SOURCE: The St. Petersburg Times
DATE: Issue #840 (8), Tuesday, February 4, 2003
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TITLE: Asian Student Dies in Racist Attack
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: A 23-year-old medical student from Mauritius was beaten to death in a brutal attack on the campus of the Mechnikov State Medical Academy on Saturday. The Interior Ministry says it is launching a special investigation into the murder of Atish Kumar Ramgoolam, but other foreign students at the school are calling for stronger action to combat what they say is a growing number of attacks on visible minorities in the city.
 
According to a fellow student, Meghaj Bhardwaj, Ramgoolam and five friends were visiting another friend in the Piskaryovsky hostel on the school's campus when the attack occurred.
 "As they were approaching the streetcar stop, they saw a group of about fifteen skinheads, who started yelling racist slurs," Bhardwaj said.
 Afraid of the group, the students ran, but Ramgaloon, who had a sprained ankle, and another member of the group, who suffered some cuts and bruises in the attack, were unable to get away.
 "Someone called an ambulance, but the doctors said that they weren't well-enough equipped to provide the necessary help and arranged for another ambulance," Bhardwaj said. "But spending almost two hours in minus-20-degree [Celsius] weather with severe head injuries was too much."
 No suspects have yet been detained in relation to the crime.
 According to Ram Rishi, an student from India at the academy, the attack on Ramgoolam is the latest and most tragic example of what has become a common occurrence for foreign students at the academy in recent years.
 "Every year, students from India, Mauritius and other countries are victims of street attacks by skinheads or agressive local youths," Rishi said. "We have been complaining about this for several years now and we can't take it anymore. We finally need some action to be taken by the police and the academy authorities." 
 Students at the academy voiced their anger over the tragedy and the dangers they face - at the academy and in the city in general - at a meeting with representatives of the St. Petersburg Police Department and Mechnikov Academy Rector Alexander Shabrov on Monday.
 "We are all scared, nobody feels safe here," sixth-year student Amit Pant said at the meeting. "How many more people have to die before they start helping with the situation?"
 The students presented a number of requests at the meeting, including one to have the institute set up a police detachment on the campus. Barring this, they asked that a security guard be hired to patrol the grounds of the on-campus hostel at night.
 "The skinheads, and other people of the same kind, know that we live here at the hostel, and they wait outside sometimes to assault us," said Vikas Patel, a first-year student from India, said, adding that, at least once a month, some student is seriously beaten up by "young people screaming racist things."
 The students present at Monday's meeting also appealed to the city's police for more protection, asking that several patrol cars be detailed to monitor the district, one of the rougher areas in the city, where the academy is located.
 But Alexander Timoshenko, the deputy head of the St. Petersburg police's special task force dealing with crimes committed against foreigners, called the suggestion unrealistic.
 "It is not just a problem at the institute. It is a problem everywhere, and we simply can't provide a car to watch every foreigner," Timoshenko said Monday.
 In the light of constant violence against them and the academy's authorities being lax to reduce to problem, Ramgoolam's death infuriated students, who describe the level of security at the academy as laughable, pointing out that there isn't even a fence around the place.
 Academy Rector Shabrov expressed shock Monday over the incident, but his comments led to a heated exchange with the assembled students.
 "I hope that this very tragic incident won't ruin the feeling of sincere sympathy and friendship between us," Shabrov said. "We will do all that we can to find and punish those responsible. Believe me, though, when I say that these hooligan groups are rather small, unpopular and rare."
 The last phrase drew an angered response from a number of the students. 
 "They aren't hooligans, they are fascists, like Hitler was," screamed one of the students. "And, if you keep doing nothing against them, they will grow in numbers and, soon, there will be thousands of them!"
 Shabrov was visibly stung by the remark.
 "You don't have to tell me about fascists," he shot back. "My relatives died during the blockade of Leningrad."
 Later, after the situation had calmed somewhat, Shabrov discussed possible measures to deal with the dangerous situation, but he was short on specifics. While suggesting that the punishment should be increased for racially motivated crimes, he said that he believed that such crimes were the work of a relatively small group that would never become a significant force in the city.
 But Boris Pustyntsev, the head of the St. Petersburg office of the human-rights group Citizens Watch, said that reaction from the Russian government and law-enforcement agencies in this case is not unusual, as crimes of this sort are generally categorized as "hooliganism," and not taken seriously enough. 
 "The extremists are feeling stronger these days," Pustyntsev said. "And the danger is not so much in the possibility that their numbers will grow, but in the fact that that they see that others committing these crimes generally go unpunished."
 At the meeting, Timoshenko said that something had to be done to reduce the incidence of crime and violence against foreigners in the city, saying that it was doing severe damage to the city's image and suggesting that there be more cooperation between the students and the police.
 "I know that not all of the incidents of this type of violence are reported," he said at the meeting Monday. "I suggest that you report all of these cases and do your best to be able to identify the assaultants."
 But most of the students at the meeting were doubtfull that closer cooperation with the police would bring results.
 "From what I have seen, it always seems like the police are always on skinheads' side," said Indian student Sanjay Noel Thambipillai. " [The police] don't support us. They just extort money from us."
 "They just ask if we are carrying any narcotics. They act surprised to hear the answer 'no' and then they go checking our veins for scars," added Patel. "Then, they check our documents and, if there is even a comma in a wrong place, they fine you $50." 
 Rishi, for his part, said that he was surprised that nothing has been done to improve the situation at the school over the last few years.
 "I can recall at least four meetings with academy authorities. Nothing has changed," he said. "Of course, we will tell our friends abroad about all of this violence and, if nothing changes, then very soon there won't be many foreign students in St. Petersburg."

TITLE: Fast-Track Visas To Be Axed After One Year
AUTHOR: By Vladimir Kovalev
PUBLISHER: Staff Writer
TEXT: St. Petersburg tourism operators were thrown into confusion last week by an announcement by the local branch of the Foreign Ministry to scrap the fast-track 72-hour visas launched last Feb. 1 to streamline entry to Russia - because not enough people had taken advantage of the scheme.
 
In an interview published Thursday in business daily Delovoi Peterburg, Viktor Lopatnikov, the head of the Foreign Ministry in St. Petersburg, said that the scheme "has not justified its existence, because only 150 foreigners took the opportunity to get the fast-track visas."
 However, federal Tourism Department representatives said Monday that the scheme has been abandoned only in Moscow - where just four tourists received the visas - but has been extended for another year in St. Petersburg and Kaliningrad.
 According to federal Tourism Department deputy head Alexander Sorokin, as many as 3,000 tourists visited the Kaliningrad enclave on fast-track visas last year, and about 150 used them to get to St. Petersburg.
 "Nothing has changed. There was a government session at the end of December that examined the results of the program," he said in a telephone interview from Moscow on Monday. "A decision was made to cancel the program in Moscow due to lack of tourists, and extend it in Kaliningrad and St. Petersburg through February 2004. Now, we're just waiting for an official document from the government."
 "In Kaliningrad, the system was mainly used by tourists from Germany who wanted to visit their fatherland while touring in Poland," he said. "In St. Petersburg, we hope it will work for the city's 300th anniversary."
 Under the procedure, approved by the cabinet on June 28, 2001, citizens of Schengen countries, plus Britain, Switzerland and Japan, could order the 72-hour visas through selected tourism agencies at least two days in advance. They could then collect the visas on arrival at any of six entry points, including Sheremetyevo Airport in Moscow, Kaliningrad and St. Petersburg's Pulkovo airport, paying $35 each, plus expenses, to cover the tour operator's services.
 However, Lopatnikov said, Foreign Ministry officials in St. Petersburg made a mess of the plan.
 "There were political reasons why the simplified way to enter St. Petersburg could not be brought into effect," he said. "Apparently, a mutual agreement [with neighboring countries] would have to be introduced, but these countries did not offer to simplify visas for Russain citizens."
 Oleg Davtyan, the deputy head of the Foreign Ministry's St. Petersburg branch, would neither confirm or deny Lopatnikov's statement, but said the fast-track visas had been working well.
 "It went quite well here," he said in a telephone interview Monday. "We issued 137 [fast-track] visas [in one year], which shows that the experiment has the right to exist."
 In St. Petersburg, 12 firms were authorized to process the visas: Fremad Russia Petersburg, Hotel Pulkovskaya, Kosmos, Neva, Grand Hotel Europe, Nika, Nordic Travel, Corinthia Nevskij Palace Hotel, Russkiye Prostory, Dyuim, Komintur and Taleon.
 "We'd say we couldn't do it, because the experiment isn't running any more," said Yelena Kastansson, financial director of Russkiye Prostory, when asked Monday what she would now tell a potential fast-track-visa applicant.
 "It was a good experiment, and we liked it. It would have been even better if the visas were extended to 100 hours and some airport procedures were simplified, such as getting visas stamped," she said. "We can't bring groups of 100 people, for example, because it takes five minutes to stamp a visa. How long would such a group have to wait? 10 hours?"
 Meanwhile, Dyuim said it quit the scheme about six months ago, because it found it was not profitable.
 "It was a good idea, but who works for just a good idea if there are financial losses involved?" a spokesperson said.
 Davtyan, of the local branch of the Foreign Ministry, said he hoped the visas would be available at the Russia-Finland border, rather than just at Pulkovo-2. He said that fast-track visas cost too much for Finns, for whom it is still cheaper and easier to get visas through Russian consular departments in Finland.
 The federal Tourism Department's Sorokin was unimpressed with the Foreign Ministry's handling of the visas.
 "I think they're trying to screw us over," he said. "But we'll keep working on it anyway."

TITLE: PACE To Boycott Referendum
AUTHOR: By Natalia Yefimova
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Parliamentary Assembly of the Council of Europe, Europe's top human-rights watchdog, has decided not to send observers to Chechnya for a controversial referendum scheduled for next month, PACE official Lord Frank Judd said in an interview published Monday.
 
Judd caused a stir last week when he announced that he would resign as the PACE rapporteur on Chechnya if Russia refused to postpone the March 23 constitutional referendum.
 "Sending observers would mean acknowledging the legitimacy of a process that we consider to be invalid at this stage," Judd told the Kommersant newspaper. The interview appeared in Russian.
 PACE president Peter Schieder downplayed Friday's decision not to send observers, saying it was not final and could be reconsidered at upcoming sessions, Interfax reported. 
 "No official motives for the decision were put forward," Federation Council Senator Mikhail Margelov, a member of the Russian PACE delegation, was quoted as saying.
 One apparent concern was security.
 In a resolution passed Wednesday, PACE called on Russia to ensure "an adequate level of public security for all individuals throughout the Chechen Republic before and during any referendum." 
 The resolution also said PACE "is concerned that the necessary conditions for holding such a referendum are unlikely to be met by" March 23, but it stopped short of calling for a postponement, as Judd had recommended, citing security problems and lack of voter awareness about the plebiscite.
 Russian officials were heartened by the text of the resolution and by Judd's decision to step down, viewing them as a diplomatic victory.
 "He had long posed a real problem for our interaction with PACE. I think those forces in the assembly that are striving for constructive cooperation with us will find an adequate form [for such cooperation]," Margelov told Interfax.
 Alexander Veshnyakov, head of the Central Elections Commission, said the resolution and Judd's decision to resign show that PACE "is beginning to rid itself of radicalism and double standards in assessing Russia's actions" in Chechnya.
 State Duma Deputy Dmitry Rogozin announced Friday that he was stepping down from his post as co-chairman of a PACE-Duma working group on Chechnya, which he and Judd headed together, in part so that Judd "could not be talked into" staying on, Interfax said.
 Rogozin said he would call for the working group to be disbanded at a PACE meeting slated for Wednesday.
 Judd said, however, that, even if he steps down, he would continue to work informally for peace in Chechnya.
 "I've invested too much in this," Judd told Kommersant. "I cannot just get up and leave. I want to work with my Russian colleagues, with Chechens, with everyone who wants peace. I'm not interested in people who want to unleash a new wave of violence. I'm tired of the old players trying to monopolize this arena."

TITLE: Putin Talks Tougher Over Iraq
PUBLISHER: The Associated Press
TEXT: MOSCOW - President Vladimir Putin said Monday that a new UN Security Council resolution might be needed if weapons inspectors are not satisfied with Iraq's cooperation, and invited the inspectors to state their case for tougher demands on Baghdad. 
 
"We'll think about it - so far there is no need, but I do not rule it out," Putin said after a meeting with Italian Prime Minister Silvio Berlusconi, Interfax reported. The comment dovetailed with one Putin made last week, when he said that Russia might toughen its stance on Iraq if the work of the inspectors was hampered. 
 In both cases, he stressed that Russia favors a political solution to the showdown, but the statements have increased the pressure on Iraq and suggested that the Kremlin's position could change if Moscow is convinced that Baghdad is thwarting inspectors or hiding weapons of mass destruction. 
 Putin said that "a meaningful part of the responsibility" for further developments in the crisis "lies on the Iraqi side," but he also said that the inspectors must lay out their case for new demands on Baghdad. 
 "Are the inspectors working? They're working. Have they found anything? No, they haven't found anything yet," Putin said in televised comments. 
 "The inspectors need to tell us what more they need from Iraq - what else can be demanded of Iraq in order that their work would be more effective. Let them tell us. We will formulate the demands to Iraq and convey them - if they are within the bounds of common sense, of course," he said. "And, after that, we will see how the work goes. 
 "All this must be assessed by the UN Security Council," Putin said, adding that "of course, the use of force is the most extreme case." 
 Berlusconi briefed Putin on his recent meetings with U.S. President George W. Bush and with European leaders. He called the use of force "the last resort." 
 Putin spoke two days before his Foreign Minister Igor Ivanov is expected to attend a Security Council meeting during which U.S. Secretary of State Colin Powell plans to present what the United States says will be new evidence of Iraq's weapons programs and links to al-Qaida.

TITLE: Officials: Russian Craft Can Save Space Station
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW - If the U.S. space-shuttle fleet is grounded throughout 2003 in the wake of Saturday's Columbia crash, the International Space Station will have to be mothballed, unless the 16 countries participating in the $95-billion project do not raise the cash to procure additional Progress-M cargo ships from the Russian space industry, Russian space officials said Monday.
 
Russia planned to send three Progress ships to the orbiting station this year, but at least one more will have to be made and launched if the shuttles do not fly, said Yury Grigoryev, deputy chief of Rocket Space Corporation Energia, which manufactures the cargo ships and the Soyuz-TMA capsules.
 A Progress M-47 lifted off atop a Soyuz-U rocket from the Baikonur Cosmodrome in Kazakhstan at 3:59 p.m. Moscow time Sunday - just a day after the Columbia blew up over Texas, killing all seven astronauts on board - and successfully entered orbit a few minutes later, said Nikolai Kryuchkov, a spokesperson at Mission Control outside Moscow. The craft is scheduled to dock with the station Tuesday, delivering fuel, equipment and food and mail.
 The Progress ships are needed to keep the international space station from sinking out of its orbit. When docked at the ISS, they burn their engines to push the station higher.
 As long as the shuttle is grounded, Russia also will have to cancel its plans to send visiting crews to the ISS for two-week stints and reserve its three-seat Soyuz-TMA capsules to deliver the permanent crews, which are usually delivered by the shuttle, space officials said. 
 This means suspending the lucrative space-tourism program. Two previous visiting crews have included tourists, who paid Energia and the Russian Aviation and Space Agency, or Rosaviakosmos, a reported $20 million each.
 The shuttle Atlantis was to have taken up a new crew in March to replace the present permanent crew of U.S. station commander Ken Bowersox, flight engineer Donald Pettit and Russian flight engineer Nikolai Budarin.
 Should Atlantis remain grounded, the new Soyuz-TMA will be needed to deliver the new permanent crew to ISS, Rosaviakosmos spokesperson Vyacheslav Mikhailichenko said in an interview.
 There has to be one three-seat Soyuz-TMA permanently docked to the station at all times to allow the permanent crew to escape in case of a major accident. The six-month service life of the Soyuz-TMA currently docked to the station expires in April, but can be extended until June. Rosaviakosmos had planned to send up the new craft in April with a visiting crew.
 It remains unclear how long it will take for NASA investigators to determine what caused the crash of Columbia and whether their findings will require upgrades in the remaining shuttles. NASA kept the shuttles grounded for almost three years after Challenger exploded in 1986. If no more shuttles are launched in 2003, one extra Progress will be sufficient to deliver enough cargo for two permanent crew members, but two cargo ships will be needed to maintain a three-man crew, Grigoryev said.
 The Progress ships, however, cannot compensate for the shuttles, which can carry up to 100 tons of cargo each and have been used to deliver elements of the U.S. segment of the station. By comparison, one Progress can deliver a maximum of 2 1/5 tons.
 If the European Space Agency and other countries participating in the ISS want to send their own astronauts to space, they will need to consider making more Soyuz-TMA ships available.
 If additional spacecraft need to be built, Russia's partners in the ISS will have to provide the funds, since the Russian government has struggled to finance even the three Progress-M ships and two Soyuz-TMA ships that Russia is obliged to provide each year.
 "Obviously, our partners will have to provide some financing," Mikhailichenko said.
 One Soyuz-TMA costs around $12 million to manufacture, while one Progress-M costs $6.1 million Both craft are launched by Soyuz rockets, which cost TsSKB-Progress around $16 million a piece to manufacture. It normally takes Energia 24 months and 18 months to manufacture one Soyuz-TMA and Progress-M, respectively. The production cycle for Soyuz launch vehicles at TsSKB-Progress is 12 months, a Moscow representative for this Samara-based company said Tuesday. 
 Both Energia and TsSKB-Progress can try to shorten the production cycle by several months, but the decision to provide extra financing needs to be made within the next month, Energia officials said.
 However, the U.S. space agency may encounter legal hurdles if it decides to invest in the production of Russian ships for the ISS. The U.S. Iran Non-Proliferation Act of 1999 bars NASA from procuring Russian-made space hardware until the U.S. administration certifies to congress that the Russian space industry has not supplied missile-related hardware or know-how to Iran. This condition may be waived only if purchase of Russian-made hardware is needed to ensure the safety of the ISS crew and the station. 
 NASA and Rosaviakosmos officials held the first round of consultations on Saturday. The next day, Energia and another major Russian ISS contractor - Khrunichev State Research and Production Space Center - joined the consultations. Russians expect to draft an action plan within the next week.
 NASA has spent more than $3 billion annually on its fleet of shuttles. In comparison, Russia's entire space budget for 2003 is about $265 million.

TITLE: The Next Russian President?
PUBLISHER: The Associated Press
TEXT: What does the stern-faced commander in chief of a million-strong army have in common with a self-effacing elf from a popular children's film? Nothing - except perhaps a longish nose, piercing eyes and a certain indefinable similarity.
 
President Vladimir Putin may not be green and wrinkly like Dobby, the house elf from "Harry Potter and the Chamber of Secrets," but moviegoers have been struck by a certain resemblance.
 The BBC even set up a Putin/Dobby poll on its children's Web site. Out of 9,188 people who cast votes as of Friday, nearly 57 percent agreed that Putin does look like Dobby.
 Russian media have reported that a Moscow law firm was preparing to sue the makers of the Potter movie for intentionally modeling the character on Putin. However, no law firm has come forward to take credit for the idea.
 Lawyer Pavel Astakhov said that the claim would be almost impossible to prove, though he acknowledged the resemblance. "The more you look at them, of course, the more they seem to look alike," he told NTV television last week.
 The Kremlin has yet to comment.

TITLE: Magadan Vote Goes Into Second Round
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: MAGADAN, Far East - Magadan's gubernational election went into a runoff between Magadan Mayor Nikolai Karpenko and former Deputy Governor Nikolai Dudov after both failed to gain enough votes for an outright win in Sunday's vote to replace murdered Governor Valentin Tsvetkov.
 
Preliminary results late Sunday night showed Karpenko in the lead with 38 percent and Dudov in second place with 26 percent, said a spokesperson for the regional elections commission. In third place, with 10.2 percent, was Andrei Zinchenko, another former Tsvetkov deputy who is expected to throw his support behind Dudov. A candidate has to get more than 50 percent of the vote to win.
 The second round will be held Feb. 16, the elections commission said.
 The Magadan election was called after Tsvetkov was gunned down by unknown hitmen on Novy Arbat in October. President Vladimir Putin called the killing "a crime against the state" and vowed to bring the perpetrators to justice. More than three months later, however, no one has been caught.
 Tsvetkov was the most senior government official to have been killed in post-Soviet Russia, even though killings of politicians occur regularly.
 Many local observers link Tsvetkov's death to his policy of running the region like a Soviet boss, concentrating control over the region's vast resources of gold, silver and fish in his administration's hands and pushing out private business.
 It remains unclear whether Karpenko, if he should win, would move to take Tsvetkov's administration's business empire, which includes a vodka monopoly, a beer factory, a major fishing enterprise and the region's only gold refinery, into his own hands or make way for more private businesses.
 Insiders say he could tighten the screws on ongoing investigations, opened as part of the murder probe, into the dealings of Tsvetkov's administration, which include the transfer of millions of dollars of budget funds into state-owned enterprises run by advisers to Tsvetkov.
 In a brief interview Sunday, Karpenko said that it would be very difficult to complete the investigations and only the courts could decide who was guilty.
 But in a region where the balance of power is often reflected in how lucrative fishing quotas are distributed, it appeared that the writing was on the wall for the Tsvetkov business empire and his allies. A regional commission decided Thursday to give the majority of the annual pollock quota to privately owned fishing group Seawolf, while a state-owned enterprise run by a former Tsvetkov adviser, who last year won most of the quota, this time received next to nothing.
 Dudov and Zinchenko said they would protest that move.
 In a sign that the mayor appeared to have the Kremlin's backing, Emergency Situations Minister Sergei Shoigu spoke on local television Friday to give his support for Karpenko.
 Karpenko ran a strong, down-to-earth campaign based on his track record as mayor. In a slick ad campaign that pronounced him "Nash," or "Our Man," respected regional figures pronounced their support for him.
 His opponents claimed that he hired the Sverdlovsk public-relations firm Imageland, the same agency hired by Russian Aluminum for their favored candidate in the Krasnoyarsk gubernatorial election last year.
 But Karpenko's campaign team denied this. They also denied being behind a wave of media reports accusing Tsvetkov's administration of cronyism.
 Dudov, however, ran his campaign on a platform of continuing the stability fostered under Tsvetkov's regime. Tsvetkov, despite the investigations into his dealings, remains widely respected in Magadan.

TITLE: Old, Young Commemorate Stalingrad
PUBLISHER: Combined Reports
TEXT: VOLGOGRAD, Southern Russia - Soviet Army veterans watched Sunday while young soldiers marched to commemorate the 60th anniversary of the Battle of Stalingrad, a turning point in World War II that is still a powerful source of pride and pain in a country that lost millions of soldiers and civilians.
 
Some 250 veterans from across Russia, joined by political leaders and foreign ambassadors placed flowers and wreaths at a memorial in downtown Volgograd - formerly Stalingrad - before watching a parade of soldiers in uniforms tailored as those worn by their Soviet predecessors during World War II.
 Minutes of silence were held across Volgograd, and the ceremony shifted to a massive monument - a woman representing the Motherland, holding a sword high in the air and towering over a mass grave where 35,000 veterans and civilians who died defending the city against Nazi invaders are buried.
 Officials, foreign dignitaries and veterans again laid wreaths, this time at an eternal flame. President Vladimir Putin arrived later in the afternoon, placed a bouquet at the grave of Marshal Vasily Tchuikov, who died in the battle of 1942 to 1943, and met with some of the dwindling number of its survivors.
 "I cried this morning because only three World War II veterans are left alive in our village, and only I was able to come here. The others are ill," said Valentin Antyukheyev, 80, a resident of Krasnooktyabrskaya, outside Volgograd. "I remember how we fought for every meter of this soil and how badly the city was ruined."
 Ambassadors from the United States, Britain, Germany, Italy and other countries that fought in World War II took part in the ceremonies commemorating 60 years since the end of the battle, which came Feb. 2, 1943, when German Field Marshal Friedrich Paulus surrendered in the basement of the city's main department store.
 The German defeat marked a turning point in the war, crushing Hitler's drive to isolate the Soviet heartland from the southern oil fields, and the battle remains a powerful symbol of Soviet courage and perseverance during World War II.
 Russian Orthodox Patriarch Alexy II sent a message to veterans Saturday praising those who "displayed unconquerable spirit to the entire world and protected their fatherland," and memorial services were held in churches throughout the country Sunday.
 Putin, meanwhile, avoided being drawn into a campaign to give Volgograd back its wartime name.
 Putin, who usually steers clear of such disputes, was drawn into the name spat in a live television phone-in show in December, when he gave a cautious "no" to a Communist proposal - popular among military veterans - to scrap the city's current name.
 Its renaming back to Stalingrad would be a valuable victory for Russia's Communist party, keen to cash in on popular nostalgia about the pivotal Soviet victory only months before a parliamentary election. But, in meetings with Stalingrad veterans on Sunday, Putin avoided the row, dwelling instead on the battle's historical meaning.
 "Such victories reflect the character of the people, the honour and dignity of the country," he told a hushed audience of grey-haired veterans decked in medals.
 "Thank you for not giving yourselves up, for not retreating, for strengthening Soviet and Russian military glory, for winning the war," he said.
 Soviet leader Nikita Khrushchev renamed the city Volgograd ("Volga City") in 1961, after publicly condemning his predecessor Joseph Stalin's murderous record of brutal political repression and labor camps.
 
 <i>(AP, Reuters) </i>

TITLE: Zhirinovsky Faces Dismissal
AUTHOR: By Vladimir Kovalev
PUBLISHER: Staff Writer
TEXT: The State Duma's Ethics Commission will consider stripping flamboyant nationallist politician Vladimir Zhirinovsky of his post as a deputy speaker for an obscenity-ridden tirade last year against Washington's plans to invade Iraq.
 
&quot;The State Duma could take the harshest measures possible against Zhirinovsky, including removing him from the deputy speaker's post,&quot; commission head Galina Strelchenko said in an interview on Ekho Moskvy radio. &quot;The commision has discussed [Zhirinovsky's] behaviour numerous times in the past, but took no strong action. Now, our patience is running out.&quot;
 Zhirinovsky's impromptu speech, much of which is addressed directly to U.S. President George W. Bush, was filmed in Baghdad in September, Newsru.com Web site reported Monday.
 &quot;George, you're a cowboy,&quot; Zhirinovsky said in footage broadcast by NTV and TVS on Sunday. &quot;You'd better stop this [expletive], quit this. Put your ammo back in storage and forget about your dad.&quot;
 Zhirinovsky also laid into former U.S. President Bill Clinton, and his alleged affair with White House intern Monica Lewinsky.
 &quot;Your predecessor, [expletive], Clinton, [expletive]. His fly was pulled down in his office. That's just [expletive]! She performed oral sex on the head of state in his office! What the [expletive] is that, America? Monica, [expletive]! What sort of a [expletive] president is that?&quot; he said.
 Slightly slurring his words, Zhirinovsky returned to the possibility of war in Iraq - before going off on a tangent that hinted at Bush's close-run victory in the 2000 U.S. presidential election.
 &quot;You'll lose Baghdad; Baghdad is your grave. Do you understand, George, you [expletive] cowboy, [expletive]?&quot; he said. &quot;Go back to your ranch in Texas, drive around the desert in your jeep, and study Spanish. But New York already speaks Russian. We'll send another 10 million Russians to America and elect our own president.&quot;
 &quot;And you, George, will get a cell in Butyrka,&quot; he said, referring to the notorious prison in Moscow.
 Zhirinovsky said that the recording, made at a private party, was a fake. &quot;It's a dirty trick by one of the guests,&quot; he was quoted by Interfax as saying Monday.

TITLE: Police Track Down MMM-Fraud Fugitive
AUTHOR: By Nabi Abdullaev
PUBLISHER: Staff Writer
TEXT: MOSCOW - After four years on the run, Sergei Mavrodi, the fugitive mastermind of the MMM pyramid scheme that scammed millions of people in the early 1990s, was caught in a police raid Friday.
 
Television showed police using a circular saw to cut open the steel door of a rented apartment on Frunzenskaya Naberezhnaya in Moscow at about 5 p.m. Friday. Mavrodi, 47, was shown looking around groggily in handcuffs as excited police officers cracked jokes and posed beside him for the cameras.
 Mavrodi has been sought in a fraud investigation since 1998 and was placed on an international wanted list. Investigators long believed that he had fled to Greece. But they said over the weekend that he had probably never left Moscow.
 &quot;You get the feeling that he never really left and was just good at hiding,&quot; said Viktor Prokopov, the Interior Ministry official in charge of Mavrodi's case, Interfax reported.
 Russian media said that Mavrodi eluded the police by frequently changing addresses and hiring a team of former secret-service officers for protection.
 It was unclear Sunday how the police managed to pick up his trail.
 When Mavrodi was detained, he was carrying a forged passport bearing the name of Yury Zaitsev of St. Petersburg, news agencies reported.
 Prokopov said that the police would start looking for any remaining MMM assets.
 MMM, which operated from 1992 to 1994, was a sensation thanks to a clever saturation-advertising campaign on national television that promised spectacular overnight returns on investments. MMM shares soared in value from 1,600 rubles (then about $1) to 105,600 rubles (about $65). Dividends were paid with money from new share sales.
 Some 2 million to 10 million people lost their savings when the pyramid-scheme folded in July 1994, and thousands of panicked people took to the streets. Investigators estimate that Mavrodi made off with up to $100 million.
 Mavrodi was charged with tax evasion and jailed. But he was released in October of that year to run for a seat in the State Duma, which he won, largely on the promise that he would spend $10 million on improvements in his district, Khimki, in Moscow.
 About a quarter of the district's voters were reported to hold MMM shares, and many shareholders believed Mavrodi's claim that MMM had been brought down by a government plot.
 As a lawmaker, he secured immunity from prosecution. A year later, however, the Duma stripped him of his seat, and thus his immunity, and the police resumed their investigation into possible fraud at MMM.
 Mavrodi remained at liberty during the investigation, and in 1996 he tried to register as a presidential candidate.
 The police closed their investigation in 1997, citing a lack of evidence. The Prosecutor General's Office reopened the case in 1998 and, when prosecutors attempted to bring Mavrodi in for questioning, they found that he had disappeared.
 Former MMM shareholders have tried unsuccessfully for years to retrieve their savings. Levon Sarvazyan, a representative of 1,800 former shareholders, said that he did not believe that Mavrodi's capture would help them in their fight.
 &quot;He will pretend to be a penniless pauper,&quot; Sarvazyan was quoted as saying by the Izvestia newspaper on Saturday. &quot;Now, we are suing the Finance Ministry, because it was the state that permitted MMM to violate the law.&quot;
 Television footage showed Mavrodi living in a shabby apartment at the time of his capture. Media reports said, however, that he had moved between apartments in a luxurious Mercedes sedan.
 While Mavrodi had laid low in recent years, the names of a number of his relatives have emerged in investigations in Russia and the United States.
 Mavrodi's younger brother Vyacheslav was arrested in 2001, and is now awaiting trial on charges of illegal trade in precious metals and stones and carrying out illegal banking activities. The charges are connected to an investment company with operations similar to MMM's that Vyacheslav Mavrodi set up in 1997.
 Sergei Mavrodi's wife, Yelena, was detained in 2001 on suspicion of trying to help a girlfriend kidnap a 6-week-old baby from a former lover. No charges were filed, and both women were released.
 Mavrodi's cousin Oksana Pavlyuchenko is the head of Stockgeneration, a company that courted investors over the Internet with promises of 10-percent monthly interest, according to Wired magazine.
 The U.S. Securities and Exchange Commission has taken Stockgeneration to court, accusing it of organizing a &quot;classical financial pyramid&quot; that has duped 275,000 investors, according to the SEC's Web site.

TITLE: IRT Hoping To Crack Cargo Fraud
AUTHOR: By Yevgenia Borisova
PUBLISHER: Staff Writer
TEXT: MOSCOW - In a bid to fight cargo fraud and improve cooperation with the State Customs Committee, the Geneva-based International Road Transport Union offered last week to bolster current tracking systems with an additional electronic signal sent to Geneva.
 
Customs posts are already supposed to send an electronic signal to the State Customs Committee when they clear imported goods.
 But customs provides the union, or IRU, with little feedback on deliveries entering Russia with special Transports Internationaux Routiers documents, IRU head of corporate communications Guy Willis said at an IRU-led seminar in Moscow.
 The IRU provides about 60 percent of all trucks entering Russia with TIR documents, which enable carriers to whisk cargo across the border and clear customs at their destinations instead.
 But Willis said that Russian customs provides information immediately for only 0.01 percent of deliveries and within two days for 4 percent of the deliveries, while no information is given at all for half of the cargo shipments.
 Lack of communication by Russian customs creates fertile ground for misuse of the TIR system, Willis said.
 In November, the IRU threatened to stop issuing TIR labels to trucks going into and out of Russia after customs officials demanded that the IRU pay $60 million in insurance claims for undelivered cargo since 1999.
 Willis said that if an additional electronic signal is transmitted to Geneva, the IRU would be able to identify companies whose trucks fail to deliver cargo and stop issuing them TIR labels.
 But officials said that an extra electronic signal will not solve the problem.
 Some customs points, especially in the Asian part of Russia, not only have no computers, but lack telephones and cannot report on deliveries electronically.
 &quot;We have hundreds of kilometers of open borders, especially with Kazakhstan, and some customs posts there are just small wooden huts with a couple of officers in them,&quot; Irina Skibinskaya, spokesperson for the State Customs Committee, said in a telephone interview Friday.
 She would not say how many computers are needed to equip all customs posts, or how much investment is needed to do so. The committee is relying on a $140-million loan from the World Bank, she said.
 &quot;The decision on the loan may be signed as soon as this spring, and the whole loan will be used on information technology,&quot; Skibinskaya said. &quot;We hope that, within the framework of this loan, we will be able to resolve this particular issue.&quot;
 Willis said that the IRU delegation was pleased with the State Customs Committee's willingness to cooperate.
 &quot;There is understanding that increasing the speed with which information is sent benefits not only them but us, and it will allow us to work more effectively with them to detect where fraud is occurring,&quot; Willis said.

TITLE: Shipping To Be Induced To Fly the Flag
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Crippled by a near 60-percent tax burden, ships flying the Russian flag carried only one-twentieth of the cargo that entered and left the country's seaports last year.
 
To address this discrepancy, the Transportation Ministry has proposed a new registration system aimed at stemming the loss of virtually the entire $6-billion per year market to ships - many of them Russian - registered with foreign governments. 
 Almost half of Russia's 400-strong fleet fly foreign flags. Only 213 are registered at home.
 To give domestic ship owners incentives to register in Russia, the Transportation Ministry is pushing to create a second registry, parallel to the existing one. 
 This International Ship Register would grant ship owners the same tax preferences offered by foreign countries like Liberia, Cyprus and Malta, which together account for 96 percent of all Russian vessels registered abroad.
 &quot;Creating the International Ship Register is our No. 1 task,&quot; Vyacheslav Ruksha, deputy transportation minister, said last week at the annual meeting of the Union of Russian Ship Owners.
 &quot;We either do it in the first half of this year or, in my opinion, we will be set back indefinitely and will end up being subjects of Cyprus and Panama,&quot; said Ruksha, who is also head of the Russian Sea Fleet Service.
 These countries maintain so-called open registers, offering their flag to foreign ships. They are attractive to ship owners because they charge a mere 5 percent in annual taxes and fees - less than one twelth of the taxes in Russia.
 Shipping companies use open registers, also known as flags of convenience, to avoid high taxes and, more importantly, to attract long-term, low-rate loans from international banks to buy new ships.
 The second registry would make Russian ships more competitive and boost the domestic sea freight industry, Transportation Ministry officials said.
 Last year, ships carrying some 61.4 percent of world trade tonnage flew flags of convenience.
 &quot;A fleet operating under the Russian flag is unprofitable. The tax burden keeps it from being a viable business,&quot; Shipowners' Union president Mikhail Romanovsky said.
 Russian ships are on average 20 years old, Romanovsky said. With more than half of their revenue lost to taxes, Russian shipowners cannot afford to upgrade their fleet. 
 Loans, too, remain out of reach for the vast majority of shippers operating under Russian registry.
 Russian banks offer loans to build ships at interest five times higher than that of foreign banks, occasionally reaching interest rates of 17 percent, ship owners say. But there is often no alternative because foreign banks are hesitant to recognize Russian-registered ships as reliable collateral for loans.
 After having been debated for years, Russia's international register is set to resolve these problems. 
 The Transportation Ministry has drafted legislation that would set fixed rates for registration and annual fees. President Vladimir Putin threw his support behind the measures late last year. 
 The State Duma has given its preliminary approval and, after the draft bill is vetted by the Finance and Tax ministries, Transportation Ministry officials said that they hoped it would get to the Duma by May.
 The Transportation Ministry calculates that the second register alone will boost the country's trade fleet to 750 ships by 2010, worth an estimated $13 billion. These ships would have the capacity to haul 183.6 million tons.
 Domestic shipbuilders would reap the derivative benefits of this, said Viktor Yuryev, deputy chief of the Transportation Ministry's shipping department.

TITLE: 36.6 Raises $14.4M in Delayed Offering
AUTHOR: By Torrey Clark
PUBLISHER: Staff Writer
TEXT: MOSCOW - A week after shying away from an initial public offering, leading drugstore chain 36.6 marked down its share price and raised $14.4 million, which most analysts labeled a modest success.
 
Rumors about the IPO - only the second on a Russian bourse - had begun swirling in the market Wednesday.
 The shares will be traded on the Moscow Interbank Currency Exchange.
 The 1.6 million shares were priced at $9 each and allocated Thursday, said 36.6's director of strategy and development, Victor Sachs. The chain had hoped that they would go for between $11 and $16, bringing in around $20 million.
 &quot;We want to be a very transparent and investable company, so we lowered our price and increased the potential float,&quot; Sachs said.
 In addition to the 20 percent allocated, the number of additional shares that may be offered was increased from 280,000 to 400,001, after investors expressed interest in having a blocking share floated, Sachs said.
 Until now, the shares belonged to 36.6 founders Artyom Bektemirov and Sergei Krivosheyev, who held 96 percent of the chain. The other 4 percent belongs to a handful of managers.
 &quot;We are very satisfied, given the type of investors we were able to attract and the importance of becoming a transparent, public company for all of our business relationships,&quot; Krivosheyev said.
 Konstantin Malofeyev, head of investment banking at MDM-Bank, a manager of the IPO, said that the goal was to attract tier-one institutional investors, who were only interested in the stock at a lower price. He would not name the buyers, but said that they included both international and Russian-based funds.
 ING investment bank in London was the lead manager for the IPO.
 Analysts said that the original price was too high, given 36.6's youth, large debt and the poor market conditions in Europe.
 Natalya Zagvozdina of Renaissance Capital estimated that the price was close to the chain's fair value. She said that it looked better for 36.6 to go through with the placement at $9 rather than cancel it.
 &quot;It would be much harder for them to come to market in six months and say, 'Here we are again,'&quot; said Vladimir Savov of Brunswick UBS Warburg.
 Savov attributed the lower price in part to investors' once-burned-twice-shy attitude and in part to the small issue.
 Investors in juice and dairy producer Wimm-Bill-Dann saw its stock price rise briefly after debuting on the New York Stock Exchange at $19.50, but then fall to $17.95. And Russia's first homegrown IPO, from Internet company RosBusinessConsulting, was too small to allow high trading volumes.
 Analysts said that 36.6's stock price is unlikely to move much until the company's final 2002 financial results are released. 36.6 posted net sales for the first half of 2002 of $53.4 million.
 The company said that it planned to use proceeds from the public offering to retire debt, expand its manufacturing base and add another 28 stores to its present 53 in Moscow and the Moscow region.

TITLE: Gref, Fadeyev Clash Over Directions for Railway Reforms
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - With railway reforms promising to spin off a $42-billion chunk of the state monopoly as a commercial enterprise, two ministers Friday painted contrasting views of how to handle what assets would remain in the Railways Ministry.
 
Railways Minister Gennady Fadeyev said that his ministry's role should grow under the reforms, countering speculation that his ministry would be folded into the Transportation Ministry after its commercial assets are reborn as a joint-stock company, Russian Railways Co.
 The railways require close government regulation, Fadeyev told a host of top government and regional officials attending the Railways Ministry's board meeting.
 Economic Development and Trade Minister German Gref, however, said that the Railways Ministry will lose its oversight and inspection functions over the sector as a result of administrative and railways reforms.
 The Railways Ministry will maintain &quot;enough levers&quot; to influence railway operations and the sector's strategy, he said. It will also set pricing in noncommercial areas, he said.
 Construction, maintenance and social infrastructure, such as kindergartens, must not be spun off with the ministry's commercial assets, Gref said. &quot;If non-core assets are transferred to Russian Railways, the company would require additional state investments,&quot; he said.
 Fadeyev said that the law on managing railway property will come into force in February after new amendments pass the State Duma, Federation Council and are signed by the president.
 The other bills in the railway-reform package have already been approved. Transport and charter bills are effective May 18. Amendments to the law on natural monopolies already have come into force.
 At the board meeting, Fadeyev gave a glowing report of the Railways Ministry's results for 2002.
 &quot;The 2002 results serve as an assessment for an entire era of rail transport,&quot; Fadeyev said. &quot;2002 is the last year that the Railways Ministry will work in the traditional way.&quot;
 The Railways Ministry took 419 billion rubles ($13.4 billion) in transportation revenues last year, a 31-percent increase over 2001, Fadeyev said.
 The ministry is not planning further tariff hikes in the near future, although &quot;electricity prices skyrocketed in a number of regions,&quot; Fadeyev said. Long-distance passenger and cargo-rail tariffs were raised 12 percent each, as of Jan. 1 and Jan. 15, respectively.
 Cargo volumes grew 2.7 percent to 1.08 billion metric tons in 2002, and should rise 3.5 percent to 1.12 billion tons in 2003, Fadeyev said.
 The number of independent rail operators will grow to 100 companies in 2003, he said. The 74 companies licensed as operators in the past two years run more than 10,000 cars and have invested 6.6 billion rubles ($207 million) in rolling stock.
 The ministry invested 80 billion rubles, including 75 billion rubles of its retained earnings in 2002, Fadeyev said. Earlier this week, the government approved the ministry's 2003 investment program at 122 billion rubles. The Railways Ministry plans to allocate 85 billion rubles to improve railway safety and the sector's infrastructure, Fadeyev said.
 Following Fadeyev's report, Gref took the opportunity to slam the Railways Ministry's wage policy, which, he described as &quot;a very big issue and of a very significant importance.&quot;
 Railway employees' wages rose 46.4 percent in 2002 and would increase 350 percent by 2007, Fadeyev said.
 &quot;When wage growth exceeds labor productivity increases in an industry, it can lead to a disproportional development of the industry and threatens the stable development of the whole economy,&quot; Gref said.

TITLE: Vimpelcom Reaches South to Expand
AUTHOR: By Larisa Naumenko
PUBLISHER: Staff Writer
TEXT: MOSCOW - The country's No. 2 cellular-phone operator, Vimpelcom, continued its regional expansion drive with the acquisition of a controlling stake in southern Russia's StavTeleSot for $38.4 million.
 
Under the deal announced Friday, Vimpelcom purchased 90 percent of StavTeleSot, the country's seventh-largest cellular-phone operator: 49 percent from Telenor Mobile and 41 percent from Stavtelecom.
 Analysts said that the acquisition would help bolster Vimpelcom's competitiveness outside the capital, where rival Mobile TeleSystems has dominated.
 &quot;For Vimpelcom, it's important to develop its regional business, and while it has fewer subscribers in the regions than MTS, time does matter and acquisitions give it a chance to catch up,&quot; said Vyacheslav Nikolayev, a vice president at Moscow's Trust and Investment Bank.
 Vimpelcom will also grant StavTeleSot a $9.2-million credit to pay back an outstanding loan. Vimpelcom will further act as a guarantor of StavTeleSot's $1.4 million debt.
 The deal came as little surprise to industry watchers, but company officials nonetheless considered it a notable achievement.
 &quot;We are very content with the purchase of StavTeleSot,&quot; said Alexei Mishchenko, general director at Vimpelcom-R, Vimpelcom's regional arm. 
 &quot;It's a profitable company, the leader in the market, which will allow us to significantly strengthen our positions in the Southern Federal District,&quot; he said.
 StavTeleSot had 175,200 subscribers at the end of 2002, or 63 percent of the market, Vimpelcom said. Rival Megafon serves an estimated 130,000 subscribers in the region.
 Analysts called StavTeleSot a solid value.
 &quot;The price of the purchase is fair given StavTeleSot's average revenue per user of $21, which is rather high for a regional company,&quot; Nikolayev said.

TITLE: Bush Submits $2.23-Trillion Budget Plan
AUTHOR: By Martin Crutsinger
PUBLISHER: The Associated Press
TEXT: WASHINGTON - U.S. President George W. Bush sent congress a $2.23-trillion spending plan Monday that would accelerate tax cuts to bolster the weak economy, overhaul some of the government's biggest social programs, give NASA a modest increase and shower billions of additional dollars on defense and homeland security. &quot;We have moved to secure the nation's safety,&quot; Bush said.
 
Even though hundreds of other government programs would be squeezed, the president projects that the deficit will still hit record highs of $304 billion this year and $307 billion in 2004. Over the next five years, deficits would total $1.08 trillion.
 Bush's budget plan for fiscal 2004, which begins Oct. 1, will set off months of heated debate in congress. Democrats attacked the tax cuts as a boon for the wealthy that will do little to help the economy, but will rob Social Security of the money needed for baby boomers' retirements.
 Senate Minority Leader Tom Daschle said that the new budget showed the president was &quot;leading the most fiscally irresponsible administration in history.&quot;
 Charles Rangel, the top Democrat on the House Ways and Means Committee, said that Bush's budget showed how far the country had moved from projections two years ago of a $5.6 trillion surplus over 10 years.
 &quot;Since then, deficits have replaced surpluses, war has replaced peace and the economy has lost 2 million jobs,&quot; said Rangel.
 In his budget documents, Bush blamed the deficits &quot;on a recession and a war we did not choose.&quot; He said that his budget would impose &quot;spending discipline&quot; through such efforts as reshaping the government's big health-care programs, Medicare and Medicaid.
 &quot;The budget for 2004 meets the challenges posed by three national priorities - winning the war against terrorism, securing the homeland and generating long-term economic growth,&quot; Bush said in his budget message to congress.
 Bush sent congress a stack of books spelling out his proposal. The five separate documents, featuring a bright blue line drawing of the White House, included a book analyzing the efficiency of hundreds of federal programs, part of a Bush management initiative.
 The budget, prepared before Saturday's Columbia space-shuttle disaster, would give NASA a 3-percent increase to $15.5 billion. The shuttle budget for 2004 would receive a slightly larger percentage increase of 4.7 percent, taking it to $3.97 billion. Figures released earlier by the White House showed a much bigger percentage jump in shuttle funding for 2004, but NASA said that those figures did not reflect the space agency's new accounting methods.
 In its management assessment of NASA, the administration said of the shuttle program: &quot;Shuttle operations are well managed but investments to improve the shuttle suffer from inadequate planning and poor cost management.&quot;
 White House budget director Mitch Daniels said that it was too early to say what spending changes the president would recommend in light of the Columbia tragedy.
 &quot;The president is committed to moving forward in space. He has made that plain. His budget makes that plain,&quot; Daniels told reporters at a budget briefing. &quot;If there is a lesson in the last couple of days, I suppose it is another sad example that more money alone can't always avoid very sad setbacks.&quot;

TITLE: Foreign Carmakers Edge Out Domestic Rivals
AUTHOR: By Simon Ostrovsky
PUBLISHER: Staff Writer
TEXT: MOSCOW - Domestic carmakers have seen their market share slip away in recent years, edged out by competitively priced foreign cars cruising in at full throttle with the help of cheap consumer loans.
 
Companies - from the United States' Ford and General Motors to Korea's Daewoo and the Czech Republic's Skoda - have taken advantage of Russian consumers' disdain for domestic autos and have made significant inroads on their homegrown competition.
 Tolyatti-based AvtoVAZ, maker of the ubiquitous Lada and Zhiguli, and Volga maker GAZ, located in Nizhny Novgorod, have said their survival is on the line.
 They have trimmed production to battle a glut in supply. But even that, they argue, has been an inadequate counterbalance to low demand for domestically made vehicles, which members of the middle class have increasingly opted against, considering them unreliable.
 Foreign carmakers have been quick to take advantage of the weak domestic competition, opening a record number of dealerships last year and increasing sales by 40 percent across the board.
 Last year, automakers appealed to the government for help - and won protective tariff barriers on imports. On average, new foreign cars now face a 25-percent duty, while tariffs on old second-hand imports are set at 35 percent.
 This is a significant extra cost, but demand for new and used car imports has risen nonetheless.
 Imports grew across the board year on year, accounting for 29 percent of the market, up from 24 percent in 2001. Russian producers' output figures dropped.
 Renaissance Capital analyst Natalia Zagvozdina said that AvtoVAZ has been most hurt, dropping 7.5 percent to 8 percent in output.
 &quot;Russian cars are losing market share by about as much as foreign cars - used and new - are gaining it,&quot; she said.
 AvtoVAZ subtracted a shift from its production schedule at the end of last year to cut back production, while foreign car makers in Russia are doing just the opposite.
 &quot;We are reviewing the possibility of adding a second shift, which would allow for considerably more production,&quot; Ford Russia president Henrik Nenzen said.
 Nenzen said that a survey showed that 52 percent of buyers of Ford's new Russian-built Focus models are replacing Russian cars. These customers, then, are first-time buyers of a foreign brand, which represents a shift in demand.
 Daewoo and Skoda have been traditional leaders in import sales. Prices on their bargain-priced vehicles have fallen so low as to be within $1,000 of the prices for domestically produced cars, making them even more competitive.
 Daewoo sold some 12,418 cars in Russia in 2002, the most of any new car importer. Skoda came in second, with new car sales of 9,407. Only three foreign brands, Mercedes, Chevrolet and Fiat, saw sales volume fall last year.
 On average, sales of new foreign cars increased by 40 percent in 2002.
 Cheap credit has enabled this growing presence, putting once-unaffordable foreign cars within the reach of ordinary people.
 It has also proven quick to catch on.
 Before Ford launched production last summer near St. Petersburg, at Russia's only 100-percent foreign-owned auto plant, &quot;less than 10 percent of our customers used credit to finance purchases,&quot; Nenzen said, adding that the figure has since grown to 25 percent.
 Nenzen expected this trend to continue, following Europe, where 60 percent to 80 percent of purchases are financed on credit.
 Imports of Japanese Toyotas have soared, also thanks to accessible car loans, its representatives said.
 Toyota sold 8,302 vehicles in 2002, an increase of 114 percent year on year. &quot;We have a credit program with Raiffeisenbank that has been very successful,&quot; said Alexander Bezrukov, a sales manager at Toyota.
 In the space of only nine months, Raiffeisenbank, a leading credit lender, has seen demand for car loans increase exponentially. Since April 2002, the bank's automobile lending ballooned from 1 percent to more than 40 percent of its retail-loan portfolio, division chief Alexander Koloshenko said. Of the bank's $28-million loans, car credit accounts for $12.2 million.
 Used foreign cars make up the majority of imported cars sold, due to their quality and competitive pricing.
 Of the 550,000 foreign models sold in Russia last year, four-fifths were second hand and only one fifth were new models sold through official dealers. These 110,000 new vehicle sales make for a relatively miniscule market slice for foreign exporters to fight over.
 Russia may be a fast-growing market for new imports, but it remains only a blip on the global sales radar screen. Sales here represent only a small fraction of multinationals' global sales.
 GM doubled its annual sales in Russia in 2002, but even that volume is only equivalent to what a single large dealership in the United States sells.
 As illustration of this, the Bob Sellers GM dealership in Southfield, Michigan, sold 3,000 cars last year, comparable to the 3,339 GM vehicles sold in the Commonwealth of Independent States.
 But GM doesn't expect its CIS numbers to stay at such levels for long. GM CIS general director Heidi McCormick predicted GM sales here would double again this year.
 Foreign companies' growing market share has worried Russian carmakers, which have appealed to the State Duma for trade protection. Industry leaders want the government to raise tariffs on used imports more than three years old, and to use budget funds to purchase Russian-made cars.
 Earlier this month, the Duma sent a draft of these proposals to Prime Minister Mikhail Kasyanov. Two hundred and forty three deputies - a majority - voted in favor of the measures on Jan. 17.
 The government, however, dismissed the Duma's appeal.
 &quot;State support and another import-tariff hike will not save the Russian auto industry; the industry can only be saved by raising the quality of Russian cars,&quot; Kommersant quoted government spokesperson Alexei Volin as saying.
 Volin noted that last year's 10-percent tariff hike on cars more than seven years old, from 25 percent to 35 percent, did little to help the industry.
 Lobbyists argue that older cars are a threat to public safety, though, privately, no one questions the roadworthiness of a 1990 BMW, and even industry insiders admit it is only a pretext for tariffs.
 Renaissance's Zagvozdina, too, saw little utility in higher duties. &quot;A new tariff hike would not help Russian producers, it would only cause demand to shift,&quot; she said. &quot;Those who wanted to buy an $8,000 used car will get credit and buy, say, a $13,000 Renault,&quot; leaving Russian producers out of the loop. 

<b>CAR SALES IN RUSSIA </b>
<b>Brand|2001| 2002| %change</b>
 Daewoo| 10,000| 12,418| 24.2
 Skoda| 8,391| 9,407| 12.1
 Renault| 5,606| 8,337| 48.7
 Toyota| 3,928| 8,302| 111.4
 Mitsubishi| 6,004| 8,167| 36.0
 Nissan| 5,286| 8,029| 51.9
 VW| 7,254| 7,972| 9.9
 Peugeot| 4,246| 6,984| 64.5
 Ford| 4,124| 6,669| 61.7
 Hyundai| 2,205| 5,575| 152.8
 Kia| 3,727| 5,379| 44.3
 BMW| 2,636| 3,790| 43.8
 Volvo| 2,402| 2,929| 21.9
 Opel| 1,458| 2,867| 96.6
 Audi| 2,508| 2,700| 7.6
 Mercedes| 3,806| 2,441| -35.7
 Citroen| 1,009| 2,272| 25.2
 Suzuki| 1,220| 1,912| 56.7
 Honda| 837| 1,340| 60.0
 Land Rover| 410| 839| 104.6
 Chrysler| 134| 380| 183.6
 Fiat| 618| 356| -42.4
 Lexus| 154| 328| 113.0
 Chevrolet| 544| 275| -49.4
 Saab| 144| 199| 38.2
 SOURCE: COMPANY DATA


TITLE: The Unresolved Debate on Capital Flight
AUTHOR: By Robert Skidelsky and Pavel Erochkine
TEXT: IS capital flight a problem for Russia? Most people would say &quot;yes&quot; and would regard the recent reversal of capital flight as a positive sign for the Russian economy. But there is another school of thought that believes that capital movements should be a matter of complete indifference and certainly not the object of government concern.
 
In the decade following the fall of communism, money poured out of Russia. Although unreliable, estimates suggest that, in the 1990s, capital flight was $20 billion to $30 billion per year on average. The Economic Development and Trade Ministry, for example, thinks that $210 billion to $230 billion left Russia during the reforms, approximately half of which was &quot;dirty&quot; money, linked to money laundering or organized crime. The IMF's estimate is that $170 billion escaped the country between 1994 and 2001. Other sources suggest that around $300 billion of assets in the West belong to Russian citizens, almost half of which were bought on money from &quot;uncertain&quot; sources.
 This has been usually interpreted as a vote of no confidence in Russia. Investing money in Russia was just too risky. Poorly protected property rights (particularly for equities), a punitive and highly unpredictable tax system, uncertainty, the need to legalize legal or semi-legal money and so on encouraged people to find ways to move money abroad. Thus, Russian capital went to countries with better conditions for secure holding of assets and for profitable and reliable investments. According to this view, 1990s capital flight was largely caused by country-specific risks.
 During the past year or two, there have been some signs of a reverse flow (although the latest data is not so promising) - a sign of growing confidence in the Russian economy. Interestingly, in the first half of 2001, almost 20 percent of money invested in the Russian economy (excluding the financial sector) came from Cyprus (which has a double-tax treaty with Russia and is used as an offshore center by many Russian companies and individuals), 13 percent from United States and 10 percent from Switzerland.
 Why is capital returning? One of the reasons is that the risk-to-return ratio in Russia has improved as many of the country-specific risks have been minimized and new opportunities for investment have appeared. Also, it is very difficult for Russian businesspeople to invest money in new businesses abroad because, in the West, competition is strong, markets are complex and Russian entrepreneurs lack Western business experience. Thus, money can only be put in cash, equities, bonds or property and, on average, it is very difficult for an investor to earn more than 5 to 10 percent interest per year. Finally, it still makes sense for some people to take money abroad and then reinvest it as a foreign investor, which can provide anonymity and better security.
 The second school of thought, which is well represented in the Kremlin, argues that one should be indifferent to what happens to the capital account. As a technical matter, savings and investment must always be equal, and net capital flows simply represent a balancing factor. Russia has more savings than can be absorbed by domestic investment, so it is natural that Russian savings are invested abroad, where they can earn a higher rate of return. The most recent data offers some support for this point of view: An influx of export revenues to Russia, it is argued, caused a rise in capital flight in the fourth quarter of 2002 simply because an improvement in one sector of the current account (oil) leads either to an offsetting deterioration in the rest of the current account or to an offsetting deterioration in the capital account.
 The basis for saying that Russia has more savings than it can absorb is similar to the argument used for Saudi Arabia. Russia, it is said, is an oil economy and, apart from investments in the energy sector, the rest is like sand. But any comparison between Russia and Saudi Arabia is completely mad.
 Russia is far more diversified than Saudi Arabia, with many potentially lucrative sectors (retail, foods, manufacturing). Russia needs an enormous amount of investment for modernizing its manufacturing sector and infrastructure. To say that investment in Russia on the scale needed may be currently unprofitable is not to say that the investment is not needed.
 People who argue that investments are not needed if they are unprofitable confuse private and social rates of return. The social rate of return is the benefit of an investment to the society as a whole. In other words, it is return to the investor plus net effect of that investment on anyone else. Russia is a classic case where private rates of return are significantly below social rates of return, which means that many things like infrastructure are seriously undercapitalized. In the long run, this situation could develop into a self-reinforcing negative spiral, which would leave everyone worse off.
 Capital controls are not an answer, not only because they could never be implemented, but because they will not deal with the underlying problem and will only distort financial markets. The focus should be on measures that will voluntarily attract both Russian and foreign money. What the government needs to do is to change the structure of incentives in a way that would bring the private rate of return closer to the social rate of return.
 Some economists might suggest taxing oil companies, who are the biggest single source of capital. In theory, a one-off windfall tax on oil companies, justified by the acquisition of oil company assets at bargain-basement prices, could be a good move. This worked in Britain, and allowed Chancellor of the Exchequer Gordon Brown to raise revenues for his training-and-employment program. But, in Russia, any such tax would only encourage more capital flight.
 The way forward is gradually to abandon open and hidden subsidies to unprofitable private and state-owned enterprises in order to let them die and to free resources, which could be invested in the infrastructure. Better infrastructure, supplemented by institutional reforms, will make it easier and more profitable to do business, and would thus attract investments to industries other than oil and gas. Once this process is started, it will be in business' own interest to keep investments into infrastructure and the real economy flowing, strengthening the Russian economy further.
 Any such measures must be complemented by the development and enforcement of property rights, particularly with regard to equity investments, the area most visible to foreign investors and policy-makers. And, in this, the authorities should definitely take a more active approach, starting with Unified Energy Systems and its planned restructuring.
 
 <i>
Robert Skidelsky is chairman of the Centre for Global Studies and a non-executive director of the Janus Capital Group Inc. Pavel Erochkine is a research officer at the Centre for Global Studies. They contributed this comment to The St. Petersburg Times. </i>

TITLE: Washington Must Come Clean on Oil Interests
TEXT: IN streets teeming with blue-jeaned demonstrators and in European Parliament halls filled with blue-suited politicians, men and women wave signs reading &quot;No war for oil,&quot; or the snappier &quot;No blood for oil.&quot; Allegations that the United States needs a war with Iraq just to fill the tanks of SUVs, and intends to pay for the war with Iraq's own oil, are sufficiently common that Washington should address them directly and often.
 
For months, U.S. President George W. Bush has emphasized that Iraqi President Saddam Hussein must be deposed because he has used chemical weapons against his own people and his enemies, possesses biological and chemical weapons and is trying to develop nuclear arms. In his State of the Union speech last week, Bush warned of &quot;outlaw regimes&quot; that can provide those lethal weapons to terrorists, an alarm that rings louder after 9/11. He said that, in the event of war, the United States would &quot;bring to the Iraqi people food and medicines and supplies - and freedom.&quot;
 He did not mention the commodity that the U.S. needs and the Iraqis possess in abundance. The reserves of oil beneath the Iraqi desert are second only to those of Saudi Arabia. Since its invasion of Kuwait in 1990 and the defeat a few months later, sanctions and deteriorating equipment have forced Baghdad to pump far less. Petroleum experts estimate that it could cost $5 billion to restore the oil fields to pre-Gulf War levels. Full production would repay that amount and more within a year.
 U.S. Defense Department officials say that U.S. invasion plans call for securing Iraq's oil fields as quickly as possible. That's prudent in that Hussein torched Kuwait's oil fields after the Gulf War, creating an economic and environmental disaster. It should not mean taking over Iraq's oil production, a distinction the White House cannot make often enough.
 Oil pumped from Iraq could indeed help pay to repair war damage and finance the operations of a post-Hussein government. U.S. Secretary of State Colin Powell said last week that he was uncertain how Iraq's oil revenue would be allocated after a war but that the oil &quot;belongs to the Iraqi people&quot; and would not be exploited for the United States' own purposes. It's a pledge that should come from the White House, as well as Powell.
 Powell was especially eloquent last weekend at the World Economic Forum in Davos, Switzerland. Answering a questioner worried about U.S. use of force, he said that in sending troops abroad for decades and seeing many of them die, &quot;we have asked for nothing except enough ground to bury them in.&quot;
 In the world of oil commerce, Russian and French oil companies are worried about losing business in Iraq. Bush's and Vice President Dick Cheney's oil-company backgrounds certainly give critics reason to believe the U.S. leaders know and favor U.S.-based oil companies.
 On all of these issues, the Bush administration needs to be clear and forceful about its intentions concerning Iraqi oil. Both the American people and European allies need the clarity.
 
 <i>
This comment originally appeared as an editorial in the Washington Post. </i>

TITLE: Defining the Dialogue in Raising Finance
AUTHOR: By Artem Vasyutin
TEXT: DOES your company operate within a group? Does your company have significant intra-group payables? 
 
In Russia, it is not hard to imagine that there is often a shortage in working capital for continuing activity. But how are those shortages financed in practice? The simplest answer, from many legal and administrative standpoints, is probably a free loan from another group company. It's a popular solution, as it doesn't conflict with civil law, but what are the tax consequences of such an option? 
 Chapter 25 of the Tax Code &quot;On profit tax&quot; has been in force for a year. Some provisions of this law, however, have not yet been examined in detail. Moreover, even the tax authorities have not highlighted some of the new ways of collecting taxes. 
 In December 2002, the Tax Ministry published an interpretation of the law, with regard to non-interest bearing loans, in its magazine Nalogovy Vestnik (&quot;Tax News&quot;)and raised this issue during conferences focusing on accounting and tax. The Ministry's position was clear: non-interest bearing loans imply a free-of-charge financial service. 
 But, again, this raises additional questions, the major one being as to the methodology of calculation of any deemed income. All letters and articles refer to the &quot;market value&quot; of the financial services, which is far from a clear definition. The financial-services market in Russia is a varied field and a lot of services are rendered on a unique basis. Every term of any loan agreement must be taken into consideration: client relationship, amount, period, currency, assets in possession by the borrower and security and control held by the creditor. Therefore, the determination of any &quot;market&quot; interest rates will be open to various interpretations.
 Meanwhile, &quot;the forces in the field&quot; of the tax authorities are no doubt waiting for written instructions that could easily indicate interest rates determined by the Tax Ministry. It is worth noting that, to date, the only mention in the tax legislation of &quot;reasonable&quot; interest rates refer to the Central Bank ruble rate multiplied by 1.1 (or 15 percent on hard-currency loans), which is the limit for deductibility of interest expense for profit tax, or, alternatively, for personal-income-tax purposes, interest rates should be at least three quarters of the Central Bank ruble rate (or 9 percent on hard-currency loans).
 It is therefore worth considering, preemptively, before we become subject to any attacks by the authorities, that taxpayers reduce risks by taking another look at their interest free loans and defining a commercial interest rate - before someone else does it for them! 
 
 <i>
Artem Vasyutin is a tax consultant at Deloitte &amp; Touche's St. Petersburg office. He contributed this comment to The St. Petersburg Times. </i>

TITLE: Russia Must Join the WTO as Soon as Possible
AUTHOR: By Anders Aslund
TEXT: RECENT events show that Russia's need for membership of the WTO is rapidly growing. One reason is the structural changes that have taken place in the Russian economy: 90 percent of what the Soviet Union exported to the West was oil and natural gas. Now, these raw materials account for just over half of Russia's exports, while intermediary goods - such as metals (comprising one quarter of exports) and chemicals - take their place.
 
However, intermediary goods are often subject to protectionist measures. Russia's steel industry has been consolidated and restructured, with the four biggest and best companies now producing four fifths of Russia's steel. They are improving and expanding output, but Russia's exports, both to the European Union and the United States, are strictly regulated by import quotas, which would not be legal if Russia were a member of the WTO.
 Russia's major competitors on the steel market are steelworks in Poland and the Czech Republic, which will soon benefit even more, because of their countries' imminent accession to the EU. Little surprise, then, that Alexei Mordashov, CEO of steel giant Severstal, leads the industrialists favoring early Russian accession to the WTO.
 Russian chemicals are often subject to anti-dumping actions in the EU, and the penalty rates tend to be twice as high as those for EU accession countries, but Russia has no means to complain. As one industry after another takes off, such examples will multiply.
 In the 1980s, the Soviet Union imported on average 37 million tons of grain each year. This year, Russia, Ukraine and Kazakhstan together will export more than 25 million tons of grain. Shocked to see this remarkable revival of Russia's agriculture, the EU clamped down with strict import quotas for grain starting Jan. 1. Russia's export of grain to the EU will probably be restricted to 500,000 tons in 2003, compared with some 5 million tons in 2002. The EU could not have imposed this draconian protectionist measure if Russia had been a member of the WTO.
 In fact, Russia has much to benefit from freer agricultural trade. It offers few subsidies to its agricultural sector, which is developing swiftly. Russia should consider membership in the Cairns group of agricultural exporters opposing protectionism. Since the liberalization of agricultural trade is one of the main issues in the current Doha round of WTO negotiations, Russia has a vital interest in joining the WTO soon.
 The so-called &quot;free-trade area&quot; between CIS countries does not work. As soon as one CIS country successfully exports any good to another CIS country, the importing country tends to impose severe protectionist measures. Last year, a veritable trade war erupted between Russia and Ukraine, in which successful exporters in both countries were penalized at a social cost of hundreds of millions of dollars.
 No country should be blamed for this unfortunate situation. The CIS free-trade area lacks legal sanctions. Every CIS government can do as it pleases, leaving the field open for arbitrary retaliation, which is sometimes resolved through prolonged bilateral haggling. Most other free-trade areas in the world function well on the basis of WTO rules and standards. It makes no sense for CIS countries to reinvent this complex wheel. Instead, they should all become members of the WTO, but they should start using WTO rules and standards immediately.
 Russia's problems with entering the WTO are often exaggerated. After all, Russia is a fairly open market economy, unlike China. While China had to make some 200 commitments, Russia should get away with about 30, and many of its problems have already been sorted out.
 The most difficult issue of principle is the EU demand that Russia raise its energy prices to the high EU level. Russia, however, has an evident comparative advantage in its abundance of cheap energy, while EU energy prices are most probably kept too high by inefficient state monopolies. The obvious solution is the gradual liberalization of Russian energy prices over a few years and, last December, Russia and the EU agreed accordingly.
 Russia's car industry has the most fervent protectionist lobby, but it appears to be satisfied with the tariff protection that Russia has introduced. Like it or not, it is only temporary, and it should be possible to get through the WTO.
 Various countries have demanded that Russia open up its banking sector to unlimited foreign participation. Through a simple decision, the Central Bank solved that problem late last year, by abolishing the ceiling of 12 percent on foreign ownership in the banking sector.
 Several Russian concerns are too tiny to merit serious discussion. Foreign companies, such as Norway's Telenor, Sweden's Telia and Germany's Deutsche Telekom, already own a large share of Russia's mobile phone companies. Even so, the Communications Ministry wants to limit foreign ownership in the telecommunications sector. Instead, it would be in Russia's true interest to facilitate the international expansion of companies such as MTS and Vimpelcom.
 One of the most important side effects of Russian accession to the WTO will be support for the domestic-reform agenda. Everybody complains about Russia's customs administration, which will be forced to improve by the WTO. Russia's insurance industry is rudimentary, but a normal market economy requires well-functioning insurance, which will be greatly facilitated by foreign participation - as demanded by WTO negotiators. By contrast, Russia's overgrown and obsolete aviation industry can only be shaken and revived through a radical liberalization.
 In short, Russia has overwhelming reasons to join the WTO early. For Russia, the timing of its accession is more important than the exact conditions. The later Russia joins, the more cumbersome the demands will be and the greater the social cost. For instance, as a new WTO member, China can now impose additional conditions on Russia's entry. Currently, both the EU and the United States support early accession for Russia. Russia should try to accede to the WTO at the important ministerial conference in Cancun, Mexico, in September.
 This is still possible if it is made a top political priority.
 
 <i>Anders &Aring;slund is a senior associate of the Carnegie Endowment for International Peace in Moscow. He contributed this comment to The St. Petersburg Times. </i>

TITLE: Something's Rotten at the Core of Yabloko
TEXT: SERGEI Ivanenko, a deputy to Yabloko leader Grigory Yavlinsky, announced last month that the party would not unite with the Union of Right Forces, or SPS, in the run-up to parliamentary elections later this year. Ivanenko colorfully likened the SPS to a &quot;viral cell that lives by devouring healthy organs.&quot;
 
The announcement caught many by surprise. Yavlinsky, after all, had long maintained that unification was possible, though he insisted on such unrealistic conditions as the ouster of UES chief Anatoly Chubais from SPS. So, when it came to a matter of utmost strategic importance for his party, why didn't Yavlinsky announce the change of position himself? What's more, uniting right-leaning parties would clearly benefit all involved. So why has Yabloko started calling SPS names? Once you know the background to Ivanenko's announcement, the change seems both logical and loathsome.
 SPS has long been making noise about a unification of the right. The idea makes a lot of sense. If SPS and Yabloko combined forces, they could raise more money, use that money more effectively and, according to some estimates, win 100 seats or more in the State Duma.
 Even if both parties clear the 5-percent hurdle required for representation in the Duma this year, four years from now, when the barrier rises to 7 percent, one or both will inevitably fall short. Uniting, in other words, is a matter of life and death for the right. At stake is the chance to create a meaningful democratic opposition in Russia.
 All attempts up to now, however, have amounted to nothing but spin: SPS sincerely offered conditions favoring its own interests, and Yavlinsky countered with his own self-serving conditions.
 Last month, both sides sat down at the negotiating table once more, and the talks proceeded in a fundamentally new direction. For starters, SPS put a thoroughly reasonable proposal on the table. Yavlinsky would be the democrats' single candidate for the presidency in 2004. Chubais, Yabloko's bugbear, would leave SPS. In the parliamentary campaign the unified party list first three would be: Boris Nemtsov, Yavlinsky and Irina Khakamada. Once in the Duma, the democratic bloc would dissolve into its constituent parts, and Yavlinsky would head his own faction.
 Just as importantly, SPS didn't make this proposal on the evening news, but via a group of businesspeople who have indicated their readiness to back a unified right party - in particular, through Yabloko's exclusive patron, Yukos. This tactic ensured that the proposal was kept under wraps; oligarchs bear publicity about as well as vampires bear direct sunlight. For once, this wasn't spin, but a strategic decision of a business elite that doesn't want to see parliament carved up between the pro-Kremlin United Russia party and the Communists.
 Yavlinsky's reply, made to the party's patron in the seclusion of a country dacha: We will never join forces with SPS. This reply could be put down to the quirks of Yavlinsky's personality. In a way, Yavlinsky is Russia's last dissident. Yabloko retains much of the old Soviet-era dissident flavor - its leader's excessive ego, its utopian social policy, and its chronic inability to come to any sort of agreement. At first glance, this might look like principled high-mindedness but, upon closer inspection, it turns out to be nothing more than a refusal to return favors.
 But Yavlinsky's political solipsism has coincided in a strange way with the Kremlin's strategy of fueling dissension among the Communists, the democrats, etc. As you may recall, shortly after the hostage crisis in Moscow last fall, our normally tight-lipped president made a show of contrasting SPS' improper conduct with Yavlinsky's proper conduct. The signal was clear: SPS, which until then enjoyed close relations with the Kremlin, had become too popular; now, Yabloko would be embraced instead.
 Yabloko's financial backers were bowled over by the party's reaction. A top Yabloko official was overheard to say in a State Duma corridor, &quot;They're finding us new backers.&quot;
 
 <i>Yulia Latynina is host of &quot;Yest Mneniye&quot; (&quot;Some Believe&quot;) on TVS. </i>

TITLE: Global Eye
TEXT: <b>Kean Insight
</b>
When George W. Bush's first choice to head an &quot;independent&quot; probe into the Sept. 11 attacks - suspected war criminal Henry Kissinger - went down like a bad pretzel, he quickly plucked another warm body from the stagnant pool of Establishment worthies who are periodically called upon to roll out the whitewash when the big boys screw up.
 
Kissinger's replacement, retired New Jersey Governor Thomas Kean, was a &quot;safe pair of hands,&quot; we were assured by the professional assurers in the mainstream media. The fact that he'd been out of public life for years - and that he hadn't collaborated in the deaths of tens of thousands of Cambodians, Chileans and East Timorese - certainly made him less controversial than his predecessor, although to be fair, Kissinger's expertise in mass murder surely would have given the panel some unique insights into the terrorist atrocity.
 Now, however, it seems that Kean might possess some unique insights of his own. Fortune Magazine reports this week that both Kean and Bush share an unusually well-placed business partner: one Khalid bin Mahfouz - perhaps better known as &quot;Osama bin Laden's bagman&quot; or even &quot;Osama bin Laden's brother-in-law.&quot;
 Kean, like so many worthies, followed the revolving door out of public service into lucrative sweetheart deals and well-wadded sinecures on corporate boards. One of these, of course, is an oil company - pretty much a <i>requirement </i>for White House work these days. (Or, as the sign on the Oval Office door says: &quot;If your rigs ain't rockin', don't come a-knockin'!&quot;) Kean is a director of Amerada Hess, an oil giant married up to Saudi Arabia's Delta Oil in a venture to pump black gold in Azerbaijan. (The partnership is incorporated in a secretive offshore &quot;tax haven,&quot; natch. You can't expect a worthy like Kean to pay taxes like some grubby wage slave.)
 One of Delta's biggest backers is the aforesaid Mahfouz, a Saudi wheeler-dealer who has bankrolled some of most dubious players on the world scene: Abu Nidal, Manuel Noreiga, Saddam Hussein and George W. Bush. Mahfouz was also a front for the bin Laden family, funneling their vast wealth through American cut-outs in a bid to gain power and influence in the United States.
 One of those cut-outs was Mahfouz factotum James Bath, a partner in George W.'s early oil venture, Arbusto. Bath has admitted serving as a pass-through for secret Saudi money. Years later, when Bush's maladroit business skills were about to sink another of his companies, Harken Energy, the firm was saved by a $25 million investment from a Swiss bank - a subsidiary of the Bank of Credit and Commerce International (BBCI), partly owned by the beneficent Mahfouz.
 What was BCCI? Only &quot;one of the largest criminal enterprises in history,&quot; according to the U.S. Senate. What did BCCI do? &quot;It engaged in pandemic bribery of officials in Europe, Africa, Asia and the Americas,&quot; says journalist Christopher Bryon, who first exposed the operation. &quot;It laundered money on a global scale, intimidated witnesses and law officers, engaged in extortion and blackmail. It supplied the financing for illegal arms trafficking and global terrorism. It financed and facilitated income tax evasion, smuggling and prostitution.&quot; Sort of an early version of the Bush Regime.
 BCCI's bipartisan corruption first permeated the Carter Administration, then came to full flower in the Reagan-Bush years. The CIA uncovered the bank's criminal activities in 1981 - no great feat, considering how many of its own foreign &quot;associates&quot; were involved, including the head of Saudi intelligence, Kamal Adham, brother-in-law of King Faisal. But instead of stopping the drug-runners and terrorists, the agency decided to <i>join</i> them, using BCCI's secret channels to finance &quot;black ops&quot; all over the world.
 When a few prosecutors finally began targeting BCCI's operations in the late Eighties, President George Herbert Walker Bush boldly moved in with a federal probe directed by Justice Department investigator Robert Mueller. The U.S. Senate later found that the probe had been unaccountably &quot;botched&quot; - witnesses went missing, CIA records got &quot;lost,&quot; all sorts of bad luck. Lower-ranking prosecutors told of heavy pressure from on high to &quot;lay off.&quot; Most of the big BCCI players went unpunished or, like Mahfouz, got off with wrist-slap fines and sanctions. Mueller, of course, wound up as head of the FBI, appointed to the post in July 2001 - by George W. Bush.
 In the late 1990s, U.S. authorities identified Mahfouz as a major financier of his brother-in-law's extracurricular activities. He denied it, but the spooked Saudis put him on ice, charging him with, of all things, bank fraud. He's now under &quot;house arrest&quot; - or rather, &quot;palatial mansion arrest&quot; - but still wheeling and dealing with Kean and Delta and other worthies. Indeed, one of Mahfouz's hirelings - the director of a Pakistani bank he owns - sits on the advisory board of our old friend the Carlyle Group, cheek by jowl with the firm's most celebrated shill: George Herbert Walker Bush.
 It seems doubtful that the worthy Kean will poke very hard at the nexus of intersections between his own business partner, Mahfouz, and the bin Ladens, the Bushes, the Saudi royals, Saddam, the CIA and BCCI. This survey only scratches the surface, but even a cursory glance makes the current world crisis look less like some grand geopolitical &quot;clash of civilizations&quot; and more like a nasty falling out among thieves, with rival mafias - who sometimes collude, sometimes collide - now duking it out for turf, cloaking their murderous criminality with pious rhetoric about freedom, security, jihad and God.
 
 <i>
For annotational references, see the &quot;Opinion&quot; section at www.sptimesrussia.com </i>

TITLE: NASA Program Dogged by Shortages of Money, Experts
AUTHOR: By Pete Yost
PUBLISHER: The Associated Press
TEXT: WASHINGTON - Investigators looking into the space-shuttle disaster will have a well-documented record of years past reflecting mounting safety concerns, tight budgets and shortages of key experts in the NASA program.
 
None of the previous warnings foretold the kind of tragedy that happened Saturday, but they depicted an agency that needed to intensify its focus on space shuttle safety.
 As President George W. Bush took office, the General Accounting Office, the investigative arm of Congress, found in 2001 that the shuttle work force had declined significantly, to the point it reduced NASA's ability to safely support the program.
 Many key areas were not sufficiently staffed by qualified workers, and the remaining work force showed signs of overwork and fatigue, the GAO said. When it visited the problem again, it reported last week that &quot;staffing shortages in many key areas still remain a problem.&quot;
 A federally mandated safety panel of outside experts expressed &quot;the strongest safety concern&quot; in 15 years when it reported to Congress last April.
 Members of Congress made clear that safety and the NASA budget will come under intense scrutiny, beginning Monday with submission of Bush's budget for the agency next year.
 &quot;Inevitably, there will be a discussion out of this about how much NASA should be funded, should there be another orbiter built and, in fact, has it been so poorly funded in recent years that maybe, just maybe, it wasn't as safe as it should be?&quot; said Senator Bill Nelson, who flew aboard Columbia in 1986 as a House member.
 The House Science Committee will lead the congressional investigations of the tragedy, focusing on how much money has been devoted to the safety of the shuttle and other space programs, and whether the disaster could have been prevented with more resources.
 While many of the warnings in years past about shuttle safety were blunt, they were often tempered with qualified praise for NASA.
 The GAO said that, to NASA's credit, the agency discontinued downsizing plans for the shuttle program in December 1999 and initiated efforts to hire new staff. But, even with these efforts, the training of new staff and dealing with critical losses due to retirements are &quot;considerable challenges,&quot; the auditors said.
 In last April's report to Congress, the Aerospace Safety Advisory Panel noted that &quot;safety has not yet been compromised. NASA and its contractors maintain excellent safety practices and processes as well as a world-class level of safety consciousness.&quot;
 On the other hand, the safety panel's former chairman, Richard Blomberg, told Congress that many engineering improvements have been cut or delayed for budget reasons and &quot;some of these would directly reduce flight risk.&quot;
 In an interview Sunday, Blomberg said that &quot;what I was talking about was long-term safety ... . I was not predicting this or any other imminent disaster.&quot;
 Blomberg said that &quot;the space shuttle was destined to be our human flight vehicle until 2020&quot; and &quot;every change takes a long time to plan. We were saying you've got to get your act together and move forward now.&quot;
 Criticism has also come from some inside the agency.
 Last August, a retired NASA engineer, Don Nelson, wrote Bush about what he said was inadequate safety of the shuttle but was rebuffed by the White House's science adviser.
 &quot;Your intervention is required to prevent another catastrophic space shuttle accident,&quot; said Nelson, who is no relation to the senator. He suggested that shuttle crews be limited to four people, saying that &quot;if this is ignored we can watch in horror and shame as the astronauts face certain death.&quot;

TITLE: Iraq Warns U.S. of Potential Casualties
AUTHOR: By Hamza Hendawi
PUBLISHER: The Associated Press
TEXT: BAGHDAD - Iraq will inflict massive casualties on American troops if the United States launches an invasion to topple Iraqi President Saddam Hussein, a senior Iraqi legislator predicted Monday.
 
Iraqi parliament speaker Saadoon Hammadi told a group of legislators from the European Parliament that Iraq &quot;will not turn the other cheek&quot; should the United States us force to make Hussein's regime give up banned weapons programs.
 &quot;American aggression will end up in a catastrophe for them,&quot; Hammadi said. &quot;They will incur casualties beyond their imagination.&quot;
 UN resolutions passed since Iraq's defeat by a U.S.-led coalition in the 1991 Gulf War prohibit nuclear, chemical and biological-weapons programs in Iraq. Thousands of such weapons were destroyed under a UN inspection program in the 1990s.
 The United States and Britain insist Hussein is still hiding banned weaponry, and say they will disarm Iraq by force if necessary. The United States has deployed almost 90,000 troops in the Gulf region, a number that may double soon.
 Iraq has steadfastly denied it has weapons of mass destruction, but it is under pressure to make concessions and show progress in the UN inspections process in hopes of blocking any U.S.-British diplomatic bid for military action.
 The inspectors have yet to find anything conclusive, and Iraq has claimed that U.S. Secretary of State Colin Powell will fabricate evidence against Hussein when he appears before the UN Security Council on Wednesday to try to prove the Iraqis are hiding banned weapons.
 Powell shot back Monday in an editorial published in the Wall Street Journal. Though he won't give the council a &quot;smoking gun,&quot; Powell promised to present evidence of the &quot;programs that Iraq is working so hard to hide.&quot;
 &quot;We will, in sum, offer a straightforward, sober and compelling demonstration that [Hussein] is concealing the evidence of his weapons of mass destruction, while preserving the weapons themselves,&quot; he said.
 He also alleged that Iraq &quot;continues to acquire banned equipment, with proscribed imports arriving as recently as last month.&quot;
 Hussein himself is expected to offer his own assessment on the U.S.-Iraqi confrontation in a television interview with leftist former British lawmaker and anti-war activist Tony Benn. The interview was taped Sunday and will be broadcast in the next day or two, Benn said.
 Facing a U.S.-led invasion, Iraq invited the two chief UN weapons inspectors back to Baghdad and Iraq has promised that the government would &quot;do our best&quot; to make Saturday's visit successful.
 The chief inspectors are hoping that they will win meaningful concessions from the Iraqis on reconnaissance U-2 flights and private interviews with Iraqi scientists - two of the issues the inspectors say have stalled progress so far.
 The talks with chief weapons inspectors Hans Blix and Mohamed ElBaradei will come just before their next important report to the council, on Feb. 14. It will be the second round of Baghdad talks for Blix and ElBaradei in three weeks.
 In Monday's round of daily arms inspections, UN teams paid unannounced visits to, among other sites, a missile-parts plant in Baghdad and a frequently inspected chemicals complex south of the capital, and a detergent factory 240 kilometers to the north, the Information Ministry reported.
 Sites such as the detergent factory are often of interest because of the &quot;dual-use&quot; manufacturing equipment or product components could be used in making chemical weapons.
 Also on Monday, the leader of the biggest Iraqi dissident faction said that a U.S.-led attack on Iraq appears &quot;inevitable,&quot; but any ground battles must be spearheaded by Iraqi opposition forces or risk civil unrest.
 &quot;Our preferred solution is that the international community - including the United States - provide support, including air support, and let the Iraqi opposition do the job of toppling Saddam Hussein,&quot; Mohammed Baqir al-Hakim said at his Tehran headquarters.
 &quot;It is the Iraqis who have the responsibility of changing the regime,&quot; he said.

TITLE: Zimbabwe Opposition Goes On Trial
AUTHOR: By Angus Shaw
PUBLISHER: The Associated Press
TEXT: HARARE, Zimbabwe - Police used batons to beat back foreign diplomats and journalists trying to get into the long-awaited trial of an opposition leader that was to begin Monday.
 
Morgan Tsvangirai and two senior party colleagues are accused with plotting to kill President Robert Mugabe. They deny the charges, and could face the death penalty if convicted.
 Before the trial was to begin, police with batons cleared the court's entrance, striking out at reporters, opposition lawmakers and scores of their supporters.
 Police said the courtroom was full, but lawyers inside said the public benches were virtually empty. Opposition leaders said Tsvangirai's lawyers planned to protest.
 &quot;This is a public place, and it is supposed to be a public court. Obviously, the state has something to hide,&quot; said opposition lawmaker Priscilla Misihairabwi. Police pushed her away with riot clubs held across their chests.
 Ish Mufandikwa, a freelance journalist, and several other people were arrested on the street outside the court.
 Angry police in blue paramilitary uniforms yelled at German deputy chief of mission Jan Van Thief to get away as he showed his diplomatic identity pass.
 &quot;You are no longer a diplomat. We will get you,&quot; one policeman shouted over the chaos. Western diplomats said they planned to protest to the foreign ministry.
 A plain-clothes security agent, dressed in jeans, sneakers and a straw hat and carrying a pistol and riot stick, ordered police to clear the main street at the court.
 &quot;We don't allow anyone to enter. This is not a parliament,&quot; the man said.
 Reporters from the state media were allowed into the building, but others who waited for 2 1/2 hours at the court entrance said few people were admitted earlier other than court staff.
 U.S. Ambassador Joseph Sullivan was allowed in alone only after being forced to wait in the crowd.
 Bharat Patel, the deputy state attorney general, told lawyers outside the court their entry &quot;was not in his hands.&quot;
 Also on trial are Movement for Democratic Change Secretary General Welshman Ncube and shadow agriculture minister Renson Gasela.
 Zimbabwe has been wracked by more than two years of political and economic chaos, as Mugabe's increasingly authoritarian government has cracked down on the opposition, the independent press and the judiciary.
 Respected anti-apartheid attorney George Bizos of South Africa, who first represented Nelson Mandela nearly 40 years ago, is defending the three.
 Tsvangirai arrived for the hearing in an armor-protected vehicle. Ncube and Gasela were only admitted to the High Court after delays while police identified them.
 Bizos applied for a delay of trial until it is open to the public, said Innocent Chagonda, a lawyer for the three accused.
 &quot;The trial is not going to begin until the journalists and the public are allowed in,&quot; he said.
 The treason charges were filed in March after a Canadian-based consulting company released a secretly recorded videotape of a Dec. 4 meeting in Montreal that they said incriminated Tsvangirai.
 A local media monitoring group said the recording had been heavily edited and rearranged, and Tsvangirai said his remarks were taken out of context.
 Ncube and Gasela are accused of helping arrange the meeting.

TITLE: Sharon Calls On Labor To Form Coalition
AUTHOR: By Ramit Plushnick-Masti
PUBLISHER: The Associated Press
TEXT: JERUSALEM - Israeli Prime Minister Ariel Sharon on Monday told the leader of the rival Labor Party that the country's two largest parties must join forces in a broad-based government to face the Palestinian conflict and economic problems.
 
Labor leader Amram Mitzna gave no immediate response to Sharon's request, but has said repeatedly that Labor would not join a government led by Sharon and his hawkish Likud Party.
 &quot;Sharon's positions are non-starters,&quot; said Avraham Shohat, a member of parliament with Labor. &quot;We can't be in a government where everything that we told our voters will not be fulfilled.&quot;
 Likud swept to victory in Jan. 28 elections, with voters endorsing Sharon's hard-line approach to the Palestinian uprising. Likud won 38 seats in the 120-member parliament, while Labor, the second-largest party, fell to 19. It was the worst showing ever for the party that launched the peace talks with the Palestinians a decade ago.
 Sharon spoke to Mitzna on security and political issues between Israel and the United States. The prime minister also told Mitzna about his &quot;open and secret contacts with Palestinians who want to speak peace,&quot; a statement from Sharon's office said.
 &quot;The prime minister said that in order to continue to advance on political tracks and in order to rescue Israel from the economic situation it is in, there is a need to have the widest possible Zionist front,&quot; the statement said.
 Israeli President Moshe Katzav has to assign Sharon the task of forming a government, and is expected to do so this week. Sharon will then have up to six weeks to form a government, and will need partners to reach a majority of 61 seats.
 Sharon insists peace talks should not resume until the violence ends, while Mitzna favors immediate negotiations with the Palestinians, despite the ongoing fighting.
 Mitzna has said that Labor's participation in the last government hurt the party by blurring the differences between Labor and the hardline Likud.
 Israeli political analysts have said that Mitzna would probably try to build a &quot;fighting opposition&quot; despite opinion polls that show a majority of Israelis support a Likud-Labor coalition.
 Tommy Lapid, the leader of the centrist party Shinui, the third largest parliamentary faction with 15 seats, met Mitzna last week in an attempt to persuade him to join a Sharon government along with his party.
 However, after the meeting, the two aired their differences in front of the television cameras, making it clear that no agreement had been reached.
 If Likud, Labor and Shinui were to join forces, Sharon would have a solid majority in parliament and would not need to include ultra-Orthodox parties. Shinui says its aim is to be part of a secular government, and strongly opposes the special privileges afforded the ultra-Orthodox in Israel. However, Sharon is reluctant to cut ties to the religious parties.

TITLE: 40 Dead in Lagos Bank Explosion
AUTHOR: By Dulue Mbachu
PUBLISHER: The Associated Press
TEXT: LAGOS, Nigeria - An explosion destroyed a bank and dozens of apartments above it in Nigeria's biggest city on Sunday, killing at least 40 people and trapping more in the rubble.
 
The cause of the blast wasn't immediately known, but police were considering several explanations, including the possibility that someone was trying to rob the bank.
 People grabbed fistfuls of cash just after the explosion, touching off bloody scuffles, and several were arrested. Trapped victims cried for help, and onlookers wailed as rescuers retrieved bloody, broken bodies.
 &quot;My uncle was in the balcony of our house talking with a friend and the force of the explosion threw them down,&quot; resident Remi Oyebanji said. &quot;They're both dead.&quot;
 Ambulance drivers fought to get through crowds of people on the narrow streets to reach the victims, and hundreds of police officers surrounded the damaged neighborhood, dispersing the looters and pushing back onlookers.
 Rescuers found more than 30 dead and 32 injured people, the Red Cross said. Ten of the wounded died later at a Lagos hospital.
 Many more victims were believed caught in the rubble, and the death toll was likely to rise, said Emmanuel Ijewere, president of the Nigeria Red Cross.
 The building housed the bank and three floors of apartments above it. The structure was leveled.
 Cranes and other heavy equipment moved in to lift the heavy concrete slabs and other debris.
 The blast occurred at about 12:30 p.m. local time on Lagos Island, a crowded high-rise district of banks and other businesses packed side-by-side with poor, densely populated residential blocks.
 The explosion damaged adjoining buildings and shattered the windows for blocks around.
 Omololu Kassim, a resident who helped carry the victims, said he saw 40 dead and as many injured. Local radio put the toll at 50 or more.
 Survivors gathered what they could and set off in search of safe housing. &quot;My husband is dead,&quot; one woman cried, carrying a bundle on her head and leading a small boy.
 Lagos state Governor Bola Tinubu said his government will begin an investigation into the blast and he promised free medical treatment for the injured.

TITLE: Youth Has Its Day at NHL All-Star Game
AUTHOR: By Alan Robinson
PUBLISHER: The Associated Press
TEXT: SUNRISE, Florida - Once again, a tied All-Star game ended in confusion. Only this time, there was a winner, and a performance to rival the greatest in the game's history.
 
Dany Heatley, a not-so-well known star from a last-place team, joined hockey greats such as Wayne Gretzky and Mario Lemieux by scoring a record-tying four goals Sunday. What he couldn't do was lead the Eastern Conference past the West in the first All-Star shootout in NHL history.
 After a 5-all regulation tie set up the fourth overtime All-Star game, the West won 6-5 when Markus Naslund, Bill Guerin and Paul Kariya scored in the shootout against goalie Patrick Lalime. Only Heatley - of course - scored for the East against goalie Marty Turco.
 In a trying, troubling season, the NHL almost got the All-Star game wrong, too, just as baseball did with its All-Star tie fiasco of last summer.
 Though Heatley put the puck in the net five times and had an assist, the NHL announced several minutes after the game he would be credited only with four goals - the fifth player to do so.
 Most of the fans left thinking the score was 8-6, as displayed on the scoreboard after the West outscored the East 3-1 in the shootout. That also was changed by the NHL's hockey operations department after most had departed.
 No, Bud Selig wasn't running the show, either, even if it might have seemed like it amid the commotion. Maybe it was fitting that, in a season in which two NHL teams filed for bankruptcy, the league didn't immediately get the bottom line right.
 &quot;You heard the fans, they didn't want to go home without somebody winning this game,&quot; Turco said. &quot;They wanted the East to win, but they were definitely excited and that got me pumped.&quot;
 Even Gretzky got excited. The Great One went to the East's locker room before the third period and urged Heatley to go for the record.
 &quot;He told me to get five, six or seven,&quot; Heatley said. &quot;It was unbelievable for him to come down. Too bad I couldn't get the fifth one.&quot;
 Heatley, a second-year player overshadowed at times on his own Atlanta Thrashers team by Ilya Kovalchuk, matched Gretzky (1983), Lemieux (1990), Vincent Damphousse (1991) and Mike Gartner (1993) as the only players in the All-Star game's 53-year history with four goals.
 He's also the youngest at 22 years and 12 days, or one day younger than Gretzky was in 1983.
 &quot;I was pretty relaxed,&quot; Heatley said. &quot;After I got the first one [against Patrick Roy], I was pretty relaxed and the chances kept coming and I put a few in.&quot;
 Heatley's big game came only one year after he played in the Young Stars game, held the night before the All-Star game.
 Fittingly enough, his big game highlighted an afternoon in which the NHL's young stars - for a change - truly did overshadow the traditional names such as Roy, Jeremy Roenick, Nicklas Lidstrom, Peter Forsberg and Jaromir Jagr.
 Marian Gaborik, who at 20 is nearly two years younger than Heatley, had a goal and two assists to lead the West's first victory in the All-Star game since 1992 - when it was still known as the Campbell Conference. Maybe Gaborik was pumped up from a pregame compliment by the injured Lemieux, who said the Minnesota Wild forward already is one of the game's five best players.
 He looked it, too, as the fastest skater on the ice, scoring the goal that put the West up 3-2 in the first by beating Tampa Bay goalie Nikolai Khabibulin, who gave up three goals a year after having a rare All-Star shutout period.
 &quot;I've never seen an [All-Star] game like this,&quot; Khabibulin said. &quot;Marty [Brodeur] was saying it was [so exciting], it was almost like an Olympics.&quot;

TITLE: AFC Streak Continues At Pro Bowl
AUTHOR: By Greg Beacham
PUBLISHER: The Associated Press
TEXT: HONOLULU - Ricky Williams ran for 56 yards, scored two touchdowns and forced a fumble on special teams to earn the MVP award as the AFC beat the NFC 45-20 on Sunday for their sixth win in the last seven Pro Bowls.
 
Williams' multifaceted performance was the highlight of a dominant afternoon for the AFC, which got three 100-yard games from its quarterbacks and six interceptions from its defense as the NFL wrapped up its season with another high-scoring all-star game.
 &quot;It seems every time we're over here, we do pretty well,&quot; said Kansas City tight end Tony Gonzalez, who had five catches for 98 yards. &quot;The last couple of games I've played in, it wasn't even close.&quot;
 Williams, who led the NFL in rushing for the Dolphins after three tough seasons in New Orleans, also caught three passes as the AFC jumped to a 28-6 halftime lead and eliminated the tension - already minor at best - from this good-natured exhibition.
 Rich Gannon, the MVP of the regular season and the previous two Pro Bowls, went 12-for-18 for 102 yards and two TDs. Drew Bledsoe passed for 122 yards, and Peyton Manning had 100.
 The AFC nearly broke the Pro Bowl record of 51 points set in 2000 by the NFC, but Buffalo's Eric Moulds was out of bounds in the end zone with 1:24 left after a 36-yard pass from Manning.
 The coaching staffs from Philadelphia and Tennessee made sure the game was decided in the air. The teams set records for most combined pass attempts (101) and combined interceptions (8).
 A sellout crowd at Aloha Stadium enjoyed another blowout victory for the AFC, which has dominated the matchup in recent years. Each of the AFC's players earned $30,000 for the win, with the NFC's stars receiving $15,000 apiece.
 Jeff Garcia, making his first Pro Bowl start, threw three interceptions in the first 17 minutes. Donovan McNabb wasn't much better for the NFC, and New England's Ty Law returned one of Buccaneers QB Brad Johnson's passes for a touchdown in the fourth quarter.
 The NFC's best performance might have come from its kicker. Philadelphia's David Akers set a Pro Bowl record by kicking a 53-yard field goal against a strong crosswind in the second quarter.
 The Super Bowl champions were well-represented, with six Tampa Bay Buccaneers in the lineup. 
 The AFC had a balanced effort, but Williams won the MVP Cadillac with several key plays. In the second quarter, Williams even forced a fumble while playing on the kickoff coverage team for the first time since the eighth grade.
 &quot;I had a great time this whole week hanging out with the guys,&quot; he said. &quot;I got a chance to see this beautiful island and relax. Hopefully I'll be able to come back many, many more times.&quot;

TITLE: Kafelnikov Upset in Milan, Davenport Wins in Tokyo
PUBLISHER: The Associated Press
TEXT: MILAN, Italy - Martin Verkerk of the Netherlands won his first ATP title Sunday, serving 30 aces and beating Yevgeny Kafelnikov 6-4, 5-7, 7-5 in the Milan Indoors final.
 
Verkerk has been on the main tour less than a year. He won two ATP challenger titles in 2002 and was not seeded in this $380,000 tournament.
 After Kafelnikov netted a return, Verkerk dropped to the ground, overcome with emotion after upsetting the fifth-seeded Russian.
 &quot;This is a little bit of dream for me, winning a big event like Milan,&quot; the 24-year-old Dutchman said.
 Verkerk earned a year-end No. 86 ranking last year after reaching his first quarterfinal in Indianapolis.
 Kafelnikov is coming off vein surgery in his left calf in December and an early elimination at the Australian Open last month.
 &quot;I beat good players this week, and a great player like Kafelnikov today,&quot; said Verkerk, who won a three-set semifinal over Ivan Ljubicic. &quot;This win pays off for two years of hard work, and five hours of training a day.&quot;
 Verkerk broke Kafelnikov in the seventh game of the first set. The Russian won the second set, playing some excellent shots and making a decisive volley to break Verkerk at 6-5.
 In the 11th game of the third set, Kafelnikov lost his serve with a streak of unforced errors. Then Verkerk served to 40-30 and completed his victory.
 In Tokyo, Lindsay Davenport won her first title since seriously injuring her right knee in November 2001, overpowering Monica Seles 6-7 (8-6), 6-1, 6-2 on Sunday in the Pan Pacific Open.
 &quot;I haven't played much in the past year,&quot; said Davenport. &quot;I have a good opportunity over the next few months and my ranking can only go up. I hope to be in the top five by Wimbledon.&quot;
 The three-time major champion spent nine weeks on crutches after surgery early last year, then endured rehabilitation that included daily eight-hour sessions on a machine that repeatedly bent and straightened her knee.
 &quot;I think losing the first set was a big wakeup call for me,&quot; said Davenport, also the Pan Pacific winner in 1998 and 2001. &quot;The last two sets were some of the best tennis I've played in years.&quot;

TITLE: Yao Keeps Rockets Firing As Sacramento Stutters
PUBLISHER: The Associated Press
TEXT: HOUSTON - The Sacramento Kings found out just how far Yao Ming has come since the beginning of the season.
 
Yao had 18 points, 11 rebounds, four blocked shots and a season-high six assists as the Houston Rockets beat the Kings 105-89 Sunday.
 &quot;Every time I play him, he continues to get better and better,&quot; Sacramento's Vlade Divac said. &quot;He's definitely going to be a great player in this league. I really like the way he thinks on the court. He plays very unselfishly and understands the concept of the game.&quot;
 In early December, Sacramento and Houston split two games in which Yao had a combined 25 points and 20 rebounds. He was much improved this time, as he notched his team-leading 15th double-double.
 &quot;We passed the ball a lot today so there were a lot of open shots,&quot; Yao said.
 Eddie Griffin led the Rockets with 22 points while Steve Francis and Cuttino Mobley scored 21 each.
 &quot;I was doing a lot of cutting and Yao found me a lot of times,&quot; Mobley said. &quot;That's what he's supposed to do. We try to work it inside first and then he works it back out. It's a lot easier for us if we work it inside first.&quot;
 Rockets coach Rudy Tomjanovich agreed.
 &quot;Yao was tremendous inside moving the ball around and scoring,&quot; Tomjanovich said. &quot;On offense, he puts their defense in a very vulnerable position. If you turn your head, we've got guys cutting and you don't know who to help. He's got a great feel for open people.&quot;
 Sacramento coach Rick Adelman was unhappy with his team's effort coming off a 124-113 loss to the Lakers on Friday.
 &quot;They were aggressive and took it to us and we were the opposite,&quot; Adelman said. &quot;They played the game with more energy and took advantage of it. They were very good and we were very bad.&quot;
 Peja Stojakovic led the Kings with 31 points.
 
 <strong>
Portland 114, Cleveland 95. </strong>Rasheed Wallace scored 14 of his 29 points in the first 10 minutes to lead the Portland Trail Blazers to victory on Sunday.
 
Wallace, in his second game back after a seven-game suspension for threatening a referee, shot 10-for-13 in 32 minutes as Portland won for the seventh time in eight games.
 &quot;It's good to see him back in the flow,&quot; said Portland guard Derek Anderson, who scored 13 points. &quot;He doesn't have to force his way back. We know we are coming to him. He's that good.&quot;
 Wallace scored a season-high 38 points in game before he was suspended and scored 28 in his first game back Friday night. He continued his domination against the Cavs.
 &quot;We bring Rasheed back the last two games and he's been just short of phenomenal,&quot; Portland coach Maurice Cheeks said.
 Wallace's first points came on a 3-pointer, and then the 6-foot-11 forward-center pounded his way to the basket in an impressive first 10 minutes.
 Zydrunas Ilgauskas scored 20 points to lead Cleveland, which lost for the ninth time in 10 games and dropped to 1-5 under coach Keith Smart.
 &quot;Against that team, you have to play a perfect game,&quot; Smart said.
 The Cavaliers went to a pressure defense in the third quarter, and steals by Dajuan Wagner and Ricky Davis sparked a 7-0 run that rallied Cleveland within 78-68.
 Wallace then scored four straight points and the Trail Blazers closed the quarter with a 13-4 run.