SOURCE: The St. Petersburg Times
DATE: Issue #922 (90), Tuesday, November 25, 2003
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TITLE: Bribery Arrests 'Insider Fight'
AUTHOR: By Vladimir Kovalev
PUBLISHER: Staff Writer
TEXT: Vladimir Yarmin, head of the Kirov district administration and Nadezhda Shuvalova, head of Kirovets, the municipal housing repair company, were detained on bribery charges Thursday, the Prosecutor's Office announced Friday.
Recently elected St. Petersburg Governor Valentina Matviyenko hailed the action as a sign that corruption has no place in the new administration that she heads.
However, sources in the Legislative Assembly said the arrests could be a result of a long-term power struggle within the Kirov district administration and should not be considered a first sign of implementation of widespread anti-corruption measures recently announced by federal authorities.
The prosecutor's office said Yarmin had threatened to shut the business of Severnaya Zvyozda-Torgservis, a local company servicing a trading and industrial facility on Krasnoputilovskaya Ulitsa, if its management did not pay 160,000 rubles ($5,400) and $100,000 "to run its business in an unimpeded way," Interfax reported.
The money had to be handed over via Shuvalova, who acted as a go-between for Yarmin, and was detained while accepting the first part of the bribe from V. Sotnikov, general director of Severnaya Zvyozda-Torgservis, in her office Thursday, Interfax quoted the prosecutor's office as saying.
"This is a very serious signal of [a tendency] to press the business and abuse power. I will do everything that would be possible to complete this case and see that he [Yarmin] pays this according to the law," Gov. Valentina Matviyenko said, as quoted by Interfax Friday.
Prosecutors who searched Shuvalova's office found 144,000 rubles ($4,850) and $550 in cash. Prosecutors also confiscated cash amounts of 51,000 rubles ($1,700), $51,039, EUR 1,350, DM 50, 162 Ukrainian hryvnas and empty official letters with the stamps of the Architectural Institute, Interfax reported.
A total of 128,000 rubles ($4,300), $25,443 and DM 50 had been found and confiscated from Yarmin's office and apartment, the news agency said.
Vladimir Yeryomenko, the Legislative Assembly lawmaker of the Mariinskaya faction, said the case could be linked to a conflict between Yarmin and Vyacheslav Krylov, the former head of the Kirov district administration who lost his job in Oct. 2002 and was later appointed to work at the City Hall construction committee. Yeryomenko has complained that his demotion was unfair.
"There were quite big problems with Krylov," Yeryomenko said Monday in a telephone interview. "He [Krylov] might have known that the administration made local businesses pay tribute and his heart was aching about it."
Krylov was one of the initiators of the successful gubernatorial election campaign of Vladimir Yakovlev in 1996 that unseated mayor Anatoly Sobchak. According to the Kandidat.ru web site, Krylov had headed the district since 1991, but fell victim last year to an ally of former governor Yakovlev, who was not happy that during the 2002 elections he had not given enough support to Sergei Nikeshin, a Legislative Assembly lawmaker in the City Hall-backed Mariinskaya faction.
Krylov could not be reached for a comment Monday.
Yakovlev lost control of Smolny when he was appointed deputy prime minister in charge of reform of municipal housing services June 16.
"It does not look to me as a [start] of some sort of campaign," Yeryomenko said. "The law enforcement bodies had merely collected enough evidence to open a case; they had to use it and they did."
"It is the consequence of many factors coming to a head," he added. "Temptations make some men weak and there are lots of tempting things in the Kirov district."
Yeryomenko said Governor Matviyenko had used the opportunity to show that she will fight corruption within the city government.
"We'll make bribe-taking disappear from the city administration," Interfax quoted her saying. "The new regime will work openly and honestly. Nobody will be able to use their position for personal profit."
Olga Pokrovskaya, a Legislative Assembly member of the Yabloko faction, said Matviyenko has set her sights on a goal that looks impossible to achieve in the prevailing conditions.
"To fight corruption you have to have a transparent budget and a free media, two things which are shrinking in the country as a whole, including in St. Petersburg," Pokrovskaya said Monday in a telephone interview.
"Look at the [city] budget, for instance, which was recently passed," she added. "Take expenditure on education financing for which millions of rubles has been allocated, but for which there are no specific purposes stated."
"I hope, of course, that officials will be honest, but it is inevitable that such practices create many opportunities for corruption," Pokrovskaya said.
Yarmin had a history of backing City Hall's political interests.
"Yakovlev appointed Yarmin [head of Kirov district] so that he would prevent [Vadim] Tyulpanov [the current Legislative Assembly speaker, member of the United Russia party] from being elected to the Legislative Assembly," Ruslan Linkov, head of the St. Petersburg branch of the Democratic Russia party, said Monday in a telephone interview.
TITLE: Moscow Hostel Inferno Kills 36
AUTHOR: By Maria Danilova and Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - A fire roared through a five-story dormitory at the Peoples' Friendship University early Monday, killing at least 36 trapped foreign students and injuring 197 others in Moscow's deadliest blaze in almost a decade.
Some 170 students from Africa, Asia and South America remained hospitalized late Monday, suffering burns, smoke inhalation and fractures sustained when they frantically jumped out of windows to escape the fire. Ten were in critical condition.
Investigators said the fire was probably set off by the improper use of an electric appliance, most likely a heater.
This was the third deadly blaze at a Russian school this year, and President Vladimir Putin called for a thorough investigation.
Leky Guarra, 21, a student from Mali who resided in the dilapidated dormitory on 15 Ulitsa Miklukho-Maklaya, said he woke up at about 2 a.m. to the sound of screams and the smell of smoke.
He and his two roommates fled through their window and gingerly walked along the window ledges to reach waiting firefighter ladders.
"It was scary because we were five floors above the ground," Guarra said. "And many of my friends didn't risk climbing out and walking on the ledges. But there was no other way out. Those friends that didn't dare go with us are dead now."
Officials said 220 foreign students were registered as residents in the dormitory.
Guarra said he called for help before making his escape but firefighters were slow to react.
"We called the firefighters at 2 a.m., but they didn't arrive until 3 a.m. What took them so long I don't know," he said.
"While they were taking their time to arrive, the house was on fire, people were screaming and shouting, trying all possible rescue means on their own. Some who stayed on the lower floors were jumping out of the windows. They were lucky on the ground and second floor. Those on the third floor often fractured legs and arms. Others were trying to escape climbing down on ropes they had made from bed linen."
A fire safety department spokesman insisted that the firefighters arrived on time and did their job well.
"It was worse than anything I ever saw on TV," said Aicha Toure, a medical student from Mali residing in a dormitory opposite the scene of the fire. "There was fire, there was broken glass, there were cries and shouts, people jumping out of windows. It was horrific."
The dormitory was used as a quarantine for new students who arrived in Moscow this fall and were to undergo medical checks before starting their studies.
Seventeen of the dead were Chinese students, the Chinese Embassy said.
Also among the dead and injured were citizens of Bangladesh, Vietnam, Ecuador, Ethiopia, Tahiti, Afghanistan, Tajikistan, Angola, Ivory Coast, Morocco, Kazakhstan, the Dominican Republic, Lebanon, Peru and Malaysia, according to students and the city health committee.
Investigators were trying to identify the injured and dead Monday night. Students and embassy officials were assisting them at city hospitals and morgues.
Rimma Maslova, deputy head doctor at Clinic No. 31, the hospital closest to the university, was treating 32 patients late Monday.
"We received two more last night but had to transfer them to a different clinic because we could not provide proper care. Their burns were too grave," Maslova said.
He said most of his patients had multiple fractures, apparently from jumping out of the windows to escape the fire.
Sergei Smirnov, head of the Sklifisovsky First Aid Institute's burn center, the best such facility in Moscow, said he was treating 13 patients, three of whom were in critical condition.
Deputy Interior Minister Rashid Nurgaliyev told a Cabinet meeting presided by Putin that a preliminary investigation pointed to an electrical problem. He said there was no evidence that the fire was the result of arson or a bomb.
Education Minister Vladimir Filippov insisted that the building had been equipped with all the necessary fire safety equipment. Strict new fire safety rules were passed for schools over the summer after two blazes in April killed a total of 50 children in Dagestan and Sakha.
Filippov suggested that arson might be to blame, saying police have questioned an African student who lived in the room where the fire started.
Police could not immediately confirm his statement.
Filippov said a similar blaze occurred in an adjacent building about nine years ago, killing seven students. "That time around it was proven that the building was set on fire," he said, without elaborating.
Some students said they have received many racist threats and the fire could have been deliberately set. "Skinheads have long been threatening us," Toure said. "Last week there was a bomb threat and students were evacuated from one buildings. But no bomb was found. This was no accident either."
"I think it was some idiot who got high and forgot a match or a cigarette," Guarra said.
TITLE: Putin Slams Ousted Georgian Head
AUTHOR: By Simon Saradzhyan
PUBLISHER: Staff Writer
TEXT: MOSCOW - President Vladimir Putin came out swinging hard at ousted Georgian leader Eduard Shevardnadze on Monday, accusing him of driving Georgia to the brink of collapse and urging the triumphant opposition to improve the country's strained relations with Russia.
"The change of power in Georgia is the logical result of a series of systemic mistakes by the previous leadership of the country in its domestic, foreign and economic polices," Putin said at a Cabinet meeting.
Those policies have left Georgia with a foreign debt of $2 billion, or 60 percent of the country's gross dometic product, he said.
Georgians "stopped seeing light at the end of this long tunnel," he said, stressing that Shevardnadze had failed to eradicate corruption.
Shevardnadze resigned Sunday night, bowing to pressure from opposition parties that fiercely contested the results of the country's Nov. 2 parliamentary vote. Parliament speaker and opposition leader Nino Burdzhanadze will serve as acting president until a new election is held.
Putin said Shevardnadze was "no dictator" and that his resignation "came as no surprise" to the Kremlin.
However, he said, Russia is concerned that the hand over of power was occurring "against a background of strong, forceful pressure" and cautioned the Georgian opposition to be careful.
"Those who organize and encourage these actions are assuming a responsibility before the Georgian people," he said.
Putin made it clear that no one in the Kremlin was shedding any tears over the ouster of Shevardnadze, whose attempts to play Russia and the West off each other and anchor Georgia to NATO has angered Moscow.
Tbilisi pursued a foreign policy that didn't "take into account geopolitical realities," Putin said. "We have had many mutual grievances. Russia had enough of those against the former leadership of Georgia."
Putin warned the new leadership not to continue to antagonize Russia. While conspicuously avoiding mention of Russia's military might or Georgia's dependence on Russian energy, he pointed out that hundreds of thousands of Georgians have fled for Russia in recent years to escape the dire economic situation at home. This diaspora and other groups based in Russia are investing some $2 billion per year into Georgia - more than all of the foreign economic aid that the country receives, Putin said.
For its part, Moscow is ready to go the extra mile to mend ties with Tbilisi, the president said. Russia "does not and cannot have any other goals" but to restore "brotherly relations," he said.
Russia played an instrumental role in arranging the bloodless change of the Georgian regime. In an 11th-hour mission, Foreign Minister Igor Ivanov flew to Tbilisi over the weekend and engaged in shuttle diplomacy between Shevardnadze and the opposition that resulted in the resignation.
Ivanov said Monday that he considers the prevention of any violence to be the biggest success of his trip. "Russia's goal boiled down to preventing violence, to ensure that ... there would be no excesses that undermined the stability, political system and territorial integrity" of Georgia, he told Interfax.
Since his 1992 rise to power, Shevardnadze has pursued a largely anti-Russian policy, trying to position Georgia in the eyes of Western policymakers as a deterrent against Russia's imperialist ambitions in the region. That policy found support among parts of the Georgian population, given the role that Russia played in encouraging and supporting separatism in Georgia's provinces of Abkhazia and South Ossetia. The Kremlin responded by threatening to bomb Georgian territory over the alleged presence of Chechen rebels and periodically cutting energy supplies.
Shevardnadze's departure offers Russia and Georgia an opportunity to set aside past grievances and build a new and more constructive relationship, political analysts said.
Russia deliberately weakened Georgia to keep it in the zone of its interests after the 1991 breakup of the Soviet Union. But since 1993, when Georgia entered the Russia-dominated Commonwealth of Independent States, Moscow's main concern has been to prevent the situation in the country from deteriorating into chaos, said Alexei Malashenko, a senior researcher with the Carnegie Moscow Center.
"With its influence in post-Soviet space growing, Russia is interested in preserving the stability and integrity of Georgia," Malashenko said.
That concern is shared by the United States, which wants more stability and predictability than Shevardnadze could offer, said Karine Gevorkyan, a researcher in the Caucasus department of the Oriental Studies Institute.
During Shevardnadze's shaky rule, Tbilisi has had control only over parts of the country.
Malashenko said Russia also is interested in retaining a military presence in the south Caucasus, including Soviet-era bases in Georgia, and gaining a larger share in the extraction and transportation of Caspian oil.
TITLE: Kalmykia: Buddhist Outlier on Europe's Edge
AUTHOR: By Simon Ostrovsky
TEXT: The smell of incense wafts through the air, a gong rings and the rhythmic murmur of monks reading a Tibetan Buddhist prayer fills the temple, but the intense spiritual atmosphere is not enough to keep a boy no older than seven from losing his place in a religious text. Lending a hand, an older monk points to a spot in a sea of Tibetan characters handwritten on a yellow card. The boy begins moving his lips, only to soon lose track again.
Heads bowed and palms together, the 40 monks listening to the prayer could easily be taken for distant Tibetans or Nepalese, but adventurous travelers in search of exotic locales need not look so far away. This Buddhist temple is located just south of Elista, the capital of the Kalmyk Republic, one of the flattest regions of Russia and home of the only Buddhist ethnicity native to Europe.
The temple is surrounded by steppe, overbearing and ever-present, and once a source of inspiration for poet Alexander Pushkin on his travels. For the nomadic Kalmyk people, the steppe has long served as the chief source of livelihood. Today's population is as sparse as the vegetation; roughly the size of Ireland, Kalmykia numbers only 300,000 citizens, half of whom live in Soviet-built Elista.
Little more than two hours by plane from Moscow, Kalmykia is one of Russia's more curious destinations. Surrounded to the north by the ethnic Russian regions of Volgograd, Astrakhan and Stavropol, and to the south by the Caucasian republic of Dagestan, the Buddhist presence seems somewhat out of place. "How did these Mongolian people get here?" one might ask. The answer is: on horseback.
The Kalmyk are the descendants of the Oirat, a union of western Mongolian tribes that joined the empire of Genghis Khan in the 13th century. After the fall of the Mongol empire in the 14th century, the Oirats relocated to the steppe of western Siberia. With the expansion of the Russian empire, the Oirats - dubbed Kalmyk by their new Russian overlords - made their way further west, toward the Volga.
In the 17th century, Russia permitted the Kalmyk to create a khanate at the mouth of the Volga in exchange for a promise to protect the southern border from the warring peoples of the Caucuses. But the oppressive policies of Catherine the Great one hundred years later led the Kalmyk east of the Volga to return to present day Kazakhstan and Chinese Turkestan. Those further west also tried to leave, but many died in a rushed attempt to cross the Volga and ultimately failed, remaining roughly where the Kalmyk reside today.
Because horses and migration defined the Kalmyk way of life before the Revolution, Kalmykia is not known for noteworthy architecture. Historically, the Kalmyk did not live in towns, and most buildings are of Soviet make. Instead, what's interesting about Kalmykia is its people.
Although most Kalmyk speak only Russian, their Asian features are only part of what separates them from surrounding nationalities. Their brand of Buddhism is superstitious to the point of shamanistic, although they are thousands of kilometers away from the Siberian shamans of the Altai mountains or Buryatia.
Up-to-date on modern medicine, most Kalmyk families turn to medicine men on the side. Tatyana Ulyumdzhiyev, a 45-year-old resident of Elista, takes her family to a medicine woman named Auntie Lyuba, who inherited her healing powers from her grandfather. On his death bed, the grandfather passed on his powers to Lyuba, and told the girl's mother to rename her and always serve her tea from a separate pot. "Nobody ever taught her these skills. She just knows," Ulyumdzhiyeva said.
Today, yin-yangs, Buddha statues and religious Boddhisatva images speckle the capital. For an optional donation of 50 rubles, you can even have a private consultation with a Mongolian lama in Elista's only hotel on Ulitsa Lenina. His advice will consist of a horoscope reading, a physical and a Kalmyk history lesson all rolled into one.
But under Soviet rule, Kalmykia's Buddhist religion was banned, and hundreds of temples destroyed along with local Orthodox churches. Only one - the dilapidated 19th-century Khosheutovsky Khurul - remains, four hours to Elista's east.
Built to honor the participation of the Kalmyk in the war of 1812, the once magnificent temple sits on the Volga's east bank, midway between the Kalmyk city of Tsagan-Aman and Astrakhan. Once a magnificent structure, it is unique for its blend of Oirat architectural traditions and classical Russian designs.
Best-known among modern temples is Elista's own Syayaknsyume Khurul. Services begin at 9 a.m. every day, but don't forget to spin the prayer wheels to the left of the entrance before coming in, and to the right of the entrance on the way out. Minibuses marked "Khurul" leave from Ploshchad Lenina in the city center every 15 minutes.
Springtime visitors to Kalmykia will find the steppe carpeted with tulips, flowering red, yellow and white around Elista and, in other areas, red as far as the eye can see. During the summer, travelers out for a modest beach holiday can take a three-hour bus-ride to the Kalmyk town of Lagan, on the coast of the Caspian Sea. But don't expect a luxury resort; Kalmykia is not a typical traveler's destination, and, besides a single hotel, tourist infrastructure is scarce.
The same goes for restaurants, which are few in number even in the capital. Most of Elista's cafes serve roughly the same food. For a unique Kalmyk experience, try byorigi, or plump dumplings, and dotr, or spicy boiled-lamb innards. Elista's version of fast food is the Sputnik cafeteria behind the White House on Ulitsa Lenina. Order a good serving of byorigi and a fried-dough pastry called bertseg to dip in your rich, homemade sour cream. Wash it down with special Kalmyk tea made with milk, salt and butter.
If you manage to visit a Kalmyk home, expect to get a dollop of lamb. Huge swathes of the steppe are used by Kalmyk herders to graze their thousands of sheep.
But don't be surprised by the meat's yellowish hue; the animals subsist on a diet of field wormwood, which flavors their meat with the hallucinogenic compound also found in absinthe. On special occasions, such as weddings, old men slay and quarter lambs in the traditional way - no knives allowed. They find a soft spot between the lamb's ribs and, pointing their middle and index fingers, plunge their hands through the skin to squeeze the beating heart until it stops.
Much of Elista's Eastern flavor is a recent addition, the result of the many stylized Tibetan gates and monuments put up around the city. But what's more surprising is the abundance of portraits of the republic's president, Kirsan Ilyumzhinov, who seems to be out to create his own little personality cult. Elista's regional history museum boasts an exhibit called "Planet Kirsan," which features Ilyumzhinov's gifts from visiting dignitaries.
In his off-time, the flamboyant politician - an avid chess fan - also heads the World Chess Federation. In preparation for the 1998 world championship, Ilyumzhinov splurged on a multimillion-dollar complex for his chess capital of the future. But because chess championships are few and far between, the average visitor is much more likely to see the complex occupied by more typical local sights: an exhibit of Kalmyk paintings or a farmers' fair.
TITLE: Shattered Tranquility of Novgorod's Volotovo Pole Church Restored Fragment by Fragment
AUTHOR: By Anders Mård
PUBLISHER: Special to The St. Petersburg Times
TEXT: VOLOTOVO, Novgorod - Tamara Anisimova strains to swing open the heavy door to the small church. Inside it is pitch black, but Anisimova keeps moving forward in search of the light switch.
Since the start of restoration here in 1991, she has come to know every centimeter of the building by heart. The light is just there for guests.
"This foot is the foot of the Archangel Gabriel", Anisimova says, pointing to a fragment of painting just inside the door. "The rest of him is still in fragments in our workshop."
Restorers are desperately trying to salvage 1.7 million pieces of unique frescos that once decorated the Church of the Assumption on Volotovo Pole.
Frescos are made by painting on fresh, moist plaster with pigments dissolved in water. The result is a surface 1 centimeter to 2 centimeters thick of plaster, with a thin, colored outer layer.
Built in 1352, the church was one of Russia's most important historic architectural monuments, until it was destroyed during fighting in World War II.
Just two years ago this church wasn't much more than rubble covered with roof.
But in 2001 a contract was signed by the Culture Ministry and its German counterpart to restore the church and its paintings. German gas firm Wintershall agreed to pay $1.5 million over five years for the project. The church, modeled on the original building, reopened as a museum in September. The frescos are to be restored to their former glory by 2006.
"The timetable is extremely tough," Anisimova says. "The result depends on the financing and the number of workers. But we are determined to finish the work."
Located on the outskirts of Novgorod city, the church's frescos are considered key to understanding Russian culture of the 14th century. The United Nations put the church on its World Cultural Heritage list in 1992.
The church is devoted to the Virgin Mary and many of the wall paintings depict events in her life. One of the apse wall paintings depicts the her enthroned, flanked by two angels, the prophet Joseph and Anna, her mother.
"Most of the paintings on the apse wall are destroyed for ever," says Anisimova. "During 10 years of salvage we managed to save two-thirds of the church's paintings."
UNEQUALED PAINTER
Situated 180 kilometers southeast of St. Petersburg, Novgorod developed from the 10th century to become a rapidly flourishing city. The only Russian city in the Baltic/North Sea Hanseatic League trade network, it became a bishop's see and was one of the most important Russian cities in the 14th and 15th centuries, with a population of around 400,000.
Even when the city declined in significance, it retained its priceless treasures of ecclesiastical works of art and its status as one of Russia's religious centers. The Church of the Assumption was built in 1352 on the hilly banks of the river Volkhovets as part of the Volotovo monastery. It was constructed at the city's zenith and modeled on the ideals of Byzantine church architecture, with cross-vaulted domes. The church has become famous thanks to its unique frescos.
"An unknown painter designed the interior," Anisimova says. "But I have a feeling that he was Greek, maybe a monk from the monastery of Athos."
The hallmark of his work is a masterly painting style employing brilliant colors and dynamic brush strokes. The painter ranks among the most important artists of ancient Russian painting from the 14th century.
"You can not find anything similar in Russia from that time," Anisimova says. "I have a feeling that the artist did not fit in, not in Greece, not in Russia. He was to free in his expressions. He painted this interior and then disappeared."
During the German siege of Novgorod which lasted from the summer of 1941 to January 1944, the church stood near artillery and shockwaves from the firing of shells meant the frescos cracked and some of the shattered fragments fell to the floor. What remained of the church after the war was only a shell standing up to 4 meters in height and still adorned with frescos.
Under the direction of Anisimova, it took restorers 10 years to clear the rubble and save 1.7 million fragments of destroyed paintings.
THREE-DIMENSIONAL JIGSAW
The restoration workshop is based in a deserted brewery in the city, next to the river Volkhov. The buildings are being renovated, and according to Anisimova, there are big plans for the old factory.
"We will arrange workshops, exhibitions, seminars and education here about frescos," Anisimova says.
The work to transform the factory into a center for old paintings will be financed by the presidential administration.
In one of the basements the restoration work has been going on for six months. Ten people are in deep concentration piecing together shattered frescos in a giant, three-dimensional jigsaw puzzle. The smallest pieces are just millimeters across, the biggest 10 centimeters. All together there were 300 square meters of paintings in the church. The task will be considered a success if even half of the frescos can be reassembled.
As many of the frescos as possible are to be put back inside the church.
"Our realistic goal is to finish the work in 2010," says Anisimova. "But then we will have to double the work force."
Parallel to the restoration, Wintershall has created a virtual model of the church and its paintings. This computer simulation allows a broad audience to experience the church in three dimensions. The simulation will be on displa with original exhibits from the church until Jan. 18, 2004 in the Dommuseum, Frankfurt am Main, Germany.
Photos: Alexander Belenky
TITLE: IN BRIEF
TEXT: Population Falls 0.4%
MOSCOW (AP) - Russia's population fell by 623,000 over the first nine months of the year, dropping by 0.4 percent to 144.3 million, the State Statistics Committee said in a statement.
Despite the decline, the statement posted on the committee's web site, registered some positive demographic trends that could be attributed to Russia's economic revival over the past few years.
It said the number of newborns grew in 83 out of Russia's 89 provinces, and the number of marriages also increased.
According to the latest census, Russia's population stood at 145.5 million in October 2002.
Prize Not Revoked
NEW YORK (AP) - The 1932 Pulitzer Prize awarded to New York Times reporter, Walter Duranty, accused of deliberately ignoring the forced famine in Ukraine in 1932-1933 will not be revoked, an administrator for the prestigious journalism awards said Friday.
"The board determined that there was not clear and convincing evidence of deliberate deception, the relevant standard in this case," Pulitzer administrator Sig Gissler said in a statement.
Some 2,000 people gathered Saturday at the golden-domed St. Michael Cathedral in the capital Kiev to light candles at a memorial dedicated to the estimated 7 to 10 million famine victims.
10 Rebels Kileld
VLADIKAVKAZ, Southern Russia (AP) - Russian special forces killed 10 rebels in a clash in southern Chechnya early Monday, and a court in a nearby region opened the trial of a suspect in the downing of a helicopter in Chechnya that killed 127 people in the nation's worst military aviation disaster.
Two special forces officers were killed and four were wounded in the skirmish south of the town of Serzhen-Yurt, said an official in the Kremlin-backed Chechen administration. He said Russian forces were combing the area for militants who got away.
Two more military officers were killed and two wounded when a police checkpoint was blown up Monday morning near Gerzel, a border crossing in the Gudermes district of northern Chechnya, the official said. In the capital Grozny, a Russian soldier was killed and another wounded while inspecting a half-ruined building, and two more servicemen were killed and two injured in rebel attacks.
Paksas Implicated
VILNIUS, Lithuania (Reuters) - Lithuanian President Rolandas Paksas's fight for political survival over accusations his office has links to Russian mobsters suffered a blow on Monday when a security chief strongly hinted Paksas might be personally involved.
The president was plunged into political crisis last month when security services said that his office and some aides were linked to the Russian mafia. Mecys Laurinkus, head of the State Security Department, said Monday that sensitive information given to Paksas and his inner circle had been leaked to the people under investigation and warnings were repeatedly ignored. Key City Appointments
ST. PETERSBURG (SPT) - Governor Valentina Matviyenko has almost completed forming her team to head key City Hall committees.
Alexander Nikonov, former Baltika brewery vice president, responsible for the company's economics and financing, has been appointed head of the finance committee.
Yury Scherbuk, deputy head of the St. Petersburg Military Medical Academy, has been appointed to head the health committee. According to Fontanka.ru, Vladimir Matviyenko, the governor's husband, could have played a role for Scherbuk's appointment as he used to work in the academy.
Alexander Bobrov, former deputy director of Peterburgregiongaz, Gazprom's local sister company, was appointed to head the energy committee while his predecessor Alexei Delyukin was made head of the Petrograd district.
Valery Nazarov, the head of the Property Committee, could be soon appointed to head the same structure, but in the federal government, the Fontanka.ru website reported Monday.
28% for United Russia
ST. PETERSBURG (SPT) - A little over one quarter of St. Petersburg voters would back the Kremlin-linked party in State Duma elections, Interfax on Monday reported a survey by the Center for the Study and Prediction of
Social Processes as having found.
Of 5044 respondents, 13.6 percent intend to vote for the Union of Right Forces, or SPS, 11.6 percent for the Communists, 7.1 percent for Yabloko, 7 percent for the Rodina faction, and 5.3 percent would vote "against all," the report said.
A total of 15.9.percent said they would definitely vote in the Dec. 7 elections, 10.9 percent do not intend to while 39 percent said they had no great desire to take part, the report said.
Head Judge Retires
ST. PETERSBURG (SPT) - The head judge of the city court, Vladimir Poludnyakov is to resign after two decades in the job, Interfax reported Monday.
Citing the Qualification Collegium of judges, the news agency said that Poludnyakov had declared his intention to resign several days ago on the basis of his age - he celebrated his 65th birthday this summer.
No successor has yet been named. Poludnyakov's deputy Valentina Epifanova will fulfill his job until one is found, the report said.
Metro Relinked Soon
ST. PETERSBURG (SPT) - The restored link between the Lesnaya and Ploshchad Muzhestva metro stations is to be commissioned on June 30, 2004, Interfax quoted Vadim Alexandrov, general director of city metro construction enterprise Metrostroi, as saying Monday.
Alexandrov said a trial run on the line is planned on May 27.
The link was lost in the mid-1990s after part of the tunnel collapsed into an underground river, leaving thousands in the northeast of the city having to take surface transport between the stations on their journeys in and out of the city center.
The total cost of the restoration is $180 millon, the report said.
Pskov Aerobic Champs
ST. PETERSBURG (SPT) - Former Miss Universe and hometown girl Oksana Fyodorova will open the national sport aerobic championships in Pskov on Thursday, Interfax reported.
The championships, held in connnection with the 1,100 year anniversary, will be opened with a ceremonial parade in which the guest of honor will be Fyodorova.
Four hundred and fifty contestants from 56 clubs in Russia, Estonia and Lavtvia will take part in the two-day event that is organized by the All-Russia sporting federation, the news agency said. Gold Reserves in Favor
MOSCOW (Reuters) - Rising gold prices should prompt the government to consider increasing the share of reserves assigned to the metal, as a weak dollar could reduce the value of the country's reserves, a Finance Ministry official said on Friday.
Gold prices gained momentum this week with the euro hitting a record high against the U.S. currency, which makes up the bulk of foreign currency reserves.
"It appears that next year a decline of the dollar against the euro may continue, despite a pickup of the U.S. economy," said Deputy Finance Minister Sergei Kolotukhin.
Gold and foreign exchange reserves stood at an all-time high of $65.4 billion as of Nov. 14.
Yukos-Energo Plan
MOSCOW (Bloomberg) - Yukos, the country's biggest oil producer, is seeking to gain control of a regional electric company and buy stakes in gas-fired power stations to create an outlet for the natural gas it extracts along with oil.
Yukos is in talks with UES to merge four utilities in which it owns stakes of more than 25 percent, then increase its holding in the new entity, said Pavel Strunilin, director for power projects.
Extra Slavneft Dividend
MOSCOW (Reuters) - Oil firm Slavneft said on Friday it had decided to pay its new owners, TNK-BP and YukosSibneft, an extra dividend of 3.71 billion rubles ($124.5 million) for the third quarter of 2003.
The company, which already paid its owners $350 million in dividends for the first six months of 2003, said in a statement it would pay an extra 78 kopeks (3 cents) per share for July-September.
Farm Credit Doubled
WASHINGTON (Reuters) - The U.S. Agriculture Department, or USDA, said on Friday that it doubled the amount of U.S. farm export credits to Russia to $200 million for fiscal 2004, which began Oct. 1.
The USDA offers export credits to facilitate sales by assuring lenders that they will get their money back even if the borrower defaults.
Poultry Ban Lifted
MOSCOW (Reuters) - The government has lifted a ban on imports of poultry from several U.S. states and restrictions on Swedish poultry, previously imposed to prevent a virus outbreak, Interfax reported on Friday.
The ban was imposed in April to prevent a potential outbreak of contagious Newcastle disease, which is harmless to humans and does not affect the safety of poultry meat or eggs, but is fatal to fowl.
Warner Music Sold
NEW YORK (Reuters) - Time Warner Inc. on Monday said it sold its Warner Music business to a group led by media mogul Edgar Bronfman Jr. for $2.6 billion, in a move to trim the media group's debts and signaling a return of the former Seagram chairman to the music business.
The Bronfman group beat out a bid by EMI for the recorded music portion of the business for an estimated $1 billion. By choosing the Bronfman bid, Time Warner company is forsaking $250 million to $300 million in cost savings it could have realized by combining with EMI.
On the other hand, Time Warner is getting more cash up front by selling the entire business, which includes the music publishing company, and will have an easier path to regulatory approval. In the past, European and U.S. regulators have frowned on consolidation within the music business.
Delta CEO Resigns
CHICAGO (Reuters) - Delta Air Lines Inc. on Monday said Chairman and Chief Executive Leo Mullin would retire, an unexpected move that leaves each of the top three U.S. airlines with new leaders since the Sept. 11, 2001, attacks.
Mullin, a former banker who helped steer Delta through a post Sept. 11 cash crunch, will retire as CEO on Jan. 1 and will step down as chairman on May 1, the No. 3 U.S. airline said in a statement. Two men will split his duties going forward.
Mullin, who has been CEO of Delta for six years, receives a pre-tax package of $16 million, which the airline said has mostly been previously funded and disclosed. Shipping Losses
ST. PETERSBURG (SPT) - St. Petersburg's Northwest Shipping posted losses of 43.392 million rubles during the first nine months of 2003, Interfax reported Monday.
Losses grew 1.6 times as compared to the same period in 2002.
Northwest Shipping is a holding with 17 subsidiaries. The company owns 296 vessels, including 170 trade ships and 52 passenger vessels.
Korus Holding and affiliated entities acquired more than 60 percent in the company in 2003. The Russian property ministry owns a 22.5 percent share in the company.
Gas Cooperation
ST. PETERSBURG (SPT) - Gazprom and the city of St. Petersburg are set to sign a memorandum of cooperation on Dec. 5, Vice Governor Oleg Virolainen said at a press conference Monday, Interfax reported.
A key element of the draft document is Gazprom's participation in the process of providing gas lines to the city's center, mainly in the Petrograd and Vasileostrovsky districts.
The project also covers disassembly of 158 decrepit boilers and construction of up to 50 modern units to perform the same function, and replacement of gas pipes in buildings.
Baltika Holds Steady
ST. PETERSBURG (SPT) - Baltika brewery plans to reach production goals of 160 million decaliters in 2003 are on track, the company's president Taimuraz Bolloyev told Interfax Monday.
This year's output will not increase significantly over 2002 figures. "We can only dream of 10 percent growth," Bolloyev told the news agency.
"Things are not going well in the industry," he said. "The reason is poorly conceived excise and tax policies for the beer industry." Bolloyev noted that the government had raised excise taxes on beer by 25 percent since the year's start. In contrast, excise taxes on vodka went up by 15 percent, while wine excise taxes increased only 9 percent.
Speaking of the future, Bolloyev said the company would develop in 2004 by improving distribution and cutting costs, not by increasing production.
Baltika plants are working at only 50 percent of capacity, which will increase recoupment periods for the facilities in Samara and Khabarovsk, for example.
Karelia Mortgages
PETROZAVODSK (SPT) - The Republic of Karelia signed a memorandum of cooperation with the Mortgage Agency, according to a press release issued by the government of Karelia Monday, Interfax reported.
The press release cited the goal of the agreement as "attraction of long-term financing of the housing sector through the secondary market of mortgage loans and making them more accessible to the population to improve housing conditions."
Loans will be made available at an interest rate of 15 percent, part of which will be subsidized by the Karelian budget.
The republic's State Property Fund will act as regional operator in the mortgage system.
To date, 51 cities and regions have subscribed to the unified federal system for issuing and refinancing mortgage loans. More than 1,260 loans have been issued for a total of 400 million rubles.
TITLE: Scientists Barred in Ownership Dispute
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: City police on Monday detained the two security guards who blocked 150 staff scientists from entering the All-Russia Science and Research Technology Institute, or VNITI.
The scientists, who have condemned the sale in summer of the VNITI's building as illegal, were not allowed to go to their workplace by the building's new owners, who have not been publicly identified. They want the institute to pay rent for the space it occupies.
"When our employees came to work this morning the security just stopped them and didn't let them in," said Stanislav Yadlovsky, head of VNITI's trade union.
"Then we called the district police and prosecutor's office," Yadlovsky said.
Armed police from the Petrograd district, where the building is located, arrived about 1 p.m. and detained the security guards.
Vyacheslav Karasyov, head of OOO Bonus, which manages the building, was taken to the district prosecutor's office.
After that the scientists went to their workplaces.
The four-story building of the institute, famed for developing the country's most advanced defense products, was unexpectedly sold in August by its former director Dmitry Zuber for $620,000.
As a result of the sale more than 150 employees of the 5,000 square meter institute were shifted to the fourth floor and allowed to occupy half of the second floor. They were also told to pay rent of $18 per square meter per month.
However, Yadlovsky said the institute was sold by Zuber illegally since it was done without consulting the board of directors and at an unfairly low price.
"Besides, there was not any need to sell the institute, and nobody planned it," said Genrikh Semibratov, a member of the board of directors.
A month ago the institute's auctioneers appealed to the City Arbitration Court to rule the deal illegal. Their appeal was supported by the city prosecutor's office and the federal Property Ministry.
"We hope that the hearing at the City Arbitration Court, due to be held Dec. 9, will resolve the situation," Yadlovsky said.
VNITI was founded in 1947 by the Defense Ministry of the Soviet Union as a unique scientific institute that has no analogies abroad. It used to provide the technical support for and organization of serial production of the country's tanks, armored personnel carriers and armored machinery.
Later the institute devised ways of using their developments in the civilian industrial sector.
The institute has the status of a joint-stock company and develops new technologies and equipment for the production of parts for highly complex machine tools. The production of such parts on standard equipment is impossible.
The institute produces bar pumps for oil extraction which are acknowledged to be among the best in Russia.
VNITI also developed elevators for wheel-chairs used by handicapped children, and many other products used in the medical, mining and electrical sectors.
Board member Semibratov said the institute was bought by two private people from Zuber, who was acting on his own. After that Zuber was dismissed, and went on vacation until spring.
Anatoly Belozertsev, an institute employee for 26 years, said VNITI's scientists are united in their support for their institute.
"This is our alma mater, and we want to protect it from unfair actions," Belozertsev said.
TITLE: Governor Discusses U.S. Visa Hassles
AUTHOR: By Irina Titova
PUBLISHER: Staff Writer
TEXT: St. Petersburg Governor Valentina Matviyenko has asked the U.S. ambassador to consider complaints by city residents about the American Consulate's frequent refusals to issue them visas to the United States.
"It has become more difficult to get a visa, and we get a lot of complaints from St. Petersburg residents," Matviyenko said to U.S. Ambassador to Russia, Alexander Vershbow, who was on a visit to St. Petersburg on Friday, Interfax reported.
"We understand all the aspects of security and economics, but I ask you to pay attention to that," Matviyenko said, adding that frequent denials would harm the development of business contacts between the U.S, and St. Petersburg.
Matviyenko said that even when working as a deputy prime minister in the government, she herself had problems getting a visa to the U.S. to attend a session at the United Nations.
"I got the visa only three hours before the flight," Matviyenko said. "What can we then say about Russia's regular citizens?"
Vershbow said that he "understood the concern" and was interested in having more St. Petersburg residents visiting the U.S., but added that such procedures were still necessary.
"There is a law on migration, but we try to perfect those procedures," he said.
Vershbow said that the visa restrictions are determined not only by security requirements, but also because of concern about illegal immigration to the U.S., Interfax reported.
Vershbow stressed that despite new, stricter visa rules "the number of denials did not change and is about 20 percent." If "an applicant can't convince a consulate staffer" that they are bona fide visitors, that is sufficient reason to refuse an application, he said.
Applicants can also apply for a visa through a private firm, without a personal visit to a consul, he added.
Vershbow asked Matviyenko about the possibility of giving a piece of land for the construction of a new building for the U.S. Consulate in St. Petersburg.
Vershbow said the consulate's current building at Ulitsa Furshtadskaya is very crowded, Interfax said.
"Due to terrorism threats there are now new standards for such institutions - they need more distance between a consulate building and the street," Vershbow said.
Matviyenko promised to do "everything possible" in regard to Vershbow's request, but added that it's impossible to find the 4 hectares of spare land needed for a new building in the center of the city.
Vershbow also spoke about the opportunity for U.S. participation in the city programs for developing mortgages and liquidation of dilapidated and emergency dwellings.
Meanwhile, the governor's press service announced that in a year St. Petersburg is planning to provide a Russian-American conference on attracting foreign investments into the city's communal sector.
Vershbow also delivered a grant for $20,000 to the library of the Russian Academy of Science for the restoration of rare books which were damaged during a fire in 1988, Interfax reported.
Vershbow said the money will be spent on restoring books about the history of Russian-American relations.
He said the initiative for the grant came from U.S. president George W. Bush during his visit to St. Petersburg in May.
TITLE: Yukos Immunity Plan Dropped
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - Yukos billionaire Vasily Shakhnovsky has dropped plans to represent the Siberian region Evenkia in the Federation Council, a move which would have given him immunity from prosecution, Interfax said on Monday.
Shakhnovsky was elected to represent Evenkia - an oil-rich region larger than France with a population of under 20,000 - in the upper house of parliament in October, the day after former Yukos owner Mikhail Khodorkovsky was arrested.
A federal court annulled the election last month on the grounds of legal proceedings against Shakhnovsky, who, like Khodorkovsky, is charged with tax evasion.
Shakhnovsky had been expected to appeal the decision and run for re-election, but Interfax quoted a letter from him to the local legislature as saying he had dropped the idea.
"The current situation around my name does not allow me to adequately represent the interests of Evenkia in the upper house of parliament," said the letter.
Many analysts say the attack on Yukos is orchestrated by the Kremlin to punish major shareholders in the oil giant for meddling in politics and successfully lobbying parliament to vote down state proposals to raise oil taxes.
Shakhnovsky, who has not been detained but is prohibited from leaving Moscow, was not available for comment.
Last week, Russian media quoted sources in the Prosecutor General's Office as saying Shakhnovsky had agreed to pay 53 million rubles ($1.78 million) of additional taxes, but charges against him have not been not withdrawn.
Prosecutors have made clear they believe his election was an attempt to prevent them from pressing the criminal case against him. Shakhnovsky owns more than 3 percent of Yukos.
TITLE: Ex-Menatep Banker Faces Deportation
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - An erstwhile business partner of ex-Yukos chief Mikhail Khodorkovsky faces a potential battle with prosecutors in Russia, unless the U.S. immigration authorities are persuaded to reverse a decision to strip him of his political refugee status.
Alexander Konanykhin, 37, one of Russia's first post-Soviet millionaires and until 1995 vice-president of Khodorkovsky's Menatep Bank, faces deportation by Dec. 20 to Russia, where he fears he will be prosecuted as a former associate of Khodorkovsky.
"My 'crime' is that more than a decade ago, I stated in articles that the KGB was combining forces with organized crime and taking over Russia," Konanykhin, now the CEO of a company specializing in internet advertising, wrote in an e-mail to The Moscow Times on Monday.
The decision by U.S. immigration authorities is Konanykhin's latest brush with American and Russian officialdom.
Konanykhin, a student at the prestigious Moscow Institute of Physics and Technology in the 1980s, made a fortune in banking by 1992, when he was a donor to Boris Yeltsin's first presidential election campaign. But then things turned sour for Konanykhin, forcing him to flee to the West.
In late 1992 Konanykhin was reported to be running offshore banking operations from the United States for his partners in Russia, through the Antigua-registered European Union Bank. The bank was closed in 1996, but according to a State Department report cited by The Washington Post in 1999, at least $12 million left Russia via its accounts.
"I had the first Mercedes 600 in Russia," Konanykhin told Profil magazine in 1997. "I had a government dacha and a ZiL [Soviet government limousine], but those were later transferred to [then-Prime Minister Viktor] Chernomyrdin."
According to The Washington Post, Konanykhin was such a highflyer in the early 1990s that he attracted the attention of the CIA, who dubbed him "The Kid."
The Post reported that U.S. and Russian law enforcement agents believed Konanykhin was in charge of moving billions of dollars out of Russia for the KGB, an allegation Konanykhin has strenuously denied.
But in interviews given to Russian and Western media, Konanykhin has claimed that Russian law enforcement agencies and security services are a threat to him.
Konanykhin faced deportation to Russia in 1996, when he was arrested for violating the terms of his U.S. visa. However, after a legal battle lasting nearly three years, he was given political asylum.
"U.S. government experts testified that in Russia I would be killed by the Russian government or face subhuman conditions," Konanykhin wrote by e-mail. "In February 1999, the Immigration Court granted political asylum to me and my wife."
But on Nov. 20 the Justice Department overturned the decision by the Immigration and Naturalization Service and issued a deportation order for Konanykhin.
"Surprisingly, the [reason] for revoking my asylum is the Justice Department's finding that there is 'no evidence to suggest that the Russian government employs corruption in its criminal justice [system] as a tool of political persecution.' It is very ironic, given the international outcry caused by the recent wave of high-profile political persecutions in Russia, most notably, of my former business associate Mikhail Khodorkovsky," Konanykhin wrote.
Konanykhin said his relations with Khodorkovsky, whom he called a friend but not a close friend, "ended in 1995 under substantial pressure on Khodorkovsky from the Russian Military Prosecutor's Office, which was after me."
Prosecutors alleged that Konanykhin embezzled $8 million in state funds. But, when contacted Monday, officials at the Prosecutor General's Office could not recall what the case was about. Staff at the Military Prosecutor's Office were unable to recall any details of the case.
Konanykhin's return to Russia, however, is not certain. By law he has 30 days to appeal the Justice Department's decision.
TITLE: Alexy II Hopes Church Will Reunite
PUBLISHER: The Associated Press
TEXT: MOSCOW - Russian Orthodox Church Patriarch Alexy II on Friday voiced hope for a reunion with an Orthodox church abroad that has run its own affairs since splitting from the Moscow Patriarchate after the 1917 Revolution.
Alexy II told visiting officials of the Russian Orthodox Church Outside Russia that the two churches should move toward unification now, when "there are no obstacles that could divide the Russian people at home and abroad," Itar-Tass reported.
"We have embarked on a path toward church unity," the patriarch said after several days of talks with visiting high-ranking representatives of the foreign church, but added that "this path will be difficult."
Alexy made the statement after a religious service in the Kremlin's Archangel Cathedral attended by the foreign delegation.
The visit by three archbishops of the foreign church was the first since it severed ties with the Moscow church in the 1920s, accusing it of cooperation with the Communist government.
It follows President Vladimir Putin's meeting in September with its head, Metropolitan Laurus in New York, where it is based.
Putin and Alexy have invited Laurus to visit Russia. Alexy II said Friday that Laurus' visit, which is scheduled for early next year, will help "prepare steps toward cooperation and unification."
The churches have sought to establish ties since the Soviet collapse, but the foreign church does not favor as quick a reunion as the Moscow Patriarchate wants.
Archbishop Mark of Berlin and Germany, who is a member of the visiting foreign church's delegation, told Nezavisimaya Gazeta earlier in the week that both churches were striving for unity, but warned against any hasty steps.
TITLE: Shevardnadze Seen as Soviet-Era Holdover
AUTHOR: By Misha Dzhindzhikhashvili
PUBLISHER: The Associated Press
TEXT: TBILISI, Georgia - Georgian President Eduard Shevardnadze, under increasing pressure for weeks over fraud in parliamentary elections, announced his resignation on Georgian television on Sunday.
"I realized that what is happening may end with spilled blood if I use my rights," he said. "I have never betrayed my people and I decided that I should resign."
Asked where he was going to live, Shevardnadze said, "At home."
News of the reported resignation sparked roars and cheers and excited dancing among the tens of thousands of opposition supporters gathered outside the parliament building, which the opposition seized a day earlier. Shevardnadze was forced to flee the building as he attempted to open the first session of the new parliament elected in the widely denounced Nov. 2 voting.
"The president has accomplished a courageous act," protest leader Mikhail Saakashvili said in remarks shown on Georgian television. "By his resignation, he avoided spilling blood in the country ... History will judge him kindly."
Saakashvili had promised to guarantee the safety of the Georgian leader and his family if Shevardnadze resigned. He said that opposition leader Nino Burdzhanadze would serve as acting president until new elections are held.
Burdzhanadze's duties would be limited, Saakashvili said, and would not include any personnel changes. The opposition said that parliamentary elections would be called in 45 days, but they have not said when presidential elections would be held.
Shevardnadze's control of the country had been slipping Sunday as leaders of protesters already occupying parliament urged tens of thousands of supporters to seize more organs of state power and some military units defected to the jubilant protesters thronging the capital's streets.
Shevardnadze's resignation came hours after opposition threats to storm his residence if he didn't go. Later, Saakashvili arrived at Shevardnadze's residence, followed later by Russian Foreign Minister Igor Ivanov and opposition leader Zurab Zhvania.
Ivanov flew into Tbilisi on Saturday in an attempt to mediate in the crisis, after the opposition chased out the newly elected parliament. Burdzhanadze, the speaker of the outgoing parliament, proclaimed herself acting president until early elections in 45 days.
Saakashvili led hundreds of his supporters as they shoved their way into the parliament chamber and took it over, scuffling with lawmakers and forcing Shevardnadze to flee, just after the president convened the body.
"The velvet revolution has taken place in Georgia,'' Saakashvili said.
TITLE: Zhirinovsky Ends TV Show With Fistfight
PUBLISHER: The St. Petersburg Times
TEXT: MOSCOW - Campaigning politicians got into a fistfight Friday night after a debate on NTV, with liberal and leftist politicians fending off what they described as an attack by Vladimir Zhirinovsky and his bodyguard.
Tensions rose on NTV's "Freedom of Speech" talk show when Zhirinovsky, the leader of the Liberal Democratic Party, accused retired General Gennady Shpak of the leftist Homeland party of sending his son to his death by allowing him to fight in Chechnya.
Well-known economist Mikhail Delyagin lashed out at Zhirinovsky.
In response, Zhirinovsky angrily promised him a beating, yelling, "Stay after the broadcast!"
After the show ended, Zhirinovsky and his bodyguard walked toward Delyagin and ran into Shpak and Yabloko Deputy Sergei Mitrokhin, Mitrokhin told Ekho Moskvy radio.
It was unclear who threw the first blow, but "in the ensuing brawl, deputies Zhirinovsky and Mitrokhin punched each other in the face. Also fighting were economist Delyagin and Shpak," Kommersant reported.
TITLE: Survey: Most Voters Don't Care About State Duma Elections
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - With a little over two weeks to go before State Duma elections, a poll has found that 12 percent of Russians think that United Russia has performed best in televised campaign debates - despite the fact that the pro-Kremlin party has not actually taken part in the programs aired by the country's three main national television channels, refusing to appear in debates with its opponents.
As well as revealing confusion among voters between debates and appearances on regular news programs, the poll, published last week by the independent VTsIOM-A agency, found that 70 percent of respondents had little or no interest in the election campaign.
Analysts said the results showed just how little Russians care about the parliamentary elections and predicted a low turnout at polling stations on Dec. 7.
The poll, conducted among some 1,600 Russians in 40 regions, showed that 42 percent of respondents have no interest in television debates, billboards, posters or leaflets devoted to the campaign.
Twenty-eight percent said they are not really interested in the campaign, while 23 percent said they are interested to a certain degree and only 6 percent admitted to being interested in the campaign.
Oleg Savelyev, a sociologist with VTsIOM-A, said that interest in the campaign, and television debates devoted to it, is low because many believe the outcome of the elections has already been decided.
"Many people are indifferent to the campaign because they think they already know the results," Savelyev said by telephone Friday.
"Besides, the parliamentary elections have never been considered critical," Savelyev said.
According to most polls, United Russia is the frontrunner in the race, followed by the Communist Party.
Yekaterina Yegorova of political consulting agency Nikkolo M said that this year's campaign had been distinguished by "unprecedented dullness."
TITLE: Knight Frank Seals Merger with PMC
AUTHOR: By Denis Maternovsky
PUBLISHER: Staff Writer
TEXT: MOSCOW - International property consultants Knight Frank have entered the Russian market through a merger with local company Property Marketing Consultants, or PMC, the company announced last week.
"The Russian economy is driving an extremely dynamic property market and the link up with Knight Frank is very exciting," Kirill Starodubtsev, managing director of PMC, said in a statement. "We will be able to offer international clients more sophisticated services in the areas of leasing, acquisition, valuation and investment."
PMC, which will change its name to Knight Frank Russia, will continue to offer realty services from its nine offices around the country. Founded in 1996, it is established in Moscow, St. Petersburg, Yekaterinburg, Kazan, Krasnodar, Nizhny Novgorod, Novosibirsk, Rostov-on-Don and Samara, according to a company statement. Its network of agents cover 60 of Russia's 89 regions, the company said.
London-based Knight Frank, one of the oldest realty consultants in Britain, is best known for its high-end residential property services. However, through its alliance with U.S. real estate practice Grubb & Ellis, it has 200 offices in 30 countries and employs over 9,000 people worldwide. In 2002 the company valued $253 billion worth of land and buildings and had under its management properties worth $33.4 billion. The commercial real estate space it let and acquired totaled 11.4 million square meters.
In the mid-1990s Knight Frank was a consultant to Moscow City Hall on the reorganization of the Rossiya Hotel, as well as the City's ambitious plans to privatize several Soviet-era hotels by 1997.
Christopher Bell, managing director of Knight Frank Europe, said in a telephone interview from London that the merger came at the right time, as the Russian real estate market was increasingly being recognized by Western investors.
"This is a great opportunity for us to enter the huge domestic market, while offering our international capabilities to Russian investors," he said.
Bell added that Knight Frank was "aspiring to become the leading service provider in Russia," but did not cite any further plans for the company expansion in the country.
According to Andrei Petrov, director at PMC, the company will be known as PMC/Knight Frank until the end of the year and will switch to just Knight Frank Russia in 2004.
Petrov said the fact that Knight Frank, "one of the most conservative companies in the field," decided to enter the Russian market, despite the persistent negative stereotypes of the country, signified a definite change of perception.
"When one looks at the growth dynamics here one cannot fail to be impressed," he said.
Gerald Gaige, head of Ernst & Young's real estate advisory services, said the entry into the market of another major international real estate consultant in addition to the "big four" already present here - Colliers International, Jones Lang LaSalle, Noble Gibbons/CB Richard Ellis, and Stiles & Riabokobylko, the local affiliate of Cushman & Wakefield Healey & Baker - signified "another recognition of the Russian market as attractive."
TITLE: New Plant Features U.S. Know-How
PUBLISHER: The St. Petersburg Times
TEXT: St. Petersburg builders gained a new source of modern and affordable building materials with the opening Friday of the Besser concrete masonry block manufacturer in Gatchina, to the south of the city.
The plant was built under the auspices of a federal target program to support private housing initiated in 1996. The Leningrad Oblast government underwrote the loan from a U.S. bank.
The Besser Gatchina plant cost a total of $6 million, according to a press release. The PromStroyProyekt company managed the project and Trest 49 put the plant into operation.
The State Construction Committee has called this plant the most automated facility in the country. The Besser Gatchina plant can produce up to 6.5 million concrete masonry blocks per year. The plant is scheduled to reach planned capacity during the first quarter of operation and eventually employ 100 people.
The American-engineered concrete masonry blocks are a boon for both residential and institutional housing, where strapped budgets are eager to find affordable materials. Besser blocks are through-painted - more than 30 colors are available - during manufacturing, which means that assembled walls require no plaster and no paint. Moreover, blocks make it possible to slash construction time by one quarter and cement use five times. Finished buildings cost less to maintain since they do not chip, absorb moisture or release heat. The blocks can be used for both facades and loadbearing walls.
Specialists predict that Besser Gatchina will attract at least 10 percent of the building materials market in Northwest Russia.
Besser blocks are cheaper than conventional bricks, retain heat better and reduce construction costs, the plant's technical director, Anatoly Polozov, said at the opening Friday. They also offer greater strength, resistance to extreme cold, and longer service life than brick and lightweight aggregate concrete.
TITLE: Kudrin Shy on Stability Fund
AUTHOR: By Alex Fak
PUBLISHER: Staff Writer
TEXT: MOSCOW - The 2004 draft budget passed by the State Duma in the third of four readings Friday may provide another surplus, but changes to the new stabilization fund designed to cushion against plunging oil prices may do just the opposite, many economists said.
According to the draft budget, which Finance Minister Alexei Kudrin called "balanced and durable," revenues from oil when it sells for more than $20 a barrel will go to a stabilization fund scheduled to start operating Jan. 1. Originally designed to neutralize excess capital and cushion against budget deficits when prices collapse, deputies now want the government to be able to spend, with their permission, any amount of money in the fund beyond 500 billion rubles ($16.8 billion) - a level Kudrin says will be reached in two to three years.
"It would make the stabilization fund useless exactly when it is needed the most," said Christopher Ruehl, chief economist for Russia at the World Bank.
Since oil prices will likely be high when the fund passes the 500 billion ruble mark, the government will start spending it just when it is needed to sterilize excessive capital inflows in order to check inflation.
"It was a bad decision. Under these terms, it won't be a 'stabilization fund' any more," said Yevgeny Gavrilenkov, chief economist at Troika Dialog.
Peter Westin, chief economist at Aton, said the 500 billion ruble minimum gives the government a short-term incentive to cut spending and build up the fund - so it can start depleting it.
Another change in strategy is that not all of the current cumulative budget surplus will automatically be transferred to the stabilization fund. Kudrin, originally against using the surplus to pay back debt, now says that some of that money, which is expected to total nearly $6 billion by Jan. 1, can be used for just that.
The 2004 budget also continues the trend of centralizing revenues.
Originally, 60 percent of tax revenues went to the regions and 40 percent to the federal government, but next year, according to the draft budget, that ratio will be inverted, with 56 percent going to the federal government and 44 percent to the regions.
The spending bill also prohibits regions from raising sales taxes, which is bound to hurt wealthier cities like Moscow but which the government says constitutes a double taxation (alongside the value-added tax), says Anton Struchenevsky, an economist at Troika.
As a result, the regions will become more dependent on federal handouts, which, according to Westin, will account for 51.5 percent of all noninterest spending by the state in 2004. This may help prop up poorer regions at the expense of the "donor regions," but it may also put strains on regional budgets by depriving them of revenues, Westin said.
Standard & Poor's warned in September that efforts to smooth imbalances among regions undermine the creditworthiness of the better ones.
Donor regions will also be prohibited from opening budget accounts at commercial banks, a move designed to increase the transparency of regional budget transactions.
Consistently higher spending combined with the shift in the tax burden from manufacturing to oil and natural resources means the budget remains "too dependent" on oil prices, said Troika's Gavrilenkov.
Combined with a lack of restructuring in the public sector, higher spending reduces efficiency in the economy, he said.
The 2004 budget, which passed 238 to 64 with one abstention, calls for economic growth of 5.2 percent and a surplus of $2.8 billion. It puts inflation at 10 percent, the average ruble rate against the dollar at 31.3 to 31.7, and is based on oil averaging $22 per barrel.
The fourth and final reading is slated for Nov. 28.
TITLE: FSB Seizes Papers from Alfa Bank in Tax Probe
AUTHOR: By Valeria Korchagina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Federal Security Service officials seized documents from Alfa Bank's headquarters in downtown Moscow on Friday in an investigation that the bank said it had initiated itself.
The documents are related to several bank clients who are being investigated for possible tax evasion, Alfa Bank said.
"The Alfa Bank security department discovered abuses and violations of the operating rules in the bank's St. Petersburg office," bank vice president Alexander Gafin said on Ekho Moskvy radio on Friday.
"This case has no relation to Yukos or politics, and the investigation was prompted by the bank itself," Gafin said.
The bank said a number of employees from its St. Petersburg office have been dismissed as a result of the security department's investigation.
"The actions of former high-ranking members of the St. Petersburg subsidiary ... were not compatible with their further work in the bank," Alfa Bank chairman Rushan Khvesyuk said in a statement.
"Not a single Russian bank can be protected from such incidents. However, we always strive to be transparent players on the market," he said.
The seized documents are related to an investigation into an Alfa Bank client in St. Petersburg who is suspected of defrauding the state in reimbursements of value-added tax on exports. A number of bank staff have been linked to the case, including the manager of the bank's St. Petersburg office, Vitaly Ryabov, Alfa Bank said. They were subsequently dismissed.
"The documents were seized in Alfa Bank's office because the head office undoubtedly played a role in the scheme," Gafin said. "We even have a suspicion that certain members of the staff have helped the group in St. Petersburg."
Unlike recent raids of oil giant Yukos by armed, masked investigators with search warrants, the FSB visit to Alfa Bank on Friday went rather peacefully.
A police car pulled up to the bank's headquarters at 12 Prospekt Sakharova at 11 a.m. and three plainclothes FSB agents stepped out and disappeared into the building. At 12:20 p.m., they walked out carrying three boxes, Kommersant reported Saturday. There were no officers in masks or with guns in sight.
VAT reimbursements are a sore point for both exporters and law enforcement agencies. VAT fraud tends to be conducted through shell companies, which either report inflated prices for sold goods or file fake documents showing the goods left the country.
FSB officials searched Alfa Bank's St. Petersburg offices in September and found about 50 passports belonging to people who were deceased, being treated in psychiatric hospitals or had reported them lost, Kommersant reported. Investigators have found a number of export companies whose founders share the same names as those in the passports.
Kommersant said all the staff members who were dismissed from the St. Petersburg office are assisting investigators in their case.
TITLE: Duma Gets Tougher on Pursuing Tax Cheats
PUBLISHER: Combined Reports
TEXT: MOSCOW - The State Duma on Friday closed a loophole in the Criminal Code that allowed tax dodgers to avoid punishment if they agreed to pay up, a move that could affect the fate of Mikhail Khodorkovsky.
Khodorkovsky, the biggest shareholder of oil giant Yukos, is in jail pending trial on charges of tax evasion and massive fraud. Two of his key allies, one of them also behind bars pending trial, face similar charges.
Amendments to the code were initiated by President Vladimir Putin long before prosecutors fired their first legal broadside against Yukos in July. They focused on cutting jail sentences for tax evasion while increasing fines.
Putin's proposals left intact a clause sparing defendants prison terms if they pleaded guilty and reimbursed money tax authorities said they owed, along with hefty fines. But on Friday, pro-Kremlin deputies closed the loophole after what Duma sources said was arm-twisting by Kremlin hardliners, believed to be behind the legal assault on Yukos.
They also seemed to draw strength from an angry recent outburst by Putin who said businessmen should pay taxes when due, not only once they are caught by inspectors.
Tax authorities willingly used the "active repentance" clause to collect cash from dodgers. It allowed them to avoid the time-consuming job of compiling evidence for courts. Under the amended code, businessmen whose companies' are found to have evaded tax payments exceeding $75,000 over three years will be subject to steeper fines, but face prison terms cut from seven to six years.
Prosecutors say they can prove Khodorkovsky and key allies at Yukos Platon Lebedev and Vasily Shakhnovsky have evaded taxes running into millions of dollars. Vedomosti reported Friday that Shakhnovsky paid 53 million rubles ($1.8 million) in income taxes. The newspaper cited an unidentified official close to Shakhnovsky and didn't say for which year the taxes were paid.
(Reuters, Bloomberg)
TITLE: Kasyanov Helps Lebedev to Aeroflot Board
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - It took eight months, some $150 million and the personal intervention of the prime minister for Alexander Lebedev to get a seat on Aeroflot's board.
Lebedev, whose National Reserve Bank bought Chukotka Governor Roman Abramovich's 26 percent of the flagship carrier in March, was one of three NRB representatives elected to the airline's 11-member board at an extraordinary shareholders meeting Saturday.
The government, which owns 51 percent of the company, lost two of its eight seats. The other two slots went to Aeroflot CEO Valery Okulov and his first deputy Vladimir Antonov.
The vote never would have taken place, however, if Prime Minister Mikhail Kasyanov had not told the property and transportation ministries, who wield the voting rights to the government's stake, to behave.
According to several sources close to the board, the ministries, correctly fearing they would lose seats to NRB, ordered their representatives to vote against electing a new board, which would have foiled Lebedev's efforts to have a say in the company's operations.
When Kasyanov found out about the plan to scuttle the vote, according to the sources, he ordered the ministries to abort it, saying it would not be "in line with sound corporate governance practices."
First Deputy Transportation Minister Alexander Neradko, who is also head of the State Civil Aviation Service, would neither confirm nor deny that such a directive was issued.
"Where did you get that information from?" he said when asked about it after Saturday's vote. "We will work constructively with the new board members," was all he would say.
In a telephone interview late Saturday, Lebedev said the attempt to keep him off the board was indicative of the "general paralysis of our ministries ... ahead of [presidential] elections in the spring."
"I don't see any logic here, this would have meant denying a private shareholder his rights," he said. "We will find out who did it and how."
Lebedev also called the previous board's behavior "outrageous." By failing to convene on numerous occasions, he said, it had neglected issues vital to Aeroflot's future, such as the long-awaited construction of a new international terminal at Sheremetyevo airport.
Aeroflot president and chairman Alexander Zurabov welcomed Saturday's vote, saying getting minority shareholders on board would help "legitimize" its work.
He said one pressing issue for the board is whether or not to approve a plan to acquire six Ilyushin Il-96-300 long-haul jets, a deal that has been under negotiation for years.
Zurabov said he expected the contract to be signed by management in December, meaning the board may have to approve or reject it as soon as next month.
TITLE: Smart Cash is Never Wired
AUTHOR: By Ben Hooson
PUBLISHER: Special to The St. Petersburg Times
TEXT: Editor's note: This is the second of two articles about taking money out of Russia.
MOSCOW - In 2003 any dollar or euro that finds itself in a private pocket in Russia and wants to go home electronically is going to have a hard time. Individuals cannot send hard currency out of Russia by wire or bank transfer without showing a slip to prove that it was bought by them in Russia for rubles, or a stamped currency declaration to prove that they carried it into the country.
A new version of the law on currency regulation and control, now going through the State Duma, should abolish all limits on personal wire and bank transfers in 2004 or 2005. Until then, the smart dollars leave in a wallet, using this year's legal amendment, which raised the limit for cash export to $10,000.
However, you do not need to be Einstein to spot a loophole. Anyone can get an exchange slip by changing dollars into rubles and back into dollars. That is strictly illegal but exchange points away from banks and shopping malls will often collude by issuing a slip, with no currency exchange taking place, for a payment equal to two commissions, as confirmed by a point near Smolenskaya metro in Moscow.
A foreigner who needs to send a large sum abroad and has the necessary paperwork is in a better position than Russians, who can only send out $2,000 per day under current rules.
"Foreigners can receive or send money outside Russia with no limit on the amount, and with or without opening a bank account," said Olga Solodkina, head of customer service at the Moscow subsidiary of Turkey's Garanti Bank.
A foreigner with a passport and valid visa can open a hard currency account in most Russian banks on the spot and use it to send money abroad, but this is not the cheapest or quickest option. The SWIFT inter-bank money transfer system will swallow 10 percent of the sum and delivery speeds vary, according to a consultant at Raiffeisenbank in Moscow.
The recognized international leaders for rapid person-to-person cash transfer without bank accounts, Western Union and MoneyGram, have already divided Russia between them in a Coke-and-Pepsi fashion. Western Union rates are slightly higher, but its network in Russia is bigger (around 2,000 desks). The ballpark rates for both systems are 10 percent for the smallest sums, gradually descending to under 5 percent for several thousand dollars. Transfers can be made worldwide in a matter of hours or even minutes. When you need their services in Russia, you should make for the nearest large bank.
The leading Russian retail banks, except for state-controlled giant Sberbank, are signed up to one or the other of the two systems - for example, Alfa Bank offers Western Union and First Mutual Credit offers MoneyGram. Sberbank has its own hybrid of wire and bank transfer, using the SWIFT system, but without need for the sender or receiver to open a bank account.
Sberbank, the post office and a few private sector banks have developed cash wire services with a focus on internal Russian and CIS transfers.
"Gastarbeiters [guest workers] from the CIS are 75 percent of our transfers, and the average sum is just $300," said Nikolai Gusman, chairman of the Russlavbank board, which set up the CONTACT wire cash system four years ago.
However, CONTACT, and the analogous systems Anelik and Migom, have also set up wire channels with the rest of the world, offering slower transfer times but significantly lower fees than Western Union and MoneyGram (two or three times less for sums up to $500).
CONTACT has over 30 outlets in Moscow and a dense network of corresponding outlets in the United States and most European countries. These outlets tend to target migrant workers who send earnings to families at home in poorer parts of the world.
"We are not talking about people who need to get $25,000 by wire to buy a diamond ring before their girlfriend walks out - transfer speed is not of the essence," Gusman said, but added that CONTACT does offer international cash delivery within 24 hours.
Russlavbank is currently in a legal dispute with Western Union regarding the exclusivity clauses that Western Union offers Russian banks.
The Anti-Monopoly Ministry agrees with Russlavbank and has ordered Western Union to change its contracts, but the multinational is launching an appeal in Russian courts.
TITLE: Industry Investment Plans Set by Cabinet
AUTHOR: By Alla Startseva
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Cabinet approved next year's investment programs, totaling nearly $18.3 billion, into the power, gas and railway sectors on Thursday.
The state monopolies - gas giant Gazprom, the national power grid Unified Energy Systems, the nuclear power concern Rosenergoatom and Russian Railways Co.- account for more than 20 percent of the nation's total capital investments.
Prime Minister Mikhail Kasyanov said it is time for the government to change its approach to preparing investment programs.
"The time has come to finance [these monopolies'] investments by a large scale through the market, as it should be in [private] corporations," Interfax quoted Kasyanov as telling the Cabinet.
But economists say that as long as the government controls them, these vital industries cannot behave according to market forces.
"There is no way for the monopolies to become more effective and be interested in cost-cutting while their markets are not liberalized," said Alexei Moisseyev, chief economist at Renaissance Capital.
Gazprom's investment program met the most criticism from the government.
The Cabinet approved Gazprom's plan to invest 232 billion rubles ($7.7 billion) in 2004, or $1.4 billion more than this year.
Next year Gazprom will step up capital investment by expanding its network of backbone pipelines to fufill export contracts, overhaul facilities and service the company's massive $13 billion debt.
Gazprom is expecting to reach an all-time high net profit of 180 billion rubles this year and has proposed to pay record dividends of 31 billion rubles ($1.04 billion).
The Cabinet declined to approve Gazprom's dividend plans. Energy Ministry Igor Yusufov said the government would recommend Gazprom cut its dividends to 15 to 17 billion rubles.
He said the Cabinet found it unreasonable to pay dividends on more than 10 percent of net profit.
"Dividend policy may be revised downward," news agencies quoted Gazprom CEO Alexei Miller as saying after the Cabinet meeting.
Miller said that Gazprom would increase exports by 4.5 percent in 2004, to 140 billion cubic meters, further boosting its revenues.
"Gazprom is having its golden years due to high world gas prices. However, it is important for the company not to waste this benefit," said Vladislav Metnev, an analyst at Trust Bank.
He said that in 2005 gas prices are expected to fall and that Gazprom should not delay getting rid of non-core businesses and cutting back costs.
The newly created RZD received approval to invest 134 billion rubles ($4.5 billion) next year for upgrades and the purchase of new rolling stock.
The Cabinet also approved investment plans for the power industry - 27 billion rubles for Rosenergoatom, 45 billion rubles for UES's regional energy companies, 21.5 billion rubles for the UES and 23 billion rubles for the Federal Grid Company, or FSK.
TITLE: Danone Fails to Reach WBD Merger Accord
AUTHOR: By Simon Ostrovsky
PUBLISHER: Staff Writer
TEXT: MOSCOW - Merger talks between Russia's largest food group Wimm-Bill-Dann and French food giant Danone have ended, WBD said Friday.
Danone has been negotiating a takeover of WBD, a dairy and juice producer with a market capitalization of $800 million, for two years.
"The two companies could not reach an agreement, and talks were terminated," WBD spokeswoman Kira Kiryukhina said.
Danone could not be reached for comment.
Kiryukhina did not say why the talks had hit a hitch but said WBD is not negotiating with other companies.
Kiryukhina said that the negotiations were not halted in connection with the attack on the Yukos oil company, which sent the market falling in the past two weeks.
Talks failed because the two sides could not agree on a price or on the future of the company and its management, the Financial Times reported, citing sources close to the deal.
WBD refused a Danone proposal to freeze talks for two months but may resume talks sometime next year, the paper said.
According to the article, talks were further complicated by internal disagreements among WBD shareholders.
Roughly two-thirds of the company is owned by management - including chairman David Iakobashvili and CEO Sergei Plastinin - while Danone holds a 7 percent stake which it has been accumulating over the past two years.
Danone has been in negotiation to acquire 68 percent of the company held by top WBD executives.
Danone would have then tried to sell WBD's juice and bottled water branches in a year to concentrate on its dairy arm, media reported this fall.
The failure of the deal is a hard hit for Danone, analysts said.
"Now they're wondering why they were so stingy," Timothy McCutcheon of the Aton brokerage said.
"Danone has not had any top line growth for the past few years, and there are a limited number of opportunities to buy objects that have scale like WBD. They had that opportunity and blew it," he said.
According to McCutcheon, WBD holds a 35 percent stake of Russia's dairy market while Danone's share is in the single digits and only covers the European part of Russia.
"People familiar with the deal have told me they could not agree on what role the current management would play if the company was sold," Alfa Bank analyst Alexander Svinov said.
TITLE: Severstal, Rouge Deal Signed
PUBLISHER: Combined Reports
TEXT: DETROIT - Russian steelmaker Severstal agreed to pay about $215 million for Rouge Industries Inc., the Michigan-based steel company announced Friday.
Rouge, which had previously signed a letter of intent with Russia's Severstal, said the companies signed a purchase agreement for basically all of Rouge's assets.
The U.S. steelmaker has amassed $558 million of debt and lost money in 17 of the past 18 quarters.
The U.S. Bankruptcy Court in Wilmington, Delaware, still must approve the deal, however, and other companies could submit competing bids.
If the sale goes through, it would be the Russian company's first investment in the U.S. steel industry. Severstal is one of Russia's top three steel producers.
Rouge previously asked the court to grant Severstal the right to bid first for Rouge's assets. That proposal was met with objections from U.S. Steel, which said Rouge did not disclose that it received a purchase offer from the Pittsburgh-based steel maker.
U.S. Steel, Rouge's second-largest unsecured creditor, said it remained interested in purchasing Rouge to protect its interest in a 50 percent joint venture making electrogalvanized automotive steel.
A division of the Justice Department also objected to the proposal, saying that Severstal could just walk away without a definitive sales agreement.
"Throughout our deliberations in making our recommendation to the U.S. Bankruptcy Court, the interests of the company's creditors have been paramount," Carl L. Valdiserri, Rouge's chairman and chief executive, said in a statement.
"We have also considered other factors that would bear on the final outcome of the process, including a prospective buyer's ability to satisfy their conditions to closing, the financial stability of the company during the period required to close the transaction and the impact on other stakeholders in this process."
He said Rouge would ask the court to set an expedited bidding period.
The Severstal acquisition is also contingent on the ratification of a labor agreement with the United Automobile workers of America, Rouge said in the statement.
(AP, Reuters, Bloomberg)
TITLE: Two Finns Make Business Fun
AUTHOR: By Eve Heathcoat Amory
PUBLISHER: Special to The St. Petersburg Times
TEXT: Within three minutes of meeting Jukka Timonen, he is leaping in the air, arms folded, legs akimbo karate style. Kari Vatanen, his business partner since 2002, has a split lip which he explains came from a battle with Jukka the night before. Neither man will confess to having lost the play-fight but Kari admits "the force is strong with that one." Not perhaps your most typical of businessmen. Possibly this isn't such a bad thing since Timonen's company, Zerkalo Ltd., founded in 1999, which organizes trips to St. Petersburg and Moscow from Finland, is almost entirely self-run. This requires endless amounts of energy from this native of Finland. Up to three times a month Timonen brings 35 to 40 students aged 20 to 28 to St. Petersburg or Moscow from Finland for five days (six days if they do both cities) and immerses them into Russian life.
Timonen started Zerkalo, which means "mirror," after observing the success his sister encountered when organizing trips to Russia for free for her friends. He wanted to call the company Rasputin Tours but apparently the name was taken; Zerkalo was his second choice. In addition to running Zerkalo, Timonen studies economics at the Helsinki School of Economics and Business Administration. He is clearly more interested in the company than in his studies and when questioned as to when he will complete his degree, he is not forthcoming with an answer. His previous business encounters (which he vaguely describes as being in the IT world) were not very successful and so he decided to capitalize on his sister's good idea and make some cash in the process. Money, however, is clearly not at the top of his agenda - the company charges 160 euros plus the cost of a visa for a five-day trip to St. Petersburg - rather, having a good time is the number one aim. He explains that work in general is inevitably boring, for example taking people to the same bars, clubs and sights time after time, but that if you have to work, this job results in some pretty good times.
The company cooperates with the Erasmus Student Network and, while they provide special tours for Finns, their clients come from all over - from the UK, Canada, the U.S., Germany, Sweden, Japan and France. Apparently when students of a variety of nationalities studying in Finland are asked to name the best thing about Finland, they reply "St. Petersburg!" Ever the pragmatist, if the students want St. Petersburg, Timonen will supply it.
Vatanen is keen to emphasize that he and his partner do not believe in spoonfeeding their clients. They consider Russia a country where some initiative is required and offer groups the opportunity to go off alone.
However, Timonen himself does take part in all activities (except perhaps tours of the cathedrals) and is now well enough established in the city's underground club world to negotiate discounts for his clients.
There are many similar companies in Finland but Timonen describes his rivals as friends "apart from one company, which will remain nameless but which we will annihilate." Very little formal advertising is carried out - a few posters here and there - rather, the businessmen rely predominantly on word of mouth. This method seems to work since Jukka and Kari have plans to expand their company, opening bases in other countries such as Sweden, France and Switzerland. One might expect the business to become increasingly formal if partners must be chosen to head offices in other countries, but Timonen is keen for the company to remain among friends, choosing people he has met through work to run the new branches. His business partner Kari was an early client who was very reluctant to come to Russia. Under pressure from his girlfriend he agreed to go on a tour with Timonen. The trip was such a success that he joined Timonen and the two are now great friends as well as business associates. They both say that the Finnish people harbor many erroneous reservations about Russia, although the comparative price of alcohol is a great draw. While it would be an overstatement to say that Timonen has great ideological plans to alter Russian stereotypes, by bringing foreigners here and introducing them to genuine Russian life, he is inevitably doing so if only by default.
TITLE: Terrorism Feeds Market Jitters
AUTHOR: By Meg Richards
PUBLISHER: The Associated Press
TEXT: NEW YORK - A wave of bombings in Turkey over the past week revived fears of terrorism on Wall Street, but the attacks didn't send stock prices plunging - while the market closed the week with a loss, it drew strength from the steadily improving U.S. economy.
There's no question such acts remain unsettling for investors, but analysts say the economy's overall health plays a far greater role in determining the market's direction. Positive reports on employment and the economy helped limit losses.
Still, the violence in Istanbul resonated with investors, who saw the markets drop sharply following the terrorist strikes of Sept. 11, 2001. For many it was a reminder of the economy's vulnerability, said Todd Salamone, director of trading at Schaeffer's Investment Research in Cincinnati, Ohio.
"When we see attacks on other people's soil, it brings that fear back and may cause investors to take action," Salamone said. "But they might not act as urgently as they would if it were happening here."
The fact that the attacks were not domestic and that they happened in a country that is not a large trading partner with the United States lessened the blow considerably, said Richard J. Nash, chief market strategist at Victory Capital Management. Although Wall Street might not see Turkey as significant, it is an important political ally of the West.
"Not to sound callous to what has gone on in Turkey... but from an economic standpoint, most investors are focused on the domestic economy," Nash said. "That said, terrorism is certainly being talked about on trading floors more than it was a week ago."
In addition to the attacks, economists said trade issues with China, concern over protectionist policies and a weakening dollar also contributed to the week's declines.
Skittish investors had many reasons to seek safer positions in the bond market and in value stocks.
For many, however, the unpredictability of terrorism remains a most unnerving factor, said Sherry Cooper, chief economist at BMO Nesbitt Burns. The uncertainty of what might happen next, and whether the next strike might be closer to home, could cause nervousness for some time.
"If all that's going to happen is what happened, then that's fine. But none of us know if this is all there is," Cooper said.
"If you get a major event on U.S. soil, there's no question that it would cause a great deal of upset. But we saw from 9/11 the resilience of the economy."
When terrorists struck the World Trade Center and the Pentagon, killing nearly 3,000 people, the U.S. economy was already in recession. Investors rushed to sell stocks after trading resumed Sept. 17, 2001. The Dow Jones industrial average lost 684.81 points, or 7.1 percent, that day, closing at 8,920.70. The Nasdaq composite index shed 6.8 percent and the Standard & Poor's 500 lost 4.9 percent.
"It seemed like everything just stopped," recalled Salamone, of Schaeffer's. "You think of workers, and the distraction of being glued to the TV... you don't exactly go out and buy a car or buy a new dress when something like that happens."
Now that it has happened, the market's reaction to domestic terrorism is likely to be more contained in the future, "because it's less of a surprise," said Josh Feinman, chief economist for Deutsche Asset Management.
"It's unfortunate that this is the world we live in now, but it's reality," Feinman said. "People recognize that they are going to have to adjust to the fact that we're going to see terrorist strikes from time to time."
The Dow ended the week down 140.15, or 1.4 percent, finishing at 9,628.53. The Standard & Poor's 500 fell 15.07, or 1.4 percent, during the week, to 1,035.28.
The Nasdaq composite index declined 36.38, or 1.9 percent, to close the week at 1,893.88.
The Russell 2000 index, which tracks smaller company stocks, ended the week down 7.03, or 1.2 percent, closing at 525.93.
The Wilshire 5000 Total Market Index, which tracks more than 5,700 U.S.-based companies, ended the week at 10,098.88, down 145.78 from the previous week. A year ago, the index was at 8,584.05.
TITLE: Balancing Policy Objectives and Lesser Issues
AUTHOR: By Stephen Sestanovich
TEXT: In the last decade it became commonplace for U.S. diplomats to criticize a foreign government by saying that some outrageous action it had taken would not sit well with global investors. Obviously the world's superpower can't take on all the hard issues, so why not get Moody's to help it out?
The Bush administration continues to treat the jailing of billionaire Mikhail Khodorkovsky in this spirit, by fretting aloud about its impact on business confidence. White House and State Department officials think they can't be totally silent as Russia takes an authoritarian turn, but they don't want to jeopardize President Vladimir Putin's support on front-burner national security problems.
Unfortunately, markets can't and won't do the work of policymakers. In a battle over who owns the biggest and choicest assets of the Russian economy, Putin and his entourage aren't swayed by short-term swings in stock prices; they're playing for bigger stakes. And Western businessmen don't care whether the oil company they invest in is controlled by the Russian state or, in Putin's words, an "appointed billionaire." They may even prefer the former. The billionaire's tenure, we now know, can be uncertain.
For the U.S. government, the Khodorkovsky affair is not about corporate governance but about whether Russia's political system is moving toward the Western mainstream. Were Putin simply an aggressive trustbuster, insisting that the deals giving Russia's oligarchs their wealth be reexamined, he could credibly claim the mantle of Teddy Roosevelt. But clapping a critic and rival in jail puts him more in the tradition of Leonid Brezhnev - or Robert Mugabe.
Bush administration officials have convinced themselves that these events are part of a long, slow transition from communism, whose meaning won't be clear for years - so don't bother about them. Maybe, but sometimes history's milestones come bunched together. Russia's next big one could be just weeks away, in the parliamentary elections of Dec. 7.
Not so long ago, this round of elections was expected to mark a major reverse for the Communist Party. Now it looks as though if anyone is put out of business, it will be Russia's only genuinely democratic and reformist parties, the Union of Right Forces and Yabloko. Deprived of Khodorkovsky's contributions and forced to campaign under an absurd media law designed to block coverage of Putin's critics, these parties hover just above the 5 percent minimum needed to get seats in the new parliament. Seeing their weakness, Putin's camp is trying to finish them off - and the possibility of a phony vote count cannot be excluded.
The Bush administration may wish it weren't so, but whether Russian democrats are swept off the national political stage or not could depend on how Putin reads foreign reaction to the Khodorkovsky affair. Rather than expecting a pass, he ought to fear that his democratic bona fides are in doubt - and need to be revalidated. Putin doesn't like criticism, but because international legitimacy matters to him, he doesn't ignore it.
Bush is rightly proud of the Russian-American relationship that he and Putin have created. The two of them have shown that cooperation between Moscow and Washington serves both sides' national interests. They have done so in part by ignoring disagreements over peripheral issues, focusing instead on major strategic objectives.
Yet the Bush administration has overlearned two of the lessons of its success. It seems to believe that Russian domestic politics don't affect Russian-American relations - that only Putin matters, and he'll always deliver. In Moscow in the past year, however, the biggest boosters of cooperation with Washington have been the same figures who were the biggest losers in the past month: Mikhail Khodorkovsky, now in jail, and Alexander Voloshin, the ousted presidential chief of staff. If Bush thinks this change is of no consequence, let him ask his staff to show him a sampling of what the new crowd has said about the United States. He won't like it.
The Bush administration has clearly concluded that the only way to get results with Russia is to keep top-tier foreign policy objectives separate from lesser issues. It wants to save its chits with Putin to win his help on Iraq, Iran and North Korea.
This approach misreads Russian calculations and underrates U.S. influence. The single most important factor that has brought Russian policy toward Iran's nuclear program closer to ours is the administration's success in bringing our European allies even closer. Russia can't take a different line without isolating itself. The same is true of North Korea: Russia will stick close to the United States because China is now even closer. Iraq is a different story: the Bush administration has not won the support of others for its policy, and Russia has felt freer to choose for itself. Putin has sometimes helped-and sometimes let his friend Bush down badly.
The past decade showed that the United States cannot want this relationship to work more than Russia does. Bush should want Putin to be a close partner of the United States. But if the president feels he can no longer speak openly about negative trends in Russia, then a basic ingredient of a healthy and balanced Russian-American relationship has already been lost.
Stephen Sestanovich is a senior fellow at the Council on Foreign Relations and a professor of international diplomacy at Columbia University. He was U.S. ambassador at large for the former Soviet Union from 1997 to 2001. This comment first appeared in The Washington Post.
TITLE: Putin Trades Yukos Chief for Land Deal
AUTHOR: By Yulia Latynina
TEXT: President Vladimir Putin showed up at the Nov. 14 congress of the Russian Union of Industrialists and Entrepreneurs. This was a little inconsistent, as immediately after Mikhail Khodorkovsky's arrest the president called on everyone to calm down and announced that he would not be meeting with the oligarchs to discuss the matter.
When the president entered the packed hall in Moscow's House of Unions, he was greeted with prolonged applause that escalated into a standing ovation. For Putin had not simply dropped by. He had come bearing gifts: namely, the cancellation of a provision in the Land Code that required private enterprises to purchase the land they are located on by Jan. 1, 2004.
The twisted tale of this provision provides a good example of administrative idiocy Russian-style. It began with passage of the Land Code, which contains a liberal clause (intended to strengthen property rights) on the purchase of commercial land for a nominal price: five times the annual land tax paid on the property. At the time, land tax rates were extremely low.
Then three processes were set in motion independently of one another. The purchase price rose, first to 17 and then to 30 annual land tax payments. Second, the Finance Ministry raised the base land tax rate to offset falling budget revenues. And third, local authorities began to differentiate land tax rates within cities.
As a result, big business was suddenly presented with a whopping bill. The land beneath GAZ would now cost $100 million. Mechel, a holding company built around the nation's sixth-largest steel mill, would have to pay $180 million, while Sverdlovsk-based Uralmash would owe $60 million.
A lot of businesses simply don't have that kind of money. Which is to say that the government had stumbled across a means of redistributing property that makes the Prosecutor General's Office pale in comparison. This would have let the oligarchs off the hook
The thing is Russia has no oligarchic class as such. The oligarchs are individuals who either try to swallow one another or refuse to be swallowed.
In Davos in 1996, Khodorkovsky stayed in a room next to Communist Party leader Gennady Zyuganov. At the time, Zyuganov considered himself a shoe-in for the presidency. As they were walking down the corridor, Zyuganov praised Khodorkovsky. "Good man," he said. "You're doing good work. When I come to power, nothing terrible will happen to you. We need good general directors."
A few hours later, a united cabal of oligarchs gave Zyuganov the thumbs-down. They were short of money but long on audacity. Most of all, they wanted to be owners of private property, not general directors.
Now they have money, and the more money you have the less daring you are. "Khodorkovsky got mixed up in politics," they say. "He refused to cut a deal with the Kremlin," they say, "Unlike us."
What do you expect from the oligarchs? After all, the RSPP is headed by a "red director," Arkady Volsky, and the Chamber of Commerce is chaired by an old lefty, Yevgeny Primakov.
Yulia Latynina is a presenter of "24" on RenTV.
TITLE: Al-Qaida Sparks Are Spreading in Underbrush
AUTHOR: By Daniel Benjamin
TEXT: Exactly who first conceived the tactic of multiple-strike terrorist attacks is not known, but among jihadists, the idea is at least a decade old. "Boom, boom, boom and America is on standby," one participant in the 1993 conspiracy to destroy landmarks, bridges and tunnels in New York was fond of saying to his fellow plotters. Destroying several targets at once, they believed, would produce a psychological impact far out of proportion to the actual violence - and paralyze citizens and policymakers with fear.
Theory was turned into practice with the 1998 destruction of the U.S. embassies in Kenya and Tanzania, which sent a message that no place, no matter how out of the way, was truly safe. The two recent double bombings in Istanbul - which killed more than 50 people at two synagogues, the British consulate and the local headquarters of Britain's HSBC Bank - extended the practice into another dimension. Now, no time is safe. An explosion may not just be a catastrophe in its own right, but a herald of more to come. For Turks - and many around the world who saw the carnage - the sense of vulnerability has been multiplied.
With all the dread and bloodshed, the bombings raise numerous questions about the status of the war on terrorism and the state of al-Qaida, which appears to have played a role - though still an unclear one - in the violence. If the central front in that war is Iraq, pace the Bush administration, why are bombs exploding in Turkey and, just weeks ago, in Saudi Arabia?
Some questions can be answered readily. In killing Turks, Britons and Jews, the terrorists hit three groups at the top of their target list. Turkey, a country that suffered an estimated 35,000 deaths from terrorism during the struggle between the government and a separatist radical Kurdish group, has long been in jihadists' gun sights. It is America's closest friend and only NATO ally in the Islamic world, a security partner of Israel and an avatar of secularism among Muslim nations. It stands for everything the militants loathe.
The moderate Islamism of its ruling party buys no friends among radicals, who remember that the Turkish state that rose from the ruins of the Ottoman Empire helped plunge Muslim believers into their modern nightmare when it abolished the caliphate in 1924. Osama bin Laden reminded us of this in his first video message after the 9/11 attacks, declaring that "since nearly 80 years we have been tasting this humiliation." Militants long to re-establish that institution, which combined king and pope in a single person.
While Palestinian terrorists have murdered Israelis and other Jews for decades, Jewish targets have just recently climbed high on the jihadist list. Though bin Laden has inveighed against the "Zionist-Christian alliance," his decision to attack Israelis came only after he recognized that the Muslim world was transfixed by images from the second intifada. Al-Qaida tried with little success to gain a foothold in the West Bank and Gaza. It then turned its attention farther afield, detonating a truck bomb outside a historic synagogue on the Tunisian island of Djerba in April 2002 and, seven months later, destroying an Israeli-owned hotel in Mombasa, Kenya, while failing to shoot down an Israeli jet with an SA-7 missile.
Britain has been a target since bin Laden's followers reconceived their struggle as one against the United States and the West, after the Soviet defeat in Afghanistan and the deployment of U.S. troops to Saudi Arabia for the 1991 Persian Gulf War. As America's closest ally, Britain has been viewed by fundamentalists as a co-conspirator in an effort to destroy Islam. In the early 1990s, British buildings were among those al-Qaida eyed as targets in Nairobi. In February, London's Heathrow Airport was ringed with troops and armored vehicles because of intelligence that terrorists were going to fire a shoulder-fired missile at a plane.
It would be myopic, however, to see the attacks as a matter of checking targets off a list. By striking during President Bush's visit to London, the radicals hijacked the media glare to send a well-timed message of impunity to the leaders of the coalition occupying Iraq. The attacks rebut the administration's contention that it had taken the fight to the terrorists and would destroy them as they gravitated to Iraq - what might be called the flypaper theory of history. "You cannot contain this struggle," the terrorists seemed to say to Bush and British Prime Minister Tony Blair. "Not only can our forces kill your troops in Iraq, but we can bring instability to the broader region and beyond."
More difficult than explaining targets is fingering the actors. An obscure Turkish group called the Islamic Great Eastern Raiders Front said it had carried out the synagogue attacks, while someone claiming to speak for al-Qaida took responsibility for the consulate and bank blasts.
With a large number of al-Qaida leaders dead, incarcerated or, as in the case of bin Laden and his deputy, Ayman Zawahiri, on the run, the organization's capabilities are increasingly in question. Yet the grisly effectiveness of the nearly simultaneous truck bombings suggest al-Qaida.
The wave of terrorism that has followed 9/11 has become the most lethal in postwar history and may be gaining speed - without counting violence in Iraq, where the extent of jihadist activity remains unclear. Since the early '90s, al-Qaida has given money, materiel and know-how to radical Islamist groups in Kashmir, Chechnya, the Maghreb, Southeast Asia and elsewhere. Many post-9/11 attacks were carried out by groups that were integrated into al-Qaida network's - for example, Jemaah Islamiyah's bombings in Bali and Jakarta or the takeover of the Moscow theater by Chechen terrorists.
Of late, though, a new pattern appears to be emerging. Islamist groups that have not historically had ties with al-Qaida seem to be adopting the group's ideology and methods. Instead of targeting their own governments, they have turned to attacking "the far enemy" - America, other Western countries and Jews. This, they believe, will ultimately cause the West to withdraw support from moderate Muslim regimes and allow a radical seizure of power.
The May 16 attack in Casablanca, in which 29 people were killed, was a harbinger of this trend toward the "relocalization" of jihadist violence. The Salafiya Jihadia, a group centered in the city's Sidi Moumen slums with little prior contact with al-Qaida and no history of targeting foreigners, set off bombs outside buildings frequented by Westerners and Moroccan Jews. Moroccan authorities later declared that al-Qaida supplied money and perhaps training, but it was clear that hardened vets of the Afghan training camps were not the ones who executed the attacks.
That showed in the results. The Jewish community center that was bombed was empty because it was a Friday night. Other explosives missed their marks. This was a far cry from the standards of al-Qaida's "success freaks," as Bruce Hoffman of the RAND Corp. has called them. Similarly, the Riyadh attack earlier this month killed 17 mostly non-Saudi Arabs; the terrorists evidently did not realize that Boeing workers had moved out of the housing compound years before.
Although Saudi officials blamed al-Qaida for the attack - all violent foes of the Saudi regime are now tagged al-Qaida - it may be that al-Qaida has done no more than call on all radicals to strike where they can to show that the jihadist movement remains alive and dangerous.
A trend toward relocalization could be good news or bad. If the form of terror we face in the years ahead is of the Casablanca and Riyadh variety, then we might be able to live with it. But if the Turkish attacks represent an unexpected success from core al-Qaida operatives, repeat attacks like these would shred public confidence.
We also should not make the mistake of seeing Istanbul as the upper boundary of potential violence. In Europe, radicalism is spreading among native-born Muslims who are alienated from both the moderate traditions of their parents and the often-unwelcoming societies in which they live. Easy access to high-quality education in engineering, chemistry and biology would put considerable destructive power in the hands of such diaspora jihadists. Nine out of 10 successor groups to al-Qaida could turn out to be incompetent, but if the remaining one has such skilled operatives, its organization could be more dangerous than any we face now.
All of this may still be off in the future. For now, it is disquieting enough that the sparks thrown off by 9/11 and other al-Qaida attacks appear to be catching. This, together with polls showing a deepening of anti-American sentiment in Muslim countries and the ever-more polarizing rhetoric of Islamic clerics around the world, suggests that we are losing ground on some key fronts, despite all the arrests of al-Qaida operatives. Wherever he is, bin Laden must be pleased.
Daniel Benjamin is a senior fellow at the Center for Strategic and International Studies in Washington. This comment first appeared in The Washington Post.
TITLE: Relief at That It's All Over for Shevardnadze
TEXT: TBILISI, Georgia - For one awful moment, I thought the army had begun firing on protesters outside parliament. There was a series of deafening explosions and people craned out of windows to see what was happening. Then the night sky erupted in a shower of pink and green and white sparks as dozens of fireworks were set off above the capital.
Georgians are calling it their velvet revolution. On Saturday, opposition supporters stormed the parliament building as President Eduard Shevardnadze was opening the first session since an election condemned by opposition leaders and international observers as seriously flawed.
They broke down the doors, clambering over desks and members of parliament to get to the podium. Shevardnadze was swiftly removed by bodyguards and hustled into a car before he was driven off along a side street. Mikheil Saakashvili, the opposition leader, took a swig from the president's mug of tea before addressing the floor.
"We want this to be a peaceful revolution," he said. "We want the president to resign, but we beg that no blood is shed."
Shevardnadze continued to resist the calls to step aside, holing up in his palatial out-of-town residence. But a day later, he bowed to the inevitable. Russian Foreign Minister Igor Ivanov flew into Tbilisi to mediate and on Sunday evening, Shevardnadze agreed to leave office.
Thousands celebrated across the capital on Sunday evening, waving the red and white cross of St. George that's been adopted as the symbol of a new Georgia. Pensioners, children, families, students and crowds of friends laughed and cheered, clapped and hugged each other with joy.
Among them was a 25-day-old baby girl, Ana, whose parents had brought her to the giant street party in a battered pram. "We wanted her to be here," they said. "We're just so happy. Now she won't have to lead the miserable lives we have led."
So much remains to be done in Georgia. Elections must be called to choose a new parliament and a new president. Nino Burdzhanadze, the bespectacled speaker of parliament, has assumed presidential powers until then. She has appealed for calm following the extraordinary events of the last few days.
In an interview with the 24 Hours newspaper, Saakashvili called Shevardnadze a great man and hailed his courage for resigning. In the West he will be remembered for his role in ending the Cold War. But in Georgia, a once affluent nation that's now struggling to keep its economy afloat, the view is a little different. Here, there is simply an overwhelming sense of relief that the Shevardnadze era, which they blame for chronic levels of poverty and corruption, has at last been put to rest.
Chloe Arnold is a freelance journalist based in Baku, Azerbaijan.
TITLE: Chris Floyd's Global Eye
TEXT: Gag RuleAlthough the "conquest" of Iraq has unraveled into murderous chaos, at least the Bush Regime is winning its ferocious battle against another dangerous foe: American soldiers who were captured - and tortured - by Saddam Hussein's forces in the first Gulf War.
The Bushists' relentless fight to block the American captives from receiving any compensation from Iraq has eerie echoes of a similar move, more than 50 years ago, to prevent American victims of Japanese torture from filing legal claims against their tormentors. The two cases seem tied by a common ulterior motive: protecting war booty used as slush funds for "black ops" and crony kickbacks.
The 1951 peace treaty "ending" the American post-war occupation of Japan (of course, U.S. troops are still there), contained a curious provision, devised in secret by U.S. envoys. It blocked almost all claims for reparations "arising out of any actions taken by Japan and its nationals in the course of the prosecution of the war." Considering that tens of millions of people were killed, robbed or forced into slave labor by Japanese forces, this shadowy codicil was generous indeed. Thus for half a century, American victims of Japan's slave labor program have had their claims to compensation stymied by their own government. Why such legal protection for indefensible evils? U.S. historian Chalmers Johnson tells the sorry tale in this week's London Review of Books.
As Japanese armies rampaged through Asia, they grabbed a staggering amount of loot from the conquered populations. New historical research reveals that Emperor Hirohito set up a secret organization, Golden Lily, to keep this swag under imperial control, dispatching various family members to oversee the operation. Civilian slaves and POWs were used to build elaborate underground stashes throughout the conquered territories; when sites were completed, the workers - and often the Japanese officers supervising them - were buried alive with the treasure, to ensure secrecy.
After Japan surrendered in 1945, American forces found some of these hoards, worth billions of dollars. Washington decided to keep the finds secret; publicizing their existence would have destroyed the fiction at the heart of the American-installed post-war government: that the Emperor - and most of the Japanese ruling elite - had been nothing but powerless figureheads in the wartime militarist regime.
Instead, Washington used the money to bankroll covert operations by the newly formed CIA: an untraceable slush fund, free of Congressional oversight, stashed under various fronts in 176 banks in 42 different countries. Over the years, the money helped the Agency overthrow governments, subvert elections, smuggle cash to despots like Saddam Hussein, arm terrorist paramilitaries in Latin America, establish its own venture capitals funds to infiltrate the business world, and so on and sickeningly on.
One of Golden Lily's chief bagmen, gangland chief Yoshio Kodama, used his stolen billions to bankroll the pro-American political faction that has controlled Japan for almost 54 years. As Johnson reports, the gangster then "went to work for the CIA and later became the chief agent for the Lockheed Aircraft Company, bribing and blackmailing politicians" to buy U.S. military hardware.
So when it devised the 1951 treaty, Washington couldn't allow compensation lawsuits that would delve into Japan's wartime - and post-war - finances. The money that might have been used for reparations had already been confiscated for the CIA. Many of the Japanese officials involved in snatching this blood-soaked loot were now pro-American statesmen spending billions on U.S. weapons and cutting sweet deals with U.S. corporations. Tossing a few scraps of compensation to the broken, ravaged victims of war crimes just wasn't good for business.
Now comes George W. Bush - a proud scion of the CIA, whose headquarters bears his father's name - carrying on this tradition. Last year, a U.S. judge awarded American captives tortured by Saddam almost $1 billion in compensation, to be taken from Iraqi assets frozen in the U.S. since the 1991 Gulf War. But Bush has thus far successfully blocked the award. Why? Because that money doesn't belong to Iraq anymore; it belongs to Bush.
Just before invading Iraq in March, Bush signed an executive order confiscating those assets. At first he insisted that this money was desperately needed for the "reconstruction" of the country he was destroying. But when the Gulf War victims said they'd be happy to postpone the award - for years if necessary - to help Iraq get back on its feet, the Regime suddenly changed tack.
Bushist minions now maintain that the money is gone, spent on, yes, "reconstruction," The New York Times reports. In other words, it's been given to Dick Cheney's Halliburton, the Bushist fiefdoms of Bechtel and Carlyle, and to arms merchants like Yoshio Kodama's old outfit, Lockheed (now grown into the gargantuan oligarchopoly Lockheed Martin).
But of course, no one really knows where the money has gone. After all, the Bushists maintain a bewildering array of slush funds for their ever-growing range of "black work," as Stalin liked to call it: assassinations, paramilitary operations by irregulars in mufti, bribes for warlords, torturers, Central Asian despots. As Slate.com reports, even the recent $87 billion war pork bill contained $9 billion in slush money for Don Rumsfeld to spend at his whim: dark dosh for the various "secret armies" he's gathering, the Los Angeles Times reports.
Money for torturers, despots, and cronies: but no money - no law, no justice - for America's own defenders, drowned in the flood of greed and dominion. Behind all the scripted rhetoric about freedom and "values," this is the reality of Bush's imperium.
TITLE: Israel May Abandon Road Map
PUBLISHER: The Associated Press
TEXT: JERUSALEM - Israel will consider relocating some settlements and laying down borders for a Palestinian state if the U.S.-backed "road map" peace plan fails, Prime Minister Ariel Sharon said Sunday.
Sharon has for decades promoted growth of settlements in the West Bank and Gaza Strip, and Israeli opposition and Palestinian leaders were skeptical. Still, Sharon is under increasing pressure to show results of his pledge to restore peace and security for Israelis after three years of violence with the Palestinians.
Sharon told the Yediot Ahronot daily he would present details of his plan soon.
Under Sharon's plan reported Sunday, Israel would draw its own border if peace efforts bog down. Israel would also uproot smaller settlements, and residents would be moved to the Negev Desert or to larger settlement blocs in the West Bank. Israel would withdraw from Palestinian towns and release some of the thousands of Palestinian prisoners it holds.
The border would run in part along a security fence Israel is building. The barrier, which would dip deep into the West Bank to include settlements on the "Israeli" side, has incensed the Palestinians, and the United States has also been increasingly critical.
TITLE: Two U.S. Troops Killed As Pattern Of Violence Emerges in Iraq
AUTHOR: By Mariam Fam
PUBLISHER: The Associated Press
TEXT: MOSUL, Iraq - Iraqi teenagers dragged two bloodied U.S. soldiers from a wrecked vehicle and pummeled them with concrete blocks Sunday, witnesses said, describing the killings as a burst of savagery in a city once safe for Americans.
Another soldier was killed by a bomb and a U.S.-allied police chief was assassinated.
The U.S.-led coalition also said it grounded commercial flights after the military confirmed that a missile struck a DHL cargo plane that landed Saturday at Baghdad International Airport with its wing aflame.
Witnesses to the Mosul attack said gunmen shot two soldiers driving through the city center, sending their vehicle crashing into a wall. The 101st Airborne Division said the soldiers were driving to another garrison.
About a dozen swarming teenagers dragged the soldiers out of the wreckage and beat them with concrete blocks, the witnesses said.
"They lifted a block and hit them with it on the face," said Younis Mahmoud, 19.
It was unknown whether the soldiers were alive or dead when pulled from the wreckage.
Initial reports said the soldiers' throats were cut. But another witness, teenager Bahaa Jassim, said the wounds appeared to have come from bullets.
"One of the soldiers was shot under the chin and the bullet came out of his head. I saw the hole in his helmet. The other was shot in the throat," Jassim said.
Television footage showed the soldiers' bodies splayed on the ground as U.S. troops secured the area. One victim's foot appeared to have been severed.
The frenzy recalled the October 1993 scene in Somalia, when locals dragged the bodies of Marines killed in fighting with warlords through the streets.
In Baghdad, Brig. Gen. Mark Kimmitt confirmed the Mosul deaths but refused to provide details.
"We're not going to get ghoulish about it," he said.
The savagery of the attack was unusual for Mosul, once touted as a success story in sharp contrast to the anti-American violence seen in Sunni Muslim areas north and west of Baghdad.
Recently, attacks on U.S. troops have increased in Mosul, raising concerns that the insurgency is spreading.
Simultaneously, attacks have accelerated against Iraqis considered to be supporting Americans - such as policemen and politicians working for the interim Iraqi administration.
Despite the ongoing violence, U.S. officials said the occupation was going well.
"If you look at the accomplishments of the coalition since March of this year, it has been enormous," Marine General Peter Pace, vice chairman of the Joint Chiefs of Staff, said in Tikrit.
TITLE: DNA Tests ID Istanbul Suicide Bomber
PUBLISHER: Combined Reports
TEXT: ISTANBUL - Police have used DNA samples to confirm the identity of an Islamic militant who rammed an explosives-laden pickup truck into the British consulate in Istanbul, a Turkish newspaper said Monday.
The man was identified as Feridun Ugurlu, a Turk believed to have fought with Islamic radicals in Afghanistan and Chechnya, the Milliyet newspaper said, citing unidentified police sources.
Police, who have claimed that media leaks are hampering the investigation, refused to confirm the report.
Several suspected accomplices of Ugurlu and another bomber who struck offices of London-based HSBC Bank were expected to be brought before a court to face charges Monday, the newspaper said. Eighteen people were detained after the attacks, which killed 30 people, including the bombers.
Before the attacks, Ugurlu was named by the Turkish media as an accomplice to two suicide bombers who attacked synagogues in Istanbul on Nov. 15, killing 23 people.
At least three groups or individuals with purported links to the al-Qaida network claimed responsibility for the attacks, although Prime Minister Recep Tayyip Erdogan said Sunday it was too early to confirm al-Qaida involvement.
Erdogan did, however, promise that those responible would be brought to justice.
"Citizens with links abroad have carried out the attacks. Let's hope that there are no others, but if there are, authorities are pursuing them and I am sure they will be caught," he said.
Two pickup trucks used to attack the Neve Shalom synagogue and the HSBC bank were bought by Ugurlu from the same dealer, Milliyet reported.
One of the pickup trucks was registered in the name of Ugurlu's father, Ahmet Ugurlu, who has been interrogated by police, the paper added.
The bodies of the three British victims of Thursday attack, including Consul General Roger Short, were expected to be flown back to Britain in the coming days, British officials said. An Australian woman and two Armenians were also killed in the bombings, but most victims in all four bombings were Turkish Muslims.
Erdogan vowed Sunday that the attacks would not dissuade his nation from seeking to become the first Muslim member of the European Union. That way, Turkey - already the only Muslim nation in NATO - could become a bridge of understanding between East and West, he said.
Meanwhile, Turkish intelligence officials confirmed media reports that the county's top political and military leaders had ordered improvements in coordination between the MIT national intelligence service, police and the paramilitary gendarme force.
Turkey has placed its security forces on high alert and has ordered its anti-terrorism and intelligence agents to cancel vacations. Foreign governments, including the United States and Britain, cautioned that terrorists could strike again and issued travel warnings to their citizens. Britain has sent anti-terrorism investigators to Turkey, and Israeli media reported that Jerusalem also dispatched specialists.
That came amid media reports Sunday that intelligence lapses may have allowed Islamic militants the time to plan and launch the bombings.
Turkish intelligence units were working hard to piece together the workings of what appeared to be well-coordinated terrorist operations. Officials said authorities were examining a report that more than 1,000 Turkish radicals who fought in Chechnya, Bosnia and Afghanistan were in the country. Some of the radicals are believed to have trained in al-Qaida camps.
Silent protests were held in cities across Turkey, including Istanbul and the capital of Ankara. Organized by trade unions and nongovernment organizations, the protests were intended to express sympathy for the victims and indignation over the attacks - the deadliest peacetime violence here in a generation.
Reports said synagogues in Turkey had canceled Sabbath services Saturday, but funerals for two police officers and a well-known stage actor who died in the attacks were held. The actor, Kerem Yilmazer, was killed when he stopped his car at a traffic light near the HSBC bank.
(AP, AFP)
TITLE: World Terror Cells Have Single Source
AUTHOR: By Paul Haven
PUBLISHER: The Associated Press
TEXT: RISHKHOR, Afghanistan - From Bali to Istanbul, New York to Casablanca, the ferocious chain of terror that has choked the world since Sept. 11 has stemmed from a special source - camps like this one just south of Kabul, where thousands of young men were indoctrinated in Osama bin Laden's brutal vision.
An Afghan link can be traced to nearly every major terrorist attack since the 2001 strikes in New York and at the Pentagon, although not all have been carried out directly by bin Laden's al-Qaida, U.S., European and Asian officials told The Associated Press.
Attacks like the ones in Turkey this past week, and others in Indonesia, Morocco, Tunisia and the Philippines, appear to have involved homegrown groups, sometimes working hand-in-hand with al-Qaida.
Between 15,000 and 20,000 people are believed to have trained at Afghan camps since 1996, when bin Laden returned to Afghanistan from Sudan, said a U.S. counterterrorism official, speaking on condition of anonymity.
Since the U.S.-led war in Afghanistan, Rishkhor and other al-Qaida camps have mostly been reduced to rubble, but the men who trained in them - including, allegedly, the two Turkish suicide bombers who detonated last week's synagogue explosions - are still pursuing their legacy of death.
"The Afghan experience was important for traditional training, indoctrination and networking," said Paul Pillar, a U.S. intelligence analyst, speaking at Columbia University last week. "Those who were trained are now training the next generation."
How many of these attacks are being directed by al-Qaida's senior leadership is unclear. Certainly, al-Qaida is considered to have had a direct hand in two attacks this year in Saudi Arabia, bin Laden's homeland and his avowed enemy.
U.S. counterterrorism officials suspect al-Qaida's former No. 3 man, Khalid Shaikh Mohammed, was directly involved in last year's bombing of an ancient Tunisian synagogue. Mohammed was arrested in Pakistan in march. In other instances, al-Qaida seems to have acted as inspiration for attacks.
The Afghan war deprived al-Qaida and other Islamic militant groups of their main operating base, making it far more difficult to plan and organize large-scale attacks like Sept. 11. But as followers poured out of Afghanistan under heavy U.S. bombardment, they created a diaspora of destruction the world is today struggling to contain.
Militants who trained in Afghanistan have returned to Turkey, Pakistan, Morocco, Chechnya and countries throughout Europe and the Middle East, possibly including Iraq, authorities say. The United States and Canada have also arrested men allegedly trained in the Afghan camps.
The decentralization has made it harder for intelligence services to track down the extremists, said Pillar, the U.S. analyst: "It's harder to follow a bunch of different groups coming at you from different directions."
Some 3,500 men passed through Rishkhor, a sprawling complex of barracks and training fields about 10 miles south of Kabul, Mullah Mohammed Khaksar, the Taliban's former deputy Interior Minister, told AP.
The camp was run by a Pakistani - Qari Saifullah Akhtar - and taught traditional combat skills in order to feed foreign troops into the Taliban army, but terrorist training also went on here.
Khaksar said that, as a senior Taliban official, he attended an al-Qaida demonstration at the camp in early 2001 in which terrorist trainees - including Middle Easterners, Pakistanis, Chechens and others - showed off kidnapping and assassination techniques. U.S. warplanes bombed the camp into ruin on the first night of the Afghan war.
"It was one of the biggest camps and they were extremely well trained," said Khaksar, who secretly contacted the United States in 1999 to seek American help in stopping the Taliban, and renounced the religious movement after their collapse. "Now these men have all returned to their homes. It is a grave risk for the security of the world."
At Rishkhor, a field and workout course once used for al-Qaida drilling has been cleaned up and retooled for training by Afghan soldiers, many of whom have taken up residence in the bombed out buildings that once housed thousands of militants.
Abdul Fatah, 48, who cooked at the camp when al-Qaida was in control and cooks today for the Afghan troops, describes the day in early October 2001 when the terrorists made a quick exodus from the camp, ahead of the U.S. warplanes.
"They got a call from someone who said there was going to be bombing and just like that they all left. By the time the bombs fell I was the only one here," he said. "I guess they are all still out there somewhere."
TITLE: Five Soldiers Dead After Copter Crash
PUBLISHER: The Associated Press
TEXT: BAGRAM, Afghanistan - A transport helicopter packed with American soldiers crashed near the main U.S. base in Afghanistan, killing at least five of them and wounding seven others, the military said.
The cause of Sunday's crash about seven miles east of Bagram Air Base north of Kabul was not known. The U.S. military said it was investigating.
The MH-53 transport helicopter was involved in an ongoing military operation dubbed Mountain Resolve, which is taking place in the east of the country, spokesman Major Richard Sater said at the air base.
Bagram Air Base is home to most of the 11,600 coalition forces in Afghanistan. An additional 5,500 international peacekeepers patrol Kabul, the capital.
Mountain Resolve has run since Nov. 7 in the eastern Nuristan and Kunar provinces, but so far no major skirmishes with suspected Taliban and al-Qaida holdouts have taken place.
Also Sunday, a coalition vehicle struck a land mine while patrolling an area of Afghanistan near the Pakistani border, seriously wounding two American soldiers from the Army's 10th Mountain Division. One of the soldiers lost a leg.
Several reporters were traveling with the division's soldiers, but none were seriously hurt, the U.S. military said in a statement issued at Bagram. It gave no further information about the journalists.
TITLE: WORLD WATCH
TEXT:
LONDON (AP) - George Harrison's first guitar - "a real cheapo" his parents gave him - has sold at auction for more than $469,200.
The guitar was part of an annual Beatles sale by music memorabilia firm Cooper Owen, conducted Thursday at the Hard Rock Cafe in London. Bids were taken at the cafe, by phone and on the Internet.
Harrison's father spent about $5.95 for the Dutch-made Egmond guitar. In The Beatles Anthology book, Harrison described it as "a real cheapo, horrible little guitar but it was OK at the time."
Another guitar, which Harrison gave to his late friend Spike Milligan of The Goons, sold for about $25,500.
Cyber Hackers Nabbed
WASHINGTON (AP) - Federal prosecutors have charged more than 125 suspected computer hackers, identity thieves and other cyberspace scammers in a nationwide crackdown on Internet crime, law enforcement officials said Thursday.
Those facing charges include run-of-the-mill counterfeiters and software pirates, as well as a man who hijacked the Web site of the al-Jazeera Arabic language news network to display a patriotic U.S. message.
The investigation, dubbed "Operation Cyber Sweep," has uncovered about 125,000 victims with losses topping $100 million over the past several months. Seventy indictments to date have led to arrests or convictions of 125 people, with more expected as the probe continues.
Aussies Threaten Schism
SYDNEY, Australia (AP) - Sydney's conservative Anglican archbishop has warned that Anglicanism could split into two separate movements over the ordination of gay bishops.
In an interview published Sunday, Archbishop Peter Jensen said that if the openly gay Episcopal bishop of New Hampshire, V. Gene Robinson, were to be invited to a meeting of Anglican bishops known as the Lambeth Conference, the church would likely split.
The conference is usually called every 10 years. The last was in 1998.
SARS Vaccine Ready
BEIJING (Reuters) - China plans to start testing a SARS vaccine on humans by the end of the year, the official Xinhua news agency said on Sunday.
Yin Hongzhang, head of the Biological Product Section of the State Food and Drug Administration, was quoted as saying the agency was expected to approve clinical tests by the end of December.
Pre-clinical trials of the vaccine on monkeys have been completed, Yin was quoted as saying. Such tests showed the vaccine was effective against the Severe Acute Respiratory Syndrome without serious side effects, the agency said.
Lithuanian Protests
VILNIUS, Lithuania (AP) - Thousands of protesters rallied near President Rolandas Paksas' office in Vilnius on Saturday, demanding his resignation amid allegations that he has ties with a businessman involved with organized crime.
Police surrounded Daukantas Square before the rally and searched protesters. Police kept the crowd separated from about 400 Paksas supporters, who rallied on the opposite side of the square. No clashes or arrests were reported, and the crowds dispersed peacefully in the evening. About 4,000 protesters turned out for the rally, police said. A parliamentary commission was established to investigate alleged presidential ties with organized crime. It is expected to submit a report to lawmakers next month.
TITLE: Desperate Vikings Clinch Win
AUTHOR: By Dave Campbell
PUBLISHER: The Associated Press
TEXT: MINNEAPOLIS - Desperate for a victory, the Minnesota Vikings were prepared to take one any way they could get it - even an underwhelming win over the Detroit Lions.
Corey Chavous and Brian Williams each returned interceptions for touchdowns late in the game, and the Vikings sent the Lions to their 22nd straight road loss, 24-14 on Sunday. One more straight loss by the Lions away from home would beat the NFL road losing streak record.
"Everyone's going to say, 'It's Detroit,' but a win in this league is a win," Minnesota coach Mike Tice said after his team ended its own four-game losing streak.
After reaching the NFC championship game in 2000, the the Vikings have been on a steady decline the past two seasons, due in part to quarterback Daunte Culpepper's penchant for committing turnovers.
Culpepper seemed to correct that problem early on this season, but after recent performances, the Vikings were hoping he didn't revert to his old ways against the Lions.
The Vikings (7-4) remained one game ahead of Green Bay in the NFC North, despite an offense that looked just as weak as Detroit's during most of the afternoon.
Culpepper completed 20 of 30 passes for 196 yards, no scores and an interception. Randy Moss sprained his right ankle in the second quarter and played on, finishing with five receptions for 56 yards.
Minnesota punted six times, and none of Culpepper's half-dozen deep throws to Moss were completed. But the Vikings followed up four awful games with one of their best defensive efforts of the season.
"We just returned the favor," Williams said.
Aaron Elling's 24-yard field goal capped a 73-yard drive and put Minnesota up 10-7 with 2:45 left.
Chavous picked off Harrington's pass and returned it for a score 19 seconds later, and Williams grabbed his third interception and ran it back for a touchdown 20 seconds after that.
The Lions (3-8), whose last away win came on Dec. 17, 2000, against the New York Jets, tied the Buffalo Bills (1983-86) for the second-longest road skid in NFL history. The Houston Oilers (1981-84) own this dubious league record with 23 consecutive losses away from home.
With visits to Kansas City and Carolina left on the schedule, Detroit has a good chance to break it.
"This one was tough. We had chances all day," said Harrington, who threw seven interceptions in two losses to the Vikings this year.
The Vikings were the NFC's last unbeaten team at 6-0 until porous defense and a recent rash of turnovers led to four straight losses. The arrests of starting defensive ends Kevin Williams and Kenny Mixon for drunken driving exacerbated their troubles this week.
"I have to commend our team for sticking together," Culpepper said.
The Lions were the perfect cure, even though untimely penalties and stalled drives kept Minnesota to just 10 offensive points.
Harrington completed 21 of 41 passes for 167 yards, four interceptions and one late touchdown pass to Az-Zahir Hakim.
The crowd of 63,946, officially a sellout but the smallest at the Metrodome this year, was late to arrive with a snowstorm swirling over most of the state.
The Vikings' fans never really got fired up, either, and they began booing after halftime whenever Eddie Johnson jogged out to punt.
Minnesota got a 52-yard punt return by Keenan Howry to set up its first second-half possession, but Moe Williams
was stopped for a 1-yard loss at the Lions 21 and stripped of the ball by Dre' Bly. Bly picked the ball out of the air and carried it to the Vikings 35 before lateraling to Corey Harris. He eluded a hard-charging Culpepper to complete the touchdown return and tie the game at 7.
"We're going to learn as a team it's not what you do, it's when you do it," Harris said.
That statement seemed to ring true for Minnesota.
"We knew we had this in us," free safety Brian Russell said. "We just haven't been playing up to par lately."
TITLE: Palander Upholds Slalom Title
AUTHOR: By Doug Alden
PUBLISHER: The Associated Press
TEXT: PARK CITY, Utah - Finland's Kalle Palander can still claim the title of best slalom skier in the world.
The defending World Cup champion won the first slalom of the season on Sunday, then sat through a lengthy delay to find out who finished behind him.
"It was a little bit cold, actually, standing outside,'' Palander said with a chuckle about waiting for nearly an hour to stand on top of the podium.
Palander, who won four slaloms last year to become the first Finnish skier to win a World Cup title, had a combined time of 1:35.91, good enough for first even if Austrian Rainer Schoenfelder's disputed redo in the opening run was allowed to stand.
American Bode Miller fell late in the first run and was disqualified, but still leads the overall World Cup standings by winning the first two giant slaloms of the season, including Saturday's race in Park City.
The fall ended Miller's bid for three wins in three World Cup races this season.
Miller, who came from behind to win the giant slalom (GS) on Saturday, caught an edge six gates from the finish and fell.
Miller also won the opening GS in Soelden, Austria, in October and won two silver medals at the 2002 Winter Olympics. He finished second last season in the overall World Cup standings and the GS, the best finish by an American since 1983.
As the slalom season opened Sunday Palander was quickly in contention by claiming the fastest time of the first run at 47.24. Schoenfelder, who won the slalom at Park City a year ago, tied Palander when he was awarded a provisional second chance on his opening run.
Schoenfelder claimed a course worker who had fallen next to a gate distracted him and caused him to go off the course. Race officials let him take it over after an initial ruling, but after the final run received 10 protests and reviewed video footage and eyewitness accounts a second time.
The repeated run was thrown out because Schoenfelder did not immediately stop and say the downed worker, who had a broken hip, caused his slip-up, course referee Gunther Hujara said.
Schoenfelder's combined time had been two-hundredths of a second behind Palander. The Austrian Ski Federation immediately appealed the decision, which listed Schoenfelder as not finishing the first run.
"We did something which might be unique now," Hujara said. "Whether this was right or not, this can be found by other people. We do not block any legal process."
Hujara said the appeal could be decided by as early as next weekend. If the ruling stands, Austrian Manfred Pranger will hang on to second place with a time 0.69 seconds behind Palander. Georgia Rocca of Italy finished third (1:36.60).
Palander survived the steep Picabo's run, which had a combined 19 skiers on both runs that didn't finish. He stood at the bottom and waited for Schoenfelder on the final run, then pumped his poles in triumph when he saw the Austrian's time was just slower.
"I was sure that I'm going to be winning. For me, it was just a joke that he could ski his second run," Palander, who placed fifth in the GS on Saturday. "I actually didn't care if he's on the start or not. I was a little bit surprised that he was skiing. But it wasn't a problem. Afterward, they did the right decision."
Tom Rothrock of the U.S. held the lead for eight skiers midway through the second run and was the top American, tying for eighth (1:37.52). It was Rothrock's first World Cup top-10 finish.
"My first run, I wasn't very clean. I had a lot of mistakes, so I was happy to lay down a good second run," Rothrock said. "There's just nothing better than coming down and being in first place - it just makes you feel really good.
"The American crowd cheering for you, it's just so sweet."
TITLE: France Shatters U.S. Hopes Of 18th Victory in Fed Cup
AUTHOR: By Steve Gutterman
PUBLISHER: The Associated Press
TEXT: Amelie Mauresmo won the Fed Cup for France in Moscow on Sunday, routing the United States' Meghann Shaughnessy 6-2, 6-1, to give her team an unbeatable 3-0 lead over the United States in the best-of-five finals.
Mauresmo, undefeated in Fed Cup play this season, shattered U.S. hopes for an 18th U.S. title in the event, seizing control of the first reverse singles match early by breaking Shaughnessy in a game that went to deuce five times to take a 2-1 first-set lead.
Shaughnessy double-faulted in her next service game to give Mauresmo another chance for a break. Mauresmo took it, lobbing a return past the American to take the game and then serving at love for a 5-1 lead on her way to the win.
Mauresmo opened the second set by breaking Shaughnessy at love and allowing the American only one point in the next game. Down 1-3 and serving at love-15, Shaughnessy suffered a setback when a service winner was called back, and Mauresmo broke her again to widen the gap.
Shaughnessy faltered again on her next serve, saving one match point but sending a forehand into the net to lose on the next point.
France went into the final day at Moscow's Olympic Stadium with a daunting 2-0 lead after Mauresmo, the world No. 4, defeated Lisa Raymond 6-4, 6-3, and two-time major champion Mary Pierce struggled past No. 17 Shaughnessy 6-3, 3-6, 8-6 on Saturday.
No team has come back from a 2-0 deficit to win the finals. But U.S. captain Billie Jean Kin's team had hoped Shaughnessy would prevail and Lisa Raymond would beat Mary Pierce in the second reverse singles match, leaving the title up to Raymond and undefeated Fed Cup veteran Martina Navratilova, who were scheduled to play in the final doubles match.
Navratilova and Raymond, who hope to play together in the Olympics next year, beat Elke Clijsters and Caroline Maes on Thursday to give the United States a 4-1 semifinal victory over Belgium. Raymond also won two singles matches in the semifinals, while Shaughnessy beat Kirsten Flipkens in a three-set, three-hour-plus marathon but lost to Els Callens.
Pierce, who beat Vera Zvonareva but lost to Anastasia Myskina in France's 3-2 semifinal win over Russia, was scheduled to play Raymond in the second reverse singles match Sunday.
Mauresmo, a finalist in the season-ending WTA Championships, dropped only one set in her eight Fed Cup matches this season, rallying from a set down to beat world No. 7 Myskina in a grueling semifinal match Thursday. It was her second straight victory over Myskina since the Russian beat her in the finals of the Kremlin Cup on the same court in October.
Mauresmo also powered France's semifinal victory with the win over Myskina and 6-2, 6-2 drubbing of No. 13 Zvonareva.