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But Putin can't sell his MiGs


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									                                  FEATURING LIFESTYLE, WORLD REPORT, LOOT.RU AND THE LEADER

                                                                                                             News & Analysis Weekly

Published Every Week in Moscow Since 1998                               FEBRUARY 17 - 23, 2001                                                         Vol. 4, No. 6 (99)

    But Putin
    can’t sell
    his MiGs                                                                                      By GERMAN ABAYEV                     still something to brag about.
                                                                                                  The Russia Journal                      "We just saw the news about it
                                                                                                                                       on TV," said Galina Morozova,

 By ALEXANDER GOLTS                                                                                      long the snowy shores of      the village administration head,
 Special to The Russia Journal                                                                           Lake Baikal, many of the      reached by telephone. "It was
                                                                                                         5,000 residents of the vil-   unexpected, and we haven't even

         efore Russian President                                                                  lage of Listvyanka are abuzz.        discussed the matter yet with the
         Vladimir Putin even                                                                      Their quiet little town was men-     [Irkutsk] regional authorities."
         left for his visit to                                                                    tioned on TV and radio during           Morozova added that the dollar
 Austria, sources close to the                                                                    President Vladimir Putin's visit     figures being bandied about
 Kremlin were saying that his                                                                     to Vienna in connection with         would be a big break for
                        m a i n                                                                   international politics and high      Listvyanka, which is about 4,200
 COMMENTARY aim was                                                                               finance.                             km east of Moscow. "It [$200 mil-
                        to con-                                                                      What got the town talking was     lion] is a substantial amount of
 vince the Austrian government                                                                    a report that an Austrian compa-     money," she said. "If it is invested
 to accept MiG-29 SMT fighter                                                                     ny signed an agreement to devel-     here, it will provide lots of new
 planes as payment for                                                                            op a $200 million ski resort in      jobs. It will bring income to the
 Moscow’s debts.                                                                                  Listvyanka. That's quite a sum       local residents."
   At a meeting with Austrian                                                                     for a village that boasts four          That will be good news for peo-
 journalists on the eve of his                                                                    cafes, a restaurant and small        ple such as Listvyanka resident
 visit, Putin was every bit the                                                                   lodging house and where a 50-        Mikhail Kolesov, who said a ski
                   See MiGS, Page 18                                                              ruble ($1.70) a month salary is                     See Winter, Page 18


                                                                                                  THE SEVERSTAL steel factory in Cherepovets in operation. Company offi-
                                                                            See Steel , Page 17   cials said they are cutting production in a bid to reverse a price slide.

    +#$ T#!(%T)#8’ &T: )!’TT)% ’! + T
’6&)T +T!! )#*T ’#$K#6BTY+’T BANK
     $/28.66         DM/13.29

  183.88                         +9.02%

                                                                                                                                                                                  THE RUSSIA JOURNAL
2 WHAT’S INSIDE                                                                                                                                                                   FEBRUARY 17 - 23, 2001

THE RUSSIA JOURNAL                                                             This week’s highlights
 President, Executive Editor
         Ajay Goyal                     ROUGH TALK
     (            Russia to export diamonds to India in a
             Editor                     deal that will be watched closely.
         Mark Najarian                  • Business — Page 9
        Assistant Editor
        Ekaterina Larina
        Assistant Editor
          Jon Wright
   (                                                                                                     EXPANDING OUTPUT
         News Editor                                                                                 The UralAZ truck plant in Miass looks to make 10,000 trucks this year.
        Vladimir Kozlov                                                                                                                          • Business — Page 9
        LifeStyle Editor
         James Beadle
 (                                            PIPING IN                                     E−WOES
     Production Manager
                                                                       State construction committee              Keeping afloat in
     Alexander Lazarenko
                                                                       chief worries about poor state                the electronic
      Chief Photographer
       Konstantin Maslov                                               of residential utility services                        flood.
            Format                                                     and equipment.                                   • Business
       Ekaterina Lapkina                                                                                                — Page 16
           BUREAUS                                                     • Real Estate
        St. Petersburg                                                 — Page 10
       Larissa Doctorow
       Washington, DC
  Tel/fax: (+1) 202 4780438
            London                                                                                    Columnists this week
  Tel/fax: (+44) 207 6811219
    Commercial Director
      Vladimir Chuvilin
      Advertising Sales
     Alexander Yakutov

                                          EKATERINA LARINA                    ANDREI PIONTKOVSKY                       OTTO LATSIS                       JOHN HELMER                       JOE ADAMOV
                                       Fallen Gov. Nazdratenko may           Russia continues to go around      Can today’s leaders separate        Beware of foreigners looking to   The Nazis got close, but they
POST: P.O. Box 75, Moscow 125047      not be out of the picture after all.   in endless, snowbound circles.    Soviet debt from Russian debt?        buy and sell press freedom.      never surrounded Moscow.
TEL: (095) 959-2330/ 37/ 45/ 82,                   Page 4                                Page 5                             Page 6                             Page 7                           Page 8
774-7826, 8-901-736-0222,

      MOSCOW 113054, RUSSIA
                                                                                   THE RUSSIA JOURNAL                                        PAGE 3

                                                                     Fo c u S
FEBRUARY 17 - 23, 2001

                  KATYA’S KITCHEN TABLE 4                                          *     ANDREI PIONTKOVSKY 5              *   EDITORIAL 6

   For complete texts of these stories,
       click on ‘RJ Net Ticker’ at

      ❙❙❙❙❙❙❙❙❙❙ NEWS ❙❙❙❙❙❙❙❙❙❙
                                          By VLADA MELKOVA                         kilograms of radioactive material
                                          The Russia Journal                       in January alone, and they expect a
                                                                                   busy year ahead.

     NEW DELHI — India signed a                   uying a kilo of apples or a         Vladimir Safronov, deputy
  deal to buy and assemble 310                    gold bracelet may not            director of Radon’s technological
  Russian T-90 tanks in an agree-                 sound like health-threat-        center for waste reception and
  ment estimated to be worth $600         ening activities. But for Moscow’s       transportation, said that, last year,
  million.                                Radon Center, these items can            the organization — which is fund-
     The three agreements that make       carry significant levels of radiation,   ed by the Moscow government —
  up the deal were signed in the          and tracking down and destroying         sent nearly 113,000 kilograms of
  presence of Russia's Deputy Prime       them is all in a day’s work.             radioactive contaminants to be
  Minister Ilya Klebanov and Indian          Radon, the capital’s only author-     encased in cement at a treatment
  Defense       Minister      George      ity for neutralizing radiation out-      plant near Sergiyev Posad in
  Fernandes, who posed for pho-           side nuclear plants, says Moscow is      Moscow Oblast.
  tographs with a model of the T-90       brimming with contamination                 Of that figure, 1,398 kilograms
  in his hands.                           from Soviet-era waste tips as well       was food, mainly goods like fresh
     Russia has said it can begin         as food and goods originating from       berries and dried mushrooms
  delivery of the tanks within a month    polluted plots and factories.            grown on contaminated sites in
  and will sell 124 of them fully         Officials said they disposed of 4,978                  See Radiating, Page 5
  assembled. The rest of the tanks
  will be assembled at the Heavy
  Vehicles Factory in the town of
  Avadi in southern Tamil Nadu

     NALCHIK — A Russian court
  sentenced a Chechen to life in
  prison for crimes including kidnap-
  ping, torture and the execution of
  a Russian serviceman in 1996.
     Salaudin Temirbulatov served
  in the rebel government of the
  breakaway republic. He was
  arrested in March 2000 in
     The Supreme Court of
  Kabardino-Balkaria, a southern
  Russian region near Chechnya,
  found Temirbulatov guilty of
  killing Russian servicemen, form-
  ing and participating in illegal
  armed groups, kidnapping, tor-
  ture and illegal weapons posses-

     RIGA — Riga's city council has
  voted to donate a 90-year-old
  bronze statue of Russian Tsar
  Peter the Great to the city of St.
  Petersburg in a bid to resolve a
  contentious local issue.
     Some members of the former
  Soviet republic's large Russian
  minority said the two-meter (6.5-
  foot) tall monument, first erected
  in Riga in 1910 when Latvia was
  part of the Russian empire and
  now kept in a warehouse, should
  be put back up somewhere in
     But many ethnic Latvians bitter-
  ly disagreed, saying the statue
  symbolizes Russian imperial
  power. They say presenting it as
  a gift to St. Petersburg, which
  was founded by Peter the Great
  in 1703, was the most appropri-
  ate option.
     Some ethnic Russian deputies
  denounced        the     decision,
  approved by a 36-7 vote in the
  capital city's city council. They
  said the statue was part of their
  heritage and should be kept in
  this Baltic Sea coast nation.

The Russia Journal

        ormer Soviet leader Mikhail
        Gorbachev said President
        Vladimir Putin's high popu-
larity ratings were due to advances
made under his government during
his first year in office, but he cau-
tioned that the mood could change if
clear and decisive action does not
come soon.
   "[Putin has been] feeling the
waters, and now knows the situation
and knows the country and can take
effective action," Gorbachev told a
gathering at Moscow's Radisson
Slavjanska Hotel for a conference on
"Primary Economic Results and
Russian-American Relations Under
the Putin Administration."
   Gorbachev cited as positive devel-
opments in Putin's first year: the           CIA Director George Tenet identify-        Gorbachev continued that the Bush
founding of a coherent foreign policy        ing Russia as a danger to U.S. inter-
and the taking of the first steps            ests, he said: "If I were that man's
toward establishment of a legal              employer, I would fire him," adding
framework and functioning econo-             that his comments were "highly irre-
my. But this was only the beginning,         sponsible." He also lambasted
Gorbachev cautioned, and more                extremist Russian anti-American
work is needed.                              sentiments, such as those espoused
   "Putin should work in the coun-           by Communist Party leader
try's national interests, not those of a     Gennady Zyuganov, who has stated
small clique who want him to be              that "Perestroika has brought about
[Boris] Yeltsin's heir," he said. "Russia    the economic enslavement of Russia
is not a monarchy. Russia will not be        to the United States."
a monarchy."                                    Gorbachev did acknowledge, how-
   On issues concerning U.S.-Russian         ever, a cooling-off of relations
relations, Gorbachev criticized U.S.         between Russia and the United
foreign policy and called for greater        States, contrasting it with the "condi-
cooperation between the two coun-            tion of trust and cooperation" that
tries on political and economic issues,      existed in the final years of the Soviet
an area in which he said business            Union and shortly after its fall.
could play a central role.                      He called for a rapprochement
   He derided those American policy-         between the two countries, saying
makers who believe that Russia is a          that business could play a vital role in
threat to the United States.                 this, as economic interdependence
Commenting on statements made by             brings nations closer together.

Continued from Page 3                        economy]," said Yasin. "But the ques-      said. "President Bush’s Cabinet has
mentality of the majority of the state       tion is whether we have to live from       very strong, experienced people. A
officials that state service is for pleas-   one fluke to another. The question is      number of them are very experi-
ing the bosses and not helping the           whether there is a development             enced with Russia."
people and that private businesses           strategy."
are a source of enrichment or the               The report also mentioned nega-
enemy of the state’s interests," the         tive tendencies in the Russian econo-
report continued.                            my, including the increased activity
   AmCham President Andrew Som-              of the Prosecutor’s Office, the Tax
ers, in presenting the report, said that     Police, the OMON militia force and
while Putin had made significant             other law-enforcement bodies in the
progress in restructuring the econo-         handling of business disputes. The
my, further efforts were needed.             examples cited included the Media-
   "Putin has brought discipline to the      MOST and Gazprom dispute and the
government, and it is important for          AvtoVAZ tax case.
investment," he said. "Both President           The report also criticized what it
Putin and the Duma have been very            saw as the creation and maintenance
receptive to the foreign experience.         of unfair competition by the govern-
What is important now is that the            ment. Examples cited included the
Russian government shows that the            approval of the merger of Sibirsky
momentum for reform will continue."          Aluminum and Sibneft-owned non-
   Yevgeny Yasin, director of the            ferrous metals producers; the
Expert Institute, had even stronger          attempt to redistribute the telecom-
concerns, saying that while the presi-       munication frequencies in favor of
dent was declaring the continuation          new player Sonic Duo; and the struc-
of the reforms, his efforts to strength-     turing of GAZ debts to the state.
en the state might lead to a more               Yasin also noted the importance of
authoritarian government, which, he          good relations between Russia and
added, "will hurt the economy."              the United States. "I am concerned
   The report cited the economic pro-        that there is a harsh criticism in the
gram of German Gref, the minister of         statements by the Bush administra-
economic development and trade;              tion: They say that Russia is not an
statistics showing 7 percent GDP             enemy anymore but that it is still not
growth; and a 17 percent rise in             a partner," he said.
investment in 2000 as the most im-              AmCham’s Somers said he hoped
portant indicators of positive change.       that relations between the countries
Those results, it added, "turned out to      would remain stable. "I am very
be better than expected."                    hopeful that U.S.-Russia relations will
   "We finally got a little break [on the    move forward on a positive track," he
FEBRUARY 17 - 23, 2001                                                                                                   FOCUS 5

                                  et’s begin with two foreign
                                  policy tirades that app-
                                  eared independently of
                           each other on the same day in
                           two respectable Moscow newspa-
                             “Recent world events show that
                           the Russian Federation is continu-
                           ing to strengthen its position on
                           the international stage. The gloat-

                         Continued from Page 3                      inated too. Back then, rules of            radioactive isotope, Safronov said,
                         Russia, Ukraine and elsewhere in the       radioactive safety were either absent      and many of these items are still in
                         C.I.S. and identified as a health threat   or not as strict as they should have       use.
                         after tip-offs from Moscow-city            been."                                        According to Safronov, Russian
                         health inspectors.                            Radon is working on cleanup pro-        fire alarm systems often contain
                            The radiation level for a typical       jects in Moscow’s Cheryomushki and         Plutonium-239 and can emit 300
                         batch of mushrooms seized last             Troparyovo-Nikulino construction           mR/h if they are not replaced after
                         month was 12,000 Bk/kg — a stan-           sites' districts, where radiation levels   10 years.
                         dard used in Russia for measuring          last      year      reached        1,900      "Even handmade gold jewelry
                         food contamination. Officials said that    MicroRoentgens per hour (mR/h)             might have radioactive components
                         was nearly five times over recom-          and 20,000 mR/h respectively, com-         used in smelting," he said, adding that
                         mended levels and enough to damage         pared to normal levels for Russia of       this was something Radon discovered
                         health, perhaps causing cancer or          10-20 mR/h.                                last year.
                         genetic damage.                               The team is also trying to stop            That could be enough to cause
                            "We also center our plan on check-      potential pollution of the Moscow          minor health problems, representa-
                         ing certain sites, roads and industrial    River at Kashirka and Kolomen-             tives said.
                         objects," Safronov said. "We set up        skoye, where radioactive waste                Safronov said Moscow businesses
                         ecological monitoring where it’s nec-      buried at a depth of 9 meters is           often unwittingly take on a radiation
                         essary, recultivating the soil and so      threatening to seep down into the          problem when they move into new
                         on, with our main task being to dis-       water. One of the solutions being dis-     premises that previously housed
                         cover, collect, transport and process      cussed involves replacing 1 meter of       radioactive materials.
                         sources of excessive radioactivity,        soil, planting trees and installing con-      Several hundred more businesses
                         including emergencies and acci-            crete blocks along the riverbank.          work with radioactive materials, and
                         dents."                                       Meanwhile, danger can come from         144 of these are set to go through
                            Moscow is paying for the mistakes       some surprising sources. Instead of        complex monitoring procedures car-
                         of the past, Safronov said, with dis-      harmless phosphorous as a luminous         ried out by Radon over the next three
                         used and contaminated Soviet indus-        material for watch and clock faces,        years, in line with recent legislation
                         trial dumps dotting the city. In many      toys and gadgets, Soviet producers         on stepping up anti-radiation mea-
                         cases, the waste came from research        sometimes used Radium-226, a               sures in the capital.
                         institutes working on nuclear
                         weapons projects, and as the dumps
                         were not mapped, experts have to be
                         called in before work can start on any
                         construction site.
                            "High radioactivity in non-indus-
                         trial areas usually has an industrial
                         nature," Safronov said. "When it
                         started, the atomic industry recycled
                         radioactive ore to get chemical ele-
                         ments that are rarely found in nature.
                         Typically, this uranium waste was
                         trashed into the city’s ravines and
                         foundation pits.
                            "During the work of these factories
                         and research institutes, their equip-
                         ment and territories became contam-
                                                                                                                                                                  THE RUSSIA JOURNAL
6 OPINION                                                                                                                                                         FEBRUARY 17 - 23, 2001

   An empty threat
        he coterie of Cold Warriors in George W. Bush’s foreign policy team

T       have upped the voltage in their bid to make National Missile Defense
        (NMD) more palatable. They have launched a furious PR campaign
against Russia, painting it as a serious U.S. national security threat.
   The campaign wrongfully resurrects the image of Russia — one of the
greatest opponents to NMD — as an Evil Empire with a Soviet-like single-
minded desire to undermine world stability. It depicts the Kremlin as a cal-
culating back-alley gunrunner, intent on supplying Washington’s most
hated regimes with deadly weaponry. And it casts Russian leaders as a
bunch of reckless militants bent on brinkmanship and ready to shuttle
nuclear missiles to Europe’s doorstep the instant diplomatic obstacles arise.
   On Feb. 9, before a Senate intelligence committee, CIA Director George
Tenet described Russia as a roguish country prepared to trample on state
sovereignty and human rights in its quest to reclaim "great power" status.
Three days later, National Security Adviser Condoleezza Rice said that
Russia was "a threat to the West in general, and our European allies in par-
ticular," while Defense Secretary Donald Rumsfeld argued much the same
on American public television.
   Then, last Thursday, unidentified and retired U.S. national-security and
intelligence officials leaked through the Washington Times that spy satel-
lites confirmed the move of Russian tactical nuclear weapons to
Kaliningrad — a story first reported by that paper (with equally sketchy
sources) in December, and one that Moscow continues to reject.
   "The fact that the Russian government denies it … is probably an affir-
mation that it’s true," former U.S. National Security Adviser Zbigniew
Brzezinski told the paper, betraying his own doubts about the satellite
                                                                                   Putin’s imperial inheritance
reports. Nevertheless, he added with absolute certainty: "It tells us some-

thing about the dogged attitudes of the Russian military and political lead-               he Russian press featured eign debt. But a country that in         under Yegor Gaidar had to find a
ers," and shows how they behave in ways "you would not expect from a                       wide coverage of every 2000 had a positive foreign-trade           way of winning back creditors’
responsible government."                                                                   detail    of     President balance of $60 billion shouldn’t        trust, deferring payments and
   Similarly, ex-CIA Director R. James Woolsey explained that the alleged          Vladimir Putin’s visit to Austria, have any problems paying this           obtaining new loans.
missile transfer was "Russia deciding to deal with the West after a fashion        from his exploits on the ski- sum.                                            The decisive step was immedi-
of the Soviet Union in the early 1980s, namely to bluster in order try to pre-     slopes to his attempts to sell         When the Soviet Union col-          ate liberalization of consumer
vent an American strategic overture, in this case missile defense."                Russian fighter planes to Vienna. lapsed in 1991, it wasn’t altruistic     prices, which proved how serious
   Taken together, these comments underscore three simple messages that               But the press only briefly men- motives that led Russia to take on      the new team was about reform.
the Bush administration is trying to communicate: 1) The Kremlin cannot            tioned that, although Putin the total Soviet debt. Along with              But this wasn’t enough — the
legitimately criticize American NMD development, because by selling its            promised that Russia would pay the debt commitments of the for-            creditors demanded a statement
arms technology to outlaw states, Russia is "part of the problem," as              its debts, he felt it necessary to mer Soviet Union, Russia inher-         on the division of debt commit-
Rumsfeld puts it. 2) Western European countries sympathetic to Russia’s            add that the previous leadership ited a large share of its rights and      ments among the 15 new
concern over NMD should be wary of siding with such an erratic and aggres-         (i.e. that of Boris Yeltsin) had powers.                                   republics. But negotiations could
sive partner. 3) The more Russia tries to demonstrate that NMD will force it       been wrong to take on all the          For a start, Russia took over the   have lasted years and Russia
to flex its muscles, the more it proves U.S. claims that Russia is a threat.       Soviet debt.                         Soviet Union’s permanent seat on      ended up taking on all the debt
   This last point appears to have completely missed Russia’s hawks. While            This suggests that the                    the     United     Nations    commitments for the sake of its
there is no respectable evidence yet of nuclear missiles being nudged into         hesitations of Prime                         Security Council, though      own survival.
Kaliningrad, the Russian military has been generating a fair amount of             Minister            Mikhail                  in comparison to some            It’s hard to imagine that Putin
bluster by dispatching fighter planes into Japanese airspace and bombers           Kasyanov’s government                        countries not on the          isn’t aware of all this. (If he real-
off the coast of Norway — moves reminiscent of the pointless buzz of the           in January over upcom-                       Security Council, its eco-    ly doesn’t know, then this in
USS Kitty Hawk late last year, which in turn was reminiscent of similar            ing payments to the Paris                    nomic and political weight    itself is worrying.) But if the
Cold War engagements.                                                              Club weren’t pure chance                     don’t entirely correspond     point of his statement was simply
   President Vladimir Putin — who has rightly called for positive dialogue         — Putin himself has some                     to the advantages its per-    to show that he is following a
on the subject and has assured that Russia "will in no way take a confronta-       deep misgivings about             OTTO       manent status confers.        new foreign policy, more inde-
tional tone" despite its firm position on the NMD issue — should rein in this      having to pay.                                 Russia also inherited       pendent from the West, it wasn’t
kind of behavior. This would give Russia more political capital, not less, espe-      The issue is not so much
                                                                                                                   LATSIS       almost all Soviet property    a very well thought-out step.
cially in trying to garner international anti-NMD support.                         about a real economic problem as abroad. And in any case, at the              Putin’s actions, on the one
   Meanwhile, Team Bush is wrong to play up Russia as a threat to the sys-         a question of principle. As a com- time the Soviet Union collapsed,        hand, seem designed to show that
tem of U.S. and European security. "Russia is an active proliferator," says        ponent part of the Soviet Union, Russia had little choice but to           Russia is the authentic successor
Rumsfeld. But, even though Russian arms exports have peaked over the               the Russian republic (RSFSR) take on the debt of all the former            of the Soviet empire. This can be
last decade, they still remain a small fraction of Soviet-era exports (as well     accounted for 60-70 percent of republics and sort things out               seen in the adoption of an anthem
as current U.S. exports), and many analysts predict that this figure will soon     total Soviet population and GDP. with them at a later date.                belonging to another state, which
dwindle for lack of proper investment and research and development. In                Even if it were theoretically       As well as leaving Russia with      included 15 republics and not
any case, the bulk of Russian weaponry and related technology goes to              possible to have divided Soviet $100 billion in foreign debt and           Russia alone. It can also be seen in
China and India, two countries that already have nuclear capabilities.             debt between the 15 newly inde- $18 billion in debt-servicing pay-         the priority given to building up
   Moreover, Rice, Rumsfeld and Co. neglect to point out how America is            pendent republics that emerged, ments due in 1992, the Soviet              Russia’s strategic-arms stock-
also "part of the problem," regarding its new class of enemies. After all,         Russia would still have found Union bequeathed to Russia an                piles, something reminiscent of
Washington’s No. 1 bad guy, Osama bin Laden, along with the Taliban                itself with two thirds of the bur- absurdly organized agro-indus-          the Soviet Union with its policy of
regime that currently gives him shelter, were arguably the product of U.S.         den. (True, Vladimir Zhirinovsky trial complex requiring tens of           strategic parity.
funded operations. Iraq’s notorious leader, Saddam Hussein, was able to            suggests following the example of millions of tons of grain imports           But on the other hand, the
build the base of his elusive arsenal with American support.                       Lenin in 1917 and renouncing all every year.                               moment it comes to debt pay-
   True, Russia has shown a disturbing willingness to commit atrocities            payments as debts belonging to         Grain supplies were sufficient      ments, everyone starts remem-
against its own people, as in Chechnya, and meddle in the internal affairs         another state, but a serious politi- to last only until Feb. 1992. The     bering that Russia is not the
of its former satraps in the C.I.S., notably Georgia. But beyond that bound-       cian like Putin is hardly likely to international community was            Soviet Union, but is another
ary, it has been a relatively benign player — so much so that Condoleezza          take this scenario on board.)        unwilling to provide loans under      state. This looks like the behavior
Rice has collapsed the Russia desk at the NSC in with the rest of Europe.             Russia’s total debt to the Paris any conditions, Russia had no          of a child who picks the raisins
   Several weeks ago, Putin confirmed that this was likely to continue             Club is no more than $39 billion. currency reserves to draw on and         out of a cake and leaves the plain
when he outlined his foreign-policy priorities to the Foreign Ministry.            If Russia were to refuse to pay the foreign-trade balance was              dough for the others to eat. The
There, the president is reported to have said he would like to see Russia          one third of this sum, this would chronically negative. To save the        thing is, this kind of bad behavior
integrated with the world community, come to terms with NATO, and                  cut it by $13 billion — less than country from famine that winter,         gets forgiven only while the child
boost Russia’s world image in the "struggle for public opinion." Previously,       10 percent of Russia’s total for- Yeltsin and his economic team            is still little.
his courting of foreign leaders, from Western Europe to the Far East, has
demonstrated his desire to see Russia as a respected and active member of
the world community. The United States should encourage those instincts;
a participating Russia is much better than an alienated one.                                                                                                   Join in the
   Instead, overtly treating Russia as a menace only strengthens the most
hard-line elements in the country’s defense and foreign-policy establish-
ment — people who agree with none of Putin’s recent priorities and who
could transform the country, along with its nuclear arsenal, into a real haz-
ard. Ultimately, isolating a country like Russia won’t work, and reviving                                               at          
Cold War rhetoric, by either side, comes with dangerous costs.                                                                     The Russia Journal Discussion Board
       FEBRUARY 17 - 23, 2001                                                                                                                             OPINION 7

  Q: Did the Nazis surround          brought up fresh divisions from                                               A: Judge for yourself. Estonia     cent of the people are Latvians
Moscow in World War II?              the Far East and pushed the                                                was discussed in the U.N.             and 44 percent Russian speakers.
             — Julian Shanahan,      enemy away from the capital.                                               Committee          on        Racial   But, in the capital Riga, there are
                  Dublin, Ireland.                                                                              Discrimination and was given a        391,000 Russian speakers and
  A: The Nazis were at the gates       Q: Please give us an update on                                           negative appraisal regarding this     only 248,000 Latvians.
of Moscow, but they could not        the case of Alexander Nikitin.                                             problem. The Russian Foreign            In all big cities, Russian speak-
surround it. I remember stand-               — William Kerr, Halifax,                                           Office expressed concern over         ers predominate. The percentage
ing on Pushkin Square at night                   Nova Scotia, Canada.                                           the state of affairs in Estonia and   of people with higher wages is
and listening to the distant roar      A: Nikitin was a first-class                                             hoped officials there would make      greater among Russian speakers.
of the artillery. A Nazi                    captain of the Navy and                                             the laws coincide with interna-       In Latvia you'll find many
bomber dropped a huge                       was accused of espi-                                                tional standards. Estonia is          Russians in banking. One third of
bomb into the yard of                       onage. All he did was                                               against      mixed       marriages.   the population is without citizen-
Radio Moscow; the next                      write about the radiation                                           Estonian officials take part in       ship, mostly Russians.
morning, German radio                       situation in the Northern                                           various celebrations for those          Some have left; many took
announced that an end                       Fleet for a Norwegian                                               who fought on the side of             Russian citizenship. Nearly
had been put to Radio                       ecological organization.                                            Germany in World War II.              38,000 people have passed the
Moscow, which also                          Nikitin was acquitted                                                 Some 130,000 Russians in            required exams and become
broadcast to the German                     because he did not dis-                                             Estonia have taken Russian citi-      Latvian citizens. College educa-
troops. The bomb did not                    close any secrets. We                                               zenship — which makes 9 per-          tion is in Latvian only. In three
explode and it was to                       have a list of what is        accused of anything under the         cent of their population foreign      years’ time, in all government
their surprise when, the                    secret information, but       sun. This was the first time a        citizens. In no country in the        schools, grades 10-12 will be
next morning, Moscow                        no one knew about it,         person accused of treason was         world is there such a big per-        taught in Latvian only. So you
was on the air as usual. When        because it was included in the       acquitted. This, I feel, was a vic-   centage of foreign citizens. Those    see, my friend, there is some-
the sappers came and defused         secret orders of the defense         tory for common sense.                who fought for Hitler are nation-     thing peculiar to each republic.
the bomb, they found a note          minister. In other words, the list                                         al heroes! To become a citizen          (Joe Adamov is host of the
inside: "We help with what we        of secrets was a secret — some-         Q: Is discrimination against       you have to know not only the         Voice of Russia radio station's
can." It was the work of the         thing typical of the former sys-     Russians greater in Estonia than      Estonian language, but their          "Moscow Mailbag" program,
German resistance. While the         tem. So as not to disclose it, one   in Latvia? Have many Russians         laws, too.
Germans were stuck at the gates      had to say nothing, write noth-      living in Latvia left for Russia?       Russian emigration from
of Moscow, Marshal Zhukov            ing, meet no one — or be                         — Name not provided.      Latvia is small. Currently, 56 per-
                                                                                                                                                                                  THE RUSSIA JOURNAL
8 OPINION                                                                                                                                                                         FEBRUARY 17 - 23, 2001

Government on its own in debt tangle
        here were plenty of mournful Duma deputies had already blocked                                                                                                        amendments. If the Duma rejects the
        faces at a recent government proposed privatization the Kasyanov                                                                                                      government proposals, Putin will
        extraordinary meeting to government hoped would bring in 15                                                                                                           have the moral right to tell creditors
examine how cutbacks in state billion rubles during their examina-                                                                                                            that the Russian authorities did all
spending could make room for tion of the 2001 budget. There’s little                                                                                                          they could, but the deputies got in
Soviet-debt payments to the Paris hope they will go back on this deci-                                                                                                        the way. The West would then have
Club of creditor nations this year. sion. In any case, the $500 million to                                                                                                    the right to demand political sacri-
The Finance Ministry’s proposals on $600 million that state asset sales                                                                                                       fices from Putin.
where to find money for the pay- could have yielded by the end of the                                                                                                            But even sending the government
ments were adopted almost without year wouldn’t have gone far in pay-                                                                                                         into retirement wouldn’t resolve the
discussion.                              ing off the debts.                                                                                                                   problem. With or without Kasyanov
   Two ministers representing the so-      As for domestic borrowing, or                                                                                                      as prime minister, Russia will still
called real sector tried to be difficult rather, its increase since the 1998                                                                                                  have to revise its budget if it is to ser-
and argued against proposed                       financial crisis, Duma                                                                                                      vice its debts, both Russian and
cuts to extra budget rev-                         deputies raise their hackles                                                                                                Soviet.
enue, saying that contracts                       at its very mention. The gov-                                                                                                  Should Putin decide to pay the
had already been signed                           ernment hopes to raise $1                                                                                                   Soviet debts, he will put pressure on
based on the forecast                             billion through domestic bor-                                                                                               the Duma to revise the budget and
income.                                           rowing — it didn’t want to                                                                                                  scale back its projects, both lobbyist
   But they were rebuffed                         risk a higher figure, but the                                                                                               projects and genuine social programs.
by Prime Minister Mikhail                         Duma probably won’t agree                                                                                                      The government has gone some

Kasyanov, who said it was-            VERA        even to this amount.                                                                                                        way to sugar the bitter pill of rev-
n’t wise to count one’s chick- KUZNETSOVA            What has the deputies         PRIME MINISTER Mikhail Kasyanov: Trying to pound out a debt solution?                      enue cuts it’s trying to feed deputies
ens before they hatched and                       most riled are the govern-                                                                                                  — the Finance Ministry has finally
that contracts shouldn’t be signed ment’s proposals to change the distri-             Unity’s behavior can be taken as a      Soviet debt payments. It’s not entire-          admitted that a free surplus of 33 bil-
based on revenue not yet received. bution of extra budget revenue. The             measure of the Kremlin’s position on       ly correct to say that Putin has pulled         lion rubles (over $1 billion — almost
Emergency Situations Minister and Duma has already approved the dis-               the issue. The pro-Kremlin party’s         a fast one on Kasyanov. Rather, he’s            the same as what Russia owes the
leader of Unity (Yedinstvo) Sergei tribution of 35 billion rubles of the           silence can mean only thing — the          simply not ready to make unpopular              Paris Club for February) remains in
Shoigu put an end to all further first 70 billion rubles in extra revenue          Kremlin hasn’t yet given any clear         decisions that could have a negative            Treasury accounts.
debate, saying: "There’s nothing to (the other 35 billion rubles are to go         instructions on how to vote on the         impact on his image. Putin can’t rec-              Under the law on the budget, this
talk about. We have to adopt the doc- toward debt payments), and they              government package of proposals.           ommend that the government not                  money could be used for the 2001
ument."                                  don’t want to lose this money now,           President Vladimir Putin has con-       pay the debts, and this is probably             budget, but the Finance Ministry
   The Finance Ministry proposals even though Russia has to pay the                sistently played indifferent to the        why he prefers to keep silent for               says the idea of channeling the
contain no surprises. The plan pro- Paris Club $1.2 billion this month.            Soviet debt issue and refuses to take      now, letting the government get on              money into budget items not
poses three main sources of revenue        Leaders of left-wing factions in the    on the political responsibility, leaving   with negotiations on restructuring              expressed as a percentage of GDP
to finance the debt payments due Duma have denounced the govern-                   it to the government to do all the         Soviet debt.                                    (all budget expenses except debt
this year — additional budget rev- ment as bankrupt. Conservatives,                dirty work. Putin, it seems, has              The rumor from the Kremlin is                commitments) is "problematic" and
enue, money from privatization and such as the members of the People’s             decided that if the government can         that it suits the Russian leadership to         that it can only be used to tide things
domestic borrowing. But the govern- Deputy (Narodny Deputat) group                 manage to pay even a part of the           drag out the process of making a                over in the event of disruptions to
ment will have to get the State Duma avoid radical language, but also              Paris Club debt, so much the better;       political decision on paying Soviet             payments during the year.
lower house of parliament’s approval oppose the government’s proposals.            but if it can’t, it’s no hard loss. And    debts in full.                                     (Vera Kuznetsova is a longtime
to put the plan into action.             Unity deputies say that Russia must       the government will have to answer            The simplest approach then is not            observer of the Russian political scene
   The hitch is that the Duma is not indeed uphold its commitments, but            to the public on why the 2001 budget       to hurry the Duma into amending                 and a regular columnist for The
keen on the government’s new ideas. offer no word on just how to do this.          wasn’t calculated to include full          the budget, or just not to insist on the        Russia Journal.)

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FEBRUARY 17 - 23, 2001                                              THE RUSSIA JOURNAL                                               PAGE 9

                                                 BU S I N E S S
                                      REAL ESTATE 10                        *   MARKETS 14                       *   AJAY GOYAL 16

                                       Indo-Rus trade getting rough

                                       By JOHN HELMER
                                       The Russia Journal

                                              $4.5 million contract has
                                              been signed and will
                                              shortly signal the start of

  The Russia Journal

          ive St. Petersburg ener-
          gy machine-building
          plants are gearing up
  for an expected flood of orders
  after holding firm Interros
  announced they were being
  merged with another Russian
  producer in a bid to dominate
  the gas turbine market.
     Elektrosila, Leningrad Metal
  Factory, the Turbine Blade
  Factory, LMZ-Engineering
  and Energomashexport are to
  join with Kaluga’s Kaluzhsky
  Turbine Factory to create
  Siloviye Mashiny, with Inter-
  ros holding more than 50 per-
  cent of the company.
     “The power machine-build-
  ing industry is probably the
  only industry that is not ruined
  and has good prospects for the
  future,”        said    Interros
  President Vladimir Potanin.
  “The coming economic growth
  in Russia will likely increase
  energy consumption, so tur-
  bine producers should be pre-
  pared for new demand for
  their production.”
     If expected contracts with
  national power grid Unified
  Energy Systems (UES) come            By VLADIMIR KOZLOV                   than 100 rubles in cash, with the
  through, the project should be       The Russia Journal                   rest paid in kind at the company
  a welcome boost for the plants,                                           store.

  creating combined annual                      eavy-truck manufactur-        Company insiders say that the
  sales for the consortium of                   ers UralAZ, buoyed by       appointment of Valery Panov as
  more than $300 million,                       an upturn in demand for     external manager in 1998 helped
  observers say.                       big rigs throughout Russia, is       save the company from imminent
     Viktor Shevchenko, LMZ            stepping up production after a       bankruptcy.       With     Panov’s
  executive director, said that        slowdown that has dragged on         appointment, the restructuring
  for his St. Petersburg plant,        since the mid-1990s.                 of the plant began, and it’s still
  the decision comes on top of an        Three years ago, the future of     under way.
  already improved financial sit-      the plant was cloudy, and many         Under the restructuring of the
  uation.                              believed it would never be able to   state-run company, the facility
     “Since last year, LMZ plant       bounce back. But UralAZ has          will be privatized and trans-
  production has been requested        increased output from 2,689          formed into a new company, the
  for the Belarus hydroelectric        trucks in 1998 to 8,500 vehicles     shares of which will be sold off.
  power station based at Polotsk,      last year and is planning to reach   Non-core divisions, such as a con-
  and there were two contracts         the 10,000 level in 2001.            struction company, will be spun
  for Argentina with a $6 million        Like most of Russia’s automo-      off and transformed into separate
  value,” he said, adding that         tive giants, UralAZ — located in     enterprises.
  the contracts were still being       the Urals city of Miass — nearly       "The company is preparing the
  fulfilled.                           collapsed in the mid-1990s. A lack   first emission of shares [on
     LMZ — Russia and the              of working capital coupled with a    Russian exchanges]," said Natalia
  Soviet Union’s premier energy        sharp decrease in military and       Makarova, a spokeswoman for
  machine-building plant — was         industrial orders brought the        UralAZ, adding that it is expect-
  set up in 1857 and now has           company to the verge of collapse.    ed in the first quarter of 2001.
  6,000 employees, Shevchenko            Because of outstanding elec-         According to Makarova, the
  said. “Before the 1990s,             tricity debts, blackouts were        state will retain a controlling
  LMZ had 10,000 workers, but          common during the daytime,           package of shares. She was
  the crisis in the energy             which forced employees to work       unable to name any prospective
              See Interros, Page 17    at night. They were paid once in     buyers of shares or the amount of
                                       six months — rarely getting more                  See Trucking, Page 11
                                                                                                                                                                                                                         THE RUSSIA JOURNAL
10 BUSINESS / REAL ESTATE                                                                                                                                                                                                FEBRUARY 17 - 23, 2001

CERTAINTY: Italian firms
look to increase activity

                                                                                                                                                                                                                                                             The Russia Journal/Konstantin Maslov
Continued from Page 1
have many investments now involv-
ing small- and medium-sized
Northern Italian companies in the
field of manufacturing industry —
furniture, basic commodities and so
on. ... At the same time, big Italian
companies are investing in projects as
well. For example, [steel corporation]

                                                                                                                                      The Russia Journal/Konstantin Maslov
Duferco — which is officially a Swiss                                                                                                                                        OFFICIALS lamented the poor state of utility services throughout Russia.
company but has control of several
Italian firms — is working on the
pipeline for the Blue Stream project
with Gazprom [and Italian oil and gas
group Eni].
                                                                                                                                                                                State pipes in
   [Domestic appliances group]

Merloni, another big company, is                                                                                                                                                     rivate developers and real-estate brokers have been almost unan-
investing in Russia. Barilla [food                                                                                                                                                   imously positive in their assessments of the past year and the
group] is also considering starting                                                                                                                                                  near-term future. But, if Gosstroy State Construction Com-
activities in the country. [Tire and        CODEST is one of several Italian companies doing business in Russia.                                                             mittee’s scorecard for 2000 is any indication, state-run organizations
cable group] Pirelli is thinking about                                                                                                                                       seem to be operating in a different reality.
big investments as well.                    existed earlier with the current situa-     family businesses that considered                                                       Gosstroy revealed that of the 1,054 units designed to be built under a
   Furthermore, Italian authorities         tion, it has made great strides. Putin is   clear balance sheets to be a restric-                                                federal direct-investment program — 458 of which were planned to be
are now paying more attention to            not a president that has given entre-       tion, and we had a stagnant economy.                                                 completed last year — only 98 were finished.
Russia. For example, a [joint Russian-      preneurs certainty, but he is a presi-      When we changed our economy and                                                         Anvar Shamuzafarov, head of the construction committee, said the
Italian bank] is being formed with          dent that made us understand that           enterprises started to have proper                                                   problem was that much of the allocated funds did not actually material-
Banca Commerciale Italiana, SIMEST          unless those in power commit them-          balance sheets, the situation really                                                 ize. Bad late-year weather also contributed to the missed targets.
— the Italian financial institution for     selves to settling the situation, it is     improved. This is a cultural restric-                                                   So, with little actual state construction to talk about, Shamuzafarov
the development of foreign Italian          impossible to get results. This made        tion linked to the Russian mentality.                                                spent more time talking about other matters, such as Russia’s long-suf-
businesses — and Vneshtorgbank.             things start again. ... I don't mean that   If it is difficult for us Europeans to                                               fering communal services industry. He spoke about the need to get more
   So, you see, there is progress. ... Of   he is the ideal president, but he can       make [financial results] public; can                                                 people paying their utility bills to help these agencies to upgrade services.
course, Italy does not occupy one of        put a stop to the past chaos.               you imagine how hard it is for a                                                        Shamuzafarov noted that deteriorated infrastructure, including gas
the top spots among countries that             RJ: What are the main problems           Russian who is used to hiding every-                                                 and water lines, resulted in 77 major accidents last year. He added that if
have invested here and, I think, will       that a Western business encounters          thing?                                                                               nothing is done to remedy the situation soon, “an era of endless catastro-
never occupy such a position: We are        in Russia, and what kind of advice             Another big problem is the                                                        phes will start in Russia.”
a country that is more oriented             can you give to someone starting a          bureaucracy. Even if Putin has start-                                                   He lamented that utility companies do not receive adequate payments
toward export. But things are chang-        business in this country?                   ed to fight it, he hasn’t found a solu-                                              for water, gas and electricity services, depriving them of funds needed to
ing in Italy as well, and for us, Russia       VT: The American consulting              tion yet. The problem is not bureau-                                                 upgrade. Apart from the gas explosions and the traditional winter-season
is one of the most interesting markets.     agencies       Ernst        &     Young     cracy in itself, because if you know                                                 breakdowns of heating facilities, he warned about the dangers of infec-
   RJ: When President Vladimir              [International] and Arthur Andersen         the rules you can follow them. The                                                   tious diseases being spread through faulty drinking-water pipes. And, he
Putin was elected, foreign investors        recently published a report saying          problem is that bureaucracy some-                                                    said, inefficient utilities waste 20- 40 percent of their resources.
were hoping for a higher degree of          the main problem is control of busi-        times can be gotten around using                                                        A few years ago, there was talk of de-monopolizing communal services
certainty. Has the new president            ness management. ... This is the first      measures that have nothing to do                                                                        and letting private companies take a shot at offering
been able to guarantee the stability        real problem for a foreign firm that        with the rules. The legal system and                                                                    services. Perhaps, it was thought, competition would
that businesses and investors were          wants to start its own investments          the system of rules concerning the                                                                      improve services, and improved services might con-
looking for?                                here. The reasons are connected, first      economy are really incomprehensi-                                                                       vince more people to pay up. So far, however, services
   VT: The problem with me is that          of all, with the legislative system. ...    ble. ...                                                                                                are still provided by the municipalities.
I've been living here for more than 12      For example, accountancy here still            There are also positive sides. The                                                                       According to Gosstroy data, customers paid 38 per-
years, and perhaps I identify too           works according to Soviet principles.       Tax Code that has been passed, for                                                                      cent of the costs for communal services last year. More
much with the reality of this country.      A second problem is the lack of trans-      example, is one of the most advanced                                                                    than 60 percent of people have legal discounts for their
It’s impossible to find certainty in        parency in the accounts at Russian          in Europe. But I'm afraid that it will                                                 KRISTINE monthly payments, amounting to 24.6 billion rubles
Russia. I think that we still need a lot    enterprises — both old and new ones.        be very difficult to enforce.                                                         PETROSIAN (nearly $1 billion) last year.
of time before we can say that Russia          Transparency is considered more a           RJ: Why? What are the problems?                                                                          Communal services payments are a heated topic
                                                                                                                                                                              Building Blocks
is a country that can give any certain-     restriction than a positive matter. For        VT: It is like putting a 200 horse-                                                                  nationwide. Housewives complain of having to pay a
ties. But if we compare the chaos that      example, in Italy, we used to have          power engine in an [old Soviet]                                                      couple of hundred rubles per month, while Alfa Bank President
                                                                                        Zaporozhets car. It will take off for                                                Pyotr Aven once said indignantly at a banking conference: “Why
                                                                                        the first 200 meters, but after that the                                             should the state pay for my communal services. Am I not able to do
                               REAL ESTATE                                              car will break down.                                                                 that myself?” According to Aven’s estimates, 3 percent of Russia’s
                                                                                           RJ: Presidential economic adviser                                                 GDP goes to cover the gap between what people pay for services and
                                                                                        Andrei Illarionov predicted that the                                                 their actual cost.
                                                                                        economic growth seen last year                                                          Actual service costs were 13.34 rubles per sq. meter last year, of which
                                                                                        would grind to a halt if the govern-                                                 customers paid only 8.32 rubles.
                                                                                        ment didn't take the right measures.                                                    However, in many regions, efforts to force debtors to pay had no effect
                                                                                        Are Italian entrepreneurs worried                                                    at all, with many people preferring to live without water and electricity
                                                                                        about a looming crisis?                                                              than to pay for them, especially people who hadn’t seen cash wages them-
                                                                                           VT: I'm sure that not only Italians                                               selves for many months.
                                                                                        are worried. But, as usual, optimism is                                                 Shamuzafarov said the system must be revised to “assure that higher-
                                                                                        prevailing. If I could give a piece of                                               income citizens pay adequately.” He also gave some cause for optimism.
                                                                                        advice, I would tell entrepreneurs                                                      Overall growth, including private construction, saw an increase sup-
                                                                                        that optimism is fine, but it is also                                                ported by investments into fixed assets, which amounted to 1.2 trillion
                                                                                        important to sharpen your analysis.                                                  rubles last year, 17 percent more than in 1999.
                                                                                           Illarionov is right. I also believe that                                             Other Gosstroy tidbits:
                                                                                        the Russian production system is at                                                     • Some 90 percent of construction-sector companies are small busi-
                                                                                        its peak. Considering the technologi-                                                nesses (with up to 100 employees).
                                                                                        cal level and infrastructure [here], it is                                              • More than 60 percent of residential construction was done by private
                                                                                        impossible to attain better growth.                                                  developers.
                                                                                        Furthermore, the positive effect of                                                     • Overall, 30 million sq. meters of residential buildings were built, 2
                                                                                        the ruble-dollar exchange rate is                                                    million less than in 1999.
                                                                                        slowly beginning to decrease. So, for-                                                  • Another 2 million to 2.5 million sq. meters was not registered with
                                                                                        eign goods and machineries will soon                                                 state authorities in an attempt to escape taxation. “There are whole cot-
                                                                                        be competitive again.                                                                tage communities and elite housing developments that tax inspections
                                                                                           It is necessary [for Russia] to make                                              are unaware of,” he said.
                                                                                        new investments. ... But growth will                                                    • Competition in the industry improved last year as the number of
                Apartments and offices for rent                                         come to a halt even if Russians find                                                 tenders held increased 2.5 times to 25,000.
                                                                                        sources of big investments, because it                                                  • Forty million sq. meters of residential area was privatized last year.
      NOW FURNISHED APARTMENTS AVAILABLE                                                will take time before those invest-                                                  Thus, since the beginning of reforms, some 63 percent of residential area
                                                                                        ments translate into new production.                                                 inherited from Soviet times has been privatized.
                       Management and Leasing:                                             It's good to be optimistic, but I                                                    • The average wage for construction industry workers was 3,098
                                    Hines                                               think one has to be careful. Illarionov
                                                                                        is a smart person. He's warned every-
                                                                                                                                                                             rubles a month ($110) — that is, they could buy only 2 sq. meters in a typ-
                                                                                                                                                                             ical Moscow building with their annual income.
         tel: 956−5050 • fax: 956−5920 •                               one: "Be careful — the land of milk                                                         (E-mail Building Blocks at
                                                                                        and honey doesn't exist anymore."
       FEBRUARY 17 - 23, 2001                                                                                                                             BUSINESS 11

                                                                         Canada sets $1.17 million
                                                                         on Russian forestry effort
                                                                         By VLADA MELKOVA
                                                                         The Russia Journal

                                                                                 ussia and Canada are joining
                                                                                 forces to improve manage-
                                                                                 ment of Russia’s vast forests
                                                                         following a U.S. $1.17 million donation
                                                                         from the Canadian International
                                                                         Development Agency (CIDA).
                                                                            With the title Building Part-
                                                                         nerships for Forest Conservation and
                                                                         Management in Russia, the scheme
                                                                         will tackle issues ranging from pre-

Delivering revenues
NICK BUTCHER, DHL’s European regional director, at a press briefing
last week, announced that the international courier company’s rev-
enues rose 16 percent in Russia and 14 percent throughout the C.I.S.
The company also said that a new express center will open in Moscow
on Tverskaya-Yamskaya Ulitsa in April, and that 20 more DHL points
will be set up at busy intersections in Moscow and St. Petersburg. DHL
also reported that it now has 956 employees in the C.I.S.

                                                                                                                   By PATRICK GILL
                                                                                                                   The Russia Journal

                                                                                                                             olden Telecom (GTI) put its
                                                                                                                             books in order last week,
                                                                                                                             announcing a cut in losses to
                                                                                                                   $10.3 million for 2000, but analysts
                                                                                                                   said other unresolved questions were
                                                                                                                   the real issues facing the company.
                                                                                                                      GTI’s founder and major share-
                                                                                                                   holder, European telecom company
                                                                                                                   Global TeleSystems (GTS), is plan-
                                                                                                                   ning to sell off its 62 percent stake to
                                                                                                                   improve its cash-flow situation —
                                                                                                                   and analysts say that the identity of       But analyst Andrei Braginsky of
                                                                                                                   any new partner is crucial to GTI’s         Renaissance Capital said the disposi-
                                                                                                                   future. The remaining 38 percent of         tion of the GTS stake was causing
                                                                                                                   stock is held by institutional investors.   some anxiety at the company.
                                                                                                                      Analysts are also keeping an eye on         “There is a lot of uncertainty about
                                                                                                                   whether GTI can consolidate Sov-            whether Golden Telecom will exist at
                                                                                                                   intel into its business. GTI owns 50        all and what sort of business it will
                                                                                                                   percent of the Internet and telecom         be,” he said. “The shape of the com-
                                                                                                                   firm and wants to acquire the rest.         pany depends on who becomes the
                                                                                                                      GTI officials acknowledged that          strategic shareholder.”
                                                                                                                   there were questions hanging over              Observers say the stake has caught
                                                                                                                   the company’s future, but they              the eye of domestic and foreign
                                                                                                                   added that operations were proceed-         investors, including Alfa-Bank,
                                                                                                                   ing without difficulties.                   Telenor and Systema Group, and
                                                                                                                      “It [the planned sale] is part of        that any fresh input could change the
                                                                                                                   GTS’ restructuring, but it’s a big          direction of the company.
                                                                                                                   hypothetical question — meanwhile,             “There are a number of potential
                                                                                                                   it’s business as usual,” said John Rose,    buyers, and this is the main question
                                                                                                                   a spokesman for Golden Telecom.             for GTI,” said Braginsky. “It could
                                                                                                                                                               emerge as a different entity with a
                                                                                                                                                               different focus. The announcement
                                                                                                                                                               could come today or in six months.”
                                                                                                                                                                  Andrei Bogdanov, an analyst at
                                                                                                                                                               Alfa-Bank, agreed the fate of the 62
                                                                                                                                                               percent share needed to be resolved.
                                                                                                                                                               “There should be an announcement
                                                                                                                                                               within weeks,” he said.
                                                                                                                                                                  Meanwhile, the remaining 50 per-
                                                                                                                                                               cent of Sovintel is held by Rostelecom,
                                                                                                                                                               the long-distance telephone operator.
                                                                                                                                                               Renaissance Capital’s Braginsky said
                                                                                                                                                               consolidating Sovintel would be “criti-
                                                                                                                                                               cally important” for GTI.
                                                                                                                                                                  GTI revenues rose 16 percent year
                                                                                                                                                               on year to $113 million. The loss of
                                                                                                                                                               $10.3 million in the year 2000 com-
                                                                                                                                                               pared with a loss of $47 million record-
                                                                                                                                                               ed in the preceeding year.
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                                                                                                                                         FEBRUARY 17 - 23, 2001      F
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                                                                                             November 1993 on the basis of the state        News. Its refining reached 1.4 million
                                                ❙❙❙❙❙            ❙❙❙❙❙
                                               ❙ ❙ ❙ ❙ ❙ ENERGY ❙ ❙ ❙ ❙ ❙                    refining enterprise rebuilt in 1949. Between   tons of oil in 2000 vs. 2.2 million tons a
                                                                                             April 1999 and March 2000, Russia's            year ago.
                                                  KIEV — Rafail Safin, LUKoil's first vice   LUKoil bought out 96 percent of plant             Under the agreement on purchase and
                                               president, has informed Ukrainian Prime       shares, which led to the company being re-     selling between the Ukrainian property
                                               Minister Viktor Yushchenko that the com-      named the LUKoil-Odessa Refinery.              authorities and LUKoil in Dec. 2000, the
                                               pany has decided to earmark $3 million           The Odessa plant has the capacity to        Russian company promised to increase its

                          The Russia Journal
                                               for the already commenced upgrade of          process 3.9 million tons of the annual         supply of feedstock to the Odessa plant in
                                               the Odessa Refinery, according to a           feedstock, from which it produces gaso-        2001-03 to 2.8 million tons yearly from
                                               Ukrainian Cabinet statement, Prime-TASS       line, diesel fuel, gas-turbine fuel, heating   2.4 million tons specified by the similar
                                               reported.                                     oil and liquefied gas, according to            agreement signed in April 1999.
                                                  The Odessa Refinery was established in     Prime-TASS, which quoted Tass Energy                                                 TRJ

        FEBRUARY 17 - 23, 2001                                                                                                     NET TICKER / BUSINESS 13
                                                                                                       The Russia Journal Online:
                                                                                                                                                                             THE WEEK

STATE SAYS NO TO RUSSIAN VESSEL                                                                                                                                              For complete texts of these stories,
                                                                                                                                                                                 click on ‘RJ Net Ticker’ at

                                                                                                                                                                              ❙❙❙❙❙❙❙❙❙❙ BUSINESS ❙❙❙❙❙❙❙❙❙❙
        HATHAM, Massachusetts —                ❙ ❙ ❙ ❙ ❙ FISHING ❙ ❙ ❙ ❙
                                                ❙❙❙❙❙             ❙❙❙❙                   ery councils this fall, allowed foreign
        The state rejected a request                                                     vessels to fish for mackerel and her-
        that would have allowed a                                                        ring in federal waters this spring, if
                                                                                                                                                                             RUSSIAN FIRM OFFERS
Russian fish-processing vessel to             Simonitsch said it would have done         they purchased fish from American
                                                                                                                                                                             PLANES TO SUMATRA
anchor off Cape Cod, saying it creat-         the opposite.                              vessels as part of a “joint venture.”
ed unfair competition for the domestic           “The merits were not there,” he told    The mackerel and herring stocks are                                                    PALEMBANG, Sumatra —
fishing industry.                             the Cape Cod Times. “There were            healthy, but domestic demand for the                                                Tehkom Co., a Russian aircraft
   Boston-based          Mayflower            only demerits.”                            fish is relatively low.                                                             company, has offered small air-
Trading made the request on behalf               David Pierce, assistant director of        But when President George W.                                                     craft to the governors of
of the Russian vessel, which would            the Division of Marine Fisheries, said     Bush froze last-minute executive                                                    Indonesia’s Sumatra island as part
have anchored between Monomoy                 last week’s decision by the state was      orders by the Clinton administration,                                               of a plan to set up a regional car-
and Nantucket this spring.                    final.                                     the agreement was frozen as well.                                                   rier to be called Sumatra

   The ship would have processed                 Mayflower made the proposal                Dave Ellenton, who has worked                                                    Airlines, according to a report in
mackerel from American fishing ves-           hoping to recoup business lost when        with foreign vessels in the past, said    Massachusetts’ Cape Cod.                  the Bernama Daily Malaysian
sels and then transported it to larger        an agreement allowing foreign ves-         American fishermen participating in                                                 News.
cargo ships for delivery to Europe.           sels to fish in federal waters was         the joint venture would have pulled in    the agreement because they have to           “The governors could buy or rent
The proposal was supposed to                  frozen last month.                         a combined $4 million on mackerel.        comply with tougher federal stan-         the 27-seater aircraft,” Irzal
expand the market for American fish-             The agreement, approved by the             But Simonitsch said domestic           dards than at-sea processors.             Chaniago, director of the compa-
ermen, but Cape fisherman Mark                New England and Mid-Atlantic fish-         processors would have been hurt by                                           AP     ny’s Indonesian affiliate, PT Putra
                                                                                                                                                                             Pobiagan Adiguna, said during
                                                                                                                                                                             a presentation here, the newspa-
                                                                                                                                                                             per stated.
                                                                                                                                                                                South Sumatra Gov. Rosihan

INDIAN GROUP, ROSNEFT OK DEAL                                                                                                                                                Arsyad, who introduced the idea
                                                                                                                                                                             of Sumatra having its own airlines,
                                                                                                                                                                             said the governors had already
                                                                                                                                                                             received the license to operate an

      ONDON — ONGC Videsh                     the participants, the Indian group                                                   torically close ties between Russia       airline, according to the report.
      Ltd. and Russia’s Rosneft               will purchase the stake from                 ❙❙❙❙❙            ❙❙❙❙
                                                                                          ❙ ❙ ❙ ❙ ❙ ENERGY ❙ ❙ ❙ ❙                 and India and comes as the Indian            Meanwhile, Aceh Province has
      finalized a deal in which               Rosneft, and its initial investment in                                               company aims to increase over-            affirmed its wish to buy helicopters
ONGC will buy a 20 percent                    the project is expected to be in the       border deal between India and             seas production of energy from 30         from Russia to facilitate surveil-
stake in the giant Sakhalin-1 oil             range of $1.5 billion to $2 billion.       Russia, this was probably the most        percent of demand at present to           lance efforts as well as increase
field, where production is expected              Sources familiar with the deal          complex deal we have done,” said          50 percent in the next 10 years.          public services.
to start in 2005.                             say state-owned ONGC will pay              Wilson, who worked on deals such             The deal comes after Putin visited                                        TRJ
   In the largest merger and acqui-           around $180 million up front for           as BP’s acquisition of Amoco and          India last year to sign trade deals.
                                                                                                                                                                             LATVIAN GAS STAKE
sition deal in Russia, according to           the stake.                                 Exxon’s purchase of Mobil.                   ONGC has entered into an
                                                 “This transaction is a major step          ONGC joins subsidiaries of             exploration agreement in Iraq and           RIGA — The Latvian Privatization
                                              in our strategy to achieve energy          Exxon Mobil Corp. and Japan’s             has memorandums of understand-            Agency said it had considered
                                              security and is the first in a series of   Sodeco, which have 30 percent             ing with Indonesia’s Pertamina            splitting the state’s remaining 8
                                              initiatives by ONGC to become a            each, as well as Rosneft with 20          and has a 40 percent share of a           percent Latvian Gas stake
                                              major international energy compa-          percent, as shareholders.                 gas field in Vietnam.                     between Russia’s Gazprom and
                                              ny,” said Ram Naik, India’s                   As part of the agreement,                 It has plans to expand into pro-       two large German strategic hold-
                                              Cabinet Minister for Petroleum and         ONGC will invest in development,          duction in Venezeula and else-            ers. The Latvian natural gas utility is
                                              Natural Gas.                               financing Rosneft’s participation in      where.                                    25.6 percent owned by
                                                 ONGC was advised by JP                  the project until it generates posi-         The ONGC/Rosneft deal comes            Germany’s Ruhrgas and another
                                              Morgan and Rosneft by ABN                  tive cash flow.                           on the heels of BP's decision to sell     German company, E. ON
                                              AMRO in the deal that started last            Oil production is expected to          its stake in Russia's largest oil pro-    Energie, holds 17.1 percent in the
                                              year.                                      build to production levels of             ducer, LUKoil, and after strong crit-     company.
                                                 “ONGC and Rosneft are both              200,000 barrels per day, while            icism in the past from oil companies        Russian gas giant Gazprom
                                              extremely commercially minded,”            natural gas sales could rise to as        of Russia, both on production shar-       owns 25 percent of Latvian Gas.
                                              said Jeremy Wilson, managing               much as 1 billion cubic feet per          ing agreements and corporate                                              Reuters
                                              director and head of energy merg-          day over time.                            governance, which led to some oil

                                              ers and acquisitions at JP Morgan.            The deal between ONGC and              majors quitting the country.
 Russia’s Sakhalin Island.                                                                                                                                                          NEWS UPDATES
                                                 “However, [by] doing a cross-           Rosneft marks the resumption of his-                                     Reuters

                                                                                                                                                                                     First with the

                                                                                                                                                                                                                                                                                                                                                                    THE RUSSIA JOURNAL
14 BUSINESS / MARKETS                                                                                                                                                                                                                                                                                                                                               FEBRUARY 17 - 23, 2001

  A close-up look at key data                                                                                                                                                                                                 Company
                                                                                                                                                                                                                                                     Mkt Cap $
                                                                                                                                                                                                                                                                         Price $
                                                                                                                                                                                                                                                                                        MARKET DATA - THURSDAY'S CLOSE

                                                                                                                                                                                                                                                                                             Vol          One week               One month              YTD             52 week high 52 week low
                                                                                                                                                                                                                                                                                                                                                                                                              4 week vol. $
                                                        Figures from Friday, Feb. 16                                                                                                                                                                    mn                                                                                                                                                        mn
                                                                                                                                                                                                           RTS Index                                                        186.74              35.48             4.60%                   9.60%              14.20%             30.30%             245.49             131.02
                                                                                                                                                                                                           LUKoil, ordinary                                    8,876         10.87               4.29             5.00%                   9.10%              −1.60%             17.50%              16.62               8.05
                                                                                                                                                                                                           LUKoil, preferred                                                     11              1.56             2.30%                   3.40%               1.40%             23.60%              12.35               5.75
   188.00                                           RTS INDEX VARIATIONS                                                                                                                                   Surgutneftegaz, ordinary                            7,334         0.264               1.67             3.30%                   9.10%               7.80%             26.90%                 0.4              0.18
                                                      RTS Close            Vol ($ mln)                                                                                                                     Surgutneftegaz, preferred                                         0.139               0.74             6.10%                   6.90%              23.00%             49.50%               0.16               0.07
                                                                                                                                                                     28.00                                 Sibneft                                             1,726         0.364               0.22             4.70%                  19.30%              23.40%             33.20%               0.39               0.22
                                                                                                                                                                                                           Tatneft                                             1,217         0.541               1.68             5.10%                  10.30%              26.90%             53.10%               0.72               0.32
                                                                                                                                                                     23.00                                 Yukos                                               5,503          2.46               4.04             4.00%                   7.40%              32.60%             38.20%               2.46                 0.6
   178.00                                                                                                                                                                                                  Gazprom                                             7,209         0.337               2.27            −0.30%                   4.30%              12.50%             14.20%               0.36               0.22
                                                                                                                                                                     18.00                                 UES, ordinary                                                          6                 0             1.70%                  −3.20%             −17.20%              0.00%              10.02                 5.5
                                                                                                                                                                                                           UES, preferred                                      5,000          0.12              10.42             9.60%                  15.50%              29.20%             45.70%               0.21               0.07

                                                                                                                                                                                  RosBusiness Consulting
                                                                                                                                                                     13.00                                 Mosenergo                                                         0.046               3.81            15.00%                  23.70%              27.10%             39.80%                 0.1              0.03
                                                                                                                                                                                                           Irkutskenergo                                       1,111         0.039               1.16             6.20%                  13.60%              42.90%             63.80%               0.07               0.02
   168.00                                                                                                                                                            8.00                                  Lenenergo                                             381          0.08               0.04             5.30%                  −5.30%               4.60%              0.00%               0.12               0.06
                      2/9/01                  2/12/01                   13/02/01                 14/02/01               15/02/01                 16/02/01                                                  Bashkirenergo                                         152         0.186                  0             4.60%                   3.20%              16.10%             16.10%               0.39               0.16
                                                                                                                                                                                                           Samaraenergo                                           61         0.056               0.02             8.70%                  12.00%              17.30%             24.40%                 0.1              0.04
                                                                                                                                                                                                           Kubanenergo                                            83         0.022                  0             3.50%                  30.90%              61.80%             74.50%               0.03               0.01
                                                                                                                                                                    13.70                                  Nizhnovenergo                                          14            0.8                 0             0.00%                   0.00%              −8.60%             −8.60%               2.05               0.75
                                                  Central Bank Exchange Rate Variations                                                                                                                    MTS, ADS                                               32          7.25                  0            11.50%                  11.50%              22.90%             38.10%              10.75                   5
                                                                                                                                                                                                           Rostelecom, ordinary                                3,000          30.1               6.47            −0.70%                   2.00%              11.00%             25.40%              31.38                 22
    28.70                                                                                                                                                           13.60                                  Rostelecom, preferred                                 931         1.139               1.03             8.00%                   8.50%              11.10%             32.40%               4.47               0.83
                                                                                                                                                                                                           Vimpelcom, ADS                                                    0.419               0.21             7.30%                   8.30%              −6.50%             13.10%               1.46               0.34
    28.68                                                                                                                                                           13.55
                                                                                                                                                                                                           Golden Telecom                                       835          18.75               1.43             1.60%                   3.40%               2.00%             28.80%              50.63              12.06
                                                                                                                                                                    13.50                                  MGTS                                                 268         11.125               1.12             1.10%                   2.90%              −8.20%             95.60%                 48               5.69

                                                                                                                                                                                                           Chelyabinsk Svyazinform                              505               6                 0             1.30%                   2.10%               6.20%             −5.50%                550               4.69
    28.64                                                                                                                                                                                                  Ural Svyazinform                                     108             20               0.04             9.90%                  24.00%              17.60%             17.60%                  40                15
                                                                                                                                                                                                           Samara Svyazinform                                    74          0.009                  0            10.40%                   6.30%               9.70%             29.80%               0.03               0.01
                                                                                                                                                                                  RosBusiness Consulting

                                                                             Rbls/$                Rbls/DM                                                          13.35                                  Nizhnov Svyazinform                                   74         34.425                  0             0.00%                   2.00%              −0.90%              5.10%              67.25               30.5
    28.60                                                                                                                                                                                                  Rostov Electrosvyaz                                  111          1.125                  0             7.10%                  46.10%              40.60%             25.00%                 2.3                0.7
                                                                                                                                                                                                           Kubanelectrosvyaz                                     59          0.725                  0            −2.70%                  −1.70%              11.50%             20.80%               1.81                 0.4
    28.58                                                                                                                                                           13.25                                  GAZ, ordinary                                         96           8.25                  0             3.10%                  14.20%               5.40%            −14.90%              18.85                   7
                     2/10/01                 13/02/01                   14/02/01                 15/02/01              16/02/01                 17/02/01
                                                                                                                                                                                                           GAZ, preferred                                        98         19.025                  0             0.90%                  −3.10%             −15.00%            −18.20%                  53              17.5
                                                                                                                                                                                                           Aeroflot                                                          7.975                  0             0.30%                   7.80%               6.30%             18.10%              13.25                 6.4
                                                                                                                                                                                                           GUM                                                  331          0.298               0.32             0.50%                  10.40%              33.30%             40.60%                 0.3              0.14
                                                                           FOREIGN EXCHANGE                                                                                                                TsUM                                                  80           1.34                  0             7.20%                   9.80%               7.20%              1.10%                   3              0.74
                                                                                      Change                            Change                             Change                                          Baltika                                               15          0.173                  0             0.00%                  −5.50%              23.20%             27.80%               0.42               0.13
                  Rb per $                                    Current                  d-o-d                             d-o-d                              m-o-m
                                                                                                                                                                                                           Sun Interbrew GDR, class A                           529            360                  0             0.00%                   0.00%               5.90%              5.90%                365                300
                                                                                      points                               %                                 %
                                                                                                                                                                                                           Sun Interbrew GDR, class B                           188           1.45               0.03            −1.40%                  −1.50%             −14.40%            −15.30%               5.64               1.45
CBR official rate                                                         28.68                          0.01                        0.03%                            1.16%
                                                                                                                                                                                                           Red October                                                       2.537                  0            −1.40%                   0.30%              −5.40%              6.70%                   7              1.98
SELT TOD avg                                                            28.6753                       0.0019                         0.01%                            1.15%
                                                                                                                                                                                                           Sberbank                                               38          4.25                  0             3.00%                   0.00%               6.30%              3.70%               5.68               1.78
SELT TOM avg                                                            28.6905                      −0.0088                        −0.03%                            1.28%                                Norilsk Nickel, ordinary                              393             27              0.21             5.90%                   4.90%               1.10%              6.90%                  57             23.63
                                                                                                                                                                                                           Norilsk Nickel, preferred                           1,906         10.15               2.97             7.50%                  16.00%              21.60%             39.00%              11.74               6.35
                             OIL PRICES ($ per barrel)                                                                    COMMODITIES ($)                                                                  Severstal                                                            9.5                 0             1.60%                  11.10%              25.80%             40.70%               9.75                   6
                                      Price ($)      1-week         52 week high                                                   Price        1-week          52 week high
Brent 1 month                              26.72         −10.30%              36.86                                                                                                                                                                                                      KEY STOCKS' VALUATION
                                                                                             Nickel, per tonne                     6,424.00           −6.20%        10,620.00
Urals NWE                                  24.34         −15.30%              35.24                                                                                                                                                                     Price                        — P/E —                                            — EV/EBITDA —                                             — P/S —
Urals Med                                  23.54         −18.00%              34.39          Platinum, per ounce                      597.5           0.50%             629.5                                                                            $             1999           2000F         2001F                1999                2000F                  2001F          1999            2000F          2001F
Siberian light (cif NWE)                   26.24         −13.50%              34.93                                                                                                                        Gazprom local                                  0.337            neg             4.0                1.9                 6.5                 2.6                2.5              0.6           0.4                  0.4
                                                                                             Palladium, per ounce                    985.00           −5.70%                903
Domestic (weekly)                            15.2          0.00%              22.36                                                                                                                        Gazprom ADS                                    6.000            neg             7.2                3.3                 8.5                 3.5                3.2              1.1           0.9                  0.9
Brent−Urals differential                     3.18        189.10%                 5.54        Copper, per tonne                     1,784.50           0.30%           1,998.50                             LUKoil, ordinary                              10.870             7.5            2.9                4.0                 4.8                 2.3                2.6              0.8           0.6                  0.5
                                                                                                                                                                                                           LUKoil, preferred                             11.000             7.6            2.9                4.0                 4.8                 2.3                2.7              0.8           0.6                  0.5
                                                                         MONEY MARKET                                                                                                                      Surgutneftegaz, ordinary                       0.264             7.1            2.9                3.1                 4.6                 2.0                2.1              2.6           1.3                  1.3
Refinancing                                                                             25.00% Interbank Rates                                                                                             Surgutneftegaz, preferred                      0.139             3.7            1.5                1.6                 2.3                 1.0                1.1              1.3           0.7                  0.6
                                                                                                                                                                                                           Sibneft                                        0.364             5.5            2.2                3.8                 3.5                 1.5                2.1              1.0           0.5                  0.5
O/N                                                                                      0.50%               MIBID                                    3.50%
                                                                                                                                                                                                           Tatneft                                        0.541             3.7            1.7                1.8                 3.1                 1.5                1.9              0.7           0.3                  0.3
3 days                                                                                   0.60%               MIBOR                                    6.52%
                                                                                                                                                                                                           Yukos                                          2.460             5.0            1.9                2.4                 3.4                 1.3                1.5              1.6           0.7                  0.8
7 days                                                                                   6.00%               MIACR                                    6.06%
                                                                                                                                                                                                           UES, ordinary                                  0.120            neg            neg                neg                 17.0                 6.5                7.7              0.7           0.5                  0.4
                                                                                 Current                Change d-o-d                 3-mo High                 3-mo Low                                    UES, preferred                                 0.046            neg            neg                neg                  7.5                 2.9                3.4              0.3           0.2                  0.2
                                                                                                                                                                                                           Mosenergo                                      0.039            neg            neg               16.9                 12.1                 7.0                4.4              1.2           1.0                  0.8
Banks' balances with CBR, Rb mn                                                         73,313                          −2,776             129,834                  69,348
                                                                                                                                                                                                           Irkutskenergo                                  0.080            neg            neg                neg                  3.2                 4.3                4.5              1.2           1.2                  1.2
                                                                                                                                                                                                           MTS, ADS                                      30.100           35.0           29.0               23.0                 19.5                14.2                9.5              8.4           5.4                  4.3
                                                                                                                                                                                                           Rostelecom, ordinary                           1.139           14.3           17.9               16.4                  4.9                 4.8                4.8              1.3           1.0                  1.0
                     Issue                              Due              Price             One week              One month            YTD                       YTM                                        Rostelecom, preferred                          0.419             5.2            6.6                6.0                 2.6                 2.6                2.6              0.5           0.4                  0.4
                                                                                   Eurobonds                                                                                                               Vimpelcom, ADS                                18.750            neg            neg               n/m                  35.6                17.1               13.3              3.7           2.9                  2.6
USD 12 3/4                                                 2028                    91              1 5/8               3 3/4                     8                   14.04%
                                                                                                                                                                                                           Golden Telecom                                11.125            neg            neg                neg                  8.1                 8.0                6.4              2.7           2.3                  2.0
USD 11                                                     2018            76 3/4                     7/8                    3                6 1/2                  14.75%
USD 10                                                     2007            80 7/8                       1                    3                7 1/8                  14.74%
                                                                                                                                                                                                           Norilsk Nickel, ordinary                      10.150             3.6            2.5                2.1                 2.5                 1.4                1.5              0.7           0.7                  0.5
USD 8 3/4                                                  2005            83 3/4                     3/8                    5                7 3/8                  13.76%                                Norilsk Nickel, preferred                      9.500             3.4            2.4               2.0                  2.3                 1.3                1.5              0.6           0.7                  0.4
USD 11 3/4                                                 2003            99 1/8                  1 1/8               3 1/4                  5 7/8                  12.21%                                Severstal                                     28.500             3.6            1.2                1.6                 0.5                 0.3                0.4              0.4           0.2                  0.2
USD 9 1/4                                                  2001           100 3/4                  0.375               1 3/4                  2 7/8                   8.28%
                                                                                                                                                                                                           SUN Interbrew, class A                         1.450            neg             9.8                7.2                 5.3                 1.6                1.3              1.4           0.6                  0.5
                                                                   Eurobonds ex-London Club debt
USD PDI                                                    2010            69 5/8                  1 5/8                     3                6 7/8                  14.89%                                SUN Interbrew, class B                         2.537            neg           17.2               12.6                 11.1                 3.3                2.7              2.5           1.1                  0.9
USD Step up                                                2030            42 3/8                  1 3/8               2 1/4                  4 3/4                  16.51%                                Aeroflot                                       0.298            neg            neg                 3.1                 2.9                 2.9                1.3              0.4           0.2                  0.2
                                                                              MinFin bonds                                                                                                                 GAZ, ordinary                                 19.025            neg            neg                neg                  3.3                 5.3               10.0              0.1           0.1                  0.1
Tranche VII                                                2011            38 1/8                     1/2              3 7/8                  4 3/8                  15.37%
                                                                                                                                                                                                           GAZ, preferred                                 7.975            neg            neg                neg                  2.6                 4.2                7.9              0.0           0.0                  0.0
Tranche V                                                  2008            38 1/2                     3/4              4 1/8                  5 3/4                  19.59%
Tranche VIII                                               2007            44 1/8                      −6                    5              −1 7/8                   17.44%
Tranche VI                                                 2006            52 1/4                  2 1/8               4 3/4                  6 1/4                  17.77%                                                                                                              SECTOR INDICES vs RTS and RTX
Tranche IV                                                 2003            64 1/8                       2              6 3/8                  7 3/8                  26.19%                                                             INDEX                          Index value          One day         One week                         One month                 YTD     52 week high                   52 week low
                                                                                                                                                                                                           RTS Index                                                          186.74              4.60%           9.60%                           14.20%                30.30%        245.49                         131.02
                                                                             RUSSIAN ADRs                                                                                                                  RTX Index                                                          386.63              5.20%           9.90%                           11.60%                29.80%        557.79                         267.94
                                                                                                                                                                                                           UFG Composite Index                                                 98.88              3.90%           8.80%                           11.80%                26.40%        134.47                          72.24
                                         Europe close, 7 p.m. Moscow time                           US close, 2 a.m. Moscow time                                                                           UFG Oil Index                                                       88.99              4.40%           9.60%                            6.20%                25.50%        125.61                          63.68
                                                                                                                                                        US/Europe %                                        UFG Utilities Index                                                 97.71              8.70%          13.70%                           29.40%                43.90%        166.42                          59.89
                                                                                                                                                            chng                                           UFG Telecommunications Index                                          99.9             1.50%           3.80%                            8.40%                25.40%        208.83                          76.67
                                         Price, $ 1 day chng Vol. $ mn                           Price, $         1 day chng Vol. $ mn                                                                     UFG Metals and mining Index                                        172.44              6.80%          17.80%                           26.80%                43.50%        174.19                         108.76

Gazprom                                        6.43             7.60%                    0.55             6            1.70%                     0                  −6.70%                                                                        EMERGING MARKETS BONDS INDICES                                                                                                   DOMESTIC DEBT
LUKoil, ordinary                              43.04             4.10%                    0.75          43.5            3.90%                  5.83                   1.10%                                                                      Index Value       1-week           1-month         YTD              52 wk high      52 wk low                                                                     Chng
LUKoil, preferred                             21.29             0.80%                    0.51         22.13            1.70%                  0.49                   3.90%                                 Bovespa (Brazil)                         16937.19           −1.10%          −1.80%           −0.20%              0.10         18,951.48             Issue           Maturity         Avg. Yield
                                                                                                                                                                                                                                                                                                                                                                                                                d-o-d, bps
Surgutneftegaz                                13.18             3.20%                    0.37         13.25            2.90%                  1.12                   0.50%                                 Shanghai B (China)                          78.54           −2.00%          −1.40%           −4.10%          −11.70%               89.8
                                                                                                                                                                                                                                                                                                                                                            21145               31/07/2001           13.32%                  −14
Sibneft                                        3.53             4.00%                    0.79           n/a               n/a                  n/a                      n/a                                Bombay Sensex (India)                     4431.89           0.90%           0.40%            9.20%               0.10          5,883.33          25023                   9/12/01          14.99%                   16
Tatneft                                       10.87             7.60%                    0.58          10.9            7.30%                  0.84                   0.30%                                 PX−50 (Czech Rep)                           471.2           1.20%           −4.50%           −6.90%            −0.70%              691           27001                    2/6/02          18.24%                   −2
UES                                           10.79             2.10%                       0         12.38           11.20%                  0.19                  14.70%                                 BUX (Hungary)                             7625.76           −0.10%          −2.50%           −4.40%              0.00         10,471.91          27002               22/05/2002           18.74%                   −6
Mosenergo                                       3.9            11.60%                    0.48          3.95           10.90%                  0.31                   1.40%                                 TA−100 (Israel)                            457.26           0.00%           1.40%            −2.50%            −2.50%           578.27           27005                   10/9/02          19.69%                   −1
Rostelecom                                      6.8             8.50%                    0.25          6.72            4.70%                  0.98                  −1.10%                                 WIG−20 Main (Poland)                      1676.81           2.30%           0.30%            −2.30%             −0.07          2,481.80          27007                    2/5/03          20.78%                    6
                                                                                                                                                                                                           JSE Overall (South Africa)                 9258.7           0.70%           0.80%            6.00%               0.12          9,265.40          27010               17/09/2003           21.51%                   13
                                                                            Data provided by United Financial Group                                                                                        XU−100 (Turkey)                             9764            −2.10%          1.10%            −6.30%              0.03         19,406.00          28001               21/01/2004           21.43%                   −3
         FEBRUARY 17 - 23, 2001                                                                                    BUSINESS 15

The Russia Journal

         ussian maritime officials
         and Greenpeace are swop-
         ping claims and counter-
claims over the proposed use of
the Arctic Sea route for transport
of nuclear waste materials. The
outcome of negotiations that have
been under way for months is
now so controversial that no one
wants to admit they are taking
place at all.
   Igor Forofontov, the coordina-
tor of antinuclear campaigns at
Greenpeace's Moscow office, told
The Russia Journal: "We are
opposed to transportation of
nuclear products by sea in princi-
ple, not only through the
Northern Sea Route, because in
case of a shipwreck, there is a
danger of irretrievable loss of
nuclear products. That can lead to
consequences that may not be
controlled at all."
   Forofontov said Greenpeace
had asked several Russian gov-
ernment ministries and shipping
companies to confirm or amplify
press reports suggesting that
planning is under way for a trial
of the shipments involving British
Nuclear Fuels, the Japanese            the transportation of nuclear         that the Japanese and British
Federation of Electric Power Cos.      materials for reprocessing and        nuclear industries are getting
and the Murmansk Shipping Co.          temporary storage, which are          desperate for an alternative
   So far, Forofontov said, there      shipped from Europe to Japan.         route, as opposition to these ship-
has been no official Russian           We got a request from Japan's         ments closes the others."
response. "We can work only with       Marubeni company to study the           According to Muenchmeyer,
documents in our hands, so until       technical possibility of trans-       the Panama Canal is now closed to
we get an official response we         portation of used nuclear fuel        vessels transporting high-level
cannot elaborate on this topic," he    through the Northern Sea Route.       waste and plutonium mixed oxide
said. "However, it seems that in       I would like to stress we are talk-   (MOX) fuel.
this case the media reports are        ing of studying the technical pos-       Recent protests in Argentina
true, and there are plans for sea      sibility so far and not concrete      and Chile have also threatened
transportation of nuclear materi-      plans for transportation of           the continuation of the Cape Horn
als."                                  nuclear materials."                   route for these shipments, he
   Anatoly Gorshkovsky, heading           Blinov conceded there are          added, while criticism is mount-
the     Northern      Sea     Route    major legal requirements in           ing in South Africa and Australia
Department at the Ministry of          Russia before the proposal could      against the third route between
Transport in Moscow, denied that       be considered concretely.             Japan and Europe of the Tasman
his ministry is involved in the           A Murmansk Shipping execu-         Sea and Cape of Good Hope.
planning. "Transportation of           tive added that transportation of       Japan ships spent nuclear fuel
nuclear waste seems to be a sub-       nuclear products by Russian ves-
ject for direct negotiations           sels through Russian ports and
between Murmansk Shipping and          waters requires enactment of new
its clients in Japan and Europe,”      legislation by the Russian parlia-
he said.                               ment. A bill to authorize this is
   Vladimir Blinov, a spokesman        now at the first-reading stage in
for Murmansk Shipping, has said        the Duma.
his company views the proposal to         Russia's Transport Ministry
ship nuclear waste through the         must also issue a special autho-
Northern Sea Route as "good            rization because the icebreakers
business," and is discussing details   that Murmansk Shipping uses are
with the Japanese utilities and        federal property, leased to the
British Nuclear Fuels. However,        shipping company for 10 years.
Blinov said the discussion has            Greenpeace's coordinator for
been limited to a feasibility study,   nuclear campaigns in Europe,
and nothing more.                      Tobias Muenchmeyer, said that
   "Our shipping company,"             the planning for nuclear-waste
Blinov said, "was informed that        transportation through Russia's
new routes are being sought for        Arctic waters is "an indication
                                                                                                                                                                                                         THE RUSSIA JOURNAL
16 BUSINESS                                                                                                                                                                                              FEBRUARY 17 - 23, 2001

                                                                                   INTELLECTUAL CAPITAL

  Keeping afloat in the electronic flood
           ussian tennis star Anna come through. As soon as some jingle,                                                                                       what they’re doing.
           Kournikova’s image may be beep or dancing figure notifies them                                                                                         I have seen dozens of managers
           wreaking havoc online with that their Inbox is pregnant with                                                                                        who rarely respond to business com-
 a damaging and highly contagious another message, they jump on it in a                                                                                        munication because they say they
 computer virus masquerading as flash. The disappointment is palpable                                                                                          are too busy. Consider this practical
 her picture. But thousands of com- if the message is work-related:                                                                                            joke played on a manager in a large
 panies here are suffering from an People are addicted to cyber love and                                                                                       U.S. company in Moscow. The per-
 even more disruptive computer cyber sex.                                                                                                                      son was giving “Very busy,” “Out
 infection: employee abuse of               Gone are the days when people                                                                                      for meeting,” and “On the phone”
 Internet and e-mail privileges.          could lock themselves in isolated                                                                                    replies to anyone who was trying to
    It is a worldwide disease, and for rooms, take the phone off the hook                                                                                      reach him while he was furiously
 roughly a decade, managers and and meditate on their business                                                                                                 chatting with a fictitious female
 business executives have come to strategies, when thoughts used to go                                                                                         online all along.
 realize that instant connectivity into phone conversations and man-                                                                                              Open and speedy communication
 comes with new problems and real agers used to pause a second before                                                                                          is important, if not critical, to the
 hazards. Constant access to commu- taking calls — preparing for the dis-                                                                                      growth of a healthy business culture
 nication can become an end in itself, cussion.                                                                                                                in Russia. This is something I have
 with the torrent of online                           The Internet and e-mail                                                                                  advocated previously in this column.
 information often distract-                       are instant media, requiring                                                                                But managers should show restraint
 ing employees from the                            instant judgments and reac-                                                                                 and prioritize incoming mail, rather
 tasks at hand, rather than                        tions. And workers have not                                                                                 than responding instinctively to any
 helping them accomplish                           been able to conform to the                                                                                 message that floats through the
 their work.                                       demand for immediate up-                                                                                    ether, no matter how irrelevant or
    Some say the issue is as                       to-the minute results, often                                                                                inane.
 much about corporate                              sacrificing quality along the                                                                                  Bill Gates would have us do every-
 ethics as it is efficiency.           AJAY        way. Half-baked thoughts                                                                                    thing at the speed of light. But top

                                                                                                                                                              The Russia Journal/Konstantin Maslov
 Over the last several years,         GOYAL        get pounded into poorly                                                                                     company leaders should avoid the
 intense debate has been                           drafted e-mails that then                                                                                   blindness that comes from blankly
 raging over privacy, eavesdropping get delivered within seconds to other                                                                                      staring at the streaking velocity of
 and the monitoring of e-mail in the waiting employees, who, in turn,                                                                                          today’s business communication.
 workplace, as companies have tried pass them on just as quickly.                                                                                                 There are virtues that come with
 to keep tabs on people’s access to         Take one look at the average                                                                                       the power of thinking in isolation, of
 office information technology.           office memo. People have forgotten                                                                                   strategizing and prioritizing the
    It is a battle employers are likely how to write effectively. The power                                                                                    good-old-fashioned way. One should
 to win. Just as banks and other of the written word has been dilut-                                                                                           not forget the merits of scribbling
 brick-and-mortar businesses have ed. And this effects performance,                                                                                             some thoughts on a small piece of
 long secured the right to record and output and, ultimately, revenues.            ANNA KOURNIKOVA – looks that are killing computers around the world. paper and then following through
 listen to office phone conversations,      Here in Russia, the problem has                                                                                     on them, step by step, without dis-
 they are likely to demolish any legal taken on even more menacing                 leagues early in the morning. When away. At around 11 a.m. Moscow traction and diversion. E-mail and
 barriers before the monitoring of e- dimensions because top managers              she was finally sacked, after a trial time, in the middle of a working day, cyber chats are no alternative for
 mail and Internet activity. And are not very well-versed in comput-               period of just 60 days, her e-mail when people should be buried under real meetings and face-to-face con-
 because, in most cases, the sheer ers themselves and have simply no               account contained over 15,000 mes- work, more than 20,000 people in versations.
 volume of this traffic will make idea what their employees might be               sages. No wonder she never did any Moscow were online on ICQ. Even             If your company is geared to the
 monitoring virtually impossible, up to.                                           thinking.                             worse, he said, there was good rea- hilt with the latest software and
 companies will eventually opt for          Also, many employees here don’t           My address book is filled with at son to believe that an additional high bandwidth connectivity, but is
 restricting access to the Internet, have access to the Internet at home           least two-dozen young executives 20,000 or so were online but were still not productive, it is probably
 rather than trying to scrutinize its — or if they do, it is very slow. As a       who spam my inbox with jokes, hiding their status.                          because of all that computing and
 use, or abuse.                           result, they end up using office con-    cards and notes each day and have        By using something like an infor- connectivity getting in your way.
    In the era of the New Economy, nections for personal use.                      never sent a business message. Once, mation meteor shower, my comput-          And if you can’t use it correctly,
 many employees have come to suf-           One of my employees sat in the         I suggested to one of them that “It’s er friends sent an indiscriminate you might as well not use it at all.
 fer so-called Net-trauma, an afflic- room next to mine. She would send            not polite to spam.” She replied: bombardment of messages to these You might as well just turn your
 tion that causes victims to chronical- me over two dozen messages a day.          “What’s spamming?”                    online chatters from accounts that computers off or chuck them out of
 ly organize every working minute Her pace of writing and sending                     Not long ago, some friends of mine collect and compile the replies. What the window.
 around the Internet. Perhaps more them was furious. The only problem              in Silicon Valley dramatically I saw was amazing: Over 50 percent              The new world of business
 disruptive than any computer virus, was that this prevented her from              revealed the degree of this problem of these people responded within requires discipline and focus. The
 Net-trauma doesn’t spread through doing anything else. She would com-             in Russia. In their spare time, these five minutes to what they thought information highway is like a huge
 e-mails and networks, but from per- pletely ignore her main priorities,           friends like doing some reverse engi- were Californian men and women flood.
 son to person as a deadly and infec- often falling behind in her weekly           neering on a popular application looking for love in Russia.                   Do not allow your company to get
 tious work habit.                        schedule and offering nothing in         called ICQ (I Seek You) that allows      Now, if you think your employees drowned in it.
    What are the symptoms? Busy meetings.                                          people to communicate online. One are sitting at their desks, concen-          (In his weekly column, Ajay Goyal
 executives forgetting all their priori-    Moreover, she became so addicted       night last summer, the best reverse trating on their work, think again. discusses intellectual capital, the
 ties and sitting in front of their com- to the Net that she would start send-     engineer I have ever met showed You might want to check who’s knowledge economy and manage-
 puter screens, waiting for e-mails to ing messages to her friends and col-        me something that took my breath spending how much time online and ment issues in Russia.)

SUIT: Russian Aluminum answers its accusers
Continued from Page 15                  ner,    Iskander     Makhmudov,            already confirmed by WestLB,           neys also rejected claims that the                                         he did not deny a hint from
York lawsuit would collapse             together control 50 percent of the         and $50 million originated by          New York lawsuit against Russian                                           Luchansky that he is in the United
because Zhivilo had sold out his        shares in Deripaska's original hold-       Raiffeisen. A WestLB source said       Aluminum may have lost its foun-                                           States.
interest in Novokuznetsk, and had       ing, Siberian Aluminum, which              his bank is investigating the claims   dation.                                                                       The attorney was emphatic that
no evidence to substantiate his         controls Sayansk, and is a 50 per-         in the U.S. lawsuit, and in a Geneva      An attorney from the BMT legal                                          "there is absolutely no agreement
charges against the other smelters      cent stakeholder in Russian                court action initiated by BMT that     team told The Russia Journal that                                          with Zhivilo's signature. The trad-
controlled by Deripaska. They are       Aluminum. According to Cherny,             followed the New York filing.          Luchansky's claims "have no bear-                                          ing partners have made no agree-
Bratsk,      Krasnoyarsk,      and      he and Makhmudov have a larger               Luchansky said the legal moves       ing on the lawsuit. They are                                               ment with Luchansky either.
Sayansk, and altogether they            stake than Deripaska, and control          by Zhivilo in the United States        bizarre.                                                                   Thus, the agreements Luchansky
amount to the second largest pro-       him through a three-year manage-           "were a total surprise to me." The        "If Luchansky bought the shares                                         speaks of have no bearing on the
ducer of aluminum in the world.         ment contract they have with him.          moves took place, he now claims,       directly or indirectly, he took the                                        case. They simply do not exist,
   Deripaska did not reveal who           Deripaska has not responded to           after Zhivilo had rejected pur-        risks associated with the dispute                                          other than in Luchansky's imagi-
had bought Zhivilo's stake, and the     that claim, and again, he was not          chase offers from others involved      at the plant. But if he has control,                                       nation"
bankers present did not ask.            asked to elaborate. The banks rep-         in the Russian Aluminum group,         as he now claims, then he should                                              Novokuznetsk was first built in
   Deripaska also claimed that          resented at the London meeting,            including Deripaska.                   do what is necessary to regain con-                                        1943, and modernized in 1966. It is
Mikhail Cherny, also the focus of       organized at Deripaska's request,            According to Luchansky, he is        trol of the plant from Russian                                             currently producing at capacity of
allegations in the New York court       included Westdeutsche Landes-              considering his own lawsuit            Aluminum, and reinstate the trad-                                          273,000 tons per annum.
case, is a minority shareholder in      bank, Raiffeisen Zentralbank,              against Zhivilo, alleging that he      ing contracts. If he reestablishes                                            Kommersant reports, and inde-
the Sayansk smelter, with just 20       Societe Generale, Credit Lyonnais,         misrepresented the financial con-      the relationship that existed                                              pendent sources confirm, that
percent. Cherny has no influence        and Natexis.                               dition of the Novokuznetsk             between the smelter and its trad-                                          Luchansky was born in Tashkent,
in Russian Aluminum’s trading             The French banks are reported-           smelter when he offered his shares     ing partners before Deripaska's                                            and entered entrepreneurial busi-
network, Deripaska assured the          ly keen to join the German and             for sale.                              takeover, that would essentially                                           ness through a company he estab-
financiers.                             Austrian banks in authorizing a              Speaking through attorneys,          resolve the problems."                                                     lished in Austria called Nordex
   In November, Cherny told the         new $125 million line of credit to         Zhivilo denied signing any agree-         The attorney declined to say                                            Gmbh. It traded mostly oil, gas
Russian press he and another part-      supplement the $100 million                ment with Luchansky. The attor-        where Zhivilo is located, although                                         and mineral fertilizers.
        FEBRUARY 17 - 23, 2001                                               BUSINESS 17

Continued from Page 9                  just 20 percent of what De Beers
   Observers say that spells dan-      buys of similarly sized goods
ger for De Beers, whose agree-         from Russia. Thus, if the DTC
ment bars Russia from export-          buys $200 million, the Indians
ing rough to anyone except the         could only buy $40 million.
DTC, or according to limits               There are those in the Russian
agreed with the DTC. How               trade who believe that about 20
much of a threat the latest            percent of the rough annually
development is for De Beers            consumed by the Russian pol-
depends on the diamond trade           ishers, or between $100 million
arithmetic.                            and $150 million worth of rough,
   Last year, Russia’s diamond         is “submarined” out of the
miner Almazy-Rossii Sakha              domestic market to cutting cen-
(Alrosa) produced about $1.7 bil-      ters in Belgium, Israel or India.
lion worth of rough, and will          These are the small-sized goods
raise this by 5 percent this year      the Indian cutters use. De Beers
to about $1.8 billion. Russia’s dia-   calls this flow of diamonds
mond manufacturers say they            “leakage.”
produced about $800 million               De Beers officials regularly
worth of polished stones last          complain when they discover
year and are looking to expand         evidence their trade agreement
to $1 billion this year. Allowing      is being violated in this way. But
for processing costs and a margin      if the volume doesn’t go above
of 20 percent of that figure, the      $150 million, and if the supplies
Russian diamond manufacturers          don’t hurt market prices, the
will want to buy about $815 mil-       complaints are muted.
lion worth of rough this year.            For the time being, as part of
   At the same time, Gary Ralfe,       the trade deal with Russia, De
De Beers’ chief operating exec-        Beers accepts a limited stream of
utive, has disclosed that the          these small goods, in exchange
DTC bought almost $1 billion           for the Russian commitment to
worth of Russian rough last            export all of its rough to DTC
year. Out of that total, more          and halt the leakage.
than $550 million was run-of-             The exact volume isn’t dis-
mine production of sizes and           closed. In 2000, it was between
qualities that are profitable for      $200 million and $300 million.
Russian manufacturers to cut           But De Beers officials are clear
and polish.                            about one thing: If Rudakov
   Gokhran doesn’t disclose            tried to sell that much to India, a
stock or sale figures. But it is       violation of the trade agreement,
believed there were no exports         they might turn a blind eye to
of stockpile diamonds to De            what would become an officially
Beers last year, and none are          sanctioned breach of contract
expected this year. The volume         impossible to ignore or accept.
of Gokhran sales to domestic              This year, De Beers is likely to
polishers was at least $100 mil-       sell less rough worldwide and
lion in 2000, but not more than        buy less from Russia. Also,
$200 million. And observers say        Rudakov has told Russian pol-
that’s the rub.                        ishers there will be no sales from
   Russian manufacturers say           stockpiles. If the contraction of
their expansion plans cannot be        exports matches the limitation
met out of Alrosa’s mines and          of stock supplies, then there
Gokhran’s stocks, unless the           may be just enough diamonds to
former cuts its shipments to De        go round the domestic industry.
Beers. If that happens, the man-          But the year 2002 should be
ufacturers say, they will buy the      different, experts say. That is
full range of Alrosa’s output, but     when Russian diamond manu-
only on condition they can also        facturers are calculating they
dispose of the small-sized dia-        will want an even larger share of
monds, which they cannot cut           current               production.
and polish as profitably as the        Concomitantly, that would
Indians.                               mean a larger volume of Indian-
   De Beers officials are emphatic     type diamonds to be disposed of.
they will not take the “leftovers,”       Observers say that if De Beers
after the domestic polishers have      is reluctant, and the Indians are
picked through production and          keen, that could decide the fate
selected what they want. They
also say their agreement with
Russia, and the presidential
decree that supports it, limits the
value of diamond sales to India to
                                                                                                                                                                      THE RUSSIA JOURNAL
18 BUSINESS                                                                                                                                                           FEBRUARY 17 - 23, 2001

MIGS: Traveling salesman’s failed try
Continued from Page 1                   had the slightest hope of supply-                                                                                         is the pressure the United States
salesman, singing the praises of ing MiGs to Austria.                                                                                                             is putting on the other NATO
the advantageous conditions the            The MiG-29 is a tactical fighter                                                                                       members. But in reality, things
Russian side proposed. A bargain, plane that went into mass pro-                                                                                                  are much simpler — prospective
indeed — the MiGs were going at duction in 1982. Mass production                                                                                                  buyers know full well that there
virtually half-price.                   stopped in the early 1990s. The                                                                                           is no mass production of MiGs in
  It’s not common practice to only major contract the aviation                                                                                                    Russia. This is why the Austrian
refuse a guest’s offer during a corporation that makes the MiGs                                                                                                   defense minister rightly observed
visit. The usual diplomatic proce- has had since then was a notori-                                                                                               that maintenance costs would
dure is to say the question needs ous deal in 1994 under which                                                                                                    end up canceling out the savings
more time for consideration. But Russia delivered 18 fighter planes                                                                                               made on the cheap purchase of
Putin was obviously so pushy to Malaysia and was paid in palm                                                                                                     the planes.
that officials in Vienna were oil.                                                                                                                                   This whole story illustrates
forced to take a blunter line.             Since then, the corporation has                                                                                        perfectly the problems with the
  In an interview with the news- gone from one risky deal to                                                                                                      state management of the military
paper Presse, Austrian Defense another in its attempts to earn                                                                                                    industrial complex. Moscow has
Minister Herbert Scheibner said, some money. In 1998, it sold                                                                                                     stubbornly continued to pump
"There can be no question of our planes to Eritrea, which was at                                                                                                  money into the MiG corporation.
acquiring Russian MiGs." This war with Ethiopia, which, in turn,                                                                                                  It was MiG that got the contract
looked highly humiliating for bought its fighters from another                                                                                                    to build planes for the aircraft
Putin.                                          Russian aircraft maker,                                                                                           carrier Admiral Gorshkov, which
  Many analysts think                           Sukhoi.                                                                                                           Russia wants to sell to India. One

Putin’s mistake was that                          The aviation corpora-                                                                                           of the reasons why India took so
he tried to take on some-                       tion recently sold four       MIG IS PUSHED to find buyers and has failed to design new fighter planes.           long thinking about the contract
thing that wasn’t part of                       MiGs to Bangladesh. And                                                                                           was that it meant having to pur-
his job. But this looks like                    if Austrian newspapers        would be better off concentrating      from Russia, the Germans decid-              chase MiGs.
a flimsy assertion, given                       are to be believed, ultra-    on repair and modernization of         ed to set up a specialized firm for             But this is not all. State arms-
that other presidents like                      right-wing       Austrian     existing MiGs. After all, dozens of    the job.                                     sales company Rosvooruzheniye
Francois Mitterrand and ALEXANDER politician Jorg Haider was                  countries have them, from                Putin promised the Austrians               for some unknown reason put
Bill Clinton never missed         GOLTS         even invited to the top-      Germany to Angola.                     that this firm would service their           money into modifying MiG-29
an opportunity to help         is a columnist secret MiG plant in               But the Russian company              planes, but not even the promise             planes, without first bothering to
their arms producers.          for the weekly Lukhovitsy near Moscow.         proved unable to organize repair       of Germany’s quality work was                find out which countries might be
  The difference is that in magazine Itogi.       But it seems clear that a   and maintenance services on its        enough to lure the potential buy-            interested in buying them.
the West, presidents                            corporation that hasn’t       own and set up a joint Russian-        ers in Vienna. What’s more,                     But the Kremlin remains con-
would only step in when a con- managed to design any promising                German company to do it. The           Moscow took a double blow as not             vinced that Russia can solve its
tract looked as if it had a very new fighters and is assailed by              German involvement is no acci-         only did Austria refuse to take the          economic problems by selling
good chance of being signed. numerous internal conflicts won’t                dent — Germany inherited two           planes, but Hungary decided it               arms abroad. The key is to be a
Putin, on the other hand, got be able to sell its MiGs to anyone              squadrons of MiG-29s after unifi-      wasn’t going to modernize its old            good salesman. Vladimir Putin
himself mixed up in an obviously but clients with nowhere else to             cation. After several years of         MiGs.                                        decided to set the example on
dubious deal — Moscow never go. Specialists say the corporation               problems getting spare parts             The explanation, Moscow says,              how to do it.

   WINTER: Village set for $200 mn resort
 Continued from Page 1                  month before local authorities oblast capital, about 70 km away.             ject, so I don't want to comment         a ferry service across the lake. It
 resort might help the locals actu-     have any specific information on There are daily six-hour flights            on it yet," he said of the ski resort    has not grown much since then,
 ally earn a living in the village.     the project's details or timing.     from Moscow to Irkutsk by               plan. He added that similar pro-         mostly due to flooding caused by
    "It would be so great," he said.       But many people in the village Aeroflot and three flights a week          jects had been discussed before          the construction of the Irkutsk
 "We could have more jobs and           said they were                                        by Transaero to        but never materialized.                  hydroelectric station during
 finally start making some              convinced the                                         Moscow. There            "No one has seen the project           Soviet times. The village spreads
    Kolesov explained that, during
 summer, when tourists visit
                                        project would
                                        come        about,
                                                              ‘A                              are no regular
                                                                       friend of mine direct flights to
                                                                                              foreign     cities,
                                                                                                                     papers at this time, and I don't
                                                                                                                     think that they are ready yet,"
                                                                                                                     said Kelman, who added,
                                                                                                                                                              over 5 km on the bank of Baikal.
                                                                                                                                                                In addition to the cafes and
                                                                                                                                                              boarding house, there are
 nearby Lake Baikal, lucky entre-       especially con-
                                                                 made 50 rubles a             however.               though, that he had no doubt             already some nearby resort
 preneurs can make some money.          sidering the fact           month selling               From Irkutsk,        that such a project would be suc-        hotels owned by the Federal
 "A friend of mine made 50 rubles       that the presi-                                       there is bus ser-      cessful if it came to fruition.          Security Service (FSB) and
 ($1.70) a month selling gems, and      dent himself is          gems, and that’s             vice four times a      "Baikal is Baikal, and people will       Intourist. The main attractions
 that's really good for here," he       an avid skier.               really good              day to the village     come here from around the                are the wooden St. Nicolas
 said, adding that many people             "We are still                                      costing 23 rubles      world."                                  Church and the local zoo, which
 live in poverty and support            very much sur-                 for here.’             ($0.80.) A private       He agreed, though, that the            has three bears, a fox and a
 themselves by selling fish and         prised      about                                     taxi would cost        resort would be a boon to the            mountain ram.
 souvenirs.                             the news, but if               MIKHAIL KOLESOV        $50 and a heli-        regional economy.                          Booking reservations for the
    "If the project materializes, we    Putin is talking                      Baikal villager copter service is        "Of course, shops and services         ski resort might not be the easi-
 can finally make a better living,"     about it, then it                                     also available for     will benefit," he said, adding that      est thing in the world just yet,
 he added. "I am surprised that         should happen,"                                       $500 an hour.          the Listvyanka labor force prob-         however. There is no official
 nobody thought of this earlier.        said Nina Voloknina, who also           Mikhail Kelman, first deputy         ably would be enough to satisfy          telephone code for the village,
 They can easily make back that         works for the local administra- head of Irkutsk Oblast adminis-              the demand for such a project.           and experienced Moscow tele-
 $200 million that they're talking      tion. "I heard about it on the tration, however, said that if the            But, he said, if they needed more        phone operators had to struggle
 about investing here."                 radio. If it happens, it would be ski project did in fact become             workers, "Irkutsk is not so far          to place calls there. But they
     The resort is set to be built by   really good."                        reality, a completely new system        away."                                   managed to eventually complete
 Austrian ski-resort equipment             Access to the village currently of infrastructure would likely be           Listvyanka was first men-              a connection, albeit with enough
 manufacturer         Dopplemayer.      might be a problem for potential developed.                                  tioned in print in 1772 by               static to keep all participants of
 According to village administra-       visitors, residents pointed out. The    "They have announced that it         Russian explorer I.G. Georgy.            the call shouting loud enough to
 tor Morozova, it might take a          closest airport is in Irkutsk, the is just an intention to do the pro-       The village was used as a port for       disturb their co-workers.

              Pushkin State Museum of Fine Arts
   Museum of Private Collections presents
                                                                                                                    XX century drawing and water colors from
              DRAWING DISTINCTIONS                                                                                  the British Council Collections

  Tel/fax: 202-8481; 203-4389                                 12, Volkhonka Ul., Moscow                                                                              open till March 9, 2001
         FEBRUARY 17 - 23, 2001                                                                                   RUSSIA/C.I.S. 19

• Nixon Center urges
pressure on Russia

W     ASHINGTON — The Nixon
      Center, a private U.S. policy
group, advised the administration
of new U.S. President George W.
Bush to insist that Russia stop
helping Iran develop missiles and
nuclear weapons.
   A report said the administra-
tion should use Russia’s interest
in potentially lucrative technolo-
gy contracts with American com-
panies to try to stop the coopera-
tion with Tehran.
   “The United States has more
leverage than it has used to
induce Russia to halt its assis-
tance,” the report said.

• EU-Kaliningrad talks

     European Union delegation
held talks in Russia’s Baltic
enclave of Kaliningrad on the
impact of EU enlargement on the
region, tucked between EU can-
didates Poland and Lithuania and
cut off from the rest of Russia.      prosecutor’s call to return            last December, the first American
  Kaliningrad’s grim airport,         detained Russian media magnate         sentenced for spying in Russia in
where birds nest in the grimy         Vladimir Gusinsky to jail, offi-       four decades. He was immediately
rafters and where the delegation      cials at the court said Thursday.      pardoned by President Vladimir
arrived from Moscow, highlights         The court held that Judge            Putin, who cited concerns about
the economic gap between the          Baltasar Garzon’s decision to          hurting U.S.-Russian relations and
enclave and its neighbors.            release Gusinsky from prison and       Pope’s health.
  And the delegation’s main stop      place him under house arrest with         The case against Pope’s alleged
in Kaliningrad reflected Euro-        bail of $5.5 million was correct and   accomplice, Anatoly Babkin, a
pean concerns about its dismal        in line with extradition procedures,   professor at Moscow’s Bauman
environmental state: a waste          the court said in a ruling.            State Technical University, was
treatment plant partially funded        Spain’s state prosecutors office     delayed because of Babkin’s ill
by Sweden to reduce the pollution     had appealed the house arrest          health. Babkin is accused of pass-
the region spills into the Baltic.    decision claiming that the case        ing secret information to Pope
  Swedish Foreign Minister            against Gusinsky warranted jail        about a high-speed underwater
Anna Lindh, whose country holds       and that Garzon had not acted          torpedo called the Shkval.
the EU’s rotating presidency, said    correctly on behalf of the Russian
upon arrival that the talks would     authorities.
focus on the environment, visa
                                                                             • Population aid
problems, migration and the
transit of goods.                                                            T   he Russian Cabinet rallied
                                                                                 behind a program aimed at
                                                                             countering the country’s sharp
                                                                             population decline with efforts to

• Turner-Gazprom-NTV

N    egotiators representing Am-
     erican media mogul Ted
Turner held talks with Russia’s
natural gas monopoly Gazprom
on purchasing a stake in the
country’s largest private televi-
sion station, Interfax reported.
  The government-connected
gas giant owns 46 percent of
NTV, the only national broad-
caster not controlled by the
Kremlin, and is fighting to seize
control of the station over debts.
  The report said representatives
of Turner met with Alfred Kokh,
                                      • Professor questioned
a former Russian government
official who now heads Gaz-
prom’s media division. No details
                                      R    ussia’s Federal Security
                                           Service summoned for ques-
                                      tioning a Russian professor
of the talks were released.           accused of giving secret military
                                      materials to U.S. businessman
• Spain rejects request               Edmond Pope, Interfax reported.

M    ADRID — Spain’s National
     Court has rejected a state
                                        Pope was convicted of espionage
                                      and sentenced to 20 years in prison
                                                                                                                                                                                THE RUSSIA JOURNAL
20 WORLD / AROUND THE GLOBE                                                                                                                                                     FEBRUARY 17 - 23, 2001

                                                                                                                                                                            the island and the resignation of

• U.S.: More seats
                                               Barak, Peres to join Sharon                                                                                                  their commander.
                                                                                                                                                                              The demands were made in
                                                                                                                                                                            two resolutions adopted unani-
                                                                                                                                                                            mously by lawmakers in Chatan,
                                             By MARK LAVIE                                                                          said Barak has no right to consider     a small town of about 25,000 peo-

S   EATTLE — Boeing Co. is con-
    sidering adding more seats to
                                             The Associated Press                                                                   joining Sharon's government.
                                                                                                                                    "Public sense requires him to quit"
                                                                                                                                                                            ple near the prefectural capital of
its new 737-900 to capture some
European tourist flight business
from Airbus Industrie.
   The A321 built by Boeing’s
                                             J    ERUSALEM — A broad coali-
                                                  tion government under Prime
                                                  Minister-elect Ariel Sharon
                                             was taking shape in Israel on
                                                                                                                                    after his overwhelming election
                                                                                                                                    defeat, Ramon said.
                                                                                                                                       Newspaper commentators were
                                                                                                                                    also critical. In Maariv, analyst
                                                                                                                                                                              Chatan was the scene of a series
                                                                                                                                                                            of arson attacks last month that
                                                                                                                                                                            local police suspect were commit-
                                                                                                                                                                            ted by a U.S. Marine.
European competitor can seat up              Friday, with Sharon's defeated                                                         Hemi Shalev called Barak a "knight
to 220 passengers and has become             predecessor Ehud Barak and elder                                                       of no honor," while columnist Sever
popular among European charter               statesman Shimon Peres accepting                                                       Plotzker wrote in Yediot Ahronot
tour operators.                              the portfolios of defense and for-                                                     that Barak reached "the lowest
                                             eign affairs, respectively.                                                            level of credibility ever recorded by
• Canada: Case set                              Barak's decision to stay on under                                                   a prime minister in Israel or any
                                             Sharon was met by a deluge of crit-                                                    other democratic country."
                                                                                                                                       The Haaretz daily headlined a
M    OSCOW — Russia’s prose-
     cutor general has opened a
criminal case against a Russian
                                             icism. Just moments after his
                                             crushing election defeat 10 days
                                             ago, Barak had said he would retire
                                                                                                                                    news analysis, "Not just a zigzag,
                                                                                                                                    but a back flip with a double twist."
diplomat whose car hit two                   from politics, at least temporarily.                                                      A poll in Yediot indicated that 84

Canadian women, killing one.                    The election had been seen as a                                                     percent of the respondents favored
                                             repudiation of Barak's handling of                                                     a broad coalition, while 15 percent

                                                                                      THE BUS involved in the crash.
                                             the negotiations with the Pal-                                                         preferred a right-wing govern-
                                             estinians — he had offered what          Israel buried its dead from a                 ment. The Dahaf poll questioned         SURIN PITSUWAN, Thai foreign minister.
                                             many in Israel considered far-           Wednesday attack, in which a                  503 Israeli adults and quoted a 4.5
                                             reaching concessions — and of his        Palestinian driver rammed his bus             percent margin of error.
                                             autocratic style of governing.           into a crowd of Israelis, killing                The Labor central committee
                                                                                                                                                                            • Thailand: No pullout
                                                Barak was heckled repeatedly          seven young soldiers and a civilian.          must approve an agreement to join
                                             when he addressed Labor Party
                                             activists Friday. "Zigzag," shouted
                                                                                        On Israel's border with Lebanon,
                                                                                      meanwhile, an explosion went off
                                                                                                                                    Sharon's government and also the
                                                                                                                                    list of ministers who would join.
                                                                                                                                                                            M     AE SAI — Thai Foreign
                                                                                                                                                                                  Minister Surin Pitsuwan
                                                                                                                                                                            said that Thailand and Myanmar
                                             some in the crowd, referring to          Friday, and military sources said             After Barak's defeat, approval for      failed to agree on pulling back
                                             Barak's frequent policy shifts dur-      several soldiers were wounded.                his move was not certain.               troops from their tense border,
                                             ing his 20-month reign.                  The Islamic militant guerrilla                   But Labor secretary Raanan           where the worst fighting in years
                                                Barak said he changed his mind        group Hezbollah claimed responsi-             Cohen told Israel TV, "whenever         occurred last week.
                                             out of a sense of responsibility         bility for the blast in Chebaa                Barak and Peres appear together,          They said border officials of the
                                             because of the difficult security sit-   Farms, an area that is in dispute             the party gives its approval."          two countries met for the first time
                                             uation the nation faces. "Emotion        between Israel and Hezbollah.                    Barak put some of the blame for      since Sunday’s fighting, but came
                                             says leave, but common sense says          The escalating violence added               his election defeat on Yasser Arafat.   away without agreeing on any
                                             stay," said Barak.                       urgency to the coalition talks, but it           "It is hard to say that the behav-   measures to ease tensions.

                                                Labor and Sharon's Likud Party        did not silence opposition to Barak's         ior of the Palestinian Authority
   SEARCH FOR SURVIVORS                      are close to agreement on a joint        decision. Cabinet minister Haim               and its leader has made it easier for
                                             government, both sides said. The         Ramon, a one-time Barak ally who              the peace camp, just the opposite,"               AFRICA
                                             unity government talks came as           broke with him before the election,           he said.
• U.S.: Answers sought

U    WAJIMA, Japan — Amid
     rising anger and distrust
here Friday, Japanese officials
                                             Billed as the “largest nude
                                           wedding in the world,” the cou-
                                                                                      ted causing death by dangerous
                                                                                      driving, but denied that he was
                                                                                                                                    at a religious school, saying corpo-
                                                                                                                                    ral punishment for school chil-
                                                                                                                                    dren is necessary.
sought an explanation of why               ples woke up early on Valentine’s          using the mobile phone in June
civilians were at the controls of a        Day to get various body parts              when his truck hit 24-year-old                   Rev. Robert Frisken, president
U.S. Navy submarine when it                painted and prepare for the                Paul Hammond, who was in a                    of     Christian     Community
smashed into a Japanese fishing            media horde filming the nuptials.          pull-off area of the road.                    Schools, a Protestant Christian
vessel off Hawaii.                                                                                                                  group, said he believed in corpo-
  Ietaka Horita, principal of the
                                           • U.S.: McVeigh passes                     • Germany: Extortion                          ral punishment as long as it was
high school that owned the boat,
said he was torn between return-           D    ENVER — Oklahoma City
                                                bomber Timothy McVeigh                F   RANKFURT — A German
                                                                                          court jailed for five years and
                                                                                                                                    not excessive.
                                                                                                                                       A New South Wales state

ing and staying in Hawaii until            moved a step closer to execution           nine months a man who tried to                court awarded US$1.4 million to
the missing are found.                     when he allowed a deadline to              extort $7.6 million from Coca-                Paul Hogan, who said his life                 HENRIETTE DIABATE
  "It was very painful for me to           pass without filing a request for          Cola’s German headquarters by                 was ruined after he was beaten
come back from Hawaii, leaving             clemency. McVeigh is scheduled             placing contaminated bottles on               on the hand 17 years ago at a
nine people still missing and their        to die May 16.                             supermarket shelves.                          Catholic school.                        • Ivory Coast: Leading
families," he said, wiping away                                                         The 27-year-old student, who                                                        politician charged
tears with a handkerchief.                                                            was not identified, was found guilty
                                                    EUROPE                            of attempted blackmail, endanger-                           ASIA
• Caribbean: Not Privy                                                                ing public safety and coercion by
                                                                                      the Frankfurt district court.
                                                                                                                                                                            A    BIDJAN — The deputy
                                                                                                                                                                                 leader of Ivory Coast’s main
                                                                                                                                                                            opposition group was indicted on
                                           • U.K.: Families to get                                                                  • Hong Kong: Political
B    RIDGETOWN, Barbados —
     Ten Caribbean countries that
want to use the death penalty to
                                           mad cow payments
                                                                                        In his attempt to force Coca-Cola
                                                                                      to pay the ransom, the man put 10
                                                                                      bottles of Coke contaminated with
                                                                                                                                    shuffle at the top
                                                                                                                                                                            charges of illegal weapons posses-
                                                                                                                                                                            sion and destabilizing the West
                                                                                                                                                                            African state.
quash rising crime have signed an
agreement to scrap one of the last
vestiges of colonialism here by
                                              LONDON — Families of vic-
                                           tims of the human form of mad
                                           cow disease are to receive interim
                                                                                      pesticide on supermarket shelves
                                                                                      in the Frankfurt area between
                                                                                      January and June last year.
                                                                                                                                    H     ONG KONG — In Hong
                                                                                                                                          Kong’s biggest political
                                                                                                                                    shuffle since returning to China
                                                                                                                                                                              Henriette Diabate, the soft-spo-
                                                                                                                                                                            ken and articulate secretary-gen-
                                                                                                                                                                            eral of the Rally of the Republicans
replacing Britain’s Privy Council          compensation       payments       of                                                     in 1997, Chief Executive Tung           party, was also charged with
with a regional supreme court.             $36,250, Britain announced.
                                                                                      • Kosovo: 10 slain                            Chee-hwa on Thursday named              destroying documents and disturb-
   The Privy Council, made up of
members of the House of Lords
and many in the House of
                                              The money will be paid to fam-
                                           ilies immediately while full com-
                                           pensation settlements for each
                                                                                      P   RISTINA — An explosion
                                                                                          damaged a bus carrying Serbs
                                                                                      into the southern Yugoslav prov-
                                                                                                                                    the territory’s financial secre-
                                                                                                                                    tary as the new head of its civil
                                                                                                                                                                            ing public order, government and
                                                                                                                                                                            party officials said.
                                                                                                                                                                              Diabate was not arrested but
Commons in London, “has served             person are decided, the Health             ince of Kosovo on Friday, killing 10            Donald Tsang will become              had been informed by authorities
the region well over the years,”           Ministry announced.                        and injuring 40, British troops in            Hong Kong’s No. 2 official, tak-        that her freedom was “provision-
Prime Minister Kenny Anthony                  The latest figures say 86 people        the province said.                            ing charge of its 180,000 civil         al,” party official Amadou Gon
of St. Lucia said Wednesday at             have died from definite or proba-                                                        servants as he replaces Chief           Coulibaly said.
the start of the three-day                 ble variant Creutzfeldt-Jakob
                                                                                      • Euroland: ECB steady                        Secretary for Administration
                                                                                                                                                                            • S. Africa: De Beers
Caricom summit.
   But “the cycle of independence
which began in 1962 ... cannot be
                                           Disease — CJD — and eight more
                                           suspected sufferers are still alive.       F   RANKFURT — The European
                                                                                          Central Bank left its interest
                                                                                      rates untouched Thursday, choos-
                                                                                                                                    Anson Chan, a highly popular
                                                                                                                                    figure who has been in the job
                                                                                                                                    since British colonial days.            J  OHANNESBURG — A group
                                                                                                                                                                               led by mining giant Anglo
considered to be complete until
                                           • U.K.: Phone crash                        ing a "wait-and-see" approach                   Tung picked Antony Leung,             American PLC has reached an
the determination of rights,
duties and interests of Caribbean
litigants are pronounced on by a
                                           S   OUTHEND — A truck driver
                                               who was sending a mobile-
                                           phone text message when he
                                                                                      instead of following cuts in the
                                                                                      United States, Japan and Britain.
                                                                                                                                    the Asia-Pacific chairman at
                                                                                                                                    investment bank JP Morgan
                                                                                                                                    Chase & Co., as the next finan-
                                                                                                                                                                            agreement to buy De Beers, the
                                                                                                                                                                            world's largest diamond compa-
                                                                                                                                                                            ny, for about $17.6 billion in cash
regional court.”                           struck and killed a pedestrian at                                                        cial secretary.                         and stock. The combined compa-
                                           the side of a road was sentenced              AUSTRALASIA                                                                        ny would be the biggest mining
• Jamaica: Nudists wed                     to five years in prison.                                                                                                         group in the world.
                                             “It is difficult to imagine a more
                                                                                                                                    • Okinawa: Protest                         Anglo American and De Beers
                                                                                       • Australia: Award in
R    UNAWAY BAY — Wearing
     little else than top hats and
                                           blatant act of such of cold-blood-
                                           ed disregard for safety on the
                                           roads,” said Judge Daniel
                                                                                      beating case                                  T   OKYO — In the latest
                                                                                                                                        expression of outrage by
                                                                                                                                                                            are already linked, with each
                                                                                                                                                                            owning about one-third of the
veils, 11 couples married in the
buff in an event that attracted
angry protests and international
                                           Worsley as he sentenced Paul
                                           Browning, 36.
                                                                                      S  YDNEY — A Christian educa-
                                                                                         tor deplored the award of huge
                                                                                      damages to a man who said he was
                                                                                                                                    local leaders on Okinawa against
                                                                                                                                    the conduct of the U.S. military,
                                                                                                                                    a municipal assembly called for
                                                                                                                                                                            other. The deal is seen as a way to
                                                                                                                                                                            simplify that complex arrange-
media coverage.                              Browning had already admit-              scarred for life after being beaten           the withdrawal of all Marines on                  — The Associated Press
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Kievskaya: #3, Shevchenko Emb.; 95
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Realty: 257-7734; 246-4007.

Townhouse, 5km Leningradskoe shosse,
90 sq.m., 2 levels, 2 bathrooms,
2 sauunas, designed interior, guarded
area,    perking,    tennis    courts.
BLACKWOOD         915-4000, see on

M.Mayakovskaya, Total area: 80 sq.m.
Guarded parking. Fully equipped kitchen
with all appliances, storage room, new
furniture. BLACKWOOD. 915-4000

SADOVO-KUDRINSKAYA,              80sqm,
modern furniture, boiler, Cosmos TV,
100sqm, beautiful renovation & furni-
ture, $1800; SMOLENSKAYA            Str,
100sqm: Euro-studio (50sqm) & 2 bed-
rooms,    after beautiful   renovation;
(104sqm, 4 balconies, underground
garage), $3000; PREDCHISTENKA
(rooms20,20,18)    nicely    furnished&
equipped, only $1500; 232-3618 yug-

M.Alekseevskaya, Korchagina str., 75
sqm, 3 rooms appartment: 13, 13 and
25. Domophone. $1000. No commis-
sion. Pager: 742-42-42 # 7306/

Frunzenskaya Emb., beautiful view to
Moscow University, calm, green, Stalin
house, close to Central Stadium of Lenin.
8/10 floor, 120 sq.m. (27,5+25,5+17+16),
corridor 18, western renovated dec. 2000
and partly furnished, kitchen fully
equipped, balcony, loggia, domophone.
Tel: 993-52-60

 Molchanovka str. (near Novy Arbat),
 140 sqm, western style, no commission.
 Tel: 561-63-97

Park Kultury: Pomerantsev Lane; total
100sq.m; fresh western style renovation;
unfurnished; equipped kitchen. $1,900.
G&G Realty 257-7734, 198-3660.

 Patriarshy Ponds, Ponds view; 130sqm;
 security; huge bathroom; everything
 excellent; 3000$; ORANGE-YS, 788-
 05-06, 8-902-692-30-92

Serafimovicha, 2, 105 sq.m., Secured
parking, videophone, 1,5 bathrooms,
designed interior, nice furniture. BLACK-
WOOD. 915-4000

Smolenskaya, 260 sq.m., ELITE HOUSE,
Western renovation, furnished, 3 bath-
rooms, security, underground parking.
PENNY LANE, 2320099, www.penny-

Smolenskaya: Plotnikov Lane; total 140
sq.m; living room 44 sq.m; kitchen 26
sq.m; jacuzzi; Good western renovation;
furnished; 2 tel.lines; satellite TV. G&G
Realty: 257-7734; 198-3660.

MAYAKOVSKAYA, near             Ermitage
Garden, 152sqm, 2 baths, after beauti-
ful renovation, $4000; CHISTY PRUDY -
CHISTOPRUDNY Bld, 130sqm, furniture
by special order, $3500; POLYANKA,
110sqm, consjerge, perfect official resi-
dence; ROMANOV, 230sqm, perfect
residence!       232-3618       yugona-
            FEBRUARY 17 - 23, 2001   23

                                                                                                                                                                                                               THE RUSSIA JOURNAL
24 THE RUSSIA JOURNAL                                                                                                                                                                                          FEBRUARY 17 - 23, 2001

                                                                                                                                                                                   SUGGEST A QUESTION: E-MAIL: POLL@RUSSIAJOURNAL.COM


                                    SHOULD RUSSIAN GOVERNORS BE ELECTED OR APPOINTED?

                                                                                                                                                                                                                                                    The Russia Journal/Konstantin Maslov
  ANATOLY KUZNETSOV,                          IRINA VISHNEKOVA,                      YEVGENY USTINOV,                        NIKOLAI KUTUZOV,                         IRINA DMITROVA,                           STANISLAV PADZHEV,
  67, LAWYER                                  34, ECONOMIST                          22, CLOTHING DESIGNER                   47, PENSIONER                            25, BUSINESSWOMAN                         67, ENGINEER

  All governors in Russia should be           It's better to appoint governors.      The post of governor should remain      Governors were, are and will be          I always take part in elections, and I    In accordance with the new line of
  appointed, because it establishes a         There have been problems with the      an elected office. In a democratic      elected. Russia shouldn't compro-        think I know just about everything        presidential power, governors
  vertical line of authority. I don't think   electoral system. People often have    system, which still exists in Russia,   mise on democracy. I don't want a        about this process. That's why I pre-     should be appointed. Russia has pos-
  this will lead to corruption. The last      to vote for candidates they don't      only the will of voters should deter-   group of politicians appointing their    fer that every new governor be            itive examples in its history. For
  word in making decisions about              know, and their choice is at worst     mine who will be governor. Yes, a       friends who would only follow poli-      appointed. The Russian president          many centuries, Russian tsars
  candidates would be President               formed based on advertising cam-       president or the State Duma might       cies that suit their interests. That's   needs people he can rely on in            appointed all the governors. In most
  Vladimir Putin's, and I can't believe       paigns. If we had an appointee sys-    find the work of an elected governor    how it would turn out to be. A sys-      every situation in every region. With     cases, their choices were correct.
  there is any possibility that he would      tem, the authorities would choose a    unsatisfactory, as it was with          tem of appointing governors would        the current electoral system, guber-      Even in a democracy, there should
  do anything illegal. People wouldn’t        governor who had proved his relia-     Yevgeny Nazdratenko. But still they     cost people their right to choose and    natorial posts are purchased by rich      be some reasonable restrictions. I
  miss out on anything if we didn't           bility and strength through years of   have no right to fire him. In such a    the right to determine their own         politicians, anyway. Nowadays,            feel comfortable entrusting this
  have these elections. The person            work in the areas of management        case, the government should take a      futures. Maybe in Moscow this            there are, in reality, no elections.      responsible function to the executive
  making the choices for governor             and organization. A governor           no-confidence vote and dismiss the      question isn't so urgent. But in the     So, the system must be changed.           power of the country, headed by the
  would be the person the people              shouldn't be a politician; he should   governor only when the people sup-      regions, citizens are fighting for                                                 president.
  elected as president.                       be a good manager.                     port the removal.                       their rights — and it's important that
                                                                                                                             they have the chance to elect the
                                                                                                                             governors they want.

                                                              LAST LOOK

GERMAN AND RUSSIAN Foreign Ministers Joschka Fischer (left) and Igor Ivanov raise a toast at a Moscow dinner.

                                                  THE RUSSIA JOURNAL
                                                                                                                                                                                           THE RUSSIA JOURNAL


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