SOURCE: The St. Petersburg Times
DATE: Issue #918 (86), Tuesday, November 11, 2003
**************************************************************************
TITLE: Iran Says Nuclear Program Slows, UN Can Inspect
PUBLISHER: Combined Reports
TEXT: MOSCOW - A senior Iranian official said Monday that Tehran has temporarily halted its uranium enrichment program and would allow tougher UN checks of its nuclear sites, fulfilling a promise it made to France, Germany and Britain last month.
Speaking at Kremlin talks and just ahead of the release in Vienna of a new report on UN nuclear inspections in Iran, Hassan Rowhani, head of the Supreme National Security Council, said checks by inspectors from the UN International Atomic Energy Agency would confirm that Iran's nuclear program was peaceful.
Washington says Iran is covertly seeking nuclear weapons.
"I officially announce that today we are giving the IAEA a letter agreeing with the Additional Protocol," he told President Vladimir Putin in the Kremlin. "From today we are temporarily suspending our process of uranium enrichment."
"A letter stating our willingness to sign up to the Additional Protocol will be submitted today at the end of the working day by Iran's delegate at the IAEA," Rowhani said after a separate meeting with Foreign Minister Igor Ivanov.
Russia, in a program that has angered Washington, is building an $800 million nuclear power station at Bushehr on the Gulf. Rowhani later told reporters relations with Moscow were so good that Russia might build a second reactor.
The Additional Protocol to the nuclear Non-Proliferation Treaty, which Tehran signed in 1970, will give the IAEA the right to conduct many more intrusive short-notice checks of declared and undeclared sites in Iran.
Iranian officials told the foreign ministers of Germany, France and Britain last month that Tehran would not only sign the Additional Protocol, but would temporarily stop enriching uranium as a goodwill gesture aimed at building confidence.
However, to the annoyance of western diplomats in Vienna, Iran took three weeks to stop enriching uranium, which makes it useable as nuclear fuel or for weapons.
Vienna diplomats also said Iran's announcement was carefully timed to soften the blow of the latest IAEA report on inspections in Iran, which will detail numerous failures by Iran to report on its nuclear activities to the UN agency.
Washington has dubbed Iran part of an "axis of evil" countries seeking illegal weapons, but Rowhani said Iran had proved this was not the case in a dossier given to the IAEA.
"They [the IAEA] gave us to understand that they had no further questions that Iran had not already answered," he said at his Kremlin meeting. "Nuclear weapons have no role in our defense doctrine."
A Vienna diplomat close to the IAEA said the IAEA had "no indications of a weapons program" in Iran, but was more cautious in his description of Iran's cooperation with the United Nations.
"On the surface Iran appears to have met the terms of the [Sept. 12] resolution," he said, referring to the toughly worded IAEA board resolution that gave Iran until Oct. 31 to come clean about its nuclear program.
Russia has been under strong U.S. pressure to halt its help for Iran's nuclear program, and some analysts said Iran's announcement of its decision in Moscow - which Ivanov said was a friendly sign - was a gesture of thanks to an ally.
"Iran is well aware Russia has been under massive pressure from the United States to sever its nuclear ties with Tehran, and Iran has been very, very afraid Russia was going to bow to that pressure," said Alexander Pikayev, a nuclear analyst at the Carnegie Moscow Center think tank.
The United States has pressed Russia to halt its Bushehr project. The Kremlin has said it shares some of the U.S. concerns and prodded Tehran to accept tighter controls by the IAEA. Moscow has also insisted that all spent fuel be returned to Russia.
Ivanov said Monday that during his meeting with Putin, Rowhani had affirmed Iran's intention to conclude an agreement for the return of spent fuel, Interfax reported.
The Nuclear Power Ministry said the agreement was being discussed during Rowhani's visit but would not say when it might be signed.
Rowhani told reporters that Moscow would not only push on with Bushehr, but could also construct a second reactor at the site.
"The Russian leadership is telling us that the atmosphere of boosting nuclear ties between us is better than ever," he said. "They are telling us that they will finish building the Bushehr reactor and we will start negotiations on building a second."
Putin indicated that Moscow was satisfied with Rowhani's pledges.
"With regard to the enrichment of uranium, Iran has a right to carry out these kinds of activities but we are pleased to note that Iran has itself resolved to limit itself," Putin said. "I do not see any obstacles to cooperating with Iran in the nuclear sphere."
Putin also said he had accepted Iranian President Mohammad Khatami's invitation to visit Iran, Itar-Tass reported. No date was announced for the trip, which would be the first to the country by a Russian head of state.
(Reuters, AP)
TITLE: NGOs Say Few Listening
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Russia's non-governmental organizations are feeling down and worthless, with many human rights advocates and environmental activists comparing the fruits of their labor to those of Sisyphus.
That's what a group of St. Petersburg NGOs who just returned from the nationwide conference of Russian NGOs in Moscow said Monday.
Although the conference culminated on Oct. 28 with several dozen statements, inquiries and legislative proposals, the delegates are skeptical that anyone official will pay any attention at all to the recommendations they have signed and sent to various authorities ranging from the Natural Resources Ministry to President Vladimir Putin.
The conference discussed a wide range of topics, including the Yukos investigation, the increasing influence of the Russian Orthodox Church on society, labor law violations in Kaliningrad's Sea Port and ongoing military reform as well as the country's chronic ailments like the war in Chechnya, Baltic Sea pollution and endangered freedom of speech.
"The gap between the Russian authorities and the country's citizens is so huge that they don't see each other, or rather, they exist in parallel worlds," Yury Vdovin, deputy head of the St. Petersburg office of human rights group, Citizens' Watch, said at a news conference where several NGOs evaluated the conference.
"No mechanism exists to make the state accountable to the people," he said. "Former undercover agents of the secret police have gone into politics and now rule the country."
The conference sent a recommendation to Putin that urgent action be taken so that the security services are overseen by the State and civil groups.
Ella Polyakova, head of the St. Petersburg human rights group Soldiers' Mothers, touched on the drastic difference between the past conference and the 2001 Civic Forum, organized by the Kremlin.
Costing $1.5 million, the Civic Forum was publicized as the establishment of a dialogue between the state and the fledgling NGO sector. Its organizers included Kremlin-linked political analyst Gleb Pavlovsky, who was head of the organizing committee.
"During the Kremlin's event, I was sitting next to Pavlovsky's people, who were laughing and bragging about how they orchestrated the forum," Polyakova recalls. "Thankfully, the current conference was free of that outrageous hypocrisy."
Yet the spirit of this year's conference was depressing.
"Everyone - from Vladivostok to Kaliningrad - was there to whine and complain," said environmentalist Alexander Nikitin, head of the St. Petersburg-based ecological center Bellona.
"The delegates cited different examples, but the problems look just the same across the country: the authorities remain deaf and blind to the voices of activists - unless, that is, the voices sing them praises, he said. "Businesses ignore the activists - unless the businesses get in trouble and need their assistance; ordinary people are mostly plainly indifferent.
"Many delegates complained to each other that they are tired of talking to a silent wall and already don't see any point of conferences as they yield no results," Nikitin said. "I am sorry to say this, but I share this view. What is the point of getting together and developing a solution if you know in advance that your proposal won't even be considered and will go straight to the trash can? None. "
For Olga Senova, who runs a local youth NGO with an environmental emphasis, public apathy is the major concern.
At the conference, she talked about the importance of cooperation between NGOs and mass media.
"Very few people perceive the environment as something that concerns them directly," she said. "They don't think things like importing food containing genetically modified ingredients matters for them. Some can't be bothered reading the labels! And, of course, almost nobody wants to get in trouble by participating in an environmental campaign," Senova said.
Alexander Yablokov, a spokesman for Greenpeace in Moscow, said no less than 300,000 people die prematurely in Russia from the problems related to ailing environment. Nearly 80 percent of Russian children suffer from environmentally-related diseases, such as allergies or asthma, the Greenpeace report says.
But Polyakova of the Soldiers' Mothers group was more optimistic about the future of NGOs in Russia.
Although she is frustrated by the adamant resistance by the Russian state, she believes that a tactful and confident approach can change things, slowly but surely.
"On one of my trips to Chechnya, I was stopped by the Russian military, who were furious and threatened to shoot me," she recalls. "They clearly expected me to make a big fuss, to loudly protest and defend myself, but I didn't, staying very calm, and their scenario broke. I was released."
It was at that moment that Ployakova realized that the best strategy for NGOs like the Soldiers' Mothers is to break down stereotypes. "The military are trained to deal with big fusses. If you do something else, they get confused."
But most importantly, Polyakova said her NGO is now seen as a much stronger force by ordinary people.
"When we started, the abused soldiers were too frightened to contact us," she said. "We used to receive complaints only sporadically. But now, they come to us by the dozens, and even some officers are not afraid to talk to us."
TITLE: Most Applicants Are Issued Visas, Diplomats Say
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: Fill out the forms in full, pay the fees, answer any questions truthfully, allow enough time and show that you will return to Russia after your visit abroad, and most likely you will get a visa.
That was the message to Russian citizens wanting to travel abroad from St. Petersburg consular staff representing six countries at a seminar on visas run by the St. Petersburg International Business Association, or SPIBA, on Wednesday.
Many myths are about that it is difficult to get a visa, or that certain people, such as young women, are always refused, the diplomats said.
But the rate of refusal is under 5 percent for all countries except for the United States, for which more than 20 percent of applications are unsuccessful, they said.
"Our biggest problem is if people don't come prepared," said Sean McColm, vice consul of the British Consulate, where 85 percent of visas are issued on the same day as applications are made. The consulate has handled 13,000 applications this year, 4 percent of which have been refused, he said.
"The biggest myth about the British Consulate is that we do not issue visas to females," he added. "It's not true."
"People hear stories that they will not be accepted, so people will say that they work at a company where they do not work, they will say that they have friends or family in Britain where they do not. For want of a better word, they will lie," he said.
"My advice is just tell the truth," McColm said. "If you lie, your credibility is damaged all the way down the line."
People seeking reliable advice on obtaining visas should ask the consulate, rather than relying on web sites or travel agents, he added.
"We have a very high percentage of applications from women - more than 65 percent," said Luigi Biondi, of the visa section of the Italian Consulate. "Women make up more than 65 percent of refusals, but this just reflects the proportion of women who apply."
"The main reason for refusals is incomplete applications," he added.
Documents relating to travel must be signed, dated and stamped, and addresses must be correct - in some cases they will be checked by Italian police, Biondi said.
Despite the strict requirements, less than 2 percent of applications to the Italian consulate are unsuccessful, he added. Last year some 12,000 applications were made to the consulate. This year the number has grown and is expected to reach 15,000, he said.
Ben Heijkoop, head of the visa department of the Netherlands Consulate, said the consulate receives about 7,000 applications a year and refuses about 3.5 percent.
Although the Schengen Agreement has been in place for several years, processing of visas is still done by the consulate of the country that will be the main destination and is treated as a national visa, he added.
The Schengen Agreement countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain and Sweden. This is almost all Western European countries except the United Kingdom, Ireland and Switzerland.
Biondi agreed, saying that people who got their Schengen visas from Finnish or Danish consulates and then went to Italy risk not being admitted.
"If someone has landed in Italy with a visa issued by another country they can technically be sent back - they do not necessarily have the right to be in Italy."
"If a travel agency offers you a Finnish visa to go to Italy this could result in you spending your summer holiday on the Finnsky Zaliv [Gulf of Finland]," he added.
Travelers must also have proof that they have sufficient funds to support themselves; if they don't this could be a reason to put them back on the plane to St. Petersburg, Biondi said.
Heijkoop and Biondi said that Schengen countries share a database on criminal activities and that people who had committed crimes in one member nation could be stopped at the border of another member nation if the crime was serious enough to prevent them entering.
Christopher Misciagno, who is in charge of non-immigrant visas at the U.S. Consulate, also said there is no discrimination against anyone and that every application is considered on its individual merits.
"There is no way to generalize for everybody," he said.
The consulate processes about 20,000 applications a year, of which 75 to 80 percent are successful, he added.
"It's a myth that young, unmarried women don't get visas," he added. "[Of those who receive visas] it's probably 50:50 between men and women."
Misciagno said the main reason for refusing applications is the inability of applicants to show that they will return to Russia after visiting the United States.
"The ties to their home country are not convincing enough to show that they have urgent reasons to return," he added.
"The most convincing ties tend to be employment, because people will leave their families behind to earn higher income somewhere else and send it home."
Misciagno said this did not mean that people on low incomes are unable to visit the U.S. Students, who often are unmarried, do not work and have no children, can get visas, but must be able to demonstrate their academic performance and desire to complete their studies in Russia."
While procedures have changed in the last year in order to address security concerns - almost every applicant is now interviewed and applications must be filed at the DHL office at Izmailovsky Prospekt 4 rather than directly at the consulate -- the consulate is ready to assist in exceptional circumstances, he added.
People requiring transit visas and staff of member companies of the American Chamber of Commerce can get faster handling of their applications than regular applicants, Misciagno said.
In response to a question about new procedures affecting scientific exchanges between the U.S. and Russia, he conceded that appointments and conferences had been missed and research postponed. This was because of processing in Washington over which the consulate had no control, he said.
Scientists wishing to travel to the United States should apply to the consulate at the same time they lodge their applications with DHL, allowing the approval process to begin earlier, he advised.
One of the most positive notes of the evening was the expression of the Indian Consul Yojna Asthana that she understood that the visa process was the "face" of India to many Russians and that the embassy tries to make it as smooth and positive as possible.
Sanjay Kumar Verma, vice consul at the Indian consulate, said that in three years of working with visas, he could not remember one refusal and that the only reason to refuse one would be serious security concerns. The number of visas issued is growing and have risen from about 1,500 in recent years to an expected more than 2,000 this year, with many traveling for religious reasons.
The peak time is Russian winter, when the climate in India is better. Travel agency Stenka Razin will start charter flights to India from St. Petersburg soon, Verma added.
Sebastian FitzLyon, the Australian honorary consul to St. Petersburg and a member of SPIBA's executive board, who chaired the meeting, said all questions regarding visas to Australia are dealt with by the Australian Embassy in Moscow.
q
Finnish Prime Minister Matti Vanhanen has called for more flexibility in the issuing of visas to Russians visiting the European Union, Interfax reported Thursday.
"In regard to Finland, we have already reached a stage where the current practice is to issue visas with the greatest possible flexibility," he was quoted as saying.
Vahnanen said he hopes that other members of the European Union would also apply the maximum flexibility under existing visa rules.
On Friday, Foreign Minister Igor Ivanov said that in three months he hoped preparations would be complete and a treaty would be signed for the simplification of visas for Russians traveling to Germany, France and Italy, Interfax reported.
"The plans concern the issuing of multi-entry visas for up to three years for Russians who work actively with partners abroad," he said. "This will include students on exchange programs, who need to be in those countries."
TITLE: Historic Riga Enchants as Latvia Gets Modern
AUTHOR: By Catherine Santore
PUBLISHER: Special to The St. Petersburg Times
TEXT: Riga is only 11 hours by train from St. Petersburg, but it might as well be on the other side of the world. With its clean, evenly paved streets, well-restored buildings and smiling, helpful residents, Latvia's capital is a piece of European heaven energized by newfound sovereignty, and it's right around the corner.
Rich in history, Latvia is a relative baby beside the other European Union members. After the failed coup of 1991, the feisty Latvians declared independence and have since been trying to reclaim their country, which is only half-populated by ethnic Latvians after 40 years of Soviet rule. Though the government's attitude toward Russians is less than friendly, Russian is often heard on Riga's streets, and most restaurants have bilingual menus and waitstaff. You may win points for starting a conversation in English, but most Latvians still speak Russian better. The national currency - the lat - is one of the strongest in the world. Grab this new currency while you can, because Latvia will be adopting the euro in the next few years.
Riga boasts a delightful old town, and a weekend trip could easily be filled by wandering its winding streets, visiting museums and stopping for melt-in-your-mouth pastries at its many cafes. Appreciation for the charming old town only grows when you remember that large swaths of it were destroyed during World War II, when Riga was caught between the Soviets and Germans.
The first stop for most visitors, the tourist information center, is housed at 6 Ratslaukums in the House of Blackheads, with its decadent Dutch Renaissance facade. The building, built in 1334 but destroyed by German shelling during World War II, was used by a medieval guild of unmarried merchants (Riga being part of the Hanseatic League). The reconstructed building's upper rooms can also be visited by way of the souvenir shop next door to the info center.
Towering above the guildhall is the green copper spire of St. Peter's, one of the city's many Catholic-built churches that have since switched to Lutheran. Also destroyed in World War II, the present-day church is a reconstruction of the 15th-century original. Its spire was the highest in Europe at the time of its construction, but its fame was short-lived - rebuilt after collapsing in 1666, the spire burned down the next year. For those who have confidence in its 1973 replica, $3 will take you up 72 meters for a view of the old town and the Soviet monument to the Latvian riflemen by the waterfront.
For a chilling reminder of the inhumanity of man, head over to the Museum of the Occupation of Latvia. Inside the hunkering black building, you'll find sobering exhibits on the Nazi and Soviet occupations ending with Latvia's independence in 1991. The museum is free, supported largely by donations from Latvians living abroad. Take a look at the thick comment book for Russian visitors' takes on the museum.
After a dose of recent history, take a step back in time to the Dome Cathedral, the largest place of worship in the Baltics. Radiating from the square are a plethora of restaurants, and you can also head up Amatu Street for a glimpse of the guildhalls that were Riga's glory at the time of the Hanseatic League. As you pass a large yellow house on the corner of Maza Smilsu and Meistaru streets, look up at the roof for the statues of hissing cats. Reputedly, the house belonged to a businessman who, after being refused entrance to the guild, installed the cats with their backs arching in the guildhall's direction. The irked organization forced him to move the cats to their present position.
Though Riga's charms are enough for an entire weekend, there are several easy day trips from the city for those with more time. A delight under winter snows is Sigulda, a small town that is the administrative center of Gauja National Park. Skirt the duck pond in the center and wander along the path until the New Castle, which is actually a 19th-century manor. The grounds are open to the public, but the building is not. Further up the hill are the crumbling ruins of the Knight's Castle, which was first built in 1207 only to be destroyed several times as wars swept through the region. It last fell in the 18th century and was never rebuilt.
Another half-hour train ride to the east brings you to Cesis, which is billed as one of Latvia's most charming towns. Cesis' pint-sized center takes just a few hours to explore. The town's pride and joy is a stone castle that was built around 1207 by the Livonian Order. Among the many armies that ransacked it were the forces of Ivan the Terrible in 1577.
Just under $2 gains you entrance to the museum and permission to explore the castle. The castle staff lets more adventurous travelers wander the grounds and clamber over the ruins. Climb down a ladder to the lower part of the tower to see a dank prison cell lit by a tiny circle of light. Watch your head climbing out and be thankful that you're not a prisoner - they got thrown straight down. The groundskeeper will then hand you a lantern, which throws its feeble light on the tower's winding stairs. Access goes up to the third floor and offers views of the half-restored interior and the sprawling park outside the castle walls. Aside from the castle, Cesis has one well-kept main street, but turn down a twisting alley and the wooden buildings tell a story of neglect.
Not all of Latvia's attractions are older than the country itself - pop over to Jurmala, which was one of the most popular vacation spots in the Soviet Union. Caught on a strip of land between the Bay of Riga and the Lielupe River, water is never out of sight for long. The beach is deserted in the winter except for a few benches that are perfect for sitting, bundled up against the ferocious wind, to watch the waves beating against the shore. And though it is rare for amber to wash up at the bay (this being more common on beaches along the open sea), one never knows. Many restaurants and guesthouses are closed for the winter, but there is a charm in having the whole town of pre-Revolutionary wooden houses to yourself, with a view straight out to the Baltic Sea.
TRAVELER'S TIPS
WHERE TO STAY
Next to Riga's freedom monument at 28 Kalku is the Hotel de Rome (Tel. 371-708-7600), with doubles for $178 with breakfast.
Sigulda boasts a more welcoming room in a guesthouse than you could find in most hotels at Livonija (Tel. 797-3066), located at 55 Pulkv Brieza. Doubles cost $36, and the house is less than ten minutes by foot from the train station.
Cesis' most centrally located hotel is Hotel Cesis (Tel. 412-0122), at 1 Vienibas Laukums. Doubles go for $75, with breakfast.
WHERE TO EAT
For hearty Latvian cuisine at bargain prices, try Staburags at 55 Caka. Sit at a heavy, wood-planked table and wash your meal down with some of the best beer in the Baltics.
To satisfy your sweet tooth, snag a table at Smilsu Pulkstenis, a tiny cafe at 8 Meistaru, just around the corner from the house with the hissing cats. Their delicious pastries are all under a dollar.
HOW TO GET THERE
Trains leave St. Petersburg's Vitebsky Station at 21:49 pm. daily, arriving in Riga at 9:35 a.m. next day.
Finnair (Tel. 303 9898) flies to Riga via Helsinki on Monday, Tuesday, Wednesday and Thursday. Aeroflot flies from Moscow every Wednesday, Friday and Sunday.
TITLE: Bellona: Soviet Stances Persist
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The instinctive reaction of Russian authorities toward nuclear accidents is to cover them up rather than clarify them and is little different to the attitudes of their Soviet predecessors, Norwegian ecological organization Bellona says.
To illustrate its argument, Bellona has just made public for the first time on its web site a transcript of a Politburo meeting chaired by Mikhail Gorbachev after the sinking of Soviet nuclear submarine K-219 in the Sargasso Sea on Oct. 6, 1986.
"The major questions discussed at that meeting were how to prevent the Americans from getting to the sunken sub, attempts to put any blame on the crew, and how to present the information safely to the public," said Bellona researcher Igor Kudrik in a telephone interview from Norway on Monday.
Kudrik said the same concerns dominated the Russian government in 2000 when the Kursk nuclear submarine sank in the Barents Sea with 118 crew members on board.
"At that time the Russian authorities were also concerned with keeping foreign submarines away from the wreck, and only gave vague, general information about what had happened," he said.
Officials have still not given a reason for the sinking of the K-219.
A fire broke out on the sub, which led to a short circuit of the main power system. The automatic system of the nuclear reactor jammed on the starboard side, and senior sailor Sergei Pryaminin had to switch the reactor off manually. He remained in the seventh reactor compartment after that, and later died.
The port reactor switched off automatically, and a nuclear catastrophe was prevented. Most of the crew were shifted to a rescue vessel and the submarine was taken under tow by several ships, but a cable broke and the sub sank to a depth of 5,500 meters.
A total of four people died in the catastrophe.
The transcript of the Politburo meeting on the matter, obtained from the U.S. National Security Archive, shows how Soviet leaders discussed the problem of how to deliver the message about the accident to other countries and the mass media.
Kudrik said he understood that the record of the meeting was obtained by U.S. archivists when they received access to the information in the early 1990s.
Gorbachev suggested saying the sub had sunk and that a nuclear explosion would not take place. He also offered to say that experts considered that radioactivity might leak out under the ocean after a long period, but this was not a big danger.
However, another Politburo member recommended that it would be better to say just that "specialists are studying the consequences of the sub's accident."
Bellona says the situation was similar after the Kursk sank, with authorities initially reluctant to let any foreign ships near the site, and releasing limited information.
"I think the similar reaction of the modern government has to do with the difficulty of making the transition to greater openness due to the heritage of the Soviet Union's habit to keep information secret," Kudrik said.
"However, they should learn to change, because such cases have to do not just with them, but with the whole country," he said.
Kudrik said greater openness "would allow solutions to be found more quickly when such accidents occur," and "teach how to prevent such accidents in the future".
TITLE: Archives on Solovetsky Reveal Cruel History
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: The state archive of political movements of the Arkhangelsk region has declassified documents about the Solovetsky Islands territorial communist organization from 1920 to 1991, including material on Solovetsky Camp, the nation's first Soviet concentration camp, on the grounds of a former monastery.
The documents contain details including the number of camp prisoners, information about the development of the prison's theater, and extermination of insects in the camp's library, Interfax said.
According to the archive, the camp initially held 2,500 prisoners, but by 1928 the number had grown to 22,000. The annual expenditure of the state on one prisoner was only 240 rubles.
"This is very important information and it is significant that those documents were declassified," said Irina Flige, head of St. Petersburg Memorial historical organization.
Flige said the archive of the Solovetsky Camp itself was not saved, and now any scrap of information about it is very valuable.
"We, as historians, are interested not only in direct documents, but also in indirect ones, which can tell us a lot about the conditions in the camp and its life," Flige said.
A commission on declassifying party documents has been working in the Arkhangelsk region since 1998. Since then 10,000 documents have been made open to the public. Archive employees are to review and declassify 30,000 more documents.
The Solovetsky Islands are known as a place of exile for people the government did not like and for religious heretics.
In 1903 the Solovetsky prison was closed. After the Revolution it was the first camp for people persecuted by the Soviet government and became a model for the gulag system that later spanned the country.
The names of only a few of the prison's inmates are known. Two of the most famous prisoners were priest Pavel Florensky and ancient Russian literature researcher Dmitry Likhachyov.
Flige said the history of Solovetsky Islands' prison is very important for Russia, since it was a key point for Josef Stalin's repression.
TITLE: Shevardnadze To Leave Chary Tbilisi
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia - After failing to convince the opposition to call off their protests, Georgian President Eduard Shevardnadze planned Monday to leave the tense Georgian capital for a meeting with an unusual ally - the one opposition leader who has urged that decisive steps be taken against the demonstrators.
Shevardnadze was expected to head to Adzharia for a meeting with Aslan Abashidze, the leader of the Revival party, which remains in second place after the disputed Nov. 2 parliamentary election, according to preliminary results from the Central Election Commission. Revival trails the pro-government For a New Russia bloc.
The powerful leader of the autonomous Georgian region, Abashidze usually carries his party on a course of cooperation with the government on most key issues. He is also a fierce opponent of opposition National Movement leader Mikhail Saakashvili.
The Central Election Commission reported Monday that with 94.6 percent of the votes counted, the pro-government bloc For a New Georgia had won 21.1, while Revival had 19.3 percent. The National Movement had 18.6 percent, the Labor Party had 12.5 percent and the Democrats just under 7 percent.
Election officials declared the results invalid in 27 out of the 2,870 voting districts, citing procedural violations.
TITLE: Berlusconi Defends Putin's Yukos Line
AUTHOR: By Caroline McGregor
PUBLISHER: Staff Writer
TEXT: MOSCOW - Two sore topics for President Vladimir Putin - the Yukos case and Chechnya - hung in the air during his visit to Europe last week for talks with the European Union hosted in Rome by Italian Prime Minister Silvio Berlusconi, whose colorful defense of Putin launched a diplomatic storm of its own.
At a press conference Thursday to conclude the 12th annual EU-Russia summit, Putin implied that a reporter had been paid to ask an uncomfortable question regarding the case against jailed former Yukos head Mikhail Khodorkovsky, who is at the center of an acrimonious public battle with Putin's government.
"In terms of Mr. Khodorkovsky, this has nothing to do with EU-Russia relations," Putin said in biting response to a question from the correspondent for France's Le Monde newspaper. "But if this question interests you - I understand, you've been given a task and you must earn your money - I will answer it.
"These are people who in the space of five to six years made billions of dollars," Putin said in reference to Khodorkovsky and his peers who made lightning fast fortunes after acquiring state assets in dubious deals in the 1990s.
"There is no Western European country where this would have been possible," he noted, according to an official transcript posted on the Kremlin web site.
Having made these billions, they now spend "tens or hundreds of millions" to save those fortunes, he continued. "We know how this money is spent - on what lawyers, on what companies and PR firms, on what politicians, in part so these types of questions get asked."
Standing alongside Berlusconi and other top EU officials, Putin said the aim was not to go after specific individuals but to establish order in Russia.
"Attempts to blackmail state authorities will fail," he added.
It was the same Le Monde reporter, Laurent Zecchini, who provoked Putin's wrath at last year's EU-Russia summit in Brussels, when he asked pointedly whether the use of deadly bombs in Chechnya were not meant to "eradicate the population, not terrorism." Putin's responded with his widely reported invitation to Zecchini to come to Moscow for a circumcision.
Observers this week have drawn a number of parallels between Khodorkovsky and Berlusconi, who was elected after assembling a media empire that makes him Italy's richest man. Yet Berlusconi, who currently holds the EU's six-month rotating presidency, enjoys a warm friendship with Putin, with whom he has met six times this year.
The two are so friendly, in fact, that before Putin had a chance to answer the question, Berlusconi interjected with a five-minute defense of Putin's policy.
"I know President Putin well enough that I can personally vouch for his precise understanding of the distinction, the separation between the executive and judicial powers," the Italian leader said.
Describing himself as Putin's unsolicited lawyer, Berlusconi also accused European media of "telling tales" in their reporting of the Chechen conflict. He leant support to Moscow's argument that it is locked in a fight against terrorism there.
His remarks sparked a flurry of criticism from other corners of the EU, in particular from Brussels, where the head of the European Commission is Romano Prodi, a long-time political-rival of Berlusconi who may challenge him for the Italian premiership in 2005.
In a rare rebuke to the country holding the European Union's rotating presidency, commission spokesman Reijo Kemppinen described Berlusconi's comments as "personal remarks."
"We do not share the view of Prime Minister Berlusconi when it comes to the situation of Yukos, nor when it comes to the present... or past situation in Chechnya," he was quoted by Reuters as saying.
One diplomat at the meeting in Rome told Agence France Presse that Berlusconi "apparently forgot he was representing the European Union."
TITLE: Open Society Institute Office Raided
PUBLISHER: Combined Reports
TEXT: MOSCOW - Camouflage-clad men raided the Moscow offices of U.S. billionaire George Soros' Open Society Institute late Thursday and then barred employees from the building and hauled away equipment and documents by the truckload, a lawyer for the foundation said.
In the latest move in a long-running real estate dispute, a paramilitary force of more than 50 men barged into the building, blocked several employees in their offices and began loading property into trucks, lawyer Pavel Kuzmin said. He said the raiders had kicked employees out, allowing them to take only personal property.
Some of the fund's financial and legal documents, its archive, grant letters, computers and private possessions of employees, including passports and employment books, "were taken away in an unknown direction," the institute said in a statement.
"I fear that we have lost the records of our 15 years of activity," Kuzmin said, adding that the confiscated property was worth more than $4 million.
Kuzmin said he believed the men were off-duty employees of Russian law enforcement and security agencies and that some were armed with stun guns. He said that police had ignored the organization's appeals for intervention and that the foundation was planning to ask prosecutors to investigate the raid.
The Open Society Institute, which was formed to bolster civil society and the rule of law, has been caught in a long-running feud over the riverside property at 8 Ozerkovskaya Naberezhnaya in central Moscow. It signed a lease in 1999 with an option to buy the building from a company called Sektor-1, which later sold the property to Nobel Technologies. The camouflage-clad men said they were from Sektor-1, according to Ekho Moskvy radio.
Kantemir Karamzin, who heads both Nobel Technologies and Sektor-1, has been trying to overturn what he says are the "unfavorable" terms of the lease since 2001, arguing that since the building was sold the lease is no longer valid. Earlier this year, the Moscow Arbitration Court upheld the institute's right to lease the building until 2009 under the terms it agreed to in 1999.
"The foundation believes that it should be renting the building for 10 years at $10,500 per month, but we believe that the rental fee should be significantly higher, and are calling for common sense," Ekho Moskvy radio quoted Karamzin as saying.
"I would suggest to the Soros Foundation that it stop these lightweight, petty arguments - in the end it's not really big money. We will put all their folders back and even wipe the dust off, and we will stay away from here, if they agree to pay the rent on time," he told NTV television Friday.
Karamzin was also quoted in the local media as saying that Open Society owes him about $4 million for back rent and overdue utility bills. The building itself is worth $7 million and therefore "fair" rent should be at least $100,000 a month, he said.
The institute denied that it owes Karamzin money and said that it had spent more than $2.5 million renovating the building.
Soros formed the Open Society Institute in 1987 to help the Soviet Union make the transition to democracy. Earlier this year he said that he was reducing its activities in Russia because it was up to the state to work in the areas his foundation has previously supported.
Some of the institute's funding programs have been taken over by jailed Yukos owner Mikhail Khodorkovsky's Open Russia Foundation, but Stewart Paperin, executive vice president of the Open Society Institute, said the raid was not related to the ongoing legal assault on Khodorkovsky and Yukos.
"The only connection to the Yukos case is that every time property rights are abused, it creates a pervasive climate of lawlessness," he told Bloomberg.
The timing of the raid, however, raised some eyebrows, since it came the same day Soros told Bloomberg Television that Khodorkovsky's arrest was an "unmistakable signal" from the Kremlin that the oligarchs "must not step out of line."
(SPT, AP)
TITLE: Moscow Objects To Public Kisses
PUBLISHER: Combined Reports
TEXT: MOSCOW - Couples caught kissing on Moscow's metro could be fined under new regulations being considered by city authorities, according to Stolichnaya Vechernyaya Gazeta's web site on Friday. The ban could even extend to a husband embracing his wife, the newspaper said.
Quoting unnamed sources, the newspaper said city authorities were thinking of introducing the ban on Jan. 1 to raise levels of public morality.
It quoted a city education official, Tatyana Maximova, as saying metro travelers were indulging in increasingly lax behavior, including drinking alcohol. Moscow police would not comment on the report.
Ekho Moskvy radio dedicated an entire show on the issue. Human rights campaigner Valeria Novodvorskaya told the station that if City Hall was serious about launching such an "Orwellian anti-sex campaign" she would encourage Muscovites "to spend their days kissing in public places - simply out of principle."
(Reuters, SPT)
TITLE: Yukos 'Abuses Rabbits, Pigs'
PUBLISHER: Combined Reports
TEXT: MOSCOW - The oil giant Yukos, already battered by the jailing of its head amid a politically tinged probe, also faces allegations of letting rabbits mate without supervision and of mistreating pigs, news reports said Thursday.
Some television news shows made much of the finding by the agricultural authority of the autonomous republic of Sakha that a farm belonging to a Yukos-affiliated company was mistreating animals, placing the story at the top of newscasts accompanied with footage of piglets and bunnies.
The attention underlined the intense scrutiny surrounding Yukos since the Oct. 25 arrest of former CEO Mikhail Khodorkovsky by special forces at a Siberian airport. Khodorkovsky was then jailed on charges of fraud and tax evasion and he resigned his post a week ago.
The animal abuse allegations against Yukos surfaced in an inspection of a farm belonging to its subsidiary Sakhaneftegaz, news reports said. Authorities found that male and female rabbits were kept together and "couplings take place unsystematically, and no zoological-technological monitoring records are kept," Interfax said. Nursing sows are also kept in common stalls, which is against regulations, the report said.
"The unsystematic coupling of buck rabbits at a farm of a [Yukos] affiliate is an outrage, indeed," Yukos spokesman Alexander Shadrin told Interfax.
"Nevertheless, I do not rule out that among the numerous accusations against Yukos a new one can be added - cruelty to animals planned and committed by an organized group," Shadrin said.
In a statement on NTV television, Shadrin, appearing somber, said the company takes the complaint seriously.
"Those responsible will definitely be punished and the irregularities will be rectified," he said. "We express the hope that to the numerous charges filed against the Yukos company... cruelty to animals will not be added."
(AP, SPT)
TITLE: Court Strips Yukos Exec of Parliamentary Immunity
PUBLISHER: Combined Reports
TEXT: MOSCOW - A federal court in Krasnoyarsk has upheld a request by Moscow prosecutors to strip a key Yukos shareholder of his parliamentary immunity in the latest legal move against the oil giant.
The ruling by the court in the Siberian city could now leave Vasily Shakhnovsky open to prosecution for large-scale tax evasion, which he has already been charged with. Prosecutors alleged he had evaded taxes to the tune of $965,000 from 1998 to 2000.
Shakhnovsky resigned as head of Yukos' day-to-day operations after a local legislature named him to the parliament's upper house Oct. 26.
The court ruling is the latest twist in action by prosecutors against Yukos in which the company's chief executive Mikhail Khodorkovsky has been arrested and detained in jail on charges of tax evasion and fraud. He has since stepped down from his post.
Shakhnovsky has been spared pretrial detention but is prohibited from leaving Moscow.
The parliament of Evenkia, a desolate Siberian region larger than France with a population of under 20,000, voted Shakhnovsky into the Federation Council a day after security police snatched Khodorkovsky from his plane in Novosibirsk on Oct. 25 and flew him to Moscow to be incarcerated ahead of trial.
Prosecutors have made clear they believe his election to parliament was a ruse to prevent them from pressing their criminal case against Shakhnovsky, who owns more than 3 percent of Yukos.
But a source close to Evenkia's parliament said the deputies could hold a revote, making sure all necessary procedures were duly observed.
"It is now being decided if we will go to the end. Then we will hold another session on the same issue observing all the formalities mentioned by the prosecutors," the source said by telephone.
Evenkia, one of Russia's poorest regions, has huge untapped oil reserves, which Yukos is first in line to exploit.
(AP, Reuters, SPT)
TITLE: Land Market Stymied by Code
AUTHOR: By Greg Walters
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW - Enterprises that privatize the land on which they stand say they can't afford to pay the government's price, although they've had three years to resolve the issue.
As the Jan. 1 deadline looms closer, the issue of land registration as set out in the 2001 Land Code has emerged as the $100 billion question to which the government is still working on an answer.
The Land Code stipulates that much of the land currently in use by private enterprise must be "re-registered" - that is, purchased or claimed under a long-term lease from the government by Jan. 1, 2004. But the country's biggest business lobby group, the Russian Union of Industrialists and Entrepreneurs, or RSPP, calculates that the total sum due on New Year's Day adds up to $106 billion, or one quarter of the country's GDP in 2003 - a cost, the RSPP claims, Russian businesses can little afford to pay.
"This means taking about $100 billion out of enterprises' turnover so that they can purchase land plots, as well as develop them, which by law should be the responsibility of the government," RSPP president Arkady Volsky said at a recent press conference. Volsky further argued that the payment would hurt the government's own goal of doubling GDP. "What they suggest is not quite adequate," he said.
Russian government officials have said they are aware of the situation and are working toward a legislative solution, which might include pushing the date for full payment back to Jan. 1, 2007, and lowering the total burden of payment for businesses. But according to Deputy Economic Development and Trade Minister Andrei Sharonov, the government has yet to put a bill amending the Land Code before parliament.
The government did not succeed in presenting the bill to the Duma, or lower house of parliament, by the end of the session on Oct. 28, Sharonov said. "Technically we've given the bill to the government, but we're still waiting for a response from the territories."
Konstantine Kouzine, a lawyer with Linklaters CIS, said RSPP's $100 billion figure is difficult to verify, but added that he thinks the payment date will likely be pushed back by the government.
"Effectively, [a Jan. 1 payment date] means thousands of companies will not comply," he said. "What are you going to do, take the land away from them? That would be catastrophic. I am expecting [an extension], frankly, to happen, because they wouldn't want to put too many people into default. It's not the first time the law is going to be delayed."
Alexei Grishko, a consultant with Jones Lang LaSalle, said the RSPP's figure of $106 billion sounded accurate. "I believe they're right," he said, adding that the Jan. 1 payment date "seems like a ridiculous proposal. I think that pushing the date back a bit seems like a good idea."
Analysts agreed, however, that the question of sorting out land payments in the short run pales in comparison to the larger problem: the insufficiency of the Land Code to create an effective land market in Russia.
"In my opinion, we have to have a very clear and understandable Land Code that describes in detail all legal aspects of sale, purchase and leasing of land," Grishko said. "The market of land transactions would become much more transparent than it is now. Right now, the price of a given piece of land has to be agreed between the players on the market."
Jones Lang LaSalle's Grishko added that no safe predictions could be made about the government's ability to fix the Land Code's problems.
"Absolutely no forecasting is to be done right now," he said. "If it comes through next year, that would be great. But right now this is really stopping foreign investors from entering the market."
TITLE: Tongues Wag as Chubais Sends Letters to Millions
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - With the election season officially under way, the co-chairman of the Union of Right Forces, or SPS, has begun the ambitious task of sending a personally signed letter to 30 million households promising to make life cheaper.
But he swears the project is not political.
By day, Anatoly Chubais is the head of national power grid Unified Energy Systems, and it is in that capacity, UES said Monday, that he decided to communicate with the masses directly.
The idea, according to UES, is to explain how the ongoing and complicated restructuring of the electricity industry will lead to lower utility bills for consumers nationwide.
In his letter, which UES refused to provide to the media, Chubais notes that electricity prices have already dropped in five regions thanks to his efforts, UES spokesman Andrei Yegorov said.
"People should feel that the reform should be welcomed and not be afraid of it," he said.
Yegorov said that each of the dozens of regional subsidiaries of UES are responsible for making sure their customers get a copy of the letter because "the Russian postal service is not ready to handle such a heroic task."
He said the letter, which is on standard A4 paper and written in language "accessible to everyone," lays out in detail how UES' tariff policy will lead to lower prices for consumers.
At the request of UES, the Federal Energy Commission on Nov.1 lowered tariffs by 20 percent in five regions - St. Petersburg, Leningrad, Yekaterinburg, Nizhny Novgorod and Perm. UES has also frozen tariffs in 12 other regions.
"People need to understand that lower prices are an effect of the reform that was stalled for so long. Today only five regions - tomorrow more and more," Yegorov said.
He said the letter lists two main reasons that UES has been able to cut prices. The first is that it has managed to cut its own expenses, while the second is the launch of the so-called deregulated wholesale power market.
Despite claims to the contrary, political and industry analysts alike said there was only one reason Chubais decided to launch a direct marketing campaign - politics. Some, however, warned that it may come back to haunt him.
"This is a short-term policy that may turn out badly for Chubais," said Sergei Suverov, power analyst at Zenit bank. "In two to three years, electricity tariffs will inevitably grow and people will recall his promises, which will likely hurt his ability to hit his super-target - the 2008 presidential elections."
"Chubais is courting the vote of a small circle of people who would vote for SPS if they weren't so embarrassed by Chubais and his unpopular reform," said Yury Korgunyuk of the INDEM think tank. "To be swayed to vote for SPS, these people need Chubais to promise to reform honestly," he said.
TITLE: IN BRIEF
TEXT: Floating Reactors?
MOSCOW (SPT) - The feasibility study for a project to build a floating low-output nuclear power station in Severodvinsk, Arkhangelsk region, was reviewed by Minatom in late October, Interfax reported deputy atomic minister Vladimir Asmolov as saying at a press conference Monday.
The project has been recommended for approval by the state review panel.
Experts say the floating power station will cost $150 million to build and will take 13 years to recoup investment. The project is economically feasible thanks to the lower cost of shipping organic fuel.
Asmolov said such floating installations could boost social and economic prospects in the country's remote northern areas. The cost of heat energy from floating reactors is half that of energy from a thermal electric station using transported organic fuel.
Atomic energy laws stipulate that only the government may invest in developing new stations. Rosenergoatom's lack of funding could put realization of the project off indefinitely unless foreign capital is allowed.
New Hotels
ST. PETERSBURG (SPT) - More than 40 small hotels will be opened in St. Petersburg by the end of 2003, Interfax reported based on a press release from the city's committee on tourism and resort development.
The new hotels will boost the city's number of hotel beds 12 percent to 33,364 in 131 hotels.
These figures were quoted in a city administration draft resolution on support for hotel and tourism investors approved in late October by the investment commission that handles such projects.
Defense Loan
ST. PETERSBURG (SPT) - The St. Petersburg branch of Alfa Bank issued a loan to Rubin construction bureau to build the Yury Dolgoruky submarine rocket launcher, Interfax reported Monday.
The bank's press release does not state the amount of the loan. The submarine will be built in Severodvinsk, Arkhangelsk region.
A special group created by the Russian Shipbuilding Agency and the Ministry of Defense will monitor spending on the project.
Alfa Bank ranked fourth in the Interfax-100 rating of banks based on second-quarter showings.
Menatep Rating
LONDON (SPT) - Standard & Poor's dropped the rating for Menatep SPb, the St. Petersburg branch of Menatep, from "developing" to "negative," Interfax reported the agency's Nov. 6 press release as saying.
The press release assigned a long-term rating of CCC+ and a short-term rating of C to the bank.
The demotion is related to the Russian government's investigation of Menatep group member Yukos.
S&P analyst Ekaterina Trofimova was quoted in the press release as saying that "although the case has so far had limited impact on the bank's liquidity, it could affect reputation and creditworthiness."
"S&P will monitor events closely for any significant changes in the bank's financial policies, strategies and owners, and the effects they might have on the bank," she was quoted as saying. Siloviye Sells Stake
MOSCOW (Bloomberg) - Siloviye Mashiny, a Russian engineering company owned by Interros Group, said last week that it had raised $44 million by selling a 17 percent stake to 10 European investment funds through a private placement.
The company did not name the buyers in the e-mailed statement announcing the sale.
The company controls four factories in northwest Russia that make machines for power plants, as well as a design bureau and a trading company. The Interros Group which owns Silovye Mashiny is controlled by Russia's fifth-richest man, Vladimir Potanin.
The sale values Siloviye Mashiny at about $260 million, more than the $234 million market value for Gruppa Uralmash-Izhora, Russia's biggest engineering company by sales.
Fiat, BasEl Mull Deal
MOSCOW (Bloomberg) - Italian carmaker Fiat signed an agreement Thursday with Russian holding company Base Element to study the sale of Fiat cars and truck engines in Russia and produce them in the country at a later stage.
The two companies plan to sell Fiat brand cars in Russia, Fiat said in an e-mailed statement.
Fiat Chief Executive Giuseppe Morchio and Russian billionaire Oleg Deripaska, Base Element's chairman, signed the agreement in Rome during President Vladimir Putin's visit.
Gold Reserves Up
MOSCOW (Reuters) - The value of gold reserves held by Russia's central bank was $3.74 billion as of Nov. 1, a rise of $1 million from the $3.74 billion of the previous month, the bank said Thursday.
The bank's official web site said it held 12.5 million ounces of gold as of Oct. 1, which is roughly in line with the official dollar value of the metal for the same date. The bank values its gold reserves at $300 per troy ounce.
It did not give a figure in ounces for Nov. 1.
The bank's total gold and foreign currency reserves had risen to $64.928 billion as of Nov. 1 from $62.07 billion on Oct. 1. Funding for Mariinsky
ST.PETERSBURG (SPT) - The Culture Ministry will provide 40,221,000 rubles ($1.34 million) for the repairs at the Mariinsky theater warehouse, which was detroyed in a fire in September this year, Interfax reported.
Prime-Minister Mikhail Kasyanov signed the related order Monday. The money will come from the savings of the Culture Ministry in January-September of this year.
The Mariinsky theater warehouse containing sets for over 30 productions was fully destroyed in a fire on Sept. 5, 2003. Sets for several shows which were lost in the fire - including those for Mazeppa, which opened the theater's season on Oct. 10 - have already been restored.
Metro Repairs Advance
ST.PETERSBURG (SPT) - A detailed schedule for completion of repair works on the destroyed part of the St. Petersburg underground between Lesnaya and Ploshchad Muzhestva stations will be developed by Dec. 15, Interfax reported.
Deputy Prime Minister and former St. Petersburg governor Vladimir Yakovlev told Interfax that he is happy to see the repairs reaching the final stage. He also promised that the federal and local governments will provide 1 billion rubles ($35 million) next year for the completion of repairs, with 80 percent coming from the city budget.
Also on Monday, Governor Valentina Matvienko said that a new station, Komendantsky Prospekt, will start operating at the end of next year, Interfax reported.
Russian Museum Retro
ST.PETERSBURG (SPT) - The Russian Museum has launched a retrospective contest for its visitors, Interfax reported.
Participants are asked to submit their recollections of their visits to the museum or any events related to the museum. Their stories from various years will comprise an exclusive People's Book, where stories of ordinary people will be published side-by-side with verse and prose by prominent writers commenting on the museum. The materials should be submitted to the museum by autumn 2004.
The museum's extensive collection features over 400,000 items and is the world's largest collection of Russian art.
Police View Negative
ST.PETERSBURG (SPT) - Nearly 60 percent of Russians perceive the country's police in a negative way, Interfax quoted the All-Russian Center For Study of Public Opinion (VTSIOM), as saying.
These were the results of a poll of 1600 people from 38 regions.
Only 8 percent of respondents were strongly positive about the police, while another 24 percent said they see the police in a "somewhat positive way," the report said.
Younger people (aged 18-24) and the elderly (over 60 years old) show the most positive reaction. The greatest skepticism comes from respondents with a high level of education and a low level of income, the report said.
Smolny Journalist Dies
ST.PETERSBURG (SPT) - Well-known St. Petersburg journalist Alexander Afanasiyev, whose last job was head of information for formergovernor Vladimir Yakovlev, died Wednesday, Interfax reported.
Born in Leningrad in 1945, Afanasiyev worked at several of the city's leading publications, including "Smena", "Vecherny Leningrad", "Leningradskaya Pravda" and hosted his own program on local television. He also was the winner of the Grand Prix of the first journalistic contest "Zolotoye Pero" in 1996.
"Born to be a reporter, Alexander Afanasiyev was a very passionate reporter, with his every article coming from the borrom of his heart," Interfax quoted Vladimir Ugryumov, the head of the St. Petersburg Union of Journalists, as saying.
TITLE: An Expert Compares Local Investment Laws
AUTHOR: By Maxim Kalinin
TEXT: During the past few years the investment climate in Russia has been marked by competition among the regions to attract investments, both foreign and Russian. The regions use legislation to encourage and regulate investment. The laws of neighboring regions - whether city or oblast - can differ, which is a point that investors must consider when deciding where to invest. This overview will point out key differences in the investment laws of St. Petersburg and the Leningrad Oblast.
THE LAWS
The Leningrad Oblast Investment Law enacted in July 1997, like its predecessor law in the Novgorod region, quickly became known as a creative and innovative measure bringing benefits to, and thereby attracting, investors.
From the end of 1999 until July 2003, the Legislative Assembly of the Leningrad Oblast enacted several broad amendments to the Oblast Investment Law, not only to improve its appeal to investors, but also to bring it in line with the relevant federal legislation.
A second law On State Support of Trade Activity in the Leningrad Oblast provides additional benefits to companies engaged in trade.
The Legislative Assembly of the city of St. Petersburg passed the St. Petersburg law On State Support of Investment Activities on the Territory of St. Petersburg in July 1998, also with the goal of improving investment climate.
The City Investment law together with the St. Petersburg law On Tax Benefits and the St. Petersburg law On Several Issues of Taxation from 2000 to 2003 (the City Tax Laws) comprise the set of legislative acts which regulate the investment climate in the city.
STATE SUPPORT
The City Investment Law provides state support for investors without requiring them to conclude agreements with officials of St. Petersburg. The city's law On Investment in Real Estate, however, requires that an investment agreement be signed to regulate the amount of investment and terms of completion of projects, but does not regulate tax and other benefits, with the exception of reduced rates of rent for land during the construction period.
The Oblast Investment Law declares that it is aimed at developing investment activity on the territory of the Leningrad Oblast through the creation of a "most favorable treatment regime," which mostly includes tax benefits and subsidies and provision of additional guarantees of state support for investors whose projects are of major economic and social importance on the territory of the Oblast.
INVESTMENT AGREEMENT
To qualify for the most favorable treatment regime in the Oblast, the investor submits a detailed business plan which includes a calculation of the investment recoupment period verified by an accounting firm specially accredited with the Leningrad Oblast Government on the basis of which an investment agreement is concluded between the Leningrad Oblast and the investor. The investment agreement determines the specific rights and obligations of the investor and establishes the term of applicability of the most favorable treatment regime.
PROPERTY TAX
The City Tax Laws allow the amounts of property tax calculated from the depreciated value of fixed assets to be deducted if the fixed assets were put into exploitation within the previous year, for periods shown in Table 1. The Oblast takes a different approach to property tax, as shown in Table 2.
PROFIT TAX
The Russian Tax Code authorizes some regions to cut regional taxes such as property tax and part of federal taxes payable to regional budgets, usually by decreasing the amount of federal profit tax paid directly to the Russian Federation subject budget from 16 percent to 12 percent.
To relieve the financial burden on investors and to maintain a stable investment climate in the region, the Leningrad Oblast provides subsidies from the oblast budget for the purposes of paying the profit tax, i.e. the oblast de facto returns to the investor the amounts of the profit tax paid by the latter to the regional budget.
The Oblast Investment Law establishes for investors a rate of 12 percent for the regional portion of the federal profit tax which is payable to the budget of the Leningrad Oblast. This reduces the total rate of the profit tax from 24 percent to 20 percent throughout the entire investment recoupment period of the investment. The same reduction is effective for two years following the completion of the recoupment period if the sum of investment exceeds $1 million, as in Table 3.
LAND TAX
City Tax Laws provide that the portion of the land tax to be paid to the budget of St. Petersburg is not levied on land plots on the territory of St. Petersburg used for the purpose of construction and/or reconstruction of buildings. This land tax benefit is effective throughout the period of such building or rebuilding and for two years after completion.
Joint ventures established by the city of St. Petersburg and foreign enterprises, according to international treaties between St. Petersburg and the governments of the foreign states ,are exempt from payment of land tax for the first seven years of their existence, or for any other period provided by the treaty, but no longer than seven years.
FAVORABLE CONDITIONS
The City Investment Law provides discounts on lease payments for land if investors build or renovate existing buildings on a land plot. The Oblast Investment Law does not contain such a provision.
OBLAST TRADE LAW
The Trade Law provides measures of state support to wholesale trade companies registered for tax purposes in the Leningrad Oblast. Trade companies are defined as companies for which 90 percent of total proceeds result from wholesale trade of Russian goods produced outside the territory of the Leningrad Oblast, provided that similar goods are not produced in the Leningrad Oblast, or the goods are included on a special list approved by the Leningrad Oblast Government.
Measures of state support of trade activity include reduction from 16 percent to 12 percent for the regional portion of the federal profit tax payable to the budget of the Leningrad Oblast, zero percent property tax rate, and subsidies as outlined in Table 4.
Measures of state support are granted to a particular trade company under an agreement between the company and the Leningrad Oblast for a period of up to five years.
RIGHTS AND LIMITATIONS
In order to prevent withdrawal of investments from the economy of St. Petersburg, especially after the investor has already used the tax benefits provided by the relevant legislation, the City Tax Laws stipulate conditions for the investor's repayment of several tax benefits which it has already received in the event of its withdrawal. These conditions are applied in the case of liquidation or transfer of the investor or foreign company's subsidiary to another assessment district.
In both cases, all taxes in relation to which benefits were granted are recalculated according to the regular tax rates. The additional taxes are payable to the budget of St. Petersburg within three months after the investor's decision to liquidate, or after the introduction of amendments to the investor's charter which reflect its intention to leave St. Petersburg for another assessment district.
The Oblast Investment Law stipulates that the obligation of the investor to repay tax benefits and subsidies must be included in every investment contract. This obligation arises if the status of investor, as defined by the Oblast Investment Law, is lost within five years after the expiration of the most favorable treatment regime. In this case, the former investor repays tax benefits and subsidies and pays a penalty on this sum.
All investors in St. Petersburg and the Leningrad Oblast have equal rights to receive information necessary to make proper decisions about their investments.
Investors also have the right to receive, use and transfer without hindrance all revenues received as the result of their investment activities after discharge of taxes and obligatory payments due.
It is also guaranteed that investors will not be forced to make any further investments.
LEGAL GUARANTEES
New legislation of St. Petersburg restricting investors' rights applies to them only three years after such legislation enters into force.
The Oblast Investment Law declares that any new legal acts of the Leningrad Oblast restricting investor's rights will not apply to investors holding investment contracts with the Leningrad Oblast.
The laws and normative acts discussed above reflect the attempts of the legislative and executive powers of the Leningrad Oblast and St. Petersburg to create the most favorable conditions for the attraction of investment and the development of business.
PROPERTY TAX
Table 1. St. Petersburg Property Tax for Investors
Fixed assets Period
1 million + rubles 1 year
5 million + rubles 4 years
500 million + rubles* 7 years
* Over 2.5 years.
Table 2. Leningrad Oblast Property Tax for Investors
0 percent throughout
recoupment period + 2 years
SUBSIDIES FOR INVESTORS
Table 3. Subsidies for investors in the Leningrad Oblast
Period Investment Subsidy
Entire investment recoupment period $1 million + 100 percent *
Two years after recoupment $10 to $50 million 33 percent
Two years after recoupment $50 million + 100 percent
*of remaining portion of profit tax (i.e. of 12 percent) to be paid to the regional budget of the Leningrad Oblast during the period specified.
SUBSIDIES FOR TRADE COMPANIES
Table 4. Subsidies from the budget of the Leningrad Oblast for trade companies for the purposes of paying federal profit tax.
Monthly profit in current year Percent of federal profit tax
payable to regional budget
10 million+ rubles 10 percent*
10 million to 20 million rubles 120,000 rubles plus 20 percent
20 million to 40 million rubles 360,000 rubles plus 30 percent
40 million to 60 million rubles 1,080,000 rubles plus 40 percent
60 million to 80 million rubles 2,040,000 rubles plus 50 percent
80 million to 100 million rubles 3,240,000 rubles plus 60 percent
100 million + rubles 70 percent
* of remaining portion of profit tax (i.e. of 12 percent) to be paid to the regional budget of the Leningrad Oblast during the period specified.
Maxim V. Kalinin is a Partner at Baker & McKenzie St. Petersburg.
TITLE: Building Cultural 'Bridges' on Intuition
AUTHOR: By Natasha Warcholak
PUBLISHER: Special to The St. Petersburg Times
TEXT: Alexandra Bejarano, founder of Artefakti decorations, seems to contradict all business-related stereotypes. In no way could she be called a down-to-earth person whose feathers are not easily ruffled. With her degree in history and a major in Colonial Latin America, experience teaching English and a deep passion for traveling and culture, she does not fit. "That's the non-commercial part of me," she laughs. While all the respectable businessmen strictly adhere to their carefully calculated business plans, she trusts her intuition. "I just follow my heart and I have always proved myself right."
So how did it all start?
Alexandra, a native of Colombia, is also the person behind Mosty, a foundation established to promote Colombian culture. It hosted the Colombian Architecture Exhibition in 2002, with special guests including the Colombian Minister of Foreign Affairs. A couple of years ago she organized a Colombian film festival and brought famous Colombian singer Toto la Momposina to perform at BKZ Oktyabrsky in front of a crowd of 4,000.
Although successful in themselves, these forays into event planning were not intended to result in an annual festival. The experience will pay off, however, when Alexandra opens an exhibit of the Colombian Gold Museum in St. Petersburg.
She describes the whole process of moving into the serious business of importing rugs and textiles as a "natural progression." Her wild passion for travel and collecting unique objects gave her an idea. "I just thought, if I know all these things, why don't I sell them?"
St. Petersburg seemed to be a good launchpad for such an enterprise. She came here to visit eight years ago and "I'm still here," she laughs. Good social connections and trusting her intuition helped to get it all started in early 2002. Indeed, the idea of importing rugs and textiles from Central Asia, Colombia, Mexico, India, Turkey and Iran, among other countries, has proven very successful and Artefakti is now a registered trademark. Advertising is by word of mouth, website and catalog, and her studio, although well-located in the city center, can be viewed only by appointment. Word of mouth has its say again, as the number of customers looking for something out of the ordinary is on the rise. More commercial objects for less demanding clientele can be purchased from the many shops specializing in interior decoration with which Alexandra cooperates.
She is not afraid of competition, simply because there is none. While there are people, mostly designers, dealing with similar things, she is still a pioneer in this field.
"Competition is good though, it really stimulates and it keeps you on your toes," she admits.
The company's staff consists of Alexandra and her assistant, Dasha Alina and two representatives in Colombia, and is aided by a whole network of friends, acquaintances and people "you just meet."
How does she find the local business environment? "Although it is harder to get things done, chaos allows movement, which is similar to how you deal with things in Colombia."
However, she doesn't agree that everything buys and sells in Russia. People's tastes are not very flexible and a lot of them are very picky while trying to be fashionable, thus turn out to be not very adventurous.
Who are her customers? "A healthy mixture of people interested in things from other countries," she says. Her stock ranges from "mainstream but natural" rugs through the whole selection of hammocks and bedspreads to completely wacky floor coverings with semi-precious stones. Potential buyers are in their thirties, mostly Russian, although there is a good clientele of well-established expats. Celebs have been seen on the premises as well.
Future plans? "Forward is the only possible way. It's natural to my personality," says Alexandra. Opening an outlet in Moscow is in the cards. Plans of expanding to Colombia and England are also in the works, and being half-British will certainly help in this department. Far-fetched projects include Mongolia, north Africa and Brazil. Expanding into mainland Russia, though, is not very appealing. "Something tells me that people are not going to be very receptive," she says.
Geographical expansion is not all, though. Alexandra finds Colombian designers extremely inspiring as their work is based on a happy confluence of old and modern. Her next step, then, is to expand into importing furniture, which might become her golden goose. Although she's more of a marketmaker than a profitmaker, her commercial part has its say here as she aims to "show a different face of Colombia" by opening a market in this country.
For example, learning the rules of Backgammon, a game played across the -stan countries, helped her to negotiate carpet prices and earned her much respect among local people. Consistency and a hard-nosed attitude also help.
How does she see herself? "I consider myself a hunter of unique decorative objects. A hard-headed businesswoman? That's also possible. Business comes naturally. You move organically. You trust your intuition," she says.
While keeping the growth of her business in mind, Alexandra believes in the importance of promoting cross-cultural understanding. Promoting Colombian culture is her priority for obvious reasons, but she's also aiming to take products from Central Asia to the local market, for which she is ready to compete. This can be downright cash-generative as well.
With her business functioning just over a year, Alexandra believes there is room to grow thanks to increasing interest in unique and exotic artifacts for people seeking to personalize their homes.
TITLE: Markets Flat Despite Numbers
AUTHOR: By Meg Richards
PUBLISHER: The Associated Press
TEXT: NEW YORK - When Wall Street saw another set of upbeat employment numbers this past week, it barely blinked. The surprising lack of response could be evidence of the market's improving health: investors, having learned a tough lesson the past three years, are approaching stocks with more rationality and emotional maturity than in the past.
"The market is behaving very well because investors are getting what they expected," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.
Even Federal Reserve chairman Alan Greenspan, who famously warned against "irrational exuberance" during the stock market's boom years of the late 1990s, seems pleased with the pace of the economic recovery. He struck an optimistic tone in remarks to securities industry officials Thursday, and even gave stocks a late-day boost by saying the odds increasingly favor the creation of new jobs.
A much-awaited government report bore him out Friday. Payrolls grew by 126,000 last month according to the Labor Department, far more than the 50,000 new jobs economists predicted. The job market has been the weakest element in an otherwise robust recovery.
The employment numbers, Greenspan's comments, an industry report on manufacturing and factory order data and solid earning released during the week all reinforce the idea that the economy is strengthening. But high stock prices have caused investors to take a step back, Sohn said.
"At this point investors are saying, 'Show me the results first and then I will buy,' as opposed to what they were saying before, when the market was undervalued and they were willing to buy in advance on anticipated growth and profits," Sohn said. "A change in attitude has occurred."
It's a far cry from the feverish burst of buying that caused Greenspan such concern during the Wall Street bubble. Investors are taking a much more cautious approach these days.
"A lot of folks touched hot stoves in 2000 and got burnt," said Richard J. Nash, chief market strategist at Victory Capital Management.
"I think investors are a lot more cognizant of valuations this time around," Nash said. "It's not necessarily a bad thing for the market to have this wall of worry to climb. The fact that there's a lot of skepticism in this rally is pretty healthy."
The three main gauges posted gains in October as investors bargain shopped following declines in September. The Dow Jones industrials advanced 5.7 percent, the Nasdaq composite index rose 8.1 percent, and the Standard & Poor's 500 index gained 5.5 percent.
To sustain the rally in the coming months, analysts say investors will be looking for a steady flow of good economic news validated by rising corporate profits.
The market is bound to show its disappointment if the number of new jobs doesn't continue to rise, and there will be enormous pressure for companies to beat earnings expectations in the fourth quarter. The next gross domestic product figure will also be eagerly anticipated, particularly following the extraordinary 7.2 percent annual growth rate reported for the third quarter. The GDP is the broadest measure of the economy's performance.
For now, investors may be content to sit back and wait, said Richard A. Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Florida.
"It could be that we have a few sluggish weeks ahead of us where the market doesn't really make much headway but it doesn't go down either," Dickson said. "That might be the best of all possible worlds. It would let people catch their breath and look toward fourth quarter earnings and 2004."
The Dow ended the week up 8.67, or 0.1 percent, finishing at 9,809.79. The S&P 500 rose 2.50, or 0.2 percent, ending the week at 1,053.21.
The Nasdaq gained 38.53, or 2 percent, to close the week at 1,970.74.
The Russell 2000 index, which tracks smaller company stocks, ended the week up 14.74, or 2.8 percent, closing at 542.96.
The Wilshire 5000 Total Market Index, which tracks more than 5,700 U.S.-based companies, ended the week at 10,289.76, up 65.24 from the previous week. A year ago, the index was at 8,438.80.
TITLE: FSC Asks U.S., UK To Probe Bond-Price Gains
PUBLISHER: Combined Reports
TEXT: LONDON - The Federal Securities Commission plans to extend a probe into bond-price gains that occurred about half an hour before Moody's Investors Service raised the country's credit ratings last month.
Russia's market regulator will ask the U.S. Securities and Exchange Commission in Washington and the Financial Services Authority in London to widen the investigation to the United States and Great Britain after completing its inquiry into trades in Russia, FSC Chairman Igor Kostikov said last week.
Russia's benchmark Eurobond due 2030 started rising Oct. 8 before Moody's raised Russia's bond ratings by two levels to investment grade. More than half of the 3.4 cents on the dollar gain in the benchmark bond occurred in the 35 minutes before the announcement at 11:24 a.m. London time that day, according to J. P. Morgan Chase & Co. statistics. Most of the trades probably occurred outside Russia, Kostikov said.
"It took place in the West, not Russia," Kostikov said in a televised interview with Bloomberg News. "We will talk with our colleagues in the U.K. and the U.S. We're working with them."
The Moody's upgrade was the first time Russia received an investment-grade rating, opening the securities to some investors whose fund rules prevent them from buying speculative-grade, or "junk," bonds.
Moody's and Standard & Poor's have a policy of telling bond issuers before a rating action is taken. Alexei Sizov, head of fixed-income at Renaissance Capital, Russia's second-biggest brokerage, said traders knew of the move about half an hour before Moody's announcement to the market.
"It is typical for us to inform issuers some time before the release; that's always been our policy," said David Levey, managing director of sovereign risk at Moody's in New York. "We will be very interested in the results of this inquiry but so far we don't see any reason to change."
The Russian regulator will contact the SEC and FSA as early as this year, Kostikov said after the televised interview. Deputy Finance Minister Alexei Ulyukayev has said the commission should investigate the trades.
The Emerging Market Traders Association, the New York-based industry body, called on ratings companies to review their policy after the bond rally, while welcoming the commission's response.
"Mr. Kostikov is taking his duties quite seriously and that has to be a good thing for the market," said Michael Chamberlin, EMTA's executive director in New York. "It's a normal path for an investigation to take" to work with international regulators.
The Federal Securities Commission is restricted to imposing maximum fines of about $2,000 on anyone found to have traded on insider information under current Russian laws, Kostikov said. There is no law preventing government officials passing on information that may affect securities prices, he said.
(Bloomberg, Reuters, SPT)
TITLE: Investment Climate Benefits from Nurturing
AUTHOR: By Michael Diosi
PUBLISHER: Special to The St. Petersburg Times
TEXT: Despite considerable economic growth over the past year, St. Petersburg is still failing to capitalize on its potential for foreign direct investment in the city.
While St. Petersburg does attract much higher levels of foreign investment than the neighboring Leningrad Oblast, a small - and decreasing - amount is in the form of foreign direct investment. Of the $881 million in foreign investment St. Petersburg received in 2002, the majority took the form of loans, most of which are repatriated within the same year. It received only $84 million in FDI, almost half the $146 million received in 2000. Meanwhile, the oblast claimed $400 million in FDI last year, nearly five times that of the city and nearly double its own 2000 figure.
The oblast is rapidly gaining economic ground, and it is a worrying trend for the city. A recent report by Expert magazine shows that while St. Petersburg continues to rank as seventh best investment climate in Russia, the oblast sits on its tail in eighth place, and last year saw its investment potential rise from a "lower" to "average" ranking. In terms of investment risk, between 2000 and 2002 the city fell from 5th to 8th best region in Russia, while the oblast rose from 22nd to 10th. Moreover, industrial production volumes and retail trade turnover in the oblast are increasing at a faster rate, as its economy diversifies into market sectors such as high-tech, communications and even research, where the city traditionally claims a stronger hold.
According to Natalya Kudryavtseva, executive director of the St. Petersburg International Business Association, the city has so far failed to adequately respond to this threat. The climate for investment in the city is simply not as attractive to investors, she claims. "Changes must be made," or the city will continue to lose investors to the oblast.
A report published by the Business Information Service for the Newly Independent States as early as July 2000 asserted that "the Leningrad Oblast is known as a particularly favorable location for foreign investment," and noted the arrival of a large number of American investors, including Ford, Caterpillar and Phillip Morris. Benefiting from available building space and natural resources, the oblast is able to utilize the traditional advantages of the city - its transport links, infrastructure and professional services - and even has its government offices located in central St. Petersburg. This, the report argues, "gives foreign investors all the benfits of a physical presence in St. Petersburg, even though their production facilities are located...in the Leningrad Oblast."
Above all, the oblast benefits from the positively investor-friendly attitude of its authorities. One area in which this is most instructive is in developing new investment legislation. As Kudryavtseva observes, "one of the key points for the oblast's success is a result of the efforts of [its] government and legislature, who managed to create a favorable investment climate a few years ago and to keep ... improving the local legislation." Introducing in 1997 its own investment legislation, under new federal authority, it consistently maintained a productive communication with organizations such as SPIBA, updating the legislation accordingly. For example, the authorities made changes to allow tax recoupments to be calculated in foreign currency, passing an amendment within six months of consultation. And this summer, following changes in federal law controlling incentives to foreign investment, the oblast introduced a system of subsidies which provide a mechanism for the return of a certain percentage of profit tax paid.
This attitude, however, is not mirrored by the authorities in St. Petersburg. According to Kudryavtseva, the city delayed its introduction of local investment legislation until 1998, and failed to adequately consider the many hundreds of written suggestions submitted by individual businesses and associations such as SPIBA. Subsequently, only two of the three working groups set up to consider amendments to the law ever functioned effectively. Indeed, the working group on State Support of Investment Activities, she recalls, "only ever existed on paper." Moreover, the draft legislation that the working groups successfully produced never reached the Legsilative Assemby . One of the committees required to approve it refused to participate, and with the governmental changes in 2000 the legislation was shelved.
This failure of cooperation, Kudryavtseva argues, is symptomatic of the approach of the St. Petersburg authorities, "a historical failure to improve" which is not limited to merely amending legislation. This she sees as a more readily solvable problem. "The key goal, which is difficult to achieve, is the proper implementation of the law and performance and responsibility of the city authorities."
There emerges a picture of systemic failure in St. Petersburg. The city suffers from political instability and a lack of clear organizational structure. There is bureaucratic duplication and it is often difficult to even discover the officials submerged within disparate and ill-defined governmental committees. Where the oblast benefits from historical continuity of competent and sympathetic personnel, relations with a volatile city administration lead the investor into a bureaucratic maze and communicative impasse. "The activities of the authorities have apparently been frozen for the last year," Kudryavtseva notes with some frustration. "The authorities are not working properly."
Meanwhile, Peter Vaihansky, marketing and member services coordinator at the American Chamber of Commerce, says the oblast authorities are more proactive in assisting investors, walking them through the various stages of bureaucracy. They provide a clear point of contact who accompanies the project through the bureaucratic process. Thus Julia Krasheninnova, human resources director at Henkel Era, a German producer of detergents and adhesives in the Leningrad Oblast, describes good relations with a helpful government when concluding a new manufacturing investment project earlier this year.
What the city needs, Vaihansky argues, is a return to "the single counter concept," a special agency within the city administration that provides clear information on administrative procedures and assists investors in their governmental dealings. It is bureaucratic reform, more important than tax or any other incentives, that is most urgently needed to improve the climate for foreign direct investment in St. Petersburg.
There is, however, a cautious optimism emerging following the election of Valentina Matviyenko in October.
Vaihansky identifies the ensuing government changes as a clear opportunity for improvement, and Kudryavtseva is hopeful too. "The rules of the investment game should become transparent, stable and fair," she says. "The city business community looks forward to seeing efficient and effective efforts by the St. Petersburg Administration and Legislative Assembly" to create more favorable conditions for investors. And it is in reacting to the competitive challenge of the oblast that St. Petersburg can create a healthy, transparent and stable environment for foreign investment.
TITLE: Status Quo Still Standing While Elite Change
AUTHOR: By Andrei Ryabov
TEXT: The arrest of Yukos CEO Mikhail Khodorkovsky has hastened serious changes in the balance of power within the Russian political establishment - perhaps the most profound changes since Vladimir Putin became president. And although the contours of the new configuration of forces remain blurred, generally speaking the balance has tipped in favor of the St. Petersburg siloviki.
However, it seems we have not gone beyond the "point of no return." At least Putin's rather tough statement made two weeks ago, responding to the elite's reaction to Khodorkovsky's arrest, contained certain hints that the situation could develop in more than one way. The president stated: "There will not be any meetings or bargaining [with the business community] over the activities of law enforcement agencies, as long as these agencies stay within Russian law. Whether the person is guilty or not, that remains to be proven by those that think he is." This can be interpreted as meaning that if the prosecutors are unable to prove Khodorkovsky's guilt, then they will be held to account. But the chances of the situation developing in this direction are very remote.
The main issue, therefore, relates to the consequences of the shift in the balance of forces caused by the ratcheting-up of the Khodorkovsky affair.
Only three factors can possibly lead to some degree of political balance being restored.
First is a consolidated and pro-active position on the part of the business community. At the moment, only the oligarchs are self-sufficient (in terms of resources) players in the political process. The resource potential of political parties, certain bureaucratic groupings and the mass media are limited. Therefore, in the best case they can only be junior partners to big business.
However, even with their great potential, the owners and top managers of major corporations are barely capable of actively resisting the course that has been set. For one thing, big business is divided. A substantial section of the business elite is not interested in the creation of a strong institutional basis for interacting with the authorities, underpinned by a system of legal guarantees, but in reaching individual agreements with those that hold power. Furthermore, business does not have a clear leader, such as Boris Berezovsky in the run-up to the 1996 presidential election.
In this situation, it is not only hard for businessmen to build constructive dialogue with each other, but also to act in concert with those state institutions that are closest in outlook to the business community. As the arrest of Khodorkovsky was unfolding, RSPP, Alexander Voloshin and Prime Minister Mikhail Kasyanov could not agree on how to act. Voloshin's desperate attempt to up the ante by tendering his resignation, without the support of the government or the country's leading corporations, only intensified the defeat of the old Kremlin clans and those who were trying to support Khodorkovsky.
The second factor is the reaction of the economy to the arrest of Khodorkovsky. According to experts, in the short term an outflow of capital from the country is inevitable. However, it is far from obvious that it will lead to an appreciable worsening of economic indicators or to a drying up of investment in the medium to long-term. Major transnational corporations are only likely to stay away from Russia if similar actions (to those against Yukos) are undertaken by law enforcement agencies against other companies. In short, Khodorkovsky's arrest on its own is unlikely to have a serious impact on the Russian economy.
The third factor is linked to the reaction of the international community, first and foremost the United States and the EU. Compared to the "Gusinsky affair," the official reaction will most likely be sluggish and lacking in substance. For the U.S. administration and the EU, the main priority in their relations with Russia is to preserve stability in a country occupying a key position in northern Eurasia. They are not that bothered about Russia's internal problems.
Irrespective of the twists and turns in the battle at the top, it is already obvious that the "old Kremlin" clans will soon suffer complete defeat in the struggle for resources and access to decision-making. In particular, the fate of Kasyanov's government can be considered a foregone conclusion - it will not survive beyond the presidential election. To a large extent, this was predetermined by their political line, focused on preserving their prior monopoly on political decision-making. Feeling increasing pressure from the "new Petersburgers," the old Kremlin clans accepted the rules of the game proposed to them and tried to prove themselves as the most effective operators among the president's favorites. The chance to use democratic procedures and an expansion of the competitive playing field as an effective instrument for protecting their position was passed up by the old leadership of the presidential administration, which enthusiastically set about building a system in which a single party - United Russia - dominated.
Second, the problems faced by the Union of Right Forces and Yabloko in achieving representation in the next State Duma have grown considerably, following their critical stance toward the actions of the law enforcement agencies in the Khodorkovsky affair. It would not be entirely surprising if this did not go down well with many people in the Kremlin, as a result of which the decision may be taken "not to allow" such "overly-independent" parties into the next Duma.
If this happens, the Duma's potential for promoting further democratization of the country and for adopting competent economic reform legislation will be seriously impaired. It is worth bearing in mind, however, that for the further development of ties with the West, which Putin and his team aspire to, the presence of liberal parties in the parliament is important both as an additional channel of communication and as evidence of the country having achieved certain democratic standards. It should not be ruled out that this latter consideration will get the upper hand in determining the fate of SPS and Yabloko.
Third, it seems likely that there will be an increase in opposition sentiment among the middle classes - people who fear that the activities of the law enforcement agencies will get out of control and lead to a wave of mass repressions. However, this is unlikely to have much impact on policy, as these classes are not particularly well organized and are not capable of promoting their own interests independently.
What are the possible scenarios?
Preservation of the status quo is the most likely political scenario and the one which seems to best suit the president. It is no coincidence that Putin in his remarks vis-a-vis Khodorkovsky's arrest underlined that "no generalized inferences should be made from this case, which will not set a precedent for other cases, and certainly not in regard to the results of privatization."
Under this scenario, despite a substantial injection of new blood into the political elite, the nature of the political process and the elite's interaction with big business will not fundamentally change. Relations between the authorities and big business will return to the informal agreement reached in 2000, under which businessmen were to refrain from meddling in politics and the authorities were to refrain from interfering in the affairs of big business. And the attempts of certain interest groups and law enforcement agencies to initiate large-scale redistribution of property will be blocked by the president. This scenario best ensures the preservation of stability, which Putin continues to view as one of the top priorities in his presidency; and in general, conditions for the continuation of market reforms are maintained.
The second scenario envisages the president losing control of the situation and the groups that are now in the ascendent initiating large-scale redistribution of property, and attacking one by the one all major corporations tied with the old elite. This scenario would clearly have a destabilizing effect.
However, the probability of large-scale property redistribution and pinpoint repressions against those political and business players who aspire to independence, undertaken by a centralized presidential power seems unlikely. This is both because it does not appear to accord with Putin's plans and because even if this scenario were attempted, there is a high probability that it would result in uncontrollable clashes between interest groups for property and access to the decision-making process, destabilizing and raising the specter of serious chaos.
Andrei Ryabov is scholar-in-residence at the Carnegie Moscow Center and co-chairman of the Russian domestic policy and political institutions program. This comment first appeared in Vedomosti.
TITLE: How To Make Real Enemies from Thin Air
AUTHOR: By Yulia Latynina
TEXT: Former Yukos CEO Mikhail Khodorkovsky is sitting in Matrosskaya Tishina; prosecutors froze 44 percent of Yukos' shares; Alexander Voloshin, head of the presidential administration, tendered his resignation.
Russia is in the midst of a crisis, and all thanks to Khodorkovsky. Do you really think anyone wanted him arrested? You may recall a similar situation three years ago when the Prosecutor General's Office decided to lean on Interros chief Vladimir Potanin. They reckoned he owed the government $140 million in compensation for what they called a rigged privatization auction in which Potanin acquired Norilsk Nickel. Did anyone go to jail? Did the oligarch pay for his sins? A deafening silence ensued. Maybe they cut a deal.
Law enforcement clearly wanted to cut a deal with Khodorkovsky, too. They did everything they could to get this point across to him. They made it very clear that the balance of power in Russia had changed. If you "respect" the new regime, then make a visible and, shall we say, material show of your respect. Khodorkovsky was a little slow on the uptake. He didn't want to deal. To translate from gangster-speak into plain language, he didn't want to get milked. This left the dutiful prosecutors no choice but to inform the president that Khodorkovsky did not respect his authority, or in other words, that he wouldn't toe the line. And it goes without saying that anyone who doesn't toe the line is a dissident with political ambitions.
A year ago, a friend of mine - let's call him Ivanov - met with his deputy head of security, who told him that another businessman - let's call him Sidorov - had sold them out to the Tax Police.
Ivanov and Sidorov had crossed swords in the past. "I don't believe it," my friend said. "Sidorov is in the process of selling his company to a German concern. Why would he open up this can of worms? I won't believe it unless you bring me some proof."
The deputy head of security produced taped recordings of a junior exec in Sidorov's company talking with the tax cops, but from their conversation it was unclear just who was recruiting whom. In short, this was no major operation, just a couple of cops trying to shake down various executives.
It's not all that hard to set the president and a particular oligarch at odds with each other. You just keep whispering in the president's ear that the oligarch has designs on his job, and you remind the oligarch at every opportunity that the president is going to eat him for breakfast. My point is not that the president was deceived by bad people. It is rather that the president is making decisions with his heart instead of his head, and these decisions will prove disastrous for the president himself, but advantageous for those close to him.
Suppose that the president was told the truth about Khodorkovsky. The oil magnate really was hatching a sinister plot to oust the president and buy off every last deputy in the State Duma.
What's the big deal? If Khodorkovsky had his eye on the presidency, the Kremlin should have let him run. The oligarchs aren't going to win any popularity contests. How many votes do you think he would have received? Diddly squat. This would have been a resounding victory for the president, but a bitter defeat for his inner circle, because the president would have been surrounded by the people of Russia. As it is, he is surrounded by loyal people who shield him from various enemies.
When no enemy exists, they make one up.
There's just one problem. At present, the people despise the oligarchs and they love the regime. But if all the oligarchs are put behind bars and their business empires pass into the hands of people closely tied to the current regime, whom do you think the people will despise next?
This crisis came out of the blue. Two weeks ago we lived in a country where the president would win re-election in the first round, where United Russia would win a majority in parliament, and where the oligarchs were standing in line to kiss the president's hand. Now we live in a country where the oligarchs have nothing to lose but their Butyrka cells.
Yulia Latynina is a presenter of "24" on RenTV.
TITLE: Putin's Reign of Fear
AUTHOR: By Vladimir Gusinsky
TEXT: Russia is full of fear. Businessmen, politicians - all those who stick their heads above the parapet - are afraid of President Vladimir Putin. Everybody understands that after a show trial of Mikhail Khodorkovsky, heads will roll. Confiscation of property in favor of the state and Putin's entourage will follow. The president clearly relishes the fear that he inspires. The greater the fear, the stronger his power.
But Putin is also afraid. He is afraid that people will remember him for the bloodbath in Chechnya, the elimination of the free media, the Inquisition-like use of the FSB security police and the general prosecutors, and for trampling on the constitution. The stronger his fear, the greater the temptation to become a lifelong dictator or to cultivate a successor who will continue to rule with an iron hand.
I was born and grew up in the Soviet Union and I know fear well. My grandfather was executed by Stalin. My grandmother spent long years in the gulag. Like everyone else I was scared to speak about certain issues out loud. I did not dare to think of challenging the power of the state. Some 15 years ago, I started to lose that fear, as the state we were so afraid of collapsed.
I was certain that fear would not return. Freedom of speech and elections came to Russia. Political parties and politicians emerged who, it seemed, were not afraid of anyone. I and others created NTV, the best television channel in Russia, and then Media Most, the largest media company. We built it ourselves, from scratch, without having to purchase privatized state property, and the journalists who worked for us were not scared of telling the truth. I thought this would last forever.
I was wrong. Having come to power, Putin destroyed our company, shamelessly using the FSB, general prosecutor and obedient courts, and brought the remaining free media under state control. Today all the main television channels are controlled by the state and the journalists who work there are once again engaged in propaganda.
Some people would argue that, even today, NTV stands out from the rest. This is true. But even the Soviet regime tolerated the "liberal" publication Literaturnaya Gazeta. This was just a smokescreen for a regime that did not tolerate real freedom of speech.
Liberal parties in today's Russia provide a similar smokescreen. When the Communist party's monopoly started to crumble, Vladimir Zhirinovsky's party emerged from the depths of the KGB, creating the illusion of a multi-party system. Grigory Yavlinsky's Yabloko and Anatoly Chubais' Union of Right Forces are part of the same illusion.
The reality is that Putin's Kremlin today has a political monopoly. It controls parliament and the courts. Chubais and other leaders on the right bear direct responsibility for the emergence of Putin's authoritarian regime. In helping to realize their dream of a Russian version of Chile's Augusto Pinochet, they neglected the destruction of the free media and did not resist Putin's attack on the constitution. Now that Khodorkovsky has been arrested and his property is being confiscated, they would like to rewind history, but they are afraid to do anything. The best one can say of their meek criticism of Putin is that it is too little, too late.
If the Russian elite does not overcome its fear, Putin will tighten the screws. The regime will be entrenched for years, even if someone else is in charge. The sooner someone challenges Putin, the less likely it is that Russia will slide back towards its past. The leaders of the parties of the right should overcome their fears and, during the parliamentary elections, give people the facts about Putin and where he is taking Russia.
It is their duty to take part in next year's presidential elections - and not like Yavlinsky, who runs just to remind people he exists. No, they must propose a fearless candidate who will tell Putin and his supporters the truth. Even if they do not succeed, they will have acquired real - rather than decorative - political power, and put an obstacle in the way of dictatorship.
If they do not find someone with enough courage in their own ranks, they should propose Khodorkovsky. He has already shown he is not afraid of Putin and has challenged him directly. This is why he poses such a danger to the president. This is precisely why he is in jail today. Yet, in truth, he is a freer man than most of those who are still at liberty.
Vladimir Gusinsky is a founder of NTV and Media Most. This comment first appeared in the Financial Times.
TITLE: The Irony of Berlusconi's Defense
TEXT: Did President Vladimir Putin see the irony in being defended by Prime Minister Silvio Berlusconi when asked in Rome about the case against Yukos chief Mikhail Khodorkovsky?
Like Khodorkovsky, Berlusconi is his country's richest man and, as Khodorkovsky may well attempt to do, he parlayed his fortune into election to its highest office.
Berlusconi has faced numerous allegations of corruption and tax fraud, which, again like Khodorkovsky, he has blamed on politically motivated prosecutors. Some of the allegations were even related to the privatization of a state company.
But defending Putin, Berlusconi said: "In Italy, I have fought to ensure that there is not a political use of the judiciary.Putin explained to me the motivation of the [Russian] judiciary. From the picture he painted, I don't think you could call it a political use of power."
Just how much Berlusconi believes himself and believes his Russian counterpart is unclear. What is clear is that they want others to believe these convenient versions.
Berlusconi, unlike Khodorkovsky, really does control his country's parliament, and this past summer it passed a law granting him immunity from prosecution.
So it's rich that Berlusconi would come to Putin's defense when asked by a Le Monde reporter about the state of the rule of law in Russia in light of the Yukos case.
Berlusconi said he had direct knowledge of "precise violations" of the law by Yukos and knew personally "that within the Russian Federation there is a desire for transparency, correctness and a fight against corruption." One only wonders how he could say that with a straight face.
On the other hand, perhaps it's better to compare Berlusconi to Putin after all. Both have a habit of creating scandals with their remarks at EU gatherings, whether by inviting a French reporter to Moscow for a circumcision or by comparing a German member of the European Parliament to a concentration camp guard.
Both also control most of their country's television channels, which has come in handy when they have let their emotions get away from them, as in the above instances.
They also have shown little tolerance for an independent, critical press. In his response to the Le Monde reporter, Putin all but implied that Yukos was paying him.
We can only hope that when Ireland takes over the rotating EU presidency at the first of the year the comparisons with Russia will be of a different kind. Wouldn't it be nice to see Russia noted most for its great literature and music and phenomenal economic growth?
TITLE: Broadening Democratic Deficit Debate
TEXT: President George W. Bush last week delivered what was billed as a major presidential address, the theme of which was that there is a democracy deficit in the Middle East. Syria, Iraq, Iran, Egypt, Jordan, Yemen, Bahrain, Oman, Qatar, Kuwait - even the Bush-beloved Saudi Arabia - each was treated to a specific discussion of progress and backsliding on freedom and liberty.
It's a hair-raisingly erratic speech (you can find it at www.whitehouse.gov). And there's certainly some inconsistency in scolding, for example, Syria for engaging in torture: a day before Bush's speech, The Washington Post reported on our "secret rendition policy," which is our new practice of shipping "suspects" to Syria for torture-driven interrogations. (Of history's many sick national security euphemisms, "renditioning" may be the all-time champion.)
But never mind. I think many of us would agree with the U.S. president that the Middle East is a loony bin of hate, extremism and dictatorial rule - the Israeli-Palestinian madness just being the most lurid example. And many would agree that the Western world has been hypocritically tolerant of the dictatorships at the root of most problems - because we want their oil. As Bush put it: "Sixty years of Western nations excusing and accommodating the lack of freedom in the Middle East did nothing to make us safe."
So what's the plan about the lack of freedom in the Caspian Sea region and the Caucasus?
Some of the Caspian Sea states - notably Azerbaijan, Kazakhstan and Turkmenistan - are new players with loads of oil and gas. Nearby, Uzbekistan has what we've judged to be a strategic location for a military base.
It ain't much. The U.S. Energy Department predicts that by 2010 the Caspian states combined might be producing more oil than Venezuela. And as to those Uzbek basing rights, well, we've now got Afghan military bases.
Nevertheless, Bush and the rest of the West seem more than happy to excuse and accommodate dictators in this part of the world.
In fact, this same week we were reading about the CIA "renditioning" people to Syria for torture - and the same week the U.S. president decided to scold Syria about its human rights practices - the World Bank finally came through with a $310 million package to turn the Caspian Sea and the Caucasus into the new Middle East.
The money is to exploit an Azeri offshore oil field, and also to build the world's longest pipeline, connecting the Caspian to the Mediterranean via Azerbaijan, Georgia and Turkey.
The World Bank insists it's all just remarkably transparent and spectacular, and notes they've hired Ernst & Young to audit the Azeri oil money. Phew! Such a relief. Nothing Enron-WorldCom-FIMACO-esque ever happens when a Big Five accounting company is on the case.
Even if this project is transparent, it still amounts to the only plan crazier than relying on the Middle East for energy needs: relying on the post-Soviet Caucasus and Central Asia.
No doubt some future U.S. president will decades from now solemnly chide us all for having excused and accommodated Karimov family rule in Tashkent, Nazarbayev family rule in Almaty and Aliyev's dynasty in Baku. Perhaps that future U.S. president's government will simultaneously be getting the Karimovs to boil people alive for us to of interrogate them; the way things are going, perhaps he'll even be talking up a "roadmap" to unravel the intractable Russian-Chechen conflict.
Matt Bivens, a former editor of The St. Petersburg Times, writes a column at www.thenation.com
TITLE: Chris Floyd's Global Eye
AUTHOR: By Chris Floyd
TEXT: Logical Conclusions
"The president, speaking after attacks on police stations and
a Red Cross facility in Iraq killed at least 35 people, said
such attacks should be seen as a sign of progress because they
show the desperation of those who oppose the U.S.-led occupation.
"The more successful we are on the ground, the more these killers
will react," Bush said ... "The more progress we make on the ground,
... the more desperate these killers become."
The Washington Post, Oct. 28, 2003
"It's clearly a tragic day for America," Defense Secretary Donald
Rumsfeld said [after 16 U.S. soldiers were killed when their
helicopter was shot down by Iraqi insurgents.] ... "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."
The Washington Post, Nov. 3, 2003
"The more successful we are on the ground, the more these killers
will react," said Chicago Mayor William "Big Bill" Thompson the
day after members of Al Capone's gang murdered seven people in
a slaughter already being dubbed the St. Valentine's Day Massacre.
"The more progress we make on the ground, restoring safety and
security to our neighborhoods, the more desperate these killers
become. Sure, they're killing more people now, running more scams,
selling more hootch, breaking more legs - but any expert will
tell you that the more successful you are in fighting crime,
the more, er, crime you have on the street. It's tragical, but
these murders are necessary. It shows we're doing our job."
"The more successful we are on the ground, the more these killers
will react," said Japanese Prime Minister Kuniaki Koiso, the
day after 100,000 civilians were killed in a single night during
the firebombing of Tokyo by American forces. "The more progress
we make in our East Asia Prosperity Sphere, liberating nations
from their repressive colonial regimes and bringing them the
blessings of free trade and open markets, the more desperate
these killers become. That flesh-devouring burst of hell yesterday
should be seen as a sign of our progress! We mourn for these
deaths, of course, but they're necessary. They're part of a war
that's difficult and complicated."
"The more successful we are on the ground, the more these killers
will react," said U.S. General George Custer, in a battlefield
interview during a brief lull in what he termed "a light skirmish"
with Indian forces at Little Big Horn. "The more progress we
make, liberating these poor people from their oppression by unelected
chiefs, bringing them all the benefits of democracy, freedom
and open markets, the more desperate these 'dead-enders' like
Sitting Bull become. Sure, we're losing a few boys here today,"
said Custer, pausing to pull a arrow from the bleeding eye socket
of his adjutant, "but that's necessary. It's all part of a war
that's difficult and complicated."
"The more successful we are on the ground, the more these killers
will react," said Napoleon Bonaparte, the day after a dawn raid
by Russian partisans killed 50 French soldiers in a rearguard
action outside Smolensk. "The more progress we make in bringing
the Continental system of open markets and free trade to this
benighted land, liberating the serfs from their oppression, fostering
the development of a thriving modern society - and protecting
our own security from the threat of this unstable, autocratic
regime - the more desperate these terrorists become. I know the
critics out there in the 'media filter' say we had no real plan
after capturing Moscow, and that our current strategic re-positioning
is some kind of retreat or 'quagmire.' But I always said regime
change in Russia would be a long, hard slog. Sure, we'll have
tragic days like this. But they're necessary. It's all part of
a war that's difficult and complicated. And if these so-called
partisans want to attack us, my answer is: Bring 'em on. We've
got the force necessary to deal with the security situation."
"The more successful we are on the ground, the more these killers
will react," said Prescott Bush, director of Union Banking Corporation,
the day after a World War II raid by British bombers damaged
operations of UBC's Silesian American Corp. near Oswiecim, Poland.
"The more progress we make on the ground, creating jobs and increasing
profits for our German partners and our shareholders in the Homeland,
the more desperate these killers become. Our freedom-loving friends
in Berlin have liberated this suffering land, bringing the blessings
of free trade and open markets to the entire region. No longer
are foreign investors bound by the onerous quasi-socialistic
labor practices of the dead and discarded past. Instead, the
forward-looking liberators are now supplying us with a skilled
workforce of non-remunerated employees whose strong ethnic ties
make for a happy and enthusiastic workplace. As we like to say
in Oswiecim: Work will make you free!"
"True, millions of people are dying in the unfortunate misunderstanding
that has arisen between our free-market German partners and the
pinko scumbags of the Roosevelt Administration," Bush continued,
"but that's necessary. It should be seen as a sign of progress.
I'm sure that whatever happens - even if, say, our assets are
seized by the United States government under the Trading with
the Enemy Act or some such - we will not be charged as traitors,
collaborators or sugar daddies for Hitler, but will actually
have our assets returned after the war so we can cash them in
and launch a family political dynasty based on war profiteering
and military aggression. It's all just part of a war that is
difficult and complicated."
TITLE: Power Shifts in Japan Election
AUTHOR: By Gary Schaefer
PUBLISHER: The Associated Press
TEXT: TOKYO - Prime Minister Junichiro Koizumi's administration retained control of Japan's more powerful legislative chamber in national elections Sunday but lost ground to the largest opposition party, whose leaders called their gains "historic."
In his first test at the polls since winning the country's top job more than two years ago, Koizumi's personal popularity brought fewer votes than some analysts had expected. They said the outcome could encourage opponents of his no-pain-no-gain economic reforms.
The returns also showed voters are increasingly split between just two parties, suggesting Koizumi's Liberal Democrats can no longer count on dominating a fragmented political opposition as they have for decades.
According to preliminary results announced by the media and political parties, the three-party coalition led by Koizumi's Liberal Democratic Party held onto a majority with 277 seats, or 58 percent, of the 480-seat lower house of Parliament, after counting independents who joined the LDP bloc after the election. Before the election, it had 287 seats.
The coalition kept a tight grip on the chamber - retaining control of all committees as well as the ability to pass legislation.
Some analysts, however, said the party's assessment might be optimistic. The opposition gains could embolden anti-Koizumi factions within the ruling party who oppose his belt-tightening policies. It might also force the prime minister to pause before moving ahead with an unpopular plan to send Japanese peacekeepers to Iraq.
Japan's largest opposition party, the Democratic Party, claimed victory with its 40-seat gain, which increased its total to 177, NHK reported. Official results are due Monday.
Leaders of the centrist party said they had taken a big step closer to their seven-year-old goal of building a counterweight to Koizumi's more conservative Liberal Democrats.
"We're not completely satisfied since we really wanted to win power, but we've established a significant foothold," said Secretary-General Katsuya Okada. "This was a historic election."
The party credited its decision to adopt a campaign platform that committed all its candidates to specific policies and time frames - an innovation in a country where slogans are typically formulaic requests for voters' "consideration."
Analysts cautioned, however, that the opposition gains were not all losses for Koizumi's coalition. They also reflected a virtual collapse of two small opposition parties, the communists and socialists, which have steadily fallen out of favor with Japanese voters in recent years as their ideologies have appeared increasingly out of touch with the times.
"The socialists and the communists were the big losers - the Democrats basically picked up their seats," said Hisayuki Miyake, a political analyst. "I don't think the election really changes much from the coalition's perspective."
Koizumi, who easily won his own seat for an 11th term, said the inroads made by the Democrats justified his efforts to rejuvenate his party's stodgy image. He forced two octogenarian former prime ministers into retirement just last month and appointed a 48-year-old telegenic deputy.
Final voter turnout figures released early Monday morning came in just under 60 percent, about 2 1/2 percentage points below the last lower house elections in 2000. The drop may have been due in part to cold, drizzly weather in parts of Japan during Sunday's voting.
Candidates debated the administration's plan to send peacekeepers to Iraq, a proposal to rethink constitutional restraints on the military and ways to keep the nation's pension system solvent - a big concern in one of world's fastest graying societies.
But Japan's economic woes remained the central issue.
Koizumi argues his reforms have gotten the world's second-largest economy back on track toward recovery after a decade-long slump and urged voters not to change horses in midstream.
That message continued to resonate with many voters in a nation that has turned over power to the opposition only once in the last five decades.
"It's better to keep the LDP in power," said Tokuji Ishida, an 80-year-old retiree, outside a Tokyo polling station. "Koizumi is carrying out reforms, as he said he would."
TITLE: Al-Qaida Blamed in Suicide Attack
AUTHOR: By Donna Aby-Nasr
PUBLISHER: The Associated Press
TEXT: RIYADH, Saudi Arabia - Saudis blamed al-Qaida militants Sunday for the suicide car bombing of a Riyadh housing complex that killed 17 people, declaring it proof of the terror network's willingness to shed Muslim blood in its zeal to bring down the U.S.-linked Saudi monarchy.
The Saturday night attack at an upscale compound for foreign workers also wounded 122 people. The blast, not far from diplomatic quarters and the king's main palace, left piles of rubble, hunks of twisted metal, broken glass and a large crater.
"It's no longer an issue of terrorism for them," said Dawood al-Shirian, a Saudi analyst. "It's become a war on the regime, a war to turn the country into a new Afghanistan ruled by a Saudi-style Taliban."
An Interior Ministry official told the official Saudi news agency late Sunday that the death toll rose to 17 - including five children - after search crews pulled six more bodies from the rubble. At least 13 were Arabs, with the others as yet unidentified, the official said.
President Bush telephoned his condolences to Saudi Arabia's Crown Prince Abdullah. Bush told Abdullah the United States stands with the kingdom in the fight against terror, a White House official said.
U.S. Deputy Secretary of State Richard Armitage said he was "personally quite sure" al-Qaida was behind the Saturday night attack "because this attack bears the hallmark of them."
Such attacks appear to be directed "against the government of Saudi Arabia and the people of Saudi Arabia," he said, adding that he expected more to follow.
Al-Qaida "will prefer to have many such attacks to appear bigger than they are," he told a news conference shortly after arriving in the Saudi capital. Such attacks showed that "all of us have to work together."
The attack came as the kingdom is pushing social and legal reforms that had stalled for years and is pursuing Islamic militants with a determination and openness Saudis have never seen. For decades, the government was reluctant to confront religious extremists, because it draws its legitimacy partly from the royal family's close association with the strict Wahabi Islamic philosophy.
Gunmen - possibly disguised as police - shot their way into the 200-house compound, trading fire with security guards. The attackers, believed to be in a police car, then drove into the compound and blew themselves up.
It still wasn't clear how many attackers there were or if they were listed as among the dead.
The victims included Lebanese, Egyptian, Sudanese and Saudis. The Interior Ministry said most of the wounded were Arabs as well. Most of the compound's residents were Lebanese, but some Saudis, German, French and Italian families also lived there.
Four U.S. citizens were among the wounded, the ministry said. In Washington, State Department spokeswoman Amanda Batt said "some Americans were treated for minor injuries and released."
By targeting foreigners' housing compounds, the attackers target the backbone of the Saudi economy. Saudi Arabia is home to 6 million expatriate workers, including about 35,000 Americans and 30,000 Britons. The kingdom relies on foreigners in its oil industry, security forces and health sector.
TITLE: Palestinian Leaders Reach Deal Over New Cabinet
PUBLISHER: The Associated Press
TEXT: RAMALLAH, West Bank - Mideast peace moves were thrown into disarray by the makeup of a new Cabinet announced by Prime Minister Ahmed Qureia, as Yasser Arafat maintained indirect control of Palestinian security forces despite Israeli and U.S. demands that he step aside.
Qureia's defeat in his power struggle with Arafat left him severely weakened and threatened to complicate efforts to restart talks with Israel and begin implementing the U.S.-backed "road map" peace plan.
Israel and the United States expressed disappointment at the outcome. They had pushed for the many Palestinian security forces to be consolidated under the prime minister, in preparation for a crackdown on Palestinian militant groups. Arafat, they charge, is tainted with terrorism and would not lead a drive against the violent groups. However, Qureia, too, has said he prefers negotiation to confrontation.
Despite their misgivings, Israeli officials who face public pressure to resume some sort of peace talks stopped short of saying they would boycott Qureia because Arafat remains in control.
"This is a sad day for reform, because we see that the control of the security services remains in the hands of Arafat's cartel of terror," said Raanan Gissin, an adviser to Israeli Prime Minister Ariel Sharon.
The United States was also critical, saying Palestinian leaders must quickly move to end three years of violence.
"The prime minister must have control of all of the security forces and insist that terrorists and military organizations not under the control of the Palestinian Authority be disarmed and dismantled," State Department spokeswoman Amanda Batt said.
Saeb Erekat, a returning Cabinet minister, called Israel's reaction to the new government "unacceptable," saying it should stay out of Palestinian internal affairs.
"The focus should be on reviving the peace process and... implementing the road map," he said.
The new Cabinet, comprising 24 ministers including Qureia, will be presented to parliament for approval Wednesday.
In the new lineup, Finance Minister Salam Fayad and Foreign Minister Nabil Shaath keep their jobs.
The political fight with Arafat centered on Qureia's efforts to consolidate the various security forces under a single interior minister, Gen. Nasser Yousef, in line with U.S. expectations.
After weeks of bitter arguing, Arafat succeeded in putting a hand-picked confidant, Hakam Balawi, into the post, while keeping the security forces under different commands.
Balawi will control the civil police and the Preventive Security Service, which would have a key role in possible action against militant groups. The other six branches will report to the 12-member National Security Council, headed by Arafat.
Arafat's resilience appeared to show the futility of efforts to replace him with a prime minister, Israeli political analyst Yossi Alpher said.
With Arafat firmly in control of security, the idea of a crackdown on militants which the "road map" requires, but both Abbas and Qureia have rejected is almost certainly dead in the water, Alpher said.
TITLE: WORLD WATCH
TEXT: Emergency Royal Birth
LONDON (AP) - The Countess of Wessex, wife of the youngest son of Queen Elizabeth II, has given birth to a girl by emergency Caesarean section, Buckingham Palace said Sunday.
The palace said the baby, born just before midnight Saturday several weeks prematurely, weighed 4 lbs 9 oz. Doctors at Frimley Park Hospital south of London said mother and daughter were "stable."
Prince Edward, 39, flew back from an official visit to Mauritius. After an hour's visit with his wife, he said he was "thrilled to bits" at the birth.
The former Sophie Rhys-Jones, 38, married Prince Edward, the queen's fourth and youngest child, in 1999. The baby is the seventh grandchild of the queen and Prince Philip.
The child, the couple's first, is eighth in line to the throne.
Guatemala Elects Chief
GUATEMALA CITY (AP) - A pro-business former mayor of the capital was leading Guatemala's presidential elections, while an ex-dictator accused of human rights abuses was trailing in third place, according to preliminary results released Monday.
With 20 percent of the vote counted, former Guatemala City Mayor Oscar Berger had 47.6 percent of the vote compared with 26.4 percent for center-left candidate Alvaro Colom and 11.2 percent for retired Gen. Efrain Rios Montt. Election officials said final results would be released at a news conference midday Monday.
A candidate needs more than 50 percent support to win the election outright. If no one candidate gets a majority, the two top vote-getters will compete in a runoff on Dec. 28. Sri Lanka Peace Delayed
COLOMBO, Sri Lanka (AP) - Hopes of ending Sri Lanka's two-decade ethnic conflict were set back Monday, as the government announced that face-to-face peace talks with the Tamil Tigers rebels have been indefinitely postponed.
Last week, President Chandrika Kumaratunga sacked three Cabinet ministers and suspended Parliament, as a power struggle with her political rival, Prime Minister Ranil Wickremesinghe, came to a head over the peace process. Kumaratunga claimed Wickremesinghe was conceding too much to the rebels.
On Monday, Constitutional Affairs Minister G.L. Peiris said the government would need to resolve who would be responsible for the peace process before talks could resume.
Rally Sours in Seoul
SEOUL (AP) - Dozens of students and workers were injured after battling riot police Sunday in one of the most violent protests in years.
The Korean Confederation of Trade Unions, which organized Sunday's protest, said at least 43 workers were hospitalized, one of them unconscious.
The protesters, estimated by police at 35,000 and by the labor confederation at 100,000, rallied to protest damages lawsuits that managers have filed against union leaders accused of staging illegal strikes. Chelsea, Man. U Win
LONDON (Reuters) - In-form sides Chelsea and Manchester United have both secured impressive victories to slash Arsenal's lead at the top of the premier league.
Chelsea battered 10-man Newcastle United 5-0 at Stamford Bridge while United was 2-1 winner at local rival Liverpool on Sunday, with Ryan Giggs scoring twice.
Arsenal, who beat Tottenham Hotspur 2-1 in the north London derby on Saturday, still leads the table with 30 points. Chelsea has 29 and United 28.
Fourth-placed Charlton Athletic are seven points adrift of United in what is already a three-way title fight with less than a third of the season gone.
Chelsea, 4-0 Champions League winner at Lazio on Tuesday, was again in scintillating form against a Newcastle side missing ill striker Alan Shearerat Stamford Bridge.
U.S. Draws Lithuania
MADRID, Spain (Reuters) - The United States will face a tricky start to the defense of its Olympic men's basketball crown in Athens next year after being drawn in the same pool as European champion Lithuania and Greece.
The reigning Olympic champion will also take on Angola, Australia and Puerto Rico in Pool B after the draw was made Saturday in Madrid.
World champion Serbia & Montenegro will face Argentina, Spain, Italy, New Zealand and China in Pool A.
Muldowney Bows Out
LOS ANGELES (AP) - Shirley Muldowney, the first woman to win a major motorsports championship, ended her long and storied career Sunday with a loss in the second round of the Auto Club NHRA Finals at Pomona Raceway.
Muldowney, a three-time Top Fuel champion, lost to Corey McClenathan, completing her last run in 4.70 seconds and 317.12 mph.
People stood and cheered as Muldowney deployed her famous pink parachutes and drove slowly past the grandstands waving to her fans for the last time.
TITLE: Outsider Takes PGA Tour Championship
AUTHOR: By Michael A. Lutz
PUBLISHER: The Associated Press
TEXT: HOUSTON, Texas - After struggling for years on the minor league circuits, Chad Campbell hit it big Sunday when he shot a final-round 3-under 68 and became the first player to make the PGA Tour Championship his first victory.
Campbell finished at 16-under 268 - the lowest score in relation to par in the 17-year history of the Tour Championship - to win by three shots over Charles Howell III.
"I think you're a little bit more respected once you win,'' Campbell said. "There are so many good players, especially at this tournament, you've got 30 guys that have had the best years.''
Two of those players - Tiger Woods and Vijay Singh - will have to let their peers decide who gets PGA Tour player of the year.
Both could have settled the issue by winning the Tour Championship. Singh recovered from a bad opening round to tie for fifth; Woods struggled the final three days, including a final-round 74, and finished 26th, his worse ever in the season-ending tournament.
Still, Singh wrapped up his first money title, while Woods picked up a record fifth straight Vardon Trophy for lowest scoring average, and won his sixth PGA of America Player of the Year award.
While the player of the year vote figures to be close, the Tour Championship wasn't.
Campbell built a five-stroke lead at the turn and cruised the rest of the way.
Howell had a 70, ending his streak of seven rounds in the 60s at the Tour Championship. A year ago, he was in the 60s all four days at East Lake and finished second to Singh.
Retief Goosen had a 69 and was at 272, while Chris Riley had a 70 to finish fourth at 273.
Howell, who got his first Tour victory at the Michelob Championship last year, knows what Campbell has been experiencing trying to break through.
"To see your name on the leader board on Sunday and to carry that on, it's a nerve-racking feeling,'' Howell said. "People say they don't pay attention to the leader boards. They're lying. When these leader boards turn over out here they sound like machine guns firing. If you have a leader board right beside you, you're ducking. To come out on top is very rewarding.''
Singh finished the season with $7,573,907, ending Woods' four-year run as the money champion. Woods was second with $6,673,413.
"It's probably the biggest accomplishment in my career I've had, especially at my age,'' said Singh, who finished with a 68. "It's nobody's goal to win the money title when you start but as the year goes along I started playing better and better and it was my goal.''
Woods also broke one of the oldest records in golf by making the cut for the 114th consecutive tournament. Byron Nelson finished in the money 113 times in a row in the 1940s.
"It's one of those things I'm proud of,'' Woods said. "There are times I haven't played well enough to probably make a cut but with good fortune or hard work or fighting it out I've been able to make the cuts.''
Woods needed a victory for a record fifth straight money title. But his putter failed him throughout the week at Champions Golf Club.
"I didn't win it in 1998 or in 1996. It happens,'' he said. "It's happened before and it will probably happen again.''
Woods still is a candidate for the PGA Tour player of the year title, along with Singh, Davis Love III and Masters champion Mike Weir.
Singh has momentum on his side, ending his year with two victories, two second-place finishes and his tie for fifth at the Tour Championship.
Since neither Singh nor Woods had a chance to win Sunday, Campbell seized the spotlight.
He shot a Tour Championship-record 61 to get a one-shot lead on Saturday and followed that with a steady final round.
It was obvious on Saturday that it was a special tournament for Campbell. He had the ball doing magical things. On the par-3 12th hole, a 75-foot putt hit the back of the cup, bounced up and then back into the hole.
On Sunday, Campbell extended his lead to three strokes thanks to his birdie on No. 2 and a three-putt bogey by Howell. After Howell made back-to-back birdies to get within two, Campbell put a swift and decisive end to any charge.
He fearlessly attacked the pin, tucked just over the water on the par-3 eighth, hitting to 15 feet and making the birdie putt. On the par-5 ninth, his second shot cleared the bunker and stopped 15 feet behind the flag, and he rolled that in for eagle.
At that point, Campbell was 18 under par and had a five-shot lead.
This time, no one could catch him.
Campbell played the back nine in 2 over, but he was only trying to avoid big numbers. He earned $1.08 million and gets to start next week in Kapalua for the winners-only Mercedes Championships.
Riley had high praise for Campbell following the tournament, as did Singh and others.
"He's been threatening for a while,'' Singh said. "He's a very aggressive player. When he gets it going, like this week, there's no stopping him. We'll hear a lot more from Chad Campbell. This is not the end of it.''
TITLE: Ireland, Wales Exit World Cup
AUTHOR: By Dennis Passa
PUBLISHER: The Associated Press
TEXT: MELBOURNE, Australia - Wales and Ireland are gone from this Rugby World Cup, Keith Wood from the sport forever.
England, after some early hiccups, beat underdog Wales 28-17, while France was too strong for Ireland, winning 43-21 in quarterfinal matches Sunday.
Chronic neck and shoulder injuries defeated Wood, the 32-year-old Irish captain, who is reluctantly retiring after 58 international matches.
"I've had lots of great days, I'm hanging up the boots" Wood said. "I think being involved in this World Cup, this group of players, was very special.
"This has been a highlight. It's unfortunate it ended on a downer, but such is life."
The semifinals are set for next weekend, with Australia and New Zealand, who beat Scotland and South Africa, respectively, playing in one semifinal next Saturday at Sydney's Olympic stadium.
France and England will meet next Sunday at the same stadium.
Jonny Wilkinson kicked six penalties, a conversion and a last-minute drop goal to help England overturn a halftime deficit to beat Wales.
Wales outscored England three tries to one, but Wilkinson's boot once again proved decisive as the Six Nations champion moved into the last four despite an unconvincing and error-filled performance.
Flyhalf Stephen Jones and openside flanker Colin Charvis scored tries to give Wales a surprise 10-3 lead at halftime, but England immediately regained control after the interval.
Outside center Will Greenwood scored England's only try shortly after halftime when he finished off a devastating break by Jason Robinson. Wilkinson then kicked a sequence of five penalties to put his side safely ahead before Martyn Williams scored a late touchdown for the Welsh.
In the earlier semifinal, flyhalf Frederic Michalak set up France's first try by flanker Olivier Magne and kicked four conversions and five penalties - nine from nine attempts - for 23 points, increasing his tournament-leading point total to 101.
Winger Christophe Dominici, No. 8 Imanol Harinordoquy and prop Jean Jacques Crenca scored the other French tries. Center Kevin Maggs scored Ireland's first try in the 52nd minute, his 14th in tests and first in a World Cup match, and center Brian O'Driscoll added Ireland's final two tries, his second on fulltime.
"We couldn't get out of our own half. They were all over us," Irish coach Eddie O'Sullivan said. "We didn't really know what hit us."
O'Sullivan believes France could go all the way.
"They've always had flair, they've always had power, but I think this French side is different," he said. "There is a clarity at the top that is very menacing."
Retiring South African halfback Joost van der Westhuizen said the All Blacks are also a strong force in the tournament.
"I've never played against a bad All Blacks side," van der Westhuizen said after his team's 29-9 quarterfinal loss Saturday. "This is up with the better ones."
The All Blacks intend to stay in Melbourne for at least this week, preferring the lower profile of a city in which the major sport is another kind of football - Australian Rules.
It means the players can walk around virtually unnoticed and New Zealand can prepare in a city in which the Rugby World Cup festivities officially ended Sunday with the France-Ireland quarterfinal.
A team official said Sunday that the All Blacks will name their team on Tuesday, have an off-day Wednesday and hold a workout Thursday before flying to Sydney on Friday, 24 hours before their semifinal against Australia.
The Australian public obviously is not confident the Wallabies, champion in 1991 and 1999, can become the first nation to win back-to-back titles, despite extending its run to a record 11 wins at the World Cup since a 1995 quarterfinal loss to England.
"Certainly we can play better," Wallaby coach Eddie Jones said after his side's 33-16 win over Scotland.
"It was a tough first half, but we came out in the second half and put the game to bed pretty easily. We're where we need to be."
Australian utility back Matt Giteau was given a 50-50 chance of returning from an ankle injury for the match against New Zealand.
The 21-year-old Giteau twisted his ankle in a tackle in the 73rd minute and limped off the field. Giteau can play scrumhalf, flyhalf or inside center, making him ideal to have on the replacements bench.