SOURCE: The St. Petersburg Times
DATE: Issue #981 (49), Tuesday, June 29, 2004
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TITLE: Markova Gets Job At Bank
AUTHOR: By Galina Stolyarova
PUBLISHER: Staff Writer
TEXT: Anna Markova, the former vice governor of St. Petersburg and Governor Valentina Matviyenko's main rival during the gubernatorial elections last year, has been appointed vice-president of Banking House St. Petersburg and will start her new job this week.
Mikhail Gaidar, a principal specialist on media issues at the bank, confirmed Markova's appointment Monday, but declined to comment on bank's motivation to give the post to the politician.
Markova's duties involve managing all issues related to information security and real estate.
"This is a new, and, importantly, neutral field for me," Markova, who has served as deputy police colonel, head of district administration and was vice governor of St. Petersburg from 2002 to 2003.
"I find the issue of strengthening the role of the business community in development of social policy of the state very important, and this is where I would like to engage myself," she said Monday in a telephone interview.
Banking House St. Petersburg was jointly established in 1997 by Bank St. Petersburg and the Industrial-Construction Bank, or PSB.
The bank has close ties with both City Hall and the Kremlin. It employs Matviyenko's son, Sergei, and Tamara Stepashina, wife of Sergei Stepashin, head of the federal financial watchdog, the Audit Chamber.
Two of City Hall's key reformers, Vice Governor Mikhail Oseyevsky, whose responsibilities include investment issues, and Vladimir Blank, head of City Hall's committee for economic development, industrial policy and trade, used to work in the Industrial-Construction Bank as top managers. The bank openly supported Matviyenko's election campaign.
After she won in a second-round runoff on Oct. 5, both Matviyenko and Markova made several attempts to bring defamation lawsuits against each other to court.
Markova won 16 percent of the vote in the first round of the elections and 24 percent in the second. Matviyenko received 49 percent and 63 percent respectively.
Political analysts perceived Markova's appointment as the end of public confrontation. Many said that Markova may have been offered the chance to sacrifice her political ambitions in exchange for a plum sinecure.
Right-wing politician and human rights advocate Leonid Romankov said the news about Markova's new job left a mixed impression.
"On the personal side, it is certainly good news for her as Markova is no doubt a willful, knowledgeable and experienced player," Romankov said. "From the political point of view, it very much tastes like a deal made in the shadows. It was too uncomfortable for the governor to have an enemy holding a grudge and collecting kompromat against her."
Romankov said the appointment reflected the unhealthy state of city politics.
"Naturally, opposition always provides a counterbalance to the authorities, stimulating them to be more responsible," he said. "If everything is settled behind the scenes in a 'master-and-puppet' style, we can't really talk about public politics in the city."
Since she lost the gubernatorial elections, Markova has remained on the political stage. She competed for a seat in the State Duma in March, but having lost the elections to Alexander Morozov, supported by both United Russia and City Hall, she contested the results in court and was one of those who had the result overturned.
Markova's conflict with Matviyenko has only very recently calmed down. Local media reported that the women had several meetings over the past month, where the women discussed city infrastructure.
Following the meetings, Matviyenko withdrew her charges against Markova and then last week came the news of Markova's appointment.
Sociologist Tatyana Protasenko, a senior researcher with the Institute of sociology at the Russian Academy of Sciences, welcomed the appointment, calling it a smart strategic move by both City Hall and Markova.
"If you can't get opponents on to your side, it is wise to at least place them within a short distance to be able to keep an eye on what they are up to," Protasenko said. "I think everybody benefits from this turn of events. Markova has a lot she can bring to the job."
Markova on Monday said she has become reconciled with the governor.
"She won the elections, and all the further disputes were result of plain misunderstanding," she said. "Thankfully, it is all over now. The city has made its choice, and the citizens should help the governor to make life in town better."
Mikhail Amosov, a leader of the city's Yabloko faction who also contested the governorship last year, said the news of Markova's appointment was an utter surprise to him.
"Considering that the politician and the bank used to fight on opposite sides of the barricades [during the gubernatorial campaign], I find this deal incredible," Amosov said. "I am honestly amazed by such a turn of events, and wouldn't even try predicting what this alliance may result in. It may well mean the end of her political career."
Markova said she is not going to run for a seat in the State Duma again, but she doesn't see her appointment as a political setback.
"Becoming a Duma deputy wasn't the end in itself," she said. "Time passed and things have changed. I brought the case to the court not because I wanted to be able to compete again, but purely because I wanted justice to win. My new job very much keeps me in politics as economics and politics in contemporary Russia are interconnected."
Representatives of the business community were more cautious in their comments, and would rather talk business than politics.
"Possibly, the decision to give Anna Markova the job was influenced by her strong experience in law enforcement and the city government and a degree in law," said Natalya Kudryavtseva, executive director of the St. Petersburg International Business Association. "The city is lacking experienced managers, and every professional one is valued."
TITLE: Putin Promises Beneficiaries Much Higher Payouts
AUTHOR: By Caroline McGregor
PUBLISHER: Staff Writer
TEXT: MOSCOW - Budget money allocated for World War II veterans will be 20 times greater and 10 times greater for the disabled, President Vladimir Putin said Monday as he tried to win support from a skeptical population for his plans to replace social welfare benefits with more transparent cash payments.
"I hope that the government and the Finance Ministry will be ready to implement these proposals, bearing in mind that the resources required are very large," Putin told top ministers, aides and advisers at a Kremlin meeting to discuss economic development.
Overall, monetary compensation for the canceled benefits is set to cost six times more than providing various forms of non-cash assistance to various categories of people including - but not limited to - veterans, the disabled, pensioners, soldiers, single mothers, holders of Soviet labor medals, civil servants and survivors of the Nazi blockade of Leningrad in World War II.
Aid to these groups will swell within the budget from about $1 billion to about $6 billion.
The government is ready for increased spending, to make the system less corrupt and "more effective," Deputy Prime Minister Alexander Zhukov said prior to Monday's meeting in televised comments.
Because money for social benefits is not given directly to the citizen but to an organization that distributes it, this money is easily embezzled, Zhukov said. The current system "is extremely lucrative for light-fingered officials," he said, adding that half of all the allocated funds go astray.
Next year's budget has set aside 170 billion rubles ($5.9 billion) for the payments, Health and Social Development Minister Mikhail Zurabov said Monday at a roundtable meeting at the State Duma, Ekho Moskvy reported. This is six times more than the 27 billion rubles ($930,000) allocated to provide benefits in the 2003 budget last year, he said.
"$6 billion is only about 1 percent of next year's projected GDP. It's not a big amount," said Yevgeny Gavrilenkov, chief economist at the Troika Dialog brokerage, commenting on what he, like most analysts, sees as a necessary reform.
The plan to substitute cash payments for benefits - like free public transportation, discounted phone service and electricity, free medication for the disabled and subsidized apartments for government employees - has met vigorous resistance from many fearful of changes to the country's social safety net.
About 1,000 people demonstrated outside the White House government headquarters after Putin proposed the change in May. The Communist Party pledged to mount a referendum to reverse the plan, even as the Kremlin rushed to introduce legislation making independent initiatives to hold referendums all but impossible. On Monday, Putin signed the bill into law.
Certain benefits will disappear as the system is streamlined and replaced by targeted assistance for those who really need it.
Putin on Monday singled out veterans specifically of World War II to receive the extra help.
Troika Dialog's Gavrilenkov noted that the number of veterans is small and shrinking every year, and Putin's intention to provide extra help to them in their last years is mainly a symbolic move to insulate them from anxiety associated with dismantling the social welfare system they have relied on.
In the face of public anxiety, Putin relaxed his line somewhat last week, saying some categories of citizens would be able to keep their rights to non-monetary benefits.
"All decisions in this sphere ... must improve the situation of this group of citizens and make the system more socially weighted, more socially fair," Putin said at Monday's meeting.
The Duma is set to consider the government's cash-for-services plan in the first of three readings Friday. A final vote is scheduled for August. The system is intended to go into effect next year.
TITLE: Passengers Rejoice as Metro Link Restored After 9 Years
AUTHOR: By Simone Kozuharov
PUBLISHER: Staff Writer
TEXT: The daily commute of nearly a half million St. Petersburg residents just got easier Saturday with the long-awaited opening of the tunnel connecting metro stations Lesnaya and Ploshchad Muzhestva.
Nine years after the tunnel between the two northeastern stations on the Kirvosko-Vyborgskaya line was flooded and closed for repairs, metro trains carried passengers over the section for the first time.
President Vladimir Putin came to St. Petersburg to inspect the reconstruction for himself on Saturday, local media reported.
Governor Valentina Matviyenko attended an official ceremony Sunday morning outside the Ploshchad Muzhestva station to mark the opening.
She addressed the crowd, wishing them a "happy holiday" and then presented certificates and flowers to those instrumental in the tunnel's reconstruction.
She also emphasized the international cooperation involved in the tunnel's $180-million reconstruction, a joint effort between Italian/Dutch company Impreglio/NCC and state metro contruction company Metrostroi.
"People had to change to different kinds of transport from a bus to a taxi bus, and they were constantly late for work," Matviyenko told a handful of journalists after the ceremony.
"When people can reach the city center in the civilized and good conditions of the metro, my soul is sincerely happy ... I am proud of our metro builders, and of city residents and their patience after all the difficulties they had to overcome," she said before being sped away in a black BMW.
On Saturday evening, people shuffled on to the metro train headed north from Ploshchad Vostanniya. A few stops later, no one got on at Lesnaya, but more remarkably not everyone got off - something they had to do for almost a decade.
"The train will leave and go as far as Devyatkino," came the monotone announcement over the loud speaker.
There was silence for a brief moment in the carriage while passengers realized the meaning of the announcement. Devyatkino is the last station at the top of the line. Gone are the days when passengers would have to get off at Lesnaya, take a free shuttle bus to Ploshchad Muzhestva and continue on underground for the rest of their journey. Now they could go straight home.
Several passengers erupted in gleeful chatter. Valentin, an older man with graying hair and proud stature, thrust his fist in the air, shouting "Hurrah!" He still had a grin on his wrinkled face minutes later as he clutched his bag in his lap and exchanged comments with fellow passengers.
"After 10 years, we were sick of it," he said. "We are tired - we are all tired - of having to use three different modes of transport instead of one. It took two hours to go to the city center instead of half and hour." The journey will be so much easier from now on, he added.
Other passengers expressed similar feelings.
"I just don't understand why this wasn't done earlier," another passenger, Alla, said.
Assistant to the head of the city metro Dmitry Burin blamed the long time the repairs took on the city's lack of know-how and money.
"There was no technical experience and secondly, there wasn't enough financing," he said. "Finally, in 2002, the decision was made that it was necessary to repair it and that it shouldn't be postponed any longer.
"The site preparation had already been done by Metrostroi. The only part that was left [to repair] was the part that was washed out and finally the money for the reconstruction was found."
Alla, like Valentin, lives two stops past Ploshchad Muzhestva near Akademicheskaya metro station, and has had to take the free transport provided by the city to get to and from her home.
However, free buses weren't the only type of transportation offered. Taxi buses costing about 14 rubles (50 cents) a ride, also made the trek. That would amount to about $31.50 extratravel budget for commuters a month, a sizeable portion of the official average $250 made by city residents.
Three taxi buses lined up outside Lesnaya on Saturday evening waiting for passengers. Their routes all included stops at Ploshchad Muzhestva.
Despite the new tunnel, there were many passengers continuing to use buses.
"People haven't gotten used to riding in crowded transport. [In the metro] they will have to stand and [in the taxi bus] they can come and take an empty seat," Alexander, a taxi bus driver said. "Of course, we'll lose something. There won't such a rush of people [needing the taxi buses]."
The tunnel, first built almost 50 years ago, collapsed in 1995 after it was flooded by a subterranean river.
TITLE: British Yachtsman Detained
PUBLISHER: The St. Petersburg Times
TEXT: A British yachtsman has been detained by border guards of the Arctic regional directorate of the Federal Security Service for breaching Russia's sea border, Itar-Tass reported Monday.
Corney Anthony George, 65, had been intending to sail his yacht "The Mohican" to the shore of the United States along the Northern Arctic Sea Route.
However, the yachtsman became concerned he would get stuck in the sea ice and decided to drop his plans and sail instead through Arkhangelsk and the White Sea-Baltic Canal to St. Petersburg, the report said.
He failed to notify the Russian authorities of his plans and was detained and escorted to Arkhangelsk.
"Bearing in mind that the transgression was due to force majeure circumstances, it has been decided not to punish the yacht skipper severely," Itar-Tass quoted Colonel-Major Vladimir Beryozkin, of the Arctic Border Serviceas saying.
"He will be able to continue his interrupted voyage on Monday upon paying a fine for the transgression," Beryozkin said.
TITLE: IN BRIEF
TEXT: Protesters Want Payout
ST. PETERSBURG (SPT) - Former child prisoners of Finnish concentration camps in Eastern Karelia on Monday protested outside the building where the government of Eastern Karelia is located, Interfax reported Monday.
About 80 people who spent their childhood in Finnish-occupied Petrozavodsk took part in the protest in which they demanded compensatory payments, the report said.
The action was in response to a letter written last week by Finnish President Tarja Halonen to the Union of Child Prisoners of Finnish Concentration Camps. He said that the Paris peace treaty of 1947 between Finland and the Soviet Union had given no consideration of compensation for individuals citizens of the Soviet Union, the report said.
Manilova on Paper
ST. PETERSBURG (SPT) -Alla Manilova, who heads City Hall's media committee, has been appointed chairman of the board of directors of leading local newspaper St. Petersburg Vedomosti, Interfax reported Monday.
The newspaper's general director, Sergei Slobodskoi said the board also decided not to pay out dividends, but that it would spend unspecified profits on the company's development, the report said.
New board members were also appointed, along with a new auditor.
Investment Committee
ST. PETERSBURG (SPT) - Maxim Sokolov, current head of Corporation C, is being mooted as the likely new head of City Hall's investment committee, Delovoi Peterburg said Monday, Interfax reported.
Sokolov personally received an invitation to head the committee from St. Petersburg Governor Valentina Matviyenko two weeks ago, the report said. Current ministry head Andrei Mikhailenko is reportedly leaving for health reasons.
The committee's press service denied any change had taken place, saying Mikhailenko is on vacation until mid-July.
"Legally, no changes in the committee management took place," Interfax reported the press service as saying.
Festival at Peterhof
ST. PETERSBURG (SPT) - The international charity festival "Music of the Fountains - Music of Peterhof," began its month-long run at the tsars' former summer residence on Sunday.
Orchestras, choirs and ensembles from Europe, the U.S. and Australia, as well as Moscow and St. Petersburg, will perform during the festival.
This year's festival commemorates the last 100 years of art and "the light and musical life of St. Petersburg that graced the tsars' summer residence," festival organizers said in a statement, Interfax reported. Japanese Boat Seized
TOKYO (AP) - Russia has seized a Japanese fishing vessel off the coast of a disputed island chain, officials said Monday.
Japan's Foreign Ministry confirmed the seizure but was still investigating the incident, a ministry official said on condition of anonymity.
The fishing boat from northern Aomori prefecture was detained Sunday after entering Russia's exclusive fishing zone in straits separating the island of Sakhalin from the Russian mainland, Kyodo News agency said.
Russian authorities were questioning the nine crew members and were planning to inspect the ship, public broadcaster NHK said.
Sakhalin lies next to the Kuril island group, which is at the heart of a long-running territorial dispute between Japan and Russia.
Grozny Blast Kills One
VLADIKAVKAZ, North Ossetia (AP) - An explosion outside a cafe in Grozny killed the owner and wounded three visitors, Itar-Tass reported Monday.
The radio-controlled explosive that caused the Sunday night blast was equivalent in force to 600 to 800 grams of TNT, Itar-Tass said. The report did not indicate whether investigators thought the explosion was connected to the fighting in Chechnya or with a suspected business dispute.
17th Candidate
VLADIKAVKAZ, North Ossetia (AP) - Chechen officials said Monday that the number of candidates running in the Aug. 29 election to replace slain Chechen President Akhmad Kadyrov had risen to 17.
The latest entrant to the race was Dmitry Berdnikov, the director of a crime-fighting council in Kazan, Tatarstan, said Buvaisari Arsakhanov, deputy chairman of the Chechen elections committee. The race is expected to be dominated by Interior Minister Alu Alkhanov, who has already received endorsement from Kadyrov's camp and from the Kremlin.
Short by 5,000 Judges
MOSCOW (MT) - The country's court system is seriously short-staffed and needs 5,000 more judges, Supreme Court chairman Vyacheslav Lebedev said Monday.
Lebedev told a judicial conference that 4,810 judges are needed for general jurisdiction courts, 1,000 are needed for arbitration courts and 150 are needed for military courts.
The country currently has 23,176 federal judges, he said.
Yushchenko Makes Bid
KIEV (AP) - Western-leaning Ukrainian opposition leader Viktor Yushchenko formally announced Monday that he will run in the October presidential election to replace President Leonid Kuchma.
"As I received backing from Our Ukraine and other parties ... I have decided to enter the campaign," Yushchenko said, according to the Unian news agency.
At a news conference in the eastern city of Hryvyi Rih, Yushchenko said that "the campaign will be a battle between [the current] authorities and the people, instead of between political parties."
Yushchenko's candidacy papers will be submitted July 3, the campaign's official start. Aeroflot Raises Rates
ST. PETERSBURG (SPT) - The Aeroflot Airlines company has decided to raise the exchange rate of conventional units, on which the company bases its ticket prices for international trips by 5 percent starting July1, Interfax reported.
The new exchange rate will equal 31.5 rubles per one conventional unit, an Aeroflot representative said.
Aeroflot has been basing ticket prices on conventional units rather than dollars starting February of this year, making the exchange rate equal 30 rubles per one conventional unit initially.
Baltic Oil Brake
ST. PETERSBURG (Reuters) - Russia has put the brakes on new north Baltic oil terminal projects while studies are carried out to determine how much oil the route can cope with, a senior regional official said Thursday.
Grigory Dvas, deputy governor of Leningrad region, said officials would not accept any more proposals until studies had determined the maximum capacity for exports via the Baltic.
TITLE: Congressman Urge Checks on Kiriyenko
AUTHOR: By Oksana Yablokova
PUBLISHER: Staff Writer
TEXT: MOSCOW - Five American congressmen are asking U.S. Secretary of State Colin Powell to investigate whether former Prime Minister Sergei Kiriyenko might be seeking a U.S. residence permit and might have played a role in the disappearance of a multibillion-dollar IMF loan during his tenure.
Kiriyenko, now the presidential envoy to the Volga Federal District, angrily denounced the allegations Monday as "a bold lie."
The five congressman, all Republican members of the House of Representatives, said in a letter to Powell that "Western European sources" had informed them that Kiriyenko recently purchased property in Illinois possibly in order to apply for permanent U.S. residence, and they expressed concern over the origins of any money he might have invested in the United States.
"In 1998, when Kiriyenko was prime minister, the International Monetary Fund (IMF) released $4.8 billion in aid to Russia. This money apparently never reached the Russian government and is now completely unaccounted for," said the June 4 letter, a copy of which was obtained by The St Petersburg Times.
"As you know, a foreigner who invests $1 million in a company in the United States can apply for U.S. permanent residence, or a green card' as it is colloquially known, provided that certain business condition are met. Our sources indicate that Mr. Kiriyenko purchased property in the Chicago area, and may have submitted an application for permanent residence status," the letter said.
"If these allegations are true, we urge you to work with all appropriate government agencies, including the Bureau of Customs and Immigration Enforcement to determine the intentions of Mr. Kiriyenko and determine the origins of his funds," it said.
The letter's signatories are Philip Crane of Wauconda, Illinois; Mike Pence of Columbus, Indiana; Charles Norwood of Evans, Georgia; Dan Burton of Indianapolis, Indiana; and Henry Bonilla of San Antonio, Texas.
None of the congressmen were available for comment Monday.
The U.S. State Department's Europe and Russia Affairs Desk was aware of reports about the letter and was waiting to receive a copy of it before issuing a comment, said a spokeswoman from Washington.
Kiriyenko suggested that the congressmen might not have known all the facts before they signed the letter.
"I am ready to assume that this is a misunderstanding," Kiriyenko said on Ekho Moskvy radio.
"There is nothing wrong with raising certain issues. But once everything is cleared up I want all those who raised these questions to offer me their apologies," he said.
Kiriyenko also said his lawyers were preparing a lawsuit against Novaya Gazeta, which published excerpts from the letter and a critical editorial Monday.
"I have always been sympathetic to freedom of the press, but my patience has run out," he said.
Sergei Stepashin, the head of the Audit Chamber, parliament's budgetary watchdog, acknowledged in April 2002 that prosecutors were investigating what happened to the $4.8 billion loan, which Russia secured in July 1998, about a month before the devastating financial crisis.
"The sum remains very serious. It's more than $4 billion that we cannot seem to find," Stepashin said.
Some observers have suggested that the money was laundered through a New York bank.
Stepashin, however, said in April this year that an audit had found no evidence that the loan was misused. "The Russian Audit Chamber and our U.S. colleagues checked the spending twice. All figures have been handed over to the U.S. side, and this problem has now been settled," Stepashin told reporters during a visit to Washington.
TITLE: Leader of Rebel Raid Said Killed
PUBLISHER: The Associated Press
TEXT: VLADIKAVKAZ, North Ossetia - Magomed Yevloyev, a suspected leader of last week's attacks in Ingushetia, was killed in a special operation, Itar-Tass reported Monday.
Yevloyev was killed when he put up armed resistance to troops trying to seize him, Itar-Tass said, citing Ingush prosecutors. An automatic rifle and a grenade launcher were found with his body.
Yevloyev was believed to be a deputy to warlord Doku Umarov, whom police officials, including Chechen Interior Minister Alu Alkhanov, have accused of being involved in the June 21-22 attacks.
Last week, President Vladimir Putin called on authorities to take the organizers of the attack alive if possible and put them on trial. Rights advocates have objected to previous government killings of suspected terrorists - especially those responsible for an October 2002 hostage-taking raid on Moscow's Dubrovka theater - before they could be interrogated or tried.
Ingush authorities, meanwhile, lowered the toll in the assault against law enforcement officers in the city of Nazran and other sites in Ingushetia to 88 dead, down from 98, and 117 wounded, Interfax reported.
Some names of the dead had been included on more than one casualty list, it said, citing Ingush Deputy Prime Minister Khava Yevloyeva.
Just who mounted the attacks and why remain unclear. Some officials see them as a spillover of the war in neighboring Chechnya, while others speculate they were in revenge for a rising wave of abductions in Ingushetia.
Ingush and Chechen officials have traded blame for the attacks. Some Ingush officials claim that Chechen rebels crossed into the region, while Chechens say the fighters were primarily Ingush residents.
Human rights advocates have warned that the attacks could unleash a wave of anti-Chechen sentiment in Ingushetia. Ingush and Russian security officers have conducted several sweeps of Chechen refugee camps inside Ingushetia, detaining dozens of residents and allegedly beating some. The sweeps have prompted some refugees, who had long resisted being sent back to Chechnya, to return there.
TITLE: Adamkus Elected in Lithuania
PUBLISHER: The Associated Press
TEXT: VILNIUS, Lithuania - Official results released Monday confirmed former President Valdas Adamkus won a second term in a runoff against former Prime Minister Kazimira Prunskiene, less than two months after her ally was impeached for divulging state secrets.
After counting all of the votes cast at the country's 2,038 polling stations, the election commission said Adamkus received 52.4 percent of the vote, compared with 47.6 percent for Prunskiene.
Commission chairman Zenonas Vaigauskas said there were no reports of voting irregularities that could cast doubt on the results.
Adamkus said he would work to restore the country's integrity in following the impeachment of President Rolandas Paksas in April.
"I will start negotiating with candidates on Monday and shaping up my team," Adamkus said, adding he was eager to help Lithuania move on following the embarrassment that surrounded Paksas' impeachment.
The victory was also a vindication for the 77-year-old former exile who spent five decades in the United States after fleeing the Red Army.
He was beaten by Paksas in January 2003 in a runoff election despite his efforts at shepherding the Baltic state into the European Union and NATO.
TITLE: Fradkov Halts Energy Sector Reforms
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: MOSCOW - Prime Minister Mikhail Fradkov pulled the emergency break on energy reform Friday, halting any and all sales of generating assets until his government can determine how privatizing huge swathes of the electricity sector will benefit society.
The government had been expected to approve a plan drafted by Unified Energy Systems to group dozens of power plants scattered across the country into 10 wholesale generating companies, six of which would then be auctioned off for cash or UES shares.
But Fradkov announced Friday that the government is temporarily freezing reforms because it is concerned not only about the plans to privatize wholesale generating companies, known as OGKs, but also about how restructuring of the sector as a whole has been handled since 2001.
"At a government meeting at the end of the year [we will] thoroughly analyze the efficiency of the work that has been done since 2001 and determine what further steps need to be [taken]," Fradkov told reporters after a meeting with senior government officials, Interfax reported.
The OGK issue is at the center of a years-long government drive to introduce elements of competition - and thus private capital - into the electricity sector by overhauling and then breaking up state-controlled UES and selling off some of its assets.
Many wealthy industrialists have spent the last year building up small stakes in UES on the expectation that they would be able to swap them for bigger stakes in specific generating assets that would fit well with their existing business interests, such as aluminum production. Foreign investors have also been along for the ride, which has seen UES's share price rise from 15 cents since early 2002.
Now, however, all those plans are in doubt. In the minutes after Fradkov's announcement, the price of UES shares dropped some 4 percent on MICEX, and some analysts now expect the market value of the world's largest electricity company by installed capacity, currently at just over $11 billion, to be cut in half in the coming weeks.
"Chubais had staked everything on the OGK plan. Now the whole reform has practically ground to a halt," said Andrei Zubkov of Trust investment bank.
"It makes no sense to talk about liberalization now that there won't be any competition," Zubkov said.
Zubkov said it was hard to see why investors would want to hold on to their UES shares now that it looks unlikely that those shares will be able to buy generating assets anytime soon. "You don't have to go to a fortune teller for that," he said.
For five straight months, the UES board, citing "technical delays," failed to make a final decision on the makeup and auction conditions of the OGKs.
This time, however, the delay does not "look technical," Zubkov said. Rather, it looks like a "political delay" by "some people in very powerful circles who do not want OGKs to be privatized," he said, adding that the recent developments surrounding Yukos may have played a role.
"It may well be that [President Vladimir Putin] does not want to see the same mistakes that were made in privatizing the oil industry repeated in the electricity industry," Zubkov said.
Chubais, the UES chief, oversaw the bulk of early privatizations and has been called the father of the oligarchs for his efforts.
Interestingly, Fradkov said that one of the reasons for the indefinite delay in UES reform was that the OGK issue was "attracting special public attention."
"The concern of investors is clear, and the resolution of this issue is important for investors to further identify their economic strategy," Fradkov said.
"For us, the task of reforming the electricity industry can only be accomplished with the clear, complete and unambiguous support of the government," Chubais said. He added, however, that there are two key pillars to the reform blueprint - strengthening government control over the national grid and other infrastructure, while simultaneously creating and privatizing large generating companies that will compete with each other.
"Rejecting either of these ideas would devastate the entire [reform] concept," Chubais said.
TITLE: Planet Fitness Moves to Expand Internationally
AUTHOR: By Sophia Kornienko
PUBLISHER: Staff Writer
TEXT: Planet Fitness, a local fitness-club chain, is going international and will open three new sport clubs in Stockholm, Sweden, one of them this year.
The chain will also open two new clubs in St. Petersburg next year and continue expanding into other regions and the NIS, said Marina Sorokina, director of Planet Fitness St. Petersburg during the company's open day on Thursday.
Established in 1997, Planet Fitness owns 19 clubs across the country, eight of them in St. Petersburg. Two of the St. Petersburg clubs, that used to operate under the World Gym brand, were purchased only this spring for up to $4 million, analysts estimate.
Among other projects pursued by Planet Fitness are franchise clubs in Samara and Kazan in Russia, Almaty in Kazakhstan and fitness consulting services in Minsk, Belarus. Planet Fitness also runs a club in Kiev, Ukraine.
The founder and president of Planet Fitness, Irina Razumova spent ten years in Sweden and advocates development of non-elitist fitness club chains, following the European model of comfort.
Planet Fitness is a Russian owned brand with 100 percent domestic private capital. In Sweden's competitive fitness market with over 1,500 operating clubs, the company hopes to offer alternative organizational techniques, including individual medical and sports counselling, at affordable rates, Sorokina said.
Planet Fitness will offer a range of activities for a flat fee, as opposed to an entrance fee plus payments per activity, as usually practiced by most Swedish clubs. The first Russian fitness club in Stockholm, occupying a total of over 3,000 square meters, was set to open this spring, but the construction was delayed, Sorokina said.
The chain's St. Petersburg clubs all have the same quality services and equipment available, even though each club is following a different price policy, depending on the numbers of additional services it offers, Sorokina said.
The clubs range from a 300 square meter "fitness studio" on Moskovsky Prospekt specializing purely in group aerobics, to the 4,000 square meter giant on the Petrograd Side, open round the clock. Membership rates vary from $20 for a one day visit to one club to $2,000 for a full annual membership with unlimited access to all Planet Fitness clubs in Moscow, St. Petersburg and Kiev. Most clubs support the "$1 per day" policy.
As part of a recently developed strategy, Planet Fitness plans expanding to densely populated city outskirts, Sorokina said. The company's first club in the north of St. Petersburg opened on Prospekt Engelsa in April this year. Up to 15 percent of Planet Fitness members in the city are foreigners, Sorokina said, adding that about three fourths of the chain's personnel speak English.
In Sorokina's opinion, "There is no other such player in the St. Petersburg market as Planet Fitness." SportLife and Galaktika can be referred to as the chain's competitors in the city, but they are very small, she said.
However, Anastasia Borisova, advertisement manager at Galaktika, said that chain fitness clubs lose out in traditions and atmosphere.
Galaktika occupied 60 percent of the St. Petersburg market before Planet Fitness began its expansion. Galaktika runs two clubs and plans to open a third one within a year. The company bets on its loyal staff team rather than on growth ambitions, Borisova said. At Planet Fitness, staff changes frequently and there is not enough homey club environment, she said.
It should take another two years for the city fitness market to shape up, and there is definitely room for new players, Borisova said.
One of the newcomers expected soon is the Moscow-based sports-club chain Strata Partners that plans to open 60 affordable fitness clubs in all of Russia's largest cities starting this year. Moscow has already seen two Strata Partners' ambitious projects - Super Gym and Orange Fitness.
"We have no doubts that the future is after the chains. Chain projects occupy 58 percent of the market in the U.K. and 75 percent in France," said general director of Strata Partners Anastasia Yusina in a recent interview with RosBusinessConsulting.
TITLE: Prince Opens RBCC Chapter
AUTHOR: By Robin Munro
PUBLISHER: Staff Writer
TEXT: Prince Michael of Kent, patron of the Russo-British Chamber of Commerce, officially opened the chamber's St. Petersburg branch on Friday, cutting a ribbon with Vice Governor Mikhail Ovseyevsky at a reception in the Marble Palace.
Speaking in Russian, the prince said: "The chamber will build a bridge between Russian and British businesses that will advance the development of Northwest Russia."
Ovseyevsky welcomed the opening of the branch, saying St. Petersburg is an open city and has been for 300 years.
"We're glad to see new faces among the investors who will work in St. Petersburg," he added.
Earlier, the prince had met Governor Valentina Matviyenko as part of a tour that took him and a delegation of British businesspeople to Moscow, Perm and Krasnoyarsk. The group had also met with Sistema head Vladimir Yevtushenkov and Norilsk Nickel head Vladimir Potanin.
The prince, who enjoys greater popularity in Russia than he does in Britain, appears to be a trump card for British businesses in the Northwest. London being the financial capital of Europe is also likely to make the chamber attractive to Russian businesses seeking to raise finance abroad. Nevertheless, the British business association is likely to play a smaller role in the city than the established American Chamber of Commerce, the St. Petersburg International Business Association, the German trade chamber and the Finnish-Russian Chamber of Commerce.
At a news conference Friday, Dan Kearvell, head of the Russo-British Chamber of Commerce's St. Petersburg office, said the chamber is open to British and Russian members and aims to promote investment not only in Russia, but also in Britain.
"They are of equal importance to us," he said.
Forty percent of the chamber's 480 members are Russian, he said.
Britain's foreign direct investment in Russia and Russian investments in Britain rose 24 percent last year, mainly due to large oil-industry deals, especially the multibillion BP-TNK deal last year and Shell's investments in Sakhalin, Kearvell said.
Large British investors in Northwest Russia include Dirol Cadbury, British American Tobacco, Unilever, and Gillette, he said.
There is great potential for growth in the activities of small and medium-sized enterprises, and the chamber hopes to assist them, he added.
Speaking at a Russo-British business summit held in association with the opening of the branch, several speakers said that Northwest Russia is booming and growing faster than other parts of Russia.
Garry Kemp, general manager of operations in the Commonwealth of Independent States for courier firm DHL Worldwide Express, said that his company's business is growing 40 percent nationally, but in the Northwest it is growing 52 percent year-on-year.
"That's businesses making contact all over the world," he said.
Maxim Kalinin, partner at law firm Baker & McKenzie, said that investors face a lot of uncertainty because laws are constantly changing. However, the economy is in transition and the changes are only to be expected.
Reforms have already made great progress and some experimentation is necessary before the legal system is brought closer to one that will serve a market economy, he added.
Rashid Izmagilov, president of Leningrad Oblast' Chamber of Commerce and Industry, said investors should not be too concerned about the transition; it is also a time when profits are being made.
Sixty to 70 new factories are being built in the Leningrad Oblast each year, he added.
TITLE: Pulkovo to Launch U.S. Passenger Flights
AUTHOR: By Lyuba Pronina
PUBLISHER: Staff Writer
TEXT: St. Petersburg-based carrier Pulkovo said Thursday it plans to start offering flights to the United States within a year, which would make it just the second Russian airline serving North America.
"We plan to start the service next summer season," Pulkovo director Sergei Belov told The St. Petersburg Times.
The company said it is currently working out an interline agreement with Ireland's Aer Lingus, which would pick up Pulkovo's passengers at Shannon Airport and fly them to their destination city in the United States.
"We are in correspondence with Aer Lingus and plan to meet soon," said Vasily Naletenko, head of Pulkovo's commercial department.
Aeroflot, based out of Moscow's Sheremetyevo Airport, is the only Russian carrier currently flying to North America directly.
From St. Petersburg, the United States is only accessible through European British Airways, Lufthansa, Finnair and other European airlines via their transit hubs.
Pulkovo plans to begin with two weekly flights to Shannon, which Irish civil aviation authorities have permitted earlier this year, Naletenko said.
Aer Lingus, a low-fare airline that operates a fleet of seven Airbus 330s on transatlantic routes, currently flies to five U.S. cities-New York, Boston, Washington, Chicago and Los Angeles.
Without an interline agreement with Aer Lingus, Naletenko said the demand for flights to Shannon from St. Petersburg would only be about 50 or 60 passengers per week, which would not make the route economically feasible.
He said Pulkovo, together with Aer Lingus, expects to eventually handle a third of all the traffic between St. Petersburg and North America. One competitive advantage in the tie-up is that Shannon has a U.S. immigration window to clear passengers before they reach the United States, he added.
Pulkovo currently flies to 78 cities in Russia and 34 internationally. The company carried 2.4 million passengers last year, half of them to destinations abroad.
The airline operates a fleet of 46 Tupolevs and Ilyushins, but is looking to lease three new jets next year, either Boeing 737s or Airbus 319/320s.
TITLE: Moscow Not Funding City Projects
AUTHOR: By Sophia Kornienko
PUBLISHER: Staff Writer
TEXT: The St. Petersburg administration is receiving less finance funding than it was initially promised by the federal authorities.
If the funds will not be made available on time, the city may become unable to continue its major construction projects.
St. Petersburg needs 11.7 billion rubles from the federal budget this year for the construction of the ring road and 2.9 billion rubles next year for the completion of Western Express Diameter, linking the ring road to the city seaport.
"11.5 billion rubles is 35 percent of the Ministry of Transport's whole annual budget in 2005," Regnum information agency quoted Russian transport minister Igor Levitin responding to governor Valentina Matviyenko's request for federal funding at the meeting with federal authorities held June 18.
As for St. Petersburg's need of 3 billion rubles to expand the metro lines by 2012, Prime Minister Mikhail Fradkov abstained from any direct comments, Regnum reported.
The lack of financing is not just a temporary delay, analysts say, but rather a new line the Kremlin has adopted toward St. Petersburg after the 300th anniversary celebrations and the elections were over.
Boris Paikin, general director of the federal construction agency's division in the Northwest, said that the construction of the St. Petersburg dam is at halt. The works presently being carried out at the site only concern maintenance of what was built before, he said at a press conference Thursday. Out of the 750 million rubles of federal funds that were supposed to be allocated to the project this year, only 150 million have been provided so far, he said.
The construction of the dam, first initiated in 1979 and later resumed in the 1990s, was scheduled to be completed by 2008. The project is worth a total of 8 billion rubles, expected to be financed largely by the European Bank of Reconstruction and Development, EBRD. However, if the federal authorities don't finance their share of the construction on time, the EBRD would not finance either, Paikin said.
As for the 750 million rubles St. Petersburg requested to reconstruct its historical buildings, the federal government agreed to allocate only 306 million rubles, Paikin said, and that will not be enough.
The city also needs approximately 600 million rubles to help move the dwellers of the destroying housing, mainly accommodating communal flats, Paikin said.
Lev Kaplan, director of the St. Petersburg union of construction companies, was present at the Matviyenko's meeting with Fradkov, where the prime minister said that St. Petersburg should stop demanding such large amounts. Kaplan recalled Fradkov as saying that the city should stop counting on receiving much assistance in the future and remember that the federal budget has obligations to finance the rest of the country as well.
Matviyenko replied that if little federal financing arrives, she would not be able to fulfill the promises given in her recent governor's address to the city legislative assembly, Kaplan said.
"My impression of Matviyenko's meeting with Fradkov was very depressing," Kaplan said. "What we see now is a deliberate policy aimed at halting the federal programs in the city. And the city will not be able to survive without federal programs," Kaplan said.
Apart from the cuts in federal financing, St. Petersburg is also going to lose 6.9 billion rubles in its city budget next year, due to the changes in tax legislation, Kaplan said.
Nikolai Pashkov, head of the marketing department at St. Petersburg Realty, said that the shortage of financing is going to affect the city's economy. Both the ring road and the expansion of the metro would encourage the development of commercial territories and construction of private cottages, which are hampered by St. Petersburg's weak transport infrastructure, Pashkov said.
Without federal funding, St. Petersburg is going to be slowly destroyed, Pashkov said.
TITLE: Director Helps Foreigners to Overcome Doubts
AUTHOR: By Chris Condlin
PUBLISHER: Staff Writer
TEXT: Elena Berezantseva, Executive Director of the St. Petersburg Chapter of the American Chamber of Commerce, says that much of her life has been dedicated to "facilitating understanding and business relationships" between the United States and Russia.
"Facilitating understanding and promoting relationships" is one of her primary responsibilities at the Chamber, a branch of the main office in Moscow. Celebrating its 10th year of operation in 2004, the American Chamber of Commerce is one of the largest and most influential advocacy and support groups for foreign businessmen operating in Russia.
The Chamber's responsibilities are "diversified, to say the least," says Berezantseva. "They include supporting foreign businesses through advocacy efforts, establishing dialogues with authorities on different levels, attracting new investment to the city and oblast, working to make foreign businessmen feel comfortable in Russia, and keeping the business community up to date on the latest legislative developments."
Berezantseva's interest in promoting communication between Russia and the United States is longstanding,dating back to her participation in one of the first groups of Russian young people to visit the United States. It was an unforgettable trip for Berezantseva, but when asked what about the United States surprised her, she answers, surprisingly, "not very much." "I already knew a lot about America. I was always interested in it, and I had read a lot about it before I went."
Later, while already a university professor, Berezantseva worked as a guide in Leningrad (St. Petersburg's former name) for groups of American and British tourists. She recalls one American lady from a small town in mid-America. "She had no idea what Russia was like, or at least a pretty distorted one," says Berezantseva. "As a result of this visit, she realized that we were the same people as Americans - we celebrated New Years, we had Christmas trees, and we were welcoming and friendly. At the end of her visit, I remember how she stood at the top of the stairs to her hotel and shouted to me that she would tell everyone what she had seen - and that she would return someday. There were dozens of people like that and those experiences were very important for me."
Berezantseva's interest and relationship with the West was ahead of her time. Long before anyone foresaw the fall of the Soviet Union she was training herself according to western principles. Completing MSc and PhD degrees in engineering and mechanics, and later teaching in the university, Berezantseva was all the while reading up on western business practices and volunteering in western-oriented "friendship societies."
"My business psychology is completely western," she says. "I was always interested in the western type of management - companies and society structure. I read a lot about this and tried to adjust my performance accordingly. I thought the ways they operated to be very efficient."
After perestroika Berezantseva, still a professor, started to work for different foreign companies, feeling out the new Russian market. Berezantseva's break finally came in 1996 when she was offered a job for a couple of days as interpreter for representatives of the Ford Motor Company, which was at that time considering opening a plant near St. Petersburg. Her temporary position quickly became permanent, her responsibilities rapidly expanded, and almost before she realized what was happening she had become Ford's manager on the ground for all pre-construction planning. When Ford finally opened its office in 1999, Berezantseva worked as the Business Development & External Affairs person until she moved to the American Chamber in 2003.
Berezantseva remembers her time at Ford fondly. "Ford was a wonderful experience and gave me insight into one of the greatest companies in history," she says. "I still refer to it as 'my company'."
Berezantseva's time at Ford also gave her first hand experience with many of the issues she faces on a daily basis at the American Chamber. She understands the challenges of foreign companies doing business in Russia as an insider, as someone with management-level experience in a foreign firm.
"It's mostly the same things," she says. "The main difference is, when you work for a business you work for a set of particular interests. It's target oriented. Now I work for many companies at once, and I have to try to represent all of their interests."
"Ford's loss, our gain, in my opinion," says John Schwarz, President of the Baltic Cranberry Company, one of the American Chamber's member companies. "Elena is a fantastic director of AmCham, she's helped us solve many of our specific issues. I think there will be a big increase in membership as long as Elena is there."
Others confirm Berezantseva's effectiveness as Executive Director. "Elena plays a very positive role at AmCham because of the experience with government organizations that she learned at Ford," says Maxim Kalinin of Baker & McKenzie and Chairman of the Chamber's Executive Committee. "She has a keen understanding of the structures of power, of the principles of government."
As proof, Kali-nin points to the Cooperation Agreement signed October 2003 between the American Chamber and the Leningrad Oblast Legislative Assembly dedicated to further improving the climate for foreign investors. "This agreement, this was a real thing," stresses Kalinin, "not just a piece of paper. And Elena was in a large part responsible for getting it through."
Berezantseva is full of praise not only for oblast authorities but also for her partners in the new city government. "The government is very much focused right now on facilitating the development of international business," she says. "The oblast government has favored foreign investment for years and years. Now the city is determined to do the same thing."
Obstacles to greater foreign investment, according to Berezantseva, are to be found both inside and outside of Russia. "The problems here are well known," she says, "lack of transparency, bureaucratic inefficiency, and a lack of stable, consistent procedures. Another basic problem is that we still need to overcome the existing stereotype of Russia. It's still with us, though it exists now on a much smaller scale than it used to. Our greatest challenge is to help foreign businessmen to overcome their doubts and cautiousness about coming here. It can be difficult, but when it works, it's very rewarding."
TITLE: UES, Gazprom Shares Pull Down the Market
PUBLISHER: Interfax
TEXT: MOSCOW - The UES and Gazprom stocks have been sliding since the end of last week, and continued to push the entire stock market down.
By 2:00 p.m. on Monday, a share of common UES stock was down 5.6% at 26.15 cents per, while Gazprom stock on the St. Petersburg exchange was at 59.3 rubles a share, having slipped 3.8% amid 41.5 million shares-worth of trading.
Sales of these stocks picked up when Gazprom's June 25 shareholders meeting failed to produce specific timing for the liberalization of its share market, and when the question of UES reformation was put off until a later date. (Prime Minister Mikhail Fradkov had said on Friday that the government's position on wholesale generating companies might only be forthcoming by the end of the year.)
The other liquid stocks on the Russian Trading System lost from 0.5% to 5.2%, but this took place in sluggish trading. Yukos stock was down 5.2% to $8.15 per share, though only three deals were posted on the RTS.
Attempts to push the market up and low cash liquidity at the end of a month and a half are not helping matters, nor does worsening affairs on world stock markets.
Market operators say that after a week full of news, trading on Monday was down appreciably, there are no new ideas yet and many investors are opting to sit on the fence.
Bank of Moscow analyst Kirill Tremasov says Friday's news about UES and Gazprom will likely continue to have a depressing effect on the entire market this week, since many investors have emphasized these two stocks. Generally, however, expectations are that the market will consolidate at current levels in response to world stock markets, he said.
Aton analyst Anatoly Kaplin takes a similar view, saying that UES and Gazprom - to blame for the whole market's drop - are still in a phase of local slippage that is far from over.
"It's possible that in front of the upcoming U.S. Federal Reserve's interest rate decision the developing market will stagnate. For Russian stocks, news about the transformation of the fuel and energy complex and dropping 'black gold' [oil] prices could be a catalyst for new sales," he said.
Financial Bridge analyst Stanislav Kleshchev maintains that the investors' short-term disappointment with the results of the Gazprom annual shareholders meeting and the drop in quotations for the company's stock is a good point from which to start opening "long positions."
"Buying Gazprom stock at the current prices with the investment horizon in one year is more than justified, since prices for the concern's internal paper is 50% lower than the cost of ADS in the West, which means the most potential growth among Russian blue chips," he argues.
The composite ruble index S&P/RUX was down 2.95% at 737.27 points, the dollar index 2.96% at 151.39 points. The RTS index had lost 1.96% to 588.21 points and the MICEX stock index 2.55% to 535.45 points.
TITLE: Just Who Did Smash Communism?
AUTHOR: By James G. Hershberg
TEXT: The Economist put it most succinctly. After Ronald Reagan died, the magazine placed a photo of him on its cover with the words: "The man who beat communism." Others said much the same. A radio broadcast I heard began, "He was credited with winning the Cold War." A few minutes later, a political scientist cited victory in the Cold War and "the destruction of the Soviet Union" as two of Reagan's chief legacies. Since then, an endless stream of admirers and commentators has hailed Reagan for triumphing over the "evil empire."
Whoa, wait a minute. It's a bit more complicated than that.
Ronald Reagan's policies surely contributed to the dissolution of the Kremlin's empire, culminating in the 1989 anti-communist revolutions in Eastern Europe and the breakup of the Soviet Union two years later. But for the media and Reagan's hagiographers to give the 40th president all the credit is like saying a late-inning relief pitcher had "won" a baseball game without mentioning the starting pitcher, the closer or the teammates who scored the runs that gave the team its lead.
Historians abhor the idea of attributing a vast, complex phenomenon to a single cause. No one person brought down the Soviet Union, but if I had to choose the one who mattered most, that person would not be Reagan, most of whose policies fit comfortably in the Cold War tradition of containment followed dutifully by presidents from Harry Truman to Jimmy Carter.
Rather, the historical wild card was Mikhail Gorbachev, who followed a well-worn path up the ladder of the Communist Party of the Soviet Union - and then turned out to be a radical reformer. Influenced by Nikita Khrushchev's short-lived "thaw" in the 1950s, Gorbachev grasped long before Reagan's election that the stultifying Soviet system required renovation. Gorbachev also committed the heresy of abandoning the aim of world revolution and the class struggle in international affairs in favor of amorphous, but much nicer, "universal human values." Above all, he refused to use the massive armed forces at his disposal to retain his party's grip on captive nations in Eastern Europe, restive nationalist republics or Russia itself.
But Gorbachev cannot claim all the credit, either. The factors that doomed the Soviet Union were largely innate, not external.
Reagan essentially followed a bipartisan legacy of containment. Sure, he offered arms to anti-communist insurgencies in the Third World and fervently articulated his beliefs in freedom and democracy, but so had other presidents. In the crunch, Reagan was, understandably, no more willing to risk World War III by directly challenging Kremlin repression in Central Europe than his predecessors had been.
"Mr. Gorbachev, tear down this wall!" - Reagan's iconic 1987 challenge in Berlin - made a nice sound bite. But however stirring his words, Europeans living under communist rule knew from bitter experience that neither the American cavalry nor American presidential rhetoric was going to liberate them.
In 1989, Eastern Europeans knew they would have to liberate themselves. They put their own lives on the line to test the uncertain limits of Gorbachev's new "Sinatra Doctrine" - other communist countries could "do it their way."
The 1980s arms race did not cause the Kremlin's collapse. The Soviet economy was rotting from within for many other reasons. The Kremlin's warped priorities - maintaining a cumbersome military machine while its economy and living standards lagged behind the West's - helped implode the Soviet empire. But those priorities had been set for decades. The turning point was not Reagan's rise, but Stalin's chutzpah after World War II. With his country devastated, the vozhd, or boss, opted to seek nuclear weapons ("on a Russian scale") and coequal superpower status. From then on, the military consumed the best and brightest of Soviet science and distorted the economy.
The focus on the military also shortchanges the role that soft power played in the Soviet realm's demise. The trillions of dollars the West spent on weapons and containment ultimately proved less significant than aspects of Western life that had nothing to do with government policies - music, movies, fashion (blue jeans!), consumer goods, "Coca-Colonization," and the prospect of a freer, tastier and more affluent life. Thanks to radio, television, Hollywood, samizdat literature and faxes, ideas and images of the West began to permeate the communist world, exerting a gravitational pull. I'll never forget the reverence with which young Russians examined a Time magazine I had taken on a backpacking trip in the 1980s, or with which Muscovites treated a Big Mac when the first McDonald's opened in Pushkin Square.
An irony worth noting is that much of the credit for winning the Cold War should go to the people Reagan so disliked as governor of California - the hippies, the anti-Vietnam War protesters and counterculture figures who in the 1960s produced the music, ideas and ethos of nonconformity that appealed to the educated youth suffocating in the communist world.
Not all Soviet leaders were oblivious to these subversive influences. In December 1980, the month after Reagan's election, KGB chief Yury Andropov circulated a confidential memorandum to the Central Committee. It was about the murder of John Lennon that month. Andropov reported that "in many of Moscow's establishments of higher education," anonymous posters had appeared to organize a demonstration in memory of the ex-Beatle. "The KGB has taken the necessary measures to identify the instigators of this gathering and is in control of the situation," Andropov assured the party elite.
But the KGB was not "in control of the situation." By the late '80s, an underground rock scene flourished in the land of socialist realism. When the whole edifice tumbled to the ground, former dissidents around the old Warsaw Pact, like Vaclav Havel, hailed (and in some cases erected new statues to) such figures as Frank Zappa, Pink Floyd, Lou Reed and James Dean.
Reagan gave a push to the tottering statues of Marx and Lenin, but his role was, in all likelihood, peripheral rather than central. In the meantime, the outpouring of hagiographic praise of Reagan for slaying the Soviet dragon says as much about us as about him. The blend of sentimentality, Cold War triumphalism and superficial news coverage reflects the dangerous American habit of neglecting the world's complexity in favor of drawing a self-indulgent, solipsistic caricature of international affairs.
James Hershberg is associate professor of history and international affairs at George Washington University and former director of the Woodrow Wilson Center's Cold War International History Project. This comment first appeared in The Washington Post.
TITLE: Institutional Reforms Are More Important than Handouts from Moscow
AUTHOR: By Vladimir Gryaznevich
TEXT: In terms of St. Petersburg's interests, the central event of this month's Russian Economic Forum held in the city can be considered to be a conference at Smolny between members of the federal government members of the St. Petersburg government.
The theme of the discussion was the problems of the city's social and economic development.
At the conference it was noted that in St. Petersburg there are many problems which the city cannot deal with on its own - for example, the high (up to 70 percent) degree of deterioration of housing, engineering infrastructure and historical monument facades decaying before our eyes. Money is needed. Meanwhile the "falling" budget revenues (revenues that the federal center appropriates) are constantly growing. In the last 3 years the figure reached 26 billion rubles ($896 million).
Governor Valentina Matviyenko identified other city problems which require urgent solution, among them the inability of many federal departments, for example, the Defense Ministry, to maintain buildings that should be handed over to the city so that the city's cultural heritage can be preserved. The long-term development of the St. Petersburg metro was also shown to be under threat - funds allocated from the federal center for development are far from sufficient, in total only 10 percent of the amount promised. Financing of the construction of the ring road is also insufficient. The city already maintains the whole Vocational Training Education system at its own expense, and now it wants to assume the responsibility of the maintenance of technical colleges, which were previously a federal concern.
In response, Prime Minister Mikhail Fradkov promised that all these problems will become the subject of deep and thorough discussion for the federal government.
To help the federal government in the crucial discussion of St. Petersburg's problems the following should be noted. From the first group of issues discussed at the conference (the metro, the ring road, the Defense Ministry buildings) everything is clear - the federal government simply needs to implement its own solutions.
Here Matviyenko's logic is flawless. "The President considers the ring road a strategic and pressing project. But the government isn't allocating the remaining 11.5 billion rubles needed to complete its construction, so is itself ruining the president's plans."
With such allegations she confronts the government - here there is nothing to discuss. But the issue isn't just about money. No money is needed for the Defense Ministry buildings to be handed over to St. Petersburg - as Vice Governor Yury Molchanov affirms, the list of buildings has long since been agreed on by the ministry itself, but the documents have got bogged down in the Economic Development and Trade Ministry. Meanwhile, St. Petersburg suffers from a shortage of real estate.
But for the remaining issues the situation is not so simple. The obvious example is the "historical monument facades decaying before our eyes." Restoration specialists claim the facades are decaying mainly because of poor workmanship by restorers. A few years ago micology scientists (specialists on fungi found inside buildings) conducted a study of the practice of repairing the facades of St. Petersburg's historical buildings, and discovered that restoration firms take practically no anti-fungal measures. The extremely high level of groundwater is conducive to the fast spread of damp in the walls. Because of this fungi begin to grow on the walls, which destroy the restoration work done several (sometimes dozens of) times faster than the proper technology would allow. This is why there are so many dilapidated facades in the city even though the funding allocated for their restoration is adequate. If such workmanship continues, the money will never be enough.
It is a similar situation with professional technological education, or PTE. Specialists and some officials (e.g. the director of the St. Petersburg Land Management of the Federal Employment Service, Dmitry Cherneiko) have long been saying that the PTE system in St. Petersburg is organized wrongly - it doesn't train the specialists that the economy needs. An entirely rational solution to the problem has been presented - the combined management of PTE by business and the authorities. The major industrial employers are willing to finance state institutes and technical colleges, but want to control the training process. And they are right. To this end employers have had the idea of organizing private PTE establishments, which would train specialists as a pure business. And so here too no money is especially needed from the state. If such a reform is implemented then it is possible that no federal government funds will be used at all.
The problems of the housing deterioration and falling revenues of the St. Petersburg budget are somewhat more complicated, but Moscow Mayor Yury Luzhkov's method of pouring in money will not solve them, more so since that kind of money will not be available in St. Petersburg, even taking into account federal support.
It would be wiser to consistently carry out the reforms developed by the St. Petersburg government. Then a significant portion of the expenses of restoring housing would be shouldered by business, and reform of the state sector would significantly increase the efficiency of budget resources spending, which would alleviate and maybe totally eliminate the problem of falling revenues. In a word, St. Petersburg, like Russia, is in far more need of institutional reforms than money.
Vladimir Gryaznevich is a political analyst with Expert Severo-Zapad magazine. His comment was first broadcast on Ekho Moskvy in St. Petersburg on Friday.
TITLE: Chris Floyd's Global Eye
AUTHOR: By Chris Floyd
TEXT: Spy Game
So Vlad "The Impaler of Chechnya" Putin has added his two kopeks to the debate over the origins of the Iraq War. Obviously distressed at seeing his self-proclaimed "soulmate," George W. Bush, floundering in the rising tide of truth about his crooked casus belli, the Chekist-in-Chief tossed the Bushists a lifeline mid-June with his claim that Russian agents had uncovered Iraqi terrorist plots against the United States - months before Bush launched his blitzkrieg on Babylon.
Strangely enough, U.S. Secretary of State Colin Powell told reporters he'd never heard of this remarkable intelligence before. This would be the same Colin Powell who spent days poring over "the very best intelligence we had" from "every source" before making the American case for war at the United Nations in February 2003. Given the Bush Regime's extremely low standard for "very best intelligence"- every major assertion made by Powell on that historic day turned out to be a screaming falsehood - one shudders to think how threadbare Putin's terrorist tidbits must have been.
That's assuming they even existed in the first place. Some cynics claim this intervention by the KGB Kid is just typical security organ disinformation, artfully stage-managed to provide a PR boost to the struggling son of ex-CIA chief George Bush I. (And they say there's no honor among thieves.) Others hint darkly of a sinister quid pro quo: What will Putin ask in return for this manful effort to pull Bush's roasting chestnuts out of the fire? A free pass for the Khodorkovsky takedown? Extra sauce at the next Crawford barbeque? The return of the Baltics?
Or perhaps it's just a bit of kooky Kremlin leg-pulling. After all, does Vlad really expect anyone to believe that a Bush Regime that grasped at every possible fear-rousing, warmongering straw - phantom WMD arsenals, phantom mobile WMD labs, phantom uranium, phantom meetings in Prague, phantom terrorist training camps, phantom unmanned bombers that could span the globe - tactfully refrained from mentioning that Saddam had terrorist teams locked, loaded and ready to fire at the American heartland? What, were they too shy to bring this up? Didn't want to cause a fuss?
As for Powell, his expressions of incredulity were couched in the same cringing ambivalence he's displayed throughout his long career as an apologist for bloodthirsty leaders - Nixon, Reagan, Bushes I and II. (Powell even acted as an apologist for Saddam, when Bush I needed to whitewash the infamous gassing of the Kurds in order to keep peddling WMD technology to his then-beloved Iraqi tyrant.) Instead of stating the obvious - that the Russian intelligence, if it existed at all, was so useless that it was flushed out of the system long before it could reach the top - Powell hemmed and hawed and said, well, maybe the boys over "in the intelligence shop" might have seen it.
If so, maybe what they found merely echoed what American intelligence already knew - indeed, what Saddam Hussein had already openly declared: that if Iraq were invaded by the United States, the Iraqis, certain to be overwhelmed militarily, would resort to "asymmetrical warfare" in retaliation, striking at American targets wherever they could. But this wasn't "intelligence" that had to be ferreted out from the bowels of the Baathist regime by wily Russian agents; it was old news from the back pages of the Washington Post and The New York Times. In the fall of 2002, for example, then-CIA Director George Tenet told Congress - in public, under oath - that there was only one likely scenario in which Saddam would ever attack the United States: if America invaded Iraq. This was duly noted in the "papers of record" - then promptly forgotten in the months of media war-drumming that followed.
Tenet's testimony dovetailed with other clear warnings intelligence officials gave Bush before the war: that invading Iraq would absolutely guarantee an upsurge of Islamic terrorism around the world, the Guardian reports. It would be the answer to Osama bin Laden's prayers: an unprovoked "Crusader" attack on the Muslim heartland, an inexhaustible recruiting tool for generations of "holy warriors." Bush knew this going in - he just didn't care. His eyes were on the prize - the milking of Iraq for power and profit - not the security of those pathetic losers who didn't even elect him president: the American people.
No doubt Saddam had his minions draw up plans for an "asymmetrical" response to a U.S. invasion - just as the United States spends countless millions each year wargaming scenarios for, say, invading Iran, taking over the Saudi oilfields, nuking China and yes, impaling Vlad's own Russia.
And no doubt Russian operatives could have easily picked up such plans while, by their own admission, they were helping Iraq prepare its pre-invasion defenses, as the Los Angeles Times reports. But Saddam - a hardened survivor who'd been helped to power by the CIA and supported in his military aggression and WMD attacks by both Reagan and Bush I - was not stupid enough to launch "pre-emptive" terrorist strikes that would have resulted in the immediate destruction of his regime, as Tenet testified months before the war.
It's obvious now that whatever revenge plans Saddam might have had, their actual reach did not extend beyond the streets of Iraq - where Bush has conveniently sent American soldiers and contractors to be slaughtered by the hundreds (while slaughtering and torturing thousands of Iraqis in their turn).
It's obvious too that these retaliations could only have been triggered by Bush's invasion. Only he could "bring it on" - as he has the promised al-Qaida upsurge - with his illegal war based on the lies of spies.
For annotational references, see the Opinion section at www.sptimesrussia.com
TITLE: Iraqis Regain Sovereignty 2 Days Early
AUTHOR: By Tarek El-Tablawy
PUBLISHER: The Associated Press
TEXT: BAGHDAD - The U.S.-led coalition transferred sovereignty to an interim Iraqi government Monday, speeding up the move by two days in an apparent bid to surprise insurgents who may have tried to sabotage the step toward self rule.
Legal documents transfering sovereignty were handed over by U.S. governor Paul Bremer to interim Prime Minister Iyad Allawi in a small ceremony attended by about a half dozen Iraqi and coalition officials in the heavily guarded Green Zone.
"This is a historical day," Allawi said. "We feel we are capable of controlling the security situation."
Bremer and his team were set to leave Iraq sometime Monday, coalition officials said on condition of anonymity.
Although the interim government will have full sovereignty, it will operate under major restrictions - some of them imposed at the urging of the influential Shiite clergy which sought to limit the powers of an un-elected administration.
The new government's major tasks will be to prepare for elections by Jan. 31, handle the day to day running of the country and work along with the U.S.-led multinational force, which is responsible for security. The Iraqis can in principle ask the foreign troops to leave - although it is unlikely this will happen.
However, the United States and its partners hope that the transfer of sovereignty will serve as a psychological boost for Iraqis, who have been increasingly frustrated by and hostile to foreign military occupation. U.S. officials hope that Iraqis will believe that they are now in control of their country and that will take the steam out of the insurgency.
All ministers in the new government were to be sworn in during another ceremony expected later Monday, a senior coalition official said on condition of anonymity.
Asked why the new government decided to hold the transfer earlier, he said Allawi had indicated his ministries were already fully staffed.
"Allawi said we are ready to take this all over... it is part of our security strategy... to have Iraqi officials be held accountable by Iraqis," the official said.
There was little initial public reaction to the near-secret transfer ceremony, which was broadcast on Iraqi and Arabic satellite television stations. There was no celebratory gunfire - which often rattles through Baghdad when Iraq's national soccer team defeats foreign clubs.
Workers were cleaning the area on Firdous Square where the statue of Saddam Hussein was hauled down on April 9, 2003 at the fall of the city. More police were seen in the streets.
In Istanbul, Turkey, where President Bush and other leaders were attending a NATO summit, the U.S. administration said it was pleased by the early transfer and said it was a proud day for the Iraqi people. Coalition officials said Bush had already sent a letter to al-Yawer formally requesting diplomatic relations.
"You have said, and we agreed, that you are ready for sovereignty," Bremer said in the ceremony. "I will leave Iraq confident in its future."
Allawi said he requested that the sovereignty be transferred earlier, reflecting a preference to have Iraqis control their own destiny as soon as possible. Last Thursday, the coalition transferred the final 11 of the 26 government ministries to full Iraqi control, meaning Iraqis were already handling the day to day operations of the interim administration.
TITLE: Iraq Talk Dominates NATO Summit
PUBLISHER: The Associated Press
TEXT: ISTANBUL, Turkey - NATO leaders opened a summit Monday dominated by the situation in Iraq as the U.S.-led administration handed over power to an Iraqi government two days ahead of schedule in an apparent attempt to surprise insurgents.
The NATO leaders were to pledge more help for the incoming Iraqi government, including training for its fledgling armed forces as it struggles to contain a wave of deadly insurgent attacks.
In their first summit since the alliance was wracked by bitter divisions over the Iraq war, the 26 leaders were set to agree on a request from Iraqi interim Prime Minister Iyad Allawi for aid in rebuilding Iraq's armed forces.
The number of NATO instructors to be deployed and the timing of the operation were unclear, but the move will give NATO a military presence on the ground in Iraq for the first time. Sixteen nations have sent troops individually to join coalition forces in Iraq.
On Monday, police used tear gas to stop hundreds of protesters from approaching the conference center where NATO leaders were meeting in Istanbul.
The protesters threw fire-bombs and several police and protesters were injured and were evacuated to local hospitals.
"We have shown that we are firmly resolved to confront risks and threats to our security well beyond NATO's traditional zone of operation," said alliance Secretary General Jaap de Hoop Scheffer as the leaders prepared to confirm the decision on training Iraq's forces.
However, the decision falls well short of U.S. hopes that NATO would assume a major military role in Iraq, perhaps by taking over the multinational-division currently run by Poland.
Opposition from France and Germany has ensured that NATO won't deploy large numbers of troops and differences persist between those nations and the United States over the implementation of the training program.
TITLE: Serbia Elects President on Third Try
PUBLISHER: The Associated Press
TEXT: BELGRADE, Serbia-Montenegro - A pro-Western reformer won Serbia's presidential run-off election Sunday, defeating a hard-line nationalist ally of former autocrat Slobodan Milosevic.
Boris Tadic received 54 percent of the vote to become Serbia's first democratically elected president since World War II. Nationalist Tomislav Nikolic got 45 percent, the state electoral commission said. Turnout was 48 percent.
The vote was seen as crucial to whether Serbia moves closer to the European Union and NATO, or sinks back into the nationalist isolation reminiscent the Milosevic regime.
"This election has shown that Serbia knows how to recognize a historic moment," Tadic said, celebrating his victory.
"My hope is that Serbia will never again be led by a man who will spearhead the killing of our countrymen," he added, referring to Milosevic, whose nationalistic regime triggered the Balkan wars of the 1990s that broke apart Yugoslavia.
Nikolic, conceding defeat based on his Serbian Radical Party's tally, blamed his loss on "almost all Serbian politicians and the West for spreading fear" among voters.
Three previous attempts to elect a Serbian president since 2002 failed because too few voters showed up. Earlier this year, parliament scrapped a 50 percent turnout requirement.
Tadic had been the favorite from the first round of voting, when Prime Minister Vojislav Kostunica, most ethnic minorities and many local celebrities supported him over 12 other candidates.
Tadic has been an ardent supporter of extraditing Serb war crimes suspects to the UN tribunal covering the Balkan wars, Europe's worst carnage since World War II.
Nikolic, 52, strongly opposes Western extradition demands and had said he would dedicate a victory in Sunday's election to Milosevic.
Tadic, 46, a soft-spoken Sarajevo-born psychologist and Belgrade college professor, entered politics in 1990 as a member of the pro-Western Democratic Party.
He took his party's helm in February after the assassination of Zoran Djindjic - the Democrats' leader and Serbia's first noncommunist prime minister since World War II - in March 2003.
TITLE: 'Fahrenheit' Hots Up U.S. Box Office
PUBLISHER: The Associated Press
TEXT: LOS ANGELES - Michael Moore's "Fahrenheit 9/11" took in a whopping $21.8 million in its first three days, becoming the first documentary ever to debut as Hollywood's top weekend film.
If Sunday's estimates hold when final numbers are released Monday, "Fahrenheit 9/11" would set a record in a single weekend as the top-grossing documentary ever outside of concert films and movies made for huge-screen IMAX theaters.
Adding the film's haul at two New York City theaters where it opened Wednesday, two days earlier than the rest of the country, boosted "Fahrenheit 9/11" to $21.96 million.
"Bowling for Columbine," Moore's 2002 Academy Award-winning documentary, previously held the documentary record with $21.6 million.
Conservative groups sought to discourage theaters from showing the film and asked the Federal Election Commission to examine its ads for potential violations of campaign-finance law regulating when commercials may feature a presidential candidate.
"I want to thank all the right-wing organizations out there who tried to stop the film, either from their harassment campaign that didn't work on the theater owners, or going to the FEC to get our ads removed from television, to all the things that have been said on television," Moore said. "It's only encouraged more people to go and see it."
TITLE: IN BRIEF
TEXT: Saddam Handover Soon
BAGHDAD, Iraq (AP) - Coalition officials and the Iraqi government have agreed to transfer legal custody of Saddam Hussein in a week, a coalition official said Monday.
The ousted Iraqi leader, however, will remain in the hands of U.S. troops, because Iraq doesn't have a prison strong enough to hold him, a U.S. official said last week.
The Iraqi Special Tribunal, established six months ago, is expected to try Saddam for atrocities committed during his 23 years as president, including the deaths of some 300,000 people.
Nuclear Rivals Talk
NEW DELHI (AP) - Nuclear-armed rivals India and Pakistan agreed Monday to notify each other before testing missiles, to open consulates and to work toward settling their five-decade dispute over Kashmir and other bilateral issues.
The two nations' foreign secretaries met for a second day Monday and "reiterated that the dialogue would lead to peaceful settlement of all bilateral issues," including Kashmir, Indian foreign ministry spokesman Navtej Sarna announced.
Outlining a series of new confidence-building steps, Sarna said the two countries would work toward an agreement to notify each other before testing missiles. This follows an accord last week to set up a hotline to prevent accidental nuclear war.
The two countries will open new consulates in Karachi, Pakistan and Bombay, India and restore their embassies to full strength of 110 staffers each, Sarna said.
They will also free all fishermen seized in each other's territorial waters, he said.
Kerry With Protesters
BOSTON, Massachusetts (Reuters) - Democratic presidential candidate John Kerry canceled plans on Sunday to address a U.S. mayors conference this week at a hotel that is likely to be ringed by picketing police officers.
"I don't cross picket lines. I never have," Kerry said at Our Lady of Good Voyage church in South Boston, where he attended Mass on Sunday evening.
Kerry had been scheduled to speak on Monday morning at the Sheraton Boston Hotel, where police officers - who have been working without a contract for two years - had a picket line on Saturday. Kerry would upset unions across the country if he crossed a picket line.
The Boston Police Patrolmen's Association is asking for a raise of about 17 percent over four years, while Boston's Democratic mayor, Thomas Menino, the host of the conference, has offered 11.9 percent.
Quick Puffs for Smokers
ALBANY, New York (AP) - Smokers who linger between drags on their cigarette may need to be a tad more careful in New York. Their smokes will self-extinguish if not puffed on regularly.
Beginning Monday, New York becomes the first state to require new "fire-safe" cigarettes to be sold. The law is meant to cut down on the number of smoking-related fires.
For the past several months, companies have rushed to meet the deadline to supply vendors with the new cigarettes, which are wrapped in special ultra-thin banded paper that essentially inhibits burning.
But manufacturers warn that though the new cigarettes go out on their own, they're not fireproof and careless handling could still lead to fires.