SOURCE: The St. Petersburg Times
DATE: Issue #868 (36), Tuesday, May 20, 2003
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TITLE: Putin Focuses On His Achievements
AUTHOR: By Natalia Yefimova
PUBLISHER: Staff Writer
TEXT: MOSCOW - In what sounded like an early campaign speech, President Vladimir Putin announced ambitious plans for boosting economic growth and revamping the government - goals that extend far beyond the 10 months he has left before the presidential election.
Putin used Friday's state of the nation address, the fourth and final one of his term, to sum up the achievements of the past three years and set three impressive objectives to be met by 2010: doubling gross domestic product, eliminating poverty and modernizing the armed forces. (Stories, page 3.)
The president also stirred up a political buzz with the kicker at the end of his speech, when he promised to consider forming a cabinet of party members loosely based on the results of December's parliamentary elections.
As in years past, Putin ticked off a list of achievements followed by the caveat that it's far too early for the government to rest on its laurels.
"Some people think all our problems are solved, that Russia's future is predictable and bright and the only question is whether our economy should grow 4 percent or 6 percent," Putin said. "But ... that is not the case."
The greatest accomplishments, according to Putin, included improving the economy and strengthening the state.
After years of inaction, the current administration has kick-started reforms of the military, land sales, pensions, natural monopolies and the housing and utilities sector.
Putin praised the progress in creating an independent court system, codifying legislation, improving the electoral system, pushing ahead with tax reform and WTO entry, and achieving political compromise on the Kaliningrad problem. He also hailed the new Labor Code and the success in bringing regional legislation in line with federal law, and tallied up a long list of economic triumphs. (Box, page 4.)
But Putin warned that the country still had a long way to go and remained too dependent on high oil prices.
The catch phrases in the speech were "consolidation" and "working together" with the goal of "reviving" Russia's status as one of the "rich, developed, strong and respected states of the world" - a goal that depends on economic prosperity.
"Our economic foundation, although it has become notably stronger, nonetheless remains unstable and very weak," he said.
One grandiose goal set by Putin, in addition to doubling GDP, was to achieve full convertibility of the ruble.
"For average citizens of our country this will mean, in practice, that when they pack their bags to go somewhere outside of Russia all they will need is their passport and some Russian rubles," he said.
Putin chided the cabinet for its mediocre work on tax reform and for dragging its feet on administrative reform - a recurring theme in his addresses since 2000 - and implied that other political players would be allowed to have their say in overhauling the sluggish, obtrusive and corrupt bureaucracy.
"The cabinet needs help," Putin said. "Obviously, there needs to be an additional political impulse and this will be forthcoming."
The hour-long speech, interrupted by seven rounds of perfunctory applause, closed with a passage on political parties and the upcoming parliamentary elections that was, without doubt, the section that inspired the most excitement among the audience of lawmakers and government officials.
Its highlight was Putin's vague promise to consider forming a "professional, effective cabinet based on the parliamentary majority," an idea that has been bounced around among pro-Kremlin lawmakers for months.
Putin did not imply that the cabinet would have proportional representation based on election results, akin to the British model, but the idea certainly seemed like an enticing carrot dangling in front of the top political parties.
Putin praised parliament's "constructive" work, implicitly contrasting it to the intransigence of the State Duma under former President Boris Yeltsin.
But then - flashing a quick, sly smile - he called for more transparency of party funding and came crashing down on hypocritical legislators, like liberals who vote for laws the country cannot afford and those who have the audacity to "publicly call businessmen 'robbers' and 'bloodsuckers' while unabashedly lobbying the interests of big companies" - a clear reference to the Communists and their allies.
Giving a catalogue of the nation's problems, Putin cited grim statistics on rising death rates and shrinking life expectancy, offset slightly by an 18 percent increase in birth rates and a 21 percent drop in infant mortality.
The president also devoted a sizable chunk of his speech to the "sensitive topic" of Chechnya, thanking all those who helped push through the March referendum that sealed the republic's status as part of Russia.
"All of us had to pay a high price to restore Russia's territorial integrity," Putin said somberly. "And we bow our heads in honor of the killed servicemen and civilians of the Chechen republic, all those who paid with their lives to keep the country from being ripped apart."
In something of an about-face, Putin called for an overhaul of the recently passed citizenship legislation developed by his own administration.
"We do not need prohibitions and obstacles, we need an effective immigration policy, which will be beneficial for the country and convenient for people, especially for residents of the Commonwealth of Independent States," he said.
Putin complained that the government promises more than it can deliver - earmarking spending that totals nearly twice the national budget - and called on the cabinet to keep tariffs on natural monopolies, such as electricity and railroads, from outpacing incomes.
Placing his primary emphasis on domestic issues, Putin made short shrift of foreign policy. He reiterated that its guiding principle was promoting national interests and stressed the supreme role of the United Nations.
While valuing the U.S.-led anti-terrorism coalition and, in the long term, aiming for "true integration into Europe," Putin said Russia's priority is closer ties with the CIS.
"I must be frank: We consider the CIS to be a sphere of our strategic interests," Putin said.
A glaring omission in the foreign policy section of the speech was Belarus, which had been mentioned in previous addresses. Russia and Belarus pledged earlier this year to deepen economic ties and push ahead with plans for a constitution-like document that would give what is now a largely symbolic union more political weight.
TITLE: Gardens Go Up in Smoke For 300th
AUTHOR: By Vladimir Kovalev
PUBLISHER: Staff Writer
TEXT: A number of people who tend garden plots on municipal land in the Petrodvortsovy region received an unwelcome 300th-anniversary surprise from the local administration when they discovered that many of their plots and the small sheds located on them to store their instruments had been burned out.
The affected plots were all located along Peterburgskoye Shosse, which runs past the new presidential residence at the Konstantinovsky Palace on its way to Peterhof, in what appears to have been an attempt to clean up the view for foreign governmental officials coming to St. Petersburg at the end of May.
According to the gardeners, one afternoon last month, they arrived at their plots to discover a number of their sheds turned to ashes and their plants ripped out of the ground.
"I'm just happy that my plot is far from the highway, because [my neighbors] the Lushnikovs lost a number of their sheds and small storage buildings, but I didn't lose anything," said Zinaida Ivanova, 67, one of the gardeners at Optimist, one of the areas in the district set aside for gardeners, which was targeted in the clean-up operation.
"At first, I thought they were planning to take all the land from us," she added.
Ivanovna said that the incident was particularly disturbing after her 13 years of work on a plot that was, initially, not good for growing much.
"We had to haul in a lot of manure to make it work," she said.
Valery, 57, who refused to give his last name, said that, on April 8, he arrived at his plot in the morning to find workers burning down the sheds of some of his neighbors. He said that he tried to do something to save the plots of lands that are cultivated mostly by the elderly.
"I was telling the gardeners who worked near the road that they should clean up the appearance of their sheds because of where they stand," Valery added. "But it's like apartment blocks - one is a mess, while the next is tidy, and no one can do anything about it."
He says that the issue shouldn't be the shape that the properties were in but, instead, why there was no warning given.
"They should have at least told us in advance," Valery said. "Now it's too late - my friend's shed is burned down and I even lost a shovel."
Gennady Lebedev, the head of the Maintenance Committee of the Strelna Municipal Administration said that the incident was the fault of local officials in the Petrodvortsovy District, who were over-enthusiastic in trying to fulfill an order from federal authorities to clean up the area.
"They basically ran ahead of the locomotive with what they did," Lebedev said in an interview on Monday. "If you look at the rest of the country, we'd have to burn down half of Russia if we followed this reasoning."
He said that a number of gardeners have filed suits against the District Administration, seeking damages as high as 200,000 rubles (about $6,450) in some cases.
"People are very practical, you see. They say that they had a color TV and a [satellite] television system located in the sheds," Lebedev said.
The Petrodvortsovy District Administration could not be reached for comment on Monday.
The Komsomolskaya Pravda daily reported on May 17 that workers from the Konstantinov Palace construction site had been hired to set fire to the sheds, quoting gardeners who said that the workers would not even allow them to remove their tools from the sheds first.
"I'm just at a loss for words every time I drive through the area around the Konstantinov Palace lately," Yury Vdovin of the local chapter of the Citizen's Watch human-rights organization said in a telephone interview on Monday. "Just as always, the authorities are convinced that the people are there to serve the power, and not the other way around."
But the Presidential Administration says that the reports of burnt properties are unfounded.
"It's impossible that anything has been burned," Victor Khrekov, the spokesperson for the Presidential Administration's property-management office, responsible for renovation of the Konstantinov Palace, said in a telephone interview on Monday. "Nobody burned anything. Today, I read a different version - that it was some special [security] service that burned them. We have nothing to do with this. We just build."
TITLE: Putin's Name Turns Up in German Crime Probe
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW - Caught in the center of a Germany-wide money-laundering investigation is a St. Petersburg real estate company whose advisory board once included President Vladimir Putin.
The Hessen, Germany-based company SPAG was among the 28 firms and homes raided by police in Hessen, Hamburg and Munich last week.
The companies are suspected of laundering "tens of millions of euros" for "one of the biggest and most powerful" Russian organized crime groups, German prosecutors said in a statement.
Prosecutors believe the crime group is based in St. Petersburg and involved in "numerous crimes, including vehicle smuggling, human trafficking, alcohol smuggling, extortion and confidence trickstering," the statement said.
No arrests have been made.
Prosecutors said the firms are suspected of laundering funds for the St. Petersburg crime group through a complex web of international companies to boost the capital of a Hessen-based company and then sending the money back to Russia for investments in real estate.
Reached by telephone Friday, prosecutors refused to identify any of the companies or provide further details about the investigation.
But a German prosecutor told Germany's Der Spiegel magazine in Monday's edition that the raids were part of a two-year investigation into SPAG, or the St. Petersburg Real Estate Holding Company.
A spokesperson for a German bank that is a major shareholder in SPAG said in a telephone interview that more than 25 law-enforcement agents raided his bank last week and seized all of its documents relating to SPAG.
"The investigations are in connection with people who worked at [SPAG] in the [19]90s," said Nico Baader, spokesperson for Baader Wertpapierhandelsbank AG.
"SPAG's heaquarters were raided, too," he said.
Baader said that the bank owns a 30-percent stake in SPAG and organized the firm's initial public offering on the German stock exchange in 1998.
He said that the bank had not known of SPAG's possible links with organized crime at the time and had agreed to handle the IPO, in part, because the company had such a highly placed patron as Putin on its advisory board.
"We thought it was good business if there was someone like Putin on the board," he said.
He added that the bank has been unable to sell its stake in SPAG after the money-laundering allegations came to light two years ago, during a probe by the German foreign-intelligence service.
Putin was named to SPAG's advisory board when the company was founded in 1992, according to German registration documents obtained by Newsweek magazine two years ago. Back then, Putin was a deputy to St. Petersburg Mayor Anatoly Sobchak and in charge of attracting foreign investment.
By 1996, Putin was already on his way up the Kremlin ladder, moving to Moscow to work in the Kremlin's property department as a deputy to Pavel Borodin, who was later fined by Switzerland for his involvement in a money-laundering scheme. Borodin paid the fine but maintained his innocence.
Putin stepped down from his post on SPAG's board only upon his inauguration as president in March 2000, according to Newsweek.
A search of the Russian Federal Securities Commission database could not find Putin's name in connection with the company.
SPAG chief executive Markus Rese refused to comment when contacted by telephone Friday.
But he dismissed the money-laundering allegations in a recent interview with Germany's Manager magazine, saying the recent raids were "like firing a shotgun into a dark barn in the hope of hitting someone."
He also told the magazine that Putin had sat on the company's advisory board since 1992. He said this was an "honorary" position only and Putin had never visited the company's premises.
The Kremlin press service on Friday denied that Putin had any ties to SPAG.
Last week's raids came as Liechtenstein prosecutors prepared to bring Rudolf Ritter, a SPAG advisory board member and company founder, to court on charges that he and his associates laundered more than $1 million for the Columbian Cali drug cartel through a Liechtenstein-based financial company.
Ritter also faces separate charges of embezzling the proceeds of share trading in SPAG stock from clients.
Representatives at SPAG's St. Petersburg offices could not be reached Friday for comment.
TITLE: Goose-Migration Center Under Hunt Threat
AUTHOR: By Anders Mård
PUBLISHER: Special to The St. Petersburg Times
TEXT: OLONETS DISTRICT, Northwest Russia - The Olonets district in southern Karelia hosts the largest springtime stopover of migrating geese in Europe, when hundreds of thousands of white-fronted and bean geese rest and feed on their way to their summer home in the Arctic. However, the birds' traditional haven is under threat from a controversial annual hunt that is running wild.
The beginning of May usually represents the peak time for the migrating geese, with over 100,000 birds per day arriving to the district. In total, over 1 million birds pass through annually.
This period also witnesses a hectic, 10-day hunting season. Every year, over 50 hunters from Finland - where hunting migrating birds during the spring migration is fobidden - join numerous Russian hunters in Olonets, 300 kilometers northeast of St. Petersburg.
This form of tourism provides much-needed income for the small town of Olonets, one of the oldest settlements in Russia, but struggling to survive since the collapse of the Soviet Union. However, environmental organizations are concerned because of the disturbance caused to the birds' reproduction patterns and rest time.
This year's hunt has been further complicated by the late arrival of spring, according to Dr. Vladimir Zimin, chief ornithologist from the Academy of Sciences in Petrozavodsk.
"Because spring is late this year, we are seeing ten times fewer birds than usual at this time," Zimin said on a recent early-morning trip out to the fields.
The steppe-like fields near Olonets, just a few kilometers from Lake Ladoga, provide perfect conditions for the tired and hungry geese on their way from Africa and Western Europe. Early each morning, the birds fly in from the lake to replenish their fat levels in preparation for a testing time in the Arctic - where no food is available before summer - and fly back to the lake to roost in the evening. After about a week at Olonets, the flocks - numbering more than 3,000 birds on occasion - head north again.
The white-fronted goose (Latin name anser albifrons) is the most commonly seen bird in the field. Measuring about 70 centimeters in length, it has an average wingspan of 150 centimeters.
This year, the hunters are mostly upset about the new arrangements imposed after the formerly state-owned Olonets-based hunting club was taken over by a private company based in Petrozavodsk in Moscow. As a result, the cost of a license rocketed from 100 euros to 380 euros per person for the 10-day hunt. Moreover, as the takeover was finalized just three months before the hunt, many hunters have not been informed of the new regulations, and have been hunting in forbidden areas.
"If this becomes a tradition, the hunt will have to close down," said Alexander Rumyantsev, owner of a hunting tourist agency in St. Petersburg. "This year, we lack the safety and discipline that every hunt needs."
The Swedish branch of the World Wildlife Fund (WWF) has been supporting ornithological studies in the Olonets area since 1998. The studies, run by Zimin, show that the geese depend on the area's grasslands for their migration to be successful.
The migration is such an event in the area that Olonets holds a festival every May called "Olonets - the Goose Capital" that galvanizes the town's entire population of 11,000 into action. Most of the action takes place under a small statue of Vladimir Lenin in the run-down town center, which becomes the site of a market of colorful tents selling everything from shoes to meat.
The main event of the festival is a goose race, won this year by a bird called Shlyapa ("Hat") and her energetic coach, Vladik Ilnitsky.
Olonets, settled in the 12th century, was declared a city in 1649, after the construction of a fortress. The city is a center of Karelian culture, and most residents can speak the local language, a dialect related to Finnish.
Now, the city is economically depressed, work is hard to find and most young people are moving to Petrozavodsk or St. Petersburg. The biggest local employers are the sawmill and the Ilinsky state farm, with 350 and 320 employees, respectively.
The Olonets district is the main agricultural-goods producer in the Karelian Republic, but agriculture in the region has been hit hard by post-Soviet economic conditions. As a result, many key fields have become overgrown, which is bad for both the geese and the cows that are one of the region's agricultural mainstays.
To help resolve the situation, since 2000, the Swedish WWF has been supporting the Ilinsky state farm with advice and $11,000 per year. The result has been better grass and conditions for the geese, more and better quality milk from the farm's 850 cows, and more employment for the depressed local economy.
"We are now trying, as far as possible, to become self-sufficient," said Ilinsky boss Nikolai Pitelin. "The cooperation with the WWF really helped us to get back on our feet."
In 2002, Ilinsky was one of only two state farms in Karelia to turn a profit, prompting the Karelia administration to back the joint ornithology-farming project with $100,000 in investment.
After the success of its agricultural projects, the Swedish WWF started a larger rural-development project in January, helped by $100,000 funding from the Swedish government. In Olonets, the project includes agriculture, small-scale tourism, environmental education and public-awareness schemes.
- Photos by Alexander Belenky
TITLE: Petersburg Taking No Chances Over SARS
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: While there has yet to be a confirmed case of Severe Acute Respiratory Syndrome (SARS) in Russia, St. Petersburg health officials are trying to ensure that the city's 300th-anniversary celebrations don't change this.
With a large influx of visitors expected to come to the city for the jubilee, including tourists and official delegations from other countries, health officials are distributing questionnaires to foreign officials in an attempt to determine which of these might present a greater danger of having been exposed to the virus during their travels.
"It's not that we think that a SARS-infected person is likely to come to the city, but we have to be prepared for such a situation," Galina Volkova, the head of the dangerous-infections department at the St. Petersburg branch of the Federal Epidemic Watch center, said on Monday.
Each of the members of official foreign delegations coming to the city will be required to fill out special medical forms detailing any points of travel or contacts with people from countries considered to be SARS trouble spots over the preceding 14 days - the disease's incubation period. They are also to state if they are suffering from possible SARS-related symptoms, such as a cough or fever.
Volkova said that the forms were much like those that, 15 years ago, the Soviet Union required visitors coming from African states, India, and a number of other countries identified as high-risk locations for cholera.
In addition to trying to keep the infection out, the St. Petersburg Administration's Health Committee has also allocated additional money for the modernization of special wards in the city's Botkin Hospital for Infectious Diseases and ordered 250 SARS diagnostic kits. Local doctors are also handing out 9,000 leaflets to inform the public about how best to protect themselves from SARS.
Along with the warning to avoid visiting countries or having contact with people from countries with a high number of reported SARS cases, people are also advised to spend more time outside, wash their hands frequently, and take more vitamins.
Volkova said the most vulnerable people in relation to SARS are medical workers and hotel employees, who are often the first to come in contact with infected people, and that they should carry special masks.
The precautions being taken for the anniversary period follow on a number of earlier moves by the city to try to guard against SARS infections. One such move came at the end of April, when Pulkovo Airlines, on the advice of the Federal Health Ministry, canceled a weekly flight to Beijing that it had only recently added to its schedule. Pilots and flight attendants were also briefed on how to react in the event they suspect a passenger may be infected.
In the last month, two foreign passengers, one from India and the other from Japan, were taken to the Botkin Hospital after they displayed symptoms of the disease, but both were released after tests for the syndrome turned up negative. While the tests were being carried out on the two visitors, all of the other passengers on the flights were required to provide information on where they would be in the following 10 days.
"This is so that we can contact them and warn them should it turn out that a co-passenger was infected," Volkova said.
While the airlines have been attempting to put practices in place to address the SARS danger, city medical organizations say that monitoring the thousands of passengers that arrive in the city daily by rail is more problematic, although all trains are required to be equipped with anti-epidemic kits containing masks and various disinfectant agents.
In the event that railway employees notice passengers with "suspicious" symptoms, they are inquired to inform the railway medical service, and those passengers are placed in quarantine at the Botkin Hospital for 48 hours.
Even with the influx of foreign visitors, Volkova says that St. Petersburg shouldn't be considered as the Russian city with the highest risk factor.
'The Far East region and Moscow still have much more direct contact with people from countries at a higher risk for SARS," she said.
TITLE: Kaliningrad Celebration Squashed
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - With an eye of St. Petersburg's 300th birthday extravaganza, Kaliningrad decided to throw a big bash next year to celebrate the city's founding 750 years ago as the German settlement of Konigsberg.
But the Kremlin squashed the plan, sternly reminding the city that it was born in 1946 - a year after an Allied deal in Potsdam made Kaliningrad a part of the Soviet Union. The Kremlin said Kaliningrad should, instead, gear up for a lower-key party when it turns 60 in 2006.
The rejection has upset Kaliningrad officials, who had envisioned a lavish celebration along the lines of that thrown by Moscow when it turned 850 in 1997, or the one that will kick off in St. Petersburg on Friday.
"I personally think it is a shame that this date is not recognized at the national level," said Andrei Popov, deputy head of the culture department for the Kaliningrad regional administration.
But Kaliningrad World War II veterans are delighted.
"Our veterans in no way would want to celebrate this date. It is not ours. This is the history of another nation and other culture," said Yury Zamyatin, the head of the city's World War II veterans council, representing some 5,400 veterans.
He and other veterans said they also opposed a 750th birthday party because it would fall on the same year as the 60th anniversary of the Soviet victory in World War II.
Kaliningrad officials submitted their plans for a big 750th anniversary bash to the presidential administration last month.
But the presidential legal department fired back a sharp rejection.
"There is no reason to celebrating the proposed date of the foundation of the city of Kaliningrad," the department wrote back. A copy of the letter was obtained by The St. Petersburg Times.
Larisa Brycheva, who signed the letter, refused to comment.
The Kaliningrad mayor's office and regional administration said the rejection caught them by surprise. Prime Minister Mikhail Kasyanov had backed Governor Vladimir Yegorov over the plan during a visit to the exclave last fall.
Mayor's office spokesperson Lidiya Pimenova said that the city had been counting on 11 billion rubles ($355 million) it had requested from the federal government ahead of the anniversary.
The city's numerous historical buildings, especially those under federal jurisdiction, require urgent restoration, she said.
"These are costly projects that we cannot undertake at the city's expense," Pimenova said.
She also said that the city will miss out on an opportunity to attract crowds of German tourists - and their wallets.
Known as Koenigsburg until the end of World War II, Kaliningrad is best known as the hometown of 18th-century philosopher Immanuel Kant.
TITLE: Duma-Based Cabinet Is Putin's Highlight
AUTHOR: By Andrei Zolotov Jr.
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin's proposal to form the next cabinet "based on the parliamentary majority" was the political highlight of his state of the nation address Friday. But, even in setting this goal, the president's speech was strategic rather than tactical and short on concrete details, politicians and analysts said.
In the context of the main intrigue preceding the speech - whether or not Putin would criticize Mikhail Kasyanov's government and how harshly - many saw the statement as a stick for the cabinet and a carrot for the political parties, mainly pro-Kremlin United Russia, going into the State Duma elections later this year.
"We were joking today - offering Mikhail Kasyanov references to apply for United Russia membership," Lyubov Sliska, a deputy Duma speaker, was quoted by Interfax as saying after Putin's address. "So far, he is joking back."
Yabloko leader Grigory Yavlinsky said that, just like the speech's economic highlight of calling for GDP to be doubled by 2010, the proposed political reform was a thinly veiled threat to the cabinet.
"Although it is not clear on which principles this proposal [on forming the government] will be carried out, the most important thing is that it was nonetheless voiced," Yavlinsky said.
Sergei Kolmakov, vice president of the Foundation for the Development of Parliamentarianism in Russia, said he considered it very important that the idea of a party-based government has "shifted from idle talk into the presidential address."
But it was not clear whether Putin planned to create something akin to the 1998 Yevgeny Primakov cabinet, which included Communist ministers, or whether he would go as far as amending the Constitution, which stipulates that Russia is a presidential republic, in which the government is appointed by and answerable to the president.
"We'll have to see after the elections whether it is a tactical step in order to get rid of Kasyanov's government, or whether it will lead to amending the Constitution," Kolmakov said in an interview.
Oleg Morozov, a United Russia member and head of the Russia's Regions faction in the Duma, said he would not want to see the Constitution changed. "In saying that the government should rely on the parliamentary majority, I think the president meant that he would like to consult with those who make up the majority of the future State Duma," Morozov said.
For members of the cabinet to be party members, the only change that would be required to existing legislation would be to amend the law to give ministers the right to join political parties, he said, implying this should not be difficult.
While Pro-Kremlin politicians were understandably the most supportive of Putin's speech, Communists were the most critical.
Ivan Melnikov, deputy head of the Communist Party, said he was "disappointed" with the address and was even more critical than his boss, Gennady Zyuganov. "The message attempted to take the president out of the line of fire and shift responsibility to the executive branch," Melnikov was quoted by Interfax as saying. "In essence, not a single promise that the president made last year has been fulfilled. At the same time, the president has set the tasks to be solved through 2010. The conclusion that one cannot help but draw from this is that he will run not only for a second, but also for the third term."
With the elections dominating the agenda and the past year widely seen as a time when the stability for which Putin takes much of the credit threatening to transform into stagnation, his speech writers found a creative solution: They broadened the text's time frame.
In speaking about his achievements, Putin referred not to the year since he made his last address in April 2002, but to his entire three years in office. And in setting out the targets, he spoke not so much of the year to come but of goals to be reached in 2008 and 2010, which are beyond his presumed second term.
Izvestia political editor Svetlana Babayeva described this, in her article on Putin's address, as a way to battle the "deficit of ideas" that has been evident in the Kremlin in the past year. "In an election year, such tricks look like a sober political scheme," she wrote.
As did many commentators, Irina Khakamada, the deputy Duma speaker from the Union of Right Forces, described the speech as Putin's "pre-electoral strategy."
Singling out the paragraphs dealing with administrative reform, military reform and the formation of the next cabinet, Khakamada, who in past years had praised Putin's addresses as a "business plan for corporation Russia," stressed this time around that the address was short on detail. "No concrete measures were spelled out," she said.
At the same time, she was indignant that Putin criticized the new law on citizenship, which her party had opposed, but has not punished any of its authors in the presidential administration, who pushed the bill through the Duma.
Nikolai Petrov, a domestic policy analyst with the Carnegie Moscow Center, described Putin's measured address as "appropriate" given the timing - on the eve of the electoral campaign but not yet fully in it.
"The next presidential address is likely to be right before the presidential elections and that will be the time to come up with concrete promises and appeals to the electorate," Petrov said. "Now it is too early to come out with this."
Staff Writer Natalia Yefimova contributed to this report.
BASIC POINTS
ECONOMY: Russia's gross domestic product, which has grown 20 percent in the past three years, should be doubled by 2010 and the ruble should become fully convertible.
Putin praised the growth of GDP, investment, exports, incomes and consumer spending and the drop in unemployment. He also lauded the 25 percent reduction of foreign debt and the $50 billion increase in reserves, which now total $61 billion.
However, he attributed these successes mainly to the favorable situation on international markets, apparently refering to high oil prices, and criticized government efforts as insufficient.
GOVERNMENT: Russia has a bloated state apparatus that lacks professionalism, Putin said, criticizing the government for stalling on badly needed administrative reform aimed at streamlining the bureaucracy.
He acknowledged the possibility of forming his next Cabinet on the basis of various parties' success in December's parliamentary elections.
CHECHNYA: Putin claimed success in returning Chechnya to under the rule of Russian law and keeping it a part of the country. He said lawlessness in the region was coming to an end. The main objectives in Chechnya are to elect a local president and parliament, to work out an agreement delineating powers between Chechnya and Moscow and to restore the republic's economy.
MILITARY: By 2007, the army's permanent combat readiness units should be staffed only by professional soldiers. As of 2008, conscripts will serve in the army for one year instead of two. Professional soldiers will have access to state-paid higher education and other benefits.
Putin asked legislators to allow CIS residents to serve in the Russian army and to ease citizenship requirements for them.
The army is to be rearmed with modern weaponry, including nuclear and strategic armaments.
FOREIGN POLICY: Foreign policy must be driven by national interests. Putin called for Russia's broader integration with Europe, but said that the top foreign-policy priority was closer ties with the CIS.
While praising the U.S.-led anti-terrorism coalition, Putin said the United Nations must remain the ultimate international decision-making body.
DEMOGRAPHY: Putin lamented Russia's rising death rate and decreasing life expectancy, which have pushed down the population from 147 million in 1989 to 145 million in 2003. An influx of 7 million migrants, mainly from CIS countries, has made the decline less dramatic than expected.
CITIZENSHIP: Putin called for changes to the current law on migration, which was developed by his administration, saying it set up too many obstacles for former Soviet citizens.
TITLE: IN BRIEF
TEXT: Unscheduled Stop
ST. PETERSBURG (SPT) - One of the first commuter trains to arrive at the new Ladozhsky train station, which was officially opened on Saturday in the southeast of St. Petersburg, became stuck on Monday after running into one of the platforms at the station, Interfax reported.
According to the Railway Ministry press service, a locomotive engineer discovered on Monday morning that one of the sides of the train was ground into the side of the platform.
"The train was halted while officials tried to determine why it did not fit in the space," the Interfax report said.
The report also said that the train was not seriously damaged, merely receiving a few scratches.
Ready To Move
ST. PETERSBURG (SPT) - The City Charter court ruled on Friday that a plan to move St. Petersburg's gubernatorial elections ahead to this December to correspond with State Duma elections is legitimate.
The draft law, which was passed in first reading on April 25, would move the vote ahead from the scheduled date in May 2004.
The court hearing was scheduled after a number of Legislative Assembly deputies sent inquires following the vote on the draft
The court's chief judge, Nikolai Kropachev, handed down the ruling saying that the draft does not contradict City Charter regulations.
Patriarch in Hospital
MOSCOW (AFP) - Ailing Russian Patriarch Alexy II has been hospitalized again after falling ill, a church spokesperson said Monday.
"Unfortunately, His Holiness not long ago fell ill again and was rehospitalized," Interfax quoted Vsevolod Chaplin as saying. He did not say when the patriarch checked into hospital.
"The patriarch is already convalescing and the state of his health should cause no worry," the spokesperson said.
Nuclear Shutdown
MOSCOW (AP) - An automatic safety system shut down a nuclear reactor at a power plant on the northern Kola Peninsula, but there has been no radiation leak, officials said Monday.
Reactor No. 1 at the Kola nuclear power plant shut down Sunday, the Rosenergoatom nuclear consortium, which oversees Russia's nuclear energy providers, said in a statement.
It said later that the shutdown occurred because of a false alarm signal in the emergency shutdown's system circuit. Officials said an investigation was continuing.
The shutdown occurred five days after the reactor had resumed operations after a three-month upgrade aimed at improving its safety.
Icelandic Plea
COPENHAGEN, Denmark (Reuters) - Icelandic officials said Friday that Russian plans for more air and sea exercises around their island show the need to extend a 52-year-old U.S. military-defense agreement, which is up for review in coming months.
In a Cold War scene last month, two Russian navy anti-submarine aircraft flew into the air space of unarmed NATO-member Iceland and were intercepted by two U.S. fighters from the air base at Keflavik Airport.
This prompted a complaint from Russian Navy chief Admiral Viktor Kravchenko, Itar-Tass reported last week, and Russia's ambassador to Iceland said in a statement that Moscow planned to increase military exercises in the North Atlantic.
TITLE: G8 Agrees To Stall on Iraq Debt
PUBLISHER: Combined Reports
TEXT: DEAUVILLE, France - The top world economic powers do not expect Iraq to start any kind of debt repayments before the end of 2004 at the earliest, U.S. Treasury Secretary John Snow and European officials said Saturday.
In a development that may affect United Nations negotiations on a U.S.-proposed resolution to rapidly end sanctions on Iraq, ministers said that it would take months merely to sort out how much the country owed, let alone any deal on relief or repayment.
"There was recognition that we cannot expect Iraq to make any service payments on that debt at least through the end of 2004," Snow told reporters at a meeting of finance ministers from the Group of Seven economic powers and Russia.
A European government source, speaking on condition of anonymity, confirmed that this view was shared widely at the meeting of ministers of G-8 countries - the United States, Canada, Japan, Germany, Italy, Britain, France and Russia.
China and Russia, two of five members of the UN Security Council with veto power, have expressed major reservations about the U.S. draft resolution on ending sanctions and also said that the fate of the text depended on working out the debt problem.
Russia is believed to be owed some $8 billion and is one of several countries warning against rushing into debt-relief deals.
Russia will solve the problem of Iraq's debts within the Paris Club, Finance Minister Alexei Kudrin told journalists Saturday on the sidelines of the meeting.
"We will use all instruments that are available to the Paris Club," he was quoted by Itar-Tass as saying. "Work has successfully begun" on determining the debt Iraq's new government will owe, and the terms for those payments, he said.
Japanese Finance Minister Masajuro Shiokawa said at the talks in Deauville that he was reluctant to see debts cancelled, but that a period of nonrepayment was inevitable.
German Finance Minister Hans Eichel also ruled out writing off Iraq's debt, but said Berlin would consider rescheduling.
"There is no need for debt forgiveness," Eichel said. Asked if he saw any room for a write off, he said: "None."
French Finance Minister Francis Mer, who hosted the talks in the chic town on France's northern coast, said that the Paris Club of creditor countries and the International Monetary Fund would need time to work out how much Iraq owed after decades of conflict.
He stressed that experts on the Iraqi side would have to be found or appointed as a point of contact for any meaningful discussion of foreign debts and what to do about them.
Some estimates put Iraq's foreign debts at well over $100 billion.
There is considerable confusion over how much Iraq owes the countries in the Paris Club - a group set up in the 1950s to tackle a debt crisis in Argentina and now comprising 19 members - and equal confusion on debts to countries outside the Paris Club.
Despite the country's small GDP relative to its G-8 peers, Russia wrote off $3.5 billion in debts to poor countries last year alone, or nearly 1 percent of the country's GDP, Kudrin was quoted by Interfax as saying. No other G-8 country can boast such a figure, he said.
Most of that sum was written off through the Paris Club, and the remaining $700 million was written off through international initiatives, he said.
"The Paris Club meets in early June and we should know by then more clearly what the figures are, but that does not include lots of other countries," one official said. "For now, there is a lot of confusion," the official said.
Snow acknowledged that Washington's push for the convening of a donor conference on aid for Iraq after the war that ousted Iraqi President Saddam Hussein and his regime a month ago was something for later this year.
Mer and others like Eichel said likewise.
"That's an issue for afterward," Mer said, stressing that collecting reliable data on debt was a key prerequisite to any discussions on aid or on debt relief.
"U.S. Treasury Secretary John Snow assured me that the Iraq crisis would not hamper the development of good relations between Russia and the United States in any way," Kudrin was quoted by Itar-Tass as saying upon his return to Moscow on Saturday evening.
"Snow is confident that close businesslike contacts between [Presidents George W. Bush and Vladimir Putin] mean there is every reason to hope for the productive development of bilateral relations in the future," Kudrin added.
Speaking Friday, the same day as Putin's annual address to the state, Kudrin emphasized the need for economic growth, much as the president did. "The tasks Putin has set are dependent on taking Russia to a qualitatively new level in the world economy and strengthening Russia's influence in the world economy," he said, Itar-Tass reported.
Russia will fully join the G-8 in 2006, the year in which it takes the rotating chairmanship of the club, Kudrin said. And by then, the country will have become a member of both the World Trade Organization and the Organization of Economic Cooperation and Development.
(Reuters, SPT)
TITLE: UES Plans To Organize Shares-for-Shares Tender
PUBLISHER: Combined Reports
TEXT: MOSCOW - UES jumped more than 5 percent, reaching a 17-month high Friday on news that the company stock may be swapped for shares in generating companies that will emerge from sector reforms.
Analysts and minority shareholders said that the plan would be beneficial to strategic investors who have been amassing stakes in the company in hopes of getting control over specific generating facilities, but harmful to the interests of minority shareholders, whose stakes could be diluted.
Shares in Unified Energy Systems rose 5.3 percent to $0.178 cents, the highest level since beginning of 2002, when skeptical investors began selling off the utility's shares for fear they would lose out in the plan to break up the state monopoly into competing generators and a grid company.
Now industrial groups think it looks as though that may change, with a new draft of the so-called 5+5 reform plan set to give those who have stakes in UES the chance to "buy" shares in power generating companies at "auctions," using their shares as currency.
As a result, those who choose not to participate in the auctions, namely the government, will see their stake in UES grow. According to the proposal, the state's stake in UES could increase to 74.2 percent from 51 percent now.
Using the largest generating plants in Russia, UES is planning to create 10 giant power companies. Minority shareholders wanted shares in these companies to be divvied up proportionally to the stakes shareholders currently hold in UES. Analysts say that such a system would be simpler and more transparent.
"If the government wants to sell its share, then it should sell it for money, not some kind of surrogate," Brunswick UBS analyst Fyodor Tregubenko said.
(Vedomosti, Reuters)
TITLE: City's Exchanges Competing With Moscow's
AUTHOR: By Angelina Davydova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Although there are three stock exchanges currently operating at present in St. Petersburg, the city's stock-market sector being the second largest in the country after Moscow, for the most part, their importance remains dependant on the capital's trading floors. And even when St. Petersburg's exchanges manage to produce outstanding results in the development of a particular sector, they soon find themselves faced with a need to work closely with the Moscow stock exchanges if they want to expand the scope of their activities.
Another key factor attracting investors to St. Petersburg - and to the Stock Exchange St. Petersburg in particular - according to analysts, is the fact that this is one of just four places that Gazprom shares can be traded.
THE BIG THREE
St. Petersburg Currency Stock Exchange, Stock Exchange St. Petersburg, and the St. Petersburg Futures Stock Exchange all opened in the early 1990s. At that time, Stock Exchange St. Petersburg specialized in shares and commodities, the St. Petersburg Currency Stock Exchange specialized in transactions with foreign currencies, and the St. Petersburg Futures Stock Exchange in derivatives.
Since then, the St. Petersburg stock exchanges have expanded the range of their activities beyond those specializations, now operating in all the stock-market sectors.
The St. Petersburg Currency Stock Exchange (SPCSE), set up by a number of local banks and the City Administration, comprises markets in currencies (U.S. dollar and euro), stocks (federal, sub-federal bonds, corporate bonds) and derivatives (futures and options), as well as providing access to the Moscow Interbank Currency Exchange (MICEX) terminal. According to Sergei Linyov, spokesperson for the exchange, the volume of turnover in currency and share transactions amounted to 428.4 billion rubles ($13.87 billion) in 2002, a figure that is 32.5 percent higher than in 2001, while the volume of the derivatives market totaled 6.15 billion rubles ($199 million), 5.3 times more than in the previous year. The volume of transactions with sub-federal bonds was worth 72.11 billion rubles ($2.33 billion).
"SPCSE now plays an important role in sub-federal-bond operations, with nine regional bonds being traded in the market," Linyov said.
"The stock exchange also provides a possibility for foreign investors to hedge risks on currency rates, interest rates and energy-resource prices," Linyov said.
"On top of that, three banks with 100-percent foreign capital - Garanty Bank-Moscow, Deutsche Bank and City Bank - are now participating in the derivatives sector of SPCSE," he said.
According to Anna Barkhatova, spokesperson for the AVK investment company, SPCSE has recently developed a number of new sectors, such as currency futures, oil, diesel and precious-metals options, and has expanded trade in sub-federal and corporate bonds.
"SPCSE is almost an MICEX affiliate now, as it helps local banks to work on the currency market and provides technical access to MICEX terminals," said Alexander Grebenko, chairperson at the Prolog investment company.
However, other analysts are less positive about SPCSE's current position and future. "Its position has weakened lately, and the market isn't liquid. The stock exchange has tried to revive the Northwest Region corporate-bonds market and the municipal-bonds market, but these efforts do not appear to have been particularly fruitful," said Dmitry Aksyonov, head of the asset-management department at the Energocapital investment company.
"Another ambitious SPCSE project is the Growth Market for small and medium-sized enterprises, although not much has been heard about this recently," Aksyonov said.
Experts are also expecting cooperation with MICEX to be further developed in the near future. According to Alexei Chernushevich, branch director of Troika Dialog St. Petersburg, MICEX has recently announced that it plans to give currency exchanges in all the regions the choice between becoming affiliated with MICEX or working independently, with no access to MICEX terminals.
Chernushevich said that MICEX has long planned to take over SPCSE and that the St. Petersburg trading floor is likely to become one of the first affiliated structures.
Another local trading floor is the St. Petersburg Futures Stock Exchange, first set up for transactions on the derivatives market, and now working in all stock-market sectors, with a recently developed commodity market becoming their leading area of activity.
Stock Exchange St. Petersburg consists of two sections, a joint-stock company and a partnership, with the former comprising commodity and derivatives sectors, as well as holding auctions and tenders, while the latter acts as an official trading floor for Gazprom shares, as well as Moscow municipal bonds, banking bonds, corporate shares and St. Petersburg-owned enterprise bonds.
According to Yury Smirnov, spokesperson for the exchange, the partnership had a turnover of 61.9 billion rubles ($2 billion) in 2002, having quadrupled the 2001 indicator. In 2002, the corporate-share sector was worth 61.7 billion rubles ($1.99 billion), while the bond sector amounted to 164 million rubles ($5.31 million).
The volume of transactions of the joint-stock company Stock Exchange St. Petersburg has also grown by a factor of 3.8 over 2002, to 1.75 billion rubles ($56.67 million).
"Foreign investors are attracted to the St. Petersburg trading floor because of the liquid market of eight Russian blue chips being dealt in here," he said.
Grebenko from Prolog investment company, who is also a member of the Stock Exchange Council, said that Stock Exchange St. Petersburg acts as a strategic partner of the RTS stock exchange, particularly with regard to a joint project on the derivatives market.
Aksyonov from Energocapital believes that the derivatives sector has been a success story for the exchange in recent years. "After the 1998 crisis, Stock Exchange St. Petersburg was the only remaining derivatives trading floor in Russia, and it retained high class specialists in derivatives dealing. A year ago, the stock exchange joined its derivatives market with the RTS, so now it's a joint project," Aksyonov said.
"The situation with Stock Exchange St. Petersburg and MICEX resembles the situation with the NYSE and the Chicago Stock Exchange - while the former is larger and better-known, the latter is the leader in the derivatives market," Grebenko said.
According to Aksyonov, another advantage for the stock exchange derives from the fact that Gazprom shares are traded there - the shares are restricted to four trading floors in Russia, and the bulk of share turnover takes place in St. Petersburg.
This almost monopolistic situation may soon change, however, as MICEX plans to start trading in Gazprom stock in the near future. MICEX was to begin trading in the stock on May 15, but there has been a postponement following a demand from the Central Bank for more detailed information on the move.
"The start of trading was put off after an additional request from the Central Bank to investigate whether the scheme would hamper other trading floors," MICEX spokesperson Vadim Yegorov said.
The government regards the move to a greater number of local exchanges as a first step in the liberalization of trade in Gazprom stock. At present, the stock is governed by a ring-fence system, under which foreigners can only buy American Depository Receipts that trade at a heavy premium to local stock.
Chernushevich from Troika Dialog said that the launching of Gazprom shares by MICEX would attract large volumes of trade in the shares, though it is unlikely that the St. Petersburg trading floor would lose business. "There's a need for several trading floors, both for reasons of security and to create opportunities for arbitrage operations," he said.
Speaking of foreign-investment activities on the Russian market, Chernushevich said that most foreigners trade on the RTS through offshore companies, or by participating in foreign funds.
"We believe there are no foreign private individuals operating on the Russian stock market now, especially if we count out people like George Soros," Chernushevich said.
"Although there has been increased activity on the stock market recently, it is mainly thanks to Russian oil money. Foreigners tend to shy away from the derivatives sector, believing it to be too risky, while Gazprom trade is divided into internal and external trade," he said.
According to Aksyonov, while Gazprom's shares cost just 29 rubles ($0.94) in Russia, they are traded at 48 rubles ($1.55) by foreigners outside the country.
"The liberalization of trade in Gazprom shares may change this situation drastically, both in terms of foreign-investment activity and the role of stock exchanges," Aksyonov said.
TITLE: Putin and Chubais Attempting Clean Up for Housing Services
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - It is the last sector of the communist economy untouched by reform, and with each passing day it creaks closer to collapse. It is, in the words of President Vladimir Putin, "a complete mess."
But with parliamentary and presidential elections now just months away, the country's political and corporate elite are starting to take notice of what may be the most important and politically sensitive campaign issue of them all - the national housing sector.
The issue of preserving, let alone improving, so-called communal systems - the maintenance and repair of buildings and the supply of basic services such as water, electricity, heat, gas, sewage and garbage - has been ignored for decades.
But not any more.
On Thursday, senior government officials, lawmakers, captains of industry and providers of communal services convened for a two-day forum titled "Reforming the Housing Sector 2003 - Time for Making Strategic Decisions."
Putin lit a fire under the government last month, calling for urgent action on housing reform and scolding officials for what he called the "social tensions" that are emerging from "the lack of elementary order" in the sector. The president said that he was shocked when he discovered just how bad things really are: "I was stunned when I was told that electricity is being supplied by verbal agreement, absolutely on a whim."
Lawmakers were quick to sense the urgency and exploit the issue politically, calling Prime Minister Mikhail Kasyanov to the floor of the State Duma to explain what he planned to do about the crumbling, corrupt and debt-ridden industry, which directly affects nearly every person in the country and employs 3.6 million people who earn on average less than $90 per month.
The solution, Kasyanov said, is to introduce competition into the sector by taking it out of the government's hands in order to create a "real business project out of a black hole."
"The concentration of all the public's pains," Kasyanov told the cabinet, "is connected to the housing sector. This is the most sensitive reform."
But while the government is not yet ready to turn the entire sector over to private firms, it is willing to let a consortium of powerful businesses - led by the two most influential of them all, state-controlled monopolies Unified Energy Systems and Gazprom - share the burden, and profit it from it if it can.
In what sounds eerily similar to the scandalous loans-for-shares deals of the mid-1990s, which temporarily bailed the government out of a fiscal hole while simultaneously enriching a clutch of well-connected insiders, UES, Gazprom and a handful of private companies, including Vladimir Potanin's giant Interros holding, have been given the green light to take control of vast swathes of housing infrastructure in exchange for assuming responsibility for communal services in regions where that infrastructure exists.
The potential pitfalls are enormous - but so are the potential profits. Public and private expenditures on communal services last year totaled more than $17 billion. However, where huge chunks of that money end up is largely anyone's guess under the current system.
UES and Gazprom say streamlining the industry will allow it to recoup the billions of dollars owed to it by current communal services providers. They also expect it to turn into a moneymaker.
Enter Chubais
Led by Anatoly Chubais, the loans-for-shares architect who now heads UES, the consortium, called Russian Communal Systems (RCS), is confident it can succeed where the government has failed, making the venture profitable enough to encourage investment in the sector. UES and Gazprom, in particular, stand the most to gain, as they hope to recoup billions of dollars owed to the sector by current communal systems providers by streamlining the massive bureaucratic machine in which they operate.
All that is needed, Chubais says, is to decrease theft, cut expenses and install better management. "We will put everything in basic order. Our team is able to manage this task," Chubais told reporters when he unveiled his plan in March.
Chubais' confidence is reflected by the amount of money RCS says it will invest in the project - up to $500 million - but half a billion dollars is just a fraction of what will eventually be needed. Experts say that the industry has been underfinanced by about $2 billion per year over the past decade, and even the government admits that modernization will cost more than $15 billion.
Take heating for example. According to a recent study by the presidential administration's auditing directorate, 73 percent of boilers and 65 percent of all pipe networks in apartment blocks are "depleted," resulting in as much as 60 percent of all residential heat supplies being wasted.
The Kremlin's financial watchdog also found that:
. the number of malfunctions has increased fivefold over the last decade.
. the national heating network suffered more than 1,500 failures last winter alone, a 20-percent increase on the year resulting in 75 "major" crises in 38 regions.
. for every 100 kilometers in the heating network, there were on average 200 ruptures or other incidents requiring repairs last year.
And that's just heat. Equally crucial - and decrepit - is the water system. For example, more than a third of all the water supplied to households is officially considered "unhealthy," according to government estimates, while water waste due to faulty pipes is about 40 percent, or nearly three times the average for developed states.
"The ineffective management of housing and utilities services and a lack of coordinated measures at the regional and federal levels are the main reasons behind the crisis in the sector," the presidential auditors said on the Kremlin's official Web site, www.kremlin.ru. "Creating the legislative basis, ensuring financial stability, budget support, tariff policy and the formation of a services market in the sector remain uncoordinated."
The Money Disappears
What is needed, the Kremlin watchdog said, is a new law on housing reform to create the legal mechanisms for competition.
The government tried this approach in 1993, but made little progress, save for grouping municipal housing and utilities departments into regional units. The sector never became competitive because the newly created regional companies retained control at the municipal level while federal and regional budgets continued to subsidize them.
But, in a classic series of hide-the-budget-money moves, nearly all of the regional companies' municipal departments have changed their names and locations numerous times over the last five years, making them virtually impossible to collect debts from, let alone control.
The total bill for consumer services last year came to 554 billion rubles ($17.7 billion), about 60 percent of which was paid by residential customers, while federal and regional budgets covered about 30 percent, leaving some 60 billion rubles in cross-debts between customers, suppliers and middlemen.
What's more, the federal government says a large portion of these budget funds are either stolen or misused by municipal authorities, meaning local communal-service providers rarely see a kopeck for their services. As a result, the government says, 70 percent of all communal services companies are bankrupt and collectively owe more than 3.5 billion rubles in back wages. In some regions, like Kamchatka, communal service workers haven't been paid since last summer.
The debt maze has resulted in consumers' owing communal-services providers about $6 billion, while the providers owe about $9 billion to energy suppliers, mainly UES, Gazprom and coal companies.
Cleaning House
With the system spinning out of control, housing specialists say it is clear that something must be done quickly, which is why the government, having failed in the task, is turning to Chubais, as it has in the past when faced with a seemingly impossible task, to begin cleaning house.
The UES CEO is starting at the regional level, where 11 administrations - Chelyabinsk, Kirov, Murmansk, Nizhny Novgorod, Novgorod, Omsk, Orenburg, Perm, Rostov, Saratov and Volgograd - have already agreed to turn over control of their housing service units to RCS.
Improvements, however, will likely neither be quick nor easy. Other regions, such as the vast northwestern republic of Komi, have tried to introduce competition into their communal services industry, but without success.
Komi's capital, Syktyvkar, organized a tender several years ago to manage one of the city's housing services companies, but the administration didn't like the winner, so the idea was simply abandoned, said Nadezhda Kulik, deputy head of the city's housing services who has worked in the sector for 18 years.
Kulik said that if the situation in Syktyvkar is anything to go by, Chubais and his RCS consortium will have their hands full. "The local administration doesn't allocate any repair equipment, transportation, uniforms or instruments. Workers have nothing with which to remove snow or fix anything," she said.
"Our infrastructure is ruined. Work is only done in an emergency, when a pipe finally bursts. It is becoming worse and worse every year," she said, adding that workers' morale couldn't be worse. Most of her employees, she said, applied for the job as a last resort: "The work is the least prestigious and the salaries, which are ridiculous, are not paid for months."
Nadezhda Kosareva, president of the Moscow-based Institute for Urban Economics, said that the situation is the same throughout the country.
The system is literally communist - created by communists under communism - and it hasn't changed a bit legally, she said.
"All the relationships within the sector were built on administrative principles, not economic principles. That is why it is impossible to describe the structure of the sector from an economic point of view."
A Soviet Maze
By law, local authorities alone are responsible for communal services. The federal government can only pass vaguely worded laws that are little more than recommendations to municipalities.
"Due to the differentiation of powers, municipal authorities are not obliged to obey federal laws concerning the housing sector," said Kosareva.
And those federal laws that directly affect the sector and that local governments must adhere to only make matters worse for the most part.
Last year, for example, parliament passed a law to increase salaries for teachers and state health-care specialists without allocating additional funds for local administrations to pay them. As a result, local authorities either funded the wage hikes from the housing sector, or simply chose not to increase salaries.
The whole system seems custom built for corruption.
Here's how it works: municipal authorities are not allowed by law to manage communal properties themselves, so they are obliged to create a management company to take over all rights and responsibilities for those properties. But, once that happens, it becomes virtually impossible to take back these properties, even if a management company runs afoul of the local administration, because it can hold on to that property as long as it wants.
The catch is that the head of the municipal government has the power to hire and fire the director of the local management company, thus controlling the company's money flows.
Now, just as communal-services workers have no incentive to work, these management companies have no incentive to square their accounts. It makes no sense to initiate bankruptcy proceedings against them because, legally, their assets are considered "socially significant," meaning that they cannot be sold in any liquidation proceeding.
The bottom line is that nearly all of these companies are bankrupt, even though they can never be declared so.
"In addition to corruption in the sector, there is complete muddle - both financially and legally," Kosareva said.
Jolting the Status Quo
When Moscow allocates money to municipal administrations for their annual budget, that money is not earmarked, meaning that local authorities can spend it on things that it isn't intended for. That is why it is not uncommon to see employees of the local water company decorating the streets with flags on national holidays instead of fixing broken pipes.
For municipalities, which act as the supplier, middleman, customer and inspector all at once, the status quo is just fine.
Another disincentive for communal-services providers to streamline their operations is that tariffs are set based on how much it costs to provide a service.
Although housing and public-utilities tariffs, which are controlled at the regional level by special commissions, rose 20.7 percent in the first quarter of the year, or 3 1/2 times faster than inflation, service companies generally make no effort to reduce expenses by modernizing because the regional energy commission would react by reducing tariffs and thus their revenues.
This is the main reason private companies have no interest in the sector - there is no way to guarantee a return on their investment.
Another reason is the lack of property rights. Investors need guarantees that they can manage assets on a long-term basis to make any investment worthwhile, but the government has thus far refused to adopt a law on concessions that would strengthen renters' rights.
Most developed countries have some kind of concessions law, and the result is more efficiency, which usually results in a 30-percent drop in expenses, said Natalya Orlova, chief economist at Alfa Bank.
Orlova said that in Western countries, where tariff policies are predictable and property rights are strong, communal services are one of the least risky and most profitable areas of the economy. Energy giants E.ON and Ruhrgas, for example, have managed to successfully provide communal services in Germany.
Playing Monopoly
RCS will officially be registered this month with a charter capital of $40 million. UES and Gazprom, through its pocket bank Gazprombank, will each own a 25-percent stake, while the rest will be evenly split among the other five members of the consortium - Interros, Renova, Evrofinance bank, YevrazHolding and Kuzbassrazrezugol. RCS plans to establish regional subsidiaries in which it will hold stakes ranging from 100 percent to 25 percent.
The idea is to convince local mayors to turn over, say, all the heating infrastructure of their towns for 10 years or so in exchange for a promise to provide stable heat supplies and maintain and modernize the infrastructure. The catch is that municipal authorities do not have the power to set tariffs for non-city-owned companies, so, for the project to be profitable for RCS, the consortium must be able to convince regional energy commissions, which are controlled by regional governors, to set tariffs at a level to its liking.
"UES and Gazprom have the political power to work around the system," Orlova said.
The Political Payoff
Energy analysts who track UES and Gazprom say that the whole idea of creating RCS likely originated in the Kremlin, which wants to avoid recurring winter heating crises that have claimed hundreds of lives over the last few years - especially with the presidential election just 10 months away.
It would also give Putin greater control of the regions, as any weakening of the power of municipal authorities gives the Kremlin a chance to strengthen its control of the regions, strengthening the so-called power vertical. It is easier for Putin to come to terms with Chubais than thousands of local chiefs.
But Putin isn't the only one who stands to gain.
"Improving the housing sector is in the interest of both Putin and Chubais," said Orlova.
Conquering the housing sector, while overseeing the world's largest electricity company, would give Chubais unprecedented political power.
In addition, rebuilding the national power sector offers Chubais, who has been dubbed the most-hated man in Russia for his past privatization shenanigans, something of a last chance to put a shine on his tarnished historical record, and the housing sector represents the last mile of that quest.
Kosareva of the Institute for Urban Economics said that if the RCS project can succeed in a few regions, Chubais could regain the people's trust and get them to believe in his pro-market reform mantra again.
Dmitry Orlov, deputy head of the Center for Political Technologies, called the housing sector "the last enclave where Chubais can improve his image as a reformer because no one has tried to reform the sector before."
"If Chubais can manage to turn the sector around, he will wash away his image of a poor privatization master forever," Orlov said, adding, however, that he doubts Chubais will succeed.
But if he does, it would be a fitting accomplishment for the man who essentially created the oligarchs as a class and drove perhaps the final nail in the coffin of communism in the process.
"The housing sector is the only untouched socialist industry left in the country, and all the political parties cherish and care for it because it gives them a wide area for populist activity," Kosareva said.
TITLE: Where To Go Now That War is Over?
TEXT: Editor,
Given the corrupt nature of the former Iraqi regime, any company or government foolish enough to have entered into an agreement with that government should not be surprised that the contracts would have no validity. LUKoil can waste its money on high-priced lawyers, but LUKoil should be realistic and forget the legal machinations as it will bring the company nothing. The "contract" was really a marriage of convenience with Saddam Hussein hoping to purchase Russian support for his regime.
With Hussein gone, and with him the regime, a new order will come into being. Russia and LUKoil can and should play a role in the development of Iraq's oil fields, but neither has any right nor claim to leadership or necessarily even an equal role in the venture. After all, Russia did nothing to help remove an odious dictator who oppressed his people. Unfortunately, Russian support of the regime does raise questions regarding Russia's motives. However, Russia is a world power and should be a partner in world affairs, along with other countries, and should play a role in helping to re-build Iraq. There is one troubling issue, however, which still needs to be resolved.
As the coalition forces that liberated Iraq move forward, if they find any evidence that Russian companies or the Russian government violated the sanctions that were imposed on Iraq, then Russia, those Russian companies, and perhaps both, depending on the nature of the violations, should be disqualified from any participation and should face censure for the illegal activity. Corruption or bad behavior should never be tolerated, let alone rewarded.
Edmund J. Bak
Chief Financial Officer, SDQ Ltd.
Minneapolis, Minnesota
Editor,
After I send this email, I will not look at your paper again (I will "unbookmark" its URL).
I have canceled my plans to visit Moscow this summer. I will, instead, take my family to a country that is not so anti-American. Two other families that had planned to go with us have also canceled.
Goodbye, Russia. I hardly knew thee.
Randy Willis
Dallas, Texas
Different Stories
In response to "Quick Victory Leaves Military Looking Silly," By Pavel Felgenhauer on April 15.
Editor,
The most overriding difference between the second Gulf War and the Russia-Grozny conflict is one of morale. Soldiers who believe that they are defending their loved ones and upholding an ideology that they believe to be correct will fight with every ounce of their ability, while the soldier who is driven by whips, will do only what he must to stay alive.
This also holds true for systems of government.
Jon Ayin
Scottsdale, Arizona
Editor,
I liked Pavel Felgenhauer's comments. However, it is impossible to judge between Baghdad and Grozny for the simple reason that the Americans went up against a disinterested army, while in Grozny they were fighting for survival.
The Americans dropped leaflets telling Iraqis not to die for a dictator. They didn't die. They just went back to their houses and nothing happened. So you see you really can't compare.
In Grozny, it was basically fight or go the prison for the rest of your life, so they had nothing to lose and everything to gain.
Claude Sauve
Montreal, Canada
Inacurate Climate
In response to "Russia Key To Ratification Of Kyoto Climate Protocol" on May 13
Editor,
I would like to point out that the scientist Yuri Izrael, who is quoted a number of times in the article, is wrong on two accounts, and that he is arguing against well-established facts and against a consensus amongst business and politics in Russia.
a) There is no debate on the reality and the seriousness of climate change among the international scientific community.
The question that is apparently at the heart of the conference's agenda: "Whether or not global warming poses a big enough threat to warrant the solution's price tag," has already been answered a number of times. Only very few scientists are still making a living by questioning the validity of this international consensus.
It is unfortunate that a man like Izrael, who is a well-educated scientist, should bring himself in line with them, and that someone with that skeptical a view on climate change should be organizing a serious conference like the one in the fall in Moscow.
b) There is also no debate on whether the Kyoto Protocol will do more good than harm to the challenge of halting climate change.
The Kyoto Protocol sets initial targets for industrialized countries to control their greenhouse-gas emissions, which many would not do otherwise. It is true that the treaty will be less effective in achieving its aim now that the United States has decided to stay away from it for the time being. However, this does not change the good it can still do in the slightest. It is a very misleading statement to suggest otherwise, and can only be intended to harm this international effort.
The Russian Federation has been an active partner in the negotiations under the United Nations that led to the adoption of the Kyoto Protocol. Over 100 countries worldwide have already committed themselves to it. All of these are now waiting for Russia to join them.
These signatories are not just European countries, but include two thirds of the world's population (e.g. India, China, Brazil). President Vladimir Putin has repeatedly stated in public his firm conviction that Russia will be a part of this multilateral effort. The facts are there, it is time for action.
Russia is bound to benefit from this treaty, and will receive investment to modernize its energy infrastructure. Many Russian actors are behind this.
Just last month, a business round table saw a joint letter signed by ministry officials, business representatives (among them Gazprom) and NGOs like the WWF to the president, urging him to speed up the ratification process.
Matthias Duwe
Policy researcher, Climate Action Network (CAN) Europe
Brussels, Belgium
What's in a Name?
In response to "First Links Shrouded In Legends" on April 29.
Editor,
You forgot to mention that Routsi is the Finnish name for Sweden. Rusi probably came from the Swedish province of Roslagen (which still exists) located outside of Stockholm, whence most of the Variagans set course for Russia.
Rolf Hansson
Moscow
Editor,
Charles VII? Rather Charles XII! (Or, as we in Sweden say, Karl XII).
About the name "Rus," I do not think "Ruotsi" is an old Viking name. However, it is the present Finnish name for Sweden. The connection with oarsmen, though, is probably correct.
"Rus" probably comes from Roden - the old name of the what is now called Roslagen, in Sweden.
Hans Stigsson
Political Editor
Norrk-Pings Tidningar
Norrk-Pings, Sweden
Lest We Forget
In response to "The Word's Worth," a column by Michele A. Berdy on May 16.
Editor,
In her otherwise creditable column, Michele A. Berdy misleads her readers on a key point of recent Russian history and inadvertently slights many thousands of long-neglected Soviet soldiers. Berdy's claim that "World War II [is what] Russians call Velikaya Otechestvennaya Voina" is in error: The Russian term for World War II is in fact Vtoraya mirovaya Voina ("Second World War"). This is the international conflagration that began in 1939, pitting the forces of two competing alliances, and ended in 1945 with a considerably altered cast of participants.
The Russian term Velikaya Otechestvennaya Voina refers only to the second period of Soviet involvement in World War II, from 1941 through 1945. While celebrations of the Soviet victory in this conflict can often be "somber and touching," as Ms. Berdy rightly points out, it would be presumptuous indeed to assume that there is "no duality or irony ... at all" associated with them: For how else, if not with ambivalence and ironic regret, are the veterans of 1939-40 to regard the annual juxtaposition of loud and elaborate commemorations of the warriors of 1941-45 with the near-total silence directed at the same time at them - the hundreds of thousands of Soviet soldiers, arguably no less patriotic and surely no less brave, who were killed and wounded in the principal Soviet campaigns of the first two years of World War II (the invasion and occupation of eastern Poland and the devastatingly bloody invasion of Finland)?
Mark Titov
Moscow
Common Ancestors
In response to "The Word's Worth," a column by Michele Berdy on April 25.
Editor,
In Michele Berdy's piece about Pascha, she mentions that she does not know why Russian uses the same word for Passover and for Easter. Well, all European languages, except for Germanic ones, use the same word.
In English (Easter) and in German (Oster), the feast is named after the Celtic/Germanic pagan spring festivals that the missionaries to those areas appropriated (like the Russian Radonitsa). In all others, they use a form of Pascha, which is Greek for the Hebrew Pesach, or Passover.
Christians, from the beginning, have seen the events of the ancient Hebrews as foreshadowings of the fullness of the truth as revealed in Christ. So, not only do the Hebrew prophets tell of the coming Messiah, but even their historical events foreshadow him. So, for instance, the crossing of the Red Sea with Moses is a "type" or foreshadowing of baptism.
This is so with Passover, when the Hebrews sacrificed an unblemished male lamb and put his blood on their homes so that death would "pass over" them. For Christians, that foreshadows the true lamb (Christ) whose sacrifice saves the whole world from death.
That is why Christians call "Easter" Pascha. It is not accidental. Thank you for your piece, and Khristos Voskrese!
Joseph Hampel
Russian Orthodox student,
Washington
Coat Courtesy
Editor,
So, Russia is about to throw a party for St. Petersburg. Well, just one question before the fun begins: Can coat attendants please improve their manners?
Four of us were on our first visit to Russia the week before last. Over the course of nine days, we had at least three disputes over the simple issue of our overcoats.
First, at the Bolshoi Drama Theater, two of my friends were hauled out of the audience for the sin of placing their coats under their seats; then, at a St. Petersburg museum, my wife was refused her coat back for losing her ticket (thankfully temporarily); finally, following a meal in a restaurant in the same city, a payment of 150 rubles was demanded for the return of each of our four coats.
When we refused, the attendant physically barred my friend's wife from leaving the restaurant. Feelings began to run high but, after a great deal of shouting, a payment of 100 rubles secured her release. Apart from the shock of the incident, she found the low price for her freedom a bit of an insult.
Seriously, a word to all coat attendants might improve matters for all forthcoming party-goers.
It must be said, despite those incidents, it was a great visit to a great city.
Peter Wallace
Press Association TV
London
It's No Game
In response to "Latest Great Game Over Oil Begins in Siberia," a comment by Ian Bremmer and Bruce Clark on May 13.
Editor,
Regarding the article by Ian Bremmer and Bruce Clark, Russia is likely to lose its Siberian oil fields and Siberia itself.
Later in this century, Russia's population is projected to drop to 60 million, while China's population is expected to rise to 1.5 billion. Tens of millions of Chinese will migrate to Russia, thereby effectively appropriating the land.
A perhaps naive suggestion: Were Russia and the United States to form a confederation of mutual interest, it could form a strategic counterweight to China in Asia.
David Govett
Davis, California
Not So Lucky
In Response to "Foreign-Relations Success Is Just Blind Luck," a comment by Sergei Karaganov, on April 29.
Editor,
Karaganov seems to be daydreaming. He is devoid of any political understanding.
So-called Russian specialists on policy matters have cost Russia dearly. It is high time that Russia chooses democratic leaders and values correctly its support base all over the world so that Russia can get back its respectful place in the comity of nations.
There was a time when Russia thought that by beating the Americans it can strengthen its economy. But time has shown that it was a foolish policy.
Russia's so-called reform policy only helped Western banks get illegal dollars from Russia. Russia has to work hard to recover its economy. George W. Bush, Bill Clinton and Tony Blair cannot help Russia. Bush and Blair attacked Iraq to strengthen their economy with the help of Iraqi oil. Now Russia has to think whether it can use similar illegal and horrible tactics to benefit their economy.
G. Sarkar
Faridabad, India
TITLE: Putin's Political Fiction
AUTHOR: By Vladimir Ryzhkov
TEXT: IN the best traditions of the genre, President Vladimir Putin saved the main domestic policy sensation of his state of the nation address for the very end. Finishing up his discourse on the importance of December's State Duma elections, he unexpectedly announced that he considers it possible - once the results are in - to create a professional government based on the future parliamentary majority.
This spontaneous initiative reflects both the contradictory nature of Putin's position and the already familiar eclecticism of his political style and language.
The justification for switching to a cabinet based on the Duma's majority was a bit confusing but, overall, correct. Putin effectively acknowledged that the infamous "vertical structure of power" - which he has been building for three years and which was expected to help further modernize the country - has not worked. Moreover, it is clear that reforms have been delayed recently by the acute, public disputes within the cabinet and the executive branch as a whole. Furthermore, the giant, corrupt Russian bureaucracy continues to ignore the reform-oriented laws that Putin has managed to get through parliament in the past years. (For example, the law on registering enterprises at "one window" or the cabinet's failure to take the necessary steps on pension reform, etc.)
This is why Putin acknowledged the need for "an additional political impulse" for the executive branch and promised that "it will be forthcoming." In this context, taking into account the Duma elections while forming the next cabinet - i.e. creating a political rather than technical government - would be a big step toward establishing true public control over the all-powerful bureaucracy.
Paradoxically, however, in the political system formed under Putin, this idea can easily be implemented in form, but is almost impossible to implement in substance. Creating a political cabinet fully accountable to parliament's majority would be possible only if December's elections were won by a Communist-led coalition (leftist government) or by a liberal coalition including the Union of Right Forces and Yabloko (liberal cabinet).
However, that is unlikely. A far more realistic outcome looks to be the victory of a pro-presidential coalition led by United Russia. In that case, a "government of the parliamentary majority" would be fictitious, and still promoted by the presidential administration. The situation would come full circle. And, just like now, the president himself would have to struggle to keep the sluggish, unsteady ship of government afloat and on course, in spite of its tendency to make senseless manoeuvers.
Implementing the idea of a cabinet of the parliamentary majority under the "managed democracy" created by Putin is senseless. When key media are kept under control and political competition is suppressed, when parliament has been transformed into an appendage of the presidential administration, when power is centralized and "verticalized" - under these conditions it is impossible to establish true public, parliamentary and party control over the executive branch, impossible to make the political system truly democratic.
It is possible, though, that the president's unexpected initiative was motivated by a desire to retain leadership beyond 2008 - this time as the all-powerful prime minister of a Duma-based cabinet under a relative figure-head of a president. But this is a remote prospect for now. Putin's political fate depends on the results of his first term and the agenda he manages to set and implement for his second term.
So far, the results do not look sufficiently impressive and there is not yet any convincing agenda.
Judging by Putin's address, the results of his first term look contradictory. On one hand, efforts to make the country more unified and its laws more uniform have been successful. But a solution in Chechnya remains remote, population figures and life expectancy are declining. There have been some economic achievements, but economic growth is slowing each year and Russia's overall competitive edge on international markets is waning. Economic growth itself, just as the reduction of the foreign debt and the rise in reserves, is mainly the result of favorable market conditions, not government policy. Several important laws have been adopted, but their implementation leaves much to be desired. And the vital reform of the state apparatus has not yet begun.
Certainly, after the chaos of the 1990s, even this is not so bad. But neither does it amount to much for the president, who has set such ambitious tasks for himself and the country.
The country's future looks even foggier. Doubling GDP by 2010, overcoming poverty and implementing military reform - which has effectively been postponed once again - are noble goals. But Putin's address did not touch on implementation. Its economic, social and foreign policy sections contained nothing fundamentally new.
Nothing but new rhetoric. For the first time, the president introduced such concepts as "consolidation of society around common values," "raising the country's competitiveness," etc. But here words and meanings got completely mixed up.
Two different images of Russia emerged. The first - a free, democratic and open country, integrated into the world, sitting at one table with the developed democracies. The other - "consolidated" around the authorities, where people once again perform some "heroic deed" and business is told to be "patriotic." Foreign and defense policy in this Russia looks no less eclectic.
By definition, a presidential address allows a country's leader to clearly and directly explain his or her political position and strategy. People may accept it or not, but they have a right to know what the nation's leader thinks and what he plans to do.
Vladimir Putin's address has left more questions than answers. But then, the absence of an answer is also an answer.
Vladimir Ryzhkov, an independent Duma deputy, contributed this comment to The St. Petersburg Times.
TITLE: It's Time for Reform From The Top
TEXT: PRESIDENT Vladimir Putin's fourth annual address was interrupted by rounds of applause seven times. The clapping, though lukewarm, was meant to commend Putin for what he has achieved since taking the reins of power from his increasingly impotent predecessor.
As Putin pointed out, the Russian Federation is no longer sliding toward disintegration, and the economy is growing steadily.
While claiming credit for what Russia has achieved under his leadership, Putin abandoned his usual caution to outline a vision for Russia stretching even beyond his foreseeable second four-year term, with an incredibly optimistic goal of doubling GDP by 2010.
Putin made no secret of the challenges - whether inherited from former President Boris Yeltsin or more recent developments - the country is facing, including a declining population, a bloated and ineffective bureaucracy and the lack of a sound basis for sustainable economic growth.
Yet, while diagnosing these and other ills, the president prescribed virtually no cures in his hour-long speech.
To be fair, the president in his annual address should focus on the state of affairs and his goals for the future, rather than on specific solutions and recipes.
But one cannot help but notice that some specific objectives have yet to be met, even though Putin has set them out as priorities in all three of his previous annual addresses.
Among them is systemic administrative reform to reduce the red tape that suffocates business and to downsize the state apparatus to make it more efficient.
Perhaps it is time for Putin to finally abandon his cautious management style and impose administrative reform on the powerful bureaucracy from the top down.
As Putin noted in his address, no bureaucracy should be expected to downsize itself. So, rather than continue to wait for the ministries to decide how to reform themselves, Putin should take the lead and create an independent board to come up with a plan and then punish those who don't implement it.
He put the Cabinet on notice in his speech by saying it was evident that it needs "an additional political impulse and this will be forthcoming." As another stick to prod the Cabinet to act, Putin suggested he would form the next government based on the parliamentary majority in the State Duma.
His message to Prime Minister Mikhail Kasyanov and his ministers seemed to be "if you don't have the skill and courage to implement the reforms, I'll get people who do."
One way or another, Putin must find a way to jump-start administrative reform. Otherwise he will find himself speaking about the same malaise at the end of his second presidential term, five years from now.
TITLE: Chechnya War Positions Now More Extreme
AUTHOR: By Pavel Felgenhauer
TEXT: AS the war in Iraq was developing, Sergei Yastrzhembsky, the Kremlin's chief spokesperson on Chechnya, told journalists that Moscow's staunch support of the Iraqi regime could help solve the Chechen problem by "consolidating the people" of the rebellious republic. Yastrzhembsky, it seems, was implying that if Osama bin Laden and other Muslim extremists were supporting Saddam Hussein in his fight with the United States, Chechen rebels (who are known to have connections with al-Qaida) would appreciate Russia's pro-Hussein stand, cease resistance and join the pro-Moscow forces.
Of course, this was just daydreaming. Some factions in the Chechen resistance may accept aid and use volunteer Muslim extremist fighters from abroad, but the main source of Chechen resistance is internal. And, primarily, it is a product of the constant (and unpunished) attacks by death squads run by Russian intelligence services, exacerbated by the marauding of undisciplined federal soldiers.
The Chechen resistance is not and never was an al-Qaida import. In fact, the official Chechen rebel leader, President Aslan Maskhadov, said last March that he fully supported the U.S.-led invasion of Iraq.
The official propaganda machine has, year after year, been pushing the idea that the Chechen people love Russia and that foreign mercenaries are running the insurgency. As is often the case, the creators of this propaganda narrative have started to believe their own hyperbole.
Last March, Moscow organized a referendum in Chechnya to approve a new constitution for the republic within the framework of the Russian Federation. If the plebiscite's results - a staggering Soviet-style 96 percent in favor - in any way reflected reality, there would be no support base for serious, organized resistance in Chechnya. But the vote has not stopped rebel attacks.
Last week, in a suicide attack in Znamenskoye, northern Chechnya, a truck laden with explosives blew up outside a government compound. At least 60 people were killed, including seven children under the age of 12, by a blast that had the force of at least 1.3 tons of TNT. The attack destroyed a regional pro-Moscow administration building and severely damaged the local office of the FSB. Several private houses nearby were also ruined. The victims were pro-Moscow government employees, Russian FSB operatives and local residents.
Znamenskoye is the center of Chechnya's Nadterechny region. Since 1991, this region has opposed the separatist leaders in Grozny and openly stated its allegiance to Moscow.
It would seem from the brutality of the rebel truck-bombing in Znamenskoye, which was performed with very little concern for innocent, civilian Chechen lives, that it was planned not only as an attack on the FSB, but also as collective punishment for the pro-Moscow Chechens. As the conflict continues, the rebels target pro-Moscow Chechens with the same ferocity as Russian soldiers, increasingly using such indiscriminate weapons as truck-bombs.
But still a sizable share of the Chechen population continues to support the rebels. A Russian occupying force of more than 80,000, backed by more than 10,000 pro-Moscow Chechen militia, is unable to break the rebel organization.
The organization also seems to be increasingly militant, and Russian support for Hussein did not amuse the rebels at all. If the rebels do not care much about killing Chechens en masse, including innocent civilians, what, in the future, will prevent similar devastating truck-bomb attacks inside Russia?
Pavel Felgenhauer is an independent defense analyst.
TITLE: Chris Floyd's Global Eye
TEXT: Language Barrier
"How best to govern the state? First rectify the language."
- Confucius.
Last week, we learned that the U.S. administration lied about the extent of Halliburton Corporation's involvement in the "reconstruction" of Iraq. Officials in the administration of U.S. President George W. Bush initially claimed that Halliburton - the oil and defense services conglomerate once headed by U.S. Vice President Dick Cheney, who still receives an estimated $1 million annually from the company in "deferred compensation" - had been awarded a relatively small contract to repair Iraqi oilfields.
But in fact, as the Washington Post reports, Halliburton is now pumping and distributing Iraq's vast oil reserves - a privilege potentially worth billions of dollars. The Bush camp freely admits that this was part of Halliburton's no-bid, open-ended contract all along; they deliberately "failed to mention it" in their first official notices. It was not publicly disclosed until a member of congress read the fine print of the contract and began asking questions.
To recap: a firm that pays the Vice President of the United States a million dollars a year has now taken over operation of Iraq's oil wealth. There have been times in U.S. history when such an arrangement would have been called by its true name: "corruption." But these are not such times.
Similar pranks are being played by members of the Defense Policy Board, a highly influential group of outside "experts," handpicked by Pentagon boss Donald Rumsfeld to proffer "strategic advice" on military matters. They function largely as an echo chamber for the aggressive views of Rumsfeld and his acolytes in government, consistently pressing for the most extreme measures, including the relentless expansion of the "war on terrorism" at home and abroad.
Last week, the Center for Public Integrity revealed that nine of the board's members are "embedded," as we now say, with arms merchants and military contractors. These DPB-connected firms have been awarded more than $76 billion in government contracts over the last two years. DFB members such as Richard Perle and ex-CIA director James Woolsey have openly parlayed their Pentagon service - which includes classified briefings from top government officials - into lucrative investments in new "security" and "defense" enterprises whose profits depend directly on the continuation of the present cycle of war and terrorism.
This activity - now known as "entrepreneurship" - was also once called by a different name: "war profiteering." In ages past, this was considered a heinous crime, worthy of punishment by death and eternal damnation thereafter. But these are not such times.
Indeed, the U.S. administration revealed last week that it intends to "embed" such activity throughout American life. Deputy Secretary of Homeland Security Gordon England told the nation's top business leaders that "security measures will, over time, likely become embedded in the fabric of our society," the conservative National Journal reports, approvingly. This suffusion of surveillance, secrecy and control into every aspect of existence "will make some businesses more desirable than others in terms of investors and employees and insurance," England said. The government, he says, will impose little or no regulation on these for-profit curtailments of liberty, while providing taxpayer-backed "economic incentives" to make the nascent security industries more appealing.
This policy dovetails nicely with DPB players such as Woolsey, whose private equity firm, Paladin Capital, set up shop a few weeks after the September 11 terrorist attacks. Woolsey and Paladin told investors that the instantaneous murder of 3,000 innocent people on American soil was a "business opportunity" that "offers substantial promise for homeland security investment," the Guardian reports. Paladin has raised almost $300 million in speculative capital for its security and defense ventures so far.
In another time, in another America, such "business opportunities" would have been given a more accurate name: "blood money."
But this is not such a time, and such an America no longer exists. Today, in the new America, leaders are paid millions by corporations who are then given the fruits of aggressive wars launched by those same leaders. In the new America, a feckless multimillionaire takes control of a democracy despite losing the popular vote and proclaims, without shame or subterfuge, that he has the right not only to arrest and detain indefinitely any citizen of that democracy - indeed, any citizen of the world - without any legal charges, but also to have them murdered by his secret services, on his sole authority, outside all judicial review or restraint. Men have already been killed by this order, as the president himself boasted in a national address last January; men - and children - have already been imprisoned (or "disappeared," as they say in other tinhorn military dictatorships) under this dread edict. Yet this arouses no concern among the public - whose lives and liberty are now forfeit to the ruler's whim - no outcry in the media, no resistance from the opposition party. It's as if no one knows how to describe this extraordinary situation - although, in ages past, its name would be glaringly clear: "tyranny."
Examples like these are now legion; they metastasize like an aggressive cancer of the blood, sending outcroppings of pestilent mutation to the farthest reaches of the body. But it seems that Americans have no words left to convey the full measure of the extremist agenda now engulfing their country. Americans can no longer call things by their right names. Their shopworn language, clappped out by the virulent cliches of advertising, propaganda, professional jargon and, yes, journalism, has become too degraded to describe the political reality - a reality that has itself become degraded, even hallucinatory, to an almost unfathomable, almost unbearable degree.
For annotational references, see the "Opinion" section at www.sptimesrussia.com
TITLE: Hamas Bombings Jeopardize Peace Plan
AUTHOR: By Mark Lavie
PUBLISHER: The Associated Press
TEXT: JERUSALEM - In the fourth Hamas suicide attack in two days, a Palestinian riding a bicycle detonated a bomb near an Israeli jeep in the Gaza Strip on Monday, killing himself and lightly injuring three soldiers.
The spate of bombings by the Islamic militant group underscored how difficult it will be to carry out the U.S.-backed "road map" plan, a three-stage prescription for ending violence immediately and setting up a Palestinian state by 2005.
Israeli Prime Minister Ariel Sharon was to have discussed the plan with U.S. President George Bush at the White House this week, but canceled his trip after Sunday's bus bombing. The Palestinians have accepted the plan as it is.
Hamas said on Monday that it has no intention of halting attacks, despite Egypt's ongoing efforts to have Palestinian militant groups agree to a one-year suspension of shootings and bombings. The armed groups have said that they might agree to a truce if Israel promises to stop hunting militants - a proposal Sharon has turned down.
Instead, Israel reaffirmed that there will be no letup in its campaign against those involved in violence. Israel "will continue to fight terror everywhere, at any time and in any way possible," a Cabinet statement said Sunday, after a Hamas suicide bomber killed seven Israelis on a Jerusalem bus earlier in the day.
The Cabinet also decided to isolate Palestinian President Yasser Arafat further, saying that Israeli officials would not meet with foreign officials who also want to see the leader. Arafat has been confined by Israel to the West Bank town of Ramallah for more than a year.
The new Palestinian prime minister, Mahmoud Abbas, has denounced violence against Israelis, but also told Sharon in a weekend meeting-the first Israeli-Palestinian summit in three years-that he wants to persuade the militants to stop attacks, rather than disarm them by force.
In Monday's bombing, a 19-year-old Palestinian rode a bicycle toward an Israeli army jeep near the Jewish settlement of Kfar Darom in Gaza. When he got close, he detonated a 66-pound bomb strapped to his body, said Col. Avi Ashkenazi, an Israeli commander in the area. Hamas sources identified the bomber as Shadi Nabaheen from the nearby Bureij refugee camp.
About an hour after the bombing, Palestinians fired on an Israeli convoy of civilian cars escorted by jeeps near the Jewish settlement of Netzarim. There were no injuries, but the bus was damaged, the army said.
The latest wave of attacks began Saturday evening when a Hamas bomber blew himself up in a square in the West Bank city of Hebron, killing an Israeli settler and his pregnant wife. On Sunday morning, another Hamas assailant blew up the Jerusalem bus and about half an hour later, a third bomber from the group detonated explosives on the outskirts of Jerusalem, killing only himself.
Israeli analyst Mark Heller said that "Hamas is trying to ensure that the road map doesn't go anywhere and that Abu Mazen [Abbas] doesn't go anywhere either."
A Hamas leader, Abdel Aziz Rantisi, said Monday that "legitimate resistance will continue as long as occupation exists on our holy land."
Asked whether Hamas was challenging Abbas, Rantisi said only that there was no point in trying to negotiate with Sharon, whom he called a "terrorist."
Hamas has carried out most of the 94 suicide bombings that have killed more than 300 Israelis in the past 32 months of fighting.
TITLE: Concerns in China Over SARS Diagnosis
PUBLISHER: Combined Reports
TEXT: BEIJING - China on Monday reported its lowest toll of fresh SARS cases since since April 16, four days before officials admitted a SARS cover-up and began reporting more openly, but the WHO said it was still failing to include "a lot" of suspected sufferers with milder symptoms.
Just 12 new cases of the deadly flu-like disease in the 24 hours to 10 a.m. [local time] were reported on Monday and the Chinese capital, had only seven new cases, the Health Ministry said, as the national death toll rose to 289 and the number of cases to 5,236.
But Beijing health officials in charge of SARS diagnosis told the WHO that doctors were underreporting by omitting patients with milder symptoms, said Daniel Chin, leader of a World Health Organisation team in the city.
"We confirmed today that, indeed, this approach was being used," he said, adding that those affected were patients with real pneumonia on a chest X-ray and symptoms but who recovered relatively quickly and had no contact history.
The steep slide in new SARS cases the last two weeks has defused panic in Beijing and helped send millions of people back to work and school.
However, China still has more than 2,000 suspected SARS cases - more than 1,200 of them in Beijing.
Chin said that hospitals were under obvious pressure to reduce their numbers of SARS patients and were not following the reporting guidelines as strictly as they should be, but he added that he did not think there was a new cover-up.
"I think clinicians are honestly having a difficult time dealing with the diagnosis," he said.
A health official said on Sunday that hospitals were following WHO criteria to the letter.
But Chin said that it was clear this was not so after the team talked with physicians and looked at medical records and X-rays at the Chaoyang and Chuiyangliu hospitals, among more than 30 designated to receive probable or suspected cases.
Chin said that Beijing officials had agreed to work with the WHO to sort out the numbers. He said that doctors were probably concerned about diagnosing people as having SARS when they did not, but he added that the issue was ensuring real SARS cases could not infect others in the community.
"I would guess that a lot of these cases that I'm talking about probably don't have SARS. But the problem at this point is we don't know which ones do and which ones don't," he said.
Other developments in the worldwide outbreak of SARS were as follows:
The United States said that it would back SARS-hit Taiwan's bid to gain observer status at the World Health Organization - move vehemently opposed by China.
Four more deaths were announced in Hong Kong, pushing the total to 251 while 380,000 primary school students and kindergartners headed back to school, after they shut down on March 29 as a precaution.
Singapore's hopes of WHO declaring its outbreak under control were dashed when the city-state reported a new case on Sunday, its first in 20 days.
On Monday the world death toll was standing at 634 with more than 7,700 people having been infected.
(AP, Reuters)
TITLE: Shiite Muslims March to Protest Foreign Administration
AUTHOR: By Hamza Hendawi
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq - Thousands of Shiite Muslims marched peacefully through the capital on Monday to protest the American occupation of Iraq and reject what they feared would be a U.S.-installed puppet government.
Small groups of U.S. infantrymen, including snipers on nearby rooftops, watched the rally but did not intervene. Several dozen Shiite organizers armed with AK-47 assault rifles patrolled the area. They, too, were left alone by the Americans.
Up to 10,000 people gathered in front of a Sunni Muslim mosque in Baghdad's northern district of Azimiyah, then marched across a bridge on the Tigris River to the nearby Kadhamiya quarter, home to one of the holiest Shiite shrines in Iraq.
Since Former Iraqi President Saddam Hussein's ouster by coalition troops last month, there has been a spate of smaller gatherings, some of them hundreds strong, demanding that occupying forces withdraw. Monday's march was the biggest in terms of numbers and had a distinctly political message.
"What we are calling for is an interim government that represents all segments of Iraqi society," said Ali Salman, an activist.
Some carried portraits of the late Ayatollah Ruhollah Khomeini of Iran, senior Iraqi Shiite clerics and of Imam Hussein, one of the most revered Shiite saints.
"We decided to gather outside a Sunni mosque to show unity between Shiites and Sunnis," said Rashid Hamdan, an organizer.
He said that the procession was organized mainly by religious groups from Baghdad's al-Thawra suburb-formerly known as Saddam City, home to an estimated 2 million Shiites. Shiites make up the majority of Iraq's 24 million people but were long excluded from political power by Hussein's Sunni Muslim regime.
The crowd chanted "No Shiites and no Sunnis, just Islamic unity," sang religious songs, and carried banners reading "No to the foreign administration," and "We want honest Iraqis, not their thieves."
That appeared to be a reference to Ahmad Chalabi, head of the Iraqi National Congress and one of the key players in current rounds of U.S.-led discussions to form an interim government. He was convicted in 1992 by a Jordanian court of embezzlement and fraud, and some Iraqis have criticized him harshly. Chalabi says he was set up.
The noisy but peaceful protest appeared to be well-organized. Organizers sprayed participants with water to cool them off and formed human chains around the crowd to ensure that the marchers stayed in line and no violence occurred. At the end of the march, about 5,000 gathered near the shrine of Musa sl-Kazim, a much revered 9th-century Shiite saint.
Some banners held aloft by protesters called on al-Hawza al-Ilmiyah, the highest religious Shiite authority based in Najaf, to form an interim government.
Meanwhile, on Sunday, the U.N. agency that cares for the world's children warned that postwar Iraq could slip into a "major crisis" without quick action to meet its urgent humanitarian needs.
UNICEF's executive director Carol Bellamy, on a four-day visit to Iraq, said that her agency was pressing to get more children back to school, deal with a worsening sanitation problem and remove potentially lethal ordnance left over from the U.S.-led war on Iraq.
She said UNICEF has secured pledges of $70 million for an emergency, six-month program to help provide Iraqi children with food and clean drinking water and to stave off disease. She also said that UNICEF has undertaken a $14 million project to distribute school supplies to 3.5 million children in Iraq to enable them to go back to school.
TITLE: Some Arabs Hit Out at Terror Groups
AUTHOR: By Paul Garwood
PUBLISHER: The Associated Press
TEXT: CAIRO, Egypt - One homegrown terrorist slit a Casablanca doorman's throat before setting off explosives killing other Moroccans. In Riyadh, Saudis perished in car bombings detonated by their own.
This week's terrorist attacks have angered millions across the region not just because of their brutality, but because innocents - including Arabs and Muslims - were caught up in the violence.
"If those people want to harm the Americans, let them target military locations, but never civilians," said Palestinian Awni Shatarat, speaking from a Jordanian refugee camp.
Regional political and religious leaders have joined ordinary people in condemning the Saudi and Moroccan attacks, which killed around 80 people - including the teams of suicide bombers.
The loss of civilian lives in terrorist attacks in the Middle East and North Africa is not a new phenomenon. Some 100,000 Algerians died during 10 years of violence in their country, while more than 2,000 people died during Islamic-related militant clashes in Egypt.
But those campaigns were directed at the Algerian and Egyptian governments, while al-Qaida, believed behind the Saudi bombings and possibly involved in the Moroccan attacks, had directed its rhetoric and violence at the West.
A leader of Egypt's largest Islamic group, the Muslim Brotherhood, said that the entire Islamic community was opposed to suicide bombings targeting civilians.
"What we are seeing is some young men who understand things in a very wrong way and have been exposed to many groups who have pushed them into committing these crimes," Essam El-Aryan said.
"The entire Islamic community is against the crimes committed by small groups who misunderstand Islam," said El-Aryan, whose group was banned in 1954 after Egyptian authorities accused it of trying to violently overthrow Egypt's secular government. The group says it renounced violence decades ago.
Terrorism expert Magnus Ranstorp said that most regional militant groups, including radical Palestinian factions, have taken care "not to cross red lines" by inflicting casualties among their own.
"But [al-Qaida] has its own internal, differing programs for legitimacy" in which violence and casualties on a larger, wider scale are sought, said Ranstorp, who works at the Center for Terrorism and Political Violence at St. Andrews University in Scotland.
"We are seeing an escalation of going after targets with little regard for collateral damage for their civilian populations," he said.
In Casablanca, one taxi driver blamed Arab envy of Morocco's ties with the United States and Jews for the attacks that tore through his city late Friday.
"These attackers, they are Muslims, but Islam forbids us from killing," he said. "This is all political - they are just hiding behind Islam."
More than 30 months of ongoing Israeli-Palestinian violence and the U.S.-led war on Iraq has inflamed Arab and Muslim sentiments throughout the Arab world. Many regard such conflicts as being the source of extremist anger.
Bin Laden himself has used Israel's occupation of Palestinian territories as a rallying cry to justify his hate of Western interests and drum up support for his jihad against U.S. and Israeli targets. He also vowed to drive U.S. forces out of Saudi Arabia, saying their presence defiled the country, custodian of Islam's two holiest shrines.
Jordanian political analyst Labib Kamhawi said that many Arabs had warned that the U.S.-led war in Iraq would anger millions throughout the region, and push many toward committing militant acts against Western interests and compliant Arab regimes.
"Therefore, what happened in Saudi Arabia and Morocco was expected and it might happen in other countries too," Kamhawi said. "We need to address the roots of anger and frustration that make some people commit these acts."
Dia'a Rashwan, an expert on radical Islamic groups at Egypt's Al-Ahram Center for Political and Strategic Studies, said al-Qaida aims to rupture Western-Mideast relations.
Rashwan said that the latest spate of attacks has spread fear throughout the region and raised public concern that terrorism can strike anyone.
"We are facing an ambiguous war that is like no other war we have seen," he said. "The enemy is not clearly defined, nor the battlefield. And the ways of fighting the war and its timing are not clear also."
Since last Monday, the Saudis have been most forthright about saying the solution is to crack down on homegrown extremism.
"It is time to stand up against such terror, against those who organize them, against those who inspire them, against those who refuse to condemn them," the Saudi English-language daily Arab News said in a May 16 editorial.
During a visit to one of the bombed Riyadh residential compounds on Sunday, Lebanese Prime Minister Rafik Hariri described the terrorist attacks as "a struggle between those who want Islam to be a universal, respected, just and moderate ... and a small group of people who want to depict Islam as [a religion of] murder, terror and destruction."
TITLE: Last-Second Kidd Shot Gives Nets Game 1 Win
AUTHOR: By Joseph White
PUBLISHER: The Associated Press
TEXT: AUBURN HILLS, Michigan - Jason Kidd's 6-meter fadeaway somehow found the net with a second left to give the New Jersey Nets a 76-74 victory over the Detroit Pistons in Game 1 of the Eastern Conference finals on Sunday.
Kenyon Martin had 16 points, nine rebounds, four steals and three blocks for the Nets and helped hold rookie Tayshaun Prince to 0-for-6 shooting in the fourth quarter. Kidd finished with 15 points, nine rebounds, seven assists and three steals in a game of ugly offense or tough defense, depending on the point of view.
"People just look at our offense," Martin said. "We didn't get this far by just trying to outscore people. We're a decent defensive team."
The Pistons led the NBA in scoring defense this season, allowing an average of 87.7 points. But the Nets were second, giving up just 90.1 per game.
The Pistons nearly won despite making just two field goals, both by Richard Hamilton, in the fourth quarter. The Nets were horrible in the third quarter, making just four field goals, including three by Martin.
Mehmet Okur actually had two chances to tie it in the final 0:01.4. He missed when he tried to tip in a lobbed inbounds pass from Prince. He got the rebound but couldn't convert the follow.
Hamilton had 24 points to lead Detroit. The loss was an especially tough blow because the Pistons, for the most part, achieved their goal of slowing the up-tempo Nets to a half-court game.
"In the fourth quarter, 11 points is not going to get it done," Prince said. "We did a great job in third quarter as far as getting back in the game. We just didn't have the same energy in the fourth."
The Pistons, playing some 40 hours after closing out second-round opponent Philadelphia on the road in overtime Friday, were on the verge of setting standards for fourth-quarter futility, scoring just two points in the first eight minutes. That allowed the Nets to turn an eight-point deficit into a 72-65 lead with four minutes remaining.
But New Jersey suddenly went cold, with Kidd missing open shots and rushed ones. Billups, fouled as he drove to the basket, made two free throws to complete a 7-0 run and tie the score at 74 with 0:22 left.
Then Kidd hit the game-winner.
"We've been down before, and we've bounced back," said Pistons coach Rick Carlisle, whose team recovered from a 3-1 deficit to beat Orlando in the first round. "We'll have to do it again."
Ben Wallace had 22 rebounds, including a team playoff-record 13 in the fourth quarter, for the Pistons.
The winner of the series will face either the San Antonio Spurs or the Dallas Mavericks in the NBA Championship Finals.
The Spurs downed the three-time defending NBA champion Los Angeles Lakers 110-92 on Thursday night to clinch a 4-2 series win over the team that eliminated them from the playoffs the last two seasons.
Dallas defeated the Sacramento Kings 112-99 in Game 7 of their conference semifinal series on Saturday.
TITLE: Devils Nearly in Cup Finals, Mighty Ducks Already There
PUBLISHER: The Associated Press
TEXT: EAST RUTHERFORD, New Jersey - The New Jersey Devils took a major step closer to their third finals appearance in four years Saturday with a three-goal outburst in the third period of a 5-2 victory over the Ottawa Senators.
Jeff Friesen, Patrik Elias and John Madden scored in the first 7:35 of the final period to break open a tie game and give the No. 2 seeded Devils a 3-1 lead in the best-of-seven Eastern Conference finals.
New Jersey is 8-0 at home in the postseason and could advance to the finals against the West champion Anaheim Mighty Ducks with a win Monday at Ottawa.
The Ducks completed their second-straight sweep of the postseason with a 2-1 victory over the Minnesota Wild on Friday.
The seventh-seeded Mighty Ducks knocked out the top two seeds - Dallas and Detroit - before completing a sweep of equally surprising Minnesota on Friday in the conference finals.
Ottawa earned the top seed in the East after accruing an NHL-best 113 points, but the Senators looked every bit like that team in the first two periods, when they held a 23-13 shots advantage. New Jersey scored on its first shot 7:25 in, before Karel Rachunek and Vaclav Varada put Ottawa on top.
On Friday, 40-year-old Adam Oates scored twice, and Jean-Sebastien Giguere stopped 24 shots on his 26th birthday night as the seventh-seeded Ducks beat the Minnesota Wild 2-1 for their second sweep of the playoffs.
"It's a great birthday present, something I've been dreaming of since I was a kid," said Giguere, who stopped 122 of 123 Minnesota shots in the Western Conference finals. "Just to be part of this is very exceptional. ... Now it's just beginning. Every game is going to be exciting and it's going to be fun."
The Wild's lone goal against Giguere and the Ducks is the fewest ever in a best-of-seven series. Boston had just two in a 1935 series, and Montreal had two in a 1952 series.
"To give up one goal in a series is unbelievable," Anaheim rookie coach Mike Babcock said.
Minnesota came into the Western Conference finals as the playoffs' top scoring team, with 42 goals, but Giguere stifled the Wild's offense.
Their only goal ended Giguere's playoff shutout streak at 217 minutes, 54 seconds - the longest since 1951 - and fifth-longest in playoff history.