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| Johnson's Russia List #8014 14 January 2004
davidjohnson@erols.com A CDI Project www.cdi.org
Contents: 1. Moscow Times: Nikolai Petrov, Monolithic New Duma Is Just an
Illusion. ********* #1 Moscow Times January 14, 2004 Monolithic New Duma Is Just an Illusion By Nikolai Petrov The political year 2003 ended with the first plenary session of the fourth State Duma, giving voters a look at the representatives they elected on Dec. 7 and setting the tone for the next four years. Tellingly, the speakers who addressed this combined battalion of new deputies --army general and 1991 putsch participant Valentin Varennikov, President (and Colonel) Vladimir Putin and Boris Gryzlov, former interior minister and now speaker of the lower house -- all hammered home the same priorities: doubling Russia's GDP, winning the war on poverty and pushing forward with military reform. All three points were unveiled in Putin's last address to the Federal Assembly. That's what you call staying on message. Putin, addressing the Duma for the first time as president, called on deputies "to serve as an example of devotion to the basic principles of democracy" before rolling out a laundry list of market-based reforms they will be expected to see into law. The list included an overhaul of public health and education, creation of an affordable housing market, development of banking, financial and tax collection systems, fine-tuning the laws on land ownership, strengthening ownership rights, increasing the efficiency of public spending and improving the performance of all government agencies. The changing of the guard is typical of the Putin era. Before there were personalities. Now there are cogs in a machine, installed to perform a specific function. And by all accounts, the new Duma will have strictly limited functions. In Gryzlov, the new speaker, we have a second Sergei Mironov. In the new Duma we have a second Federation Council. Gryzlov's election marked the first time that the Duma speaker is also a faction leader. In a way this makes sense. After all, if Gryzlov wants to gather his more than 300-strong faction in one room he'll have little choice but to use the Duma's main chamber. Duma sessions are going to look like meetings of the United Russia faction with a sprinkling of special guests from other parties. In the past, bitter competition between rival factions drove the number of committees in the Duma to 28. Hopes that the new one-party majority might downsize a few of them came to nothing. All the bigwigs who rallied to the Kremlin's banner need big offices and foreign cars, after all. So much for administrative reform and trimming bureaucracy. In fact, the number of deputy speakers rose this time around to 10, including two first deputies. Just three of the deputies come from the "minor factions." The rest are Unirussians. As a result, United Russia has eight of the 11 votes on the Duma Council, which sets the agenda for the lower house. And what about the "new right"? Forget about it. There are only a couple dozen independent deputies in the Duma, and the bar for registering a new deputy group has been raised from 35 to 55. The real size of the Duma is now equivalent to the size of its dominant faction. United Russia's deputies will play all the major roles; the rest of the deputies are nothing more than extras. The decisiveness with which the pro-Kremlin majority altered the Duma's rules and regulations to suit its needs should leave no doubt that it could amend the election laws and the Constitution just as quickly and just as radically. And yet the new Duma only appears to be monolithic and manageable. The new majority is more than happy to follow the Kremlin's orders as it divides the spoils, but the faction is far from indivisible. Political parties, which clashed on the floor of the Duma, have given way to the parties of governors and special interests who will clash behind closed doors. The Kremlin clans who pull the Duma's strings are also far from unified. The battle for leadership posts in the new Duma promises to be a serious one, and the outcome will become clear when the Duma convenes later this week. It is already obvious, however, that while it won the battle on Dec. 7, the Kremlin, and society as a whole, have lost the war. The fourth Duma will be a reliable tool for the Kremlin, but the quality of the legislation it passes is certain to decline now that all quality control mechanisms have been dismantled. Mistakes are inevitable, and we're all going to pay the price. Nikolai Petrov, head of the Center for Political and Geographical Research, contributed this comment to The Moscow Times. ********* #2 gazeta.ru January 14, 2004 No homosexuals allowed in new Duma By Yelena Rudneva, Maria Tsvetkova The painful redistribution of top jobs in the State Duma has finally been completed. United Russia has, quite unexpectedly, given several key posts in house committees to virtual outsiders. Gennady Raikov, known for his dislike of homosexuals, has been appointed the chairman of the committee for deputies' ethics, a couple of days after defecting from the People's Party. On Tuesday it became clear why the redistribution of committee chairmanships had been so problematic for United Russia, which secured the majority of seats in the lower house at last month's elections. The process has continued for over a month, with new variants being proposed nearly every week. Although initially United Russia deputies seemed to agree with the idea that they should share control of the Duma committees with other factions, they decided to let their former rivals only take the posts of deputy chairmen. There just wasn't enough posts for the swollen United Russia ranks. The lack of top jobs led to the introduction of an extra post of a first vice-speaker in each committee. One such post was retained by Lyubov Sliska, another was introduced especially for Alexander Zhukov, the former head of the Duma budget committee. On Tuesday the biggest faction in the new Duma, that now has over 300 members, gathered to finalize its decision on the distribution of committee posts. The United Russia members barely managed to squeeze into the Duma's small conference hall which is usually used for news conferences and parliamentary hearings. The session was brief and rather formal - at first the deputies patiently waited for Boris Gryzlov, the party leader and chairman of the State Duma, and then spent about 20 minutes behind closed doors. That is how long it took them to vote for the names of the candidates to the leading committee posts, proposed by the party leadership. As she emerged from the conference hall, Alexandra Buratayeva, clearly upset by her colleagues' decision to appoint Yekaterina Lakhova and not her to the post of the head of the committee for the affairs of women, complained to other deputies that no alternative candidacies had been nominated. Why some United Russia activists failed to claim key posts became clear when Gryzlov appeared before the press to announce the results of the session. The all-important budget committee had been entrusted to Yuri Vasilyev, the former mayor of Pyatigorsk, and hardly noted for his party work. All that is known about him is that he did a postgraduate course at the Leningrad State University and that in August last year his jeep was hit by a bomb in Pyatigorsk. Vasilyev was not in the car when the blast occurred. Initially, the faction members assumed that the head of the budget committee would be the former chief of the sub-committee for classified budget expenditure, Vladislav Reznik, who enjoys a reputation as a virtuoso lobbyist. However, Reznik will be in charge of credit organizations and financial markets. The Motherland bloc nominated Viktor Gerashchenko, the former Central Bank chief, to that post. Another surprise decision taken at Tuesday's session was the appointment of Vladimir Pligin, a lawyer from St. Petersburg, to head the committee for nation building. In the mid-90s Pligin defended the then-mayor of the northern capital Anatoly Sobchak in court. Pligin's predecessor, Valery Grebennikov, who many thought would automatically retain his post, arrived at the session already knowing that the party leadership had revised its plans concerning him. When asked by journalists about his successor, Grebennikov said he could not remember his name. Otherwise, most of the posts were distributed as had initially been planned. Former SPS member Pavel Krasheninnikov retained his post as chairman of the Duma committee for legislation, renamed the committee for civil, criminal and arbitration law. Konstantin Kosachev was appointed the head of the committee for international affairs, succeeding Dmitry Rogozin. Gennady Raikov, the former leader of the People's Deputy Group (the People's Party), who announced his decision to join the United Russia faction only a day earlier, was entrusted the top post in the Duma credentials committee, which, among other things, will oversee deputies' ethics. The State Duma will convene for its first session this year on Friday. ********* #3 Izvestia January 14, 2004 WHY THE RUSSIAN PEOPLE ADORE PUTIN Citizens happy with foreign policy, but concerned about personal safety Author: Georgi Ilyichev [from WPS Monitoring Agency, www.wps.ru/e_index.html] [Over half of citizens attribute Vladimir Putin's support rating, which has remained at an unprecedented level of 70-80% for the past few years, not to the president's achievements or outstanding personal qualities, but to their own hopes for a bright future - and a lack of any realistic political rivals.] Over half of Russian citizens attribute Vladimir Putin's support rating, which has remained at an unprecedented level of 70-80% for the past few years, not to the president's achievements or outstanding personal qualities, but to their own hopes for a bright future - and a lack of any realistic political rivals. This conclusion follows from a nationwide poll done by the National Public Opinion Research Center (VTsIOM) shortly before New Year (1,600 respondents). The pollsters asked respondents to compare the situation in various areas of society as it was when Boris Yeltsin was president, and the way things are now. Responses indicate that the greatest achievements over the past four years have been made in three areas: foreign policy, raising living standards (almost half of respondents said they have "expanded opportunities for earning money"), and restoring constitutional order in the mountains of Chechnya and Dagestan. The worst situation, according to respondents, concerns personal safety for Russian citizens. Following the terrorist bombings in summer and autumn 2003, and another incursion into Dagestan by Chechen guerrillas, it would be strange to expect any other answer - but many of the pollsters were unprepared to see one-third of respondents expressing their concern about this. The situation is almost as bad in the social sphere (health care, science, education) - one-third of respondents noted a deterioration here as well. The pessimists also outnumber the optimists (by 2-3%) in assessments of two more vital areas for society and the state: fighting crime and developing inter-ethnic relations. However, the human rights situation and the development of democracy in Russia aren't doing as badly as the president's opponents at home and abroad claim: 23% of respondents noted improvements in these areas, and only 15% said they had deteriorated. Pollsters also attempted to determine how citizens' attitudes are correlated with their political preferences. As expected, the most positive assessements of all issues came from supporters of United Russia, while Communist Party voters were gloomiest of all. But supporters of Yabloko and the Union of Right Forces (URF) yielded some surprises: far more frequently than respondents with other political orientations, they claimed to see improvements in human rights, personal safety, development of democracy, and resolution of the conflict in Chechnya. Don't laugh: 44% of URF voters believe the fight against corruption in Russia is going well. Remember that the leaders of these parties went into the parliamentary election campaign claiming the exact opposite. Perhaps this misunderstanding of the attitudes of their own voters was one of the main reasons behind their defeat. Only one-fifth of respondents agreed that the president's outstanding approval rating is the consequence of Vladimir Putin's real achievements during his time in the Kremlin. A similar proportion of respondents believe the president's rating is due to his personal and professional qualities. Meanwhile, one-third of respondents are sure that the high support rating is due to citizens' hopes for what the president may achieve in future. The pollsters drew the following conclusion: while giving Putin's real successes and achievements their due, most citizens are fairly objective and critical in their assessment of various aspects of the president's activities over the past four years. Translated by Andrei Ryabochkin ********** #4 Nezavisimaya Gazeta January 14, 2004 TWILIGHT AT THE END OF THE TUNNEL It's not easy for Putin to be a reformist president of Russia Author: Konstantin Mikulsky [from WPS Monitoring Agency, www.wps.ru/e_index.html] [The most difficult task in a transition period is convincing people that the policy course chosen by the state is essential and correct. This course should not deviate from aiming to shape an effective economy, social justice in societal relations, and political democracy.] A hundred years from now, the events of the late 1980s and early 1990s will be universally remembered as the Great Anti- Communist Revolution that opened the way for Russia and the other socialist states to restore the socio-economic foundations of society which are commonly accepted by global civilization, and suited in principle to the opportunities and demands of the 21st Century. Right now, the prospect of the distant future brings no joy - but the social losses of the 1990s are still keenly felt. Russian society is going through a specific transition phase in development from "communist socialism" to modern socialized capitalism. In Russia, this transition phase has taken the form of a special kind of capitalism: asocial, criminal-bureaucratic capitalism. It can only be civilized by deep, goal-directed transformations of a revolutionary nature. And in order for that to happen, the requisite forces in society need to take shape, along with their ideology and strategy. The parliamentary election results haven't removed the many and varied prospects for Russia's development from the agenda. Under the circumstances, it is particularly important that the policy course chosen by the state should not deviate from aiming to shape an effective economy, social justice in societal relations, and political democracy. The general public, and especially the elite, must be convinced that such a course is essential. Putin, as the most senior state official, has been fortunate in becoming president of Russia rather than any other country. The idea of having one leader prevails in the impressions Russian citizens have of normal state governance. They are attracted to the idea of totally entrusting their fate to the regime. It's no accident that the parties which were successful in the elections more or less openly used the slogan of "We'll support Putin's policies, whatever they may be." However, in terms of his reform mission, it's not easy for Putin to be president of Russia. On that issue - reforming the nation - he cannot win the active, involved support of the people. The people can be the passive object of reforms, "onlookers," obedient - but as a whole, they cannot yet act as a force directly involved in transformations, driving the transformations forward by their own actions. In consequence, they cannot provide the president with active political and moral support. Hence, the president is obviously dependent on the conservatism of the elite. It's easy enough to fight a cluster of essentially defenseless oligarchs - but it's extremely difficult to draw the bureaucratic class into the current of socio-economic and political reforms, along with the "political class" of the same type, which is frequently unable to accept many things which are vital for the nation. We are forced to admit that in the absence of effective democratic sectors of the political spectrum, progress towards real democracy and a socially-oriented market economy in Russia is only possible with the help of the regime. And that automatically implies that the regime will be of an authoritarian nature, to some extent. The authoritarian mechanisms are already evident or under construction. Essentially, all the preconditions have been created for strict state control over politics. This is a fateful issue for Russia: which direction of social development will the authoritarian regime choose? Conserving the existing order of things, even intensifying it - or shaping a civil society? Presumably, the president is aware that there is no alternative to entrenching a free market economy in Russia, with a certain amount of state regulation restricted to objective needs: in other words, implementing contemporary liberal ideas in one form or another. However, economic policy is subject to change depending on the dominant direction of political influences and economic circumstances. The situation in politics is even more complicated. The elite's attitude to democratization of society is frequently rather negative. The elite aims to retain the political status quo (this doesn't rule out power-struggles within the elite). Therefore, the elite wants a weak state in the areas where it is busy enriching itself and making free with the law - but a strong state in the areas where it needs to counter social resistance and defend its privileges. Favorable political resources (the president's high authority, his administration's leading role in shaping state policy, the favorable economic factor of relatively high GDP growth) are not yet being used to the full extent in order to make progress on reforms. The regime's attention is focused on further strengthening its political positions. The regime is systematically lagging, however, in addressing socio-economic and socio-political problems. And having two different directions of development at once - creating a liberal economy combined with the slowing effect of authoritarianism on political processes - could do irreparable damage to Russia. The current, largely unstable, transition situation could generate an entrenched socio-economic system of a clan- bureaucratic type - with an authoritarian political order, a party system shaped by the state rather than oriented towards social dynamics, and passivity among the majority of citizens. This would entail a historical defeat for Russia - especially since many of the nation's major problems, including the problem of ensuring economic growth, are showing signs of getting worse. The goal of overcoming Russia's asocial criminal-bureaucratic capitalism will not be served by "restoring fairness" via crushing any particular oligarch, or reducing the profitability of oil monopolies, or nationalizing any particular enterprises, or increasing the state intervention in the economy which is perceptible in the present condition of state administration. Just as Russia's current form of capitalism was created under the direct influence of the state or condoned by the state, the process of making the socio-economic system healthy must begin with changes in the mechanism of state. And in this context, it is a cause for concern that the first steps of the long-overdue state administration reforms are being delayed. Translated by Grigory Malyutin and Andrei Ryabochkin ********* #5 BBC January 13, 2004 Russians reveal laws they want most By Artyom Liss bbcrussian.com As Russia's newly-elected parliament prepares for its first sitting, bbcrussian.com has been asking readers what law they would most like to see passed. The replies point to widespread mistrust of both parliamentarians and the whole political system. The most popular idea is for a law that would make parliamentary deputies "do their jobs properly - or else". Igor from Russia wrote in to suggest that ordinary people should award each deputy a score between 1 and 10. Politicians who score less than 5 at the end of their four years in office would then face another four years behind bars. And Anna from Moscow thinks that the new deputies should start by abolishing their own immunity against criminal prosecution. No more laws! Many people think that the best laws have no chance of coming into existence in Russia, because of corruption and bureaucracy. E-mailer 'S.O.V.O.K' [slang for Soviet man] suggests, ironically, that the best laws are those which just legalise existing customs and traditions. "So I think that we need a law to make the position of President hereditary," he writes. "Also, a free Boeing-747 should be allocated to each deputy, and we should also set a cap on bribes - it's time we finally made those below-the-table payments official!" On a slightly more serious note, Yana from Russia wants a total ban on new laws. The reason? "To give deputies more times to make sure that existing legislation works!" Vodka ban? Of the minority who still hope to see the new parliament changing Russia for the better, most suggest: a tax increase for oil companies, and lower taxes for the rest of industry military reform, replacing conscripts with paid professionals, a financial incentive for those who want to have more children, legalisation of marijuana and a ban on vodka. Banning vodka is, of course, a non-starter, but some of these ideas are already floating around in the corridors of the new Duma. Taxing oil producers into the ground seems to be particularly popular with the newly-elected parliamentarians, and the reform of the military has been on the minds of many Russian politicians for the past few years. So at least part of what has been suggested during the bbcrussian.com interactive brainstorm seems to have a chance of becoming reality. Whether it will change life in Russia for the better, is open to debate. ********* #6 Three-quarters of Russians back censorship - poll January 13, 2004 MOSCOW (Reuters) - More than three-quarters of Russians think censorship is necessary because there is too much sex and violence in the media, an opinion poll showed Tuesday. According to the survey of 1,500 Russians, conducted by ROMIR monitoring, 41 percent thought censorship was "definitely necessary" while 35 percent thought it was "probably necessary." Only six percent thought it was "definitely not necessary." Russia's media has struggled to achieve independence since the end of the Soviet Union, and national television has been brought firmly back under state control since Vladimir Putin became president four years ago. The clampdown has brought criticism from rights groups, but most Russians have accepted it without protesting. There has been an explosion of pornography and an increase in sex on television after the staid coverage of Soviet times. "This is not a question of the Soviet Union being better, people think the media are too aggressive," said ROMIR spokeswoman Yevgeniya Krikina. "People think there is too much sex and so on, they do not want to restrict information." ********* #7 RosBusinessConsulting January 14, 2004 Russia almost stops dollar imports The import of US currency to Russia has almost ceased while the volume of cash rubles is growing. This denotes a change in the correlation between cash rubles and dollars. The Izvestia newspaper reports that the introduction of a new ruble banknote, a 5,000-ruble banknote, will be the finishing touch in this trend. It may substitute a 100-dollar banknote, which is a popular form of cash savings in Russia. The volume of cash dollars in circulation in the world is $630bn, and less than a half of this amount is in circulation in the USA. At least 370bn dollars are circulated outside the issuing country, and this share was constantly growing over the past decade, Izvestia reports. According to information from the US Department of the Treasury, only a third of all dollars were in circulation in foreign countries at the beginning of the 60s. Demand for cash dollars rocketed at the beginning of the 90s due to unprecedented demand for cash dollars in Russia and neighboring countries. According to official data, Russia was importing up to $2bn a month between 1994 and 1996. US bankers recall that almost all newly printed dollars were sent to Russia at that time. As a result, about 40 percent of all cash dollars circulating outside the USA was accumulated in former social countries. However, stability provided by dollars costs Russia dearly. According to estimates of the US Department of the Treasury, the national budget receives a "bonus" of about $14bn to $16bn a year in interest on state securities, the main asset that guarantees the dollar's stability. This means that Russia's dollar imports provide $1.5bn to $3.3bn in revenues to the US budget. Currently, Russians have $37.6bn in the so-called dollar equivalent, which includes cash dollars and euros. Foreign financiers estimate this volume at about $40bn to $80bn. However, the flow of new dollars to Russia has ceased. Demand for dollars has actually ceased and it is met by internal resources, a domestic bank expert reported. He predicts this tendency will not change this year citizens are not willing to buy dollars. Meanwhile, the volume of cash rubles is constantly growing. According to information from the Russian Central Bank, this volume increased by about 30 percent over the past eleven months. Yevgeny Gavrilenkov, the chief economist of Troika-Dialog, estimated the ruble's success as a result of Russia's economic growth. ******** #8 The Guardian (UK) January 14, 2004 Putin angry at history book slur Nick Paton Walsh in Moscow The history books in Russia may have to be rewritten yet again. President Vladimir Putin has ordered a review of all history textbooks after one controversial book asked students to debate whether he was a dictator running a police state. The Russian president has written to the president of the Russian Academy of Sciences demanding an inquiry into the history textbooks used across Russia by February 1. The pretext for the letter, dated last month, is a response to complaints about Russian history books, particularly from world war two veterans. Yet privately, Kremlin officials are thought to be furious about one particular textbook, National History: the 20th Century, which addresses the former KGB officer's authoritarian administration. The Kremlin has been careful to create a popular mandate for the revision. According to the Kommersant newspaper, Mr Putin writes in the letter: "I share the feelings and opinions of the veterans of the great patriotic war [the second world war]. I order in that in the shortest period of time scientists and historians be invited to consider the situation with history books for middle schools. The results of this work should be reported by February 1." National History: the 20th Century was banned in schools in November by the education ministry. Some 20,000 copies were being read by 16- and 17-year-old schoolchildren - impressionable future voters. The book was written by a history teacher, Igor Dolutsky, and addresses Mr Putin's rise to power. It asks students to "disprove or prove" a remark by journalist Yury Burtin about "Putin's personal power and authoritarian dictatorship". ******** #9 kremlin.ru Moscow, the Kremlin January 12, 2004 Vladimir Putin's Speech at the First Session of the Council under the President for the Fight against Corruption VLADIMIR PUTIN: Good afternoon respected colleagues, We are holding the first session of the Council for the Fight against Corruption today. And I would like to describe its tasks in more detail. Many countries, to some or other extent, have to deal with the problem of corruption. And a certain practice has already been worked out, while great experience in targeted anti-corruption policies has been accumulated. Entire systems to counteract this evil are in place. The main form of corruption in Russia today is bribery. Meanwhile, corruption as a social manifestation is a far more complicated matter. Its consequences extremely negatively affect the most diverse spheres of state and public life, from the economy to morals. It is obvious that corruption is closely linked with various forms of abuse of power. Moreover, this occurs at all levels. This comes in the form of all sorts of preferences for so-called close businessmen and the creation of extra-legal advantages when receiving state services and much more. In essence, this means actions that lead to violations of equality and the very freedom of economic activity. They lead to the state failing to fulfil its obligations to guarantee honest competition. As a result, citizens' legal rights are violated, the economy's normal development is held back and serious barriers emerge in the way of economic growth. In general, corruption demoralises society, while it damages the authorities and the state apparatus. It is particularly unacceptable in judicial and law enforcement practice, in judicial and law enforcement bodies, for whom the fight against corruption is a primary function. I believe that the main task of the council, as a consultative body, is to identify the reasons for and the conditions in which corruption spreads. And this is the basis for drawing up a systemic anti-corruption policy. This should be a policy that is reflected in both current legislation and in the organisation of enforcement proceedings. I would like to stress once again: the roots of corruption lie in the very flaws of the organisation of the state's economic and administrative life. Poor quality legislation cultivates these roots, while they spread due to the lack of effective control over the activity of officials, and bodies of state and municipal power. As you know, the authorities in Russia have repeatedly and forcefully declared that corruption needs to be dealt with. Entire programmes have been drawn up, while individual, quite tough measures have been taken. However, I should say directly that they have not, unfortunately, had much effect. The scale of this problem will only be reduced when the country sees the law, its institutions of democracy and the civilised market strengthened. And when the authorities will not only fight with the consequences of corruption, but also its causes. Accordingly, I would like to set out the main priorities that, in my view, form the basis of our joint work. Firstly, constant and systemic anti-corruption expert studies have to be conducted with regard to legislation. This applies to both articles that could lead to abuse and the very possibility of corruption in current laws and bills being prepared. The legal field has to be cleared of empty declarations, dual interpretations and internal contradictions. Laws should only include clear and realistic demands, as well as comprehensible mechanisms for their application. Secondly, the council will have to become involved in work to analyse the activity of federal, regional and local bodies of power. I would like to emphasise that this does not mean interfering in the work of local authorities. I am speaking about analysing their activity. You know that the relevant commission has already been set up, whose results should not only influence the course of administrative reforms. I should reiterate that we have delayed this process, but also the definition of an anti-corruption component part of the state policy. The execution of any administrative procedures should be as transparent as possible. Bodies of power have to part once and for all with the traditions of making state and municipal decisions outside the limits of budgetary and taxation legislation. And the budget and extra-budget funds established by the law must become the only way to receive and allocate money for the authorities. The third area of our activity is the improvement of the state and municipal apparatus, the tough regulation of officials' rights and obligations. A task connected with this is the creation of a working mechanism to settle conflicts of interests of state and municipal service officials. They need to be put within strict procedural limits, while the results of their work must be open to civil society, to people, in essence, taxpayers, who pay for the services of the state apparatus from their own pockets. We should not be afraid, in my opinion, of improving the material situation, raising the wages of officials, but their activity should be transparent, open and absolutely understandable for society. The council will have to form working commissions featuring specialists who know the problem and have great authority in the professional and public sphere. The council should possess objective information about the scale of corruption and in which areas it has become the most entrenched. It should rely on clear legal criteria and appraisals. We must provide an exact definition of the very notion of "corruption" and understand what facilitates it in today's conditions. And, finally, my last point. The more effective and stronger the institutions of civil control are, the fewer chances to abuse power in the interests of personal and collective gain there will be. And, therefore, one of the council's tasks is to work out effective forms of public control over state and municipal authorities. We have already raised this subject repeatedly, but effectively working mechanisms of control have so far not been established. I would suggest that the council should put forward its own specific proposals in the form of legislative initiatives of the Government and the President of the Russian Federation. In conclusion, I shall add that the period of the organisational formation of the council must be completed as soon as possible, including with regard to its expert and working mechanisms. Empty talk, any fuss or form of "campaigning" is totally unnecessary in this sphere and they must be consigned to the past. On the contrary, precise and realistic measures are needed both to deal with instances of corruption and, most importantly, to prevent them. To fulfil this task and form, as I have already said, working bodies quickly, I propose that we appoint the council's chairman today. I know that some of my colleagues are of the opinion that the chair should rotate for a period of six months. I agree with them. We shall do this. I propose that the council's chairman for the first six months be Chairman of the Russian Federation Government Mikhail Kasyanov. If there are no objections, then let's do this. Now let's talks about the formation of the two working commissions and determine who will chair them. ******** #10 kremlin.ru Moscow, the Kremlin January 12, 2004 Vladimir Putin's opening speech at a Government session President Vladimir Putin: Good afternoon, colleagues, As you know, more accurate data about the results of our work last year and for the past few years in general are currently being finalised. One can say with satisfaction it is becoming increasingly obvious that the goals that we set ourselves one being the doubling of GDP in ten years are attainable. I would like to draw your attention to this and say that we cannot allow rates to slow down. In spite of all the difficulties, they still need to be developed. This concerns economic growth rates, other macroeconomic indices and inflation. We are consistently lowering the latter. This year, we are setting ourselves the task of attaining the level of ten percent. This is also asking a lot, but, bearing in mind the positive trends that we have managed to secure with regard to this parameter in the past few years, this is an objective, real index and it has to be achieved. The same applies to securing labour productivity growth rates. Last year, despite the gap between labour productivity and household income growth rates, for the first time productivity lagged behind. Nevertheless, for the first time, incomes were guaranteed by increased labour productivity. This is a positive sign for our economy, and we need to ensure that it is maintained. Of course, all this is being done with one aim in mind: to solve the population's social problems. I know that the Government is considering the medical insurance issue this week. This and other similar matters should constantly stay in the focus of our attention this year. You know that an official visit to Kazakhstan took place. Many important documents were signed, but it is not important how many documents were signed. What is important is the level and nature of our relations with Kazakhstan that have taken shape over the last few years. And I would like to thank all my colleagues who are taking part in this process. We not only agreed to extend the lease for the Baikonur space centre until 2050, which is extremely important. We also agreed to co-operate in the space exploration sphere in the broadest sense of this term. We reached agreement concerning our interaction on an entire series of other areas in the economy, the social sphere, border issues and the fight against crime. We agreed to co-operate more closely in the energy sphere. We are expanding our extraction, and our partners, including Kazakhstan, are doing the same. Kazakhstan has serious plans in this area, and I think that you will agree with me: we, bearing in mind the strategic nature of our relations, must think about how to guarantee the lawful interests of our partners, including in the transportation of their energy carriers. We shall speak about this separately at a later date. This is all I would like to say at the moment. Let's exchange up-to-date information. ********* #11 Date: Tue, 13 Jan 2004 From: "Celeste Wallander" <CWallander@csis.org> Subject: Re: 8010/sitcoms Re: Melvin Anders' piece, in addition to sitcom, there is radio comedy show evidence that Russia serves American audiences as negative referents. On January 3rd's NPR radio news quiz game show "Wait, Wait" for the Listener Bluff segment the panelists advanced three stories on historical facts whom someone is trying to re-invent. Two of the stories are false, the third is true, the challenge is to pick which is true. I cannot remember the third, but one was that Mata Hari was really a man. The third story was about a campaign in Russia to reconstruct Ivan the Terrible as not so bad, and by the way Stalin as maligned and misunderstood as well. Knowing the reference in question, and knowing Russia these days, I of course knew this was the true one. The person playing the game did not, however. Too crazy to believe, I guess. Celeste A. Wallander Director, Russia and Eurasia Program and Trustee Fellow Center for Strategic and International Studies 1800 K St. NW Washington DC 20006 Tel: (202)775-3233 Fax: (202)775-3199 Email: cwalland@csis.org ******** #12 Russia: Leadership Struggles With Yukos Affair By Sophie Lambroschini The Russian Audit Chamber has disclosed details of its coming probes into big business. Prime Minister Mikhail Kasyanov has renewed his defense of the Yukos energy giant . Later this week, the Moscow city court is set to hear an appeal by jailed Yukos boss Mikhail Khodorkovskii challenging the legality of his pre-trial detention, which was prolonged late December 2003. RFE/RL reports that the Russian leadership still appears to be split on how to handle the business dealings of the country's oligarchs, and the Yukos affair in particular. Moscow, 13 January 2004 (RFE/RL) -- Russian Prime Minister Mikhail Kasyanov was blunt. He told the Russian business daily "Vedomosti" in an interview yesterday, "If legal activities to optimize tax payments are declared illegal retroactively, then I see this as negative." His declaration came days after the Tax Ministry had presented Yukos with a 98-billion-ruble -- equivalent to almost $3.4 billion -- tax arrears and fraud bill for 2000, following a tax audit in December 2003 and a new probe by the Russian audit chamber into big business. A Tax Ministry press release said that Yukos's alleged backlog includes taxes avoided on tax-optimizing schemes through domestic offshore zones and closed companies. The new tax bill follows a string of accusations against former Yukos CEO Mikhail Khodorkovskii that landed him in jail. Some analysts say Khodorkovskii, in addition to having political ambitions -- which some believe are responsible for landing him in jail -- had also run into conflict with those that support state ownership of strategic resources, over his plans to make available Russian oil resources to foreign owners. For weeks following Khodorkovskii's October arrest on tax evasion and illegal privatization charges, Yukos management had hoped to keep the company out of the conflict. But the tax-arrears accusations are a direct attack on the company itself. Yukos Vice President Bruce Misamore called December's two-week audit "not a standard tax audit." But today he expressed careful optimism. "It's encouraging when anybody at a very senior level in the government comes out fairly strongly and expresses its position with respect to the legal system within Russia and how it should work, particularly as it relates to the tax allegations that have been made," Misamore said. Tax arrears and fraud accusations against the company itself are late developments in the affair. They target the company directly for using tax schemes in domestic offshore zones. Oil companies were able to save taxes by setting up companies in underprivileged Evenkia, Mordovia, and Kalmykia. As a result, Yukos was contributing 12 percent of the local Mordovia budget in taxes, but paying less overall. Such privileges were outlawed in a blitz reform by the outgoing Duma last December, however. Misamore rebutted allegations of corporate tax evasion. "Every citizen and every company in Russia and in other locations around the world have the right to only pay the taxes that they are legally required to pay. And that surely is a social obligation," Misamore said. "But in addition, I think, from a shareholders' standpoint, that companies should -- and are obligated to their shareholders to -- not overpay their taxes, and therefore, by definition, to minimize the taxes that they pay." Kasyanov appeared to be following the same logic. He said, "There were loopholes that made optimizations legal. The law did not forbid Yukos and other companies to field deals through domestic offshores. [So] the authorities that [supervised this] should have done all they could to [close] these loopholes. For three years, all they did was not criticize very loudly; then they must also bear the responsibility. But not only the tax minister, and the finance minister -- the whole government bears that responsibility, including myself," Misamore said. To criticism aired by President Vladimir Putin and populist politicians about the unfairness of tax privileges, Kasyanov replied, "If those actions were governed by law at the time, then today we must go according to legal criteria and not by ideas of fairness." Yukos's internal audit department head Galina Antonova called the 98-billion-ruble tax bill a "myth" in an interview in "Vedomosti." She argued that it would represent -- together with 55 billion rubles already paid in taxes -- 87 percent of Yukos's profits for 2000. Misamore said that Yukos is replying to the ministry's inquiries but that "no formal claim" has been lodged so far. According to Russian law, Yukos will have to pay only when the court procedures are completed. Kasyanov's remarks support earlier remarks indirectly criticizing the law-enforcement authorities for their handling of the Yukos affair. In the past, Kasyanov had expressed concern about Russia's image as a result of the attacks against Yukos. Economist Ksenya Yudaeva, a fellow with the Carnegie Endowment in Moscow, says that Kasyanov's statements reflect his position as the last influential authority opposing the law-enforcement clan's attack against Yukos. "I think it is a demonstration of his consequential position, that he shows that he didn't submit to the general line," Yudaeva said. But she added, "I don't think it will have any strong influence over the case against Yukos." Kasyanov joined the cabinet under former President Boris Yeltsin's pro-oligarch government in 1995, and is widely believed to be the last major figure of the Yeltsin group still in power after the resignation of the presidential chief of staff, Aleksandr Voloshin, in the aftermath of the Yukos scandal. Yudaeva says Kasyanov's stance does not necessarily mean the pro-Yukos faction has any political weight. Yudaeva adds, however, that it may reflect the opinion of second-rank members of the cabinet's economic bloc, like Deputy Economy Minister Arkadii Dvorkovich. ******** #13 Le Monde diplomatique January 2004 Abkhazia: stable but fragile By MATHILDE DAMOISEL AND RÉGIS GENTÉ Mathilde Damoisel is a documentary filmmaker, director of 'Soukhoumi, rive noire' (The Black Shore of Sukhumi), a film on the contemporary history of Abkhazia. Régis Genté is a Tbilisi- based journalist Abkhazia, the small and as yet internationally unrecognised breakaway state in the Caucasus, is being used by President Vladimir Putin of Russia to put pressure on independent Georgia. It may not want a real settlement to the situation. ABKHAZIA, the pearl of the Black Sea, was a major Soviet tourist destination sheltered from turmoil. Now, 10 years after the war with Georgia in 1992-93, the small Caucasian state is in uncertain peace, defending its de facto independence unrecognised by the international community. The war caused 10,000 deaths, and there are 200,000 Georgian refugees, most of them still living in makeshift shelters in Georgia without any hope of return. The scars of war can be seen everywhere in Abkhazia and the infrastructure remains devastated. Of an estimated post-war population of less than 180,000, 10% depend on international aid. There is still no negotiated settlement between Georgia and Abkhazia. In 1989, as perestroika encouraged hopes for independence all over the USSR, Abkhazia was only an autonomous republic of Georgia. (Until 1931, when Stalin changed its status, it had been on an equal footing with Georgia.) On 18 March 1989 the national Abkhaz movement Ajdgylara wanted to be "no longer to be a part of the Republic of Georgia". Tbilisi reacted immediately to this attempt at secession. Georgians were the region's dominant ethnic group (1). As Professor Georges Charachidze of the Paris-based Institut national des langues et civilisations orientales (Inalco) said, violence on both sides reflected "this pathology of historical conscience affecting all peoples of the USSR. The same obsession consumed both Georgians and Azerbaijanis: loud claims to an exalted past led to legitimisation of the expulsion of Abkhaz and Armenian minorities, supposedly the weaker element in this relationship"(2). Demonstrations quickly turned into calls for independence. On 9 April 1989 Soviet troops violently dispersed demonstrations, killing 21 people. The split between Georgia and its satellite republic began and their interests were irreconcilable. Abkhazia continued to claim its sovereignty, even proposing to establish federal links with Tbilisi. But Georgia believed its emancipation from the Soviet system began with the defence of its territory. On 6 January 1992 Georgia's first president, Zviad Gamsakhurdia, elected in May 1991, whose nationalist and authoritarian line angered the opposition, was overthrown in a coup. In March, Gorbachev's former foreign minister, Eduard Shevardnadze, was called back to Georgia to preside over the national council, serving as a provisional parliament. In July the independent republic was admitted to the United Nations and the World Bank. But fighting broke out in South Ossetia, Georgia's other autonomous republic, and opposition loyal to Gamsakhurdia was a threat. In the absence of Georgian representatives, Abkhazia's Supreme Soviet under Vladislav Ardzinba reinstated the 1925 Abkhaz constitution on 23 July, formalising a return to its pre-1931 status. War started on 14 August 1992. Under the pretext of securing railways and liberating hostages, Georgian forces entered Abkhazia with the real goal of neutralising separatists. There was fighting until 27 September 1993. Supported by volunteers from the Confederation of Peoples of the Caucasus (including men loyal to the Chechen leader, Shamil Basayev) and especially by the Russian army, which sent a regiment of the 104th parachute division, Abkhaz forces retook their capital, Sukhumi. Almost the entire Georgian population of Abkhazia fled. Georgia was on its knees. To secure Russia's military support against the Gamsakhurdia rebels and without consulting parliament, Shevardnadze accepted Georgia's membership into the Community of Independent States on 9 October 1993. Previously he had turned it down. It was a victory for Moscow: troublesome Georgia fell into line and ended its pro-Western ambitions and its distance from Moscow. Russia used the Abkhaz question to control its near neighbours. Even though there was "no real Russian strategy in the Caucasus" in the words of Silvia Serrano of the Inalco-based body, Observatory of Post-Soviet States, the coexistence of real and imagined interests, from the geopolitical to the trivial, combined to keep the region under Russian supervision. By helping Abkhaz separatists, Moscow wanted leverage over Georgia, the key to the Caucasus. Some Russian political and military figures believed that control of the corridor was in Russia's vital security interests: a buffer against Turkey and Iran, and an open passage to the Black Sea. After Abkhazia became part of its protectorate in 1810, Russia showed several times how little importance it attached to the nation. This was not forgotten in Abkhazia. But the small state's need to protect itself against Georgia forced it to turn towards Russia. Most of the population thought that ordinary existence was no longer possible. Only Russian forces were strong enough to ensure the defence of the country, as the fighting of September-October 2001 had proved. Russia established its influence in Abkhazia. Encouraged at the highest levels of power, Russian investment blossomed, with mobile phone networks, the purchase or long-term rental of tourist infrastructure, even the planting of 10,000 hectares of hazelnut trees by a chocolate manufacturer. In spring 2002 a campaign was organised to grant Russian citizenship to Abkhazians without papers - a way to bring the destinies of the peoples closer. In December the Sochi-Sukhumi railway line was reopened despite sharp protests from Tbilisi. Russia is now an essential player in any settlement. "The key to the conflict lies in Russia," says Cyrille Gloaguen, a researcher at the Institut français de géopolitique. "From the day the Kremlin decides to settle it, and takes the role of arbitrator, it will be only a matter of weeks." But we must not underestimate how antagonistic the protagonists have become - either side of the Inguri river, stereotypes have hardened. To Abkhazians, Georgia is still the aggressor. And most Georgians refuse to recognise Abkhazian claims of identity and even the existence of an Abkhaz-Georgian problem: Tbilisi still refers to territorial loss and its compulsory return. Paata Zacharieshvili is a Georgian philosopher and an instigator of the informal dialogue between civil representatives from Georgia and Abkhazia. He emphasises: "We must admit that the Abkhaz conflict did not begin with the 1992-93 war, but is far more deeply rooted. There can be no solution as long as we refuse to understand Abkhazian aspirations and admit our responsibility in the outbreak of war." But Abkhazians have taken on the part of a threatened minority that they inherited from the Soviet era. The absorption of their republic by Georgia in 1931, and the subsequent ban of the Abkhaz language, the cultural repression and massive implantation of Georgians and Russians into the country remain on their minds. So does the era of Georgianisation. Destalinisation did help to right the situation, but Abkhazians still fear the loss of their identity. In Georgia it is often said that Abkhazians were guests of the nation, a mountain people who merely descended from the North Caucasus a few centuries ago to settle on the banks of the Black Sea. Who was there first? Invoking the past means that the real questions about the constitution of stable nations are never asked and any real settlement avoided. No one knows what will become of Abkhazia, but it has become a Russian means of exerting pressure on independent Georgia. This became clear last summer as Russian companies retook control of Georgian energy distribution (3). But even if a pro-Russian president succeeded Shevardnadze, the nature of the conflict would still not change. "It looks unlikely to be settled anytime soon," says Serrano, "because Moscow is not holding all the cards." This situation suits Abkhazia. Given a choice between the Russian rock and the Georgian hard place, Sukhumi will claim independence, but remain open to the idea of an association with the Russian Federation. In 2004 no successor to the ailing Ardzinba will be able to do anything else. State structure in the region is weak. Pressure from clans and former networks of influence from the USSR is strong, and mafia interests are a major obstacle to any conflict resolution. The ceasefire line along the Inguri river is a lawless zone where Abkhaz and Georgian smugglers run their stolen car, petrol and cigarette trafficking businesses freely and harmoniously. What can the United Nations Observer Mission in Georgia (Unomig) or the group of friends of the Secretary-General (4) achieve in this context? The UN Special Representative in Georgia, Heidi Tagliavini, says: "The Abkhaz question is still not settled, but the situation is now stable, if fragile, thanks in part to Unomig." Working from the Boden document, which proposes a "distribution of competences" between Abkhazia and Georgia based on a federal state, the international community continues to back Georgia's territorial integrity. But this is unacceptable for Sukhumi. "The important thing is to start negotiations," insists Tagliavini. "This document is just a launching point." In March 2003 Vladimir Putin and Shevardnadze met in Sochi to discuss the Abkhaz question. Their signed agreement called for the return of Georgian refugees to the Gali region, the reopening of the Sochi-Tbilisi railway line via Sukhumi, and the modernisation of the Inguri hydroelectric plant. Presented as a step forward, the Sochi agreement confirmed the status quo, particularly in the case of the Gali refugees. It also put Moscow in command to the detriment of the UN and possibly of any comprehensive political settlement. (1) After the 1989 census, the population was estimated at 525,000, 46% Georgians, 18% Abkhazians, 15% Armenians, 15% Russian and 3% Greek. (2) "L'Empire et Babel: les minorités dans la perestroïka," Le Genre humain, n° 20, "Face aux drapeaux," Gallimard-Seuil, Paris, 1989. (3) On 6 August, the Russian company Unified Energy System (UES) bought the shares from AES Corp, the US shareholder holding 75% of AES Telasi, which handles electricity distribution in the Georgian capital. (4) France, Russia, Germany, the UK, and the US. ******** #14 Vedomosti January 14, 2004 "REFORMED" OLIGARCHS The oligarchs are now helping to modernize Russia Author: Boris Grozovsky, Anna Nikolaeva [from WPS Monitoring Agency, www.wps.ru/e_index.html] [Concentration in the Russian economy is far greater than in the US or Europe, or even South Korea with its famous chaebol. However, experts no longer fear that the Russian economy could be "chaebolized." The largest holding companies are working hard to integrate Russia into the global economy.] Concentration in the Russian economy is far greater than in the United States or Europe, or even South Korea with its famous chaebol. However, experts no longer fear that the Russian economy could be "chaebolized." In their view, the largest holding companies are working hard to integrate Russia into the global economy. In December, the Prospect Research and Initiatives Foundation completed a study entitled "Russia's Big Business in 2003." The project leader was Alexander Dynkin, first deputy director of the Global Economy and International Relations Institute (IMEMO) at the Russian Academy of Sciences. Dynkin says that in 2002 the ten largest integrated business groups (IBGs) accounted for 38.7% of industrial output, 21% of all capital investment, 31% of exports, and 22% of all profit tax revenue collected by the state. Average labor productivity at these holding companies is 3.7 times higher than the overall industry average. The concentration of the Russian economy is greater than the European level (the top ten IBGs in Germany account for only 15% of industrial output), the United States level (27%), and even the level of South Korea, famous for its chaebol (30-32%). The researchers collected data on output, revenue, investment, employment, labor productivity, and so on for the ten largest business groups: Menatep, LUKoil, Alfa-Renova, Basic Element, Surgutneftegaz, AvtoVAZ, Interros, AFK Sistema, Severstal, and MDM. The economists counted 4,565 enterprises in these ten holding companies, owned by the parent companies or affiliates, or having a special relationship with holding company members. The researchers note that towards the end of the 1990s the large holding companies blocked the influx of foreign investment into Russia, viewing foreign companies as competitors in the process of buying up cheap assets. However, they believe those times have passed: as evidenced by the deal between the Tyumen Oil Company (TNK) and BP, for example, or SUAL and Flemings. In 2002, the degree of concentration in industry decreased slightly. As IMEMO analyst Alexei Sokolov notes, the holding companies grew rapidly in 1999-2001, but in 2002-03 the concentration process went into reverse. Sokolov attributes this to the rapid growth of medium-sized enterprises that began in 2002. Vladimir Rudashevsky, advisor to the AFK Sistema chairman of the board, says the share of the top ten IBGs will continue to fall at the rate of 1-2% per year, since the state is taking special measures to support medium-sized business. Andrei Bugrov, deputy CEO of Interros, agrees. "Concentration will decrease. The top holding companies will gradually be transformed into something akin to investment funds, lending to or acquiring enterprises, restructuring them, and selling them after adding value." Bugrov describes this activity as "producing blue chips." Yuri Simachev from the Complex Strategic Studies Institute says some IBGs have essentially become investment companies already: unlike in 1999-2000, they are no longer buying enterprises that can be fitted into a production chain - they are now buying profitable companies which dominate their market segments. As examples of this approach, Simachev cites Interros investment in agriculture and gold mining, Alfa's investment in telecommunications, and Basic Element's acquisition of Rospechat. Even those who were concerned about the "chaebolization" threat two or three years ago have no fear of it now. The crisis of 1998 provided a powerful impulse for concentration - "but now the pendulum has swung the other way," says Yevgeny Gavrilenkov, chief economist at Troika Dialog. In his view, the IBGs now realize that the assets they bought can be used effectively, and have become more discriminating in choosing their investment projects. Vladimir Salnikov from the Macroeconomic Analysis and Forecasting Center says Russia's holding companies only appear gigantic in the domestic market; by international standards they are far more modest. Rudashevsky agrees: "In terms of total worth, Russia's business groups aren't even among the world's top hundred companies - so they have to merge and unite in order to compete more effectively in the global arena." Translated by Andrei Ryabochkin ********* #15 Analytical department of RIA RosBusinessConsulting January 13, 2004 Aluminum tycoon to equate Russia with Guinea The 'Guinea-like' corporate restructuring scheme, used by the Russian Aluminum group, may become popular among Russian raw material barons The Krasnoyarsk Aluminum Plant has laid off about 5,000 employees since January 1, 2004, RBC Daily was told. The company is implementing a restructuring program, spinning off its non-core assets into separate commercial structures. The group's managers assure employees that they would all be transferred to new subsidiaries. However, many subsidiaries of the Russian Aluminum group have undergone such changes over the past year, and not all the redundant employees have found jobs in new subsidiaries. Some of them were laid off, and some were employed on the basis of fixed-term contracts. According to trade union officials, all this happens with the tacit approval of local administration officials. According to experts, this restructuring scheme, whereby a significant number of non-core employees are made contract workers, may become popular in other raw material industries that are not interested in maintaining a large staff. The Labor Code does not allow managers to fire many staff employees at once. As for contract workers, Russian laws are not so strict, giving employers a free hand. At the beginning of this year, the Krasnoyarsk Aluminum Plant, part of the Russian Aluminum group, started implementing its restructuring program. The company's managers are spinning off all non-core assets into separate commercial structures. This raises the attractiveness of the main business and helps cut production costs significantly. Theoretically, the employees of the parent company employed in non-core businesses should be automatically transferred to new subsidiaries. However, according to the representatives of the Association of Socialist Trade Unions of Russia (SOTSPROF), not all such workers have a chance to get a job on similar terms in new companies. Some of them are laid off in the process of restructuring, and others are offered contract jobs in the subsidiaries. "All non-core employees receive redundancy notifications, but not all of them get documents about their transfer to another job. They have to seek employment at new companies by themselves. And there is no guarantee that they will be successful," Anatoly Kutikov, deputy chairman of SOTSPROF, told RBC Daily. Using such restructuring schemes, the managers of the parent company significantly reduce their payroll. In addition, it allows them to transfer a large part of non-core personnel to contract work. The situation with the Krasnoyarsk Aluminum Plant is not the first conflict around the restructuring of Russian Aluminum's companies. A significant part of the workers at the Sayanogorsk Aluminum Plant were laid off in late December 2003. At the end of August, a group of workers at the Achinsk Aluminum Plant went on hunger strike to protest against this policy. However, this did not help. According to Mr. Kutikov, about 4,000 workers were laid off in early January, and only 3,700 of them found jobs in new subsidiaries. "According to our information, one of the new subsidiaries, Glinozem-Service, is going to lay off 10 percent of the staff workers. In addition, a significant number of workers were transferred to contract work," Mr. Kutikov noted. In the opinion of trade union representatives, such an aggressive method of shrugging off unneeded assets and reducing payroll is largely the result of political instability following the arrest of Mikhail Khodorkovsky, the former head of Russia's largest oil company YUKOS, in late October 2003. "It seems that Mr. Deripaska (owner of the Russian Aluminum group) is preparing his assets for sale, so that he could sell his business quickly in the event of a threat. Even if there is no such necessity, he will cut costs significantly and make his business more profitable through cutting payroll and transferring some of the workers to contract work," Mr. Kutikov said. Russian Aluminum's managers use this scheme in the group's subsidiaries in Guinea, where only engineers and technical staff are on the payroll, and the largest part of workers are employed on a contract basis. This allows the company not to maintain 'useless' workers during recession periods and have full staff only in especially successful years. It seems the managers of Russian Aluminum decided to introduce this scheme in their Russian companies as well. Indirectly, this is confirmed by the fact that the company has hired some Western managers over the past year. Analysts say this restructuring scheme may find its way into other raw material industries soon. The main idea is to spin off non-core assets into separate companies, at the same time shrugging off 'excessive' workers and keeping only the engineering and technical 'skeleton' on the payroll, transferring others to contract work. According to experts, fixed-term labor contracts leave employees almost 'helpless', as they can be fired by their employers during market recession periods. "For a company, to have fixed-term contract workers is a suitable means of avoiding taxes and legal responsibilities," believes Yevgeniya Krevchenko, a labor law consultant. "For a worker himself, this is the most 'slippery' kind of a labor contract, with a very low level of social protection," she added. In the opinion of trade union representatives, local administrations could prevent the spreading of this restructuring scheme. However, in most cases, such actions happen "with its tacit approval". "Local administrations have to make a compromise with oligarchs, because it is they who sponsor election campaigns most often," Mr. Kutikov said. The administration of the Krasnoyarsk region refused to comment on the situation around Russian Aluminum's companies. At the same time, administration officials said the regional authorities were taking effective measures to develop small businesses as an alternative source of income. ****** #16 From: Dimitri Klimentov <dklimentov@msn.com> Subject: New York's 2nd Annual Red Shift Festival Date: Tue, 13 Jan 2004 Media advisory 2nd Annual Red Shift Avant-garde and Experimental Film Festival to open in New York on Wednesday, January 14. New York, January 13. New York's 2nd Annual Red Shift Festival, will take place on January 14 and 15, 2004 at the venerable East Village Anthology Film Archives, a showcase for independent and avant-garde films. From short films to silent epics, from gritty documentaries to spectacularly crafted animation, Hi-8 video to 35mm film, Red Shift Festival champions work in all moving image formats and a full range of subject matter and innovative programming. The First Red Shift Festival played to sold-out audiences and rave reviews living up to it's mission of discovering and promoting emerging independent filmmakers and drawing worldwide attention to Russian immigrant culture in the West, particularly thriving in New York. This year's program includes films by Slava Tsukerman, Marina Goldovskay, Yuriy Gavrilenko and Dmitry Rozin, Alina and Jeff Bliumis, Dmitry Povolotsky and Mihalis Gripiotis, Alexander Shnurov and Victor Olenev, Maria Vasilkovsky, Yevgeniy Fiks, Signe Baumane, Yuri Makoveychuk, Mirek Nisenbaum and Sabina Hahn, Michael Shraga, Sergei Aniskov, Masha Reshetnikov, Nataliya Lyakh, Alexandra Lerman and Darya Belova, Olga Kisseleva, Darya Zhuk, Irina Danilova and Aliona Yurtsevich. The two-day festival opens at 8pm at the Anthology Film Archives, 32 2nd Avenue at 2nd Street, New York Members of the press wishing to attend should carry media credentials. Updates and full details on the Festival, including schedule, program, filmmakers' bios are posted on the Festival's website at: http://www.rsfest.com Contacts: Yuri Gavrilenko Festival Director (917) 907-4425 ******** #17 Russian Pres Candidate Accuses Putin Of Terror Cover-up January 14, 2004 MOSCOW (AP)--The top liberal candidate running in Russia's presidential election accused President Vladimir Putin and other officials on Wednesday of a cover-up of the government's handling of terrorist acts that have rocked the country in recent years. "I promise that when I become president, the citizens of Russia will know the truth" about the attacks, Irina Khakamada wrote in an open letter published in Russia's major newspapers. Her letter marks the boldest accusation yet against Putin by a Russian politician inside the country. A co-leader of the pro-reform Union of Right Forces party, Khakamada was a former deputy speaker in Russia's lower house of parliament before losing her seat in the Dec. 7 parliamentary elections. She said that she had decided to tell the truth about Putin's role in the resolution of the October 2002 hostage-taking in a Moscow theater after a Tuesday appeal by relatives of terror victims to presidential candidates to find the truth and punish those responsible. The theater siege ended when the Russian government pumped a powerful gas into the building to disable the Chechen rebels, some of whom had bombs strapped around their waists. Of the approximately 800 hostages, 129 died, almost all from the effects of the gas. Khakamada said that during her negotiations with the terrorists, she had come to the conclusion that they "did not plan on blowing up the theater, and the authorities were not interested in saving all the hostages." "I have to make the unavoidable conclusion that this terrorist act helped whip up anti-Chechen hysteria, continue the war in Chechnya and preserve the high rating of the president," Khakamada wrote. Khakamada also said that Russian citizens must discover the truth about a series of 1999 apartment house bombings that killed hundreds and that triggered the second war in Chechnya. Russian officials blamed the blasts on Chechen rebels, but rebel leaders denied involvement. Some critics even suggested that Russia's Federal Security Service, the main successor to the Soviet-era KGB, had engineered the attacks to justify the military campaign. ******** #18 Moscow Times January 14, 2004 For Trepashkin, Bomb Trail Leads to Jail By Anatoly Medetsky Staff Writer Former intelligence officer Mikhail Trepashkin said he had evidence supporting a hair-raising theory that the Federal Security Service participated in the deadly 1999 apartment house bombings. He also suspected there was an FSB link in the Dubrovka theater siege. Trepashkin, a practicing lawyer, planned to lay out some of the evidence in the Moscow City Court, which on Monday sentenced two men to life in prison on charges of helping carry out the bombings. But on Oct. 22, a week before the trial started, he was stopped by police outside Moscow and arrested on changes of illegal arms possession. Police claimed to have found a gun in his car; Trepashkin says the gun was planted after he was stopped. Three weeks later, on Dec. 15, he was transferred to the Matrosskaya Tishina prison and put on trial on charges of divulging state secrets and illegally possessing ammunition -- a separate case that prosecutors opened in 2002 but only recently finished investigating. Trepashkin's wife, his lawyers and friends said in interviews that the two-pronged legal attack stems from Trepashkin's investigation into suspicions that could deal a stunning blow to the FSB. If it hadn't been for the October arrest, "the court would have had to study the evidence," said Trepashkin's lawyer in the gun case, Yelena Liptser. Trepashkin was to represent at the bombings trial the sisters Alyona and Tatyana Morozov, who lost their mother in the blast on Moscow's Ulitsa Guryanova. The replacement lawyer "was unprepared for the trial, and the court denied him time to study the case, so he didn't bring anything up," Liptser said. Did Trepashkin have any damning evidence? "Apparently so, if he ended up behind bars," Liptser said. But Nikolai Gorokhov, Trepashkin's assistant and a member of the defense team, said Trepashkin had just wanted to raise some troubling questions. "There was no direct evidence, but there definitely were some murky facts that had to be investigated," he said. Trepashkin's findings suggest that a man named Vladimir Romanovich rented the basements in the Moscow apartment buildings that exploded, Trepashkin told the weekly Moskovskiye Novosti before his arrest. The explosives that destroyed the buildings were stored in the basements. He said Romanovich was an intelligence officer whom he knew from his days in FSB service. Romanovich died after being hit by a car in Cyprus a few months after the bombings, he said. The FSB, which denies having anything to do with the bombings, says another man, Achemez Gochiyayev, rented the basements and planted explosives there. Gochiyayev remains at large. According to Trepashkin, Gochiyayev knew Romanovich as a business partner and was aware of the locations of the basements, but he didn't plant the explosives. Furthermore, it was Gochiyayev who alerted police about two other basements rented by Romanovich in Moscow, allowing them to safely defuse bombs that they subsequently found there, Trepashkin said. Trepashkin unearthed his evidence after an independent State Duma commission asked him to investigate the bombings in the summer of 2002. The commission was formed by then-deputies Yuly Rybakov, Sergei Yushenkov, Sergei Kovalyov and Yury Shchekochikhin. A decade-long career in the FSB meant Trepashkin knew the right avenues to get information, Gorokhov said. "He had many connections and friends. He knew where to go," he said in a telephone interview. Trepashkin made no secret about his investigation and growing suspicions, giving interviews to newspapers and Ren-TV, a channel controlled by Unified Energy Systems. "Troubles began as soon as he began cooperating with the commission and disseminating information," Gorokhov said. He said authorities began receiving anonymous complaints about Trepashkin and the Military Prosecutor's Office called him in for questioning. The Military Prosecutor's Office opened its criminal investigation into Trepashkin at the end of 2002. If convicted of the charges of divulging state secrets and illegally possessing ammunition, Trepashkin faces up to 10 years in prison, said his lawyer in that case, Valery Glushenkov. The charges are based on a search of Trepashkin's apartment, in which investigators claimed to have found 30 classified copies of FSB documents that Trepashkin kept from his time at the agency and 22 cartridges, Glushenkov said. Prosecutors say Trepashkin showed the documents to FSB officer Viktor Shebalin when asked for advice, thus revealing state secrets about the ways FSB operates, according to Glushenkov. Trepashkin said he did show some of the documents to Shebalin, but they were not classified. The rest of the documents in question and the cartridges were planted, he said. Misfortune has followed many members of the Duma commission looking into the bombings. Yushenkov was killed near the entrance to his apartment building in April, and Shchekochikhin died in a hospital later that year after apparently suffering food poisoning. After Trepashkin's arrest, another member, Otto Latsis, editor of the liberal Russky Kuryer newspaper, was beaten unconsciousness. Kovalyov and Rybakov failed to win re-election to the Duma in last month's elections. Several other people have suspected that there was a connection between the bombings and the FSB. One of them is former FSB Lieutenant Colonel Alexander Litvinenko, who fled to Britain and was granted asylum. Last year, a Moscow court convicted him in absentia on charges of abuse of office and stealing explosives and sentenced him to 3 1/2 years in prison. Businessman Boris Berezovsky, whom Moscow has also tried to extradite and was granted British asylum last year, has bankrolled a film examining the FSB's possible role in the bombings. Another documentary focusing on the FSB theory, titled "Disbelief" and directed by Andrei Nekrasov, is scheduled to debut Friday as the Russian entry at the 2004 Sundance Film Festival in Park City, Utah. After Trepashkin took up the bombings investigation, Chechen rebels seized the Dubrovka theater in a hostage crisis that left scores of people dead. Trepashkin suspected that the FSB was involved there as well. "This could not have happened without their knowledge," he told his wife, Tatyana. She recounted the conversation with her husband in an interview at a downtown cafe. Trepashkin did not take many precautions as he pressed ahead with his investigation, his wife said. He shared his thoughts and findings with Litvinenko and other supporters, speaking on the telephone for hours despite being aware that it was probably tapped, she said. "I want to live honestly and openly," Trepashkin wrote his wife from his prison cell in explaining why he had pursued the investigation. But he is finding little support from a mother who is worried about raising their two daughters, 7 and 1, without a father. "I would like him to change his position," she said defiantly, her tired face framed by bleach-blond hair. Clinching her fingers, she continued, "It's like he is bashing his head against a wall. "He won't start a coup. The government will stay. They have surrounded themselves with a strong wall. "In the best case scenario, they will jail him for a long time. In the worst case scenario, they won't be that ceremonious." The word "ceremonious" can be a euphemism for being killed, and asked whether that was what she meant, she replied, "Yes." ******* #19 Rosbalt January 14, 2004 The CIS: Critical Areas in 2004 It will not be boring in the Commonwealth of Independent States (CIS) this year. All the problems that have been in the news in 2003 - the long and unproductive negotiations over Russia-Belarus integration, the failed Russian peacekeeping mission in Transdniestr, friction between Russia and Turkmenistan over the status of Russians in Turkmenistan, the uncertainty after the change of power in Azerbaijan - have all carried over into 2004. However, two events require special consideration, for they could have a decisive impact on the countries of the former Soviet Union and on Russia's relations with the Commonwealth. These are the presidential elections in Georgia (already held in early January) and in Ukraine (scheduled for the last Sunday of October). The revolution in Georgia, which brought an end to the reign of Eduard Shevardnadze, has brought to power a much younger politician, who will inevitably make all manner of mistakes. The Russian media have labeled Mikhail Saakashvili the 'Georgian Zhirinovsky,' but this is unfair. To judge by his initial steps as president, he seems more like Russia's first president. As evidence, consider his strongly populist approach, his promise of radical change and his public declarations against corruption along with an apparent willingness to say what people want to hear. If you add to this that the Georgian people were fed up with the former leadership and that Saakashvili is immensely popular, the similarity to Boris Yeltsin becomes clearer. Georgia's problems are such, however, as to make impossible any quick, comprehensive resolution. It remains to be seen, in fact, if they can be resolved at all. Faced with such a situation, an inexperienced leader is likely to try to achieve at least one noticeable success, both to strengthen his own position and to divert attention from the country's many other problems. As it will be impossible to do much about corruption, restoration of the economy is going to be a long and difficult process. With the age-old conflicts with Abkhazia and South Ossetia appearing to have reached dead-end, it seems more than likely that Georgia will attempt to resolve the crisis with willful Ajaria. If Georgia is successful here, the government will have demonstrated that it wields real authority. However, success is not a sure thing. Ajarian leader Aslan Abashidze is a strong politician and highly popular at home. While he undoubtedly once nurtured ambitions to rule Georgia, he has probably set these aside. But his family has ruled Ajaria since the 16th century, and he is unlikely to give it up without a fight. He already has Russia's unconditional support and has always enjoyed excellent relations with Moscow. Therein lies the main danger. Any attempt by Tbilisi to pressure the Ajarian leader will immediately bring Russia into the equation. While Moscow will have to get involved, any political (not to mention military) Russian involvement will be harshly condemned by the West, which has already shown where its sympathies lie with remarks like 'Saakashvili is democracy, Abashidze is authoritarianism.' There is, in point of fact, no abundance of democracy in Ajaria, and the Georgian leadership will bear this in mind. Whatever happens, developments in Georgia and perhaps the whole of the South Caucasus this year will depend on relations between Tbilisi and Batumi. The other place where political tension will build this year is Kiev. The presidential elections in Ukraine this year promise to be a battleground between Moscow and the West for influence over this large buffer state that is simultaneously trying to integrate with the EU and the proposed single economic zone of Russia, Belarus and Kazakhstan. The result of the vote in Ukraine will determine which direction Ukrainian politics takes at least until 2010. There either will be open political competition of the European kind or there will be a post-Soviet election with the result decided beforehand behind closed doors and the voting serving only to confirm what has already been decided. Ukrainian President Leonid Kuchma has repeatedly said in public that he does not intend to run for the presidency a third time. It is obvious that the ruling elite in Ukraine has decided to copy Russia and prepare a successor. Some observers have suggested that the head of the presidential administration, Viktor Medvedchuk, could be that successor, while others believe Prime Minister Viktor Yanukovych is the best choice. It remains clear, however, that no one has been found who could compete with opposition leader Viktor Yuschenko, who remains the frontrunner in the race. So 'plan B' may be called into play: the Ukrainian constitutional court has already declared that Kuchma may run again (his current term is considered his first, not his second). At the same time, parliament has overcome opposition resistance and approved a constitutional reform to make election of the president, beginning in 2006, a matter of parliamentary rather than popular vote. Thus, if Kuchma wins election this year (he could decide to run by underlining the need for continuity during a period of change and upheaval) he would be able to run again later in the parliamentary republic that will exist after 2006. If such a scenario is being considered, Ukraine is likely to face trouble. The opposition will probably try to organize mass rallies like the demonstrations of 2001 and 2002 that paraded under slogans of a 'Ukraine without Kuchma' and 'Arise Ukraine.' It should be borne in mind that Kuchma has always managed to deal with opponents and has faced even more critical situations than this one. But constitutional manipulation will undoubtedly cause consternation and disapproval in the West, where Kuchma is not liked anyway. The opposition will probably exploit these Western sympathies but will also try to garner direct support, as was done in Georgia and Serbia. Kuchma does, however, have the support of Russia, and this is significant. Of course, Russia is under no illusions as to the reliability of the fickle Kuchma as an ally. But, given the situation, Russia will surely back Kuchma in preference to the pro-Western Yuschenko. With all the attention that Ukraine is now getting from the European Union, there can be no doubt that a serious power struggle is about to unfold. On one side, there are the Russian spin doctors, expert in stage-managing elections and traditionally supportive of Kuchma, while on the other side there are the European and American experts on 'velvet revolutions,' who know how to deal with corrupt autocrats. Fyodor Lukianov, editor of Russia in Global Politics, for Rosbalt. Translated by Nick Chesters. ********* Web page for CDI Russia Weekly: http://www.cdi.org/russia Archive for Johnson's Russia List: http://www.cdi.org/russia/johnson With support from the Carnegie Corporation of New York and the readers of Johnson's Russia List A project of the Center for Defense Information (CDI) 1779 Massachusetts Ave. NW Washington DC 20036 |
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