SOURCE: The St. Petersburg Times
DATE: Issue #916 (84), Tuesday, November 4, 2003
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TITLE: Khodorkovsky Resigns as Yukos Chief Exec
AUTHOR: By Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW - Mikhail Khodorkovsky announced his resignation as Yukos chief executive Monday in a move he said was aimed at shielding his company from legal attack and, according to a source close to the oil magnate, could free him up to run for president.
"As the leader of this company, I must do my utmost to lead our working team out from under the attack that has been directed against me and my partners. I am leaving the company," Khodorkovsky said in a statement written from the jail cell he has been in since being arrested at gunpoint 10 days ago and charged with fraud and tax evasion.
"My further personal plans are linked to continuing work as chairman of the board of the regional public organization Open Russia," he said. "Wherever I work, I will dedicate all my energy to my country - Russia, in whose great future I firmly believe."
The source said it was possible that Khodorkovsky, now freed from his role as chief executive, might run in the 2004 presidential election.
"[The resignation] means that Khodorkovsky will automatically become part of the political scene in a totally different way," the source said. "If before he was a lobbier, now he will become a political player in his own right. The longer he stays in jail, the greater political figure he will become.
"The government has forced him to accept that he will not be in a position to defend himself using only legal means because the performance of the prosecutors indicates they have total disrespect for Russian law. In order to defend himself, he will have to use other means, and this will have political consequences," the source said.
He said he could not rule out the possibility that Khodorkovosky might run for the presidency in 2004 but that "it is too early to decide."
Should Khodorkovsky run, it would be quite a turnaround for an oligarch once reviled for playing a leading role in the looting of the country in a series of rigged privatizations in the 1990s. Ever since he established full ownership control of Yukos after diluting out minority shareholders in a series of scandals for shareholder rights in 1999, Khodorkovsky embarked on a clean-up campaign.
Not only did he clean up the company's books, he also paid great attention to his own public relations. He set up several high-profile philanthropic projects, including the Open Russia Foundation, and courted influential Western figures like Lord Jacob Rothschild and U.S. foreign policy guru Henry Kissinger, both of whom sit on the board of Open Russia.
Politicians from both the Communist and Union of Right Forces parties have said Khodorkovsky's jailing has turned him into a political figure. Ekho Moskvy radio last week conducted a poll that gave him more votes than President Vladimir Putin, and the Moscow press has been filled with reports decrying his arrest as a coup by a group of sinister KGB hawks in the Kremlin.
"According to the election law, Khodorkovsky can run," independent political analyst Andrei Piontkovsky said. "He certainly has enough money. I don't think he will be a strong candidate, but it would be a very good campaign."
Election law states that prisoners in pretrial detention can run for election, but convicted criminals cannot. Analysts have said Khodorkovsky could prove to be a powerful third opposition force that could force Putin into a second-round vote in the March election and make him find a compromise with big business.
Whatever the potential political ramifications, however, investors for now seem cheered by his resignation. Yukos shares jumped 3.9 percent on the RTS index minutes after the news broke.
"This offers an opportunity for the president to focus on Khodorkovsky as an individual, rather than on Yukos the company," said Roland Nash, chief equity strategist at Renaissance Capital.
Analysts have seen the legal onslaught against leading shareholders in Yukos, which began with the July arrest of core shareholder Platon Lebedev on fraud charges, as a response to Khodorkovsky's moves to encroach on Putin's power base. They have said his jailing could be an attempt to force him to step down from his leadership position at Yukos and give up his ownership of the company, similarly to how the Kremlin dealt with another former oligarch who trod on the its toes, Vladimir Gusinsky.
But analysts said Khodorkovsky did not seem ready to bow to the Kremlin yet.
"[Khodorkovsky's resignation] is not a capitulation. It's the opposite. It's a show of defiance," Piontkovsky said. "He is ready for a long siege."
"This does not mean a surrender of his position," said Lilia Shevtsova, senior political analyst at the Carnegie Moscow Center. "It means he is trying to save his company."
Khodorkovsky's lawyer Anton Drel said his client has not sold his shares in Yukos. Khodorkovsky directly owns 9.5 percent of Menatep, Yukos' parent company, while his beneficiary rights to a 50 percent Menatep stake held in a trust arrangement have been handed over to fellow core Yukos shareholder Leonid Nevzlin, who is now in exile in Israel.
Drel, who manages Yukos' parent company Menatep's financial affairs, said weekend reports published in British newspapers that Lord Jacob Rothschild had taken over voting rights for that 50 percent stake were "rubbish." A representative for Rothschild would not comment on the reports when contacted Monday.
Reuters quoted a source close to Yukos' owners as saying that Simon Kukes, the former chief executive of the Tyumen Oil Co., would take over Khodorkovsky's job as CEO. That report could not be confirmed late Monday. Kukes is currently chairman of Yukos' board of directors.
"Kukes certainly has the experience," said Steven Dashevsky, head of research at Aton Capital Group. "But Kukes did not build the company from the ground up. If Khodorkovsky abandons the company, then it is clearly negative. It is clear that Khodorkovsky was crucial to Yukos' corporate success.
"People think this is going to end with Khodorkovsky's resignation," he said. "But [prosecutors] will still go after his assets and they will still go after company cash flow. Thinking that this is going to end is just naive."
TITLE: Governor Names Her Team
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Governor Valentina Matviyenko sent a list of suggested vice-governors to the Legislative Assembly on Monday, said Viktor Lobko, himself a candidate for vice governor as head of the City Hall's management office.
The seven candidates arranged their first meeting with the local lawmakers the same day.
The candidates are Mikhail Oseyevsky, deputy head of Promstroibank, who will oversee city finances; Oleg Virolainen, who will keep his position with the communal services department; Sergei Tarasov, the former speaker of the Legislative Assembly, now offered oversight of science, culture and education; Andrei Chernenko, the former deputy presidential representative to the Northwest region, who will oversee law enforcement issues; Vladimir Dedyukhin, who will continue chairing the maintenance committee; Alexander Vakhmistrov, who is to keep overseeing construction; and Yury Molchanov, who is to head a new committee on investment, and is currently head of the Business Link group, which has a recruiting agency, an advertising agency, a development agency and a construction company.
The earliest date the Legislative Assembly will be able to vote on any candidate is Nov. 12, ten days after the new law on the structure of government of St. Petersburg was published.
It is expected that there will be at least six vice governors in the new city cabinet but the exact figure, as well as the names, will depend on city lawmakers' vote.
Legislative Assembly and Party of Life member Vatanyar Yagya welcomed the suggested cabinet and said the team should be very effective. "Sergei Tarasov, in particular, is a very good choice with his valuable experience as a local lawmaker and speaker," Yagya said. "I do think the team has a healthy amount of strong professionals from the Yakovlev's government, just enough to provide smooth succession of powers, where appropriate, especially in spheres like maintenance and construction."
But Olga Pokrovskaya of the local Yabloko party said Matviyenko's assembling a government of professionals in specific areas rather than of successful financial managers is wrong in principle.
"It is very much like making an elephant the director of the zoo," she said. "Thus, a good builder doesn't necessarily mean a good head of a construction committee."
The seven proposed vice-governors present a mixture of the old guard from Yakovlev's team, with a handful of former Communist Party bosses, whom Matviyenko has known for several decades, as she herself was a successful local Communist party leader.
Pokrovskaya said such a combination means that no reforms can be expected from the new cabinet. She went on to call the cabinet a representation of an undercover political party, the party of bureaucracy.
"Remember the fierce battles between them during the election campaign," she said. "Now they are together, and it shows that the battle was nothing more than a fight between two clans -- it wasn't at all about ideology."
Alexei Musakov, a political analyst and insider with the Center for Regional Politics, only laughed when asked how the vice governors and some other heads of committees correspond with Matviyenko's promise to select only people with spotless reputations.
"It is the wrong era for people with spotless reputations," he said. "But naturally, that promise was a joke, but wasn't the entire campaign a joke?"
But Musakov said some vice-governors and committee heads are bound to be temporary figures.
"You have to remember that the entire electoral campaign was orchestrated from Moscow, by Mr. Voloshin [former head of the presidential administration who resigned last week]," he said. "It will take some time to shift the balance."
But independent political analyst Daniil Kotsubinsky was more skeptical about Matviyenko's team. He said the governor has been making hypocritical promises throughout her campaign.
"Where are the new names?" he said. "We know everyone, and not from their better sides."
More importantly, he said, who fills the top posts in Smolny doesn't matter much.
"Unless the rules of the game change, and the city administration becomes decentralized, handing more powers to district councils, unless it becomes accountable to the city parliament, it makes absolutely no difference who is in the government," he said.
TITLE: Klebanov To Oversee Northwest Federal District
AUTHOR: By Lyuba Pronina and Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: President Vladimir Putin appointed Ilya Klebanov, the minister of industry, science and technology, to be his representative to the Northwest Federal District, the Kremlin announced Saturday.
Most analysts said the move was a further demotion for Klebanov, a former deputy prime minister, whose plans to reform the defense industry ran into powerful opposition.
Klebanov, 52, will replace St. Petersburg Governor Valentina Matviyenko, who was Putin's envoy to the district before her election last month.
Klebanov, in charge of the defense industry since 1999, was stripped of his deputy prime minister post in February 2002. He continued to serve as minister of industry, science and technology, while Prime Minister Mikhail Kasyanov assumed direct responsibility for defense contracts.
The reforms Klebanov introduced in 2001, intended to consolidate the country's 1,700 defense enterprises into a smaller number of holdings, were widely criticized by industry players and analysts as ill-conceived. Klebanov's plans stalled, and he also was accused of taking sides in awarding defense contracts.
During 2002, Kasyanov stepped in to overturn two key defense contract awards involving sales to China of 40 Su-30 fighter jets and two destroyers.
Since then, Klebanov appeared to gradually lose control over reform - a process that accelerated after Deputy Prime Minister Boris Alyoshin took up oversight of the defense industry upon his appointment in April 2003 and moved to review Klebanov's plans.
Yury Korgunyuk, a political analyst with INDEM, said Klebanov not only failed to produce any significant results during his tenure or make use of his talents in Moscow, but didn't even manage to show a bit of personality.
"Klebanov is one of those people who is neither fish or fowl," Korgunyuk said Monday. "He is very different from others in the St. Petersburg team of reformers, like [German] Gref or [Alexei] Kudrin, but quite honestly, I am still guessing what was so good about him that the president raised him that high."
"The military-industrial complex will be happy," said Konstantin Makiyenko, the deputy head of the Center for Analysis of Strategies and Technologies, or CAST, in a reaction to Klebanov's appointment.
Korgunyuk, in turn, branded Klebanov's new job as unimportant, suggesting that it would take nothing but loyalty and punctuality to do it well.
"Look at the others doing the same job, they don't have particular talents, with the only bright exception being perhaps Kiriyenko. "
Ruslan Pukhov, the director of CAST, welcomed the decision but shared Korgunyuk's view of the job itself.
"This is an elegant dismissal," he said. "Originally the institution of [presidential] envoys was created parallel to the governors inherited from the Family. Now that everyone is reined in, this post is merely a decorative one. You could even put a Cheburashka [toy mouse] there."
But Tatyana Protasenko, a political analyst with the Institute of Sociology of the Russian Academy of Sciences, disagrees, and draws a parallel between Klebanov's appointment and that of Valentina Matviyenko, his predecessor as presidential representative.
"It is definitely not a step down," she said. "Both Matviyenko and Klebanov have a clear important task from the president to bring St. Petersburg closer to Moscow. The president needs strong executives in his hometown, and with Klebanov's appointment he gets what he wanted."
An engineer by profession, Klebanov headed the commission investigating the Kursk submarine disaster in August 2000, in which 118 sailors were killed.
His appointment as presidential envoy was generally received positively on Saturday.
"I also very much welcome the fact that Klebanov is not from security services," Protasenko said. "Growing numbers of them in governmental structures of all levels up to the highest were getting alarming and provoked much speculation."
Klebanov's appointment keeps a non-member of the siloviki - people who made their career in the military, police or secret services and who, because of the Yukos investigation, are seen as having gained the upper hand over oligarchic interests in the Kremlin - in charge in the district.
Most heads of the seven districts are siloviki, but Klebanov, like his predecessor, current governor Valentina Matviyenko, who replaced Viktor Cherkesov in March, is not one of them.
"[Klebanov] knows the Northwest district, the military-industrial complex, ship-building industry and St. Petersburg," Interfax quoted Matviyenko as saying. "He will be very useful for the city in solving problems with the federal center."
Conflicts between Putin and Yakovlev, who beat Putin's mentor and former boss, then mayor Anatoly Sobchak, in an election to run St. Petersburg in 1996, are thought to have poisoned the city's relations with the federal government and contributed to neglect of the northern capital's infrastructure and decaying housing stock.
"I don't think a more suitable candidate for the post could have been found," Interfax quoted Sobchak's widow and Federation Council member for Tuva, Lyudmila Narusova. "Ilya Iosofovich [Klebanov] knows the region well and is an outstanding manager, so I welcome his return to his native hearth and home."
Leningrad region governor Valery Serdyukov said Klebanov is an experienced politician, but focused on Klebanov's economic role.
"If we talk about the scientific-industrial potential of the [Northwest] district, then he is one of the best candidates," Interfax quoted Serdyukov as saying. "Ilya Isofovich may help us develop the sector to its full potential."
Others concentrated on Klebanov's ability to get along with the St. Petersburg governor as a key asset.
State Duma deputy speaker and Union of Right Forces co-leader Irina Khakamada described Klebanov as having progressive points of view together with a conservative ones, Interfax reported.
"He has no contradictions with Valentina Matviyenko and they will be able to work together in an absolutely friendly way," she said. "Therefore I think this is a very useful appointment that will benefit the district and St. Petersburg,"
Duma Deputy Igor Artemyev, a St. Petersburg Yabloko party member, called the appointment logical and justifiable, Interfax reported.
TITLE: Sharon Hails President Putin As a 'True Friend of Israel'
PUBLISHER: The Associated Press
TEXT: MOSCOW - Israeli Prime Minister Ariel Sharon on Monday praised ties with Russia and called President Vladimir Putin a "true friend of Israel."
Welcoming Sharon to the Kremlin, Putin said Russia would continue trying to help the Middle East peace settlement and added that recent violence in Israel had caused much concern in Russia for former citizens who have emigrated to Israel.
"We know Israel is striving for peace," Putin said. "The Jewish people have suffered a lot over the last decades."
Sharon, who arrived in Moscow on Sunday on his third visit as prime minister, answered in kind. He said Israel highly values friendly ties with Moscow.
"President Putin is a true friend of Israel," he said at the start of talks. "We highly appreciate Putin's attitude, and his repeated personal safety guarantees for the state of Israel."
Sharon said Israel was ready to compromise for the sake of peace.
"I have repeatedly said during our meetings with President Putin that Israel was ready to make concessions in exchange for a real peace," Sharon said. "Israel is probably the only state in the world that is ready to make concessions even though it hasn't lost a single war."
Russian and Israeli officials said the two leaders would focus on a Russian-backed UN resolution on a Middle East peace plan and Israel's concern about Iran's nuclear program.
Israeli officials traveling with Sharon said the talks would also touch on proposals for improved intelligence-sharing in the international fight against terrorism.
Israeli officials said Sharon would raise objections to a Russian initiative to seek a UN Security Council endorsement of the "road map" Middle East peace plan, which the United States also opposes.
Israel only reluctantly accepted the U.S-backed plan, which aims to end violence and establish a Palestinian state by 2005.
In addition to Putin, Sharon was to meet Prime Minister Mikhail Kasyanov, Foreign Minister Igor Ivanov, Defense Minister Sergei Ivanov and Russian Jewish leaders before returning to Tel Aviv on Tuesday evening.
Russian Jewish leaders, meanwhile, said Monday that they have appealed to Sharon to oppose what they called "the rehabilitation of Nazi criminals" in Estonia and Latvia.
In an open letter to Sharon, the Jewish leaders urged him to join them in sharp criticism of what they said was a decision by the Estonian authorities to build a monument to those who fought to free Estonia and died in World War II.
"In effect, it is a monument to Estonians who fought on the side of Hitler's Germany, including in SS units," said the letter, whose prominent signatories included the chief rabbi of Russia, Berl Lazar.
"We cannot consider this anything other that an attempt to rehabilitate Nazism and make it heroic - an attempt that is by no means the first in Estonia and Latvia," the letter said.
TITLE: IN BRIEF
TEXT: Lobbying Over India
NEW DELHI (AP) - Russia will push for the lifting of restrictions on the sale of nuclear technology to India, arguing that it deserves to be treated differently from other nuclear-armed nations, an Indian newspaper reported Monday.
India is currently subject to a 1992 ban on the sale of nuclear components and materials imposed by the Nuclear Suppliers Group - 40 countries whose declared aim is to contribute to the nonproliferation of atomic weapons.
The ban applies to countries that don't conduct their nuclear technology programs according to the International Atomic Energy Agency's guidelines, otherwise known as "non-nuclear weapons states."
"There is a pressing need to review the guidelines of the [Nuclear Suppliers Group] and work out a special arrangement for India to allow it to cooperate with other countries in the nuclear field," Nuclear Power Minister Alexander Rumyantsev was quoted as saying by The Hindu newspaper.
Poet Gamzatov Dies
MOSCOW (SPT) - Dagestani poet Rasul Gamzatov, often called the Caucasus' greatest poet of the 20th century, died Monday at a Moscow hospital. He was 80.
Gamzatov, who had Parkinson's disease, died after a long illness, NTV television reported.
Gamzatov, who wrote lyrics for songs that were translated into dozens of languages and sold in the millions of copies, was born in Tsada, Dagestan, on Sept. 8, 1923.
When Gamzatov turned 80, President Vladimir Putin invited him to the presidential residence in Sochi and presented him with Russia's highest order of St. Andrei.
Gamzatov will be buried Tuesday in the Dagestani capital, Makhachkala.
Putin Awards Miners
MOSCOW (AP) - President Vladimir Putin on Monday presented state awards to dozens of rescuers who saved coal miners, some of whom were trapped in a deep shaft in the southern Rostov region for nearly a week.
In a ceremony at the Kremlin, Putin conferred medals on 55 rescuers and miners for their role in one of the most successful rescues in post-Soviet Russia.
TITLE: Kudrin Asks Public To Support Kremlin
AUTHOR: By Alex Nicholson and Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW - If there were any doubts that President Vladimir Putin had the government's cashiers under control, Finance Minister Alexei Kudrin emphatically put them to rest on Monday with a clarion call to the nation to back the Kremlin in the new, oligarch-free Russia.
"Byzantium is over!" Kudrin told Kommersant. "With all due respect to Alexander Voloshin, I want to stress that his departure coincides with the end of the Yeltsin epoch.
"I've heard personally from [Putin] and clearly understand myself that this is not a redistribution of property and not a campaign against oligarchs," Kudrin said.
Kudrin, who is also a deputy prime minister, appeared to applaud the legal attack on Yukos that has led to the imprisonment of Mikhail Khodorkovsky and Platon Lebedev and the resignation of Voloshin, Putin's former chief of staff.
"Will it be better or worse? It will be different, as is always the way when epochs change. I know that for the Russian economy it will be better."
"If the economy continues to depend on oligarchs, high oil prices, artificially flush banks and false bankruptcies this will have a destructive influence. [The oligarchs] have been returned to a business environment, in which you can only be successful if you play fair."
In an interview with Kompaniya magazine also published Monday, Kudrin said that the Finance Ministry was considering the re-introduction of a so-called 'added income tax' to raise more revenues from the oil sector, at a time when world oil prices were high.
Economists said Monday that time would tell if a sea change in the Kremlin would be good or bad for the economy, while political analysts said Kudrin had made the remarks to distance himself from those who have challenged the Yukos clampdown.
Others said that if a new era had dawned, it wasn't as bright as the one Kudrin was hoping for.
It would, in fact, be downright "bureaucratic."
"We are living in a different country, a new epoch," said Liliya Shevtsova of the Carnegie Moscow Center. "That does not mean we are now living under dictatorship. We are no longer in an oligarchic regime, but in a bureaucratic regime."
Independent political analyst Andrey Piontkovsky said that whatever the new era would be, it was clear its new masters were the siloviki, and by giving the interview Kudrin had showed where his loyalties lay.
Piontskovsky suggested that Kudrin had timed his comments to distance himself from United Energy Systems chief Anatoly Chubais, who is firmly out of favor after his harsh weekend rhetoric against the attack on Yukos.
In an interview on RenTV on Saturday, Chubais said the country was being led in "a dangerous new direction. I am not interested in who is going to be next," he said. "What really interests me is what I should do to make sure that there is no next one."
Piontkovsky said Kudrin's comments indicated he was afraid he might lose his job along with Chubais. "He wants to say, 'I'm not Chubais's man, I'm yours,'" he said.
Chubais is considered the unofficial leader of the so-called St. Petersburg liberals, the group that includes Kudrin and Economic Trade and Development Minister German Gref, and makes up the third Kremlin faction, after the siloviki and the Family.
Kudrin's reassurances appeared to be exactly what financial markets wanted to hear Monday, but contrasted sharply with comments by Prime Minister Mikhail Kasyanov, who on Friday called the arrest of shares in Yukos, a publicly traded company, a "new phenomenon" and said its consequences would be "hard to define."
But Kudrin defended the arrest of Yukos shares, saying the move was "a court decision, which - thank God - was governed not by economic expediency, but by the law."
But financial and political analysts found Kudrin's "rule of law" line hard to swallow.
"If this were only about imposing the law, then the jails should be overflowing," said Steven O'Sullivan, co-head of research at UFG. "Certainly there are negative indications that we are heading onto a path that can lead dramatically to a more statist intervention in the economy."
"Business confidence has been shaken for the next six months, almost irrespective of what the Kremlin does now," said Roland Nash, chief strategist at Renaissance Capital, adding that recent events had sent a strong signal to investors that those "in control were are not willing to share influence." While he agreed that the country was moving into a new stage of development, he said it was "not clear if that is going to be positive or negative."
While O'Sullivan saw a suggestion that Putin was reining in prosecutors after televised comments on Sunday delivered by his chief of staff Dmitry Medvedev, Piontkovsky said this was more likely a sign that Putin was trying to mollify an offended Kasyanov.
"I interpret the interview with Medvedev as a performance by Putin, who is afraid of directly contradicting Kasyanov," he said.
For the first time in his career, Putin has stepped back. ... There are a lot of people in the elite who are unhappy with Putin at the moment, and all that is needed is a point of crystallization, a figure around which the disaffected can unite as a real opposition."
Yuri Korgonyuk of the Indem think tank said it was premature to call the end of infighting between Kremlin clans.
"Byzantium is far from over. This attack on Yukos is like a behind-the-scenes fight that suddenly bursts out into the open? That's as Byzantine as it gets."
"It certainly is true that Voloshin was one of the columns of our modern-day Byzantium. But his place will be filled quickly."
TITLE: City Air Pollution Rising, Hits Health
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: Air pollution in St. Petersburg is getting worse, becoming more dangerous to human health and the city, for the first time, entered the list of Russia's cities with the most noxious air, according to the Main Voeyikov Geophysical Observatory, which monitors the nation's air pollution.
"Despite the decline of industry in the city in the last 10 years, air pollution has increased by almost 50 percent," Emma Bezuglaya, head of the air pollution analysis laboratory at the observatory, said Monday.
She said the dirtier air has contributed to an increase in heart, circulatory and respiratory diseases.
In the last five years the number of heart and vascular diseases among St. Petersburg adults has risen by 10 percent to 15 percent. The number of children born with congenital heart and vascular defects rose at the same rate as the city's air became dirtier, she said.
And, in 2002, for which figures have only just been published, St. Petersburg was for the first time included in a priority list of Russian cities with the worst air pollution.
Thirty-five cities with the highest levels of air pollution are on the observatory's priority list, while 130 cities also have air pollution levels ranging from high to very high.
In 2002, the concentrations of ammonia, benzapiren, nitrogen dioxide and formaldehyde in St. Petersburg's air were twice the level considered safe, the observatory said.
In the city's central district, the level of nitrogen dioxide was regularly 79 percent above the acceptable level.
Bezuglaya said that between 2001 and 2002 the concentration of suspended substances, carbon monoxide, formaldehyde and benzapiren in the cities in the European part of Russia more than doubled. Maximum concentrations exceeded norms by four to eight times.
She said that increases were partly due to the numerous forest fires across the country last year.
But, according to Bezuglaya, rising vehicle use also played a big role.
"For instance, in the case of St. Petersburg, the deterioration of the air quality was significantly increased by the number of automobiles in the city increasing by four times," Bezuglaya said.
She said cars contributed a lot to rising nitrogen dioxide levels.
"Unfortunately, cars and marshrutki [route taxis], are significantly dirtier than the city's former ecologically cleaner trams and trolley-buses, the numbers of which have declined in the city for the last several years," Bezuglaya said.
TITLE: Jury Picked for Sutyagin Trial
PUBLISHER: The Associated Press
TEXT: MOSCOW - Jury selection began Monday in the trial of Igor Sutyagin, a scholar accused of passing military secrets to the United States, in what is believed to be the first espionage case to be decided by a jury in Russia.
In a departure from the usual secrecy imposed on treason cases, the Moscow City Court began choosing the 12-member jury who will decide whether Sutyagin, a former scholar at Moscow's respected USA and Canada Institute, is guilty of treason, Itar-Tass reported. Court officials couldn't be reached for comment.
Sutyagin, who says he is innocent, has been in jail since his arrest in October 1999 on suspicion of passing military information to a British firm investigators say was a cover for the U.S. Central Intelligence Agency. Prosecutors are seeking a 14-year term.
TITLE: IN BRIEF
TEXT: Submarine Leaks Fuel
ST. PETERSBURG (SPT) - An out-of-service diesel submarine moored off Anlgiiskaya Naberezhnaya was found to be leaking fuel into the Neva River, Interfax reported Monday.
The agency quoted Yevgeny Kononenkov, deputy head of the special sea inspectorate, as saying that water tests had found a large spill that had been traced to the submarine, and that the spill had been contained.
The submarine is more than 30 years old and after serving in the Northern Fleet was part of the Baltic Fleet. It is now out of service and under consideration for being turned into a museum, the report said.
Publisher Assasinated
ST. PETERSBURG (SPT) - Lyudmila Pomazova, 50, the head of the Drofa St. Petersburg publishing house, was killed Friday along with her husband, in what police said was a contract hit.
Pomazova was shot six times and her husband twice, outside the building where they lived in Vsevolozhsk, a town in the Leningrad region. Both died instantly, police said.
Peterburg TV Rating
ST. PETERSBURG (SPT) - St. Petersburg Governor Valentina Matviyenko has hailed the appointment of Marina Fokina to head city television company Peterburg and said it will allow the station to return to glory, Interfax reported Friday.
"It is necessary to create a station that reflects the status of the city ... that the ratings of the St. Petersburg channel are higher than the rest, that it is the leader in St. Petersburg," she said.
Fokina's record as the head of the local branch of the Rossia channel showed that she would be able to formulate a concept for the development of the station, Matviyenko said.
HIV Up in Novgorod
ST. PETERSBURG (SPT) - The Novgorod region has registered 112 new cases of HIV infection since the beginning of the year and has recorded 591 cases of AIDS since records began, Interfax reported Friday
HIV cases have been recorded in 19 of the region's 21 districts with the worst infection rates being in the city of Novgorod, and the Borovichy, Pestovsky, Soletskom, Kvoininsky and Chudovsky districts, the report said.
Most infected people are aged 15 to 30 with 60 percent of them male, the report said.
Special Dam Company
ST. PETERSBURG (SPT) - Governor Valentina Matviyenko has issued an order for a state company to be formed Nov. 10 to complete the construction of a protective dam to guard the city from flooding, Interfax reported Thursday.
She also instructed Valery Nazarov, head of the city property committee, to clarify who owns the dam and provide documentation to the federal government, the agency reported.
Bomb Trial Opens
MOSCOW (AP) - A Moscow court opened a trial Friday against two men accused of involvement in a series of apartment house bombings in 1999.
Yusuf Krymshamkhalov and Adam Dekkushev are accused of accompanying shipments of the explosives used in Moscow and Volgodonsk, where 246 people were killed in three explosions.
TITLE: Putin Planned to Raise New Chief's Profile
AUTHOR: By Alex Nicholson
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin may have called Alexander Voloshin's resignation "a mistake" on Friday - after popping in at the outgoing head of the presidential administration's farewell staff meeting - but nearly four years ago he had already named Voloshin's replacement.
In early 2000, as Kommersant journalists compiled a collection of interviews with the then-acting president, Putin said he planned to keep Voloshin on for "about two years" and named the little-known Dmitry Medvedev as a suitable replacement.
But when the "From the First Person" compilation was published, there was no mention of Voloshin's tenure to be found.
Former President Boris Yeltsin's daughter Tatyana Dyachenko and Valentin Yumashev, who ghostwrote Yeltsin's memoirs, made sure the prediction was edited out, "so as not to offend Sasha [Voloshin]," according to a report in Kommersant on Wednesday.
Now with the last high-profile representative of Yeltsin's inner circle clearing his Kremlin desk, attention has focused on his replacement and former first deputy.
Medvedev, 38, is perhaps best known as the man behind the ongoing overhaul of Russia's bureaucracy, the head of Putin's presidential election team in 2000 and the man who, as board chairman of Gazprom, engineered the ousting of former CEO Rem Vyakhirev in a single marathon meeting in 2001.
Softspoken and smooth-talking, Medvedev has something in common with the Kremlin siloviki group of powerbrokers, who like him hail mostly from St. Petersburg, said Nikolai Petrov of the Carnegie Moscow Center.
"He is capable of smooth talking for an hour and a half and yet you won't remember what he has said and might not remember what he looks like," Petrov said. "He is as inconspicuous as a 'chekist' should be."
But Medvedev is no former security service officer. He comes from another institution whose graduates now tread the Kremlin halls: the St. Petersburg State University's law faculty.
"I remember the students wrote him a note of thanks, which they hung on the timetable board," recalled Nikolai Kropachev, dean of the law faculty and chairman of the Ustavnoi court in St. Petersburg, who knew Medvedev as a student and later as lecturer in Roman and civil law at the faculty.
"They wrote to say what a good lecturer he was and how much they loved him," Kropachev said in a telephone interview. He added: "In Russia the word 'inteligent' normally refers to an intellectual of the Chekhovian mold. Dmitry Anatoliyevich [Medvedev] is intelligent, but not the kind you often get in Russia that weeps for his country. He is a qualified specialist, morally pure, bold and demanding."
It was soon after defending his civil law thesis in 1990 that Medvedev first met Putin.
A month after Medvedev had become an adviser to Anatoly Sobchak, then the chairman of the city's council of people's deputies, Putin also joined Sobchak's team.
When Sobchak became mayor of St. Petersburg, he appointed Putin his deputy and put him in charge of foreign affairs.
"We communicated frequently," Medvedev told the Vedomosti newspaper in 2000. "We worked together for a year and a half alongside Anatoly Alexandrovich [Sobchak].
"After this I returned to the law faculty and started to practice practical jurisprudence. Vladimir Vladimirovich [Putin]'s career continued to grow. He offered me the post of consultant to the committee for foreign affairs. Our active communication continued until he left for Moscow [in 1996], after which we had virtually no contact. It was renewed only after Vladimir Vladimirovich became prime minister [in August 1998]."
In an interview with the Vek newspaper in March 2000, Medvedev explained his move to Moscow.
"It started with a telephone call in October 1999: they said that Vladimir Vladimirovich wanted to talk. I came down and was invited to work in the government.
"From Nov. 9, I worked as the deputy head of the government apparatus and from Dec. 31 [the day Putin was appointed acting president] I became deputy head of the presidential administration."
Medvedev's appointment as Gazprom board chairman in the summer of 2000 was seen as a victory for the Kremlin as it sought to rein in the asset-stripping excesses of the company's old guard, and it helped pave the way for Vyakhirev's ouster in the pivotal May 2001 board meeting. It also saw his political clout soar.
Despite comments by Putin on Thursday, the same day Medvedev was appointed, that liberalization of the Gazprom share market would come in a "matter of months" rather than years, analysts say they are not holding their breath.
"Isn't a matter of 36 months the same as a matter of three years?" said James Fenkner, head of research at Troika Dialog.
"I'd love to see it happen, but we've been so close to this so many times it is hard to believe."
But Fenkner said he saw little ominousness in Medvedev's appointment. "He's generally seen as a reformer, so it wasn't as scary as people thought." Many had expected Voloshin's successor to be from the secret services.
"It was interesting when the rumors [of Voloshin's resignation] started to circulate on Monday evening," Fenkner said.
"It just proves that the candidates of good and evil switch chairs depending on when you're talking about them. I remember a time in 2000 when Voloshin was considered the weakest link ... then all of a sudden he's the defender of rights."
Medvedev may not be the most colorful character in Putin's inner circle, but Vladimir Pribylovsky, head of the Panorama think tank, said this may change with time.
"Medvedev looks sort of gray, but perhaps it's because he hasn't had that many opportunities to display his potential," Pribylovsky said.
The St. Petersburg State University law faculty posted congratulations on its web site for two of its freshly promoted former students.
Dmitry Kozak, who graduated from the law faculty in 1985, two years before Medvedev, was also promoted, becoming his first deputy.
Offered congratulations on the success of his former pupils, Kropachev's reply was swift.
"Congratulate Russia that such people are in power."
Staff Writer Simon Saradzhyan contributed to this report.
TITLE: Reshuffle: New Posts, Old Hands
PUBLISHER: The St. Petersburg Times
TEXT: Like Dmitry Medvedev, his new boss, Dmitry Kozak, graduated from the law faculty of St. Petersburg State University and worked with Vladimir Putin in the St. Petersburg administration.
Kozak has worked in the presidential administration since June 2000.
From 1991 to 1993, he headed the legal department in the Leningrad council of people's deputies, and from 1994 to 1999 the legal committee of the St. Petersburg administration. From 1998 to 1999 he was a city vice governor.
In May 1999, Kozak was brought to Moscow to work in the Kremlin as deputy head of the administration for legal issues.
In August of that year, when Putin was appointed prime minister, he was put in charge of the government apparatus. In 2000, after Putin's election as president, Kozak was made deputy head of the presidential administration.
Putin was reported to have put Kozak forward as his candidate for prosecutor general in 2000, but at the last minute changed his mind in favor of Vladimir Ustinov.
In the presidential administration, Kozak was responsible for judicial reforms that limited prosecutors' powers. He also oversaw the process of bringing regional legislation into line with federal law.
The appointment of Igor Shuvalov as Kozak's replacement as deputy head of the presidential administration has been described as the consolation prize for the Voloshin camp.
Shuvalov, 36, graduated from the law faculty of Moscow State University in 1992, after which he worked in the legal department of the Foreign Ministry.
A close acquaintance of Family insider Alexander Mamut from their days studying law, Shuvalov worked for Mamut's ALM Consulting from 1993 to 1997.
In May 2000, he replaced Dmitry Kozak as head of the government apparatus when Kozak followed Vladimir Putin to the Kremlin. Now Shuvalov has joined him as the president's aide on administrative reform.
He is expected to oversee the "economic bloc" in the presidential administration.
TITLE: Appointment Keeps Putin Above the Fray
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: By elevating Dmitry Medvedev, a St. Petersburg technocrat, to his chief of staff, and Dmitry Kozak as Medvedev's first deputy, President Vladimir Putin has prevented the siloviki from becoming virtually the sole players in his administration and will thus retain his position as ultimate powerbroker.
Late Thursday, Putin accepted the resignation of Alexander Voloshin as chief of the presidential administration.
Voloshin is widely believed to have stepped down after realizing that he was no longer able to defend the interests of the Family, officials appointed by Boris Yeltsin and their big business allies, from the onslaught of the siloviki group of Kremlin powerbrokers.
Putin's decision to accept Voloshin's resignation, after mulling it over for five days, was seen as a victory for the siloviki, officials from the security services who came into the Kremlin with Putin.
"There should be no doubt that the balance of power has shifted greatly toward the siloviki with Voloshin's departure," Yury Korgunyuk of the Indem think tank said Friday. "This signals that the Family is losing the remnants of its clout, but it should not necessarily be interpreted as a full and final victory for the siloviki."
As if on cue, Medvedev came out Sunday night on Rossia television and questioned the decision last week to arrest shares in Yukos. He said the legal effectiveness of the action was not clear and warned that it could have serious consequences for the economy.
Andrei Piontkovsky, an independent political analyst, said Medvedev's words suggested Putin was bowing to those against a full victory for the siloviki.
If Putin had picked one of the siloviki to replace Voloshin, the siloviki would have gained a near monopoly influence over Kremlin policy, said Korgunyuk and Alexei Makarkin of the Center for Political Technologies.
Instead, Putin picked Medvedev and promoted Kozak. He also promoted Igor Shuvalov, another lawyer, to the rank of deputy head of the administration. Medvedev and Kozak belong to neither of the two main rival groups, and their appointment indicates the emergence of a new group, which Kommersant on Saturday dubbed the "Petersburg lawyers."
Given that the presidential administration outweighs even the government when it comes to formulating, if not implementing, policies, Medvedev and Kozak are in a position to pull strings on many issues.
They cannot, however, match the weight of Voloshin.
"Voloshin was a generator of ideas, a creator," Makarkin said. "While formally a subordinate, he was also somewhat of a partner for Putin, while the newly promoted men are more the obedient executioners of the president's will."
Medvedev and Kozak will be able only to limit, not match, the political clout of the siloviki group, which is led by deputy heads of the presidential administration Viktor Ivanov and Igor Sechin, according to Vladimir Pribylovsky, head of the Panorama think tank.
Their relative weakness and lack of experience in economic policymaking will inevitably lead Medvedev and Kozak to gravitate toward liberal economists in the government such as Finance Minister Alexei Kudrin and Economic Development and Trade Minister German Gref, also natives of St. Petersburg.
If allied, these two groups would likely prevent the siloviki from having a monopoly of influence on Putin, Korgunyuk and Makarkin said.
TITLE: One Day in The Life of Mikhail Borisovich
AUTHOR: By Carl Schreck
PUBLISHER: Staff Writer
TEXT: Russian prisons are infamous for overcrowding and rampant tuberculosis, but what is life behind bars like for the country's richest man?
After being put in the notoriously overcrowded Matrosskaya Tishina prison in northern Moscow following his arrest Saturday, Yukos CEO Mikhail Khodorkovsky was moved Monday to the prison's more comfortable so-called "Special Isolation Unit No. 4."
Since Khodorkovsky's arrest, media interest in his living conditions, down to the minutiae of his daily routine and diet, his toilet facilities and bathing schedule, has been intense.
Based on the testimony of Justice Ministry officials and prison reform advocates, plus a varied roundup of this week's press reports, a day in the prison life of the Mikhail Borisovich is not likely to resemble Solzenitsyn's Gulag Archipelago, so much as a wiseguy's cell in Goodfellas.
Khodorkovsky's day begins at around 6 a.m. in a 5-meter-by-3 meter cell along with his two cellmates, according to Justice Ministry spokesman Boris Kalyagin.
The cell is equipped with two bunk beds.
A prison breakfast of fish soup, tea and bread is available, according to Kalyagin and media reports, after which Khodorkovsky is allowed to conduct meetings, either with an investigator or lawyer.
Khodorkovsky is served lunch from 1 p.m. to 3 p.m. and dinner from 6 p.m. to 8 p.m., Izvestia reported last week, a schedule that Kalyagin confirmed.
Kalyagin said lunch consists of meat-and-rice soup, a vegetable medley with rice, bread and compote, while dinner consists of buttered kasha, or Russian porridge, tea and bread.
"I wouldn't say it is restaurant quality," Kalyagin said of the food.
Deputy Justice Minister Yury Kalinin, who visited Matrosskaya Tishina a week ago, denied previous reports that Khodorkovsky had refused to eat the prison food, Interfax reported.
"There were no refusals of food," Interfax quoted Kalinin as saying. "Any refusal to eat is for us an incident that must be reported immediately."
Even if Khodorkovsky does refuse to eat the prison food, he is in no danger of starving, as prisoners in Isolation Unit No. 4 are allowed to receive packages with food and other items from the outside.
Yevgeny Baru, lawyer for Khodorkovsky ally Platon Lebedev, who was arrested in July and moved to Matrosskaya Tishina's more crowded No. 1 isolation cell last month, said his client was not allowed to receive tomatoes, cucumbers or red peppers from his relatives during his stay, Kommersant reported Tuesday.
But Kalyagin said Khodorkovsky faces no such restrictions in Unit No. 4, saying that there are no restrictions on the number of packages or food items he can receive.
"There is only a limit on the amount of food they can receive in one package," he said. "They can receive no more than 3 kilograms of meat and 3 kilograms of cheese in one delivery. But it's not a big deal, since they can just keep receiving packages."
And should Khodorkovsky receive more food than he can eat in one sitting, he can store it in the cell's small Ardo refrigerator.
Vremya cited the Justice Ministry on Wednesday as saying that Khodorkovsky had received a package from relatives containing fruit and chocolate, in addition to sneakers and a tracksuit. Guards cut up food parcels to check for hidden objects.
Khodorkovsky can also take daily walks, in a closed-off courtyard, for up to an hour a day.
While incarcerated, Khodorkovsky can catch up on the latest news on his case, thanks to a Funai television, which according to Komsolskaya Pravda has excellent reception of ORT, RTR and NTV.
He can also receive any newspapers he wishes to have delivered to him by friends and relatives, Kalyagin said.
Should the oil magnate feel like taking a break from current events, there is a small library from which he can select volumes from, Kalyagin said. But Khodorkovsky may not need to visit the library anytime soon. The billionaire's lawyer Anton Drel said his client had asked to have books on Russian history brought to him, Kommersant reported.
The sanitation facilities in Khodorkovsky's cell offer him and his cellmates a certain amount of privacy. Kalyagin confirmed media reports that the toilet is separated by a waist-high partition.
A general shower for the entire floor is located outside the cell, Kalyagin said, and Khodorkovsky is basically free to wash himself as he pleases.
"Technically prisoners are allowed to shower once a week, but if they want to bathe more often they can get permission," Kalyagin said.
He said soap was made available to prisoners for bathing, and that they could have shampoo and other toiletries delivered.
Khodorkovsky will not have to succumb to excessive facial hair growth either, as prisoners are allowed to possess "safe" razors, Kalyagin said.
"Of course you can't have any open blades or anything dangerous like that," he said.
Komsomolskaya Pravda reported Tuesday that Khodorkovsky had already received 10 Gillette razors.
Kalyagin said that alcohol and other drugs, as well as cell phones, were forbidden in the unit, though tobacco was not.
With regard to Khodorkovsky's cellmates, Komsomolskaya Pravda reported that they were representatives of the business elite charged with financial crimes and all very "erudite," an assertion that Kalyagin declined to confirm. He did note, however, that they were by no means "hardened criminals."
On the general state of the facilities, Valery Abramkin, director of the Center for Penal Reforms, said they compared favorably to other Russian detention centers.
"It's comparable to Lefortovo, though conditions at Lefortovo are slightly better," Abramkin said, referring to the FSB-run detention facility where Lebedev was first incarcerated.
Guards are on duty on the floor of Khodorkovsky's cell and would intervene should any fights break out in his cell, Kalyagin said. He also said that there is a special room in which prisoners are placed temporarily for major rule violations. For minor infractions prisoners receive a warning, Kalyagin said.
Abramkin said he did not expect Khodorkovsky to face any altercations, but that he might face psychological problems while incarcerated.
"It's such a high-profile case that I don't think there will be any provocations from other prisoners," Abramkin said. "But there are difficulties that arise. They might not beat you, but [prison] officials make fun of you and can create a tense atmosphere."
Khodorkovsky is not the first well-known figure to be detained in Matrosskaya Tishina. Some of the prison's most famous inmates include several participants in the August 1991 attempted coup against then-Soviet leader Mikhail Gorbachev.
One alumnus of Isolation Unit No. 4 is Politburo member Oleg Shenin, who was held there from August 1991 to October 1993. Shenin said accounts of Khodorkovsky's current abode differ greatly from how he remembers his stay.
"I read now that there has been European-style renovation," Shenin said. "But when I was in there, it was considered the very worst isolation cell.
"We didn't have a separate toilet, and it was only about 3 meters by 2.8 meters for four people. For a long time we only had a radio, which we used to listen to the news. Finally, in May 1992, we got a television."
Shenin did not hesitate for a second when asked why he thought Khodorkovsky was placed in much more comfortable conditions than he and his co-conspirators had been.
"Money decides everything these days," he said.
But Abramkin said he doubts Khodorkovsky was moved to make prison life more bearable for the oligarch.
"They did it so they could keep a closer eye on him," he said. "It's much more difficult to watch someone if there are 70 prisoners in a cell."
TITLE: Borodin Floats Idea of Putin Rule Past 2008
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: President Vladimir Putin could be in power for another two decades if his former boss's vision becomes reality, The Financial Times reports.
Yeltsin-era Kremlin property chief Pavel Borodin, who now serves as the secretary of the Russia-Belarus Union, said that Putin could become the head of a new confederation to be formed by reuniting some of the former republics of the Soviet Union.
Borodin hired Putin to work as his deputy at the Kremlin property department in 1996.
The confederation, according to Borodin, would start with a proposed union of Russia and Belarus, and would later include other CIS countries.
"After the end of his second term, [Putin] needs to have [another] first but very long term," the FT last week quoted Borodin as saying. "In eight years we will build a post-Soviet space, and then in another eight years we will merge with Europe. I think that [Putin] agrees," Borodin said.
Borodin said that he had discussed the plans, to create a new super-state for Putin to run after he completes a second presidential term in 2008, with the president, the FT reported. Putin's victory in the March 2004 presidential elections has been widely predicted by analysts, and is little doubted even by his potential opponents.
But Borodin's idea of creating a new state for a Russian leader to rule after serving two terms, the maximum allowed under the constitution, is not new.
The establishment of the Russia-Belarus Union in 1996 was widely regarded at the time as a backup option to keep then-President Boris Yeltsin in power beyond his second term, due to expire in mid-2000.
The plans were put on hold after Yeltsin chose Putin as his successor in 1999. Subsequently, the move toward a Russia-Belarus lost its impetus and the Union remained largely ceremonial. The reluctance by authoritarian Belarussian President Alexander Lukashenko to concede any of his powers to Moscow also slowed progress in the talks for a union between the countries.
Yet steps taken by Moscow in recent years could make it easier to unite parts of the former Soviet Union into a future federation. Russia has used its position as the strongest economy in the CIS to push for adoption of the ruble as its single currency.
Last month the presidents of Russia, Belarus, Ukraine and Kazakhstan signed a principle agreement to form an integrated free trade zone. The four nations set a Dec. 1 deadline to outline the main steps need to create a common market, which ultimately will require harmonizing legislation.
But Borodin's ideas, even if they take their inspiration from real contingency plans from within the Kremlin in the late 1990s, left analysts unimpressed.
"The fact is that such an option could be in the works, but this work, if it ever happens, is likely to start much closer to 2008," said Yevgeny Volk, the head of Heritage Foundation Moscow's office.
"Right now it is purely Borodin's wishful thinking. I'm sure these plans are not on the immediate agenda for Putin's closest circle," Volk said.
Volk said that talk about extending Putin's term as much as 20 years was likely to be just a political bluff to boost Borodin's personal political fortunes.
TITLE: Duma Candidates Cling To Their Jobs
AUTHOR: By Caroline McGregor
PUBLISHER: Staff Writer
TEXT: MOSCOW - By law, 30 governors, three ministers, one ambassador and dozens of other high-ranking government officials who are running for election to the State Duma must vacate their posts for the duration of the campaign season.
Many, however, have yet to do so, Central Elections Commission chairman Alexander Veshnyakov told journalists last week. Of the 13 registered parties, only United Russia, the Union of Right Forces and Yabloko have fully complied, he told RIA Novosti.
Veshnyakov said the Communist Party, the Liberal Democratic Party and the Homeland bloc had yet to do so - "to my surprise."
He said his staff is determining whether the non-compliance is simply an unconscious error on the part of the officials. If it is intentional, though, he said the commission will ask a court to cancel that individual's registration.
Under the June 2002 law on elections, all Category A officials have three days to go on leave from the moment the commission approves the party list on which they are registered to avoid any conflict of interest. This includes ministers, their deputies and advisers, and other public servants at the federal and local level.
United Russia, as the party of power, is most broadly affected by this. Its list was registered Oct. 20, obligating its 60 some public servants to vacate their offices by Oct. 23.
News reports at that time said that all but Interior Minister Boris Gryzlov, the party leader, had done so, but a ministry spokeswoman confirmed that Gryzlov did indeed go on leave that day, as required.
Almost half of that number - 30 - are heads of regional administrations, which will leave one-third of the country's 89 regions in the hands of deputy governors through Dec. 7, when the elections take place.
This high-ranking contingent includes the three officials who, together with Gryzlov, make up United Russia's federal list: Moscow Mayor Yury Luzhkov, Emergency Situations Minister Sergei Shoigu and Tatarstan President Mintimer Shaimiyev.
The bulk of the people bound by the rule are running for United Russia - but not all of them.
Russia's ambassador to Norway, Yuly Kvitsinsky, is running on the Communists' ticket and he returned home from Oslo last week.
Also, Eurasia party leader Pavel Borodin has handed over his leadership of the council overseeing the inert Russia-Belarus union to his deputy, but retains the right to make financial decisions, RIA Novosti reported earlier this week.
Bureaucrats on leave do not have the right to use their offices, their government-provided cars or telephones or to get help from their assistants.
"This is why several parties waited to register their candidates until the very last moment - to maximize the period during which they could legally avail themselves of these benefits," Central Election Commission member Yelena Dubrovina told Gazeta.
Journalists running for the Duma are subject to the same rules. For example, Moskovsky Komsomolets columnist Alexander Minkin who is running for Yabloko, is on leave, the paper said.
TITLE: Putin Declares War on Piracy
PUBLISHER: Combined Reports
TEXT: MOSCOW - President Vladimir Putin on Monday urged his Cabinet and lawmakers to take stronger action against rampant video and music piracy, which has swept the Russian marketplace and caused growing international concern.
"I'm asking the Cabinet together with lawmakers in the State Duma to continue working to perfect legislation directed at strengthening the fight against piracy in the sphere of intellectual property rights," Putin said at the Cabinet session in remarks carried by Russian television.
The Russian Anti-Piracy Organization, established by the United States, has estimated that piracy in Russia costs the American movie industry up to $450 million a year. Officials said that in 1999, some 80 percent of videos sold in Russia were pirated.
Genuine movie DVD's cost up to the equivalent of $30 in Russia - too expensive for most average citizens. Pirate copies, however, can be purchased for around $5 from stalls and markets, often even before the film has been released in local cinemas.
Deputy Interior Minister Rashid Nurgaliyev told the Cabinet session that police inspected 70,000 enterprises in the first nine months of this year, putting a halt to illegal activity at 482 of them and opening 2,724 criminal cases.
Nurgaliyev said that the government's action has driven a market share of audio products down, estimating that it has fallen from 80 percent in 1999 to about 64 percent this year. However, pirated DVD movies account for almost 90 percent of all the DVD films sold in Russia, Itar-Tass quoted him as saying.
Putin visited Russia's most well-known film studio, Mosfilm, on Saturday, where he discussed the issue of piracy with some of the country's leading directors, who urged him to take a harder line.
"We have two tasks: fighting piracy; and strengthening the legal base for the protection of intellectual property," Putin told them.
"We have a lot of very good products. Recognition at the film festival [in Venice] is proof of this. But in order to sort out the production industry, much remains to be done," he said.
It will be hard to compete [with foreign films] until we have mass production. In Hollywood they roll them out for the mass viewer and don't think about the creative process, but artistic films you can count on the fingers of one hand."
(AP, SPT)
TITLE: RTS Up 6.33 Percent On Yukos Bow-Out
PUBLISHER: Combined Reports
TEXT: MOSCOW - Russia's benchmark RTS index soared 6.33 percent on Monday after the chief executive of embattled oil company Yukos resigned, saying he wanted to save Yukos from state prosecutors' attacks on him.
The index closed at 538.14 points. Yukos jumped more than 12 percent to close at $12.65 in dollar-based trade on the Russian Trading System after a sharp spike on the news.
Traders said the company and the stock market were far from out of the woods. Yukos shares are still off about 15 percent since Mikhail Khodorkovsky's Oct. 25 arrest and the RTS is down some 10 percent.
"You can view this as an effort by the company's management to find some kind of reconciliation with the authorities. Of course this news is more positive than negative, but risks remain because the charges are not dropped," Aton trading chief Dmitry Starenko said.
Nonetheless, buoyed by the distance Khodorkovsky is putting between himself and his oil company and signs from the Kremlin that it wants to contain the economic damage caused by the legal assault lifted shares across the board.
In overseas trading, oil companies Tatneft and LUKoil jumped 16 percent and 8 percent, respectively. Gazprom (up 9.6 percent), UES (up 7.7 percent), Rostelecom (up 7.58 percent), Norilsk Nickel (up 6.87 percent) and Mosenergo (up 5.5 percent) where among the biggest winners.
Khodorkovsky and some of his associates are charged with fraud and tax evasion and prosecutors have frozen their controlling shares in Yukos, which has recently merged with smaller rival Sibneft.
Khodorkovsky himself has been in jail since Oct. 25 in what is widely seen as an effort by a hawkish faction in the Kremlin to bring the outspoken oligarch to heel before December parliamentary elections.
"The hierarchy of power has started to work, and this is a good sign for the market. I wouldn't be too big a pessimist about Yukos and for now I don't expect an outcome of biblical proportions," said Konstantin Shapsharov of Alfa Bank.
Khodorkovsky's arrest and the freezing of the stake sparked concerns that Putin's Kremlin was reneging on its promise to stabilize the economy.
Worse, some investors speculated that a Kremlin faction with a separate agenda had the upper hand or some wanted to re-nationalize Yukos, privatized in the mid-1990s.
"Far more visibility is going to be needed first on whether the risks to stabilization both political and linked to property rights are going to be contained," United Financial Group Chief Strategist Christopher Granville said.
"That depends on whether the Russian elite, led by the president, will be capable of working out clear rules and guidelines which would prevent these types of episodes in the future from repeating themselves," Granville said.
In what was seen as an extra swipe at Yukos, rival Surgutneftegaz received a temporary license for a huge East Siberian oil field last week after the license was revoked from a YUKOS subsidiary.
(Reuters, SPT)
TITLE: Novosibirsk Raid Raises Eyebrows
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - The 14-hour raid on the offices of Novosibirsk's power monopoly last week was the second high-profile action by the region's Federal Security Service in less than a week, leading many political observers to conclude that they were somehow related.
After all, the first raid resulted in the arrest of Yukos boss Mikhail Khodorkovsky at a local airport, while the second involved, at least tangentially, Anatoly Chubais, the head of state-owned national power utility Unified Energy Systems and one of the few top executives to publicly decry the action against Khodorkovsky - which President Vladimir Putin has warned government officials not to do.
The regional FSB declined to comment on the timing of the two raids. In fact, in a bizarre exchange by telephone Friday, they laughed off the request.
"Why are you calling us, anyway? Aren't we the stranglers of democracy?" said an FSB official in Novosibirsk, who declined to give his name.
When asked if it was just a coincidence that his office had been involved in two high-profile fraud cases within a week, the official joked: "We haven't heard any news. We cannot read out here."
Eventually he sent a three-paragraph statement via fax saying the raid on Novosibirskenergo, which started the same day that prosecutors in Moscow announced they had frozen a huge chunk of Yukos shares thought to belong to Khodorkovsky, was in relation to suspected fraud involving payments for electricity transmission in 2002.
The official then asked for contact details for The Moscow Times. "Give it to me," he said. "It might come in handy in [our] Gestapo dungeons."
With such a vague pretext for raiding the company, Novosibirskenergo officials were at a loss to explain what the FSB agents were actually looking for. A spokeswoman for the utility said the search focused on the offices of the company's top managers, including its general director and chief accountant, and that information stored on a computer server was copied. She said investigators were generally polite, but put balaclavas over their faces as soon as reporters arrived on the scene.
"It looked as if they were not looking for documents specifically related to the finances of 2002, but rather into everything, including current operations," she said. "The search lacked logic and was rather unsystematic."
Political and market analysts polled Friday said the whole affair was puzzling, with most saying it did indeed appear to be some kind of warning to Chubais to stay out of the Yukos debate. Others, however, pointed out that it might involve the ongoing struggle for control of Novosibirskenergo.
The notoriously opaque utility is one of just three regional energos that are not formally controlled by Chubais and UES, which owns just 14.2 percent of the company, and its ownership structure, board membership and management have been in a state of constant flux for years.
Although several top UES officials - such as first deputy CEO Leonid Melamed, deputy board chairman Mikhail Abyzov and financial director Dmitry Zhurba - have been involved in Novosibirskenergo in some capacity in the past, "they are no longer affiliated with the company," UES spokeswoman Tatyana Milyayeva said.
"We are only a minority shareholder there. The only reason the searches may concern us is if they get in the way of preparations [for] winter."
TITLE: Potanin Bears Up Under Increased Pressure
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - If Mikhail Khodorkovsky thought his fellow tycoons would rally to his defense, he was mistaken.
Of the nation's handful of billionaires, only one, Vladimir Potanin, has publicly expressed an opinion on Khodorkovsky's arrest and the subsequent sequestering of his oil giant's shares - and Potanin's opinion is remarkably similar to President Vladimir Putin's.
"For humane reasons, I don't want to criticize my colleague," Potanin told a Russo-British Chamber of Commerce conference on corporate governance Friday. "I can only say that this problem did not fall from the sky.
"This problem has a prehistory and observers who know Russia well understand where it stems from."
Unlike Khodorkosvky, who openly funds parties opposed to the pro-Kremlin United Russia, Potanin made his peace with the Putin administration over the origins of his vast wealth early on and agreed to toe the party line.
At a United Russia "fan club" jamboree in late June, just days before the legal assault on Yukos kicked into high gear with the arrest of core shareholder Platon Lebedev, Potanin essentially pledged allegiance to the authorities and vowed to atone for his "past sins."
On Friday, Potanin echoed what Putin told top Western and Russian investment bankers just the night before, saying that there was no indication that the Yukos attack presaged a wider assault on the companies that grew out of the rigged privatizations of the last decade.
"Neither I nor my colleagues with whom I have discussed this topic see any signs" that other businessmen will be targeted, he said.
Political observers have said that Potanin's tacit support for the legal actions against Khodorkovsky is partly an act of self-preservation.
Like Khodorkovsky, Potanin acquired the source of his fortune - metals giant Norilsk Nickel - in the notorious "loans for shares" scheme in 1995. Potanin's Uneximbank bought a 38 percent stake of Norilsk for $170 million, which was $140 million short of the asking price. After several fruitless investigations into the legality of that deal, the Audit Chamber got into the act shortly after Putin came to power, prompting Potanin to pay the disputed $140 million in an effort to put the case to rest.
But recently a State Duma deputy from the Khordokosvky-funded Yabloko party asked the Prosecutor General's Office to re-open its criminal investigation into Alfred Kokh, who was the head of the State Property Committee when Norilsk was privatized. Kokh is now the campaign manager of SPS, which is also funded by Khodorkovsky.
"I would stay away from the question of who is right and who is wrong," Potanin said in regards to the Yukos affair.
"Nevertheless, the message to the market is very negative," especially if authorities eventually confiscate shares in Yukos," he said. One of the dangers of becoming a transparent company like Yukos is that authorities will be able "to clearly calculate what is located where."
Like Potanin, analysts polled Friday said the conflicting signals being sent by authorities are a cause for concern.
"On one hand, they are saying that businesses need to be clean and neat and pay taxes," said Timothy McCutcheon, a metals analyst at investment bank Aton. But by doing so they will make themselves vulnerable to legal attacks for what happened a decade ago, when a plethora of legal loopholes existed," he said.
With this in mind, "Potanin has been doing quite a bit of damage control," McCutcheon said.
TITLE: Hospitality Shows Why Novgorod Region Good Investment
PUBLISHER: The St. Petersburg Times
TEXT: NOVGOROD - On Oct. 30 Novgorod region government officials led by Vice Governor Alexander Boitsov hosted Honorary Consul of Australia Sebastian FitzLyon and representatives of Ernst & Young to discuss the region's investment climate.
The Novgorod region is one of the best examples of successful economic policy at the regional level. This success is the result of the regional government establishing an efficient system to attract investors that avoids the notorious Russian red tape.
The favorable investment climate in the Novgorod region is also due to its strategic geographic position in between two of Russia's major consumption markets - Moscow and St. Petersburg - and its proximity to the Scandinavian and Baltic countries, Europe and Belarus.
Regional investment legislation has been drafted in close cooperation with Ernst & Young international professional services, a fact which further helps to attract foreign investors.
Local legislation can be divided into three groups: investor guarantees, tax concessions, and promotion of investment attractiveness of the region. Investors bringing own or borrowed funds into the Novgorod region enjoy on average up to 25 percent tax exemptions. The executive authorities promote investment by creating a foreign investment guarantee system. A practice is in place to support significant projects at the regional, municipal and district levels, to assist in solving various issues including those related to federal government relations. The improved investment climate and new investment legislation adopted in 1994-2003 resulted in a substantial inflow of foreign investments. Over the period from 1994 through 2003 the Novgorod region attracted over $700 million in foreign investments.
Investors include such renowned companies as Cadbury, Dandy, Zommer, Pfleiderer, Amcor Rentsch, Golden Lady, Chiza and others. Altogether the region runs 123 companies with foreign capital employing 20,000 people.
Both local and foreign experts believe the Novgorod region to be among the best in Russia in terms of investment climate.
Arnold Shalmuyev, head of the regional administration's economic department, briefly described the current regional economy stressing the fact that since the beginning of the year capital investments in the industrial and social sectors totaled 4,700 million rubles, which is 126.5 percent above last year's figure.
The Honorary Consul of Australia expressed his wish to strengthen and develop the relationship between the region and Australian companies. The consul gave a brief overview of the Australian economy expressing his appreciation of the investment policy pursued by the Novgorod region authorities.
In the course of the meeting a number of investment project presentations were given, including those of Novgorodenergo to build two 325 mW combined-cycle plants, Bumprommash to build a coffee factory project in the city, Intourist Novgorod to partly reconstruct the existing Intourist hotel and add a new wing, and the Veliky Novgorod project to produce waste-based biogas fertilizer, implement a broiler farming upgrade and expansion project. A brief project review was also delivered by Business Partner, a company involved in facing brick production, and NovoInTurService, which runs the Paraskeva Tourist Complex construction project.
RISK RATING
EXPERT MAGAZINE RISK RATING OF RUSSIAN REGIONS*
2001-2002 2000-2001 Region
1 1 Novgorod region
2 2 Moscow
3 15 Moscow region
4 8 Yaroslavl region
5 3 Belgorod region
6 10 Orlov region
7 45 Nenets autonomous region
8 5 St. Petersburg
9 9 Tatarstan
10 22 Leningrad oblast
* Legislative, political, social, economic, financial, criminal and environmental factors contributed to risk assessment.
TITLE: FSC Looks Into Metals Giant Past
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Moscow region branch of the federal arbitration court on Monday said it had approved a request by the nation's stock market watchdog to re-examine the restructuring of Norilsk Nickel.
The move is the latest attempt by the Federal Securities Commission to have the consolidation of tycoon Vladimir Potantin's metals giant declared illegal.
The FSC says the purchase three years ago by Norilsk Nickel, the world's top producer of nickel and palladium, of Norimet, a London-based trading company, should be annulled because Norilsk shareholders never got a chance to vote on the deal.
Norilsk has claimed that it did not need shareholder approval for the deal to be legal.
The FSC is asking the Moscow region court to cancel the purchase of Norimet and for both sides to return what they received in the deal.
Norimet was acquired in exchange for shares in Norilsk's core unit, Mining and Metals Company (MMC) Norilsk Nickel.
Analysts said that although the timing seemed odd, they did not see any connection between the legal move against Norilsk and the ongoing assault on Yukos' Mikhail Khodorkovsky, who like Potanin built his fortune on the back of rigged privatizations in the mid 1990s.
TITLE: UFG Bank Deal Public
PUBLISHER: Combined Reports
TEXT: MOSCOW - Deutsche Bank on Wednesday said it had agreed to buy 40 percent of Moscow investment bank United Financial Group, the first foreign company to announce an investment in Russia since the arrest of Yukos CEO Mikhail Khodorkovsky on Oct. 25.
Deutsche Bank, Europe's second-largest bank by assets, and UFG will cooperate on research, sales and trading in Russian equities and corporate finance, the companies said in joint statements in Moscow and Frankfurt.
The price of the deal was not disclosed, but the Financial Times reported that it was around $70 million.
The two companies said they would sign the deal, to close in January, later this week.
"The Russian market is the largest and most important in Eastern Europe," Kevin Parker, head of global equities at Deutsche Bank, said in the statement. Russia forecasts its economy will grow by more than 6 percent this year, its fifth-straight year of growth.
Deutsche Bank's UFG partnership, planned for months, was announced nine days after Russia arrested Khodorkovsky and froze a 40 percent stake in Yukos.
Since then, President Vladimir Putin has met with officials from banks such as Morgan Stanley to ease investor concerns following one of the biggest one-day losses since the 1998 crisis.
UFG chairman and CEO Charles Ryan was among the 16 bankers who met Putin in the Kremlin.
UFG will continue to be run by its current management with representatives from the German bank joining the board.
(Bloomberg, SPT)
TITLE: U.S. Shows Concern Over Yukos Case
PUBLISHER: Combined Reports
TEXT: MOSCOW - Moscow risked a rift with Washington on Saturday over the legal action against oil giant Yukos, calling U.S. criticism of the affair disrespectful as the Russian government itself appeared split on the issue.
The U.S. State Department, in comments echoed by Germany, raised concerns Friday that the case - which has seen Yukos boss Mikhail Khodorkovsky thrown into jail on massive fraud charges - might be politically motivated.
State Department spokesman Richard Boucher said on Friday that the Kremlin should act to dispel concerns that the arrest was politically motivated.
"There's always the issue [in] a case like this as to whether it's a single event or whether it has some sweeping implication for the rule of law in Russia," Boucher said.
But Moscow called the criticism hypocritical.
"This statement is a continuation of a notorious policy of double standards," Foreign Ministry spokesman Alexander Yakovenko told Russian television. "It is, at the very least, tactless and disrespectful toward Russia."
The National Security Council also weighed in on the matter, saying it raises "significant concerns about the state of the rule of law and the investment and business climate in Russia." NSC spokesman Sean McCormack said, "It is important for Russian authorities to dispel concerns that this case is politically motivated."
Eugene Lawson, president of the U.S.-Russia Business Council, warned pointedly in a statement that "it is much easier to destroy than to build investor confidence," Eugene Lawson.
The assault has spooked investors, some fearing it could herald an assault on Russia's privatized businesses. Yukos shares plunged after the arrest, and their descent accelerated when prosecutors froze a major stake in the company.
In a meeting with investors on Thursday, Putin sought to calm fears and counter criticism of the methods used against Yukos, saying the case was little different from high-profile corporate fraud cases elsewhere.
"Putin reminded us of the situations that have arisen in the U.S. with Enron and WorldCom," a participant said.
On Friday, Prime Minister Mikhail Kasyanov said he was concerned by Khodorkovsky's arrest. This was a clear challenge to Putin, who has said the case must be left to the prosecutors.
Russian newspapers said the comments highlighted splits in the government, and speculated that Kasyanov might soon follow Kremlin chief-of-staff Alexander Voloshin, who resigned last week, apparently in protest.
Analysts interpret the legal assault as an attempt to crack down on Khodorkovsky's political ambitions, since he has openly funded political parties.
Yakovenko said Washington had unfairly singled out Russia for criticism.
"I cannot remember the State Department making such statements about other countries in similar cases," he said.
Politicians such as Anatoly Chubais, a leader of the liberal Union of Right Forces, call the case politically motivated, and most Russians would agree.
Nearly two-thirds of Muscovites asked by the VTsIOM-A polling agency were skeptical about Kremlin assertions the Yukos affair is a purely criminal matter.
(Reuters, LAT)
TITLE: Institute Director Sought Dialogue
AUTHOR: By Angelina Davydova
PUBLISHER: Special to The St. Petersburg Times
TEXT: Wilfried Eckstein, 46, until recently director of the Goethe-Institut in St. Petersburg, is leaving to become the head of the Goethe-Institut in Thailand. He spent four years in St. Petersburg and admits that he will miss the city.
Eckstein, with degrees in German and English philology and history, came to Moscow in 1992, where he stayed until 1996. He has witnessed great changes in both cities on the economic, cultural and aesthetic fronts. There is a lot of bright new advertisement and, on the other hand and there is also the penetration of Western culture and the emergence of a private cultural market and private initiative in general.
Although he describes St. Petersburg as a conservative city with certain boundaries, he also says that it is a good field in which to find partners for the West. Eckstein says he himself found quite a lot of interesting partners and colleagues in St. Petersburg, emphasizing that quality is more important than quantity. As quality institutions he names the Kunstkamera, the Hermitage, the Russian Museum's Department of Newest Trends, and the Peter and Paul Fortress.
"I enjoyed every project we've done here, while I certainly should point out that the red thread of everything we were doing was the image of the human being, and we've always tried to make man a topic of discussion, to place man in the middle," he said.
The former director of the Goethe-Institut in St. Petersburg says the institute's mission differs from country to country, according to local needs and interests. Here in St. Petersburg, the main task was to bring Western European culture to Russia and Russian culture to Europe, to build a partnership, to promote better understanding of each other as well as of certain ideas, values and aesthetics.
Eckstein says it was more of a dialogue than a one-sided learning process.
Speaking on the current state of the St. Petersburg art market, Eckstein points out the dominance of the large cultural institutions, such as the Hermitage. But his outlook on some of the private galleries also remains quite optimistic. "I am happy that they exist and find buyers, most of whom are still from Switzerland or the United States. I am sure these galleries will develop further, with the most important task being the attraction of local buyers," he said.
Although St. Petersburg's community can not compare to Moscow's, Eckstein says Germans like coming here to the most culturally rich field in Russia, even though faced with eight months of winter and a high crime rate.
He also thinks the baroque concept of the city makes St. Petersburg attractive. The city is a living cultural memory, and it is incredibly interesting and challenging. Many contemporary artists feel this and are trying to preserve this memory. Timur Novikov, for example, devoted his life to precisely this task.
Eckstein is married and the father of three children, all of whom attended a local school, but are now already in Germany.
He says that being in St. Petersburg helped him and his family learn about both Russia and Germany. Here the 17th and 18th centuries were preserved, while they were lost in Germany.
"After two world wars we still keep working on our guilt, and one of the negative effects of this process is that we've rejected everything that happened before the end of the Second World War. We did not build a bridge to our past," said Eckstein.
Eckstein thinks reconstruction of this bridge started only recently with the fall of the Berlin wall.
St. Petersburg also claims to be one of the few keepers of this lost and forgotten German past. According to Eckstein, St. Petersburg is the second most important city outside of Germany after Prague in terms of wealthy cultural heritage of the German language.
Although there is much experience to share and many opportunities to form a dialogue between the two countries, Eckstein sadly admits that, in spite of common beliefs, Germany has never been the most important foreign country for Russia. Russians have always been looking toward America, to its attractive ideals and strong liberal culture, since the end of the 19th century. And America will always remain the number one foreign country for Russia.
"Russia takes a lot of love from Germany. Germans like Russian a lot, but of course this love goes hand in hand with fears not of Russian bears, but rather of Russian robbers," he said.
"Russia takes practical things from Germany, not its dreams or attitudes. Russians dream of the freedom of America or Paris, not Germany, it's only the way of life that makes us close to each other," Eckstein said, laughing.
Coming back to the topic of his departure, Eckstein suggests the most important achievement of his work in St. Petersburg was that "we always talked of people, not about institutions."
Arina Nemkova, director of the German-Russian Meeting Center, highly estimated Eckstein's achievements while in charge of the Goethe-Institut in St. Petersburg. "We've done several joint projects and I may say that our cooperation was always fruitful," she said.
Yet another partner of the Goethe-Institut in St. Petersburg, the Russian Museum, also praised what Eckstein did as head of the organization, saying that under his guidance cooperation between the museum and the foreign cultural institute graduated to a new level.
TITLE: IN BRIEF
TEXT: S&P Unmoved
LONDON (Bloomberg) - Russia's foreign-debt rating was left unchanged by Standard & Poor's, which said the country's economic growth and investment is being jeopardized by the arrest of Mikhail Khodorkovsky, chief executive of AO Yukos Oil Co.
S&P kept its rating on Russia's euro- and dollar-denominated debt at BB, two levels short of investment grade, with a `stable' outlook, the company said in a statement from its Moscow office. The rating is two lower than at Moody's Investors Service, which last month raised Russia to Baa3, an investment grade level.
The strength of the country's oil-led growth that this year boosted foreign currency reserves to a record is likely to prevent S&P cutting its rating any time soon.
MMK Profit Up
MOSCOW (Bloomberg) - Magnitogorsk Iron and Steel Works, or MMK, Russia's top steelmaker, said nine-month profit more than tripled as steel prices rose at home and in Europe.
Net income rose to 15.56 billion rubles ($521 million) in the first nine months of the year, from 4.08 billion rubles in the year- ago period, based on Russian accounting standards, the company said in a statement on its Web site. Sales rose 53 percent to 65.7 billion rubles.
"The increase in profit was caused by rising prices for the metal and changes in the product mix," the company said.
UES Profit Down
MOSCOW (Prime-Tass) - The net profit of power grid monopoly UES fell to 19.6 billion rubles ($650 million) in January-September under Russian accounting standards from 40 billion rubles in the same period last year, the company said Monday.
The company attributed the decline to the fact that it included revenues from its participation in restructuring Russia's $2.5 billion debt to the Czech Republic in its 2002 financials. The company did not elaborate.
UES' revenues from core activities rose to 40 billion rubles from 36.6 billion rubles a year ago.
The company's costs rose to 15.1 billion rubles from 12.4 billion rubles. Ford Investment
ST. PETERSBURG (SPT) - Ford Motor Company has invested $4.5 million in the production of car components at its facility in Vsevolzhsk, in the Leningrad region, the press service of the U.S. company reported Friday.
The construction of a new warehouse of 6,300 square meters was needed due to the constant increase in the production volume of the enterprise.
The Vsevolzhsk plant is the first production facility in Russia that is fully controlled and managed by the international automobile company. Investments in this plant have amounted to $150 million.
Paper Mill Credit
MOSCOW (SPT) - Sberbank decided to lend Segezha pulp and paper mill, located in the Republic of Karelia, 40.4 million euros for a term of seven years, Sberbank's press service told Interfax Monday.
The funds will go to rebuild one of the mill's paper-making machines.
The loan will allow the machine to double output and bring the quality of paper to world standards. The mill plans to enter the European market and meet growing domestic demand for high-quality paper bags and kraft paper, of which it is the world's second biggest producer.
Sberbank signed a memorandum of agreement with the Segezha mill in May for the bank to provide 410 million euros for modernization. In July the Northwest branch of Sberbank decided to finance a project to modernize the pulp boiling facility to the tune of $15.4 million.
New Bank VP
ST. PETERSBURG (SPT) - St. Petersburg's Baltiisky Bank appointed Dmitry Istyufeev vice president, Interfax reported Monday.
In his new post Istyufeyev will oversee the bank's technical policy, activity on interbank and financial markets, financial planning and budget issues, and also processing services. Istyufeyev was previously deputy chairman of the board of MDM-Bank Saint Petersburg.
Baltiisky Bank's assets were recorded at almost 13 billion rubles at July 1, 2003, a 44.8 percent increase since the year's start.
The bank occupies 45th place in the Interfax-100 ranking of Russian banks.
Zvezda Profits Down
ST. PETERSBURG (SPT) - Zvezda saw net profits halve in January-September, 2003 over the same period in 2002, to 21.711 million rubles, the company's chief accountant Ludmila Kremneva told Interfax on Monday.
Kremneva cited a drop in sales volumes as the cause of decreased profits.
Zvezda is one of Russia's biggest manufacturers of diesel ship engines and diesel generators.
Insurers To Gather
ST. PETERSBURG (SPT) - The Rendevous of Insurers and Reinsurers will be held in St. Petersburg from Nov. 16 to Nov. 18, Interfax reported Monday.
Vitaly Arkhangelsky, general director of Skamnarinkonsalting, the company organizing the event, said the rendevous will feature roundtables and bilateral discussions on aviation reinsurance and alternative placement of aviation risks, commercial insurance for ships, cars and machinery, energy risks, life insurance on international markets, outsourcing in the insurance business, and conflict resolution.
TITLE: Markets May Not Coast Through November
AUTHOR: By Hope Yen
PUBLISHER: The Associated Press
TEXT: NEW YORK - Wall Street resumed its advance this past week, posting a monthly gain despite October's reputation for market crashes. That offered hope to upbeat investors who are counting on the market's traditional year-end rally to add to their gains.
But while the outlook for the rest of 2003 appears promising, analysts say investors might be a bit too confident and that November could prove to be more challenging for the market than typical.
"There's a lot of optimism, and I think that's going to hinder this market going into November," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research.
He noted that after a particularly strong third-quarter earnings and economic performance, estimates for the fourth quarter and 2004 appear a little high and will likely be lowered in the coming weeks. "That always will shake the market up a bit," Johnson said.
October is known as the jinx month because of market crashes in 1929 and 1987, and the month marked a multiyear low for the main indexes last year. Many analysts worried that the market was due for a similar pullback this year following September's dismal losses and after rallying since mid-March.
But this year, the three main gauges posted an October gain as investors seized the opportunity to pick up bargains from September's declines. They also sent stocks sharply higher Tuesday after the Federal Reserve indicated it is unlikely to raise interest rates for a while.
"I'm happy it went as well as it did and there were no disasters," said Barry Berman, head trader for Robert W. Baird & Co. "The fact of the matter is that people are buying a lot of these stocks because a lot of things are in place such as low interest rates."
November, meanwhile, is known as the start of the "best six months" of the year, as investors start to put year-end bonuses and dividends to work, which typically leads to a "Santa Claus" rally and a "January effect" of market advances.
Analysts say this year's year-end rally could be more muted or vulnerable to some November declines first.
Johnson noted that a common measure of investor anxiety, the Chicago Board Options Exchange's volatility index, is trading at 52-week lows at below 16. Many believe a reading below 20 may indicate investor overconfidence that makes the market vulnerable to future declines.
In addition, it is unlikely that earnings and economic data in the coming quarters will be as strong as the third quarter, as fiscal tax cuts lose their effect over time.
Indeed, there was evidence of investor concern this past week after stocks finished mixed Thursday following a surprisingly strong third-quarter gross domestic product. Analysts said investors welcomed the news, but were skeptical the increase could be sustained.
Still, analysts say there are many reasons for optimism. They note that the year-end rally is somewhat inevitable barring major unforeseen events, since consumer spending picks up.
TITLE: Winners and Losers in Yukos Affair
AUTHOR: By Yulia Latynina
TEXT: A coup d'état has taken place in Russia. The law enforcement agencies have seized power. Everyone knew the coup was coming. And President Vladimir Putin did nothing to stop it.
The coup came in the form of the detention of Russia's richest citizen, Yukos CEO Mikhail Khodorkovsky.
You can't say that law enforcement was dead set on staging a coup. The Prosecutor General's Office made perfectly clear to Khodorkovsky that it was time for him to leave the country. The offices of Anton Drel, the lawyer who represents Platon Lebedev, were searched, and Drel himself was questioned. Lawyers' offices weren't searched even during the Soviet era. Chekists arrived at the school where Khodorkovsky's 12-year-old daughter is a student and demanded her file. Even in the criminal free-for-all of the early 1990s, children were considered off-limits.
A blind man could have seen this coming. But Khodorkovsky didn't get the message. He dug his heels in, preferring to become a political prisoner rather than go into political exile. By doing so, Khodorkovsky paradoxically won this round in his psychological bout with the authorities. Things went according to his plan, not the prosecutors'.
For this very reason, the prosecutors were hesitant to arrest Khodorkovsky. They knew very well that this was not a pretrial detention. This was a coup in the political system. Previously the system had stood equally on the old oligarchs and the new "St. Petersburgers"; henceforth it would stand on the St. Petersburgers alone.
As a rule, victims of coups and revolutions are those most responsible for causing them. Had Paul I not been mad, and had Nicholas II not been spineless, the former would not have been strangled in his bedchamber and the latter would not have been executed and thrown down a mine shaft. The same applies to the oligarchs: if they weren't so greedy, they wouldn't be under the gun.
Back in the late 1980s, when the future oligarchs were just getting started in a frenzy of dirt and blood, each faced an impossible task: dealing with the thugs who walked into their offices, stuck guns to their heads and demanded money, without turning into thugs themselves. They solved this problem by amassing security forces and privatizing the state along with the cops and the prosecutors.
They took care of the thugs and the "red directors." They got their man elected president in 1996 by raping the country and denying it the necessary vaccination in the form of a weakened, moribund culture of communism. Then, instead of disarming and disbanding their privatized police forces, the oligarchs began to battle one another. They taught the prosecutors how to use criminal investigations to pry factories away from their owners.
They created a Frankenstein monster but the monster did not obey his master for long. "Why work for them when I can work for myself?" the monster thought to himself. And when the oligarchs decided to become squeaky clean, it was too late. The crud had hardened and it wouldn't wash off.
The victims of a coup are always those most responsible for bringing it about. But the reverse is also true. Those who stage a coup always become its hostages, like NKVD chiefs Yagoda and Yezhov, executed by the man sent to replace them.
Two things happened last Saturday, one obvious, the other less so. Mikhail Khodorkovsky was obviously deprived of his freedom, perhaps temporarily. Less obviously, Putin lost power.
Until now, Putin had played the old oligarchs off against the new St. Petersburgers, and as a result he had access to full information about what was happening in the country. No longer. Soon he will get his information from the same source as the rest of us - the TV news. And the news anchors will assure him that the workers worship him and that his ministers hang on his every word.
The loss of information is itself a loss of power.
Kremlin clan feuds performed the function of a separation of powers. When the president relied on the old oligarchs as well as the new St. Petersburgers, he was the master of both. By allowing one of the clans to be destroyed, he has become the hostage of the other. When a plane loses a wing, it spins out of control.
And loss of control is loss of power.
In a country where the Prosecutor General's Office detains Khodorkovsky, beat cops will feel free to shake down every last shop owner. This leads to capital flight. In the third quarter of this year alone, the outflow of capital amounted to approximately $8 billion, compared to total outflow in 2002 of just $7.4 billion. The country is going broke. Rich countries can afford presidents. When countries hit hard times, only a dictator will do. And dictators are always the hostages of their own corrupt government machines.
If by "power" we mean the possibility of imprisoning absolutely anyone, then of course Putin has retained power. If we mean the capacity for running the country, however, Putin has lost power. You can't control a plane that has gone into a nose dive. But you can eject people from the cockpit or shoot them right there in the cockpit.
Khodorkovsky has been detained. And yet, paradoxically, by allowing himself to be detained he has for now retained his freedom of choice and his freedom to carry on fighting in the war between business and the authorities. Not that he stands any chance of winning.
The Putin regime has lost its freedom.
Yulia Latynina is a presenter of "24" on RenTV.
TITLE: Should U.S. Policy On Russia Change After Yukos?
AUTHOR: By Bruce P. Jackson
TEXT: Every so often, the arrest of one man involves more than the charges he may face and his fate before the court. In these rare instances, the legal proceedings are a distraction from the larger moral and strategic implications, and so they are intended to be. The arrest of Mikhail Khodorkovsky by Russian secret services in Siberia over the weekend is one such arrest.
The "crimes" of Khodorkovsky are considerable in the eyes of the special prosecutor and the new regime of former KGB officers who now surround President Vladimir Putin. As chairman of Yukos Oil, Khodorkovsky is a successful businessman who built the largest privately held company in Russia from the wreckage of the Soviet energy sector, converted his firm to Western business practices and entered into merger discussions with American corporate giants. This conduct alone might, in today's Russia, be considered a threat to the state, but the real charge behind the arrest contains much more.
This has been a year in which independent media and major independent business owners in Russia have been put out of business by the strong-arm tactics of the special prosecutor and the newly vigilant Federal Security Service (FSB), the agency that succeeded the KGB. In a climate that progressive Russian business executives compare to the fearful period of the 1950s, Khodorkovsky made the fatal mistake of expressing political opinions and having the temerity to provide financial support to opposition parties.
While this alone is insurrectionary behavior in the increasingly tsarist world of President Putin, Khodorkovsky had the additional misfortune of being the last surviving oligarch. For those who have not kept up their Russian, "oligarch" is a term of art for "rich Jews" who made their money in the massive privatization of Soviet assets in the early 1990s. It is still not a good thing to be a successful Jew in historically anti-Semitic Russia.
Since Putin was elected president in 2000, every major figure exiled or arrested for financial crimes has been Jewish. In dollar terms, we are witnessing the largest illegal expropriation of Jewish property in Europe since the Nazi seizures during the 1930s.
Unfortunately, the implications of Khodorkovsky's arrest go beyond the suppression of democratic voices and the return of official anti-Semitism. This arrest must be seen in the context of increasingly aggressive military and extrajudicial actions in Ukraine, Moldova, the South Caucasus and Chechnya. In the past month, Putin has demanded that Ukraine sign a concessionary economic treaty, Russian intelligence services have been detected behind election irregularities in Azerbaijan and Georgia and in influence-peddling in Moldova and Abkhazia, and Russian gunboats have confronted the Ukrainian Coast Guard in an illegal attempt to seize a valuable commercial waterway.
For the balance of his first term, Putin has skillfully taken advantage of America's necessary preoccupations with the war on terrorism and the liberation of Iraq. Now Moscow and the capitals of Eastern Europe are watching carefully to see how Washington responds to this latest crackdown. If the United States fails to take a hard line in response to such a high-visibility arrest, chauvinists in the Russian Defense Ministry and the FSB will correctly conclude that there will be no meaningful response to the re-establishment of a neo-imperial sphere of influence in the new democracies to Russia's south and west. In addition to the expected Cold War thuggery and opportunistic financial seizures, we should expect that the new powers in Russia will rig the crucial elections in Ukraine and Georgia next year and continue to prop up the brutal dictatorship of Alexander Lukashenko in Belarus.
Finally, the incarceration of one man in Moscow's notorious Matrosskaya Tishina prison poses painful questions for U.S. policy. It is now impossible to argue that President Bush's good-faith efforts at personal diplomacy with Putin have produced democratic outcomes. Indeed, each of Putin's visits to the Crawford ranch and Camp David has been followed by the cynical curtailment of democratic freedom inside Russia. While it remains unclear what positive qualities Bush detected in Putin's soul during their famous meeting in Slovenia, it is abundantly clear that this is the "soul" of a would-be Peter the Great.
If anyone should pay a price for the pursuit of thuggish policies, it is Putin. It's difficult to see why the U.S. Senate would even consider repealing the Jackson-Vanik Amendment, the 1974 legislation under which Russia still must receive an annual waiver from the United States to maintain normal trade relations. On the contrary, Congress should probably consider additional sanctions. The FSB-led attack on Russian business has already cost American shareholders multiple billions in their savings. These losses will undoubtedly continue until rule of law returns to Moscow.
The arrest of one man has sent us a signal that our well-intentioned Russian policy has failed. We must now recognize that there has been a massive suppression of human rights and the imposition of a de facto Cold War-type administration in Moscow.
Some in Washington will argue that all the oligarchs are probably guilty of some unspecified crime, and that we would be wise not to jeopardize our relationship with Putin for the sake of one man or one company. But there are some who are probably still waiting for the facts of the Dreyfus case before jumping to conclusions. The rest of us already know that we have been played for fools.
Bruce P. Jackson is president of the Project on Transitional Democracies. This comment appeared in The Washington Post.
TITLE: It's Time To Take Stock Of Russia's Risk Rating
AUTHOR: By Christopher Granville
TEXT: After the dramatic events of the last few days - as prosecutors arrested first Mikhail Khodorkovsky himself and then his group's controlling shareholding in Yukos - we can now take stock of the resulting prospects for country risk. The nature of the risk was pulled into sharp focus by President Putin at his Oct. 30 meeting with Moscow investment bankers. That interesting discussion suggests two risk scenarios. The first is that investors will be left to rely on Putin's indication that the Khodorkovsky case will be ring-fenced. As time passes without further attacks on other business leaders, and depending also on the outcome of the Khodorkovsky case itself, the market will gradually recover its nerve after the present collapse. Or else, in the best case, the re-elected Putin backs legislation to exclude the 1990s as a source of arbitrary prosecution and expropriation.
Putin's basic message is "trust me," and this must be the base case risk scenario for Russian assets going into his second term. His statement that the Khodorkovsky affair will not be followed by a campaign against other businessmen implicitly confirms that Khodorkovsky is being punished for what is perceived in the Kremlin as an attempt to use his wealth to capture the state and rule Russia. The charges brought against Khodorkovsky for this purpose relate to the 1990s, and virtually the whole Russian business community would be vulnerable to similar prosecution. The fact that Khodorkovsky has recently been more politically active than other oligarchs - violating the famous deal of July 2000 - provides little comfort, precisely because that deal remains unwritten. Who is to say what the boundaries of acceptable political activity will be in the future? Only Putin himself. Above all, the conviction of Khodorkovsky would create perverse incentives by showing that law abiding and transparent behavior today offers no protection from the unchangeable past of the 1990s.
In the base case, time is the only cure for this damage. That is, as Putin's commitment to 'no further campaigns' is seen to hold, confidence will recover. The time required will be longer if Khodorkovsky is imprisoned and expropriated. Nagging doubts about a repeat will re-emerge as the political struggle looms for the succession to Putin in 2008. In this scenario, then, the risk premium for Russian assets will be higher than it need have been, and the equity market will perform below the strong potential suggested by Putin's otherwise splendidly pro-business reform agenda.
There is a better way. This would entail giving formal - and at least partly legislative shape - to the unwritten deal with the oligarchs ("keep your property, but keep out of politics"). A key element would have to be making the 1990s off-limits to prosecutors via reduced statutes of limitations. But perhaps, after the elections and with one major oligarch (still?) in prison, Putin will exercise leadership and back such a move as necessary for the country to move on. In this best case scenario, Russian assets will get back on the re-rating trail.
Christopher Granville is an analyst with United Financial Group. He contributed this comment to The St. Petersburg Times.
TITLE: Probe Could Stymie Yukos' Vision for Reform
AUTHOR: By Andrei Piontkovsky
TEXT: President Vladimir Putin and Yukos boss Mikhail Khodorkovsky had a well-publicized, but apparently friendly, exchange of words long before the Yukos investigation gathered steam.
"Mr. President, your bureaucracy is made up of bribe-takers and thieves," Khodorkovsky said. "Mr. Oligarch, would you like me to remind you how you acquired your fortune?" Putin replied.
This is, in a nutshell, what was said at a meeting between Putin and leading businessmen of the Union of Industrialists and Entrepeneurs, or RSPP, in February.
The tragedy is that they are both right. The bureaucracy is indeed made up of bribe-takers and thieves, and Khodorkovsky produced several cogent examples to support his thesis. However, the very same Khodorkovsky is one of those who, during the turbulent years of primative capital accumulation, was appointed a member of the super-rich business elite by the Russian bureaucracy. Boris Berezovsky, in his letter from afar to the editors of Kommersant, described with disarming candor how "in those years, anyone who was not lazy could get huge chunks of state property by giving minor bribes to officials."
An oligarch is not simply a very rich person. Bill Gates is the richest person in the world, but no one would call him an oligarch. Oligarchy is the binary relationship between business and the authorities. Oligarchic capitalism à la russe is when major businessmen can function and multiply their fortunes exclusively by virtue of their "administrative resources," i.e. their connections in the corridors of power, while the bureaucracy flourishes and enriches itself by collecting tribute from businessmen. On occasion, the fusing of money and power has been taken to its logical conclusion: in 1996, Vladimir Potanin was appointed deputy prime minister and Berezovsky was made deputy secretary of the Security Council.
As Khodorkovsky himself wrote in an article for Nezavisimaya Gazeta in 1997: "The most profitable business in Russia is politics and that's the way it will always be. We got together and drew lots to decide who should go into government. Potanin came up lucky. In government, he did a great deal for his own company Unexim. Next time, it will be someone else's turn."
The billionaire Khodorkovsky, just like the rest of the oligarchs, grew out of this incestuous union between money and power. In the second half of the 1990s, Khodorkovsky's reputation in the West was not at all good. Legal action was taken against him by Western minority shareholders, whom he had squeezed out by flagrant use of "administrative resources."
However, as he developed his business, he was the first of the Russian oligarchs to realize that to be accepted as an equal by the international business elite, Yukos had to alter its model of behavior, learned in the jungle of bandit capitalism.
He made his company transparent, introduced Western accounting standards and standards of corporate governance, openly declared his income and started to spend major sums on social and educational projects. By coming out of the shadows, he ceased to be dependent on the bureaucracy and the state. The former oligarch transformed himself into a modern businessman. In just 10 years, he had done what took American robber barons three generations to achieve. But his impetuousness proved to be perilous.
At the February RSPP meeting, Khodorkovsky came convinced of his role as a pioneer in transforming the business system. "Your bureaucracy is made up of bribe-takers and thieves" was not a trivial complaint to the good tsar about his remiss and cunning servants who had once again stolen some oil company.
Khodorkovsky's message was much more serious. He was saying: I want to play by new rules according to which business is open, competitive, law-abiding and not dependent on the bureaucracy. Many colleagues are prepared to follow my lead, and only in this way can we pull the economy out of the system of bandit capitalism that was created with our involvement and that condemns Russia to stagnation and marginalization. But alone we cannot break the vicious circle of money and power. Both the state and its bureaucracy must also be prepared for this. And therein lies your historic responsibility, Mr. President.
The president did not get it or did not want to get it. His reaction to Khodorkovsky's words is understandable and natural. He took umbrage on behalf of his beloved "administrative vertical" - and all the more so as the charges came from someone who recently got fat off this administrative vertical.
Presidents, however, do not have the right to indulge their feelings. Historically, Khodorkovsky was right. What he was proposing and what he had done in recent years was aimed at freeing the country from the trap of oligarchic capitalism.
This does not suit the bureaucracy and its armed wing - the so-called power structures - one bit. This is why they went for their victim in such a frenzied fashion, after receiving the command. The path proposed by Khodorkovsky of separating business and the authorities would in time deprive them of their role as providers of protection to the whole of the economy from oil companies to furniture shops and grocery stalls.
The attack of the siloviki on business is no noble campaign to restore social justice, it is a revolt by dollar millionaires against the billionaires. This is no battle against the flawed system of criminal capitalism, but a battle for the redistribution of power and property within the existing system.
The two interlocutors, who unfortunately did not understand each other back in February, together could do a great deal to modernize Russia. But they have both become hostages of the old system - one in Special Isolation Unit No. 4 of Matrosskaya Tishina and the other in the Kremlin.
Andrei Piontkovsky, an independent political analyst, contributed this comment to The St. Petersburg Times.
TITLE: Indignation, But Only for Me, My Oil Firm
TEXT: WASHINGTON - It was his last trip to America before being arrested, and Mikhail Khodorkovsky was being introduced to a ballroom of lunch diners at the Ritz-Carlton: "He believes that Russian business has a special responsibility before society, a special responsibility to build a civil society... his unique blend of pragmatism and idealism.... He is impatient with those who defer to the status quo."
The clank of cutlery echoed to the chandeliers; in the far back, journalists had been cordoned off in two rows of chairs. Then Khodorkovsky took the podium, and the sea of blue suits obediently dropped utensils and donned earphones for translation.
He began with the growth of Russian business: how a stock market created from nothing was now worth many billions; how honesty and professionalism now ruled the day, thanks, of course, to Yukos.
"The question of property is solved. No serious politicians question this," he said in the first half of October. "The main problem now: respect for individual rights. My partner, Platon Lebedev, has been in jail for three months, even though the charges put forward against him fell apart at the outset."
And that was it, his whole message, repeated over and over: Khodorkovsky (of all people) was bringing honesty to Russia's markets; no one was even thinking about taking away his company; a remaining problem was civil rights; the solitary example of said civil rights problem was that someone had arrested his partner. (Not once - neither in the Ritz-Carlton nor in an evening speech at the Carnegie Endowment - did Khodorkovsky mention Chechnya, or the creeping Sovietization of media, or any other concern of liberal Russia-watchers. It was "me and my oil company" indignation.)
Back to the Ritz, where, with his unique blend of pragmatism and idealism, Khodorkovsky summed up: much will be decided from 2004-08, but not "the question of private property, that's settled." Then questions.
The first questionrs noted (tactfully) that Khodorkovsky was a Kremlin-appointed oil billionaire and asked whether, given the utter illegitimacy of his wealth, there was anything he could do to appease the hostility of most Russians.
"Unfortunately," Khodorkovsky replied, "Russia has many times, instead of moving forward down a path, stopped to discuss and rediscuss what happened in the past. When you look backwards, it's hard to go forward."
In other words: suck it up.
And later, with some irritation, Khodorkovsky said, "The question of property in Russia is settled, it does not stand, and in the matter of Yukos is not being raised. So there can be no discussion about Yukos."
Soon none of the diners had any questions - though the penned-off journalists had plenty. The emcee ignored our raised hands and pleaded, "Anyone? Does anyone have a question?"
Impatiently, a journalist shouted, "I have a question!"
"Maybe someone up front here?" the emcee said hopefully.
"Move up front!" journalists yelled to their impatient colleague, and to the emcee, "We've got questions!"
"Anders!" the emcee called out desperately, and Anders Aslund - a Carnegie scholar and well-known defender of the oligarch-creating privatization schemes - obediently offered a question. "Great," said a Financial Times journalist sarcastically, "'Transparency,' that's just great."
But we got our turn. As Khodorkovsky left the hall, journalists surrounded him and he answered five questions for us.
Unfortunately, five different panicky financial-type journalists repeated the exact same question five times - Q: Is it true you're selling Yukos to ExxonMobil? A: No comment.
Matt Bivens, a former editor of The St. Petersburg Times, writes The Daily Outrage at www.thenation.com.
TITLE: Chris Floyd's Global Eye
TEXT: An Inspector Calls
This column owes a heartfelt apology to a top official of Bush Administration, whom we unjustly maligned some weeks ago. No doubt infected by the corrosive wave of cynical anti-Americanism now raging across an ungrateful world, we predicted that the report of David Kay - who was hired by the CIA to find Iraq's elusive weapons of mass destruction - would be nothing but a sham, a whitewash: "the fix is in," we sneered.
But we were wrong. Far from being a whitewash, Kay's report has turned out to be one of the most devastating and unflinching exposes of war crimes in world history. In damning detail, Kay has revealed the torturous machinations and evil practices of a ruthless tyrant seeking to thwart the clear will of the UN Security Council and the international community, using false declarations and crude propaganda to mask his secret plans to abet terrorism, wage aggressive war and threaten the entire world with weapons of mass destruction. Those apologists for tyranny, who for months doubted the veracity of these charges, have now been shown to be nothing more than knaves, fools, lickspittles and dupes.
Given the success of Kay's mission, you'd think the Bush Administration would be trumpeting the results of his investigation from every marble pillar and post in Washington. Instead, the report got only the most cursory airing, then was promptly deep-sixed into the shadowlands of "secret hearings" and "restricted access." Strange behavior, you say? Not when you consider that the perfidy which Kay so thoroughly unmasked was, of course, perpetrated by the Bushists themselves.
Step by step, Kay and his investigators dismantled - inadvertently, one presumes - the public case for war laid out by Liar-in-Chief George W. Bush, Head Bagman Dick "Deep Pockets" Cheney, Warlord Don Rumsfeld and that lifelong toter of Establishment whitewash, Colin "First My Lai and Now This" Powell. Their relentless claims of the hell that Saddam could unleash against the Homeland "on any given day" (as Bush himself put it) - 500 tons of chemical weapons, some already mounted in missile warheads, primed and ready for use; "mobile labs" cooking up deadly poisons on the run; eyewitness reports from Iraqi defectors providing irrefutable evidence of banned weapons production; and most ominous of all, an "active" and expanding nuclear arms program that could soon produce "a mushroom cloud" in America's cities - were all completely debunked by Kay's investigation, Newsday and the Washington Post reported this week.
Instead, Kay found that the combination of UN inspections and other international oversight efforts had worked a wonder of disarmament: Iraq's production of chemical, biological and nuclear weapons - which had accelerated greatly in the late 1980s with the eager aid of Saddam ally George Bush I - ended in 1991 and was never restarted, Kay said. What's more, those oh-so-informative defectors - many of whom were paid millions by the Bush Regime - "certainly fabricated much [evidence] that they supplied, and [some] perhaps were under the direct control" of Saddam's secret service, Kay declared.
So: There were no weapons of mass destruction. There were no active WMD programs. There were no mobile weapons labs. There was no nuclear program, or any effort to obtain the technology to start one - even after UN inspectors were withdrawn in 1998. "On any given day," Saddam Hussein could not have threatened the United States or neighboring countries, nor passed any WMD material to any terrorist group anywhere in the world. These are not the ravings of anti-war dissidents, but the sober conclusions of David Kay's official $300 million investigation.
The entire case for war, put forth so meticulously by the Bushists in national forums and at the UN, was based on lies, bribes, distortions - and threadbare intelligence cooked to order for the conspirators in the White House, who set up a system that deliberately ignored or rejected any finding that clashed with their unalterable plans for aggression and conquest, as Seymour Hersh reports in The New Yorker.
Not since the Nuremberg Trials has a criminal conspiracy to commit state terrorism been so nakedly revealed. For it's glaringly obvious that the top guns in the Bush Regime knew in advance there was no WMD threat in Iraq. They would never have acted so precipitously if they really believed Saddam could unleash anthrax missiles on Jerusalem or slaughter tens of thousands of American troops with his "armed and ready" biochemical weapons. (Witness their circumspection when confronted with a real WMD threat from North Korea.) As for Saddam's nuclear "menace," they left his nuke plants unguarded for weeks after taking control of the country, allowing looters and terrorists to pillage them at leisure. The "aluminum enrichment tubes" that were the Bushists' "smoking gun" for Saddam's "aggressive" nuclear program were likewise abandoned to their fate by American forces, and why not? Even before the war, experts said the tubes couldn't be used in nuclear weapons, a fact belatedly confirmed by Kay's investigators. Some of these "sinister" tubes have been scavenged to make sewage pipes.
The Bushists are now in full flight from the reality of Kay's report: hiding it, twisting it, pretending it doesn't mean what it clearly says - but their own evidence cries out against them. They planned and executed a war of aggression in the full knowledge that their casus belli was false, a pious fig leaf cloaking their primitive lust for loot and dominance. They stand condemned - by their own man, their own words - of a sick and bloody crime against humanity.
For annotational refeernces , see the Opinin section at www.sptimesrussia.com
TITLE: Time Running Out for Qureia in Palestine
PUBLISHER: The Associated Press
TEXT: RAMALLAH, West Bank - A Palestinian suicide bomber blew himself up near Israeli soldiers in the West Bank on Monday, as the embattled Palestinian prime minister faced a two-day deadline to form a new government before the expiration of his emergency term.
The bomber killed himself, but caused no other casualties. He set off the explosives as he ran toward soldiers searching the village of Azzoun near the frontier with Israel. The Al Aqsa Martyrs' Brigade, a militant group with loose ties to Yasser Arafat's ruling Fatah movement, claimed responsibility.
The bombing highlighted the failure thus far by the prime minister, Ahmed Qureia, to form a new Palestinian government.
For the past month, Qureia has presided over a small emergency Cabinet that operated without parliamentary backing and was virtually paralyzed.
Over the weekend, Arafat asked Qureia to stay on the job and form a regular government. Qureia's emergency term expires at midnight Monday, and he then has another 24 hours to put together a new team, Palestinian legislators said.
Once a government has been formed, Qureia plans to hold separate talks with Israeli Prime Minister Ariel Sharon and leaders of the Islamic militant Hamas, to try to break the months-long deadlock over implementation of the road map. Israeli media reported that a Qureia-Sharon summit could take place by the weekend.
Qureia has said his top priority is to negotiate a truce with Israel. Sharon has rejected the idea, saying the Palestinian Authority must first dismantle militant groups, as required by the "road map" peace plan. However, Sharon has come under increasing criticism at home, including from his army chief, for pursuing a policy of military strikes without pushing hard to resume peace talks.
Qureia's task of forming a Cabinet did not appear any easier Monday than a month ago when, at the last minute, he backed away from presenting his proposed team to parliament for approval because of intense political wrangling.
Despite the difficulties, Saeb Erekat, the chief Palestinian negotiator, said Monday he believes a new government can be formed within two days.
"It's very realistic," Erekat said, but acknowledged that "there are still some problems concerning the interior minister."
If Qureia does not form a Cabinet by midnight Tuesday, the Palestinians will be effectively without a government.
TITLE: Baku Riots As Aliyev Ascends
PUBLISHER: The Associated Press
TEXT: BAKU, Azerbaijan - Ilham Aliyev was inaugurated as Azerbaijan's new president Friday, succeeding his ailing father as leader of the oil-rich former Soviet republic.
Aliyev, 41, was sworn in during a ceremony at the Respublika Palace attended by about 2,000 people. His 80-year-old father, Heidar Aliyev, who has ruled Azerbaijan for most of the past 35 years, missed the inauguration because he is still too frail to leave the Cleveland hospital where he has been treated since July.
Ilham Aliyev was elected last month in a vote criticized by Western observers for alleged ballot-box stuffing and falsified counting.
Rioting broke out in the capital, Baku, the day after the election, and one protester was crushed to death.
Ilham Aliyev said he planned to develop the "non-oil sector" of the country's economy and strengthen the country's armed forces.
The new president also indicated he might use military force to resolve a dispute with Armenia over the Nagorno-Karabakh enclave. Nagorno-Karabakh, an ethnic Armenian enclave in Azerbaijan, is controlled by Armenia-backed forces that drove out the Azeri army in the early 1990s.
TITLE: Guerrillas Attack Chopper, Kill 16
AUTHOR: By Tini Tran
PUBLISHER: The Associated Press
TEXT: FALLUJAH, Iraq - Targeting Americans with new audacity, insurgents hiding in a date palm grove shot down a Chinook helicopter carrying dozens of soldiers heading for home leave Sunday, killing 16 and wounding 20 in the deadliest strike against U.S. forces since they invaded Iraq in March.
Witnesses said the attackers used missiles - a sign of the increasing sophistication of Iraq's elusive anti-U.S. fighters. Two days before the attack, Iraqi insurgents warned of new attacks using "modern and advanced methods."
Three other Americans were killed in separate attacks Sunday, including one 1st Armored Division soldier in Baghdad and two U.S. civilians working for the U.S. Army Corps of Engineers in Fallujah. All three were victims of roadside bombs, the military said.
On Monday, a C-17 transport plane with about 18 of the wounded soldiers arrived for treatment in Germany in a pre-dawn rain. Fourteen were taken to a waiting ambulance bus on stretchers while the others walked.
Sunday's death toll was the highest for American troops since March 23 - the first week of the invasion that ousted Saddam Hussein - and the attack represented a major escalation in the campaign to drive the U.S.-led coalition out of the country.
The giant helicopter was ferrying the soldiers on their way for leave outside Iraq when two missiles streaked into the sky and slammed into the rear of the aircraft, witnesses told The Associated Press. It crashed in flames in farmers' fields west of Baghdad.
"It's clearly a tragic day for America," Defense Secretary Donald Rumsfeld said in Washington. "In a long, hard war, we're going to have tragic days. But they're necessary. They're part of a war that's difficult and complicated."
Like past attacks on U.S. forces and a string of suicide bombings that killed dozens in Baghdad the past week, U.S. coalition officials blamed either Saddam loyalists or foreign fighters for the strike outside Fallujah, a center of Sunni Muslim resistance to the U.S. occupation.
Paul Bremer, the head of the occupation in Iraq, repeated demands that Syria and Iran prevent fighters from crossing their borders into Iraq.
"They could do a much better job of helping us seal that border and keeping terrorist out of Iraq," he told CNN. The "enemies of freedom" in Iraq "are using more sophisticated techniques to attack our forces."
The loaded-down Chinook was a dramatic new target. The insurgents have been advancing in their weaponry, first using homemade roadside bombs, then rocket-fired grenades in ambushes on U.S. patrols. They also have used vehicles packed with explosives and detonated by suicide attackers.
In the fields south of Fallujah, some villagers proudly showed off blackened pieces of the Chinook's wreckage to arriving reporters.
Though a few villagers tried to help, many celebrated word of the helicopter downing, as well as a fresh attack on U.S. soldiers in Fallujah itself. Two American civilians working under contract for the U.S. Army Corps of Engineers were killed and one was injured in the explosion of a roadside bomb, the military said.
"This was a new lesson from the resistance, a lesson to the greedy aggressors," one Fallujah resident, who would not give his name, said of the helicopter downing. "They'll never be safe until they get out of our country," he said of the Americans.
Fallujah lies in the so-called "Sunni Triangle," a region north and west of Baghdad where most attacks on American forces have taken place. The downing and the soldier's death in Baghdad brought to at least 139 the number of American soldiers killed by hostile fire since President Bush declared an end to combat on May 1.
Around 377 U.S. service members have died since the beginning of military operations in Iraq.
TITLE: IN BRIEF
TEXT: Floods Kill 66 in Jakarta
JAKARTA, Indonesia (AP) - Flash floods swept through a popular tourist resort on Indonesia's Sumatra island, killing 66 people, five of them foreigners, and leaving dozens missing, local officials said Monday.
The floods, which were triggered by days of heavy rain, took place late Sunday in Bohorok, close to the provincial capital of Medan in the northern Sumatra province.
Many landslides and floods in Sumatra have been blamed on deforestation disrupting natural water absorption and flow. The island is home to many palm plantations that are a staple of Indonesia's economy.
Spain Cuts off Gilbraltar
GIBRALTAR (Reuters) - Spain shut its border with the tiny British colony of Gibraltar on Monday for the first time in two decades because a cruise ship carrying tourists with a viral infection had docked there, officials said.
The cruise ship Aurora, loaded with hundreds of British tourists who have suffered from the 24-hour infection, arrived in Gibraltar's harbor on Monday morning.
Spanish state radio said about 4,000 Spaniards cross the border every day to work in Gibraltar and that about 500 people were already gathered at the crossing point.
Strike Averted In Israel
JERUSALEM (AP) - A nationwide strike against plans to overhaul Israel's welfare state shut down government services, banks, airports and trains on Monday, but a court limited the stoppages to just four hours.
The workers struck despite efforts by Prime Minister Ariel Sharon, who held intense negotiations over the phone from Moscow, where he arrived Sunday on a state visit, officials said.
Early Monday, Israel's Labor Court headed off what was supposed to be an open-ended walkout - one of the widest strikes in the nation's history and a challenge to Finance Minister Benjamin Netanyahu's plans to overhaul the nation's troubled economy.
Taliban Hostage Spared
KABUL, Afghanistan (AP) - Suspected Taliban insurgents appear to have backed off a threat to execute a Turkish hostage who was kidnapped to bargain for the release of 18 Taliban prisoners, Turkish and Afghan authorities said Monday.
Hasan Onal, the Turkish road engineer who was abducted Thursday, was in "good health," said Kurtulus Ergin, the Kabul manager of the Turkish company Gulsan-Cukurova, which employed Onal.
Onal's Taliban captors threatened to kill him before the end of Sunday unless the prisoners were freed. Late Sunday, however, Turkish Foreign Minister Abdullah Gul said he had information that the rebels had lifted the two-day time limit.
Cleric Menaced in Iran
TEHRAN, Iran (AP) - Iranian security agents on Monday arrested two sons and two close aides of Iran's leading dissident cleric, said Zahra Rabbani, wife of one of the detainees.
Grand Ayatollah Hossein Ali Montazeri's sons, Ahmad and Saeed, were taken into custody by plainclothes security agents in Qom, a holy city 80 miles southwest of Tehran, Rabbani, Ahmad's wife, said.
Rabbani said Iranian authorities gave no reason for the arrests, but the move came after she had decided to turn a building next to her home into a seminary school for the elder Montazeri to teach in.
TITLE: Henman Excels to Take Paris Masters Title
PUBLISHER: Combined Reports
TEXT: PARIS - Britain's Tim Henman put a gloss finish on his disappointing year when he defeated gutsy Romanian outsider Andrei Pavel 6-2, 7-6 (8/6), 7-6 (7/2) Sunday in the final of the 2.45-million-euro Paris Masters and then described it as one of his greatest moments in the sport.
It was 29-year-old Henman's second title of 2003 following his victory in Washington, the 11th of his career and his first Masters - and it came at the end of an impressive week in which he had stylishly defeated world number one Andy Roddick, Wimbledon champion Roger Federer and triple French Open champion Gustavo Kuerten.
He also beat Sebastien Grosjean to exact revenge for the defeats he suffered at the hands of the Frenchman at Wimbledon and Queen's.
"This is one of my greatest achievements," said Henman who becomes the second British winner here after Greg Rusedski's victory over Pete Sampras in 1998.
"I never thought that I could win this event. I have never played well in Paris and, before this week, I could count on one hand the matches I have won.
"But I couldn't be happier to win the Paris event - it's one of the most prestigious Masters events."
Now that Henman is back among the elite of men's tennis he is more consistent than ever before but, in some ways, just as inconsistent as he ever was.
Twelve months after surgery to his shoulder, Henman's victory at the Paris Masters showed his serve and volley game - a rarity in modern tennis - is capable of beating the very best.
Federer and Roddick were both dealt with in straight sets and the only player to take a set off Henman in six matches was Grosjean.
Before the final, the Briton said he had never played such good tennis and, after returning to the top 15 with victory over Andrei Pavel on Sunday, he is aiming for the top three.
"I've played well in patches but not as consistently, and that's the battle isn't it? That's the challenge for me, it's whether I can string it together.
"I played some good tennis when I was at my highest ranking but if I play the tennis I'm capable of for longer periods, then I don't think number four will be my highest ranking," he said.
But with Henman, the shot-making is only half the story - what happens in his head is what will make or break his chances of challenging top-ranked players such as Roddick, Federer and Juan-Carlos Ferrero.
He has a reputation of mentally folding under pressure, which translates into unforced errors on-court as his normally flowing game tightens up.
As Roddick pointed out Henman was until Sunday one of the few top players without a Grand Slam or Tennis Masters title. He had lost his previous two Masters Series finals and has reached the Wimbledon semi-finals four times without making the final. It is probably no coincidence that he has performed so well in Paris. He came to the French capital just hoping to win a couple of matches as a preparation for his 2004 campaign.
"I think it's pretty evident that my demeanor, my attitude on the court is pretty relaxed. I do feel there is an element of win-win," he said after beating Grosjean.
But after holding his nerve when Grosjean was on fire in the first set, and beating Roddick in two tiebreaks, Henman's old problem reared its head in the second set against Pavel.
Cruising after winning the first 6-2, Henman's game hit a trough. Pavel broke his serve but Henman won the tiebreak 8-6 on his third set point.
Seeing a chance of a shock victory, the Romanian was a different player in the third set, recovering power on his serve and charging the net. But again Henman took control of the tiebreak to win it 7-2.
"There was definitely some nervous tension. The third set was the toughest of the week for me," Henman said.
Great players like Pete Sampras and Andre Agassi feed off the crushing tension of the big matches, and the acid test of Henman's new attitude will be Wimbledon next year.
At 29, time is running out for Britain's number one to win the title at the All England Club.
Every year the pressure on home favorite Henman builds to an excruciating level over the Wimbledon fortnight and he has never been able to take the final step into the final.
"I think sometimes I can be guilty of almost trying too hard to win and that puts added pressure on one's self," he said. "It's inevitable it gets harder and harder as the matches get bigger and bigger."
Perhaps winning the Paris title will help relax Henman and allow him to enjoy the Wimbledon experience, win or lose.
"I don't want this week to be an exception. [Wimbledon] has always finished with a loss, [but here I have finished] with a win so I think this is my greatest achievement.
"I've always believed that one day I can win a Grand Slam and to get a title of this stature under your belt can only go to increase your belief."
(AFP, Reuters)
TITLE: Russian Dancers Display Style
PUBLISHER: The Associated Press
TEXT: MISSISSAUGA, Ontario - Russia's Tatiana Navka and Roman Kostomarov, who train in New Jersey, won the ice dance championship at Skate Canada on Sunday.
The Russians won $25,000 in edging Bulgarians Albena Denkova and Maxim Staviyski. Canada's Marie-France Dubreuil and Patrice Lauzon surged up to take third place with a sensational free dance in the second Grand Prix event of the season.
Navka, 28, and Kostomarov, 26, are coached in Hackensack, N.J., by former world dance champion Alexander Zhulin, who is Navka's husband. Their free dance to music from the movie "The Pink Panther'' - she was dressed in pink and he in black - mixed with sound bites from Austin Powers movies actually was more classical than the far-out programs they've done in the past.
"This is to show the judges we can skate different styles,'' said Navka. "We want to be different from everybody else.''
Denkova, 28, and Staviyski, 25, who train in Moscow with coach Alexei Gorshkov, skated to classical music and got the highest free dance points total, 107, to 106 for Navka and Kostomarov. The Russians had a big enough leadto remain first and win 207-204 overall.
Navka and Kostomarov were edged out of bronze by Denkova and Staviyski at the world championships in March, but now appear to have drawn even or overtaken the Bulgarians.
With the retirements of the top two couples - Canada's Shae-Lynn Bourne and Victor Kraatz, and Russia's Irina Lobacheva and Ilia Averbukh - Navka and Kostomarov are positioning themselves for a run at the world title next March.
Dubreuil and Lauzon train in France with Muriel Boucher-Zazoui, who steered Marina Anissina and Gwendal Peizerat to 2002 Olympic gold. That influence oozed out of a sensuous free dance that earned them 103 points to boost them to 191 overall.
Their highly athletic dance had a level of difficulty pegged at 39 compared to 27 for the Russians. During a straight-line footwork sequence, Dubreuil fell to the ice.
"Usually in the past if you fall in dance, you fall down through the ranks,'' she said. "I was surprised (they moved up in the standings) but this dance is very challenging physically, with lots of hard elements.''
TITLE: SPORTS WATCH
TEXT: Owen to Stay
LONDON (AFP) - Liverpool boss Gerald Houllier is confident he can persuade star striker Michael Owen to stay on Merseyside, despite persistent rumors linking him with a move next summer.
Owen has fuelled the speculation by stalling on signing a new contract at Liverpool and it was reported on Sunday that Real Madrid are planning a 25-million-pound ($42 million) bid for the England striker, who has 18 months left on his current deal.
But Houllier, who is attempting to reshape his Liverpool side as a more attacking outfit which will gift Owen more opportunity to express his predatory skills, insisted he would not sell even for twice that price.
Cuban Pitcher Defects
MIAMI (AP) - One of Cuba's top pitchers defected in an undisclosed country so he can begin playing professionally in the United States, a Cuban exile leader said Friday.
Maels Rodriguez and another player, Yobal Duenas, were reported missing by Cuban authorities Saturday.
"They're safe," said Joe Garcia, executive director of the Cuban American National Foundation. He declined further comment.
If the players seek political asylum or residency outside the United States, they most likely will be declared free agents by Major League Baseball and be able to sign with any team.
The players' Miami-based agent, Henry Vilar, did not return telephone messages Friday.
Rodriguez, a 24-year-old right-hander, is one of Cuba's top pitchers and his fastball is said to regularly top 160 kilometers per hour.
Juve, Milan Draw
MILAN, Italy (Reuters) - A stunning 84th minute volley from Marco Di Vaio gave Italian champion Juventus a 1-1 draw at AC Milan and kept the pair neck and neck at the top of Serie A.
In a rematch of last season's all-Italian Champions League final, Milan, which won that final on penalties, had gone ahead in the 65th minute through Danish striker Jon Dahl Tomasson.
The draw leaves the pair level at the top on 20 points each, four ahead of Lazio, which kept in touch with a 2-1 win at Udinese.
Hurricanes Shocked
BLACKSBURG, Virginia (Reuters) - Kevin Jones rushed for 124 yards and Virginia Tech got two touchdowns from its defense as the Hokies stunned the second-ranked Miami Hurricanes 31-7 in college football action Saturday.
Virginia Tech (7-1) managed just 219 total yards and only 44 yards passing, but used its overpowering defense to throw the national championship picture wide open.
Miami (7-1) had its 39-game regular season unbeaten streak snapped. The loss could end the Hurricanes chance at again playing in the championships.
Meanwhile, top-ranked Oklahoma rolled along, destroying local rivals Oklahoma State 52-9. Jason White led the Sooners (9-0) to another win.
Number three USC was also a big winner, dismantling No. 6Washington State 43-16 in Los Angeles.