region's Moscow-backed administration - and would have likely included more criticism of Russian policy in Chechnya.
TITLE: Chechen Warlord Dies in Prison in Perm
PUBLISHER: The Associated Press
TEXT: MOSCOW - Salman Raduyev, a convicted Chechen warlord who led a bloody raid on a hospital in 1996, has died while serving a life sentence in prison, the Justice Ministry said Sunday.
Raduyev died in the Perm region, where he was confined to a high-security hard labor camp, a ministry spokesperson said.
"At the present time, the exact cause of death is being established," Deputy Justice Minister Yury Kalinin was quoted by Interfax as saying.
But Interfax, citing the prisons department, reported that Raduyev died early Saturday morning after suffering from internal bleeding. It was not clear what led to the bleeding, the report said.
"I can admit that some conjectures could appear - but this would be absolutely groundless," Kalinin said, adding that an autopsy was being carried out by Health Ministry specialists.
However, the Kommersant daily on Monday quoted an unnamed prison source as saying that Raduyev died after a guard struck him repeatedly during a check of inmates' cells. Prison officials strongly denied the allegation, Kommersant said.
Raduyev, who had enjoyed considerable notoriety in Russia but was less respected in Chechnya, was born in 1967, making him either 34 or 35 when he died.
He was the first prominent Chechen rebel warlord to be prosecuted by Russian authorities. Last December, a court in Dagestan sentenced him to life imprisonment after he was found guilty of terrorism and murder.
The charges against Raduyev, who was arrested in March 2000, focused on a January 1996 raid on the town of Kizlyar, where he and other rebels took hundreds of hostages at a local hospital. The raid, which came at the end of the first Chechen war, left 78 people dead.
Raduyev's act seemed a bid to recreate the success of the popular Chechen rebel leader Shamil Basayev, who had led fighters into the southern Russian town of Budyonnovsk in June 1995. Basayev's fighters took more than 1,000 people hostage in a hospital. After gun battles that killed more than 100, an agreement was reached to free the hostages and let the raiders escape back into the mountains.
Basayev remains one of Russia's most wanted men. He claimed responsibility for the Oct. 23 to 26 siege of the Theater Center na Dubrovke in Moscow.
Raduyev had been injured numerous times. During his trial last year, Raduyev sat in a cage, wearing a baseball cap and large aviator sunglasses that the Russian media reported was to hide significant plastic surgery. He maintained that he only obeyed orders from late separatist leader Dzhokhar Dudayev when he conducted the raid, and that the court was trying to "make me a scapegoat."
TITLE: Penza Flag Proposal Opts For Jesus Instead of Putin
AUTHOR: By Kevin O'Flynn
PUBLISHER: Staff Writer
TEXT: MOSCOW - Inspired by a government order that regions should have their own flags, Penza has designed a gold and green banner with an image of Jesus in the center.
The flag, a radical departure from Penza's coat of arms with three distinctive sheaves of wheat, is ruffling the feathers of non-Christian groups even though it has yet to be approved by the federal government, which gets the final say on all flags.
On the simple flag, a large head of Jesus stares out from a gold background. A green stripe runs along its left side.
Yury Leptev, the deputy head of Penza's committee on social politics, said it was a legend, not the Bible, that had prompted the regional government to put an image of Jesus on its flag. According to the legend, Ivan the Terrible stopped in Penza on a journey through central Russia and promised to present an icon of Jesus on his way back. Although Ivan took a different route back, one of his aides presented the promised icon to the locals, Leptev said.
NTV television reported that Jesus was Penza's runner-up to President Vladimir Putin, who was dropped when someone in the local administration pointed out that no region had a flag depicting a Russian leader.
No other regional flags have images of religious leaders either.
The proposed flag was adopted by the regional legislative assembly on Monday. It was unclear when Moscow would make a ruling on the design.
Leptev defended the choice of Jesus.
"The Orthodox Church, the Catholics and the Cossacks supported it," he said by telephone from the city of Penza.
"Jesus was also a prophet for Muslims," he said, adding, "I know the Koran very well."
Non-Christian faiths, though, are expressing concerns about the flag, saying it blurred the lines separating church and state.
"It's untimely," said Borukh Gorin, the press secretary for Berl Lazar, one of the two chief rabbis of Russia.
She said a flag with Jesus was not the right thing for a multiconfessional country or region like Penza. Penza has a community of about 5,000 Jews.
"It looks fake," said Farid Asadullin, an aide to Moscow mufti Ravil Gainutdin. "Jesus was not born in Penza ... you need to ask why he is on [the flag]."
Asadullin said there was a big Muslim community in the Penza region.
"How can they be worried?" Leptev asked. "We didn't take anything religious. ... We didn't take the cross."
He conceded that the proposed design has gotten some flak at home. "The Communists are against it, even though some Communists go to church," he said.
He said the region had held an unofficial referendum before deciding support the flag was strong.
NTV, however, showed a number of people in Penza expressing opposition to the new flag.
"No, I don't like it," said one woman, "I don't even know what is on there."
TITLE: Russian Bells Inspire Tug of War at Harvard
AUTHOR: By Avery Johnson
PUBLISHER: Staff Writer
TEXT: MOSCOW - Every Sunday, at the Lowell House dormitory on Harvard University's Cambridge, Massachusetts campus, a klappermeister climbs to the top of a red brick tower and creates a sound that has become almost as central to dorm life there as all-night study sessions or fast food.
The klappermeister (Harvard's name for a bell-ringer) rings 17 bells - Russian bells, originally from Moscow's Danilov Monastery.
When the Soviet government threatened to destroy the Danilov Monastery's bells in the late 1920s, American industrialist Charles Crane saved them by purchasing the entire set of 18 bells, and it was installed at Harvard in 1930. But the further fate of the bells would prove as uncertain as their past - because at Harvard, no one could stand the sound of them.
In his 1936 history of the bells, "The Lowell House Bells," unofficial klappermeister Mason Hammond described the Danilov bells' first concert in their new home.
"At once the horrid truth became apparent - this zvon was no carillon or set of chimes on which each note could be played independently with some semblance of a tune ... . Invariably the undergraduates reacted with cat-calls, alarm-clocks, saxophones, tin-pans, etc."
Although the students eventually grew to appreciate the bells, the Danilov Monastery has always been home to dozens of listeners who long to hear their zvon, or ring. And this year, Patriarch Alexy II and several priests at the Danilov Monastery, where the offices of the patriarch are housed, launched a campaign to return the bells to the monastery's bell tower in time for the 700th anniversary of St. Daniel's death in March 2003.
"The patriarch wants to return the bells in order to restore historical truth and correct a historical mistake," Father Alexei Polikarpov, the vicar of the Danilov Monastery said last week.
The monastery's bell tower is not empty today: It was rebuilt in 1985 and outfitted with bells taken from razed churches in northwest Russia, but Father Roman Ugrinko, the current ringer at Danilov, said the substitutes' sound doesn't come close to the original bells' distinctive ring.
"The bells have a weak sound, and they don't play well together because they come from different churches," he said. "But to ring the original bells - that would be a pleasure. They are the bells Gogol heard, they are the bells that called our forefathers to worship."
But fulfilling the patriarch's request to return the bells would require closing the Harvard dormitory for a year, dismantling the Lowell House bell tower and shipping the cumbersome copper bells - the largest of which weighs 13 tons - halfway around the world. Former Lowell House dormitory directory William Bossert said last week in a telephone interview that the effort would cost tens of millions of dollars. Despite the price tag, current Lowell House director Diana Eck said that she and Harvard president Lawrence Summers are considering the Russian patriarch's appeal, which comes 14 years after a similar move in 1988.
"Ronald Reagan was at the monastery and there were discussions. He promised to help the church talk to Harvard," said the Russian Orthodox Church's official bell-ringer, Igor Konovalov. But follow-up negotiations failed.
Subsequently, in 1990, Bossert received a letter from the Orthodox Church via the Harvard president's office and helped the university's general counsel draft a reply. At the time, Bossert said he suggested returning the 18th bell - it hangs alone in Harvard's Business School - as a compromise, but this was never done.
"They [the Russian patriarchate] were just hoping that moving the bells would be an easy thing, and that we [Harvard] didn't want them," Bossert said. "They said 'thank you for being a wonderful steward for the bells during a difficult period, but now we want them back.' But now the bells are a part of Harvard history, too."
In an e-mail interview last week, Harvard's current official klappermeister, Alex Healy, said any attempt to move the bells would prove to be "an architectural and engineering feat" complicated by the fact that the tower was actually constructed around some of the bells. He added that the dormitory "is very proud of its Russian bells. They have been with the house since it was built, and despite the occasional complaints, I cannot imagine the house giving them away," he wrote.
Polikarpov, however, has no trouble imagining the bells in Danilov's tower.
"To transport the bells will be difficult but, if people can fly to Mars, then it's possible," he said.
Polikarpov is currently preparing the monastery's arguments for returning the bells, which will be presented to Harvard early next year. Church leaders disagree, however, over what exactly their approach ought to be.
Konovalov has suggested that Harvard foot the bill for returning the bells, without compensation from Danilov, arguing that the church didn't sell the bells, so it shouldn't pay for their return.
"Lenin and Stalin were gangsters," he said. "The church couldn't defend itself."
But Polikarpov is more moderate. "It was a sale. No one took the bells by force," he said, adding that the church is willing to pay for the bells' return, although it would have to solicit donations in order to do so.
At present, neither side is considering filing suit but, if the case ever gets that far, the history of the Danilov bells will certainly play an integral role in making a judgement.
The sale of the bells was finalized in the late 1920s, before the Soviet government closed the Danilov Monastery in 1930. To remove the bells, the top third of the Danilov bell tower was removed. It was rebuilt in 1988 in time for the 1,000th anniversary of Christianity in Russia.
Although the 18 bells shipped to Harvard were cast as a set intended to be played together, the making of the set occurred over a period of several centuries. Tsar Fyodor Alexeyevich commissioned the set's largest bell - the 13-ton bell, which is called "Mother Earth" by Harvard students - in 1686. Another three were cast over the next 50 years. Later, in the late 19th century, 14 smaller bells were cast to match the older bells.
When the bells arrived in Cambridge in the fall of 1930, the tedious process of hanging, tuning and playing them proved too difficult for Harvard's experts, so the Soviet government sent its own bell specialist to help: Konstantin Saradyev supervised the installation and tuning of the Danilov bells and taught bell ringing to a select Harvard few.
But, within a few months, Lowell had caught Saradyev drinking ink as an antidote to the poison he believed the Americans had slipped him, and sent the Russian ringer back to the Soviet Union, where he died in a Moscow mental hospital in 1942.
The bells have not been tuned since, although a $1.7-million renovation of the tower in 1996 and 1997 confirmed that their pedestals and cables still function properly.
Proper tuning or no, however, in Healy's opinion the bells' sound isn't as important as that of other instruments - since their traditional function is to call the faithful to prayer rather than produce music for entertainment's sake.
"Many of the higher bells are 'out of tune' in the sense that there is a natural Western scale to which several of the lower bells have been tuned, and the higher ones do not quite match," Healy wrote. "This can often be a little disturbing to Western ears, but, for me, the distinctive sound of Russian bells comes from the sound of a single bell and its overtones and not the tuning of the entire set of bells."
During their first several decades at Harvard, the Danilov bells received far less attention than they have since the 1960s, when a group of undergraduate ringers began meeting once a week and on special occasions (Halloween, the Harvard-Yale football game, the springtime performance of Pyotr Tchaikovsky's "1812 Overture") to play the bells for 15 minutes.
Today, including the Danilov bells, only five complete, intact sets of pre-revolutionary Russian bells remain in the world.
"In that respect, we're glad that the bells weren't melted," Polikarpov said.
TITLE: IN BRIEF
TEXT: Not Just Random
ST. PETERSBURG (SPT) - Vera Fokina, the 77-year-old mother of State Duma speaker Gennady Seleznyov, was attacked in the entranceway of her apartment building in St. Petersburg on Dec. 11, Interfax reported.
An unknown young man followed Fokina into the building after she had opened the door and struck her twice with a stone - once on the head and once on the arm. The attacker then stole her purse, which contained 700 rubles ($22) and ran off.
Fokina was hospitalized with a broken arm.
Seleznyov told Interfax that he didn't believe that the attack on his mother was random, as she was attacked in a similar manner three years ago.
Then, Seleznyov said, the robbers came to the door of his mother's apartment, rang the bell, and said they came to give her something from her son. When Fokina opened the door, the attackers struck her and tied her up. They then stole her money and two icons.
Another Look
ST. PETERSBURG (SPT) - Nikolai Koshman, the head of Gosstroi, Russia's federal construction committee, arrived in St. Petersburg for a three-day inspection of 50 reconstruction and repair projects in the city being carried out ahead of the 300th-anniversary celebrations next year, Interfax reported Monday.
Among the projects to be inspected are Kazan Cathedral, the Russian National Library, the Artillery Museum, Herzen Pedagogical University, the St. Petersburg Circus, Peterhof, the State Russian Museum, the State Hermitage Museum and the subway line between the Lesnaya and Ploshchad Muzhestva metro stations.
Koshman just recently made a similar visit to the city - from Nov. 25 to Nov. 27 - during which he criticized the inefficient use of funds for repairs of a number of the sites.
Babkin Trial Starts
MOSCOW (AP) - A Moscow court on Monday opened hearings in the closed-door trial of Anatoly Babkin, a technical university professor who is accused of aiding alleged U.S. spy Edmond Pope.
Babkin, a professor at Moscow's prestigious Bauman Technical Institute, is charged with treason in the form of espionage for allegedly giving Pope secret information on the Shkval underwater missile.
Pope, who spent eight months in jail, was convicted of espionage in December 2000 and sentenced to 20 years in prison. However, President Vladimir Putin pardoned him, citing concerns about hurting U.S.-Russian relations and Pope's health.
Babkin, who pleaded not guilty Monday, has said the Federal Security Service forced him to confess to treason last spring under duress. He has said he was detained by security service officers while suffering from a heart condition, and his trial has been delayed repeatedly because of health problems.
If convicted, Babkin, 72, faces 20 years in prison.
Hostage Suit Grows
MOSCOW (AP) - Sixteen people who were taken hostage by Chechen rebels in the Dubrovka theater or whose relatives were killed in the siege intend to sue the city government, joining eight others who have already filed suit for moral and material damages, their lawyer said Monday.
Igor Trunov said his clients, whose cases were to be filed in a Moscow court on Monday, would demand from $450,000 to $1.5 million each. The eight who have already filed suit - five former hostages and three relatives - have asked for a total of $7.5 million. Their suit is scheduled to be heard on Dec. 24.
Trunov said 20 more victims had contacted his office to register lawsuits, news agencies reported.
Trunov has said he is basing his case on a new anti-terrorism law, which he says stipulates that the region where a terrorist attack occurs should pay moral and material damages to the victims.
TITLE: EU Tanker Ban May Disrupt Oil Exports
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW - A ban on single-hulled tankers carrying fuel oil through European waters could lead to gridlock at Russian ports and push shipping fees up by as much as 40 percent, costing exporters hundreds of millions of dollars, oil traders say.
"The new rules will block both loading and unloading. It will be a big problem for us to transport products out of the Baltic Sea," said Andrei Chirikov, director of Sibneft Oil Trade, the trading arm of No. 5 oil major Sibneft.
The European Union voted Friday to ban all single-hulled tankers in response to last month's breakup of the 26-year-old Prestige, whose lone hull cracked in a storm three weeks ago, leaking tens of thousands of tons of fuel oil that continue to lay waste to large swathes of Spanish coastline. Authorities have blamed the disaster on the ship's weak design, which is less sturdy than more modern double-hulled vessels.
Some 25 million tons of Russian fuel oil have been shipped out of Baltic Sea ports this year, and another 9 million have exited the Black Sea. Traders and shipping brokers say that the majority of Baltic shipments were carried by single-hulled tankers, which are older and therefore cheaper. About half of all tankers in use worldwide are single-hulled.
Traders say that the ban, which will come into force in the next few weeks as soon as EU member governments publish it in their official newspapers, will likely lead to a short-term deficit of double-hulled tankers available for Baltic Sea duty. Until Friday's move, single-hulled tankers were to be gradually phased out worldwide by 2015 under a program of the IMO, the United Nations body that governs world shipping.
"The availability of tankers is going to be restricted. If the ban is implemented right away, it will block terminals and refineries," Chirikov said.
The only exit out of the Baltic Sea is through the Danish Straits.
The Prestige was chartered by the Swiss-based Crown Resources, which is controlled by Mikhail Fridman, the chairperson of Russia's vast financial industrial group Alfa.
Crown has come under intense criticism from environmentalists because, soon after the Prestige disaster, it chartered another 26-year-old single-hulled vessel, the Byzantio, to ship fuel oil from the Estonian port of Muuga to Rotterdam. Greenpeace activists demonstrated against the ship's departure from Estonia and at its arrival in the Netherlands, and eco-warriors from the organization daubed the halls of Crown's head office in Zug, Switzerland, with crude oil last week.
"We are extremely sensitive about this," said Ian Kilpatrick, head of energy at the company's head office. "We are completely reviewing our chartering policy."
"There may well be some disruption and price increases in freight charges [as a result of the ban]," he said, adding, however, that the disruptions would probably be short-lived as the global supply of double-hulled vessels was great enough to ensure shipments.
Michael Aishford, partner at major shipping brokerage Simpsons, Spence and Young, also said that there would be enough double-hulled vessels to meet demand but, in the short term, he said that he expected a 40-percent increase in freight charges as demand for these vessels soared.
"The move will have a dramatic impact on the market in the short term," Aishford said.
Russian traders currently pay about $11 per ton for short-haul trips from the Baltic through the waters of northern Europe to Rotterdam. For longer trips, such as the St. Petersburg to Singapore route, the cost is $27.50 per ton.
"The freight hike will impact both sides: consumers and oil companies," Chirikov said. "Somebody will have to pay for it."
TITLE: New Phone Network Launched
AUTHOR: By Angelina Davydova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Delta Telecom has launched its new Sky Link mobile-telephone network, which employs the CDMA2000 1X standard, Viktor Ustyuzhanin, the company's general director, announced at a press conference on Monday.
The company is the first in Russia - and one of the first in the world - to open a third-generation network of this kind, providing a higher speed for data transmission than the GSM standard, as well as digital voice-telephone services.
Ustyuzhanin said that the technology for the network had been provided by the American firm Lucent Technologies, and that it will operate on the 450 MHz frequency.
Delta Telecom is only the second provider in the world to offer the CDMA2000 standard with a 450 MHz frequency, the first being Zappmobile, a mobile operator in Romania, which launched its network a year ago. Zappmobile also employed Lucent Technologies equipment for its network, which now serves 40,000 clients.
There are several mobile operators already working with the CDMA standard on the 800 and 1,900 MHz frequencies in the U.S., though it has yet to be taken up in Western Europe.
CDMA2000 1X differs from second generation standards in the higher speed of data transmission, with 120 to 153 kilobytes being transmitted per second instead of the 30 to 40 kilobytes provided by the GSM standard.
The faster speed makes the new network comparable with ADSL Internet connections, said Leonid Konik, senior analyst at the Comnews Group. "It means that you'll be able to connect your mobile phone to a notebook or PDA and watch films with stereo sound. On top of that, you'll be able to get digital voice-telephone services."
Through the new network, Delta Telecom will offer federal telephone numbers as well as local seven-digit numbers, Gennady Golant, the firm's technical director, said at the press conference.
Founded in 1991, Delta Telecom has a 5-percent market share in St. Petersburg. Konik said that the firm would be aiming its new network at corporate subscribers and private subscribers that use mobile connections heavily. Delta offers three tariff schemes, two of which offer unlimited use for $50 to $60 per month. In comparison, two local GSM operators offer unlimited use for fees of $200 to $250 per month. The third plan, at a cost of $25 per month, comes with 250 minutes and 15 megabytes of Internet traffic.
At present, there are only two mobile-phone models available in St. Petersburg that are compatible with the new system - the Synertek S200 and Curitel HX-510B, costing $310 and $390, respectively. Both are manufactured in South Korea.
Yury Khromov, general director of Moscow Cellular Communications, said at the press conference that MCC is also planning to launch a CDMA2000 standard network on the 450 MHz frequency.
TITLE: Duma Urges Ban on Foreign Slavneft Bids
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - State Duma deputies on Sunday voted overwhelmingly for a declaration urging the cabinet to act to stop a foreign company from winning Wednesday's open auction for 74.95 percent of Slavneft, which is expected to be the country's biggest privatization tender ever.
By a vote of 255-63, deputies passed a nonbinding resolution urging the government to keep the oil company in Russian hands. Specifically, lawmakers said that companies in which a foreign government has more than a 25-percent stake should be declared ineligible to bid, Interfax reported.
The move was evidently directed at China National Petroleum Corp., China's largest oil company. CNPC has expressed its interest in bidding and has more cash on its hands than any other known bidder.
The bid from CNPC is seen as being in line with Beijing's drive to cut its reliance on Middle Eastern oil.
The Duma pointed to a 2001 privatization law that bars Russian entities that are more than 25 percent state owned from buying state property. The Duma said that the prohibition should apply to foreign state-owned entities as well.
Sunday was the deadline to enter the contest, and the list of bidders will be finalized and approved by the Anti-Monopoly Ministry on Tuesday.
A spokesperson for the State Property Fund, which is conducting the auction, refused Sunday to say which companies had applied.
The only confirmed participants are Sibneft, Tyumen Oil Co., or TNK, and CNPC, with its estimated $9-billion war chest.
Russian media sources have reported that another half dozen or so offshore companies have entered, but it is unclear who their backers are.
The starting price for the stake in Slavneft, which produces 320,000 barrels per day and is one of the last major oil assets in state hands, has been set at $1.7 billion, but many experts say that the final price could pass the $2-billion mark.
Surgutneftegaz, the state's No. 3 producer, had said that it would bid, but unexpectedly pulled out of the competition Wednesday, leaving Sibneft and TNK as the only top-five Russian oil companies participating. Top producer LUKoil pulled out earlier this month after saying that it intended to bid, and No. 2 Yukos never committed.
TITLE: State Tightens Control Over Drug Regime
AUTHOR: By Torrey Clark
PUBLISHER: Staff Writer
TEXT: MOSCOW - The government introduced a new system of drug certification Sunday that opponents say could encourage corruption and counterfeiting while raising new administrative barriers.
The Health Ministry has billed the measure as a step in fighting counterfeit medicines, which it says account for up to 12 percent of the market.
The ministry said in a statement Sunday that the measures are aimed to toughen control, in part by testing the quality and checking the origins of imported goods. The new certificates will be required for imports prior to customs processing.
"Counterfeits are a significant problem," said Maria Vlasova, co-chair of the American Chamber of Commerce's health-care committee. "But the emphasis should be on the enforcement of intellectual property rights, not certification."
"By raising administrative barriers for manufacturers, it might open more room for perpetrators of counterfeits," she said.
The certification, required for each batch of medicine entering the market, will cost about 2,000 rubles ($63) for domestic companies and 3,000 ($94) for foreign firms, nearly a tenfold increase.
The Health Ministry said that the new system should not lead to price increases as it replaces certificates previously required at each stage of the sales chain with a single certificate.
TITLE: Mystery Billboards Attack Offshore Assets
AUTHOR: By Victoria Lavrentieva
PUBLISHER: Staff Writer
TEXT: MOSCOW - Huge black billboards with slogans saying "Bring Your Money Back to Russia!" and "No More Offshore!" have recently appeared on major roads in Moscow.
While some of the ads refer to www.offshoram.net, there is nothing at that address to indicate to whom it belongs. In fact, no one seems to know who is spearheading the drive. If they do, they aren't saying, but federal officials insist it isn't them.
"Yes, it looks very socially oriented, but this was not our initiative," said Natalya Konovalova, spokesperson for the Financial Monitoring Committee, which was created last year as part of an effort to get Russia removed from an international blacklist of countries where money laundering is rampant.
Konovalova said that the FMC investigates offshore operations, but only for their connection to terrorism and money laundering.
Government officials have long been concerned about the amount of assets held in offshore accounts. Just last Monday, the head of the Central Bank's licensing department, Mikhail Sukhov, was quoted as saying that the bank wants to ban offshore firms from holding more than 10 percent of their assets in local banks. But he did not mention the ongoing anonymous ad campaign.
Recent billboard crusades that have puzzled Muscovites include one used by Solodov beer to launch its brand, which simply said: "Solodov, I Want You!" The Vremya Novostei newspaper advertised itself with the declaration "Time Will Come," while mobile-phone retailer Euroset opted to share this nugget with the city: "Greed Leads to Poverty."
A client manager at the Anko agency, which owns the billboards on which the anti-offshore messages have appeared, said that the ads were ordered by a PR firm which she declined to name. She also said that she had no information regarding the agency's client.
The Finance and Tax ministries, which have been active in other social campaigns, said that they are not in any way involved.
Offshoram.net isn't helpful, either.
"It appeared not long ago, but I have no information about its owners," said Alexei Skripka, who provides technical support for the domain. "I only know that our client is a private individual."
The site provides much information about the history of offshore accounting and about recent legislative and political initiatives aimed at moving companies onshore. Under the rubric "The government is against," one can find a list of measures taken by the government to put an end to offshore schemes.
Some newspapers are already speculating about who might be behind the billboard idea. A recent article in Izvestia said that the campaign might be financed by Sergei Pugachyov, former head of Mezhprombank and now a member of the Federation Council representing the Tuva region.
Pugachyov is believed to have close ties to President Vladimir Putin and is known for his charitable activities, including donations to the Russian Orthodox Church.
Pugachyov has been actively lobbying the idea of a tax amnesty for the capital taken out of Russia during the last decade. According to Izvestia, this suggestion was raised at Pugachyov's recent meeting with Putin and is supported by the Russian Chamber of Commerce.
TITLE: Abramovich To Sell Off 26 Percent Of Aeroflot
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - More than a year after quietly buying up a blocking stake in Aeroflot, Chukotka Governor Roman Abramovich's holding company Millhouse Capital is looking to jettison it, sources close to the deal said Monday.
Millhouse, which controls oil major Sibneft, half of metals giant Russian Aluminum and other assets, declined to comment, but sources said that Aton had already been asked to find a buyer for the 26-percent stake.
Aton Vice President Anton Nisin said that the investment house would neither deny nor confirm this.
Industry analysts said that it would make sense for Millhouse, which failed to influence the operations significantly of the state-controlled airline, to sell its stake, especially at a time when Sibneft is raising money everywhere it can find it to bid for the government's 75-percent stake in Slavneft later this month.
"They have other needs, including money for Slavneft," said Aton analyst Madina Butayeva.
The Aeroflot stake, which companies close to Abramovich bought for a reported $120 million, has not resulted in the kind of influence the holding had hoped to have over the airline, which the government tightly controls through its 51-percent stake.
"Millhouse has not demonstrated itself in any way. There is an internal conflict between shareholders," said Andrei Ivanov, analyst with Troika Dialog.
Ivanov said that the only likely buyer for the stake is an investor who thinks that the state will soon sell its stake, which is unlikely to happen. Millhouse's initial idea was to buy into Aeroflot and then watch the value of its stake grow ahead of the airline's privatization, he said.
"But Millhouse must have overestimated the leverage of its lobbying efforts," he said.
Since finding a buyer for the whole stake is unlikely, Millhouse will probably sell it in parts, which would be good for Aeroflot, because it would increase the liquidity of its shares, less than 2 percent of which are in free float, said United Financial Group transportation analyst Yelena Sakhnova.
"By buying the blocking stake, [Millhouse] has cornered itself. If it finds a single buyer, it won't make any difference for either the company or the market," she said.
"If the stake is sold in parts, Aeroflot's liquidity will rise, and the share price could reach our projected target of 44 cents," she said.
The airline's stock rose 2.3 percent on Monday to close at 33.3 cents.
Aeroflot is offering minority shareholders the opportunity to sell their shares to the company for 10.3 rubles ($0.32) each if they don't agree with its plan to acquire a new fleet of foreign jets. The deadline is Dec. 27, the date of the extraordinary shareholders meeting, which was called to vote on the acquisition.
At $0.32, Millhouse's stake would be worth about $90 million.
According to its charter, Aeroflot cannot buy more than 10 percent of its outstanding stock in any given year.
TITLE: Alfa Bank Wins $10M Legal Suit Against 'Prague Pirate'
AUTHOR: By Victoria Lavrentieva
PUBLISHER: Staff Writer
TEXT: MOSCOW - After three years of litigation, Alfa Bank announced on Sunday that it has won a $10-million case against controversial Czech multimillionaire Viktor Kozeny.
The Dec. 11 ruling in London by the Privy Council overturned a January 2001 decision by the Bahamian Court of Appeal, Alfa Bank said in a statement. The Privy Council considers appeals from former colonies, including the Bahamas.
Under the final ruling, Kozeny, dubbed the "Prague Pirate" for cashing in on the first wave of Czech privatization, must repay Alfa Bank more than $6 million plus interest and costs under the terms of a 1999 credit agreement, the statement said. Alfa Bank estimated the total sum to be $10 million.
"It was the first case brought by a Russian entity that was discussed at the Privy Council since 1917," said Gerald O'Mahoney, a partner with Davies Arnold Cooper, a London-based commercial law firm that represented Alfa Bank.
"We are delighted, though not surprised by today's decision. We were always confident of our position and determined to pursue this matter vigorously," Alfa Bank President Peter Aven said in the statement.
Alfa Bank issued Kozeny a $35-million loan in 1999 to participate in the privatization of Azerbaijan's state-owned oil company. Alfa Bank took him to court when he stopped making payments.
The $450-million investment project to buy the Socar oil company failed and led to a number of legal suits against Kozeny, including an accusation of fraud by several American investors. Among the investors in the privatization deal were former U.S. Senate majority leader George Mitchell and Frederick Bourke, chairperson of Dooney & Bourke, a handbag company.
Kozeny, a Harvard graduate now in his late 30s, made his fortune in the Czech Republic by running an investment scheme starting in 1991 in which he persuaded 80,000 Czechs to turn over their privatization coupons to his company.
By 1996, he had earned a fortune estimated at more than $200 million, while his clients' investments had plummeted.
"That a Russian bank should end up in such a thoroughly British institution as the Privy Council in pursuit of a Czech emigre resident in the Bahamas ... is symptomatic of the complexities and mysteries that have long surrounded the colorful Czech," Alfa Bank said.
TITLE: Rich in Natural Resources, the Komi Region Awaits Investors
AUTHOR: By Yevgenia Borisova
PUBLISHER: Staff Writer
TEXT: SYKTYVKAR, Komi Republic - If Dmitry Mendeleev had sought a region of Russia to be his workshop, he would have had to look no further than the northern Komi Republic.
"There is no other Russian region with a scale of minerals, ores and energy resources comparable to ours," said Nikolai Yushkin, director of the Urals division of the Institute of Geology with the Russian Academy of Sciences, located in the region's capital, Syktyvkar.
"We have almost the whole of Mendeleev's Periodic Table in our area," Yushkin said.
He pointed to a sprawling wall map of the region with dozens of small, colored lights. He lit one group after another, each color indicating deposits of rare metals, coal, gas, oil, diamonds and mineral water. The map twinkled like a Christmas tree.
The republic, which is roughly the same size as Iraq, produces about 3.2 percent of Russia's oil (11.3 million tons in 2001), with LUKoil dominating the industry, and about 7 percent of the country's coal (18.8 million tons in 2001). It has some 30 percent of the country's bauxite output and about half of its titanium.
Among the most valuable deposits are chrome, manganese, copper, lead and zinc.
The republic also has clay, sand, stones, plaster and limestone used for construction materials.
Many of the reserves remain untapped, and Russian experts put the value of mineral resources and raw materials at up to $11 trillion.
That doesn't mean that investors are scrambling to pump funds into the region. Like many other parts of the country, Komi has a dilapidated infrastructure and a spotty track record when it comes to working with outsiders.
But Komi Governor Vladimir Torlopov, who was elected last year after serving two consecutive terms as speaker of the region's parliament, plans to change all that.
"We have a lot of wasted property, including huge workshops that are not used. I am prepared to sell them off for a modest price to investors who could make them profitable," Torlopov, who holds a doctorate in sociology, told reporters at a recent news conference in Syktyvkar.
He said that poorly run state-owned companies and numerous stakes in other companies will be sold off, as well as unfinished construction and buildings that the region cannot maintain.
Komi is also prepared to fight corruption, make the regional budget transparent and place all orders via tenders, Torlopov said. The region will focus on developing processing enterprises, he said.
Some 74 percent of Komi's industrial income comes from oil, gas, coal and electricity, while forestry and paper account for 19 percent, according to Moody's, which in August ranked the region B2, two notches below Russia's sovereign rating of Ba3.
Dropping the Debt
The region of 1.2 million people inherited many social problems from Soviet times that were worsened by perestroika and privatization. Unemployment permeates Russia's once-leading coal producers Vorkutaugol and Intaugol. Huge investment is needed for housing and infrastructure.
Komi has accumulated a staggering debt of 6.5 billion rubles ($200 million), of which 3.8 billion rubles is to the federal budget, Torlopov said. The region's annual budget is 12.7 billion rubles.
Making matters worse, the federal government's revamp of how taxes are distributed to the regions will cost Komi 2.5 billion rubles this year and next, Torlopov said.
Komi's economy was started by primitive forced labor. Since the time of Ivan the Terrible, Komi, with its average winter temperatures hovering around minus 20 degrees Celsius, was better known for being the place to jail dissidents than for its natural resources. The region absorbed hundreds of thousands of so-called enemies of the people, and its Stalin-era labor camps held the likes of future Nobel Peace Prize winner and Israeli Prime Minister Menahem Begin.
Yushkin said that Komi's wealth was neglected in Soviet times "because there were larger or easier deposits to extract in other Soviet republics.
"Another reason for the neglecting of, say, our bauxite deposits, was that someone" - he pointed up, indicating the Kremlin - "was lobbying to import them from Africa or Australia. It was absurd to pay a lot of money for these imports, but that was how it used to work."
Foreign Investment Up
In 2000 to 2001, Komi was ranked No. 41 out of the 89 regions for its investment potential by Expert magazine and No. 67 for the risks involved.
Foreign investment tripled, from $77 million last year to $266 million, in the first nine months of 2002 alone. 73.4 percent of the investment came from Finland and 11.5 percent from Austria, while the rest appeared to be funds being repatriated home from Cyprus (8.7 percent) and Luxembourg (3.5 percent).
The biggest foreign firms are Finland's Fortum Oil and Gas Oy, which works with LUKoil in developing the Timan-Pechora oil fields, and Austria's Neusiedler, which earlier this year acquired a majority stake in Syktyvkar Forest Enterprise, or SFE.
Domestic investment, however, slowed down 7 percent to 16.5 billion rubles from January through October. The biggest domestic investment was in the oil extraction industry (31 percent), followed by construction of pipelines (15 percent), the pulp industry (7 percent) and oil processing (5 percent).
Russia's No. 2 metals producer SUAL Holding is a bright spot in the regional economy, investing more than $75 million from 1997 to 2001. SUAL, which recently opened the country's first private railroad in Komi, has a bauxite deposit in Timan from which it has extracted more than 2 million tons of ore. Bauxite reserves are estimated at about 350 million tons.
SUAL plans to build a $1.7-billion alumina-aluminum complex in the South Timan area. It is prepared to put in $450 million of its own investment and is putting together a pool of investors.
The Komi administration appears to have made a breakthrough this year in its collapsing coal industry. It passed over its shares in Vorkutaugol and Intaugol to Baikal Ugol, which belongs to the MDM Group. Baikal Ugol, which was created last year, operates in Krasnoyarsk, Irkutsk, Chita, Khakassia, Buryatia and Sakhalin and extracted about 70 million tons of coal last year.
The deal is a compromise: while Vorkutaugol was a potentially valuable asset, Intaugol was effectively a dead weight, with nearly idle mines and thousands of jobless miners. As a result, the 50,000 inhabitants of the town of Inta were all but unemployed.
Projects on Tap
The Komi administration is actively pushing forward 50 investment projects that jointly could reap more than $8 billion. The projects, which are posted on Komi's web site rkomi.ru, run from a small 2.5-million-ruble ($80,000) upgrade of equipment at the Ukhta-based Akim mineral water bottling plant to three major investment projects requiring some $1 billion in investment each.
Among the projects is a $610-million plan to build an open mine at the Seidinskoye coal deposit near Vorkuta. The deposit, according to the project's proposal, contains about 400 million tons of coal located close to the surface, and up to 10 million tons a year could be extracted.
The prospects of the mine will greatly increase if the Belkomur railroad - a project that Komi has declared a priority - is built nearby. The $654-million Belkomur railroad involves the construction of 794 kilometers of straightened track within the existing railroad between the Komi, Perm and Archangel regions. The three regions, which have earmarked funds for the railroad from their own budgets, believe that the new railroad will make their cargo competitive on the European market because the route will become more than 600 kilometers shorter, saving up to 30 percent of transportation costs.
"We are investing about $10 million a year," Torlopov said. "If we continue at that pace, it will take up to 30 years. Of course, we need investors."
Among the other projects that Torlopov and his deputies pointed to as especially important to the region was the construction of a $56-million salt factory in the Knyazhpogostsky district - which has a salt deposit of 2.7 billion tons - a $27.3-million plant to isolate materials based on locally extracted basalt and a $3.6-million Khoilinsky barite facility.
Timber is a growing industry, with SFE producing about 700,000 tons of pulp a year. Komi wants to set up a $807-million pulp plant in the Udorsky district, which has 24 million cubic tons of timber. The plant would have a capacity of 500,000 tons.
"Timber is a renewable resource. I have seen calculations that show its long-term profits could be comparable with those of oil deposits," Torlopov said.
Finding Foreigners
Komi Economics Minister Yevgeny Leskin said that the revival of the timber industry is being slowed down by the absence of processing enterprises - and foreign investors.
"Foreigners have stable interests, more money, they pay taxes, take care of the environment and respect the law," he said. "We would like to get big firms with reputable names in the region."
To that end, Komi offers special conditions to investors that require them to pay only 10 percent of the region's share of property tax and half of the profit tax during the start-up period.
The biggest foreign investor in the region is Fortum, which formed from the merger of Neste and IVO in 1998 and has a 50-50 joint venture called SeverTEK with LUKoil-Komi. Fortum said that it has invested $100 million in developing an oil field in South Shapkino in the north of Komi and plans to invest another $77.5 million in developing four more fields.
As part of the South Shapkino project, Fortum is helping construct a 100-kilometer pipeline from the field to the southward main pipeline at Kharyaga.
Knut Furuheim, vice president of Fortum and chairperson of SeverTEK, said the South Shapkino project is proceeding well, but that the company has a challenging schedule due to Komi's harsh climate and remote location.
"We find the Komi region quite stable, open toward foreign involvement and investment, with modern approaches," Furuheim said in an e-mail interview. "There is equal treatment by the Komi government of small and large, Russian and foreign companies."
He said that Komi was especially attractive to his company because of its "large undeveloped oil and gas resources of Timan-Pechora, political stability, proximity to Finland, possibility to export some of the production to our refinery in Finland [and] traditionally good relationships between Finland and Komi."
Threat of Red Tape
However, it is not clear whether investors - especially those who snap up stakes in existing enterprises - will be able to restructure the companies as they see fit.
"Any decision to lay off staff should be, of course, agreed upon with the administration," said Deputy Komi Governor Yury Kolmakov. "Otherwise, we may get a social explosion. If significant layoffs are planned, the investor will have to talk to us about the sort of retraining they are going to provide."
The new owners of SFE are not convinced. SFE chief executive Michel Tchesnakoff, a French citizen of Russian descent, said that decisions about possible layoffs or the sale of unprofitable assets were solely up to the management.
"But, as they may have an impact on local employment, it is a practice that we try to inform our local authorities about our decisions in advance, in order to give them the possibility to prepare plans to cope with the situation, which is going to happen locally," he said.
Earlier this year, SFE was taken over by the Neusiedler, a branch of Mondi Europe, one of the biggest European packaging companies with headquarters in London. The group owns 88 percent of the huge 300-hectare factory, which employs more than 15,000 people - including more than 5,000 at its headquarters.
According to the factory's figures, last year it paid 1.3 billion rubles in taxes and posted net profits of $59 million. It aims to boost output from the current 700,000 tons to 1 million tons per year.
"The group sees good potential in the growing Russian market for our products," Tchesnakoff said.
Tchesnakoff said that certain challenges remain in working in Komi - particularly when it comes to working with regional bureaucrats.
"It should be clear that companies are operating in the region to conduct profitable business, and that the only contribution to the regional and local budgets must be made in accordance with the Tax Code," he said.
He said that SFE is hoping local authorities will more clearly define the rules of the game for doing business in the region and keep these rules in place for an extended period of time.
He also said that SFE hopes the authorities will take steps to trim red tape and bureaucratic control.
TITLE: A Crude View of the Iraq Crisis
AUTHOR: By Daniel Yergin
TEXT: IF oil is the question, Iraq is not the answer. Some people say that the Iraq crisis has been manufactured to cloak an "oil grab" by the United States and the American oil industry. Others believe that a liberated Iraq will flood the world market with cheap oil and provide a quick fix for concerns about our energy security.
These perspectives, while very different, are based on a fundamental misperception - of both scale and timing. Yes, Iraq is a major oil country, with the world's second-largest known reserves. But in terms of production capacity, Iraq represents just 3 percent of the world's total. Its oil exports are on the same level as Nigeria. Even if Iraq doubled its capacity, that could take more than a decade. In the meantime, growth elsewhere would limit Iraq's eventual share to perhaps 5 percent, significant but still in the second tier of oil countries.
But even that scenario assumes that Iraq will welcome foreign investors on a reasonable timetable - and, history tells us, that this is not a foregone conclusion. After the 1991 Gulf War, a liberated and grateful Kuwait announced that it would open its oil industry to foreign investment in order to boost production. Eleven years later, that still hasn't happened, owing to nationalistic opposition in Kuwait's parliament.
While today's crisis is focused on overall security - Iraq's weapons of mass destruction - there is a clear energy dimension to the confrontation: the security and stability of the Persian Gulf region, from which flows almost a quarter of the world's oil. Iraqi President Saddam Hussein's drive to dominate the region is obvious and cannot be dismissed.
But it requires several leaps of logic - as well as inattention to developments in the rest of the world, particularly in Russia, the Caspian region and West Africa - to conclude that the current Iraq crisis is all about oil. No U.S. administration would launch so momentous a campaign just to facilitate a handful of oil-development contracts and a moderate increase in supply - half a decade from now.
How would a Persian Gulf without Hussein affect the future of Iraqi oil? The discussion now underway is dominated more by the uncertainties and risks than the benefits. The most immediate question involves a possible war, and the resulting damage that it might do to Iraq's output at the very moment when a new regime would desperately need oil revenues to secure its own stability. There is also much apprehension that Hussein would torch Iraq's oil facilities in a Pyrrhic defeat.
The next critical issue, when "the day after" arrives, will be the question of authority. Who would be in charge? If there is a temporary military government, either UN or U.S.-led, it would be preoccupied with establishing firm control over Iraq's weaponry and laying the basis as quickly as possible for a new Iraqi government with broad representation. It would certainly be focused on security, including the oil facilities. After all, the country earns the bulk of its living by exporting oil. For that reason, a temporary military authority would be inclined to see the "new" Iraq maximize its oil earnings. But a military authority is unlikely to want to get much involved in the decision-making about the future of the industry. Rather, it will try to push the responsibility into the hands of a new Iraqi government - or an interim group of technocrats.
A new Iraqi government, for its part, will just as surely want to get its hands on its number one economic resource so that it can generate revenue for reconstruction and development. At the same time, a new government would also be determined to bolster its sovereignty, legitimacy and nationalist credentials - all of which will be essential requirements for holding the country together. This ensures that Iraq will be a very tough negotiator when it sits down with the oil companies.
It is often assumed in the "it's all about oil" discussions that Iraq would turn over its current 2.8 million barrels per day of production capacity to international companies. But that's another shaky assumption. If the new Iraqi government brings in foreign companies, it will have to split revenue - keeping perhaps 88 cents of every dollar of earnings for itself, with 12 cents or so going to the companies. Why not keep the whole dollar for itself and simply buy what it needs in terms of technology and equipment for the existing fields?
What a post-Hussein government will need is capital - lots of it - for exploration and new production from its currently undeveloped fields. And that is where a new regime is likely to turn to international oil companies. But which ones?
It will have no shortage of suitors. Once things are clear, companies will be eager to get in line to sign contracts with a country that has 11 percent of the world's proven reserves.
Companies from several countries - Russia, France, Italy and China, among others - already hold contracts, but they are not operational because of UN sanctions still in place. Companies without contracts, including American ones, will have to assess how much time and trouble they are willing to bear. For oil companies, the big issue, wherever they operate in the world, is how to manage the range of risks - from the geological to the political. In response, they often work together in consortia and partnerships. This approach hedges their bets, spreads their investments and diversifies their portfolios.
And that's likely to be the outcome for Iraq. The companies with existing contracts will likely team up with other companies - American, European, Canadian, Australian, Japanese - to form new partnerships.
None of this will take place swiftly. It might take a new regime a year or so just to get things organized and begin to negotiate contracts. When it does, it will have to face the deteriorating condition of the Iraqi oil industry.
To get back to 3.5 million barrels could take three years, at an estimated cost of at least $7 billion. Another 2 million barrels per day would require a major push, and it would still leave Iraq several rungs below the capacity of Saudi Arabia, the United States and Russia. Making that leap to 5.5 million barrels a day would come sometime after 2010, at a cost of upwards of $20 billion.
As its output increased, Iraq would begin jostling its neighbors for market share. That would not, however, give Iraq enough clout to be an OPEC buster. It would not have the ability to "flood" the market. Nor the desire. Its intense need for revenues would make it much more interested in oil at $20 or $25 per barrel than at a cut-rate $10.
By the year 2010, world oil demand, driven by countries such as China and India, could be almost 90 million barrels a day - 17 percent greater than today. And where will that oil come from? Here's where the picture grows more complex.
One can already see the beginning of a larger contest. On one side are Russia and the Caspian countries, primarily Kazakhstan and Azerbaijan; on the other side, the Middle East, including Iraq. Over the last three years, Russian output has increased by about 25 percent, to 8 million barrels a day. The race heated up with the recent announcement by four Russian oil companies of their intention to build a new Arctic port to export directly to the United States.
Right now, Russia and the Caspian states seem to have the edge in this race. All that, however, is subject to change. The outcome will be determined not only by geology and the balancing of opportunity and risk by companies, but also by political and economic stability and by the decisions governments make.
Daniel Yergin, chairperson of Cambridge Energy Research Associates, is author of "The Prize: The Epic Quest for Oil, Money, and Power." He contributed this comment to The Washington Post.
TITLE: Good Old Boys Are Back To Run the U.S. Economy
TEXT: WASHINGTON - Good news for the world economy! Yes, more Ford-Nixon retreads-turned-overpaid-mediocre-corporate executives have been recruited to oversee American economic policy.
First there's John Snow, the nominee for U.S. treasury secretary, who was a transportation secretary under Gerald Ford (alongside Donald Rumsfeld, then Ford's chief of staff, and Dick Cheney, then Rumsfeld's deputy).
Cheney left to run an oil company, Rumsfeld to be a pharmaceutical executive and Snow to run a railway giant, Virginia-based CSX.
Snow was a typical business hero, earning $50 million over a decade in which his company's sales and profits declined. Snow's pay in these years, naturally, skyrocketed - from $1.6 million in 1991 to $10.1 million by 2001.
Remember all those Enron and WorldCom workers who bought the company stock for their retirement plans, then were left twisting in the wind? Snow reminds us that that doesn't happen to the CEO class.
In 1996, he borrowed $25.4 million from CSX to buy company stock. This was part of a program designed, as The New York Times explained it, "to align the interests of the executives with those of the company." Apparently, those interests weren't sufficiently aligned by skyrocketing multimillion-dollar paychecks for lousy performance.
But by 2000, CSX shares on Snow's watch had fallen by 40 percent. So, did Snow take a bath? Of course not. CSX "canceled the program," according to The New York Times. Snow gave back that disappointing stock, and the company forgave the loan. Gee, why didn't they just do that with the Enron 401(k)s?
Now, of course, it's not just the CEO's fault. What about the board of directors? Forbes magazine notes that extending (and then forgiving) such seedy CEO loans has to be approved by a company's board - and then reports that "William Donaldson, President Bush's pick to chair the Securities and Exchange Commission, is that kind of board member."
Donaldson, 71, is a long-time Bush family friend, and yes, he's another retread: He used to be undersecretary of state under Henry Kissinger. Now he's to lead "reform" of Wall Street.
Forbes recounts how in April 2002 - that is, long after the collapse of Enron - Donaldson was a board member at an Internet company, Easylink Services, that chose to loan $200,000 at 5-percent interest to its CEO. (Chump change by Snow's standards, but a lot for Easylink - equal to 3 percent of what the struggling company has in the bank.)
Next, true to form for all of these company "loans," this one was forgiven, both principal and interest, on the stern condition that the CEO stay on the job through May 29. "He's still on the job," Forbes reports, "but he doesn't owe $268,000 anymore."
Again: Your loved ones could be dying of a curable disease, your home could burn down, you could leap forward to take an assassin's bullet in the gut to save your company chief - but, no matter your needs or circumstances, unless you yourself are in the executive suite, I doubt the company would offer you $200,000 at 5-percent interest.
Even if they did, I doubt even more that they would then take you aside and say: "Look, just stay through May and we'll fuhgedaboutit." But maybe you live in a better world than I do.
Matt Bivens, a former editor of The St. Petersburg Times, is a Washington-based fellow of The Nation Institute [www.thenation.com].
TITLE: State Sell Off Should Make an Honest Woman of Slavneft
TEXT: THE government's 75-percent stake in the Slavneft oil company is set to go on the auction block Dec. 18. If the auction takes place as planned, the government will rake in at least $1.7 billion, and Slavneft will finally shed its humiliating reputation as a big state-controlled barn whose door is always open to looters.
At this point, it's unclear if the auction will take place at all, however.
Early on, there were two main competitors for Slavneft - Sibneft, Russia's fifth-biggest oil company owned by Chukotka Governor Roman Abramovich, and Mezhprombank, founded by Sergei Pugachyov, now a senator representing the Tuva Republic. Sibneft and Mezhprombank are more than just major industrial groups; they represent two parties, the Yeltsin-era "family" and the St. Petersburg chekists.
It was Abramovich who pushed for the Slavneft auction. For many years, he controlled the finances at Slavneft through managers well placed throughout the company. When these managers sold him out to the chekists, Abramovich had little choice but to buy his own closet with all the skeletons it contained. And he's prepared to pay big money.
The chekists allied with Mezhprombank, however, don't have much money. The cash to buy Slavneft was supposed to have been put up by Western banks under guarantees issued by Gazprom and Rosneft. When this arrangement hit a snag, the privatization of Slavneft ran into problems.
First, the Audit Chamber reared its head, announcing that the asking price of $1.7 billion was too low. What does the Accounting Chamber have to do with this, you might ask? If the auction is conducted above board - and it will be - the asking price will bear no relation to the final price anyway.
Then the China National Petroleum Corporation popped up. The people who run CNPC aren't exactly known for basing their decisions on business interests alone. CNPC, like the Accounting Chamber, seems to be there to provide a pretext for cancelling the auction, this time on the basis that Slavneft could not possibly be sold off to foreigners.
And finally, the government of Belarus recently sold its 11-percent stake in Slavneft to Sibneft.
Sibneft is to be congratulated. It bought the stake cheap. At first, Belarus set an asking price of $250 million for its stake. Then it cancelled the auction on the pretext that no one had offered more than the lone bidder, Sibneft. Two weeks later, Sibneft offered $210 million for the stock, and this time Belarus accepted.
The sale of the Belarus stake in Slavneft was initiated by Mezhprombank, an old friend of President Alexander Lukashenko. Mezhprombank apparently intended to buy the stock for pennies on the dollar, in exchange for promising Lukashenko strong representation in the Kremlin. But Sibneft beat Mezhprombank at its own game.
From the tactical point of view, the purchase of the 11-percent stake was a victory for Sibneft. Combined with its previous holdings in Slavneft, Sibneft now has close to a blocking stake. But would Sibneft be angling for a blocking stake in Slavneft if it didn't doubt that the government's controlling stake would actually be put up for auction?
This is all very sad.
You could agonize till the cows come home about how Abramovich pawed Slavneft's bottom line. But if Abramovich robbed Slavneft of its financial innocence, at least he's prepared to atone for his sins and make an honest woman of her. If anyone wants to compete for the hand of Slavneft, let them show up at the open auction on Dec. 18.
Those who would cancel the auction want the state-controlled oil company to remain a prostitute, forever haggled over by her various pimps.
That is how they understand the state's best interests.
Yulia Latynina is author and host of "Yest Mneniye," ("Some Believe") on TVS.
TITLE: Integration, Media And the Economy
TEXT: In response to "Russia and Europe: The Limits of Integration," a comment by Rene Nyberg on Dec. 6.
Editor,
While I don't wish to take issue with any aspect of Finnish Ambassador Nyberg's excellent tour d'horizon of the current dynamic between Russia and Europe, I can't agree with his paraphrase of Alexei Malashenko and Dmitry Trenin's assertion that "Eurasia as a concept no longer exists" (quoting Ambassador Nyberg). "Eurasia" is not an assertion of self-identity or allegiance, such as "Mother Russia (Rus')," "Great Russia (Rossiya)," or even the Soviet Union. "Eurasia" is a collective mentality, a state of mind common specifically to Russians that has resulted from Russia's largely self-imposed isolation from many of the main currents of European history and culture - but punctuated occasionally by over-reactions to this same circumstance on the part of "Westernizers" such as Peter the Great and others. With all due respect to Ambassador Nyberg (assuming that he endorses the position of Malashenko and Trenin on this point), Russians never were and likely never will be Europeans. This does not make Russians inferior to Europeans, or otherwise unworthy partners. But current trends toward a significantly greater coincidence of European and Russian interests, which are welcomed by many both in Europe and Russia, should not be grounds for a flawed reverse analysis of Russia's historical path.
Vladimir Berezansky, Jr.
Moscow
Freedom of Speech
In response to "Criticism May Be Sign That NTV Has Yet To Come To Heel" on Nov. 26.
Editor,
The Kremlin should not try to tamper with the media; Russia needs freedom of the press. But NTV officials should not have to be told that they needed careful reporting during the hostage crisis. Savik Shuster was not the man to do the job. Sending him into the fray was like letting a bull loose in a china shop.
Radio Free Europe/Radio Liberty fired him in May last year for violating the station's professional code of ethics. While he was receiving money from Gusinsky for appearances on NTV as a soccer commentator, he used Radio Liberty broadcasts to champion Gusinsky's cause in the NTV dispute. When Jordan and company moved into NTV, Shuster volunteered his services and did an immediate about-face for his new bosses, pooh-poohing the Gusinsky-NTV affair as being merely what he called a conflict of economic interests.
To let distraught relatives of hostages make emotional pleas on televison to the Kremlin to give in to terrorists' demands is inadmissible in a highly explosive situation in which the Russian government was trying not only to save the hostages' lives, but also to make clear that Russia could not be held hostage to any demand that terrorists sought to sharpen by threatening to kill innocent captives. To cave in to the demands of one group of terrorists is to offer an open invitation to other such groups of people for whom human life is not sacred - something on which many other countries that have faced the problem agree.
When Kremlin officials called to tell NTV to fire Shuster, NTV officials should have been able to answer: "Keep out of the media, gentlemen. But you're too late anyway. We've already fired him - because we're professionals."
Wayne Brown
Munich, Germany
Voodoo Economics
In response to "The 1998 Crisis Saved Russia," a comment by Anders Åslund on Nov. 26 and "The Crash: A Step in the Right Direction?," a response from Joseph Stiglitz on Dec. 3.
Editor,
Anders Åslund's account is, as always, penetrating and accurate. I would, nonetheless, have a few remarks to make. It is undoubtedly true that "seldom has a crisis been resolved more successfully," referring to the sequence of events unchained by the default in August 1998. I do not, however, completely agree with the proposed explanations.
To begin with, critics of devaluation, at the time, feared a huge spurt of inflation, which, patently, did not occur. In fact, devaluation was the first building block, at the root of the present successful performance of the Russian economy. Only thanks to devaluation was domestic industry given a chance to compete with foreign producers. This caused an increase in domestic activity, as a consequence of the fact that a majority of Russians could, with a devalued ruble, only afford cheaper, domestically produced goods. This, in turn, had positive consequences both for companies' profits and levels of employment, with the welcome side-effect that increased cash-flow dramatically reduced the problem of arrears on wage payments.
Another, obvious cause of the present positive macroeconomic performance of Russia is the high level of commodity prices, especially oil, on international markets.
The claim that "society was dealt a tremendous shock" is also questionable. Indeed, in 1998, as at present, the great majority of Russians had only limited and occasional involvement with the financial sector, which was the main victim of the 1998 crisis.
Referring to another allegedly misplaced criticism that "the government has persistently collected one-third of GDP in taxes - exactly the U.S. level," it should be noted that the Russian tax base - i.e. who pays taxes - is quite different from the U.S., and, at the same time, tax collection is extremely distorted by incentives, given the arbitrary practices of the tax police and the political motivation of many investigations.
The legislative developments of recent years, namely "undertaking one fundamental reform after another" is, of course, welcome. The hiatus between laws and their implementation remains, nonetheless, a serious cause for concern. Only the next crisis, perhaps a collapse in oil prices, will tell how far Russia has gone on the road to reform.
Donato De Rosa
Paris, France
Dear Editor,
Anders Åslund obviously never leaves his motorcade to see the way most Russians live.
First, these people recommend bad policies, and then, when they fail, they claim that it was the "needed wake-up call." Who woke up, Mr. Åslund? Maybe Western pundits woke up to the fact that Russians can take care of themselves just fine, without spotlight hungry academics telling them what to do.
I have worked and lived in the former U.S.S.R. since 1995 and the only thing I have noticed about Western aid programs is that the funds were misappropriated and, even though everyone knew this, more funds were provided. Now, future generations of tax-paying Russians have to pay for this. Or worse, pay for haughty Western "aid" workers who charged $500 per hour for lousy advice.
Mr. Åslund, you should be ashamed of your comments, as they are condescending, incorrect (the total tax burden in Russia is unchanged despite the reforms, for example) and openly self-serving. The Russian economic crisis was a disaster, leave it at that.
Tim McCutcheon
Moscow
Editor,
It was fascinating to read the sharp debate on recent history and perspectives of Russian economy. While in general I support Åslund's optimistic view, I agree with Stiglitz that it was breaking away from the IMF program in 1998, rather than adhering to it, that was the turning point for the Russian economy - abandoning the unsustainable policy of overvalued currency, high interest rates and exploding GKO debt pyramid.
At the same time, Stiglitz, like other Russia skeptics, subscribes (especially in his book) to the notion that recent economic growth is largely attributed to high oil prices. I strongly disagree. In fact, the average oil price during, for example, from 1995 to 1997, was only about $5 per barrel lower than during the period 1999 to 2002. And while, during that former period, the Russian government begged and borrowed tens of billions from the IMF and international markets and still could not balance its books, in the last four years, Russia paid off nearly $50 billion of foreign debt without refinancing, added $40 billion to forex reserves and even, after that, had a healthy budget surplus and robust economic growth. The change is dramatic, and exceeds many times any alleged windfall from the "oil bonanza."
But the big picture in this debate, in my opinion, is that both Åslund and Stiglitz largely stick with a typical economist's folly that growth or the lack of it can be directly attributed to a set of macroeconomic parameters and specific policy steps. This is equivalent to treating the economy as an electrical device in which pushing some buttons and turning some handles produces predictable output - and the only question is which buttons are connected to which output wires.
This approach ignores the long-term structural state and trends in the economy, which can't be reduced to a few numerical indicators. What is really important is not formal adherence to some mythical set of macroeconomic parameters and IMF targets, but that huge structural changes and very painful adjustments were working their way - often resembling ugly ducklings at first - throughout the Russian economy during the 90s, and finally began to "come of age," to bear fruits, in the last few years. This is the real "invisible hand" that was largely missed by the IMF, financial media and economic analysts.
To give just one example: Until recently, all one could read about Russian agriculture is that it was "backward," "unreformed" and, allegedly, had "almost collapsed" with the drying up of state subsidies. Guess what? It turned out that Russia suddenly became an important grain exporter, instead of a buyer of huge quantities of wheat from abroad, as it was during Soviet times, and the real problem in the immediate future will be overcoming EU trade barriers, not "avoiding collapse and hunger."
The driving force of expansion today is not oil, but long-term factors: Growth in consumption and investment, the rapid development of a modern retail and service sector and the emergence of mortgages and consumer credit (which seems to be finally past the critical point in 2002). It is sustainable because it depends on self-reinforcing, internal factors, not on an external financing boom or a dangerous asset bubble.
Political stability, improved corporate governance, pragmatism and increasing professionalism among the Russian political and economic elites - all of this is part of the virtuous circle that can fuel economic growth for at least a decade. The recent vigorous push to this positive momentum was the government's decisive action during the "Nord-Ost" hostage stand-off. This contrasted sharply with the malaise and chaos of the early and mid-90s. Investors clearly took notice.
The more the European media beau monde anguished about poor mistreated terrorists, the more the Russian Eurobonds in my portfolio appreciated in value. And I count on keeping it that way.
Kirill Pankratov
Boston, Massachusetts
Editor,
The debate between Åslund and Stiglitz about the causes of Russian decline in between 1992 and 1998 and growth after the default appears to have touched a nerve, having expressed their opinion, sometimes in a highly emotional manner. It is easy to understand the reason for emotion: At stake is the reputation of Western economic advisors to the Russian governments during the transition. Has the title of advisor become an asset or a liability?
I choose not to address this issue. Honest economists admit their mistakes (to err is human, after all), while those who are dishonest will not be convinced by any argument. However, for the sake of truth, it is necessary to put things straight.
Stiglitz makes a few hasty generalizations but his position is generally sound. He does not argue that the IMF advice was technically wrong. The main stress is on the distinction between economics and politics that this institution, as many other international organizations, maintains. Did the IMF economists not realize that the pledge of unconditional financial support for the Russian government induced the latter to behave irresponsibly? Certainly they did. But knowing does not necessarily imply acting. Apparently, there were more important things than providing correct economic advice. More like being "politically correct."
In this respect, I am surprised that there is no serious discussion about what happened immediately after the default. August 1998 represented a clear structural break from previous economic policies, and the actions of the Primakov government deserve a detailed examination.
Yegor Gaidar's ususally outspoken institute is extremely shy when it comes to explaining the events of late 1998 and early 1999 (see the annual report for 1998 at www.iet.ru). Åslund prefers to ignore Primakov as well. However, many things that Russia is proud about today trace their roots to this period: The fall in trade and tax arrears, the disappearance of non-monetary trade and a federal-budget surplus. Of course, one should note controversial things that the Primakov government did, like taking unnecessary U.S. trade credit for the purchases of agricultural products.
The Russian transition of 1992 to 1998 was a complex period. Its intricacies are not well understood and I would not be surprised to see future generations of economic historians spend as much time discussing what conditioned the transition as they do with the Great Depression of 1930s today. There is no simple judgment as to which policies succeeded and which failed. However, a few points seem clear:
1) The transition was necessary. The command system failed and had to be replaced.
2) The best alternative to the command system was a market economy in a Western style.
3) Social engineering (of the early reformers' style) did not bring about the desired results (Russia did not become wealthier).
4) Successive economic shocks (the non-payment crisis of 1992, inflation in 1993, the default of 1998) sponsored evolutionary adjustments that proved to be successful in the long run (Russia is closer to its objective of becoming a wealthy Western market economy today than it was 10 years ago).
I do not see how Stiglitz contradicts these statements. Åslund disagrees with points 3 and 4. Thus, from my perspective, he loses the debate.
Vlad Ivanenko
London, Canada
TITLE: A Constitution Perfect To Suit Every Situation
AUTHOR: By Vladimir Ryzhkov
TEXT: WHEN Russians went to the polls nine years ago to vote on a new constitution, they understood very well why they had been called upon to cast their ballots. But they had only a vague idea just for what they were actually voting. They were driven by hope and fear, as people usually are in such situations.
Russians were frightened. They had just seen tanks open fire on the parliament - a small-scale civil war in the heart of the capital. The new constitution promised stability and an end to civil strife. Elections to a new parliament were called at the same time, and hastily formed parties battled for seats in the still non-existent Federal Assembly. In this sort of hysterical state, a country will buy just about anything. And that's what happened.
No one really read the constitution all that closely until after its adoption. I remember well how the deputies of the first post-Soviet State Duma studied the country's basic law throughout their term in the legislature. As it turned out, the constitution we had passed, more or less blindly, wasn't all that bad. The new constitution was based on sound, modern principles. The articles laying the foundations of the constitutional order - the designation of Russia as a "democratic federal rule-of-law state with a republican form of governance," its provisions on civil and human rights, the justice system and local government - would do honor to any democratic country in the world.
To this day, the constitution "weighs" on legislators, compelling them to adopt important laws even when they enjoy little real support. This was the case with the law on alternative military service, which the Duma recently passed, and the decision to introduce universal trial by jury.
At the same time, the circumstances in which the 1993 constitution arose, and the personalities of those who defined its basic parameters, left an indelible mark on the document itself, and on the political life of the country. The constitution served as the table at which the victors of October 1993 gathered to feast.
At the head of the table sat Boris Yeltsin, the tsar-like democrat. The powers of the president enshrined in the 1993 constitution seemed to have been based on those of Emperor Nicholas II following the October Manifesto of 1905 - head of state, guarantor of the constitution, defender of the country's sovereignty and integrity, coordinator of all branches of power, chief architect of domestic and foreign policy, commander-in-chief, etc. The power of the president, which Yeltsin used to bring Soviet institutions to heel and to sweep away Soviet symbols, is now being used by his successor, Vladimir Putin, to restore a number of those institutions and symbols. The president's excessive constitutional powers constitute the main flaw in the political system. Far too much depends on who's in the Kremlin, and who's there with him or her. The temptations are too great, and the checks are too feeble.
After its defeat in October 1993, parliament was relegated to the servants' table. The Federal Assembly was shorn of real power and excluded from the process of handing out ministerial portfolios, making it one of the weakest parliaments in Europe from a constitutional and political point of view. The assembly has proven especially weak in "Putin's" Russia, where the head of state effectively controls both chambers of the legislature without belonging to a political party. The Duma enjoyed a brief taste of power after the 1998 default, when it participated in the formation of post-Soviet Russia's first (and last?) coalition government, led by Yevgeny Primakov. But, since that time, no further experiments involving the Duma in cabinet decisions have been attempted.
The other victors of 1993 fared little better. The regional leaders garnered significant powers and privileges, and seemed to have reserved their place at the head table. The federative organization of the state and the weakness of civil society combined to give them practically unlimited power on home turf, and broad influence on policy at the federal level. All of that has now gone by the wayside. The governors have been herded into the largely irrelevant State Council. Their places at the head table have been taken by Putin's plenipotentiary representatives - his envoys to the seven federal districts.
The lesson of the last three years is that Russia's federal foundation can be undermined without trampling too rudely on the constitution. Budget revenues were centralized and federal districts created without violating the constitution. The Federation Council was reformed and defanged, and a new law on regional government passed that allows Moscow to dismiss elected regional leaders and to dissolve regional legislatures - all without violating the constitution. Planned reform of the relations between the federal center and local governments could well become the next step in the ongoing building of the executive chain of command.
Thus, a constitution containing the most liberal of principles and freedoms was used to establish a regime controlled by an elected president wielding practically unchecked power. The experience of the past few years has shown that the constitution permits the most varied, often contradictory developments, from Yeltsin's call for regional leaders to take all the sovereignty they could handle, to Putin's strict "power vertical." From the strong parliament that played a decisive role in forming the Primakov government to the current weak, subservient Federal Assembly. From uncontrolled freedom of speech under Yeltsin, when even state-owned television broadcast strong criticism of the president, to the current unspoken but nonetheless effective censorship of all channels, even those that are privately owned. From wide-open political competition to an unconditional political monopoly.
The constitution is like a play that allows plenty of room for the director's interpretation. On the basis of a single document, Russia's political elite can create a hymn to freedom and a stirring tale of "order" lost and found.
There is less and less demand for freedom in Russia today. The demand is for "order." More and more people contend that the norms set out in the constitution are outdated. Vladimir Platov, governor of the Tver region, recently proposed that the president appoint governors, and that the governors in turn appoint the heads of municipalities and districts - bypassing the electorate altogether. He also proposed eliminating the president's two-term limit and increasing the length of each term to five years. And Platov is hardly alone.
Many now find the constitution's democratic and federative principles an annoyance. The enormous powers of the head of state seem insufficient to them. They would like to see the rise of an authoritarian regime that eliminates political competition, public control of the bureaucracy and the battle against monopolies and corruption.
All of this is extremely dangerous. Frequent changes to the basic principles of statehood, the fundamental rules of the game, are signs of a country with strong authoritarian traditions, a weak civil society and unstable democratic institutions. If Russia heads down this slippery slope, it will be following in the footsteps of such countries as Turkmenistan, Uzbekistan, Azerbaijan, Kazakhstan and Belarus. Pressure on the constitution is mounting daily. The number of constitutionally "questionable" decisions increases. But the ship is still afloat.
The constitution is a classic political play. Just like Pushkin's "Boris Godunov," it contains its share of ghosts from the time of Ivan the Terrible and the young Peter the Great. But it is a Russian classic all the same. Not a word should be cut. Nor can we allow it to be rewritten at the whim of those in power. Pushkin is "our everything." But the constitution is, too. This should be the position of every responsible citizen of the Russian Federation.
Vladimir Ryzhkov, an independent State Duma deputy, contributed this comment to The St. Petersburg Times.
TITLE: Encouraging Signs for the Russian Media
TEXT: "WHEN I first spoke to a meeting organized by the American Chamber of Commerce in Russia in 1994, only a dozen staunch investors were present, and none of us could have imagined that we would be here today discussing foreign investment in the Russian mass media. The media in this country, unlike other sectors, took a long time to develop as a business." I am paraphrasing from the opening remarks of Boris Jordan, Gazprom-Media's general director, delivered last week at a breakfast forum organized by AmCham.
"As you can see, I've gone gray working in Russia, but it's still easier to work here than in Norway," said Reidar Karlsen, managing director of A-pressen Russian Media, a subsidiary of Norwegian media group A-pressen. "A colleague of mine who competes in the newspaper market in Norway's second-largest city has lost all his hair."
A-Pressen is one of the main Western investors in the Russian media market today. It has built several printing houses, invested in regional newspapers and bought a blocking stake in the newspaper Komsomolskaya Pravda, which is controlled by Vladimir Potanin's Prof-Media. Karlsen spoke in late November at a conference on opportunities for foreign investors in the Russian mass media. The conference was conducted as part of a meeting of the board of the World Association of Newspapers, the leading international organization of newspaper publishers.
What is attracting investors to Russia? First and foremost, the rapid growth of the advertising market in the context of stable overall economic growth. In recent years, the advertising market has expanded by from 40 to 50 percent per year. The size of the advertising market is expected to hit $2.5 billion this year, and could reach $4 billion in 2004. The media industry in the West, by contrast, is in a period of recession. Jordan noted that some Russian media specialists working in leading Western companies now express a willingness to return to Russia. An influx of qualified specialists with knowledge of the local market would provide an extra boost to the development of the media industry.
The main impediment to the growth of the media market in this country is the continued domination of nonmarket factors.
The government remains a major player on the media market. Two government-supported television stations, Channel One and Rossia, sit on up to 70 percent of television-ad revenues, leaving the other 1,000 or so companies now in operation to fight over the remaining 30 percent. Karlsen said unfair competition from publications subsidized by the state and by local business interests forces the regional newspapers that A-Pressen has invested in to keep their prices artificially low and to operate at a loss for now.
Yury Purgin, head of the Altapress Publishing House in Barnaul, one of the most successful independent Russian publishers, told the WAN conference that the 500,000 rubles ($15,700) his company pays in local taxes every year is equal to the subsidy that his competitor, a state-owned newspaper, receives from the local government.
The government's media-market policy is illogical and irrational. It is a financial burden on the state and hinders the normal development of an independent press. The public's mistrust of the state-controlled press extends to the mass media as a whole. Karlsen said it would take years for his local newspapers to earn readers' trust. The government has frequently declared its intention to pull out of the media market, but it has yet to match words with deeds.
I keep coming back to Jordan's remarks last week, however. The fact that two serious international organizations met to discuss investment in the Russian mass media within two weeks of each other could be seen as a coincidence or as a sign of good things to come.
Alexei Pankin is the editor of Sreda, a magazine for media professionals (www.sreda-mag.ru)
TITLE: Global Eye
TEXT: Fade to White
Governing a country is largely a mundane affair: a daily grind of budgets, legislation, policy-making, appointments and so on. But underlying every government is something deeper, nobler - a greater vision of the ideal society, the best way to order the world. It's a cherished dream, a touchstone, that guides and inspires the wielders of power as they carry out their prosaic duties of public service.
This month, we were vouchsafed a rare glimpse of the greater vision that guides the Bush Administration - a picture of the ideal society that they are working so hard, so selflessly to build in the hallowed American homeland. It came as Republican luminaries, including President Bush himself, hosted gala birthday celebrations for the country's oldest senator: Strom Thurmond, Republican from South Carolina, who turned 100 last week - still holding office, although he will finally retire in January. Thurmond's long and colorful career included a run for the presidency in 1948, when he carried several states before losing to Harry Truman.
Senator Trent Lott of Mississippi - the new Senate majority leader-touched on that historic 1948 race when offering his unstinting praise for Thurmond. "I want to say this about my state," Lott declared. "When Strom Thurmond ran for president, we voted for him. We're proud of him. And if the rest of the country had followed our lead, we wouldn't have had all these problems over all these years, either."
What stirring moments, as the leader of the free world - the leader of all those who believe in goodness, justice and civilization - joined the most powerful man in the U.S. Senate in embracing the vision of society put forth so long ago by Senator Thurmond. It must have seemed a doomed, quixotic crusade back in those dark days of '48, when Harry Truman and his rootless cosmopolites buried Thurmond's authentic Americanism in a blitz of big money and slick PR. But now, what sweet vindication to see that vision resurrected by a dynamic president and his faithful followers!
And what is this vision that stirs such pride in Bush and Lott, this vision whose earlier fruition would have spared the country "all these problems over all these years?" O Clio, muse of history, carry us back through the mists of time and let us hear again the plangent voice of Strom Thurmond in 1948, calling his people on to glory in the holy name of "white supremacy."
"We stand for the segregation of the races and the racial integrity of each race! All the laws of Washington and all the bayonets of the army cannot force the Negro into our homes, our schools, our churches!"
Thus did Thurmond rouse the faithful after Truman dared offer a civil-rights law to the nation. Among the "socialistic-communistic" measures in the proposal: "equal protection under the law" for all citizens; a federal law against lynching; an end to "poll taxes" that kept poor blacks (and whites) from voting; and a request that the army stop segregating its black soldiers.
This was too much for Thurmond, who, as political master of South Carolina, had forced through a law requiring anyone voting in the state's primary elections to "swear allegiance to racial segregation in religious, social and educational affairs." Truman's communistic plan would "bring about the end of segregation in the South, forcing mixing of the races in our hotels, in our restaurants, in our schools, in our swimming pools," Thurmond thundered, painting a veritable vision of hell. Negro germs in the swimming pools! Laws against lynching! The horror, the horror.
In Lott's Mississippi, they knew the score. Official 1948 party documents warned that a vote for Truman would mean that his "vicious anti-lynching and anti-segregation proposals will become the law of the land, and our way of life in the South will be gone forever." And what a life of goodness, justice and civilization it was: Mississippi was the top-ranked lyncher of uppity darkies in the century following the Civil War. Of the 3,442 officially acknowledged extrajudicial killings of blacks, Trent's boys bagged 538 of them, far outpointing the 352 recalcitrant coloreds murdered by the good Christian folk in the third-place state, George W.'s Texas.
It is this "way of life" that Lott - this month - said should have been made the law of the land. Although he later declined to elaborate on which "problems" could have been "avoided" by building a countrywide system of Mississippi-style apartheid, all those raised in the Old Confederacy - including Lott, Bush and your own Global Eye - know exactly what his code words meant.
It's true that many decades later, after African-Americans had fought and died for the right not to be lynched in their own country, Thurmond belatedly began whoring after their votes. But this was just expediency; after all, the Web site of the "Strom Thurmond Institute" at Clemson University even now declares that his 1948 pro-lynching, white-power campaign was "founded on the same philosophic and political principles that have always been Senator Thurmond's, and which today have regained the country's attention."
Indeed they have, as Bush's celebration of Thurmond shows. But, oddly enough, the president's own highly expedient appointees, Colin Powell and Condi Rice, weren't around to fete the cuddly old codger. Not to worry, though; we have it on good authority that the dusky pair are still allowed to use the White House swimming pool.
Unless Trent's taking a dip, of course.
TITLE: Hamas Fighters Die as Israel Ups Security
AUTHOR: By Mark Lavie
PUBLISHER: The Associated Press
TEXT: JERUSALEM - Israeli soldiers on Monday killed three Palestinians, two of them armed Hamas fighters, and troops destroyed several houses, leaving more than 100 people homeless in separate confrontations in the Gaza Strip, Palestinians said.
In the northern Gaza Strip, Israeli soldiers shot dead the two Hamas fighters who were trying to infiltrate Israel in the Beit Hanoun area, Israeli military officials and Palestinian witnesses said.
"I can see from my farm here two bodies lying in the battle zone. One of them is wearing a military uniform," said Ali Ismail, a farmer who lives in the area. He said a gun battle raged for hours.
The bodies were found in the morning, military officials said, along with grenades, ammunition and bombs the men were carrying. But Hamas sources identified the dead as its fighters, Abdel Karim Shabat, 19, and Mohammed Adwan, 18.
Near the Jewish settlement of Neve Dekalim in the Gaza Strip, Israeli troops said there were fierce firefights throughout the night. A Palestinian was killed in the fighting. His family members said he had gone out during the night to check the irrigation system on the family farm and his body was found in the morning.
In Rafah, a flashpoint for violence near the Gaza-Egypt border, Israeli soldiers demolished 16 houses, leaving more than 100 people homeless, said Saed Zoarab, the refugee camp's mayor. Officials have not been able to reach the area because soldiers constantly fire on people who pass by, he added.
The army said the buildings were abandoned structures used by Palestinian gunmen as cover when firing on soldiers and detonating explosives. Palestinians are not allowed to enter the area, which is very close to the Jewish settlement of Morag, the army added.
Earlier, Palestinian leader Yasser Arafat said Osama bin Laden was harming the Palestinian cause and should stop invoking it to justify attacks by his al-Qaida movement.
After twin terrorist attacks aimed at Israelis in Kenya last month, al-Qaida claimed responsibility and dedicated the operation to the Palestinians. But Arafat, who has been battling an Israeli attempt to lump the Palestinian struggle in with the al-Qaida campaign against the West, rejected the gesture.
"I'm telling [bin Laden] directly not to hide behind the Palestinian cause," Arafat said in an interview published in the London Sunday Times.
Bin Laden "never helped us, he was working in another completely different area and against our interests," Arafat said.
Israel recently claimed that al-Qaida members had infiltrated the Gaza Strip, but the Palestinians hotly denied that.
Arafat aide Ahmed Abdel Rahman said, "We don't want our just cause to be used as a cover by [Israeli Prime Minister Ariel] Sharon and his government to continue their escalation - as though, if the U.S. is fighting al-Qaida in Afghanistan, so Israel is fighting al-Qaida in Palestine."
On Sunday, the Israeli cabinet decided to bar Arafat from Bethlehem during Christmas celebrations, a government source said on condition of anonymity.
Also, Israel's military chief told the cabinet ministers troops would remain in the town of Jesus' birth throughout the holiday because of security threats.
The Palestinians, who take great pride in hosting the Christmas services in Manger Square that attract Christian pilgrims from around the world, sharply criticized the Israeli ban.
"The Israeli decision ... is a violation of their promises to the American administration, the Vatican and the pope," said Nabil Abu Rdeneh, Arafat's spokesperson. "All the excuses that they give are lies and are rejected."
Arafat is a Muslim, but since returning from exile and becoming head of the Palestinian Authority, he regularly attended the Christmas celebrations in Bethlehem, beginning in 1995.
Last Christmas, Israel prevented Arafat - whom it blamed for failing to prevent terrorist attacks - from traveling the 20 kilometers from Ramallah to Bethlehem.
Israeli soldiers have occupied all main Palestinian cities and towns in the West Bank, except for Jericho, for most of the past six months in an attempt to stop Palestinian suicide bombings and other attacks.
TITLE: Congress Of Exiles Tackling Iraq's Fate
AUTHOR: By Salah Nasrawi
PUBLISHER: The Associated Press
TEXT: LONDON - Iraqi dissidents struggling to agree on who should serve on a committee to shape Iraq's future if President Saddam Hussein is removed have extended talks in London until Tuesday.
Some 300 Iraqi exiles - drawn from various regional, religious and political backgrounds - began talks here on Saturday aimed at forming a transitional government to replace Hussein.
But aside from agreeing on the need for an interim administration and having the Iraqi president tried for war crimes, the Iraqi exiles have found consensus elusive.
Talks were originally scheduled to finish Sunday, but dragged into Monday. Opposition officials then said they would need another day to settle unresolved issues.
The key sticking points are over the membership of a policy-making committee for Iraq's future and the desire of an opposition party that wants Iraq run as a monarchy to have a referendum held on what form any new Baghdad regime should take.
Each opposition faction wants to be included in the policy committee because many believe it would serve as a transitional government if Hussein is toppled.
Iraqi women and tribal chieftains are complaining that they are already being shut out of the committee, which is expected to have room for 40 representatives.
The United States, which has threatened to remove Hussein for stockpiling weapons of mass destruction, helped organize the three-day London meeting to prepare Iraq's political future.
Delegates on Sunday settled on a list of 49 officials of the current Iraqi regime - including Hussein and his two sons - who should face trial, and others who should be granted amnesty.
"This committee will issue a general amnesty and start national reconciliation after regime change in Iraq," conference spokesperson Hamid al-Bayati told reporters.
Iraqi Vice President Taha Yassin Ramadan has dismissed the conference, saying he does not pay attention to "what is called the Iraqi opposition."
Conference delegates have expressed concern that a post-Hussein Iraq would descend into chaos.
The main opposition factions were pressing for the greatest influence over the committee as independent delegates said they should play a greater role in shaping Iraq's future.
Sunni Arabs have complained the London conference was dominated by Shiite and Kurdish groups and said they fear the policy-setting committee will be as well.
Sunni Arabs, while a minority in Iraq, have controlled politics and the military there for decades.
TITLE: Inspectors Visit Ex-Nuclear-Bomb Premises
AUTHOR: By Nadia Abou El-Magd
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq - UN weapons inspectors searched a sprawling complex where Iraqi scientists once worked on a nuclear bomb, one of at least six sites they visited Monday morning.
Monday was the third consecutive day UN inspectors were at al-Qa'qaa, near the town of al-Tuwaitha, about 25 kilometers southeast of Baghdad. The site had been under UN scrutiny in the 1990s and was involved in the final design of a nuclear bomb before Iraq's nuclear program was destroyed by UN teams after the 1991 Gulf War.
The United Nations offered few details about Monday's inspection at al-Qa'qaa. During their Sunday visit, inspectors said a chemical team updated information about a sulfuric acid plant, an explosives-production plant and storage areas. Sunday's inspection also focused on a production unit built between 1998 and 2002.
Also, for the third day in a row, inspectors visited Hatteen, a complex some 65 kilometers south of Baghdad. Hatteen houses a number of government factories that produce everything from cars to ammunition.
Inspectors also visited electronics and heavy machinery factories in Baghdad, the Biological Technologies Institute at Baghdad University, and what Iraqi officials described as a small boat factory 32 kilometers north of Baghdad.
In Berlin, the German defense ministry said Sunday that the United Nations had asked it to supply the inspectors with unmanned spy aircraft. A decision on whether to supply the LUNA drones and the technicians needed to maintain them likely will be made this week, said a ministry spokesperson on condition of anonymity.
The inspectors are working in Iraq under a UN resolution passed last month that threatens serious consequences if Iraq fails to prove it has surrendered all its banned weapons. The United States has threatened to attack Iraq - alone if it deems it necessary - and says it has proof Iraqi President Saddam Hussein is hiding weapons of mass destruction. Iraq says it has no such weapons.
Sunday, in one of what has become a series of routine confrontations, U.S. and British jets patrolling the southern no-fly zone over Iraq fired on a surface-to-air artillery battery and a mobile radar unit after coming under fire, the U.S. Central Command reported on its Web site.
An Iraqi military spokesperson said "the evil American and British warplanes bombed civil and service installations in the provinces of Dhi Qar and Wassit" on Sunday but offered no further information, the official Iraqi news agency reported.
British and American planes have been patrolling zones over northern and southern Iraq since the Gulf War to keep Iraqi forces from flying there. Iraq says the patrols violate its sovereignty and its forces frequently shoot at allied pilots both in the northern zone set up to protect the Kurdish minority and the southern zone to protect Shiites. Iraq has never shot down a coalition warplane.
TITLE: Gore Pulls Out of 2004 Presidential Race
AUTHOR: By Will Lester
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Al Gore left the field of potential 2004 Democratic U.S. presidential candidates in a surprise move that immediately raised the stakes for a half-dozen others pondering a run for the White House.
The party's 2000 nominee made his announcement Sunday on CBS' "60 Minutes." Some close aides had expected him to start making calls to political and financial advisers to test the waters and then make a decision over the Christmas holidays.
While saying he still had the energy and drive to run again, Gore, 54, noted "there are a lot of people within the Democratic Party who felt exhausted [by the 2000 race] ... who felt like, OK, 'I don't want to go through that again.' And I'm, frankly, sensitive to that feeling."
Many Democrats expressed surprise at the timing of the decision, which came after Gore spent several days in New York discussing his plans with family members.
Potential rivals moved quickly to praise Gore, who still has a considerable following among Democratic voters.
Gore won the presidential popular vote by a half-million votes in 2000 but conceded to Republican George W. Bush after a tumultuous 36-day recount in Florida and a 5-4 Supreme Court vote against him.
Senate Democratic leader Tom Daschle, Missouri Rep. Dick Gephardt, Massachusetts Senator John Kerry, Vermont Governor Howard Dean and North Carolina Senator John Edwards promptly praised Gore as an important force in the party who was certain to contribute more to the party in future years.
Connecticut Senator Joseph Lieberman, possibly closest to Gore after serving as his running mate in 2000, planned to respond Monday. Associates said they don't expect Lieberman to announce his political plans quickly, though they say it's very likely he will run for president.
After seeking the presidency or vice presidency every four years since 1988, Gore said Sunday he'll probably not have another chance to run for the White House.
And he said a rematch with Bush "would inevitably involve a focus on the past that would in some measure distract from the focus on the future that I think all campaigns have to be about."
Party activists were critical of Gore for losing despite a booming economy and eight years of a Democratic administration. Gore even lost his home state of Tennessee; a victory there would have given him the White House.
Associates have said Gore was getting more comfortable with the idea of life as a private citizen. He made an appearance on NBC's "Saturday Night Live" this weekend that might have been considered risky were he seeking the presidency.
In one SNL sketch that must have had a special poignancy for him, Gore visited the set of NBC's "West Wing," a popular TV show about the president and his staff. Gore sat at the desk in the mock Oval Office as if he belonged there, then told cast members to go to dinner without him because he wanted to linger a little longer in the place he nearly claimed two years ago.
TITLE: Stackhouse Steps Up To Fill Jordan's Shoes
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Michael Jordan happily sacrificed scoring for a victory, while Shaquille O'Neal took command to help the Los Angeles Lakers pick up their 10th win of the season.
Jordan matched his career low with two points on 1-for-9 shooting, but Jerry Stackhouse filled the void with 28 points, leading the Washington Wizards to a 95-82 road victory over the short-handed Toronto Raptors 95-82 on Sunday. O'Neal had 30 points and 14 rebounds and the Lakers capitalized on the absence of Orlando's Tracy McGrady, the NBA's leading scorer, in the second half, beating the visiting Magic 107-84 and snapping a two-game losing streak.
Jordan matched his season high of 40 minutes Sunday, and contributed nine assists and eight rebounds as the Wizards snapped a two-game losing streak.
"I wasn't going to shoot. I didn't care about shooting," Jordan said. "How many points did I have? ... Nine assists and two points. To me, that's how you win."
"What this team needs is someone who can sacrifice their game for the betterment of the team. I'm not afraid to step up and do that. We need to win. We need to get that attitude back. Somebody has to sacrifice their game. I don't mind that it's me right now."
Jordan's lack of scoring didn't bother coach Doug Collins.
"I think he was happy with his two points today because of the way the team played and all the other things he did," Collins said. "This was one of the best games he's played for us this year in terms of doing what needed to be done to win the game."
Kwame Brown and Larry Hughes added 14 points apiece for the Wizards, who never trailed after Stackhouse ignited an 11-2 run with a 3-pointer that opened the second half.
Lindsey Hunter had 22 points for the Raptors, who were without injured All-Star Vince Carter and leading rebounder Antonio Davis. Toronto has lost four straight games and six of seven.
In Los Angeles, the slow-starting Lakers became the 21st team in the league to reach double-digit victories.
"A 10th win - we got out of the single digits," Rick Fox said. "Being able to shut people down - we seem to take pride in that at playoff time. Right now we need to move that up."
Kobe Bryant had 21 points, eight rebounds and six assists and Derek Fisher had 19 points, six rebounds and five assists as the Lakers outrebounded the Magic 52-36.
For the second straight game, O'Neal left Staples Center without speaking to reporters.
"Shaq was tough down the middle, so you have to give them credit tonight," Orlando's Darrell Armstrong said.
An improved defensive effort was the foundation for Los Angeles' most one-sided win of the season.
"We played a much more aggressive game tonight," Lakers coach Phil Jackson said. "It's just one game, we have to come back and make it more than one game and repeat the effort."
The absence of McGrady helped.
McGrady, averaging 30.1 points, scored 21 points in the first half, but played just two minutes in the second after bruising his back.
McGrady, walking gingerly as he left the arena, said he got elbowed in the back but hoped to play Monday night at Phoenix.
"I am a little sore," he said.
Grant Hill had 16 points and Darrell Armstrong added 15 points for the Magic, who lost for the fourth time in five games.
Sacramento 107, New Orleans 92. In Sacramento, California, Chris Webber had 28 points, eight rebounds and seven assists, as Sacramento extended its home winning streak to 12 games.
Webber shot 12-for-16 and Doug Christie finished with 21 points as the Kings beat the Hornets for the fifth straight time at Arco Arena and won for the eighth time in 11 games overall.
Baron Davis scored 23 points, and David Wesley and Jamaal Magloire each added 15 points for the Hornets, who had their four-game road winning streak stopped.
(For other results, see Scorecard.)
TITLE: Eagles Soar to NFC East Championship
PUBLISHER: The Associated Press
TEXT: PHILADELPHIA - The Philadelphia Eagles are NFC East champions again, and they could face a familiar foe in the playoffs.
Minus Donovan McNabb, the Eagles clinched the NFC East title Sunday with a 34-21 home victory over Washington. Philadelphia (11-3) is 4-0 without McNabb, who broke his right ankle Nov. 17. If the Eagles win at Dallas and the New York Giants, they will have home-field advantage for the NFC playoffs.
Against Washington, A.J. Feeley threw two touchdown passes and was 16-of-28 for 220 yards.
Tampa Bay (11-3) also clinched a playoff berth for the fourth straight season, holding off Detroit 23-20. The Bucs, who tied franchise records for wins and road victories (five), can win the NFC South on Sunday night with a road victory over Chicago.
Earlier this season, the Eagles beat Tampa Bay 20-10 in Philadelphia. They also won 31-9 at home in a wild-card game last season.
Against the Lions, Martin Gramatica kicked a 38-yard field goal with 3:04 left. Detroit's Jason Hanson was short on a 57-yard attempt with 1:51 left.
The weekend also saw Atlanta and Seattle play in the league's 22nd overtime game this season, setting an NFL record. And Cincinnati quarterback Jon Kitna ripped the league's lowliest organization and questioned the ownership's dedication to winning.
In Atlanta, Shaun Alexander's 27-yard TD run gave Seattle a 30-24 victory after Atlanta's Jay Feely missed a 36-yard field goal.
The previous record of 21 OT games was set in 1995.
The Bengals didn't come close to extra time against Jacksonville, losing 29-15 at home. Cincinnati has the NFL's worst record at 1-13 and matched the franchise record for losses.
In the last 12 years, the Bengals have had the league's worst record. They haven't had a winning season since 1990.
"I'm saying that, as an organization, we don't expect to win," Kitna said. "And if you don't expect to win, you're not going to win very often. Until you expect to win and do the things that are necessary to win - until you give your players reason for optimism - you're going to have a tough time."
Philadelphia 34, Washington 21. At Philadelphia, Feeley threw touchdown passes to Duce Staley and to Antonio Freeman.
Washington (5-9) was sloppy, and two fumbles led to Philadelphia scores. Champ Bailey fumbled a punt for the second week in a row to set up a field goal by David Akers. Carlos Emmons had a 44-yard fumble return for a score in the third quarter.
Tampa Bay 23, Detroit 20. At Detroit, Martin Gramatica kicked three field goals, Brad Johnson was 24-of-41 for 253 yards for the Bucs, and Keyshawn Johnson caught six passes for 90 yards.
The Lions (3-11) were without quarterback Joey Harrington after the first drive because of an irregular heartbeat. Harrington's heart returned to a normal rhythm before he was hospitalized, but he stayed overnight at Henry Ford Hospital as a precaution.
Seattle 30, Atlanta 24 (OT). At Atlanta, Matt Hasselbeck was 22-of-31 for 298 yards and a touchdown for Seattle (5-9). Michael Vick was 21-of-38 for 240 yards, and ran for 40 yards on 13 carries for the Falcons (8-5-1).
Miami 23, Oakland 17. At Miami, the Dolphins limited the NFL's top-ranked offense to 218 yards as Miami (9-5) tied the Raiders (9-5) for the best record in the AFC with two games left.
Ricky Williams ran for 101 yards, Jason Taylor had three sacks, and Patrick Surtain intercepted Rich Gannon's pass to end Oakland's last bid. Oakland had only 162 yards passing.
Green Bay 20, San Francisco 14. At San Francisco, a steady downpour didn't stop Brett Favre from passing for 201 yards for Green Bay.
Green Bay's defense also stepped up, stopping the 49ers' final drive at the 11 with 22 seconds left.
Ahman Green ran for 90 yards and a touchdown, and Donald Driver caught a TD pass for the Packers (11-3). Jeff Garcia drove the 49ers (9-5) from their 26 to the 11 before throwing three incompletions. Both teams already clinched their divisions and playoff berths.
Jacksonville 29, Cincinatti 15. In Cincinnati, Mark Brunell threw a season-high three touchdown passes for Jacksonville (6-8). The smallest crowd ever at Paul Brown Stadium - 42,092 - watched the Bengals (1-13) tie the franchise record for losses in a season.
(For other results, see Scorecard.)
TITLE: Penguins Slip Up as Ducks Start To Fly High
PUBLISHER: The Associated Press
TEXT: ANAHEIM, California - The Anaheim Mighty Ducks are beginning to find scorers to take the pressure off Paul Kariya and Steve Rucchin. Not that they need much offense the way Jean-Sebastien Giguere is playing in goal.
Giguere made 19 saves for his franchise-record third consecutive shutout in the Mighty Ducks' 5-0 victory over the Pittsburgh Penguins on Sunday night. "It's flattering, but you have to put the whole team in," Giguere said. "My teammates made it much easier for me."
Andy McDonald had the second two-goal game of his NHL career and linemates Mike Leclerc and Matt Cullen each had four-point games. Cullen assisted on the final four goals, setting a career high for assists and matching one for points.
"He's got some confidence, he's got some jump, he's really rolling since he started playing with Andy McDonald," coach Mike Babcock said. "Now you add Mike Leclerc to that group and suddenly we have a really strong line there. Today they were relentless on the puck. They had great speed and they were hard to play against."
Giguere has not allowed a goal in the last 200 minutes, 15 seconds - a franchise and personal record. The shutout was his fourth of the season, and 12th of his career.
"Our penalty kill was excellent early when we needed it," said Babcock, whose team killed two penalties in the opening 10 minutes and three overall. "All in all, it was a pretty good night for us. We didn't give them many opportunities."
"They played hard last night in a tough overtime game," Pittsburgh coach Rick Kehoe said. "Some of our best players logged a lot of ice time last night and this is what happens sometimes. We knew it would be tough tonight."
Mighty Ducks defenseman Keith Carney opened the scoring 10:17 into the first period, followed by Petr Sykora at 19:07 off a Cullen rebound.
Anaheim added two more goals by McDonald and Leclerc in the second, when it outshot the Penguins 16-4.
McDonald scored his ninth of the season at 8:14 of the third for 5-0.
Phoenix 2, Los Angeles 1. Referee Tim Peel pointed to the net three times to confirm the goal, then waved the goal off, before finally signaling a goal a second time.
When it was all sorted out by video review, Branko Radivojevic had a goal and the Phoenix Coyotes had a victory over the Los Angeles Kings on Sunday night.
Radivojevic one-timed a pass from Daniel Briere into Jamie Storr's pads from the left side of the crease with 7:03 left to help the Coyotes win for the second time in three games after winning only one of their previous 11 attempts.
"I'm sure it was in the net," Radivojevic said. "I think the goalie sat on it, but it was in the net for sure."
That the goal was reviewed was cause for concern for the Coyotes, who have had six goals disallowed either by the on-ice or video officials in their last three games.
"We were starting to wonder," said Teppo Numminen, who assisted on Mike Johnson's first-period goal. "We got a break and it's a huge break for us."
Storr said he had the puck trapped under his left thigh, but wasn't certain whether the puck crossed the goal line as he fell back and started to slide into the net under a crush of players.
"Where I was, it was close to the line," Storr said. "When I scooted forward and opened my legs, it was a foot out. If it went in, great. If not, someone made a mistake."
Adam Deadmarsh scored his team-leading 13th goal for the Kings, who saw their three-game winning streak snapped.
"The way we've been playing defense, one goal sometimes can get us a point," Los Angeles coach Andy Murray said. "But we still need to finish more of our opportunities."
The Coyotes took a rare early lead with a power-play goal at 5:03 of the first. Storr stopped a shot by Ladoslav Nagy and the puck dropped to the top of the crease. Johnson shook off his defender, lunged and tucked the puck just under the crossbar for his eighth goal.
The goal was Phoenix's third first-period goal in its last six games. The Coyotes have surrendered nine first-period goals over the same span and had not held a first-period lead since scoring the first two goals in a 3-2 overtime loss to San Jose on Dec. 3.
"First-period goals are big, especially at home," Numminen said. "We've got to come out jumping."
Deadmarsh tied it with 14:55 remaining, when he gained control of the puck behind the net, skated out front and pulled Brian Boucher from the crease with a move to his forehand, then backhanded the puck into the net.