SOURCE: The St. Petersburg Times
DATE: Issue #920 (88), Tuesday, November 18, 2003
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TITLE: Defense Minister Eyes Oil Reserves
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSOW - Defense Minister Sergei Ivanov assumed the unlikely role of macroeconomic and energy policymaker Monday, suggesting that the state should assume stricter control over the nation's oil reserves.
"Unless we start investing significant government resources in exploration in the coming years, we may face dire consequences in the next 10 to 15 years," Ivanov said in an interview with Kommersant newspaper published Monday.
Ivanov also reiterated comments by President Vladimir Putin, his former boss in the Leningrad KGB offices that the country's leadership does not intend to revisit 1990s privatizations.
"There will be no return to the issue or any revision of the results of privatization. The president has spoken about this unambiguously many times," he said.
But while private enterprise is a crucial plank in the development of the economy, the role of the state should also be strengthened, Ivanov said.
"The state, in my opinion, should not lose control of any strategic sectors of the economy," he said.
Putin himself on Monday expressed a desire to increase the state's returns from oil companies.
"The government should take back its authority to regulate export duties on energy, especially oil products," Putin said at a Cabinet meeting.
Domestic oil prices have soared and supplies dwindled since 2002, when the government got rid of a system of regulating domestic supply and quickly adjusting export duties. Oil companies wanted the change so they could be assured of greater fiscal stability.
It was unclear Monday whether Putin's and Ivanov's statements were populist election season rhetoric or meant to be followed by immediate actions, but deputies planned to consider giving the government the right to directly regulate export duties Tuesday.
Kremlin-connected political analyst Sergei Markov, however, said actions could indeed follow. "One thing is clear: Oil companies have failed to voluntarily provide enough funds to help the state and the economy, so the funds will have to be taken with the use of force," he said.
The "use of force" will probably be through higher taxes, he said.
With his remarks, Ivanov joins a growing chorus from current and former Federal Security Service officials who hold key Kremlin positions and are known as siloviki, and this suggests that the call to milk big oil for more money is real, Markov said.
"Ivanov is a key figure in the siloviki camp, and they all think that natural resources should serve the country," Markov said.
The siloviki also thought to be behind the legal assault on oil giant Yukos that has led to the jailing of former Yukos chief executive Mikhail Khodorkovsky and his key ally Platon Lebedev.
Ivanov's alarm over the slow rate of exploration and development in Russia's oil sector is not entirely unjustified, analysts said Monday.
"There are two views regarding the prognosis for Russia's reserves," said Valery Nesterov, oil and gas analyst with Troika Dialog. "The optimistic view is the view of oil companies, which says that if sufficient steps are taken the problem of declining reserves will be solved. The pessimistic view is the one expressed by Ivanov."
On average, Russian oil majors currently have sufficient reserves for about 26 years of continuous extraction. Those reserves are double the average for the industry worldwide.
However, most of the resources were inherited from geological research, exploration and development conducted back in Soviet times. In addition, the oil companies have gone through a period when the simplest and cheapest way to add to their reserves was "to buy a next door oil company," Nesterov said.
Furthermore, the state has had little control over the issue of boosting exploration and geological research since a special tax on oil companies designed to fund geological research was cancelled in 2002.
Oil companies argue that the government should create more attractive conditions for them to fund research themselves. One of their demands has been for holders of exploration licenses to be given priority rights for production licenses if oil is found.
"But as the debate goes on, reserves will be halved in 10 years if current production growth levels remain the same," Nesterov said.
After a decline in the mid-1990s, Russia is now producing more oil than any other nation in the world, pumping about 8.8 million barrels per day.
Nesterov cautioned that the oil sector would face further fiscal uncertainty if Putin's call to shift export duty powers to the government is carried out. "But surely it also would be better for the needs of the budget," he said. "Export duties are definitely not going to get any lower, just increase."
TITLE: Tsereteli Offers Sculptures
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Notorious Moscow-based sculptor Zurab Tsereteli, patronized by the mayor of Moscow and heavily criticized for his gigantomania, has made an offer to the city of St. Petersburg -- to fill a whole park with his work.
Seventy-four life-size busts of Russian Tsars and Princes, 120 lanterns and benches, a fountain, a memorial chapel containing a metal book bearing the names of victims of the siege of Leningrad, and inevitably, a statue of Peter the Great are among the art works Tsereteli has just suggested installing the 300th anniversary park in St. Petersburg.
The park is in the city's Primorsky district near the Gulf of Finland.
The project, which would cost $15 million to implement, has already been presented to the Legislative Assembly. While it received praise from the assembly's speaker and the chairman of the local Union of Artists, even the mere suggestion that Tsereteli could be let loose on a St. Petersburg project knocked the wind out of many artists.
"Offering himself to the city in such enormous quantities is rather self-centered," said local designer and arts critic Nika Dranitsyna. "Tsereteli's monumental art is deeply alien to the spirit of St. Petersburg, but what concerns me the most is the ethical part.
"If his work gets refused, he is capable of reworking it slightly and offering it to someone else," she said. "It shows that he is not about art, he is about self-promotion."
Tsereteli, whose works have mushroomed around the Russian capital, enjoys strong support from the Moscow authorities, including Mayor Yury Luzhkov, who is the sculptor's close friend. Yet most arts critics and ordinary citizens pull faces when hearing his name, accusing the artist of gigantomania and poor taste.
His giant 94-meter high bronze monument of Peter the Great installed on Sept. 5, 1997 on the Yakimanskaya Embankment in Moscow as part of the celebrations of Moscow's 850th anniversary was dedicated to the 300th anniversary of the Russian navy.
It caused a raft of protests. Many people demanded that the colossus, which they likened to Godzilla, be removed, while bombers threatened - and even tried - to blow it up.
Not only size matters for Tsereteli. Multiplicity does as well. No other Russia-based modern artist has been so active internationally offering his work as gifts around the world.
The most recent case was last year, when Tsereteli presented the city of Rome with a mighty monument of writer Nikolai Gogol, who once lived in Italian capital. The bronze statue is 2.9 meters high, and weighs 3.3 metric tons.
But it is not always the case that his most generous presents get accepted.
Tsereteli's statue of Columbus made 12 years ago was rejected by five U.S. states because of its bulk and aesthetics. The sculpture is twice as high as the Statue of Liberty without her pedestal.
However, Vadim Tyulpanov, speaker of the St. Petersburg's Legislative Assembly, welcomed the Tsereteli park idea.
"I was very impressed," Tyulpanov said. "Not only is the project visually impressive, it also has a breathtaking scale unknown in St. Petersburg."
National daily Izvestia quoted Albert Charkin, chairman of the St. Petersburg Union of Artists, as calling the project "a marvel."
"The 'Window to Europe' part is fascinating. Any passer-by would see themselves going through the park towards Europe," Charkin said.
Tsereteli has had his eye on St. Petersburg since 1995, when he proposed erecting a statue of [Second World War hero] Marshal Georgy Zhukov on Marskoye Polye in central St. Petersburg, to commemorate the 50th anniversary of the end of the Second World War.
He offered several sculptures as presents for St. Petersburg's 300th anniversary, but had no luck until May this year, when his monument of Count Ivan Shuvalov was installed in the courtyard of the Academy of Fine Arts. Shuvalov was the founder of the academy.
Tatyana Pchelyanskaya, an art historian and head of the marketing department at the Museum of the History of St. Petersburg (Peter and Paul Fortress), said the idea of the Tsereteli park sent shivers down her spine.
"His oversized monsters would be out of keeping with the spirit of St. Petersburg," she said. "Having them would be a disgrace. His art is more appropriate in Moscow."
But Yevgenia Kikadze, art-director of the Marat Gelman Gallery in Moscow, disagreed.
"Tsereteli is just so provincial and lacking taste that Moscow, despite its grand scale and cosmopolitan spirit, is having a tough time digesting his art," she said. "He also fancies thrusting his costly sculptures on cities and countries as presents, without being asked, which is tactless and intrusive.
"The algorithm should have been that St. Petersburg's parliament decided on a project, found the money and launched a competition," Kikadze said. "Then Mr. Tsereteli could present his work and it would be evaluated."
Public hearings on the Tsereteli project for the St. Petersburg's 300th anniversary park will be organized by the end of November. In the meantime, the artist suggested that a charitable foundation be created to raise the $15 million needed for the project.
TITLE: Dismay as Tourism Budget Slashed
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: St. Petersburg's 300th anniversary may have resonated all over the world, but the initial city budget for tourism development in 2004 has been cut by more than 80 percent, with just $200,000 to be spent promoting the city, which earns a large, but unknown, part of its income from tourists.
Despite all the promotion for the 300th anniversary this year and huge numbers of people arriving for the festivities, the city budget is in deficit for next year.
Citing a lack of funds, the city administration slashed the budget of its tourism committee from 35 million to just 6 million rubles ($200,000). The St. Petersburg's Legislative Assembly has already passed the budget after two hearings. The third and final hearing is on Nov. 26, but it is already too late to make any changes.
"Naturally, 6 million rubles is nothing but - unlike this year - St. Petersburg is going to have a budget deficit in 2004, and some major cuts have been made in almost all spheres, including social benefits," said Pavel Fenin, a leading expert on tourism issues for the city parliament.
In 2002, the Legislative Assembly passed a law on development of the local tourism industry in 2002-2005, earmarking 30 million rubles to be spent on tourism development in 2003, and 35 million rubles in 2004. This year, the projected amount arrived safely.
Many representatives of the local tourism industry are disappointed at the news, which was all the more surprising after tremendous efforts were put into promoting St. Petersburg's 300th anniversary worldwide.
For Rachel Shackleton, general director of Concept Training, Development and Consultancy Services, the news was a deep shock.
"The whole idea of the jubilee celebrations was to put St. Petersburg on the map as a major travel destination," Shackleton said. "I would expect the city to continue its great work on renovation of monuments and so on - because only a tiny percent of what should be done has actually been done.
"The anniversary was seen as a springboard for further expansion of tourism. But they just seem to have dropped everything," she added.
Larisa Ropotova, head of Fremad Russia travel agency, said she was also disappointed, but was quick to add that the city has never been a really generous sponsor of its tourism infrastructure or promotion campaigns.
"The budget of the tourism committee has never been something to brag about," Ropotova said. "The lion's share of city promotion has been routinely sponsored by the travel agencies and other market players at their own expense. The victim, in the end, will be the city."
Some experts, however, remained calm about the budget decrease.
Yelena Zakharova of Russian Cruises said the cuts are unlikely to have a major effect on the industry.
"Most agencies are private and don't need the city to stay afloat," she said. "I don't think it will be a tragedy. The question is how well will the money be spent?"
On a similar note, Lyubov Sofyan, general director of Nordic Travel Agency, was quoted by local daily Delovoi Petersburg as saying that 6 million rubles would be just enough for the city at the moment.
"The city can't even cope with the current influx of visitors," she said. "We have even lost large numbers of tourists because we don't have enough hotels yet."
But Concept's Shackleton said there should be more cooperation between the administration and the private sector; the city - as well as the business - should be a substantial contributor to turning tourism into a leading industry, which, naturally, involves greater financial commitment than 6 million rubles a year.
"What can you possibly do with 6 million rubles?" Shackleton said. "A few people get some new uniforms, and the money is gone."
Sergei Korneyev, director of the North-Western office of the Russian Union of Tourism Industry, agreed.
"The move [to cut the budget] was at the very least illogical," he said. "According to the research by the World Tourism Organization, every dollar invested into promotion of a tourism destination subsequently brings back from $6 to $15 of profit. These figures speak for themselves."
Local authorities tend to underestimate the importance of tourism development projects, Fenin said.
"The administration hasn't been able to see a clear connection between funding of such projects and an increase in the number of tourists," he said. "They seem to believe that the city itself is so great that people will be coming here anyway. An efficient mechanism of calculating how much the city earns from tourism specifically has yet to be developed."
After the vote next week, the Legislative Assembly will next review the budget - and possibly amend it - in March, when some extra revenue is expected to be filling the city coffers.
"The new government has promised to raise some extra cash to overcome the deficit by what they call 'more efficient use of the city state property,' and that means increasing rents," Fenin said. "Even if the promised extra funding arrives, it's unlikely to be allocated to tourism. The city's ailing social sphere will come first."
TITLE: UES Worst Polluter, According to Study
AUTHOR: By Maria Danilova
PUBLISHER: Staff Writer
TEXT: MOSCOW - National power provider Unified Energy Systems is the country's worst polluter, according to a new study of 31 top companies.
The annual report, released by the nongovernment Independent Environmental Rating Agency on Monday, ranks the Western Siberian Metallurgical Plant, Norilsk Nickel, Severstal and Russian Aluminum as the next four worst polluters in 2001.
The most environmentally friendly companies are St. Petersburg shipbuilder Severnaya Verf, followed by carmakers GAZ, KamAZ and AvtoVAZ and nuclear fuel supplier TVEL.
The worst polluter on the previous list, which was released last year and ranked only 13 companies, was Norilsk Nickel, while the cleanest company was GAZ.
Companies were rated by how much fresh water they used, the amount of pollution they emitted and the amount of waste - toxic or otherwise - they disposed of, among other things.
"A UES employee leaves an environmental footprint that his 15 times bigger than that of an average Russian employee," Independent Environmental Rating Agency director Alexander Martynov said Monday.
UES said pollution in the electricity sector was part of a global problem. "Unfortunately, emissions into the atmosphere are unavoidable in the energy sector, and this is the case all over the world," UES spokeswoman Tatyana Milyaeva said. "But we pay great attention to environmental issues and work on developing renewable sources of energy to further minimize harmful emissions."
Martynov said companies are gradually becoming more environmentally responsible, pointing out that all 13 companies in the previous list refused to assist researchers while this time around 12 of the 31 companies agreed to help.
In addition, the Tyumen Oil Co. "had the worst environmental indicators last year. But this year the company was readying itself for a merger with British Petroleum and they significantly improved their stance," Martynov said.
"Such environmental ratings can become a real economic force to drive technological and managerial innovations," he said. "We hope that it will affect companies' investment and capitalization ratings and lead them to work on environmental programs to get a better rating than their competitors."
GAZ said it was pleased with is environmentally friendly rating two years in a row. "It is the result of systematic work in this direction," GAZ chief ecologist Sergei Tsymbalov said by telephone. "Last year we spent up to 10 percent of our investment budget on various environmental programs."
TITLE: Journalists Sent Fake Summons
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - The Prosecutor General's Office began investigating Monday who might have sent out fake summons to several prominent journalists and two senior officials of the private RenTV television station.
Journalists Sergei Parkhomenko of Ekho Moskvy radio, Yezhenedelny Zhurnal editor Mikhail Berger, Nezavisimaya Gazeta editor Natalya Koshkaryova as well as RenTV president Irena Lesnevskaya and RenTV general director Dmitry Lesnevsky were among those who on Friday received fake letters from the Prosecutor General's Office summoning them to appear for questioning within 24 hours.
Printed on what appeared to be the Prosecutor General's Office official letterhead, the letters politely invited recipients to come and clarify issues related to ongoing investigations into the financing of the media organizations they run or work for.
Parkhomenko, once the editor of Vladimir Gusinsky's Itogi magazine and until this year editor of Yezhenedelny Zhurnal, said Monday that the letter addressed to him was sent to Yezhenedelny Zhurnal and that he and Berger called the prosecutor's office Friday seeking clarification.
He said prosecutors were as puzzled as he was with the summons and vehemently denied sending them.
The prosecutor's office issued a statement Friday saying the letters were fake. On Monday, it said it was looking into the matter.
Parkhomenko, who is known for his critical reports about the Kremlin, said the letters were no doubt a prank.
"It is probably a joke - a joke, however, that very well reflects the realities of today's Russia," he said by telephone. "Such a joke three years ago would have been unthinkable because it would have not been understood. But these days it looks appropriate and very timely."
Parkhomenko suggested the letters also could have been a kind of a warning to critically minded journalists from the special services.
"I do not rule out that it was done by some 'clever men' from the special services just to keep professional journalists on their toes," he said.
Lesnevskaya refused to comment.
TITLE: European Walkway Signposts Ties Between Europe and City
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: The European Walkway, a three-hour walking route that takes in 15 points in St. Petersburg associated with each one of the 15 member countries of the European Union, was officially opened Friday.
Beethoven's "Ode to Joy," the anthem of the European Union, rang out from the Petropavlosk cathedral as the walkway was initiated. It was played by Jo Haazen, director of the Royal Carillon School in Mechelen, Belgium, on a carillon that is Belgium's gift to the cathedral and its site on the walkway.
Marco Ricci, Consul General of Italy, which currently holds the EU presidency, said the walkway renews the symbolic connection between the European Union and Russia.
"It is another sign of the very rich and indivisible ties between St. Petersburg and Europe and refers to the past and the present," he said.
Ricci said the term "window to Europe" in regard to St. Petersburg was first employed in 1739 by Italian Francesco Algarotti who said: "This great window recently opened in the north through which Russia looks on Europe."
The walking route is marked by plaques in Russian and English with a map of the whole walkway and an explanation why a particular site has been included and with which nation it is associated.
Richard Wright, head of the delegation of the European Union in Russia, said that when the EU membership will expands to 25 countries next year he hoped that the walkway would also be extended to take in places associated with the 10 new member countries that join next year.
Alexander Prokhorenko, acting head of City Hall's committee for external relations, said the point where the ceremony was taking place was the place where St. Petersburg started and that its foundation had changed Russia significantly and moved it closer to Europe.
"This walkway is a reflection of the past and the current relations between the city and Europe," Prokhorenko said.
He suggested that similar walkways could be built in Europe itself commemorating great citizens of countries that are now in the CIS and their association with European cities.
Silvia Kofler, spokeswoman for the EC delegation, said outside the ceremony that selecting the 15 sites had been difficult - for some small countries, such as Luxembourg, finding an association with St. Petersburg was not simple; larger countries had to focus on just one link to the city even though they have many.
Booklets describing the walkway will be available from travel agencies.
TITLE: Former Kremlin Digger Dishes the Dirt
AUTHOR: By Maria Danilova
PUBLISHER: Staff Writer
TEXT: MOSCOW - In her book "Tales of a Kremlin Digger," former Kremlin correspondent Yelena Tregubova shares her experience of dealing with presidential officials, whom she calls "mutants," and lashes out against what she says is a Putin campaign to curb freedom of speech.
With chapters titled "One Night with Alexander Stalyevich [Voloshin]" or "How Putin Was Recruiting Me" and a detailed account of a private dinner in 1998 with then-FSB director Vladimir Putin at a Japanese restaurant where she addressed him by the more intimate name "Volodya," the book may appear to be a tabloid look at behind-the-scene Kremlin intrigues. But Tregubova insists it is not.
Drawing on four years of covering the Kremlin for a number of leading Russian newspapers, including Kommersant, the book is a clarion cry that freedom of speech has all but evaporated in Russia, she said.
"The public wouldn't be interested in reading a book about the plight of journalists and the problem of a free press in Russia," Tregubova, 30, said in a recent interview. "So I spiced it up as much as I could with intriguing stories about Kremlin officials so that it would look almost 'yellow' and people would buy it and read it.
"But once they swallow this pill, which is sweet on the outside, they will taste the bitter essence of what has happened in the country.
"There is hardly a single publication left these days with an editor-in-chief who won't change or simply pull an article after a call from the Kremlin - or, worse still, replace an opposing journalist with a loyal one," she said.
As if to confirm Tregubova's words, state-controlled NTV television pulled the plug on a report about the new book just hours before it was to air Sunday night. NTV ran advertising spots for the segment on its 9 p.m. news magazine "Namedni" throughout the day and allowed it to air in the Far East, which is seven time zones ahead of Moscow, before canning it.
"This is the reaction of the Kremlin," Tregubova said Sunday night.
"Several hours before 'Namedni' was to be shown in Moscow, I got a call from Lyonya [program host Leonid Parfyonov], who told me the segment wouldn't be aired. He told me: 'I am not going to lie that somebody spilled Coke on the tape. The report was called off.'"
The Kremlin press service could not be reached for comment late Sunday, but earlier in the day it declined to comment about the book.
NTV general director Nikolai Senkevich denied being pressured to yank the report.
"It was my personal decision," he said by telephone. "As soon as I saw the show today at 2 p.m., I decided that I respect our audience too much to air such a base and vulgar segment.
"Nobody can reproach our channel about a lack of political coverage. But this is not about politics, it's about promoting the book and its author. 'Namedni' has earned the reputation of being a refined, high-quality show. But this whole story just smells bad."
The producer and editor of the segment, Andrei Shilov, said it included an interview with Tregubova in which she drew parallels between Putin and Soviet secret police head Lavrenty Beria, a womanizer who was known for disposing of women when he was tired of them. Tregubova spoke with Parfyonov in a studio decorated to resemble a Japanese restaurant - a nod to the dinner date with Putin described in the book.
Mikhail Margelov and Alexei Volin, who served in former president Boris Yeltsin's Kremlin press office, were also interviewed and they were largely critical of the book, Shilov said.
Tregubova said her main point in the interview was that "the main achievement of the Yeltsin years - freedom of speech - was done away with after Putin became president."
Likewise, by contrasting her experience of covering the Kremlin in the late Yeltsin to early Putin years, Tregubova in her book sets out to show that Putin "has practically destroyed all independent political journalism in Russia," according to the first chapter of the book.
She writes that shortly after Putin moved into the Kremlin, the Kremlin pool of reporters saw a wave of repressions in which those who did not toe the official line - including herself - lost their accreditation.
Reporters were instructed to only ask the president questions that had been cleared with his press secretary, and the Kremlin press service itself eagerly returned to Soviet-style methods of feeding the press - literally, the book says. It describes a foreign trip by Putin in which the Kremlin pool was divided into those who were loyal and disloyal to the president. Those in the loyal group got to dine with Putin.
Tregubova portrays Putin as a former KGB agent who remains passionately devoted to the security services and says he was personally involved in decisions to shut down private television stations and cross her off the Kremlin accreditation list.
"He sincerely believes that this is what mass media should be like," she said.
In the book, Tregubova also provides a blunt account of slips of the tongue and other blunders committed by Putin and his predecessor that the Kremlin banned reporters from writing about. In one example, she says that in the weeks before he was elected president in 2000, Putin met a young boy who had been hit by a car while jaywalking. "In a hospital in Petrozavodsk, instead of expressing pity for the small boy on crutches ... Putin told him, 'From now on you won't be violating traffic regulations anymore.' Little wonder that after this, when Putin tried to kiss a tiny girl, she wouldn't let him and told him, her eyes full of tears, 'I am afraid of you!'"
Tregubova said her refusal to bow to the Kremlin in her reports ultimately cost her her Kremlin accreditation in 2001.
After the release of the book three weeks ago, Kommersant editors fired her, complaining she had not notified them about taking a sabbatical to work on the book. Tregubova said she had told the editors about the sabbatical.
"It was a physical necessity for me to describe everything I saw there [in the Kremlin]," said Tregubova, who started working on her book early this year.
"I tried several major Russian publishers, but they all said they didn't want to face the risks," she said.
Tregubova finally found an ally in Alexander Ivanov, director of the publisher Ad-Marginem, Latin for "on the margin."
The publisher also has released the works of ultranationalist writer Eduard Limonov as well as Vladimir Sorokin's controversial "Goluboye Salo," which can be translated as "Blue Lard" or "Gay Lard" and depicts homosexual contact between Josef Stalin and Nikita Khrushchev.
While any political consequences of publishing Tregubova's book remain to be seen, the economic risk of investing into the project has surely paid off. "Tales of a Kremlin Digger" is currently among the top 10 best selling books in Moscow.
"They [the other publishers] must be biting their elbows now," Tregubova said with a laugh.
Asked whether she had any fears about targeting the Kremlin, her voice trembled.
"I know that I am responsible not only for myself but also for my loved ones," she said. "That is why I never told my Mom that I was working on this book, not until the day it was released. I didn't want her to worry about me."
Tregubova said a friend told her that Press Minister Mikhail Lesin has read the book and allegedy reacted by saying, "I hope that she understands that with this book she has condemned herself. No one will ever hire her."
"But I would be more afraid if I had kept silent," she said.
TITLE: Yukos Row Blamed as University Head Quits
AUTHOR: By Caroline McGregor
PUBLISHER: Staff Writer
TEXT: MOSCOW - Leonid Nevzlin, a Yukos billionaire, resigned Monday as rector of the Russian State Humanities University, or RGGU, perhaps having spotted the writing on the wall for his departure.
RGGU press secretary Irakly Bolkvadze said the university's academic council had received a letter from Nevzlin, dated Monday, in which he requested to be released from his duties because he was taking another job. Nevzlin did not say what the new job was.
The government had pushed the RGGU academic council to fire Nevzlin at a hastily convened meeting on Friday, but the "Nevzlin question" was ultimately postponed until the council's next meeting Thursday.
Defiantly insisting he would not allow the government to dictate his fate, Nevzlin said in an interview with Gazeta published Monday that he was considering sacrificing himself for the sake of the university, which he said had been made a hostage to the government's campaign against him - much the same way that Mikhail Khodorkovsky resigned from the helm of Yukos to distance the company's fate from his own.
In the drive to oust him, Nevzlin said he saw the fingerprints of Vyacheslav Surkov, a deputy head of the Kremlin administration. "I've known [him] a long time, and in the way this question is being decided, I spot familiar handwriting."
Education Minister Vladimir Filippov, who attended Friday's meeting, had made clear to the council that if it did not vote Nevzlin out directly, he could do so indirectly, by merging RGGU with another school and naming new leadership for the new entity.
Filippov, whose ministry oversees the RGGU, attended the meeting to help the academics "make the right decision," Izvestia reported Saturday.
This spring, Yukos announced it would pour some $100 million into the university's work over the next 10 years.
RGGU has so far received $5 million, said the university's founder, Yury Afanasyev, whom Nevzlin replaced as rector on June 26, about a week before the arrest of Platon Lebedev, another core Yukos shareholder, threw the case against Yukos into motion.
Nevzlin reiterated in the Gazeta interview that Yukos' financial support would continue, even in his absence, provided "the directorship doesn't end up in the hands of a Chekist."
Nevzlin had appeared to hold out hope for his position in an interview published last Friday in Kommersant. He had hoped that Afanasyev, as the university's honorary president, would come to his defense at the meeting later that day. Hailing his predecessor as a democrat of the first wave, he said, "It's up to him alone to decide."
Afanasyev, however, told Interfax on Friday that the university needs a rector who is physically present. "What if there is an emergency, like a fire, for example, and the rector is not around? Who would we turn to? Responsibility would fall to the [Education] Ministry."
Bolkvadze said a replacement for Nevzlin would be discussed at this Thursday's meeting.
Nevzlin confirmed this week that he is in Tel Aviv, where he gained Israeli citizenship earlier this month.
TITLE: 20 Masked Men Storm Soros Institute, Karamzin Injured
AUTHOR: By Denis Maternovsky
PUBLISHER: Staff Writer
TEXT: MOSCOW - About 20 masked men carrying clubs swooped down on the disputed headquarters of George Soros' Open Society Institute on Friday night in an attack that injured 10, including the building's owner.
The raid was a failed attempt to retake the building and organized by the Open Society Institute's lawyers in New York, a source close to the institute said Sunday.
Institute employees were kicked out of their headquarters Nov. 6 when a group of about 50 gunmen acting on orders from building owner Kantemir Karamzin seized the building in a rent dispute.
A security camera recording aired on NTV television Saturday showed a group of men in black scaling the fence around the building on 8 Ozerkovskaya Naberezhnaya the night before and running toward the security office.
The Soros source said lawyers at Open Society's main headquarters in New York had orchestrated the attack behind the backs of both Soros and the Open Society Institute Russia in an effort to force Karamzin to cede the building "the hard way."
"Open Society's employees were asked to come to the offices on Friday night. We were told that court marshals would show up and force Karamzin to vacate the building and that we could make a list of missing personal belongings on the spot," the source said.
"We waited until 10:30 p.m. like complete fools and no one came. And then, when the attack started, we were called by lawyers and told to get out of there."
Yekaterina Geniyeva, the president of Open Society Institute Russia, said Sunday that she had spoken with Soros the day before and his feelings about the latest raid were "extremely negative."
"I do not know who sanctioned this attack," she said by telephone. "It came as a complete shock to me. The only thing I can tell you is that it wasn't us and it wasn't George Soros."
Open Society Institute Russia's lawyer, Pavel Kuzmin, said the chances that the rent dispute could be resolved "in a civilized manner" have now been lost. "It looks like mafia infighting now. This is no different from what Karamzin's people did to us," he said.
"It is impossible to say what will happen next. Karamzin has already hinted that he will retaliate."
Karamzin told NTV that he was sure that the Soros foundation was behind Friday night's attack.
Karamzin said he and five of his employees suffered minor injuries, while four others were briefly hospitalized with injuries including a broken nose and a concussion.
The long-running dispute stems from a 1999 agreement under which Open Society gets to rent the building for $10,500 per month for 10 years. Open Society says it has spent $2.5 million renovating the building.
Karamzin says the building is worth $100,000 per month and Open Society owes several million dollars in back rent and unpaid utility bills.
A Moscow court upheld the 1999 agreement earlier this year.
TITLE: Oligarchs Submit to Putin's New Take-It Deal
AUTHOR: By Alla Startseva and Catherine Belton
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin on Friday offered the nation's leading executives a new deal that few are likely to refuse: share your wealth or risk losing it.
The state, Putin told nearly 800 business leaders from across the nation, will work to strengthen property rights and reduce bureaucracy, but businesses must "fully recognize their social duties" by sharing their wealth and helping to reduce poverty.
"[Businesses] must aim their efforts at developing a system of new social guarantees for the population in line with the new demands of the time," Putin told a packed Hall of Columns in the House of Unions that included at least five billionaires. "[We must join] forces to make the lives of people economically sound so that they have plenty to live on."
The meeting, organized by RSPP, the nation's biggest business lobby, was first requested in the hours after the Oct. 25 arrest at gunpoint of Yukos founder Mikhail Khodorkovsky. At the time, RSPP said that Russia would face a potentially calamitous crisis of confidence in the economy if Putin didn't meet with top executives to clarify his position on the legal assault on Yukos. Putin flatly rejected the offer. Since then, however, Khodorkovsky has been denied bail, Deputy Prime Minister Alexei Kudrin has trumpeted "the end of the oligarchy," unrelenting prosecutors have publicly warned all businessmen to toe the line, and the leading pro-business voice in the Kremlin, Alexander Voloshin, has been replaced.
The result has been that the once-heated rhetoric coming from the so-called union of oligarchs has given way to cowed deference. In fact, neither Putin nor executives mentioned Khodorkovsky or Yukos by name during the union's annual congress Friday.
Metals-to-banking tycoon Vladimir Potanin explained the RSPP's decision to not press Putin publicly about Khodorkovsky, who still sits on the union's governing council, this way: "There is a level of detail into which you can go with the president, and one into which you had better not go."
"Today the president clearly stated that there should be a line between business and power. Many of my colleagues and I understand this and we don't intend to cross this line," Potanin said.
Indeed, one by one, nearly all of the nation's leading business figures in the last few weeks have declined to come to Khodorkovsky's defense. One exception is Unified Energy Systems chief Anatoly Chubais, who has been called the father of the oligarchs for overseeing the rigged privatization auctions that formed the basis for most of their fortunes.
Conspicuously absent from Friday's congress, Chubais chose instead to attend, together with Prime Minister Mikhail Kasyanov, the grand opening of the second unit of a hydropower plant in the Siberian town of Nizhnevartovsk. Both men have railed against the way prosecutors have handled the investigations into Yukos and its top shareholders, with Kasyanov suggesting Friday that the Justice Ministry should take over control of the nominally independent General Prosecutor's Office. He also said he had ordered the Natural Resources Ministry's to end its aggressive review of Yukos' drilling rights, which he called "intolerable."
Political analysts said Kasyanov is unlikely to keep his post if Putin wins reelection in March, as expected, while Chubais is the only major business figure campaigning for a political party, the Khodorkovsky-funded Union of Right Forces, in the State Duma race.
"Kasyanov has nothing to lose. He understands he won't keep his chair in the new Cabinet anyway and is showing off now his will to protect oligarchs," said Vladimir Pribylovsky, president of the Panorama think tank.
Everyone else, said Alexei Makarkin of the Center for Political Technologies, is afraid of the Kremlin's tough new line.
"The Kremlin as never before demonstrated so strongly that it did not want to discuss anything with big business," Makarkin said, referring to the three-week period in which Putin refused to meet with a business community in shock with Khodorkovsky's arrest.
Even Oleg Deripaska, the publicity-shy Russian Aluminum magnate, made a point of distancing himself from Khodorkovsky. When asked by the New York Times last week what would happen to the former Yukos chief, Deripaska said bluntly, "I don't care."
"He's a good guy, and personally I have a lot of sympathy for him, but I couldn't understand what they were struggling for. I'm surprised Khodorkovsky did this.... [After all] he's a very rich man."
Another billionaire who attended Friday's meeting, metals and oil tycoon Viktor Vekselberg, echoed Deripaska's remarks. "I see the problem of Khodorkovsky as his personal problem," he told Interfax.
So much has the pitched rhetoric been toned down that Putin first addressed RSPP members as colleagues, but by the end of the session they were "friends," according to union chief Arkady Volsky.
And despite his defense of the attack on Yukos, Putin seemed anxious to contain tensions with the business community, insisting again that it did not presage a "deprivatization" campaign.
"Any criminal case involving the world of business gives rise to suspicions and alarm, because a thought always arises whether there won't be a return to the past. There will not be, it is impossible," Putin said in remarks that received enthusiastic applause.
Analysts say the attack on Khodorkovsky was a reaction to his bid for greater political power at a time when Putin is determined to consolidate his own power base and wipe out any alternative sources of influence.
Combined, the political power grab by Putin and the prospect of property being returned to the state led many to speculate Russia was returning to its Soviet past.
In Friday's address, however, Putin dismissed such fears, saying that a new level of cooperation between business and the state is needed.
But the speed and intensity of the attack on the financial empire of Russia's richest man made it clear that businesses had to engage in dialog with the Kremlin on Putin's terms, not their own, said metals baron Oleg Kiselyov.
"It is clear that businesses must cooperate with the state or it will be impossible for them to exist," he said.
In laying out the new deal, Putin agreed with businesses that security forces should not be used in settling business disputes, but he said businesses were acting in a similarly negative fashion.
"It's often hard to understand where the government ends and business begins, where business ends and the government begins," Putin said. In what seemed to be a direct attack on Yukos, he lashed out at some businesses that, he said, were "lobbying their interests through the government so that their competitors get hurt."
"We are coming to a point where whoever pays more to his majesty the bureaucrat gets his way," a visibly angry Putin said.
Volsky said RSPP got the picture - business will take on the responsibility for wage hikes and other social issues while the state conducts full-scale tax reform and insures property rights are upheld.
TITLE: Business and Politics Mix in Race for State Duma Seats
AUTHOR: By Francesca Mereu
PUBLISHER: Staff Writer
TEXT: MOSCOW - Yukos is not the only major company trying to get its people into parliament. Most big businesses have representatives running on party lists in the Dec. 7 elections, and they are likely to form powerful lobby groups in the next State Duma with the aim of defending the interests of their industries.
An analysis of the party lists of United Russia, the Communist Party, Yabloko, the Union of Right Forces and the Liberal Democratic Party of Russia shows that roughly 20 percent of the candidates are directly linked to big or medium businesses, with most of them high up on the lists.
But businesses are likely to control as much as 60 percent of the seats, said Dmitry Orlov, deputy director of the Center for Political Technologies. "Twenty percent of the deputies in the next Duma are likely to be actual businessmen - i.e. former or present managers - and 40 percent will be informal lobbyists," he said.
Businesses' interest in the Duma reflects their desire to be close to the center of power and to be in position both to shape legislation and prevent the passage of laws that could endanger their economic interests.
The business phenomenon, which may be the main feature of this Duma race, is explained in part by the peculiarities of Russian capitalism, which "depends on bureaucracy," said Vladimir Pribylovsky, the head of the Panorama think tank.
"To get a Duma seat means to become a bureaucrat and to stop paying bureaucrats when you want something done," he said.
Immunity from prosecution is another reason for businessmen to want into the Duma, an issue that is particularly germane now with the arrest of Mikhail Khodorkovsky, the founder of Yukos, Russia's biggest oil company. Duma deputies and members of the Federation Council are granted immunity from prosecution.
Politically, the Kremlin has nothing to fear from a business-dominated Duma, which is likely to be "loyal to those in power," said Alexei Makarkin, an analyst with the Center for Political Technologies. It can expect opposition, though, when it comes to economic issues.
Once in the Duma, business representatives will try to get control of key committees, including those on the budget and taxes; credit organizations and financial markets; economic policy and business; industry, construction and high technology; and natural resources, the analysts said.
One candidate linked to one of the major oil companies, who spoke on the condition he not be identified, said once in the Duma, deputies representing the interests of big oil will try "to take control of the budget and tax committee to avoid an increased tax burden."
"Businesses are likely to organize inter-faction groups and in general they will trade their votes to back bills that are convenient for their business or for business in general," said Yakov Pappe, a professor with the Russian Academy of Science's Institute of Economic Forecasting.
This is one of the things President Vladimir Putin is said to be trying to prevent with the attack on Khodorkovsky, who had been openly financing political parties with the aim of getting his people into the Duma.
Businesses' greater interest in the Duma also reflects the changing role of parliament's lower house, said Svyatoslav Kaspe, an analyst with the independent Russian Public Policy Center. If during former President Boris Yeltsin's years in office the Duma was weak in terms of formulating policy and drawing up legislation, it is gradually losing its "decorative" character and becoming an attractive lobbying instrument for business, he said.
Kaspe said the trend was positive since it means the "hidden lobbying" typical of Yeltsin's time, and used by oligarchs like Boris Berezovsky, is coming to an end.
Business also had a presence on the party lists for the last parliamentary elections, in 1999. The difference now is that the placement of business candidates is more organized and more centralized, the analysts said.
Four years ago, small and medium regional businesses used their links with regional administrations to get into the Duma. "At the time, the center was very weak and the regions strove to get into the Kremlin," Makarkin said. "Relations between business and power were organized from the bottom up. Putin changed this trend and now things start from the center down. This is why you have to be close to the center - read the Kremlin - if you want to keep your business going."
In 1999, 7 percent of the people on the Communist Party list came from business, and this year it is more like 24 percent.
"The Communists have become a respectable object for investment, and more and more business companies are buying spots in the party," Makarkin said.
Fatherland-All Russia's list in 1999 was 8 percent business representatives. Among those who made it into the Duma was Vladimir Dubov, deputy chairman of the board of Yukos. A member of the Duma's budget committee, Dubov for four years has coordinated the interests of Yukos, Sibneft, TNK and LUKoil in the Duma.
In this year's election, Dubov was given a place high up on the list of United Russia (a party created by the merger of Fatherland-All Russia and Unity in February 2002). But in what was widely seen as a Kremlin order linked to the Yukos affair, he was excluded from the party list at the end of October.
The degree of business representation on a party's list corresponds to its chances in the elections. This year, United Russia, the largest faction in the Duma and the main Kremlin-supported party, is business's favorite. About 27 percent of the people on its party list come from business, and they include representatives of almost all big businesses.
"Now from the very beginning businesses understood who is the real party of power and they understood how important it is to invest in it," Makarkin said.
Business lobbying in parliament is not unique to Russia; there are lobby groups in the U.S. Congress and the British Parliament, for instance. What makes Russia different is that businessmen themselves are becoming members of the Duma.
"This is the most powerful form of lobbying," said Roland Nash, chief at Renaissance Capital.
The parties also benefit from having business representatives on their lists, since they bring in significant funding and also can help raise the party's profile. A spot at the top of a party list, with a good possibility of getting into the Duma, reportedly costs from $1.5 million to $2 million.
According to the law, Duma deputies have to be engaged only in their political activities and cannot have another job, except in teaching or research. But the law is easily evaded. After taking up Duma seats, businessmen often become members of the boards of their firms and say they are occupying no paid positions.
TITLE: Papers Bound by Owners Ties to the Kremlin
AUTHOR: By Anna Dolgov
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW - While the government has taken over the main television networks in recent years, major newspapers have remained in private hands, but despite their ostensible independence, they may be confined by their own set of restrictions in criticizing the state.
The media industry has changed shape drastically since the mid-1990s, when squabbles between powerful magnates who controlled television stations and newspapers spilled out into broadcasts and onto the printed page.
When state assets were being divided up in privatization sales during the 1990s, business tycoons used the media to earn favors from government functionaries through properly aimed mudslinging or praise.
"Investors paid money without counting on the publication's profitability, but they got better access to resources that were being privatized," said Ivan Zasursky, head of a research department at the Moscow State University's Journalism School and deputy chief of the Rambler Internet company. "Now this process is over."
The end of privatization handouts and oligarch wars has brought about a new approach to running daily newspapers.
"It is getting increasingly business-like," said Anna Kachkayeva, a media analyst with Washington-funded Radio Liberty. "The success of the editorial policy is directly linked to an increase in circulation."
The less-tolerant political climate under President Vladimir Putin has also caused some more ominous changes.
Government actions against a free press have bred self-censorship among some journalists. And since most newspapers are owned by companies that have business interests in other spheres, they may be influenced by their owners' wish to keep friendly relations with the state.
"The newspapers have become hostages of the relations between their owners and the authorities," Zasursky said.
One of the reasons behind the print market's transition to a more capitalist approach is newspapers' ineffectiveness, relative to television, as a political instrument - as media magnates, stripped of their television assets, seemed quick to realize.
TV broadcasts remain a political instrument - now promoting the views of Putin's administration - while newspaper publishing is evolving into something more like a business venture.
"There is no other way," said Yevgeny Abov, deputy chief of the Prof-Media holding, through which metals magnate Vladimir Potanin owns the Izvestia and Komsomolskaya Pravda dailies, and which also holds a 35 percent stake in Independent Media, the parent company of The St. Petersburg Times.
"Either they turn into a media business mainly guided by the criteria of reader audience, share of the market and popularity, or they lose their audiences altogether. They become fully dependent on non-media sources of financing, and those sources sooner or later run out."
The laws of the market have brought considerable diversity to newspaper publishing. While most TV broadcasts have been reduced to indistinguishable, and undistinguished, pro-Kremlin reports, newspapers seem to be tailoring their coverage to their specific audiences.
Kommersant, for instance, is written for educated professionals with an interest in finance, while Komsomolskaya Pravda caters to a wide group of average readers with an interest in flamboyant entertainment stories, consumer tips and just a bit of politics.
Some newspapers report making money - no small feat in a business where breaking even is often considered an achievement.
Komsomolskaya Pravda is a significant money-earner, Abov said, refusing to disclose specific figures. Izvestia reported pre-tax profits of about 28.4 million rubles (nearly $1 million) in 2002.
Kommersant expects to make several million dollars in pre-tax profits this year, said editor Andrei Vasilyev, who also heads the Kommersant publishing house.
But even the most successful newspapers cannot match television's popularity. Newspapers have lost a lot of readers since the Soviet era and polling data shows the figures are still going down.
The house-to-house deliveries of Pravda in the Soviet days ensured wide circulation, and the scarcity of other sources of information led many Russians to perfect the skill of reading between the lines.
Now, newspapers have to compete not only with a greater number of television stations, but also with electronic media and an array of general interest magazines.
Newspapers also seem to be paying for their sins of the 1990s, when unabashed promotion of their owners' views appeared to have undermined their credibility.
TITLE: Oligarchs Own Most National Papers
AUTHOR: By Anna Dolgov
PUBLISHER: Special to The St. Petersburg Times
TEXT: MOSCOW - Most of Russia's national newspapers have oligarchs behind them, and while some dispute that the ownership has any bearing on editorial policy, the style of coverage often matches the owner's relations with the Kremlin.
The weekly Argumenty i Fakty and daily Trud are controlled by Promsvyazbank, which is believed to be connected to Kremlin-linked banker Sergei Pugachyov.
Trud - the name of which means "labor" and proclaims itself to be a workers' newspaper - is exceptionally cautious in reporting on national politics, with hardly a critical word about President Vladimir Putin.
Argumenty i Fakty is marked by similar caution and frequent pro-Putin coverage, interspersed with brief, lightly critical stories.
Both papers have potential to influence the Dec. 7 parliamentary vote because of their wide distribution in the regions. Argumenty i Fakty has an average issue readership of more than 7 million, according to a survey by TNS Gallup Media earlier this year.
One of Russia's best-known newspaper titles, Izvestia, is owned by metals magnate Vladimir Potanin through his Prof-Media holding. A moderate daily with a reputation for good writing, Izvestia has been generally loyal to the Kremlin.
This may in part be a reflection of Izvestia's tradition dating back to Soviet days, when it had no choice but to promote the Communist government yet refrained from sliding into the vehemence and doggedness of Pravda.
Prof-Media deputy director Yevgeny Abov said that Izvestia's owners do not interfere in editorial policy. But he conceded that the reason may lie in a wish to distance themselves from the paper to guard against being punished for any critical reporting.
Potanin has been keeping a low profile during the Kremlin's campaign against Yukos shareholders, and Izvestia has given it less coverage than other serious dailies.
Potanin's holding also includes Komsomolskaya Pravda, which draws a mass audience with tabloid-style crime reports and human-interest stories.
Gazeta, which has earned a reputation for accurate reporting since it began publishing two years ago, is owned by Vladimir Lisin's Novolipetsk Metallurgical Plant. Its founding editor, Raf Shakirov, left last month for Izvestia.
Vedomosti, a business daily, is owned jointly by the Financial Times, The Wall Street Journal and Dutch-owned Independent Media, the parent company of The St. Petersburg Times.
Some of the most critical coverage of the Putin administration has come from Kommersant, Nezavisimaya Gazeta and Noviye Izvestia, three dailies controlled by Boris Berezovsky.
Berezovsky, who lives in exile in London, is wanted in Russia on fraud charges, but Britain has refused to extradite him. He has little fear of repercussions and could hardly make his relations with the Kremlin any worse.
"Kommersant is in a very good position because Berezovsky already has nothing to lose," said Ivan Zasursky, head of a research department at Moscow State University's Journalism School.
But Kommersant editor Andrei Vasilyev objected to this view, saying a newspaper with claims to objectivity and independence cannot allow its editorial policy to be affected by the owner's relations with the Kremlin.
"I remember a time - I was already chief editor then - when Boris Abramovich had great relations with the Kremlin. ... But one of the newspapers that was the most skeptical in its coverage of the government was Kommersant," Vasilyev said.
"And that sometimes strained the editorial staff's relations with the owner."
But government actions against independent media over the past few years and the prosecution of Mikhail Khodorkovsky and other top Yukos shareholders have stoked fears that critical newspapers owned by oligarchs may be suppressed.
"The whole country and all of business has worries, and in that sense I think we have them, too," Vasilyev said.
The weekly Moskovskiye Novosti was acquired by Khodorkovsky through his Open Russia charity foundation in September. The newspaper, which seems to have gained some depth under its new ownership and new editor Yevgeny Kiselyov, has a core readership of liberal intellectuals.
Moskovsky Komsomolets, or MK, is one of the few major dailies relatively free of outside financial control, with most of its stock owned by Pavel Gusev, who has been the editor since 1983.
But Gusev enjoys warm relations with the Moscow city government.
TITLE: Chechen Leaders Consult
PUBLISHER: The Associated Press
TEXT: Chechen President Akhmad Kadyrov met Friday with a former envoy of rebel leader Aslan Maskhadov, in what Kadyrov called a sign of growing normalization in Chechnya.
The meeting in Moscow brought together Kadyrov, who was elected president in October after all his challengers withdrew from the race; Salambek Maigov, who had represented Maskhadov in Moscow and carried out talks on his behalf in foreign capitals; Abdul-Khakim Sultygov, the Kremlin's human rights representative for Chechnya and a top advocate of Russia's policy there; and Khusein Isayev, the chairman of the Chechen State Council that backs Kadyrov.
Kadyrov portrayed the meeting as evidence that the rebels' cause was doomed.
"Maigov is a man who until very recently was Maskhadov's representative; he has recognized Maskhadov's lack of a future and understood that we have to live together, that Chechnya is an inalienable part of Russia," Kadyrov was quoted by Interfax as saying.
Maigov, who is running for the State Duma in Dec. 7 elections, said he and Kadyrov had discussed the humanitarian situation in Chechnya and a future agreement between the federal and Chechen governments setting out their spheres of authority over the region.
Kadyrov also met with President Vladimir Putin and discussed issues including the proposed budget for the region.
"We've discussed a number of issues, I received support in all of them," Kadyrov told Itar-Tass.
Meanwhile, Colonel Ilya Shabalkin, a spokesman for the federal troops in Chechnya, said Sunday that Maskhadov was giving up the rebels' claim to the lowlands of Chechnya and aiming to reign over a region in the mountains of southern Chechnya, Interfax and Itar-Tass reported.
"He is also ready to accept Ichkeria's [Chechnya's] membership in the Russian Federation as an autonomous entity."
Asked to comment on the announcement, Maigov said it was "utopian."
TITLE: Report: Kremlin Insiders Wed
TEXT: The St. Petersburg Times
The prosecutor general's son intends to marry the daughter of deputy head of the presidential administration Igor Sechin, Moskovsky Komsomolets reported Friday.
Prosecutor General Vladimir Ustinov's son Dmitry will tie the knot with Sechin's daughter next Saturday, the newspaper said.
But the newspaper pointed out that Sechin is widely believed to lead the so-called siloviki - the Kremlin clan of St. Petersburgers that is seen as being behind the investigation into Yukos and the arrest of its founder, Mikhail Khodorkovsky. The Prosecutor General's Office is conducting the investigation and ordered the arrest.
The marriage would not be the first among political clans. Perhaps the best-known love story was between Yeltsin's daughter and adviser, Tatyana Dyachenko, and Yeltsin's former chief of staff Valentin Yumashev, who got married in October 2001. In February 2001, Yumashev's daughter Polina married metals baron Oleg Deripaska.
TITLE: Cans Hold the Future for Beer
AUTHOR: By Alex Nicholson
PUBLISHER: Staff Writer
TEXT: MOSCOW - It's an odd sign of the times, being taught beer-drinking hygiene while sitting in the cinema waiting for the latest blockbuster to begin.
But the aluminum industry's public-information-style ad campaign extolling the benefits of disposable cans over beer bottles appears to be working.
Just a few years ago, nary a canned Russian beer could be had. These days, however, one out of every eight domestically brewed beers comes locked in metal. And now that the nation's leading brewer is betting more than a quarter billion dollars on crushable receptacles, there appears to be no turning back.
St. Petersburg-based Baltika said Thursday it will buy $270 million worth of cans from Russian Aluminum's Rostar over the next six years, an unprecedented deal for both industries.
"For us it is very pleasant that Baltika has decided to put its premium brands in cans," Rostar general director Pavel Ulyanov told reporters Thursday.
Like all leading brewers, Baltika is banking on banki to help it tap the booming premium segment as the pace of growth in the overall market is tapering off. It's No. 7 "export" brand only comes in cans.
While the beer market is expected to grow just 5 percent to 7 percent this year, about half the pace of recent years, premium segment growth will hit double digits, analysts said.
The agreement signals a sea change in both markets, as the leaders of each discovered that the synergies of two Russian companies working together far outweighed the potential pitfalls of squaring off.
The two companies were on opposite sides of the fence for years, with Baltika lobbying the government to lower import tariffs on aluminum cans and Rostar lobbying to raise them, or at the very least, keep them steady at about 5 cents per can.
For Baltika, which has relied on Polish company Can Pack for much of its supplies, the tariffs made making a more aggressive push into aluminum prohibitive.
Market watchers say it was Baltika's aggressive lobbying for lower tariffs that lead to a Can Pack truck being sprayed with bullets outside St. Petersburg last year.
"Baltika most likely backed down," a source familiar with the case said. "If they had continued buying their cans from Poland, the trucks would have continued to be shot at."
Baltika dismissed the incident as "a one-off" and said that previous disputes had nothing to do with its deal with Rostar.
Baltika spokesman Alexei Kedrin pointed out that the shooting incident did not interrupt deliveries from Poland, and that the brewer continues to buy from Can Pack. The deal with Rostar, he said, benefits everyone involved.
Under the terms of the agreement, Rostar will supply half of Baltika's can requirements. This year the company expects to increase its use of aluminum by 20 percent, packaging 30 million dekaliters of beer, or 17.4 percent of total production, in some 600 million cans.
Ulyanov said Rostar's goal is to raise the market share of canned beer in Russia to 25 percent, which is in line with Europe. In America the figure is 50 percent.
TITLE: Foreign Investment Up 62% This Year
PUBLISHER: Combined Reports
TEXT: MOSCOW - Russia received $20.9 billion of foreign investment in the first nine months of 2003, or 61.9 percent more compared to the same period a year ago, the State Statistics Committee said Monday.
The figure included $4.67 billion of foreign direct investment, which rose 77.3 percent on the same period last year, the committee said in a statement.
Foreign investment to Russia was $12.7 billion in the first half of the year, including $2.5 billion direct investment.
Investment growth was a major driver for Russia's more than 6 percent economic growth in the first nine months of 2003, but a probe into oil major Yukos set off fears that investors may choose to wait until the legal row is resolved.
The committee said that cumulative foreign investment since the fall of Soviet rule to the end of September was $53.6 billion, a rise of 34.7 percent on the first nine months of 2002.
Direct investment amounted to 46.2 percent of cumulative foreign investment while credits from international financial organizations and loans for trade made up 51.7 percent.
Portfolio investment amounted to 2.1 percent of cumulative foreign investment at the end of September, down from 3.5 percent in the same period a year ago.
The main investor countries were Germany, the United States, Cyprus, Britain, France and the Netherlands, which accounted for 70 percent of cumulative and 70.8 percent of foreign direct investment to Russia.
The committee also said that industrial production jumped 7.2 percent in October year on year, as high world prices for oil and gas led the country's biggest companies to pump more fuel, driving demand for steel pipes and pumping equipment. Output, adjusted for the number of working days, grew at the fastest rate since May.
Production of oil, coated steel, pipes and food led the increase. Chelyabinsk Pipe Works, Russia's second-largest steel pipe maker, said last week that it boosted production 39 percent last month.
The country pumped 10 percent more crude in October than in the year-earlier period, the State Statistics Committee said. It produced 18 percent more pipes, 18 percent more coated steel and 9 percent more construction materials. The food industry's output rose 10 percent, as did machine building.
Prime Minister Mikhail Kasyanov last week said that projections for gross domestic product growth will likely be revised upward to more than 6 percent thanks to strong performances by the Russian manufacturing sector.
(Reuters, Bloomberg)
TITLE: Beer Market Matures as Milk and Juice Trail
AUTHOR: By Michael Diosi
PUBLISHER: Special to The St. Petersburg Times
TEXT: The Russian beverages industry is still in a stage of economic transition, as the differing beverages markets slowly face consolidation by key players.
"Consolidation benefits the consumer," explains Alexei Krivoshapko, consumer goods analyst at investment bank UFG, "because it improves product quality and affordability." And, he argues, there is still much room for consolidation across the markets as they merely begin to approach maturity.
Nowhere in the beverages industry is recent consolidation more apparent than in the Russian beer industry. According to a 2002 report by BISNIS, in the previous three years the beer market has seen increasing market consolidation and expansion by the major players, and is one of the leaders for attracting foreign direct investment, which in turn engenders more intense competition. "Emerging from an environment in which breweries hid behind generic labels and produced beers of ill repute," the report claims, "the Russian brewing industry has improved drastically not only in quality, but in assortment, brand and packaging."
A recent report by brokerage Troika Dialog claims the beer industry is finally approaching maturity and faces consolidation by these large international brewers. "The Russian beer market underwent a fundamental change in character at the end of 2002," it explains, "as the switch was made from extensive growth to consolidation."
Finding market saturation in Moscow and St. Petersburg, the report identifies a greater customer sophistication and an acceleration in price competition. There is also a more intense focus by the larger breweries on the niche markets often held by local brands. Thus smaller, independent breweries such as Stepan Razin (which claims 34 percent of the St. Petersburg market but just 5 percent nationally) will become acquisition targets as consolidation accelerates. "Independent local breweries are not of a sufficient size to join the national league and will now face the option of selling up to large foreign companies," the report argues. "The changing market is forcing local breweries to seek new competitive advantages in order to survive and strengthen their market share."
The beer market is already dominated by just two companies, Baltika and Sun Interbrew, which together claim 47 percent of the market. And with consolidation brewing, Troika expects this joint share to rise to around 70 percent by 2008.
And it is here that the consumer stands to benefit most, as price and quality become the main battlegrounds for competition in the consolidated market. "Most players try to compete in branding, as price competition results in margin erosion," says Krivoshapko. For companies, profits lie in the perceived extra value of brand names. And as the dominant brands establish their positions, the focus of competition shifts.
However, it is a trend that is not mirrored by other beverages markets. According to Krivoshapko, 30 percent of the national juice market, and only 20 percent of the dairy market, are controlled by the top ten producers in each field. The markets are less mature, and shares are slower to consolidate.
Troika finds geographical and structural problems that are specific to the beverages industry in Russia. "Russia's size, relatively low concentration of population and weak retail network conspire to limit the opportunites for [a] greater degree of market dominance," it observes.
For Krivoshapko, the main failure lies in the distribution system. "It is difficult and costly to get products onto shelves," he explains. The result is a dominance of local production of local brands that holds back national consolidation. And it takes time for national players to emerge and establish dominance in the local marketplace.
This is perhaps clearest in the milk industry, where regional fragmentation reduces competitiveness across the market.
Of course, the short shelf life of fresh milk is the key impediment to national distribution (and exports) but that alone can not explain the regionalization of UHT milk production. It is not merely a case of insufficient infrastructure. A report by management consultancy McKinsey claims governmental intervention in the dairy market exacerbates the problems of regionalization, and wilfully obstructs consolidation within the market. "The playing field is non-level in the dairy industry," it notes. "Local governments implicitly subsidize unproductive farms through tax arrears." Moreover, a lack of bankruptcy enforcement sustains underutilized and uncompetitive plants "which drag down industry scale and capacity utilization." In addition, the report finds "regulatory harrassment" which hinders restructuring and applies excessive pressure against lay-offs. "Local governments intent on saving local jobs are known to also deter green-field investment by giving new entrants administrative burdens through red tape."
The result is a multiplicity of local milk manufacturers, who share dominance in their local markets but are unable to compete on a national scale. For example, according to marketing agency AC Nielsen, the pasteurized milk industry in St. Petersburg sees two manufacturers, Unimilk and Piskaryovsky, claim a 68 percent share of the market. But in the Northwest region this drops to just 40 percent, and nationally to around 10 percent.
There is also an absence of foreign companies active in the dairy market. Foreign companies claim just 3 percent of the industry, compared with beer's 53 percent. "Consolidation is driven by international players," argues Krivoshapko. As it is, the large Russian players such as Wimm-Bill-Dann, currently by far the largest in the total dairy market with a 31 percent market share, must slowly modernize the industry from within.
The juice industry, meanwhile, is starting to see the key national players also dominate the regional picture. Multon alone claims over 50 percent of the St. Petersburg market, 46.2 percent in the Northwest and over 27.4 percent nationally. Similarly, Wimm-Bill-Dann claims around 30 percent of the national market, and 18.2 percent in the Northwest, according to a retail audit by Business Analytika. And it is continuing to expand both organically and through acquisitions into the regional markets.
However, juices remains a rapidly growing market, with Krivoshapko anticipating 10 percent volume growth in 2003, compared with 6 percent for milk and just 3 percent for beer. Maturity, it seems, is still a fair way away.
What is coming, Krivoshapko claims, is increasing customer sophistication in the market. As incomes and consumption grow, the consumer becomes more discerning, and more sensitive to quality and branding. The large juice manufacturers can exploit consumer perceptions that juice is healthier, and challenge the soft drinks market through marketing and innovations in packaging and new product lines.
So differing beverages markets compete with each other. For example, the struggling soft drinks industry, which is totally dominated in Russia by Coca-Cola and Pepsi, counter-competes in the juice market with new products such as Fanta's new Cranberry line. And beer continues to steal its share of the alcohol market from vodka, but is threatened by the arrival of alcopops and bottled cocktails as new consumer trends develop. The battleground, Krivoshapko notes, still lies more in branding and perception than quality and price.
Above all, consolidation in Russia's national markets will allow it to enter the international arena. Almost all beverages sold in Russia are produced in Russia, as imports are expensive and subject to high import duties. But exports are not yet significant in any market. "There is simply not much of a market internationally," says Krivoshapko, as Russian producers look first to establish and expand market dominance at home. It is only when domestic market shares have consolidated that Russian products and brands can seriously compete in the international marketplace.
TITLE: Retail Giants Bring Quality Food and Service
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: Where you go to get your food and drink in St. Petersburg is changing fast with glistening hypermarkets and supermarkets and well-stocked discounters replacing the produkty and gastronom stores infamous for their often sloppy and inefficient service and narrow choice of consumer goods.
The long lines that existed in Soviet times for basic food items such as bread and milk are gone forever, and the clumsy kassa system in which customers choose what they want, go to the cashier to pay for them, and then deliver the receipt to the sales assistant before getting their goods is on its way to extinction.
In contrast to consumers in many other countries, Russians spend large proportions of their income on food and drink.
"An average Russian consumer spends 69 percent of their real disposable income on retail merchandise, of which more than half goes toward food, which makes the food retail sector a very lucrative segment of the market, even in a low per capita income environment," said Natalya Zagvozdina, consumer goods analyst with Renaissance Capital, in a report last year.
True, the services of the older formats have improved - with many being 24-hour stores and stocking many of the brand goods that the modern stores offer - but for many of these the writing is on the wall because the newer stores also have greater sales volumes, allowing them to make economies of scale. This means they can offer lower prices for the same goods, an important factor in a market where most customers have low incomes.
"Supermarkets' and hypermarkets' share of the St. Petersburg food and drink market has grown from about 8 percent to 13 percent in the last three to four years," said Yekaterina Ilyina, administrative director of property consultants Colliers International, in a written response to questions.
Customers gain a lot from the more modern formats, where the quality of products is almost guaranteed and the price is usually more reasonable, meaning that they offer more value for money, she said.
"The level of the support staff of such stores is higher and more qualified. Additional services are provided to the customers at such stores," she added.
Producers also gain since there is firm demand for large orders. This makes producers' sales more predictable, lowering their risks and costs, Ilyina said.
Consultancy McKinsey and Co. in a study of the Russian food market printed in 1999 said: "The Russian labor productivity [in food retail] is at 23 percent of the U.S. level. Street vendors are at 9 percent, traditional Soviet-era formats (the smaller gastronoms) at 24 percent, open-air wholesale markets at 24 percent, kiosks and pavilions at 26 percent, and supermarkets at 78 percent of the average U.S. productivity."
The low productivity was linked to a lack of modern formats and "over-manning, low scale of chains and stores, and low capital intensity compared to U.S counterparts."
Zagvozdina's report said that 50 percent of the total retail floor space in Russia belongs to outlets with an annual turnover of less than $50,000.
Alexei Shaskolsky, head real estate value at the Institute for Problem Entrepreneurship Studies, said another selling point of the new formats is that shopping, which used to drain people's energy, has become fun.
"Imagine a Soviet era universam with a retail space of 600 square meters to 900 square meters and only 200 food items on sale," he said in written answers to questions. "Now Paterson or O'Key in the same space are having 50 to 70 times more items, Ramstore or Metro have 100 to 200 times more.
"St. Petersburgers are acquiring a new habit of once-a-week family shopping, and they can have quality food," he added.
"I expect that new formats - modern type supermarkets and hypermarkets - will eventually (in a three- to five-year period) dominate the food market here in St. Petersburg," Shaskolsky continued. "They will become not only the people's preference for convenience, quality and customer freedom of choice, but also a cultural phenomenon.
"Archaic, primitive, Soviet and quasi-Soviet stores will no longer be acceptable both to new generations of Russian customers and to those Russians who still remember the doktorskaya sausage for 2.2 rubles per kilo," he added.
Among the leading modern format stores eyeing the St. Petersburg food and drink market are Moscow-based Paterson and SuperSiwa, local firms O'Key and Lenta, Alfa Group's Perekryostok, and Spar. The highly successful discount store Pyatorochka - 2002 sales were reported to be $512 million - which started in St. Petersburg is engaged in intense battles with smaller underfunded local stores and is carrying its competition for market share beyond the northern capital.
Moscow-based Turkish supermarket pioneer Ramstore is planning to open several stores next year.
Paterson opened its first store in June 2002, and now has three supermarkets operating, with two more to be opened by the end of this year. Paterson has declared its intention to have eight supermarkets in the city, Colliers' Ilyina said.
SuperSiwa opened its first store in the early 1990s, has two supermarkets operating and is seeking a site for a third, she added.
The first O'Key hypermarket was opened last year, with two more being opened this year, and the chain says it intends to open two new stores every year, Ilyina said.
Perekryostok opened its first hypermarket in 2002, a second will open by the end of this year and a third in February.
Perekryostok plans to open another half dozen stores after that, primarily serving as anchor tenants in shopping malls, she said.
At least two Ramstores are under construction in St. Petersburg. One of them is to be the anchor tenant in the Gulliver complex near the Staraya Derevnaya metro station.
Ramstore is a joint venture of two Turkish companies, construction giant Enka and retailer Migros. It pioneered supermarkets in Russia, opening its first in Moscow in 1997, where it now has about 20 supermarkets and hypermarkets and plans for rapid expansion into the regions.
Mustafa Saglam, general director of Ramenka, the holding company for Ramstore, said in written responses to questions that the chain is noted for low prices, a wide assortment of goods, customer satisfaction, and for being an organized sales area for local producers.
Ramstore sees huge development potential for St. Petersburg and the competition as "small and not really organized."
Colliers' Ilyna predicted that there will soon be rapid growth of chain stores, supermarkets and cash and carry stores.
"This process will depend upon consumer welfare as well as macro-economic activities," she said. "The arrival of regional and Moscow chains has already taken place and we also have a great number of local companies which are now actively developing."
"Unfortunately, foreign retailers and chains are not well represented due to the risks that they don't want to take," she said, predicting that "this tendency will continue for another year, while the share of opened markets and kiosks will go down."
IPP's Shaskolsky said the St. Petersburg market is still not mature and consumers and retailers still have a lot of benefits to gain when competition starts to bite.
"The new formats take hold only over a minor part of per capita expenses," he said. "These new formats have a few years left before serious competition between them starts. Lenta and SuperSiwa do well together on Savushkina Ulitsa; O'Key in Ozerki will soon be joined by Lenta and SuperSiwa in a row - I expect no complaints."
German-based wholesaler Metro stands a little apart from the other projects because its clients are the smaller businesses to which it can bring benefits in dealing with producers on their behalf.
Metro opened its first St. Petersburg store in the spring and now has two with a third one to open on Pulkovskoye Shosse.
Yulia Belova, a spokeswoman for Metro, said that wherever Metro has entered a market, its presence has had a positive impact on the economic cycle of production - wholesale - retail - final consumption.
"Wholesale prices started to go down, retail prices followed, the whole distribution system started rapid transformation to market efficiency, through competition, but also through evolution and market integration," she said in a written response to questions.
"Independent retailers, hotels, restaurants, kiosks, have the first immediate advantage by their supplying opportunities in the Metro cash and carries," she continued. "Also, suppliers of Metro manufacturers, wholesalers and distributors can now set their activity on a reliable, high potential basis as a guarantee for their investments and for their business planning."
Metro Cash & Carry stores are equipped with the latest technologies for heating, cooling and refrigerating, hydraulic installation, fire protection, warehousing and electronic data processing, resulting in efficiency, quality, freshness and security. Each store has its own bakery, large departments for fresh fish, meat products, fruit and vegetables, she said.
"Our distribution system is another important factor," Belova added. "Producers and distributors often can not satisfy the needs of all retail and restaurants and cafes. And our goal is to create the maximum convenient conditions for these very audiences."
"Our development also touches on road construction and transport development, which leads to new jobs," she said.
Just how much the local economy benefits is becoming clearer. Whereas much of the brand-name and quality fast-moving consumer goods that are their staple food and drinks were once imported, companies have found it profitable to produce within Russia, avoiding headaches with border delays and sometimes stiff customs tariffs.
Launching the first Marktkauf store of another German retailer, AVA, in February this year, spokesman Helmut Metje said 95 percent of the 80,000 items on sale in the store's food, merchandise, construction and gardening sections come from Russian distributors, with 80 percent of the food items produced domestically.
Authorities also like the more modern formats where sales taxes and other obligations to local budgets are easier to collect and more reliably paid than those from open markets, hawker's trays, kiosks, pavilions and neighborhood stores.
Perversely, even though the market is undersupplied with quality shopping outlets when compared with many other countries, these formats are competitively disadvantaged against those that find it easier to hide their earnings.
Renaissance Capital's Zagvozdina estimated last year that only 12 percent of Russian customers shopped in supermarkets and trade centers.
"The share of supermarkets in Russian sales turnover is just 2 percent, compared to 18 percent in Poland, and 36 percent in Brazil," she reported.
However, she thought the competitive advantage is on the side of developers with foreign financing.
"Small retail outlets with an average annual turnover of $50,000 can not afford to build even a small-scale supermarket with 1,000 square meters of trading space, which would cost about $700,000 to construct and equip," she said. "This clearly presents a competitive advantage for foreign retail developers who, in syndicates or alone, will be able to construct or rent modern trading spaces, and build mega-chains."
McKinsey & Co. thought creating equal conditions for competition by making sure everyone paid taxes was one of the keys to the transformation of the market.
"Modern formats cannot gain share against the less productive open-air wholesale market stands, kiosks and pavilions because the latter benefit from lower tax liabilities, less control on the origin of their goods (which are often illegal imports or counterfeits), and cheaper access to prime locations," its report said in 1999.
"Inefficient Russian food processors also impede the entry of modern formats since best practice firms will not invest in a country unless they can source quality products domestically."
However, McKinsey was also upbeat, based on the performance of a pioneer supermarket in a Moscow region town.
"If the main barriers are removed, modern formats should gain substantial market share," the report concluded.
TITLE: Business Ethics Guru Sets Example
AUTHOR: By Michael Diosi
PUBLISHER: Special to The St. Petersburg Times
TEXT: The carefully crocodile-clipped bundles of business cards on one side of an otherwise tidy desk are an apt metaphor for Mathew Murray's approach to business in Russia. In both of his main roles here, as founder of management consultancy Sovereign Ventures Inc. and as chairman of the Center for Business Ethics and Corporate Governance, Murray is engaged in bringing different, and often conflicting, parties together in constructive communication. By locking companies together in a more candid dialog, he hopes to foster more reliable - and honest - business relationships.
It was an approach that grew out of his early understanding of Russian realpolitik. Having studied political science in Boston, Murray won a research fellowship at the Carnegie Institute for International Peace, a think tank based in the U.S. and Moscow, writing on U.S.-Soviet arms negotiations and arms policy. In 1982 he moved to Capitol Hill as a legislative assistant for national security policy to Senator Edward Kennedy, uniting American and Soviet scientists in a public forum at the height of the Cold War. "It was this attempt to find a common language over the threat of nuclear war that taught me the value of people-to-people diplomacy," he observes, an understanding that he would later bring to his business dealings in Russia.
After five years in Washington, Murray returned to school and took a joint master's degree in Law and International Affairs, focusing on Soviet issues and international security. He graduated in 1988, and came to Russia for the first time. "I was a bicyclist," he says somewhat nostalgically, on an adventure trip that took in Tallinn, the Golden Triangle, Moscow and a week in St. Petersburg. "It was a challenge at every bureaucratic level," he recalls, "but the most exciting way to see a new country."
Returning to New York as a lawyer with Baker & McKenzie, Murray made several trips to Russia over the following three years as he helped establish the law firm's Moscow practice.
But in 1991 Murray reached a turning point. In a business environment mixing Soviet-style decree from above and the chaotic notion that anything not expressly prohibited was permitted, Murray decided to go independent. "The moment had come to shift away from avoiding destruction towards more creative endeavors," he explains.
So while the big firms sought corporate transactional work, Murray founded Sovereign Ventures Inc. and from his first offices at 51 Sadovaya Ulitsa began providing management consultancy and rule of law development services in the new political and economic milieu.
He cut his teeth on his first project assisting the U.S. government in a humanitarian aid program selling surplus U.S. food to Russia and investing the proceeds in small businesses. From here, he began creating wholesale distribution systems for food and independent media products, as well as family entertainment and bowling centers - a private passion evidenced by the skittle now housed on his bookcase. He used consulting contracts under Russian law and is pleased never to have given a bribe, recalling light-heartedly his refusal to offer even a bottle of vodka to the Russian tax police when defending the tax-free basis of his first project.
What convinced Murray to set up business in Russia? "He loves fresh business ideas," says Christian Courbois, chairman of the executive committee of the St. Petersburg International Business Association, who got to know Murray through some friends in the early 1990s. "He loves the process of building - new projects, new goals. He seems to be the kind of guy that is attracted to the flame." John Schwarz, an early client who founded Baltic Cranberry Corp. with Murray's assistance, said of Murray that "like a lot of us, it was the challenge as seen ten years ago and the desire to participate in building the Russian economy. Matthew is dedicated to seeing business in Russia succeed."
For Murray, reform is a key requirement for corporate success in Russia. Between 1995 and 1997, Murray was chairman of SPIBA's public policy committee, working to promote Russian legal reform and greater transparency in dealing with the authorities. "Unfortunately most disputes are the result of direct or indirect government interference," he notes, and sought to build better and more open communication between the government the investment community. Thus he helped institute both the Governor's Council on Investment and the St. Petersburg Arbitration Court. He also created the St. Petersburg Tax Dialogue, a quarterly meeting with the tax authorities, culminating in a basketball tournament between SPIBA and the tax police. "They were much better than us," Murray recalls, apparently without irony. "It became known as the Governor's Cup," he says, pointing to a commemorative trophy that stands next to his skittle.
This emphasis on transparent communication is symptomatic of the way Murray operates in Russia. "We cut through the fog," he explains. "Sunshine is the best antiseptic."
He cites as an example the dispute over the Lomonosov porcelain factory, where he managed to reinstate dialog between a group of U.S investors and the "red directors" who were, he jokes, "re-fighting the Cold War." His role was that of mediator, "seeking a common language" and creating conditions for the parties to talk.
It was his awareness of the need for dependable business values that in October 2000 led Murray to help found the Center for Business Ethics, a non-government organization dedicated to helping Russian companies implement their own business ethics programs and ensure good corporate governance. Acting with individual businesses, the Center aims to "surface" values inherent within the Russian system and bring greater integrity and transparency to the marketplace. "Capitalism here is uniquely Russian," Murray explains. "Business must find and adopt its own core values."
According to Courbois, it is a belief in the "fair play environment" that informs Murray's approach to business in Russia. "I think he believes that the success in the U.S. can be replicated in Russia if just the rules of the game are followed," he suggests.
Murray himself maintains he is not on a moral crusade. His ambitions, he says, are simple: to see the Center thrive as a self-sustaining institution, "and to make a larger honest profit." And in the process, he hopes, help business in Russia to operate on a transparent and socially responsible basis.
TITLE: IN BRIEF
TEXT: Russia Sees 6% Growth
MOSCOW (Bloomberg) - Russia's economy will grow more than 6 percent this year, as average oil prices were $5 a barrel more than the highest government forecast and consumer spending drove demand for mobile phones, real estate and clothing.
"Economic growth in Russia for the full year could exceed 6 percent," the government cited Russian Prime Minister Mikhail Kasyanov as saying in the Siberian city of Nizhnevartovsk. He didn't say why.
Russia's economy has grown by more than 4 percent per year since 1999, the longest expansion since the fall of the Soviet Union. As oil and gas companies such as Gazprom and Yukos are boosting output, while 46 consecutive months of consumer spending drives mobile phone use at operators such as MobileSystems.
Poultry Spat Near End
BOSTON, United States (Reuters) - Economic Development and Trade Minister German Gref said Thursday that Moscow and Washington are quite close to resolving their current trade spat over import quotas on U.S.-produced poultry.
"I think we are quite close to a resolution," Gref said during a joint news conference with U.S. Commerce Secretary Donald Evans. Gref and Evans spoke privately after appearing before an audience at the U.S.-Russian Investment Symposium sponsored by Harvard University.
PC Sales Jump 23%
MOSCOW (Prime-Tass) - Supplies of personal computers on the Russian market increased 23 percent to $467 million in July-September, according to a report released Friday by the global research firm International Data Corporation. In real terms, the supplies increased by 684,000 units compared to the same period last year, the IDC said without providing absolute figures, although it did say that the increase from the second quarter exceeded 22 percent.
According to the report, the top five suppliers in the third quarter included Hewlett Packard, headquartered in the U.S., Russia's K-Systems, Aquarius, Kraftway, and Formoza.
Church Gay Flap
MOSCOW (Reuters)- The Orthodox Church said Monday that it has broken off ties with the Episcopalian movement over the U.S. church's consecration of an openly gay bishop, which it called "unchristian and blasphemous."
The Episcopal Church consecrated Gene Robinson two weeks ago.
"The ordination of a homosexual bishop makes any communications with him or those who elected him impossible," the church said in a statement.
United Russia Ahead
MOSCOW (Reuters) - The pro-Kremlin United Russia party still enjoys a commanding lead in the run-up to State Duma elections on Dec. 7, an opinion poll published Monday said, but its liberal opponents made slight gains.
United Russia has 29 percent approval, slightly down from 30 percent recorded two weeks ago, according to the poll by the respected VTsIOM-A polling agency.
The Communist Party came second in the poll with 23 percent, unchanged from two weeks ago.
Gazprom Eyes Bonds
ST. PETERSBURG (SPT) - Russia's gas giant Gazprom plans to raise as much as 88 percent of its total $5 billion corporate borrowing program for 2004 from European, U.S. and Asian markets, a top executive said on Friday, Reuters reported.
Gazprom's Chief Executive Officer, Boris Yurlov, said that the company would mainly focus on international bond issues with the first issue expected as early as the first quarter of 2004.
Yurlov also said Gazprom's debt cutting program would slow down in 2004, as the company needed money to boost investments in new projects. The firm would cut debt by only $400-$500 million in 2004, compared with a cut of $2 billion in 2003.
$100M for Shipppers
ST. PETERSBURG (SPT) - The International Finance Corporation, part of the World Bank Group, will open a $100 million credit line to the Volzhskoye and Severo-Zapadnoye shipping companies, Viktor Olersky, chairman of the Severo-Zapadnoye shipping company, told reporters Friday.
The credit line is to be used to finance building new ships, he said, according to Prime-Tass.
The talks on providing the credit line have finished and Olersky said he hopes that IFC's board of directors will approve the credit line within a short time.
The total amount of financing needed for the program is $143 million and the IFC is able to provide about 70 percent of the amount, according to its internal policies, Olersky said.
Ad Profits Pass $1Bln
ST. PETERSBURG (SPT) - Russia's TV advertising market is expected to exceed $1 billion in 2003 for the first time in its history, Alexander Dybal, the CEO of Gazprom-Media holding, said Friday.
In 2004, the market is expected to reach $1.2 billion, he said.
No other details or comparative figures were provided.
Petmol Profits Up
ST. PETERSBURG (SPT) - Petmol increased net profits 2.9 times in January-September 2003 as compared to the previous year, to 73.942 million rubles, Interfax reported Monday.
Deputy General Director Sergey Polyakov noted that the growth in net profits was due to increased sales volume and discontinuation of less-profitable products.
Petmol, a major dairy product manufacturer in the Northwest, is responsible for 40 percent of the region's dairy sales. St. Petersburg and the Leningrad Oblast consume 88 percent of production.
Primorsk Oil Transfers
ST. PETERSBURG (SPT) - Primorsk Spetsmornefteport, a subsidiary of Transneft in the Leningrad Oblast, handled 12.623 million tons of oil in January-October 2003, which is 20.8 percent more than during the same period last year, the port authority told Interfax.
In October alone the port handled 1.536 million tons of oil, which is 50 percent more than in October 2002.
The Yaroslavl-Primorsk oil pipeline was opened Dec. 27, 2001 and is the final destination of the Baltic Pipeline System bringing oil from the Timano-Pechorsky and Western Siberian oil and gas provinces, as well as from Kazakhstan. The system is capable of handling 18 million tons of oil a year.
TITLE: TNK-BP Delays Slavneft Split
PUBLISHER: Combined Reports
TEXT: BOSTON - Russian oil firm Slavneft will stay independent for at least another year until details such as minority shareholder rights are hammered out, a senior executive of one of its owners, TNK-BP, said on Friday.
The contentious issue regarding the company's minority shareholders has been left unresolved since BP and TNK merged earlier this year. The deal, worth more than $7 billion, is the largest single foreign investment in Russia to date.
Robert Dudley, president and chief executive officer of TNK-BP, Russia's third-largest oil firm said he is advocating a "big bang" for making the final split of Slavneft assets with its 50-50 partner and No. 1 Russian oil company Yukos.
"If you are not careful you can really disadvantage certain minority shareholders," Dudley told reporters on the sidelines of the 7th Annual U.S.-Russian Investment Symposium.
"I am advocating we take our time, work out what the split would be and at a certain point in time in the future you make the split all at once, and until that happens Slavneft remains and operates separately ... for a period of time for at least a year," Dudley said.
In response to a question from Reuters, Dudley said there has been no discussion of TNK-BP buying Yukos's share in Slavneft. There is speculation in Russian financial circles that Yukos is looking for extra cash in order to bypass the banking sector.
"No plans to have TNK-BP to have all of Slavneft. There is some speculation because of the circumstances of Yukos, but there are no discussions going on around that," Dudley said.
On Oct. 25, Russian authorities staged a dramatic arrest of then Yukos Chairman Mikhail Khodorkovsky. Khodorkovsky, Russia's richest man, thought to be worth $8 billion, was charged with seven counts of fraud and tax evasion. He remains incarcerated.
His arrest sent Russian shares into a nosedive as investors grew concerned the government might try to undo the privatizations of the 1990s. Investors were further buffeted by prosecutors ordering Khodorkovsky's shares in Yukos be frozen, a move which prevents him from selling them.
On Friday, Russian President Vladimir Putin met with industrialists to try to calm their fears, pledging he would not turn back the clock on reforms.
Dudley, like other executives at the symposium, said the arrest of Khodorkovksy has not caused the firm to change any of their plans.
"It has not affected what we are doing day to day at all and not affected our planning, whether one year or five years, in terms of our planning right now. We are continuing to make the commitments for heavy reinvestments inside the company," he said.
Dudley said the firm expects production to increase 14 percent year-over-year in 2003 with a more modest 6 percent to 8 percent increase in 2004 as the impact of more modern oil production technology diminishes on mature assets.
Dudley says the company has increased production, as of Friday, to 1.33 million barrels per day, but the average for the year will be a little more than 1.2 million barrels per day.
Dudley said TNK-BP is in the midst of a top-to-bottom review of its assets and operations, but ruled out any sales or purchase through the first quarter of 2004.
"The company is generating enough cash flow to fund its operations and does not need to borrow any money," he said.
Dudley firmly said the company was not interested in buying any of the remaining 37 percent of the Kovykta gas field in eastern Siberia - with reserves of 1.9 trillion cubic meters - that it does not already control through Rusia Petroleum.
In October, Russian industrial group Interros put its 25 percent stake in Rusia, the firm controlling the Kovykta gas field, up for sale. Local authorities own the remaining 12 percent.
"There is no strategic rationale for TNK-BP to go buying more," Dudley said.
On Friday, state firms, primarily from China and South Korea, agreed to buy gas from the Kovykta gas field starting in 2008, but said that the final decision would depend on gas prices and governmental approvals.
(Reuters, SPT)
TITLE: Risk Aversion Plays Big Role on Russian Market
AUTHOR: By Christopher Granville
TEXT: MOSCOW - After the enforced calm of the public holiday which began the latest reporting period, the market emerged less volatile, but still sickly. The drama of the period following Mikhail Khodorkovsky's arrest, when barely a day passed without market-moving events, has given way to chronic and corrosive uncertainty.
The shift is summed up in the contrast between last week and this week's Yukos affair highlights. After the Nov. 4 scare of the Natural Resource Minister's threat to Yukos' production licenses, this week was more predictable. Whereas that license scare was calmed by Putin himself on the same day, the one thing that can be predicted with confidence about the latest developments is that they denote long drawn-out processes with poor visibility for weeks if not months ahead.
As the market watches and waits through the period of protracted uncertainty now in prospect, we expect it to be unnerved by the mood of revanche among law-enforcement officials and their sympathizers in the wider bureaucracy. An example of the poisons released by the Khodorkovsky affair came in the remarks made by Deputy Prosecutor General Vladimir Kolesnikov at a public discussion forum on Nov. 12. Kolesnikov said that other businessmen still at liberty should think hard about what they are doing.
This sobering picture is reflected in the past week's equity market performance. The most significant feature is not so much the overall weakness - with the benchmark RTS Index down 1.8 percent - as the decline in domestic volumes. Average daily turnover in MICEX was $246 million. This modest level is all the more striking against the background of comfortable ruble liquidity, as reflected in low overnight interbank rates (averaging under 2 percent) and the continuing nominal appreciation (+0.2 percent) of the ruble against the dollar. Such FX market pressures would normally provoke ruble interventions by the Central Bank, boosting liquidity still further. But the inflation-conscious Central Bank has been holding back, and reserves even declined from their all-time high of $64.9 billion to $64.7 billion in the week to Nov. 7. The fact that ruble liquidity remains shy of the MICEX equity section speaks volumes about domestic investors' risk aversion after the Khodorkovsky shock.
Comparison with international flows tells a similar story. The week's average daily exchange-recorded ADR turnover of $293 million outstripped the MICEX by 20 percent. This would have been unheard of at any previous time this year. But now, the NYSE-traded MTS and Vimpelcom offer the best combination of shelter from the new political risk and exposure to continuing strong domestic demand - and these were the only leading stocks to end the week in positive territory. For now, Russia's strong macro story is undimmed and Putin's commitment to ring-fence the Khodorkovsky affair is credible. So opportunistic buying, led by foreign investors, can be expected to materialize every time the RTS Index falls back toward 500.
Christopher Granville is an analyst with United Financial Group.
TITLE: Doubling GDP the Planned Economy Way
AUTHOR: By Fiona Hill and Clifford Gaddy
TEXT: In his May 16 address to the State Duma, President Vladimir Putin outlined the ambitious goal of doubling the nation's gross domestic product in the next decade. Since then, this goal has become a minor preoccupation for Western analysts, who have spent a great deal of time trying to figure out whether it is feasible. The real concern, however, is not whether Putin can double GDP, but how he will actually do it. There is every reason to believe he can achieve his objective. Unfortunately, he will likely do so by resorting to old Soviet methods of cranking up production.
Doubling GDP as a means of mobilizing the nation is a throwback to the Soviet era, when leaders were fixated on growth and size. Soviet leaders regularly exhorted their countrymen to perform heroic feats in 10 years or so. Josef Stalin declared in the early 1930s, for example, "In order to survive we must accomplish in 10 years what the capitalists did in 100." In 1960, Nikita Khrushchev, giddy from success in the space race, boasted, "We will catch and pass the Americans in 1970." And in 1985, even Mikhail Gorbachev launched a campaign to double Soviet industrial production by 2000. (He gave himself an extra five years for good measure.)
Achieving a big quantitative goal in the Soviet Union was fairly straightforward. The crudest way was to manipulate the data to show growth.
A classic example was the prison labor camp system, the gulag. At its peak in the late 1940s and early 1950s, the gulag accounted for as much as 15 to 18 percent of all industrial output and employment on the territory of today's Russia. Soviet statistics deliberately masked this fact. Forced labor camps exceeding 3,000 or 5,000 people (depending on their location) were classified as towns, which meant that remote regions in Siberia where many camps were located seemed to have had unprecedented urban, as well as industrial, growth.
Russia today is not Stalin's Soviet Union. But it is still not a full-fledged market economy. The pressure persists to manipulate economic statistics - like GDP - that assume it is.
GDP, by definition, is supposed to measure the total market value of all goods and services purchased for final use during a given year. The key phrase is "market value." Even without blatant statistical deception, a nation can increase its GDP if the government rather than the market decides what has value and what does not. This is precisely what the Soviet government did during the industrialization of Siberia under central planning.
In the 1970s, the intensive exploitation of energy reserves and some of the largest construction projects in Russian history made Siberia the motor for Soviet growth. These included the construction of the world's biggest aluminum plant, a massive dam on the Yenisei River, the completion of the Baikal-Amur rail line, and gigantic power plants.
Western analysts were astounded by the magnitude of projects, the scale of investment in Siberia, and the rapid rate of growth. But neither the scale of projects nor the size of Soviet GDP meant that the allocation of resources involved was determined by market rules. Siberia's growth was entirely driven by communist planners bent on creating an industrial utopia in this vast region.
Most of the Siberian endeavors would never have been undertaken under market conditions. Some of the largest construction projects were located in the harshest climatic zones of the so-called Russian North, where the costs of construction were extremely high. By the late 1980s, Siberian projects offered an extremely low return on their massive investment. Gorbachev's economic advisers backtracked from commitments to huge construction ventures, criticizing giant outlays and postponing many projects indefinitely.
The Siberian industrial enterprise was brought to a screeching halt by the collapse of the Soviet Union. Today's Russia has inherited the burdens of maintaining all the huge enterprises communist planners left for it in distant places. And millions of Russian citizens find themselves stuck in Siberian cities with bankrupt industries and dismal living conditions. Those who would like to move are prevented from doing so by persistent institutional barriers to mobility and insufficient jobs and housing in other parts of the country.
The case of Siberian development in the 1970s raises the question of opportunity costs - where the country grows, what it builds and with what long-term benefit. And who makes the decision to build something in the first place, the market or the government?
In the Soviet Union, central planners indulged in growth for growth's sake, promoting construction projects in Siberia that defied nature and the market, and putting factories and people in some of the most inhospitable places on the planet. There is every indication that Putin and the government may choose to do the same again. Grandiose Soviet-style projects - like the giant Bureisky dam and hydroelectric station in the Far East - have already been revived and will certainly be used to boost GDP.
The Bureisky project was mothballed in the 1980s, then relaunched by Unified Energy Systems to address energy shortages in the Far East in 1998 and 1999, and financed by the government. It was opened in July by Putin, who used the occasion to stress, once again, the importance of stimulating economic growth. The press hailed the Bureisky dam as a return of the glorious traditions of the Soviet era.
Massive construction projects are extremely seductive for those setting out to increase GDP, but an obsession with size on an abstract level contrasts with the real value that GDP is supposed to measure.
Russia is already big - too big - in this raw quantitative sense. In the things that count, however, Russia is too small. Viewed from the perspective of the international economy and the country's current engagement in it, the country's economy is - with the important exception of its energy sector - vulnerable and thin.
Today, a decade into the market economy, more than 48 percent of industrial enterprises are still loss-makers. The stock market, which represents the profitable segment of the economy, is extremely narrow. A handful of oil and gas companies account for two-thirds of its market capitalization; metals and other commodities account for most of the remaining third.
The overall size of the Russian stock market is only about twice that of Finland's.
Even more telling than the total value of the companies is the fact that a mere six companies - four oil companies, UES and Norilsk Nickel - account for 90 percent of all shares traded on a typical day. This hardly serves the purpose of reallocating resources in the country, which is the rationale of any market.
In short, Russia does not need more construction and more production for the sake of growth. In referring to GDP as the ultimate indicator of the vitality of the economy, size is not the issue - it is quality that counts.
Russia needs to make industry outside the energy and commodities sectors truly value-creating and let the market, not the government, decide how factors of production - people and capital - will ultimately be used.
If Putin needs an appropriate economic goal to mobilize the population, then he should choose mobility itself.
The government should help people relocate to places and professions of their own choosing and out of the cities and factories that communist planners placed in Siberia.
Fiona Hill and Clifford Gaddy are senior fellows at the Brookings Institution and authors of the recently published book "The Siberian Curse: How Communist Planners Left Russia Out in the Cold." They contributed this comment to The St. Petersburg Times.
TITLE: Yukos, Soros, Heritage and Gridlocked City
TEXT: Editor,
The present problems surrounding Yukos have put Russia at the center of a potentially major turning point, not only for the nature and structure of the Russian government, but for the economy as well. Russia's wealth and prosperity is based in good part on robber barons, not unlike the United States in the late 1800s. According to Marxist theory, heavy concentration of capital in any one sphere can have many negative consequences for a society. Great disparities between the rich and the poor, and major increases in crime, social unrest and state repression are all byproducts of cowboy capitalism.
If Yukos were to be eventually nationalized, it could very well mean a potential return to a Soviet style, statist command and control economy of the bad old days. If the analogy to 19th century capitalism has any validity, imagine if President Vladimir Putin were to steal a page from Teddy Roosevelt, the trust-busting U.S. president at the turn of the century. Roosevelt distinguished himself by attacking concentrations of capital in the United States, going up against monopolies like U.S. Steel and Standard Oil. The old monopoly of Standard Oil seems particularly appropriate in the light of current events. By breaking up John D. Rockefeller's oil monopoly into multiple parts, Roosevelt assured a vigorous level of competition in the economy for decades to come.
If Putin were to act as a trust buster with Yukos and other monopolies, he could in fact lay the groundwork for a long-term economic boom in the Russian economy by promoting diversification, an efficient marketplace and a more equitable distribution of income in Russian society.
Karl Eysenbach
Eugene, Oregon
Editor,
Now that President Putin has crushed the media, the Duma, the military, and of course the security forces, the only thing left is to dissolve democracy and throw out the facade. But perhaps it will do for Putin to keep up appearances of democracy in Russia. Wake up Russia! The USSR has gone. You get to choose your own path now! Don't let your freedom slip away.
Daniel Lowell
Austin, Texas
Editor,
The current debacle over Yukos and the detentions of its top executives can be viewed from the public affairs perspective of Shell, BP or Exxon attempting to finance a campaign to control 25 percent of the British Parliament or the American Congress.
James Kennedy
Paris, France
Editor,
How angry the vultures get when someone tries to chase them away from Russia's twitching, mangled body - outraged may be a better word. I hope this is only the beginning. I hope Putin wins.
Antoine Wencker,
Zurich, Switzerland
Soros Office Raid
In response to "Open Society Institute Office Raided," a combined report by The St. Petersburg Times and The Associated Press on Nov. 11.
Editor,
The raid on George Soros' Open Society Institute made me wonder if this could really be happening in Russia and not in a banana republic somewhere in Africa or South America.
A private paramilitary group, in camouflage and armed, raiding an organization based purely on the fact that "there is a dispute going on concerning real estate"? Taking legal documents, archives, grant letters, computers and private possessions of employees without any formal court documents? And the police and authorities refusing to intervene, probably because, as the institute's lawyer Pavel Kuzmin said, the men were off-duty employees of the Russian law enforcement and security agencies? Where is the rule of law?
What if a citizen gets into a dispute with his landlord about the rent being paid too late? Can the landlord send in "troops" to take all his tenant's furniture without the police or other law enforcement representatives taking action?
How can Russia, which is urging the World Trade Organization to take it in as a member, have such a lack of decent laws which protect people? If people have a business dispute, why do they not just go to court and wait until a judge decides what must be done instead of taking paramilitary action?
It really is not a good way to convince foreign companies or individuals to invest in a country in which you are never sure who might turn up on your doorstep and arrest you or steal your property with absolutely no legal grounds for the action.
Paul Devos
Eindhoven, Netherlands
Memory Lapse
In response to "Russian Economy Reveals Lack of Historical Memory," a comment by Adam Federman on Oct. 28.
Editor,
Mr. Federman's view of the situation in present-day Russia in general and St. Petersburg in particular reminds me very vividly of the picture of life in the United States that Soviet television presented to us during the Cold War.
According to its reports, New York, for instance, was populated solely by down-and-out homeless people searching for food in ... yes, "overflowing trash bins" and, of course, the Mafia (admittedly, not Russian but the good old Cosa Nostra).
How could it happen that a conscientious scholar like Mr. Federman overlooked (or, as he puts it, "ruefully dismissed") some other realities of life in St. Petersburg which are reflected on other pages of the same issue where his piece is published - for instance, a young computer programmer from St. Petersburg getting a mortgage to buy an apartment? (Don't forget, it all takes place in a country where just a dozen years ago the only "personal computer" most people had access to was the antediluvian abacus!)
I also think that the cellular communications boom described in the same issue can hardly be considered as a sign of lack of "investment in sectors of society that affect the day to day lives of Russian citizens." And the fact that a Russian steel firm buys a bankrupt American one to make it profitable, also reported in the same issue, shows that oil export today is ceasing to be the Russia's only source of hope.
Of course, a new and prosperous economy in Russia cannot grow overnight on the ruins of "developed socialism" and there is always a risk that something goes amiss. Can Mr. Federman say that the economy of his own country is that reliable?
Eugene Tsypin,
St. Petersburg
Return of Heritage
In response to "Novgorod Cross Languishes in Madrid Academy," an article by Irina Titova on Oct. 14.
Editor,
I am of Russian descent, my family had to leave Russia during the Bolshevik revolution. Here are my comments on this matter: (1) I agree this Cross should be returned to Russia. I believe very strongly that cultural and religious objects should if at all possible be returned to Russia. It's bad enough what Lenin/Stalin sold in Europe and the United States in the 1920s and 30s to obtain foreign exchange. I have lived for many years in Switzerland and Germany, and found it bordering on being obscene when some wealthy individual adorns a wall in his home with a dozen Russian Orthodox Icons. I have an acquaintance at the Embassy of the Russian Federation, here in Ottawa, and I will raise this subject. (2) Spanish soldiers graves. Since the "Blaue Division" were integrated into the army of Nazi Germany I wonder if the "Kriegsgräber Vorsorge Stiftung" (war graves commission) of the Federal Republic of Germany should not contribute to the cost of recovering the remains of these soldiers?
Kiril Graf Sekerka-Baibus,
Ottawa, Canada
Tikhvin Virgin
In response to "Tikhvin Virgin To Return to Russia Next Summer," an article by Irina Titova on Oct. 24.
Editor,
I am the mother of 3 children and grandmother of 7 grandchildren. I am hoping that the return of this icon to Russia will help convince the Russian Orthodox church that the Catholic church is not trying to steal members from its church. Maybe the Pope will be able to visit Russia.
Martha Roy Houma,
Louisiana
Editor,
What great progress in a couple of years with the Russian Orthodox Church and Russian Orthodox Church Overseas. The return of the Tikhvin Virgin icon is an extraordinary example! The way to go ... as we say in Americanese!
Catine E. Perkins
Bastrop, Texas
Street Robbery
In response to "Robberies Target Tourists," an article by Vladimir Kovalev on Oct. 14.
Editor,
In early September, while my wife and I were walking along Nevsky Prospect toward the Russian Museum and the Statue of Pushkin, someone tried to take her purse. Fortunately, she was alert enough to instantly take precautions and prevent this from happening. Another male tourist in our group had his wallet taken quickly from his trousers. Despite these incidents, we still had a wonderful time and we both love your city very much.
Fred Nadelman,
Savannah, Georgia
Editor,
This will not be the last such incident in Russia. I have already been here for seven years and the welfare of foreigners has not improved. Russians do not know how to assess our value.
As for the police, they are as dangerous as these thieves. This country is simply growing older as people holding the reins of power are simply incompetent. What are they doing about skinheads? They are simply leaving them alone and the result will be that they will kill more people. Lots of improvement is needed and it is high time to hire foreigners to guide this country.
Gregory Chacha,
St. Petersburg
Editor,
I am impressed by the rapidly-rising standard of living in St. Petersburg since 2001, and would love to buy an apartment on the Petrograd Side to spend a couple of months of the year. The city gives me a great buzz! As a tour leader, I have brought over 50 American groups to St. Petersburg since 1985 and have had remarkably few cases of theft. Groups of gypsy children were a threat in the Arts Square area a few years ago, but I noticed none in the city this summer. I assumed the police had cleared them from the city centre, perhaps in connection with the Tricentenary celebrations.
The biggest nuisance to me personally is being stopped by police patrols in the late evening, and being asked to empty out my pockets. Nothing has ever been stolen, but I fear they are intending to rob me.
I have learned my lesson and now never leave the Hotel Angleterre without my passport and visa, and never with excess cash. In general I feel as safe walking around Russian cities at night, if not more safe, than, say, London.
Chris Webb
Bridport, Dorset, England
Equal Rights
In response to "Women Struggle for Equal Rights at Work," an article by Catherine Santore on Oct. 14.
Editor,
I am a Ph.D. student at the University of Colorado, born and raised in the U.S.S.R. and currently living in the U.S. with plans to return to Russia.
I do not believe that one can apply the same type of measurement to the issue of employment among women in Russia and in the U.S. First of all, what you see now is the consequence of the calamitites of the '90s.
You need to keep in mind that the overwhelming majority of the women in the old Soviet Union were employed, unlike in the U.S. Russia is dealing with a new concept of private ownership and therefore the rules of the game are still being worked out.
But to say that the same is true regarding employment opportunties for both sexes is simply wrong.
I have been living in the U.S., for over 10 years, and almost all American women I know outside of my university are housewives. My mother was a medical administrator for 35 years, while my U.S. mother-in-law was in paid employment for only a year of her life!
It seems the "women staying at home" phenomenon is being introduced in the Russian society nowadays especially among very rich people perhaps following the tradition of American soap operas. Please be more specific when you say "women in the West."
Natasha Watson
Colorado
Clogged Roads
In response to "Traffic Proving Major Headache for City Drivers," an article by Irina Titova on Oct. 10.
Editor,
After having spent a marvelous holiday in your beautiful city, I must, however concur with your readers who are unhappy with the state of traffic flow and congestion.
As your city continues to thrive and prosper this problem will inevitably deteriorate. There is no easy solution, but cities in the U.K. have started to turn to trams to help solve the problem.
This helps to alleviate the problems. Having already a tram based transport system perhaps an improvement to encourage the movement of trams would help. Possibly a toll upon entry to the city might be appropiate to promote other forms of transport.
Good luck, St. Petersburg does not deserve to be ruined by congestion.We all agree on that!
Keith W. Boyle
Brierfield, England
TITLE: Monologue Dressed Up As Dialogue
TEXT: All one has to do is look back three weeks to the RSPP's reaction to Mikhail Khodorkovsky's arrest to see how big business since then has been cowed.
On Oct. 25, the day of the arrest, the RSPP demanded that Putin clarify his position immediately. "The business community's trust in the authorities is ruined, and the dialogue [between business and the Kremlin] has de facto collapsed," the RSPP said.
The threat to Putin, the RSPP implied, was that big business would stop investing in Russia. Anatoly Chubais warned that the conflict could cause business to unite against the president. But Putin never blinked. He refused to discuss Khodorkovsky's arrest with the RSPP, saying there would be "no meetings or bargaining" over the prosecutors' actions. In the following weeks, Putin issued repeated reassurances, most often in meetings with Westerners, that the legal assault on Khodorkovsky was not part of a wider campaign to revisit the results of privatization. The Westerners -- whether the bankers he called into the Kremlin, the Italian prime minister or the head of the IMF -- have seemed satisfied. But while Putin was trying to restore calm, his prosecutors were telling business leaders where they really stand. Deputy Prosecutor General Vladimir Kolesnikov warned that "those who are not yet jailed" have to be careful, and called the Yukos case just "one part of a chain" of similar cases. By the time the RSPP leaders finally got their meeting with Putin, they had surrendered. On Friday, they distanced themselves from Khodorkovsky and did not even mention his name in the president's presence. After the meeting, Vladimir Potanin said he "was not worried" that the Yukos affair was not raised. Viktor Vekselberg said Khodorkovsky's problem was his "personal problem," and Oleg Deripaska said he just could not understand what Khodorkovsky was fighting for. Within the RSPP, only Chubais, who did not show, remains an independent figure willing to challenge the president. In Oleg Kiselyov's words, the oligarchs decided they had to cooperate with the state or cease to exist. For Putin, cooperating with the state seems to mean serving the state. If under Boris Yeltsin we had businessmen running the state, under Putin the state wants to run the businessmen. However, if Putin is serious about doubling GDP in a decade and overcoming poverty, he would do well to enter into a frank and open discussion with business, rather than continuing with the de facto monologue that currently masquerades as dialogue between the Kremlin and business.
TITLE: Bush and His 'Enemies of The People'
AUTHOR: By Matt Bivens
TEXT: As a legal concept, can someone explain the difference between President George W. Bush's "enemy combatant" and Josef Stalin's "enemy of the people"? I don't think there is one. In each case, a national leader on his own, without courts, without laws, without clear definitions, dreams up a label. His government then applies it to certain people -- and then they're gone.
"For the first time in our history," notes former U.S. Vice President Al Gore -- the man who won the votes yet lost the White House -- "American citizens have been seized by the executive branch of government and put in prison without being charged with a crime, without having the right to a trial, without being able to see a lawyer, and without even being able to contact their families. "President Bush is claiming the unilateral right to do that to any American citizen he believes is an 'enemy combatant.' Those are the magic words. If the president alone decides that those two words accurately describe someone, then that person can be immediately locked up and held incommunicado for as long as the president wants, with no court having the right to determine whether the facts actually justify his imprisonment."
I'll never cease to be amazed at what a non-issue this is. Gore's speech was a half-day wonder, buried inside most newspapers and newscasts. Even among the politically literate, no one in America talks about this. Throw a Russian oil oligarch in jail and announce he may have to wait two years for a trial, and everyone gasps at the horror of it, and governments and editorial boards all start scribbling out their indignation and their concern for democracy. Yet in America for more than two years we have imprisoned upwards of 650 people in a U.S.-controlled chunk of Cuba, where our most inalienable rights and highest principles apparently don't apply. And we refuse to say anything about their fate. At some point, no doubt declaring ourselves dizzy with success in the war on terror, we'll let them be tried or released. Or not. After all, we are still expanding the prison complex in "Gitmo," as Guantanamo is affectionately known. The Red Cross, which jealously guards its own neutrality -- so crucial to winning access to POWs -- recently was moved to call Gitmo "a legal black hole." And amid allegations of torture by U.S. guards, there have been dozens of suicide attempts among inmates. Now given that we admit we don't even know who's shooting at us in Iraq, and given that U.S. forces have shot at two of the 24 members of our handpicked Iraqi Governing Council, isn't it possible that some of those corralled overseas, christened "enemy combatants" and shipped to Gitmo might be innocent? After all, immediately after Sept. 11, 2001, the Bush administration overnight rounded up some 1,200 people of Arabic descent -- apparently the first 1,200 they could find, because virtually everyone was cleared by the FBI of any terrorism connection (though not before many had been held incommunicado for months, abused and terrified). The government struck out 1,200 times; who's to say it hasn't struck out again in Gitmo? Shouldn't there be some independent review of this? And if not -- if we choose to deny fair trials to "enemy combatants" grabbed in Afghanistan or Iraq -- what will happen to U.S. soldiers who might be captured in those same lands? Matt Bivens, a former editor of The Moscow Times, writes the Daily Outrage for The Nation magazine. [www.thenation.com]
TITLE: Chris Floyd's Global Eye
AUTHOR: By Chris Floyd
TEXT: The Inhuman StainThere is a horrible scandal eating away at the heart of the American body politic. Among the many corrupted currents loosed upon the nation by the Bush Regime, this scandal is perhaps the worst, for it abets all the others and breeds new pestilence, new perversions at every turn.
Last week, Maher Arar of Canada detailed his ordeal at the hands of Attorney General John Ashcroft's security "organs." Returning from a family holiday in Tunis, the Syrian-born Arar - 16 years a Canadian citizen - was seized at a New York airport. Jailed and interrogated without charges, on unspecified allegations of unspecified connections to unspecified terrorist groups, he was then deported, without a hearing, to Syria. When he told the Homeland Chekists he would be tortured there - his family was marked down as dissidents by Syria's Baathist regime - the Chekists replied that their organ "was not the body that deals with the Geneva Conventions regarding torture." They shackled him and flew him to the America-friendly regime in Jordan; from there he was bundled across the border to Damascus, the Washington Post reports.
But this is not the scandal we were speaking of.
For 10 months, Arar was held in a dank cell in Syria: a "grave," he called it, a closet-sized unlighted hole filled with cat and rat piss falling down from the grating overhead. He was beaten, often with electrical cable, for weeks on end, kept awake for days, made to witness and hear even more exquisite tortures applied to other prisoners. He was forced to sign false confessions. Ashcroft's Baathist comrades had a pre-set storyline they wanted filled in: that Arar had gone to Afghanistan, attended terrorist training camps, was plotting mayhem - the usual template. Arar, who had spent years working as a computer consultant for a Boston-based high-tech firm, had done none of those things. Yet he was whipped, broken and tortured into submission.
But this is not the scandal we were speaking of.
Arar's case is not extraordinary. In the past two years, the Bushist organs have "rendered" thousands of detainees, without charges, hearings or the need to produce any evidence whatsoever, into the hands of regimes which the U.S. government itself denounces for the widespread use of torture. Apparatchiks of the organs make no secret of the practice - or of their knowledge that the "rendered" will indeed be beaten, burned, drugged, raped, even killed. "I do it with my eyes open," one renderer told the Washington Post. Detainees - including life-long American residents - have been snatched from their homes, businesses, schools, from streets and airports, and sent to torture pits like Syria, Morocco, Egypt and Jordan.
But this is not the scandal we were speaking of.
Of course, the American organs needn't rely exclusively on foreigners for torture anymore. Under the enlightened leadership of Ashcroft, Bush, Donald Rumsfeld and other upstanding Christian statesmen, America has now established its own centers for what the organs call "operational flexibility." These include bases in Afghanistan and Diego Garcia, the Indian Ocean island that was forcibly depopulated in the 1960s to make way for a U.S. military installation. Here, the CIA runs secret interrogation units that are even more restricted than the American concentration camp at Guantanamo Bay. Detainees - again, held without charges or evidentiary requirements - are "softened up" by beatings at the hands of military police and Special Forces troops before being subjected to "stress and duress" techniques: sleep deprivation (officially condemned as torture by the U.S. government), physical and psychological disorientation, withholding of medical treatment, etc. When beatings and "duress" don't work, detainees are then "packaged" - hooded, gagged, bound to stretchers with duct tape - and "rendered" into less dainty hands elsewhere, the Washington Post reports.
But this is not the scandal we were speaking of.
Not content with capture and torture, the organs have been given presidential authority to carry out raids and kill "suspected terrorists" (including Americans) on their own volition - without charges, oversight or evidence - anywhere in the world, including on American soil. What's more, through a series of executive orders, Bush has asserted the right to designate anyone he pleases "an enemy combatant" and have them "rendered" into indefinite detention or simply killed at his order - again, without charges, evidence, oversight or appeal. The life of every American citizen - every person on earth - is now at the mercy of his arbitrary whim.
But this is not the scandal we were speaking of.
All of the above facts - each of them manifest violations of international law and/or the U.S. Constitution - have been cheerfully attested to, for years now, by the organs' own apparatchiks, quoted in numerous high-profile, mainstream publications, including the NY Times, the Economist, Newsweek and others. The stories appear - then they disappear. There is no reaction. No outcry in Congress or the courts - the supposed guardians of the people's rights - beyond a few wan calls for more formality in the concentration camp processing or judicial "warrants" for torture. And among the great mass of "the people" itself, there is - nothing. Silence. Inattention. Indifference. Acquiescence. State terrorism - lawless seizure, filthy torture, official murder - is simply accepted, a part of "normal life," as in Nazi Germany or Stalin's empire, where "decent people" with "nothing to hide" approved and applauded the work of the "organs" in "defending national security."
This is the scandal, this is the nation's festering shame. This acquiescence to state terror will breed - and attract - a thousand evils for every one it supposedly prevents.
For annotational references, see the Opinion section at www.sptimesrussia.com
TITLE: U.S. Retaliates After Weekend of Violence
AUTHOR: By Louis Meixler
PUBLISHER: The Associated Press
TEXT: BAGHDAD, Iraq - U.S. troops raided a Baghdad neighborhood Sunday and fired a missile at an alleged training base in northern Iraq, as part of a new offensive against guerrillas, even as a tape purportedly made by Saddam Hussein urged the rebels to redouble their efforts.
The military moves came as the Army tried to determine why two of its Black Hawk helicopters crashed in the northern city of Mosul on Saturday, killing 17 soldiers in the largest single loss of U.S. life since the war began.
On Sunday, the military fired a satellite-guided missile with a 500-pound warhead from Taji, north of Baghdad, and hit a suspected training base west of Kirkuk, about 130 miles away, said Lieutenant Colonel William MacDonald, spokesman of the 4th Infantry Division.
MacDonald said it was the first time such missiles have been used since the end of major combat on May 1.
In Baghdad, U.S. troops backed by armored vehicles and helicopters moved into the Sunni Muslim neighborhood of Azamiyah, sealing off a 20-block area and searching 450 houses for over seven hours. They netted 30 Kalashnikovs, about a dozen shotguns and 10 pistols, according to U.S. officers.
Soldiers detained 21 people for illegal weapons possession, although all were expected to be released Monday.
Meanwhile, the alleged Saddam tape urged Iraqis to escalate attacks against the occupation and "agents brought by foreign armies" - an apparent reference to Iraqis supporting the coalition.
The speaker on the tape, aired on Al-Arabiya television, said the only way to end the chaos in Iraq was for Saddam and his now-outlawed Baath Party to return to power.
The CIA said it would review the tape for its authenticity. But President Bush dismissed the recording.
"I suspect it's the same old stuff. It's propaganda. We're not leaving until the job is done, pure and simple," Bush said. "I'm sure he'd like to see us leave, if in fact it's his voice. I know the elements of the Baathist party, those who used to torture, maim and kill in order to stay in power would like to see us leave."
The voice in the recording resembled Saddam's, but was huskier and the speaker seemed tired.
"The evil ones now find themselves in crisis and this is God's will for them," he said.
The only solution for Iraq, the speaker said, was for "the zealous Iraqi sons, who ran its affairs and brought it out of backwardness... to return... to run its affairs anew," he said, referring to the Baath leadership.
The top U.S. administrator in Iraq, Paul Bremer, said Saddam likely made some arrangements for a guerrilla war against the Americans before his regime fell in April.
"I think there are some indications that he had prepared for a low-intensity conflict, terrorist war, the kind we're seeing now, beforehand," Bremer said on "Fox News Sunday."
In northern Iraq, the U.S. military was investigating whether ground fire from guerrillas caused Saturday's collision of the two U.S. helicopters.
"There are reports that there may have been ground fire, and one of them may have been trying to avoid that. We just don't know at this point," Bremer said.
All the victims were from the 101st Airborne Division, which is based in Fort Campbell, Kentucky, a military spokesman said. Division spokesman Major Trey Cate said one helicopter carried a quick response team that was on its way to investigate a shooting incident in which a U.S. soldier was injured. The other helicopter was on a transport mission.
An Iraqi policeman in Mosul said at least one of the Black Hawks was hit by ground fire.
"They hit it with a missile," said policeman Saddam Abdel Sattar. "I was in the army. I know these things."
Another witness said he heard gunfire on the ground before the crash.
"The Black Hawks were in the air and there was shooting. It was dark and one slammed into the other," said an Iraqi Civil Defense Corps soldier who identified himself only as Mahmoud.
Before the Saturday crash, the U.S. military's deadliest single incident since the Iraq war began March 20 was the downing of a Chinook helicopter near Fallujah on Nov. 2, which killed 16 soldiers. A Black Hawk was also shot down on Nov. 7 in Tikrit, killing all six soldiers on board.
TITLE: U.S. Military Realignment Worries Korea
PUBLISHER: The Associated Press
TEXT: SEOUL - U.S. Defense Secretary Donald Rumsfeld assured longtime ally South Korea on Monday that a planned pullback of U.S. troops from the border area with communist North Korea will strengthen the ability of the American military to respond to an invasion from the north.
Some in South Korea have worried that ending the U.S. forces' role as a "tripwire" along the Demilitarized Zone might lessen the American commitment to defending against an attack from North Korea. The Pentagon has portrayed the move as better positioning American troops to counterattack.
"We understand that weakness can be provocative," Rumsfeld told a joint news conference with his South Korean counterpart, Cho Young-kil, after a series of meetings at the Ministry of Defense.
The 50-year-old U.S.-South Korean defense alliance has been successful, he said, because "we have had the ability to deter and defend and, if necessary, prevail. And that has been well understood. I can assure you it will be well understood in the years ahead, and, needless to say neither of our governments would do anything that would in any way weaken the deterrent and the capability to defend."
In his talks with defense officials, Rumsfeld won no specific assurances that the 3,000 troops South Korea plans to send to Iraq at the United States' request will play a combat role. At the news conference, Cho left unclear the exact role of the Korean troops and when they will be dispatched.
In a joint written statement, Rumsfeld and Cho said the United States has pledged to work closely with Seoul, particularly on intelligence sharing and logistic planning, "to ensure a smooth and timely" deployment of Korean troops to Iraq.
Rumsfeld said that at Monday's defense talks the two sides reaffirmed an earlier agreement to shift U.S. ground troops further away from the DMZ, to two hubs south of Seoul, in two phases. In the first phase, U.S. soldiers stationed north of Seoul will be consolidated on a smaller number of bases. Then they will be moved south of Seoul - mainly to the Camp Humphreys area.
Still to be resolved is whether a residual U.S. force of perhaps 700 to 1,000 troops would remain at Yongsan Garrison, the headquarters of the 8th U.S. Army, in downtown Seoul. Both sides have agreed that the headquarters will be moved to a less populated area, but the United States has yet to respond to a South Korean request to leave a residual force at Yongsan, which was headquarters for Japan's Imperial Army during its occupation of the Korean Peninsula from 1910 to 1945.
In their joint statement, Cho and Rumsfeld said they agreed to continue negotiations on that issue.
Included in the plan for realigning U.S. troops is a transfer of 10 military missions now performed by American forces to the South Korean military. At the news conference, Cho said his forces are ready to take over eight of those missions at any time.
But he said South Korea cannot yet take responsibility for two of the ten missions - guarding the Joint Security Area inside the DMZ and providing counter-fire to North Korea's artillery force.
"It would be somewhat premature to implement this transfer immediately," he said.
TITLE: Nationalists Fill Vacuum After Failed Serb Election
PUBLISHER: The Associated Press
TEXT: BELGRADE, Serbia-Montenegro - The collapse of Serbia's presidential elections for the third time in just over a year and a strong showing by an ultranationalist ally of Slobodan Milosevic are raising fears of major instability in this volatile Balkan republic.
With its parliament dissolved and the reformist government practically ousted, Serbia plunged into a power vacuum Sunday as it failed for a third time to elect a president because voter turnout fell below the 50 percent minimum required by the law.
In another worrisome sign, the 39 percent of the electorate who did cast ballots voted overwhelmingly for the extreme nationalist candidate Tomislav Nikolic, who won 46 percent, compared to 35 percent in favor of Dragoljub Micunovic - the candidate of the ruling coalition, preliminary official results showed.
The election results were a major blow for the pro-Western authorities and a sign that Serbia might be sliding back toward the nationalism that led to a series of Balkan wars in the 1990s.
"This is a defeat for Serbia," said Micunovic, a 73-year-old veteran politician with strong democratic credentials who had been ahead in pre-election polls.
Deputy Prime Minister Zarko Korac said the results amounted to a "tragedy."
Sunday's vote was considered a major test ahead of the Dec. 28 parliamentary election, which was scheduled last week after the government lost parliamentary support.
The Prime Minister Zoran Zivkovic sought to disperse fears of instability. He conceded that the apparent defeat of the reformist bloc was the result of its disunity.
"We must not despair or allow for the reforms in Serbia to stop," Zivkovic told The Associated Press.
Nikolic, 51, deputy leader of the extreme nationalist Serbian Radical Party, had been banking that disillusionment with the democracy and the West would help his cause.
He played the card of national pride, pledging to have no more extraditions of Serbs to the U.N. tribunal to answer charges of war crimes committed during last decade's Balkan wars.
"I had expected this... sadly the turnout was low. We are now looking forward," Nikolic said.
In March, Serbia's first post-Milosevic prime minister, Zoran Djindjic, the republic's first democratic leader since World War II, was assassinated, allegedly by crime bosses and Milosevic-era paramilitary commanders.
TITLE: Abramovich 'is God,' Cheer Chelsea Fans
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: LONDON - While British supporters of Chelsea are getting used to the idea of having a Russian oligarch in charge, Russia's own Chelski boys are getting in on the act by setting up a supporters' group of their own.
Cheering Chelsea's 4-0 win against Lazio at Metelitsa Sportland on Novy Arbat early this month, Russian fans of Roman Abramovich's Chelsea were nearly as ardent as their blue-shirted counterparts in a West London pub.
And although they were in a clear minority in the venue to Manchester United fans, the Chelsea bug is definitely catching on with Russian soccer fans.
"I first took notice of Chelsea when Dmitry Kharin joined the team," said Maxim Motin, a former sports journalist and now a public relations officer for a local soccer club, over a beer. "And since Abramovich bought the club, it's a must."
Motin recently launched a web site (www.chelseafc.ru) for Chelsea's Russian supporters. The group has been officially registered with Chelsea's Stamford Bridge headquarters, with the certificate signed off by club chairman Ken Bates. Now Motin is going on a recruitment drive, encouraging other Russian Chelsea watchers to join the group.
"The site has only just started working, but we already have 60 registered fans," Motin said.
The Moscow Chelsea supporters' group is still small, with just a dozen or so regulars turning up to watch televised Chelsea games at Sportland or Doug and Marty's Boar House.
But if the support base is tiny, the group is already ahead of the game in terms of merchandising: It makes and sells its own Chelsea shirts, scarves, clocks and even drums. It also has its own amateur team, which regularly kicks the ball about with other English Premier League supporters' groups. In August, the Chelsea supporters emerged victorious from a tournament with teams of Liverpool, Manchester United, Newcastle and Southampton fans, Motin said.
The group formed spontaneously after a message posted on the Internet, but it has been hard to organize Russian supporters, he said. "There are maybe, say, 100 Chelsea fans sitting out there, in small groups in each bar. We'd like to bring them together," he said.
Unlike Motin, most of the fans in Sportland are new Chelsea supporters who started following the club only after Abramovich bought the Premier League club in July.
"It only came to my attention after Abramovich bought it," said Vadim Ginsburg, a manager at a metals company. "He did it so deftly!" But Ginsburg says he is not exactly passionate about Chelsea, more curious.
Brothers Bagrad and Georgy Khurkhurov, who as well as rooting for Chelsea support CSKA, asked Motin for more details about the group.
"It's great that a Russian has bought the club - he turned the football market upside down," Bagrad Khurkhurov said.
None of the fans had any issue with Abramovich buying into a foreign club instead of a domestic team, nor about the oil boss-turned-soccer mogul himself.
"If it were a Russian club, he would not have bought top players for it, and there would not be any dividends for him either. Within two years Chelsea will show everyone," Khurkhurov said.
Others in the group agreed it was more natural for Abramovich to go shopping abroad than looking for a club to buy closer to home.
"If he invested the money here, it would have been misused or misappropriated," Ginsburg said.
"Buying a club in Russia? [Troika Dialog Chairman Alexander] Mamut wanted to buy Torpedo but the deal fell through," Motin said. "They would not have allowed Abramovich to buy a club in Russia. And if they did it would not have helped. [Russian soccer] is all in such a crisis."
Motin is confident that Abramovich's strategy of buying up star players will pay off for Chelsea, if not now, then sometime soon. "They have been lucky so far, though the team is new and I don't expect they'll win the championship," he said. "But I guess in six months there'll be no stopping them."
Motin said that in buying Chelsea, Abramovich, who has moved to sell off most of his assets in Russia and is increasingly based in London, was also using the investment as an entry into British political and business circles.
"Abramovich not only bought a club, he bought a pass into British society and made connections," Motin said. "London's mayor [Ken Livingstone] supports Chelsea, so it's like he bought his friendship."
But while details of Abramovich's friendship - or any relationship with Livingstone, known by the epithet "Red Ken" for his opposition to former Prime Minister Margaret Thatcher in the 1980s - remain unknown, Abramovich's British profile is definitely on the up.
In the last few weeks Abramovich was named Britain's biggest earner, topping the annual Sunday Times Pay List with $955 million in earnings in 2003, leaving Harry Potter author J.K. Rowling, England soccer captain David Beckham and Queen Elizabeth II trailing in his wake. Abramovich has begun a sell-off of some of his assets in Russia, including his 26 percent stake in Aeroflot and a 25 percent stake in RusAl. He still retains a block of shares in YukosSibneft and 25 percent of RusAl.
Basking in the afterglow of the Chelsea deal, the British press rushed to report that other Russian oligarchs were eyeing English clubs. The Independent on Sunday wrote that Interros head Vladimir Potanin was planning to buy into Chelsea's London rival Arsenal, but the report was promptly denied in a company statement.
Asked about the rumored deal, Potanin said, "The denial corresponds with reality."
The reaction to Abramovich from Chelsea fans in Britain has been overwhelmingly positive, according to bestselling author John King, a former member of a notorious gang of Chelsea fans called "The Headhunters," who writes about the role of soccer violence in British culture.
He said that supporters have no problem with a foreigner taking over the club. "I think English people are quite relaxed about foreigners, even if sometimes they don't seem to be in their talk, and real anti-Semitism is almost nonexistent here," he said. Abramovich, who is Jewish, buying the club "seems to have saved us financially, and that is the most important thing," he said.
But King said it was "dangerous that someone can buy a football club so easily, as each [club] represents a culture and many thousands of people. It doesn't matter if it is a billionaire or a corporation, though this has happened many times before."
At a Chelsea home game in September against Birmingham side Aston Villa, halftime talk among the club's London fans was also positive about their new owner, his spending spree and his big plans for the club. Abramovich has even acquired the affectionate moniker "Red Rom," a reference to 1970s champion racehorse Red Rum.
"English clubs are very jealous of Chelsea; every other English club supporter would love to be in the same position as us," said Joe Fascione, a Chelsea player for most of the 1960s.
After pouring over 140 million pounds ($234 million) into rescuing the cash-strapped club, Abramovich embarked on another spending spree to lure big-name players. His largess has won him an undeniable devotion from Chelsea fans, who have ranked him anywhere between a "good fella" to "God." All the fans at Chelsea's Stamford Bridge ground hoped that Abramovich's millions would rocket the club to the Premier League title and European honors.
"I think that everyone who is interested in Chelsea is 100 percent behind what he has done," said Claire Twine, a London retail manager and a Chelsea fan since 1970.
In a sign of appreciation, fans have added a new pre-game chant in Abramovich's honor, to the tune of the Russian folk song "Kalinka." From his seat in the VIP section, a shy Abramovich often smiles back.
The unauthorized version, in a pub near the Stamford Bridge ground, is now a post-match tradition: "Roman Abramovich, Roman Abramovich! He's so f***ing rich!"
Chelsea's English fans don't seem to care where Red Rom, or "Mr. Chelski," got his riches. Their only worry is that he might pull out of the game in the same way he came in: quickly and quietly. Initial skepticism from some die-hard fans is beginning to fade, though.
"He's loaded!" said Jonathan Buckingham. "Last season no one would have imagined the club would have the players it's got now - he's put us in a different league. He is God, pretty much."
John Stevens, a firefighter and Chelsea fan for as long as he can remember, has overcome his initial doubts about Abramovich. "I was a bit worried at first, because we all thought something could go wrong - it just seemed too good to be true. I hope he does not sell the place and disappear, so there'll be no more Chelsea ... He seems to enjoy the football, and enjoy us winning."
The oligarch factor is also a worry at Stamford Bridge.
"What happens if Mr. Abramovich is assassinated, that's where our worry is," Fascione said.
Gloomy thoughts aside, Chelsea is enjoying its honeymoon with Abramovich, said another fan, Tony Boreham.
"He's like Father Christmas, he came along and saved us. Russia? When I think of Russia now, it's about cold weather, beautiful women and, well, Chelsea," he said.
Back on Novy Arbat, the Chelski boys thought that Abramovich's Chelsea investment would help improve Britain's view of Russia. "If we talk about investing in Russia's image, this is it," Ginsburg said.
TITLE: SPORTS WATCH
TEXT: Raiders Test Positive
OAKLAND, California (AP) - Four Oakland Raiders have tested positive for the newly discovered steroid THG and face four-game suspensions, a United States television network reported.
Oakland senior assistant Bruce Allen said he knew of no suspensions. He criticized the CBS report Sunday but would not confirm or deny the reports of the positive tests.
CBS' "The NFL Today" and SportsLine.com reported that defensive tackle Dana Stubblefield, center Barret Robbins, linebacker Bill Romanowski and defensive tackle Chris Cooper were notified in letters from the NFL this past week that they tested positive for THG, or tetrahydrogestrinone. It was not clear when the tests were conducted or the urine samples were taken.
Allen said he would no know if the players received such letters.
Agents for the players did not immediately return calls Sunday. NFL spokesman Greg Aiello would not comment.
Stubblefield and Cooper, along with running back Tyrone Wheatley and fullback Chris Hetherington, appeared Thursday before a grand jury probing a nutritional supplements lab - the Bay Area Laboratory Co-Operative.
An attorney for BALCO founder Victor Conte has confirmed his client is the target of the grand jury probe. Conte has been accused by the U.S. Anti-Doping Agency of supplying athletes with THG. He has denied the report.
Ireland Under Fire
DUBLIN, Ireland (Reuters) - Ireland's national soccer side escaped unhurt Sunday after armed raiders fired shots inside the hotel where they were staying, police said.
Two men wearing balaclavas burst into the team hotel in Portmarnock just outside Dublin and threatened staff with a firearm.
"At least one or two shots were fired as the two men jumped over the counter and escaped with a very small amount of money," a police spokesman said.
The hotel said the team members were in their rooms at the time of the raid and there were no injuries.
Ireland plays Canada in an international friendly today, its first match since being beaten by Switzerland last month and failing to qualify for next year's European championship.
France Captain Retires
SYDNEY, Australia (Reuters) - France World Cup captain Fabien Galthie has officially retired from international rugby after pulling out of Thursday's third-place playoff against New Zealand.
Galthie, 34, has played in four World Cups and was called the greatest scrumhalf in French history by coach Bernard Laporte after Sunday's 24-7 semifinal loss to England.
Galthie, who has won 64 caps since his debut in 1991, helped France to a famous semifinal victory over New Zealand in 1999 and a Six Nations grand slam in 2002.
Africa Soccer Progress
JOHANNESBURG (Reuters) - Africa's soccer World Cup qualifiers last weekend featured several newcomers to the international arena.
Portuguese-based striker Cafu made a belated debut for the Cape Verde Islands on Sunday and scored twice in the island nation's 3-0 win over Swaziland at home in Praia. Cape Verde progress to the group phase of the 2006 qualifiers 4-1 on aggregate.
Jean Lomani, the leading scorer in the Zambian league, netted a second goal in as many matches for Rwanda as they saw off Namibia 4-1 on aggregate.
Marathon Shock
TOKYO (Reuters) - Recriminations began to fly in Japan on Monday the day after Olympic women's marathon champion Naoko Takahashi slumped to her first defeat since 1998.
"Takahashi Trip-up," screamed one headline. "Olympic Doubt," ran another. In a country where marathon running is almost a religion, a shell-shocked press struggled to digest the unthinkable.
Takahashi succumbed to Ethiopian Elfenesh Alemu in Tokyo and finished second in an ordinary time of two hours 27 minutes 21 seconds, about two and a half minutes behind Alemu.
South African Success
KIAWAH ISLAND, South Carolina (AP) - South African golfers Trevor Immelman and Rory Sabbatini combined to shoot a 1-over 73 on Sunday and finished at 13-under 275 to give South Africa its second World Cup title in three years and fifth overall.
The South Africans, who each earned $700,000 for the win, started the alternate-stroke round with a seven-stroke lead over the U.S. team and French teams.
Dokic Oz Flip-Flop
MELBOURNE, Australia (AP) - Tennis player Jelena Dokic, who gave up her Australian passport two years ago, will return to play in next year's Australian Open.
Dokic has boycotted the tournament the last two years following a fallout with officials regarding the tournament's draw. She represented Australia in the Fed Cup in 1999 and 2000.
She will represent Serbia-Montenegro, where she was born, in the tournament. In October, Dokic said she was considering changing her nationality back to Australian in order to compete in the Athens 2004 Summer Olympics. U.N. Worker Killed
KABUL, Afghanistan (AP) - A series of terrorist attacks suggest that anti-government militants are targeting international workers here, a United Nations official said Monday.
On Sunday, Bettina Goislard, 29, a U.N. High Commission for Refugees worker in Ghazni, central Afghanistan, was gunned down by two Afghan men as she traveled through a bazaar in the city in a clearly marked U.N. vehicle.
Goislard was the first U.N. foreign aid worker to be slain in Afghanistan since the Taliban regime was ousted by a U.S.-led coalition two years ago.
Arnold Takes Office
SACRAMENTO, California (AP) - In contrast to the extravagance of his campaign, Governor-elect Arnold Schwarzenegger planned to take office Monday with a quick, low-key ceremony and then get to work.
Mindful of the bitterness that still surrounds California's recall election, not to mention the state's fiscal troubles, the Republican has shied away from black-tie celebrations that normally enliven the beginning of new administrations.
Schwarzenegger was expected to deliver a brief speech, attend three ceremonial receptions and return to the Capitol by mid-afternoon for his first hours of work as governor.
Yemen Frees Terrorists
SAN'A, Yemen (AP) - Yemen's government on Sunday freed 92 followers of the al-Qaida terrorist network, a Yemeni judge responsible for dialogue with suspected terrorists said.
They were freed along with 1,500 other inmates as part of an amnesty during the Ramadan holy month, said the judge, Hammoud al-Hitar.
He added that 65 detainees suspected of terror-related crimes, including suspects in the bombing of the USS Cole in October 2000, would be put on trial after Ramadan.
Sniper Trial Nears End
VIRGINIA BEACH, Virginia (Reuters) - Deliberations resumed Monday in the murder trial of Washington sniper suspect John Muhammad after jurors failed to reach a verdict on Friday.
If jurors find Muhammad guilty, they must then decide whether he should be sentenced to death or to life in prison without parole.
Muhammad, a 42-year-old Gulf War veteran, is charged with two capital murder counts, one conspiracy count and a firearms charge in the death of Dean Meyers, who was shot dead at a gas station outside Manassas, Virginia, on Oct. 9, 2002.
Bars Bombed in Bogota
BOGOTA (Reuters) - A young woman was killed and three Americans were among the 72 injured in a grenade attack on two popular pubs in Colombia's capital on Saturday, police say.
Police arrested a man who fled the scene, and said they suspected he was a member of the Revolutionary Armed Forces of Colombia, a Marxist rebel group known by the Spanish initials FARC.
Sharon Visits Berlusconi
ROME (AP) - Disturbed by what he sees as rising anti-Semitism in Europe, Israeli Prime Minister Ariel Sharon flew to Rome Monday for talks with Italian leaders, hoping that their support for his government would help counter European critics of Israel.
Sharon planned to spend three days in Rome, and will meet with Italian Premier Silvio Berlusconi, an ally of Israel and the current president of the European Union.
TITLE: Wales Poses Euro Test For Russia
PUBLISHER: Combined Reports
TEXT: Wales' winger Ryan Giggs has declared himself fit for Wednesday's Euro 2004 second leg play-off against Russia in Cardiff.
The 29-year-old was furious at the horror tackle by Vadim Yevseyev during the 0-0 draw in Moscow on Saturday which he feels could have ended his season.
"That was one of the worst tackles I have ever had to contend with in my career," said the Manchester United player.
"It made me very angry. It was high and dangerous. I was angry when it happened and I am still very angry now. I am bruised, yes, but I will be all right to play in Wednesday's second leg."
Wales can clinch a place in the Euro 2004 finals Wednesday after a fiery draw with Russia in the first leg of the play-off in Moscow club side Lokomotiv's Stadium.
The tackle provoked Giggs into retaliation on his return to the field after treatment, and Yevseyev collapsed theatrically holding his face.
The referee saw nothing wrong with the incident, and the UEFA delegate waved away the protestations of Russia manager Georgy Yartsev on the touchline.
"I would like to see that again, I do not think I did anything else but brush him aside with my arm," said an angry Giggs.
Wales, without two of their most influential players after long-term injuries to midfielder Simon Davies and forward Craig Bellamy, faced sustained pressure in Moscow.
But despite being dominated for much of the game, Wales take their qualifying hopes back to Cardiff in what has been described as the most important match in Welsh international soccer for 50 years. A weakened Russia will be without suspended playmaker Alexander Mostovoi and goalkeeper Sergei Ovchinnikov after both were booked Saturday.
Apart from losing impetus on the field, Russia also had trouble off it. Another big fine is likely after fans set off flares and firecrackers in the crowd and then threw them, along with other projectiles, onto the pitch, forcing the referee to stop the match a number of times while two Russian soldiers with red buckets went around extinguishing the still-burning flares.
Outside the stadium, Russian fans continued their quest to build up a reputation for being the least hospitable fans in Eastern Europe. After attacking Irish fans last year, they decided to go for the Welsh.
Around 400 fans gathered near the Rossiya hotel, where the Welsh fans were staying, throwing firecrackers, Interfax reported.
Hooligans "lit fireworks and threw bottles," a police spokesman told RIA Novosti.
No one was hurt in that incident, but eight Welsh fans were injured, and five hospitalized after an attack on Nikolskaya Ulitsa near the Kremlin.
Wales holding Russia to a 0-0 draw was one of a series of upsets in Saturday's first leg playoffs for Euro 2004. Latvia beat World Cup semi-finalists Turkey 1-0, and Scotland edged the Netherlands 1-0.
Favorites Croatia were held 1-1 at home by Slovenia in another surprise result for the underdogs, but Spain restored some order with a 2-1 victory at home to Norway.
The five playoff winners will join the other 11 known finalists in the European Championship being held in Portugal from June 12 through July 4 next year. All the second legs will take place this Wednesday.
The first goal of the day came when winger James McFadden fired the winner before 51,000 delighted home fans as Scotland earned their first competitive win over the Dutch since the 1978 World Cup finals.
The Netherlands had an outstanding team on paper with Ruud van Nistelrooy and Patrick Kluivert up front, supported by Edgar Davids and Andy Van der Meyde in the middle.
But the Dutch failed to combine effectively as a team and squandered their scoring chances.
Disappointed Dutch skipper Frank de Boer said: "This is a terrible result for us. Now we have to score at least two goals in Amsterdam on Wednesday, and that may be difficult considering the number of chances we missed today."
Latvia joined the surprise packages by beating a Turkey side reduced to 10 men after a 73rd minute red card for defender Emre Asik.
The Latvians, ranked 69th in the world, secured victory over a side who have struggled since finishing third at the 2002 World Cup. A 29th minute strike by Maris Verpakovskis, his fifth of the qualifying campaign, proved to be the winner. Although Senol Gunes's men will still expect to qualify, the year is clearly turning sour after his former Group Seven leaders were pipped to the top slot by England.
Spain, surprisingly forced into the playoffs after finishing second to Greece, suffered an early shock in Valencia when they fell behind to Steffen Iversen's 14th minute opener for Norway.
Raul equalised after 21 minutes and Spain's overwhelming second-half pressure eventually paid off when Henning Berg turned the ball into his own net under pressure from Raul five minutes from time.
Goal-happy Dado Prso gave Croatia a fifth minute lead in Zagreb. But Ermin Siljak leveled for Slovenia midway through the first half to swing the match their way - although a later booking means he will miss the second leg.
With the away goals rule in operation, a goalless draw next week will give Slovenia a remarkable third major tournament appearance in four years after Euro 2000 and the 2002 World Cup.
Staff Writer Kevin O' Flynn contributed to this story.
TITLE: Federer Express Departs For Next Season Ranked Second
AUTHOR: By Howard Fendrich
PUBLISHER: The Associated Press
TEXT: HOUSTON - A warning has been delivered to world No.1 Andy Roddick and other top tennis players: Roger Federer and his coach think that the Wimbledon champion can get better.
Federer capped a fantastic tournament and year with a truly spectacular performance, dominating Andre Agassi 6-3, 6-0, 6-4 Sunday to win the season-ending Tennis Masters Cup for his tour-high seventh title of 2003.
Even Agassi was moved to call Federer's play "an inspiration'' and "as good as it gets."
"He's very explosive. He has great hands. Great hand speed, great feel. Great movement. An all-court game," Agassi said. "He can play from the back and beat the best, and he can play serve-and-volley and take certain kinds of players out of the equation just by coming forward."
Federer displayed all of that and more during a week in which he earned $1,520,000 and moved up to No. 2 in the rankings, behind Roddick. Federer went 5-0 and won 11 of 12 sets against an elite field, with wins against the other reigning major champions: Agassi (Australian Open), Roddick (U.S. Open) and Juan Carlos Ferrero (French Open).
"I really overachieved," Federer said. "I've worked very hard this year, and it really paid off."
Federer is only 22, a year older than Roddick, and theirs could become a classic rivalry - trading Grand Slam titles, dueling for the top of the rankings - along the lines of John McEnroe vs. Bjorn Borg, or Pete Sampras vs. Agassi. Roddick has the fastest serve in tennis and one of the best forehands around. Federer's superb serve relies more on placement than pace, and he just doesn't appear to have any holes in his game.
Roddick finishes the season at No. 1, but Federer won one more title and six more matches, a tour-leading 78. Federer also owns a 5-1 head-to-head edge against Roddick.
"Andy deserves his No. 1 spot. He should walk away from here and feel the best. I would feel the same way if I were No. 1," Federer said.
"Maybe I feel the best this week, because I really have played unbelievable tennis. And I'll try to achieve next year what he achieved this year."
The Swiss star's versatility is impressive. He won tournaments on clay, grass, hard courts and indoors, and his only really disappointing showing was a first-round exit at the French Open - where Roddick also lost his first match.
Federer "has a good chance, if plays well at the beginning of the year, to get to No. 1 [in 2004]" said his coach, Peter Lundgren.
"He can still be stronger. He can work on his serve. His volley can get better. If you look at his whole game, he can improve."
In Sunday's match, Federer put together a 39-13 edge in winners and had 11 aces. He broke Agassi five times and never faced a break point against one of the greatest returners in history. Federer covered the court so well, Agassi didn't have a backhand winner until the third set.
Repeatedly, Federer would drive a ground stroke to a corner, forcing Agassi wide, and then deposit his next shot into the open court for a clean winner.
At 33, Agassi was the event's oldest finalist since 1978, and was attempting to be its oldest champion. He also was hoping to set the mark for longest gap between titles at the tour championship, having won it in 1990.
Although that didn't happen, Agassi proved once again that he has plenty of good tennis in him, moving up one place to No. 4 in the rankings.
"It's been a hard week for me. It's been a lot of tennis after a two-month break," said Agassi, who took time off after the U.S. Open because his wife, Steffi Graf, gave birth to their second child. "If there's an edge off my game, there's no chance out there. That's how it felt."
TITLE: Toronto's Bosh's Debut Bash
PUBLISHER: The Associated Press
TEXT: TORONTO, Canada - Rookie Chris Bosh showed the confidence of a veteran in his finest game as a professional on Sunday to help the Toronto Raptors defeat the Houston Rockets.
Bosh forced overtime with his first NBA 3-pointer and scored 10 of his season-high 25 points in the extra periods to lead the Raptors to a 101-97 double-overtime victory over the Rockets in Toronto.
Bosh, the fourth overall pick in the draft out of Georgia Tech, hit a 3-pointer with 7.2 seconds remaining in regulation to force overtime, and added four points in the first extra period and six in the second as the Raptors improved to 5-0 at home and 5-5 overall in the season.
"I was open. I felt confident. I didn't hesitate. The basket looked pretty big, so I just let it go," Bosh said.
In regulation time, Bosh made a jumper over Yao Ming, cutting Houston's lead to one with 32 seconds remaining.
Houston's Chinese superstar was on his second visit to Toronto. "It's still very cold," Yao said after the Raptors' victory.
Steve Francis followed with a 19-foot jumper, giving Houston a three-point lead with 15 seconds left, but a double-teamed Vince Carter found Bosh, whose 3-pointer tied it at 83 with 7.2 remaining.
"He was lucky. He just threw it up and hoped it went in," Francis said.
Francis scored 25 points, and Yao added 20 points and 12 rebounds for Houston.
Carter scored 18 points for Toronto, and teammates Lamond Murray and Antonio Davis each added 13.
Bosh said he impressed himself with the poise he showed.
"I just stayed calm. I've been here before, just not at this level," he said. "It gives me confidence to know that I can have good games after bad games."
Bosh struggled in his first start of the season in Friday's loss to Sacramento, and Toronto coach Kevin O'Neill used him in a reserve role against the Rockets.
"I don't think it's best for Bosh's long term growth to be a starter right now," O'Neill said before the game.
Bosh responded by shooting 7-for-11 from the field and 10-for-10 from the line. He also grabbed six offensive rebounds.
"I feel very comfortable with him taking a 3-pointer at the end of a game," O'Neill said. "I have a lot of faith in that kid."
O'Neill drew up a potential game-tying 3-pointer for Bosh in a loss to Portland last Tuesday, but a covered Bosh passed the ball off to Murray, who missed a 3.
In the second overtime, Bosh's offensive rebound and basket gave Toronto a 96-93 lead with 33 seconds left.
After Houston's Cuttino Mobley missed a jumper, Bosh made two free throws.
After Francis made a jumper to cut the lead to three, Bosh converted two more free throws to give the Raptors a five-point lead with 14 seconds left.
The 19-year-old Bosh went 6-for-6 from the free throw line in overtime.
"He's poised. I looked at him take that three, and he looked like he knew what he was doing," Mobley said. "And then he goes to the foul line and sinks six shots in a row."
Francis missed an off-balance 3-pointer at the buzzer, forcing overtime. Francis also missed another potential game-winning 3-pointer at the buzzer of the first overtime.