Notebook

Chicken Fight

A US-Russia trade war stews

over chicken and steel 

 

On March 10, Russia imposed a 60-day ban on the import of chicken from the US, citing concerns about salmonella and the use of antibiotics. Yet many observers attributed the move to a tit-for-tat action in response to the US’ imposition of import tariffs on some types of Russian steel.

In late March, Prime-Minister Mikhail Kasyanov said he expected a solution to the ban to be found within 30 days. It was not clear whether this meant that the ban would be lifted. “Now it all depends on American veterinary services,” ITAR-TASS quoted Kasyanov as saying. “We have highlighted all the problems and shortcomings, and Russian veterinary services have presented their demands to their US counterparts.”

Prior to the ban, Russia was the largest importer of American poultry, buying more than 40% of US exports. US food industry and Agriculture Department officials maintained that US poultry is safe and talks between the two countries were continuing in early April.

The Russian ban was estimated to be costing meat and poultry giant Tyson Foods some $1 million per week in lost sales, Wall Street analysts said. 

On April 1, Agriculture Minister Alexei Gordeev and US Ambassador to Russia Alexander Vershbow signed a protocol providing for the lifting of the chicken ban on April 10 on all but a handful of US chicken exporters. Yet, according to Kommersant daily, the US failed to satisfy one of the clauses in the protocol, which requires the US to provide Russia with a report on how the US has met all aspects of the protocol on chicken quality. The US maintains that such a report was, in fact, passed on to the Russians. In any event, on the day this magazine went to press, April 15, the Russian government announced it was lifting the ban because US officials had satisfied their demands for tighter control over the quality of US chicken exports. The move was widely expected to ease tensions in the run-up to May’s summit between presidents George Bush and Vladimir Putin (see page 22). 

 

 

Viktor is out

Putin ousts conservative

CB Chairman; ruble holds

 

Viktor Gerashchenko was dismissed from the post of Central Bank Chairman in March and First Deputy Finance Minister Sergei Ignatiev took over the position.

Observers judged the move to be a sign that Russia’s stalled banking reform (reportedly long opposed by Gerash-chenko) would finally move forward. Gerashchenko was seen by many as a firm defender of a strong ruble and a staunch opponent of those who said the artificially high ruble rate to the dollar—supported by Central Bank interventions—did Russia’s economy more harm than good. 

Ignatiev, 54, said his policy would be to maintain ruble stability “for the time being,” saying he doesn’t believe “there is any need to make changes in exchange rate policy, at least in the near future.” (Interfax). Ignatiev has a track record as a scrupulously honest functionary, yet observers say he will be more inclined to “toe the government’s line than was Gerashchenko.” 

A native of St. Petersburg, Ignatiev is a veteran of government service and served as deputy chairman of the Central Bank under Gerashchenko from 1992-1993. His main job at the Finance Ministry was development of monetary policies with the Central Bank, and he was closely involved in drawing up banking reform legislation that Gerashchenko was said to oppose. Yet Duma Banking Committee Head Alexander Shokhin told Ekho Moskvy radio that “working with Ignatiev won’t be easy. He sticks to his views and it is quite difficult to look for a compromise with him.”

Observers said the Kremlin knew Gerashchenko’s exit could hit the ruble hard, so the announcement was made on Friday, March 15, giving the financial sector two days to calm down. By early April the ruble/dollar rate remained relatively stable, at R31 to the dollar. 

 

100 and counting

Lenin’s remains

holding out

 

The embalmed remains of Vladimir Lenin, which have been on display in the Red Square mausoleum since 1924, will be presentable for at least another 100 years “with appropriate care,” said Yuri Denisov-Nikolsky, deputy director of the Center for Biomedical Technologies. 

Denisov-Nikolsky’s comments followed the closure of the mausoleum earlier this year for a six week-long period “of preventative work.” This will consist of “examining Lenin’s corpse,” Denisov-Nikolsky said. 

 

Back on the Air

TV-6 back in business,

but at a price

 

Journalists from the TV-6 television channel won back their license on March 24, but only after agreeing to what many observers called a “marriage of convenience” with the pro-Kremlin group “Media Sotsium,” headed by, among others, Trade and Industry Chamber Chairman Yevgeny Primakov and President of the Union of Industrialists and Entrepreneurs Arkady Volsky. 

A team of former NTV journalists, led by Yevgeny Kiselyov, had joined TV-6 last year, but the station was shut down in January by an arbitration court on grounds that it was insolvent. This prompted Kiselyov to bid for the license which he has now won. 

Russian commentators noted, however, that Kiselov’s team paid a price for their victory in the form of a Kremlin-brokered partnership with Media-Sotsium. Former Prime Minister Primakov said the Media-Sotsium consortium must now “create a television station that is free of pressure from the state, free from pressure by oligarchs, free of any kind of pressure.” Yet Gazeta newspaper reported that 12 pro-Kremlin oligarchs, including Energy chief Anatoly Chubais and Siberian Aluminum head Oleg Deripaska, had pledged a total of $10 million to provide the new sixth channel with startup capital. 

 

Pope Broadcast Draws Ire

Catholic-Orthodox relations

continue to decline

 

Patriarch Alexei II called the live telecast of a prayer by Pope John Paul II at a Moscow Catholic Church “an invasion of Russia.” The prayer by the pope was broadcast at Moscow’s Cathedral of the Immaculate Conception on Malaya Gruzinskaya street. 

The Archbishop of the Catholic Church in Moscow, Tadeusz Kondru-siewicz, called for greater spiritual cooperation among Christians, yet admitted that “the presence of the Holy Father comes at what is unfortunately a very difficult time” for the Orthodox and Roman Catholic churches. 

Relations between the Roman Catholic and Russian Orthodox church are at a low ebb. Last February, the Vatican’s plans to elevate four apostolic administrations in Russia to full dioceses raised discontent with Orthodox representatives, who threatened to completely sever ties with the Vatican. A letter posted on the Russian Orthodox Church website accused the Vatican of making aggressive moves on Russian soil. “If the Catholic Church worked in Russia with the same amount of discretion and good manners we use when working in Catholic countries, the relationship would not be in such a bad state,” the letter said. 

Pope John Paul II has said he would like to make a trip to Russia, but the Russian Orthodox Church still objects to such a visit. Russia has 600,000 practicing Catholics, while two-thirds of Russians consider themselves Orthodox believers. 

 

Tops on Ice

Russian skaters take

top medals in Nagano

 

After many unsuccessful attempts to win a World Championship, and after the controversial Salt Lake City Olympic results, Irina Slutskaya defeated Michelle Kwan to capture her first World gold medal in Nagano, Japan in March. Sarah Hughes, the Olympic gold medalist, did not travel to Nagano, citing fatigue from post-Olympic interviews.

Alexei Dospekhov of Kommersant wrote that “the multi-year rivalry between Michelle Kwan and Irina Slutskaya is the essence of women’s ice skating of late. When others win, like Sarah Hughes, it makes one think that in sports, too, unexpected things can happen.”

“I thought the World Championship, as compared to the Olympics, would be simpler,” Slutskaya said. “It turned out not to be the case. It was even more difficult!” Slutskaya scored two perfect 6’s for her short program and skated a no less impeccable free program to the music of Tosca. Referring to Salt Lake, where she got two low marks of 5.6, Slutskaya joked, “I guess I improved the presentation component a great deal in one month.”

Two other Russian skaters—Irina Lobacheva and Ilya Averbukh—won their first-ever World gold in ice dancing. The pair won the silver in Salt Lake City. Truth be told, the absence of their main rivals—the French team which took gold in Salt Lake, Gwendal Peizerat and Russian-born Marina Anisina—surely made the task an easier one. 

All in all, Russia brought home three of four possible golds from the World Championships. In the men’s singles competition, Olympic champion Alexei Yagudin dominated the ice, winning his fourth world title. Maxim Marinin and Tatyana Totmyniana won a silver in doubles.

Upon returning home from Nagano in April, Lobacheva and Averbukh were awarded the special Fair Play Prize established by Trud newspaper and the joint-stock company Mosenergo. Lobacheva competed in Salt Lake despite a knee injury, and a prize official said both skaters showed fair play behavior both on the ice and at press-conferences. The last Russian athlete to receive the national Fair Play Prize was Yevgeny Kafelnikov, who was awarded the prize for donating his Kremlin Cup tennis tourney prize money to the families of victims of the November 2001 plane crash over the Black Sea.

 

Unfriendly result

Local soccer fans and sports observers were frustrated by Russia’s surprise loss in a friendly soccer match with Estonia. Some sports writers said, given such a dismal performance, Russia had no business being in the upcoming world championships. Ruslan Nigmatulin—Russia’s new “envoy in Italy”—was cited for special contempt because he is out of practice for not getting enough game time playing for his new club, Verona. 

Head coach Oleg Romantsev, while admitting the team played weakly, said he would rather break in players in a friendly match and lose it, rather than win a friendly match only to face problems at the World Championship. The World Championship is the first world soccer event Russia has competed in since 1994.

 

 

 

Indicators Good

Russia’s economic growth in 2002 should slow to less than 4%—roughly in line with government expectations—but should pick up a bit next year, said Anne Krueger, IMF first deputy managing editor. Russia’s GDP—the broadest indicator of economic health—rose 5% last year. “Policy makers have reason to be happy with the situation,” Krueger said. “Russia is performing impressively, given the unfavorable economic environment.” Russia has enjoyed two years of boom, partly due to high world prices for its oil, but also thanks to a rise in domestic production, namely in the food industry. 

 

More Links in the Chain

The Ramenka company, owner of the largest chain of supermarkets and department stores in Russia—“Ramstore”—announced plans to invest $1 billion in the construction of new shopping centers in Moscow and other cities over the next five years. According to the Moscow Tribune, Ramstore intends to build some 50 “class A” supermarkets in the next two to three years, with eight to ten shops this year in Moscow alone. Ramenka General Director Mustafa Saglam said his company sees little competition in the sector: “Competition has been only on paper and, during the next five years, there will be no serious contest between the main players, because the market is still empty. Moscow in particular has enormous space for retail business, being one of the biggest metropolises in Europe, with almost 10 million people.”

 

How Sweet the Smell

Kalina, Russia’s largest cosmetics maker, plans to hold an IPO on the New York or London stock exchanges next year. If it comes to pass, Kalina will become the fifth Russian company to trade on world markets and the first in its sector. Kalina will offer 25-30% of its stock, Financial Director Alexander Petrov said. Kalina accounts for as much as 23% of Russia’s $3.5 billion cosmetics market, general director Timur Goryaev said. The controlling stake in Kalina belongs to Goryaev, while 17.8% belongs to the European Bank for Reconstruction and Development.

The Sorcerer’s Stone

Russia has succumbed to the spell of Harry Potter. The new movie has grossed $1.5 million since premiering here on March 29, an official with the film’s distributor said. Over 415,000 Russian movie-goers have rushed to see the adventures of Harry, Hermione and Ron, Karo-Premier company officials said. 

 

A River of Vodka

Novosibirsk-based distillery Vinap has signed a major contract for shipment of its vodka to the US. According to Vinap General Director Yuri Veryasov, the 15-year contract with Marinelli Communications is worth “hundreds of millions of dollars.” Vinap plans to supply $30 million of its Sobol (“Sable”) vodka for sale in the US each year. 

 

Gulag.com

The first-ever internet center in the history of Russia’s penitentiary system was opened in a penal colony for minors in Iksha, Moscow region. According to teacher Vyacheslav Shushpanov, the juveniles in his custody do not have full access to the internet. They are be barred from chat and email communications and may use the internet only for educational purposes. The project was sponsored by Yukos. If the pilot project proves successful, other penal establishments may be brought online.

 

Loyalty Pays

The government of Moscow region passed a resolution providing for a one-time payment of R1000 ($33) to couples on their golden (50 year) and diamond (60 year) wedding anniversaries. According to the chairman of the Regional Committee of Social Security, Valentina Lagunkina, “the money will serve to strengthen the institution of the family.” Approximately 1500-1700 couples in the region are expected to be eligible for the one-time payment.

 

PM to Sing

The pop quartet Prem’er-Ministr (“Prime Minister”) will defend Russia’s national colors at the prestigious Eurovision-2002 music contest. The group captured the honor by winning the all-Russian music contest here in March.

The jury for the Russian contest was made up of employees of Russia’s ORT TV channel, headed by general director Konstantin Ernst and popular composer Igor Matvienko (who writes music for the group Lyube), singer Oleg Gazmanov and Lev Leshchenko (see Russian Life Calendar January/February 2002). 

Prime Minister will sing its new song in English, “Northern Girl.” Russia’s best result at a Eurovision contest was in 2000, when Alsu took second place. The musicians have a good chance of doing well in the contest, Kommersant said, “as long as the jury doesn’t expect to see [Russian Prime Minister] Mikhail Kasyanov on stage.”

 

Anti-American feeling in Russia has returned to levels not seen since the summer of 1999, when passions ran high over the NATO bombing of Yugoslavia. In an opinion poll held March 22-26 across 33 regions of Russia by the All-Russian Center of Public Opinion Studies (VTSIOM), one in three Russians (30%) characterized US-Russian relations as “cool,” with 18% considering them “tense” and  4% describing them as downright “hostile.” Only 13% saw relations between Moscow and Washington as  “friendly,” “good” or “neighborly” (vs. 20% last September). Some 29% called relations “normal and neutral” (down from 42%).

 

Golden Dreams

Russian gold miners anticipate a successful year. They feel Russia can increase its gold output by 17-20 tons (to 170 tons, up from 154.5 tons in 2001), raising Russia to the fourth largest gold producing nation after South Africa, the US and Australia. In the last three years, gold output in the three top-producing countries fell by 67 tons, while in Russia it grew by 30 tons over the same period. Russian gold producers are also quite happy that gold prices have been stable since the beginning of the year—at around $295 per ounce. 

 

“If a conscript doesn’t want to bear arms, there are other forms of service. For example, he can learn the ABCs of a 

sapper’s work. Isn’t that humane?”

Tatarstan President Mintimer Shaimiev offering 

an interpretation of alternative military service.  (Itogi).

 

“According to optimists, what was done during [Putin’s] two years is more than during the previous six years before Putin. According to pessimists, one could have done much more. But Putin was confronted with at least two ‘Nos’: no personnel, and no right program for further action.”

Izvestia editorial summing up the results of Putin’s first two years in power.

 

“Israel allows all Jews to automatically become citizens of Israel! So I am convinced that we, too, need to give Russian 

citizenship to all Russians.”

Duma deputy Viktor Alksnis criticizing the new 

Law On Citizenship, which requires applicants to live in Russia

 for five years before attaining Russian citizenship.

 

“Add it up yourself: if, over the last three years, 70,000 more babies have been born each year than during the crisis years, then how many hypothetical babies did we not get to count in 1995-1998?”

Presidential adviser Andrei Illarionov

 

“[I am thinking of the] hero of the Olympics, skier Mikhail Ivanov. He is a true fighter and a patriot. It was a shame to watch our functionaries, who reminded one of well-fed cats cut off from their sour cream. How low they were all bowing before [IOC President] Rogge, who visited the Russian House in Salt Lake City like a master-baron. People who forgot about their honor and dignity, about the honor and dignity of their country, have no place at the head of our sports movement.” 

Krasnodar region Governor Alexander Tkachev, answering the question 

“Who would you appoint as Russia’s sports boss?” (Kommersant)

 

“... At the Olympics I figured it out clearly: Russia will never become a respected friend for America. They don’t see us as a strategic partner—though sometimes they do notice us—but only when they need something from Russia. I am disappointed: after the explosions, the US might have somehow changed their attitude towards other countries, but nothing of the kind 

happened. They want to be not only the first, but the only ones ...”

Duma Deputy Nikolai Kharitonov (Kommersant)

 

In 2001, Russia became a net exporter of wheat, exporting 1.68 mn tons and importing 915,000 tons. ! Real disposable

 

“You may laugh if you feel like it, but I am telling you: 

with each Davis Cup tie, you have fewer chances to see 

me on the court.” 

Yevgeny Kafelnikov confirming his promise to quit tennis 

if his Russian team wins the Davis Cup.

 

“Hurrah! We are pushing, the Swedes are bending!”

A well-educated tennis fan, shouting a quote from Pushkin’s poem 

“Poltava” at the Davis Cup quarterfinals vs. Sweden.

income rose 12.9% on the month and 10.3% on the year in February 2002. (Goskomstat) ! Average per capita income in February was R3,051 ($98), up 30.7% on the year and 14% on the month. (Prime Tass) ! Only 9.7% of Russian women consider themselves to be well-off. !The volume of foreign investment into Russia in 2001 grew 30.1% to reach $14.26 billion. (Goskomstat) Direct foreign investments totaled $3.98 billion, portfolio investment $451 million, others $9.82 billion. The leading investors come from Germany (17.1%), the US (15.8%), Cyprus (14.9%), Great Britain (10.7%) and France (9.2%). ! Russia earned $4.4 billion from arms sales in 2001. ! Russia expects to produce 352-360 million tons of oil and gas condensate this year, up from 348.9 mn tons in 2001. ! The share of foreign capital in the Russian banking sector is below 10%. (RCB) !  Some 6% of officers in the Russian armed forces are women. (ITAR-TASS) There are 1.2 million soldiers in the army, of which 40% are officers or ensigns. While almost 1,000 women have taken part in combat, the majority work in communications, health and support roles. About half of all professional soldiers in the Russian armed forces are women. ! In February, unemployment in Russia amounted to 6.39 million persons, or 9% of the total work force. ! Some 15% of stock in Sberbank (State Savings Bank) is owned by companies with predominantly foreign capital. (Sberbank) !Retail sales of alcohol and beer rose 10% between 2001 and 2002, to 18.5 million decaliters. (Interfax) ! 3,220 federal troops have been killed in Chechnya since the fighting began in 2000. ! The price of heroine in Russia has risen 100% since the beginning of the US-led anti-terrorist campaign in Afghanistan. (ITAR-TASS)