CHUBAIS ON THE ELECTRICITY SECTOR AND YELTSIN’S NEW BOOK

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CHUBAIS ON THE ELECTRICITY SECTOR AND YELTSIN’S NEW BOOK

Segodnya, October 7, 2000, p. 2

In St. Petersburg on October 6, there was a meeting of the chief executives of all power utilities which are part of Russian Joint Energy Systems (RJES). Such biannual meetings each spring and autumn have already become a tradition within the company; the autumn meeting is devoted to preparing for the period of heaviest demand, in the autumn-winter heating season.

RJES CEO Anatoly Chubais declared yesterday’s meeting to be exceptionally important. Its main theme turned out to be a performance evaluation for RJES executives, covering the past 18 months, and Chubais himself made the judgements.

“We have succeeded in our top priority – moving toward 100% monetary payments,” said Chubais, and promised to take this level up to 97%. Commenting on the more notorious cases of power cut-offs (including some to facilities essential for public welfare), Chubais criticized local electricity re-sellers, alleging that they periodically cut power to vital facilities, often as a provocation.

Meanwhile, relations between RJES and Gazprom continue to have serious problems, which Chubais described as “a state of uncertainty”. The electrical utility could be starved of gas very soon. Gazprom boss Rem Vyakhirev has promised only 95 billion cubic meters of gas for the next year (as opposed to 127 billion in the previous year). RJES vice-chairman Vyacheslav Voronin declared that Gazprom’s stand was based on a desire to demonstrate its own importance and compel the intervention of President Putin, whose relations with Chubais are currently uncertain – especially since the release of Yeltsin’s latest memoirs, which describe Chubais’ actions against Putin.

Anatoly Chubais himself admitted yesterday that everything in Yeltsin’s book was true: he had indeed categorically objected to Yeltsin’s decision to make Putin prime minister. He qualified this statement by noting that Putin himself hadn’t wanted the job at the time, so Chubais – as always – was just “going with the flow”.

CIVILIZED LOBBYING BY OLIGARCHS

Segodnya, October 7, 2000, p. 5

At a meeting on Friday, the Russian Union of Industrialists and Entrepreneurs (RUIE) re-elected Arkady Volsky as its president. Volsky has held this position since 1990, when this body was known as the Scientific-Industial Union of the USSR. According to Volsky, at a recent personal meeting President Putin expressed his approval of “a significant part” of the RUIE’s suggestions on economic reform.

Among those elected to the RUIE managing coucil are: Vagit Alekperov of LUKoil, Alexei Mordashov of SeverStal (Northern Steel), and Alexander Mamut of MDM-Bank. The RUIE has also discussed the question of joining its managing council with Chubais, Friedman, and Potanin. Arkady Volsky says: “The interests of the oligarchs are too diverse to enable them to form their own collective body – but the RUIE can help them to engage in lobbying in a civilized manner.”

RUSSIA AND ITS NEIGHBORS TO FORM AN ECONOMIC COMMUNITY

Nezavisimaya Gazeta, October 7, 2000, p. 3

At a scheduled meeting of Customs Union states (Russia, Kazakhstan, Belarus, Kyrgyzstan, Tadjikistan) on October 6, plans to create an Euro-Asian Economic Community (EAEC) were discussed and approved. On October 10, these agreements will be presented to the five heads of state for signing. Prime Minister Mikhail Kasianov said after the meeting that Russia stands to benefit from this process; in part, because it affects the cross-border transport of goods vital for Russia. Other member states will gain access to Russian markets.

Admittedly, it remains unclear to what extent the revival of the Customs Union will facilitate the integration of the five member states, toward its main goal: creating a unified economic space across all five countries. Almost all of them are at different levels of economic development, so it’s rather difficult to speak of equal rights.

The main point of dispute at the meeting concerned procedures for agreement and decision-making. Eventually, it was decided that EAEC decisions would first go to an Integration Committee comprised of the deputy prime ministers of all five member states. Prime Minister Kasianov said that Russia, considering its economic resources, could have claimed 80% of votes – but it was purposefully downplaying its share, meanwhile hoping that all economic agreements reached within the EAEC would be thoroughly justified.

However, despite the decisions already made, there is still a grey area in decision-making and relative influence within the EAEC. Kazakhstan, which is to some extent the originator of the idea of setting up the EAEC, is insisting that it should host the EAEC headquarters. It seems that the Russian delegation at the meeting disagreed with this. The issue was left unresolved.

CIS citizens have been concerned about the prospect of visa requirements. Addressing this question, Prime Minister Kasianov noted that Russia’s withdrawal from the Bishkek Accords on visa-free travel throughout the CIS does not at all entail tougher rules on travel between Customs Union states. If necessary, Russia is prepared to agree to visa-free travel within the Customs Union.

PUTIN SETS OFF FOR ASTANA AND BISHKEK

Nezavisimaya Gazeta, October 7, 2000, p. 3

On Monday October 9, President Putin begins an official visit to Kazakhstan. The presidents of Russia and Kazakhstan are expected to sign an agreement on cooperation in the Caspian Sea, and a memorandum on humanitarian cooperation.

On the following day, Putin will take part in a meeting of the council of the five Customs Union states. The Kremlin is indicating that the Customs Union may be transformed into a Euro-Asian Economic Community as early as April 1, 2001. The voting rights in this body would be distributed in proportion to economic input: Russia with 40%, Kazakhstan and Belarus 20% each, and Kyrgyzstan and Tadjikistan 10% each. Decisions would require a two-thirds majority.

Putin will arrive in Bishkek on Wednesday morning. There he will take part in a meeting of the CIS Collective Security Council, to discuss military and political integration within the framework of the CIS Collective Security Treaty. The Council will also discuss plans to form a security system, and sign an agreement on the status of formation of collective security forces and resources. In addition, participants in the meeting are likely to take a close look at the situation in Afghanistan.

PUTIN: IT SHAMES RUSSIA TO BEG FOR FOOD AID

Nezavisimaya Gazeta, October 7, 2000, p. 3

“It is shameful for Russia to beg the world for food aid,” said President Putin yesterday, at a Moscow reception on the eve of Agricultural Workers Day. Putin stressed that this year’s harvest, totalling no less than 65 million tons of grain, “gives Russia a chance to shake off dependence on aid from abroad in this area”. Putin believes that the future of agriculture and the food industry lies in large-scale trade-oriented production. He noted that food production and processing are the “driving forces” in agriculture and rural development.

Putin stated that Russian agriculture has a number of significant assets, including “hard-working and talented people, and our soils – no other country has soils of such quality.” Putin stressed that much depends on “good management and care” in developing agriculture still further. The role of regional governments in this is enormous, but Putin noted that not all regions have been successful in this area to date.

UNITED STATES AND RUSSIA CLASH OVER SUSPECTED SPY

Nezavisimaya Gazeta, October 7, 2000, p. 1

The Moscow City Court has set the date for the hearing of the case of American businessman Edmond Pope, accused of espionage, for October 18. Pope’s lawyer Pavel Astakhov said yesterday that the case would be heard by only one magistrate, Justice Nina Barkova; so the Moscow City Court and the prosecution have rejected Pope’s appeal for a jury trial, although FSB investigator Shalkov confirmed Pope’s right to make such a request.

Meanwhile, as a consequence of Pope’s arrest, the US State Department has issued a warning to American citizens doing business in Russia about the hazards of any contacts with the defense sector. And the US Congress International Relations Committee resolved on Wednesday to call on the Clinton Administration to discontinue economic aid to Russia, and to oppose Russia’s efforts to join the WTO, if Pope is not allowed to go free.

The Russian Foreign Ministry made its response yesterday. In its official declaration, the Ministry stresses that “according to the papers submitted to the court by the investigation, Pope was engaged in collecting classified information concerned with the defense capacity of the Russian Federation… which can hardly be described as normal business activities”. As for the resolution of the International Relations Committee, the Foreign Ministry described it as “an attempt to put political pressure on the judiciary of the Russian Federation”.

FRIENDLY BANKER FLIES IN TO WISH PUTIN A HAPPY BIRTHDAY

Kommersant, October 7, 2000, p. 2

World Bank chief James Wolfensohn seems to have considered it necessary to wish President Putin happy birthday in person. He arrived in Moscow yesterday, and is meeting with Putin today in St. Petersburg.

Mr. Wolfensohn is a great devotee of the Russian arts. Back in spring, he and Putin went to the Mariinsky (Kirov) Theater to see the opera “War and Peace” by Sergei Prokofiev, produced by Andron Konchalovsky. Wolfensohn’s staff say he tries not to miss a single new play or film by Hollywood-based Russian directors. Mr. Wolfensohn also enjoys hunting Russian-style; he went shooting with Viktor Chernomyrdin on more than one occasion. True, ex-prime minister Chernomyrdin found a more reliable bear-hunting partner in former IMF Director Michel Camdessus – but that’s a different matter, since Monsieur Camdessus’ father ran a hunting supplies store.

Tonight, the Mariinsky Theater is presenting an opera called “Mazepa”, by Tchaikovsky, about a cossack hetman’s rebellion against the tsar. Vladimir Putin is likely to give it a miss, in favor of attending the traditional banquet dinner with governors and bankers. Mr. Wolfensohn will join him there later.

WILL THE KURSK SUB BE RAISED?

Argumenty i Fakty, No. 40, October, 2000, p. 2

We all remember that President Vladimir Putin promised to raise the bodies of sailors from the Kursk nuclear submarine, from the bottom of the Barents Sea. However, it seems the operation is likely to be delayed, and the president is not to blame. Rumor has it that Defense Minister Igor Sergeev has prepared a memorandum for the president, where over 20 risk factors connected with raising the bodies have been estimated. The expert conclusions are far from being favorable.

Firstly, no one has any experience in cutting apart a huge submarine’s hull at such a depth.

Secondly, if the submarine is cut apart, it is less likely to be raised afterwards, since it could fall apart during the salvage operation. If this happens, no one can guarantee that there will be no leakage of the nuclear fuel from the submarine’s reactor. If this happens, it would lead to a disaster worse than Chernobyl. Finally, according to expert appraisals, even if the operation to retrieve the bodies is carried out without any complications, it will be difficult to call it a success: half of the submarine crew are unlikely to be found.

In any case, the issue of the operation on the submarine has to be resolved by the end of October: any later, and work in the Barents Sea will be impossible because of the weather.

RUSSIAN COMMUNICATIONS CAN BE EASILY MONITORED

Inostranets, No. 38, October, 2000, p. 7

Last week the Russian Supreme Court complied with the suit of journalist Pavel Nitulsky, and admitted that item 2.6 of order No. 130 of the Media Ministry was illegal. In accordance with the order, operators of telephone and paging communications are obliged to install at their own expense tapping and surveying equipment and to put it in commission to the Federal Security Service (FSB). Moreover, according to item 2.6 of the aforementioned order, the secret services do not have to inform operators for the reasons of monitoring the subscribers, as well as which subscribers are being surveyed. Thus, order No. 130 of the Media Ministry, in fact, allows the FSB to uncontrollably tap telephones, and check e-mails, since in this case any control from the prosecutors’ offices or the courts is only theoretical. Nonetheless, the Justice Ministry registered the order.

Overall, the aforementioned order drew no objections from the Supreme Court of Russia. Only item 2.6 was cancelled, since it was decided that it contradicted the law “On communications”. According to the law, telephone and paging operators must provide for confidentiality of subscribers’ communications. However, the decision of the Supreme Court is hardly likely to considerably affect the situation: operators will only theoretically be able to ask the FSB to provide information on who is to be tapped or monitored. At the same time, if a subscriber finds out that they are being monitored, they will be able to appeal to the court against operators, demanding that surveillance be stopped and the confidentiality of their communications be provided in accordance with the law “On communication”. Just another theory…

YELTSIN’S DAUGHTER TO RETURN TO POLITICS?

Zavtra, No. 40, October, 2000, p. 1

According to our sources, close to the “family”, lately Tatiana Dyachenko has been looking to return to big politics with the help of Alexander Voloshin, head of the presidential administration. Moreover, she aspires to hold one of the leading positions in the new government. Supposedly, Dyachenko is looking to the post of deputy prime minister for social issues, which is currently held by Primakov’s protege Valentina Matvienko.

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