Notebook

Pereslavl turns 850

Town of First Russian Navy

 

A theater performance called “Vivat, Veliky Pyotr” (“Long Live Peter the Great”) was held in July as part of festivities for the 850th anniversary of Pereslavl-Zalessky, one of the most ancient Russian towns in the Golden Ring. 

Pereslavl-Zalessky was founded as a fortress city in 1152 by Prince Yuri Dolgoruky, who also founded Moscow. The great Russian military commander Prince Alexander Nevsky reigned here in the 13th century. In the 18th century, Tsar Peter I built a navel fleet on Lake Ple-scheyevo, which laid the foundation for the future Russian fleet. 

For the festival, folk concerts and sports competitions were held on the shores of the  Trubezh river. As seen in the photo, there were also sword battles between “knights” near the walls of the famous Spaso-Preobrazhensky (“Trans-fig-uration”)  church.        

 

Elections Set

Duma polling precedes

presidential

 

Russia’s next presidential elections will be held on March 14, 2004, Interfax news agency reported, quoting Central Electoral Commission Chairman Alex-ander Veshnyakov. Elections for the State Duma’s lower chamber were set for December 14, 2003. Observers agree President Vladimir Putin will seek reelection, though no official announcement has yet been made.

Dumaspeak

Legislature ponders the

state of Russian

 

In an effort to purge the language of its more colorful expletives, Duma deputies passed a bill that would cleanse “Russian as the language of state.” The bill, approved in the first reading by a vote of 365-2, with six abstentions, would ban swear words “in the public administration, industry, transport and the energy and communication sectors.” The bill also outlaws “expressions humiliating towards races, ethnic groups, social categories, sexes, languages and political and religious convictions.” The bill also bars otherwise unneeded use of foreign words –“if they have Russian equivalents.” 

 

Lessons of Berlin?

Kaliningrad enclave 

threatened by European integration

 

Europe’s Schengen Visa system allows visitors to get one visa covering 15 countries of Europe. Lithuania and Poland are set to join the Schengen zone, which de facto, would isolate residents of the Kaliningrad enclave—who now travel through these two countries visa free. European leaders have suggested that Kaliningrad residents would then need a visa to travel to the Russian “mainland.”

Meeting with French President Jacques Chirac in July, Vladimir Putin (whose mother-in-law and sister-in-law live in Kaliningrad) succeeded in changing at least one European leader’s mind on this issue. Chirac came out in support of Putin’s position that such visas are unacceptable and violate Kaliningrad resident’s rights. 

Russia is proposing the creation of non-visa corridors on Lithuanian territory for people and cargoes. 

Chairman of the State Duma Committee on Foreign affairs Dmitry Rogozin, who also serves as special presidential representative on Kaliningrad, said the simplest solution would be to introduce the same regime which existed in West Berlin and the rest of Germany in the 1970s. Back then, special sealed wagons and non-stop trains and buses were used to transport people and cargoes from West Berlin to the rest of Western Germany. 

 

This Means You!

Russia to reach out

to “Fellow Travelers”

 

Russia’s Presidential Administration has created a department to work with “compatriots” abroad. The department will be overseen by Deputy Presidential Administration Head Vladislav Surkov and headed by Aleksei Sitnin, former head of information policy for the presidential administration on external policy. 

Sitnin said that the Kremlin defines as compatriots “all those who speak Russian, are interested in Russian culture, and want to support connections with Russia.” The limits of the definition are not defined by “citizenship or nationality, which is secondary,” Sitnin said. 

 

A Torpedo It Was

Government concludes

Kursk investigation

 

The Kursk submarine tragedy that killed 118 crew members was caused by an explosion of fuel in one of its torpedoes, the governmental commission investigating the accident has concluded. Valery Dorogin, a parliamentary deputy and member of the commission investigating the accident, said the fuel in the 65-76 Kit (“Whale”) torpedo used in the Kursk was at fault. 

The announcement of the commission’s findings indicated that the investigation was complete, closing a chapter on one of the nation’s biggest recent disasters. According to Dorogin, after the first explosion, the fire and increase in pressure caused all other ammunition on the submarine to detonate. All crew members in the submarine’s first compartment and some in the second died immediately after the first explosion. The second explosion signaled doom for the entire craft. 

Russia has already taken out of service all Whale torpedoes, which use highly volatile hydrogen peroxide for a propellant and have reportedly been in navy service since the early 1970s. The torpedoes have a higher speed and range compared with conventional torpedoes powered by electric engines—advantages that, according to reports, prompted the navy to neglect concerns about its unstable fuel. 

Officials initially claimed that the Kursk’s sinking might have been caused by a collision with a Western submarine or a World War II mine. But they later pointed to a flawed practice torpedo as the most likely cause. The Kursk, one of Russia’s largest and most advanced submarines, exploded and sank during naval maneuvers in August 2000. The major part of the wreckage was lifted in an international operation last October, allowing prosecutors to retrieve the remains of 115 of the crewmen and search the ship for clues to the disaster’s cause. 

 

What’s in a Name?

What not to name

your next bar

 

Two Russian university students thought they had a great idea, naming their Chelyabinsk bar after President Vladimir Putin. But they had to change the name recently after the president, in a press conference, lashed out at what many call the Cult of Personality surrounding him. 

After the speech, the two students, Yevgenia Borispolskaya and Yelena Terekh, said officials put pressure on them to change the bar’s name. Borispolskaya said police officers, business inspectors and health officials made frequent spot-checks on the bar, making normal business impossible. 

After meeting with Valery Tretyakov, the federal inspector for the Chel-yabinsk region, the bar owners took down the bar’s sign, leaving only one that reads Pepsi-Cola. 

 

Small is Good

Russia’s small- and medium-sized enterprises employ at least 45% of the labor force (without even taking into account the shadow economy), according to Goskomstat. Last March, Goskomstat said small enterprises accounted for just 12% of the country’s GDP. Yet the official statistics took into account only registered legal entities, without covering the classification of individual entrepreneurs and “enterprises without the creation of legal entity.” Russia is also catching up to Europe in an important indicator: there are 45 small enterprises per 1,000 residents in Europe vs. 37 per 1,000 in Russia.

 

Capital Perspective

Reeling for dollars

 

President Vladimir Putin has hinted that his government may be prepared to announce an amnesty for the repatriation of capital. He has called on Russian businessmen to repatriate the funds they have invested abroad at the same time as newspapers here have reported the government was preparing a law to help bring the money home. 

Fearing unfriendly tax regimes and even confiscation, Russian businessmen have tended to hide their profits abroad, mainly in offshore accounts. Yet, during Putin’s two years in office, Russia has slashed taxes and the political environment has stabilized. 

Yearly capital flight from Russia is estimated at $20 billion, with the tiny island of Cyprus, a major off-shore tax haven which has a favorable tax treaty with Russia, ranking as the largest investor in the Russian economy. Putin said in a speech to business leaders that the international community will continue tightening rules on the use of funds in offshore accounts. Meanwhile, Finance Minister Alexei Kudrin said that the influx of capital into Russia last year exceeded that leaving the country for the first time since 1995, which he said bears witness to a heightened confidence in the country’s economy.

 

Dubious Honor

Russia climbs to top 

of arms export heap

 

In 2001, Russia for the first time ever outstripped the US as the world’s leading arms exporter, the authoritative Stockholm International Peace Re-search Institute (SIPRI) reported. 

According to SIPRI’s annual report, the average level of global arms transfers dropped during 1997-2001, mainly due to a sharp reduction in deliveries by the US. During the five-year period, the US exported arms worth $44.82 billion (expressed in 1990 US dollars), including $4.56 billion in 2001.The US has registered a 65% drop in arms deliveries since 1998. At the same time, Russia increased its exports six-fold, but remained far behind the US at $17.35 billion for the five-year period. 

In 2001, however, Russia became the world’s largest “merchant of death,” with a 24% increase in arms transfers, worth $4.97 billion. The world’s top five arms exporters in 2001 also included France (3rd, with $1.288 billion in exports), Britain (4th, with $1.125 billion) and Germany (5th, with $0.675 billion). Two former Soviet republics also ranked in the top 10 international arms exporters: Ukraine (6th, with $0.43 billion) and Belarus (10th, with $0.333 billion). 

 

Billions and Billions

Russia mints its

first billionaires

 

Russia has its first official billionaires. The Russian oil company Yukos, in preparation for its third level ADR listing, has disclosed information on the ownership of the company’s stock. It is the first case in Russia where the names and shareholdings of a major Russian company have been publicly revealed. 

The official website of Menatep Group published the ownership structure of Yukos (Menatep controls approximately 61% of Yukos stock). The co-owners of Group Menatep are: Mikhail Khodor-kovsky (9.65%), Leonid Nevzlin (8%), Platon Lebedev (7%), Vladimir Dubov (7%), Mikhail Brudno (7 %), Vasily Sakhnovsky (7%), and a number of smaller unnamed stock holders (4.5%) as well as a special trust fund (50%) whose sole beneficiary is Khodorkovsky. 

Given that Group Menatep also owns controlling stakes of several banks and some other assets, all the aforementioned persons are easily classified as “paper billionaires.” Even if one calculates only the value of Yukos, each of these men controls between $0.9-1.2 billion.

 

Blood Drive

Russian soccer squad

looks for new talent

 

The Russian press was unanimous in its prescription for Russia’s national soccer team in the aftermath of its humiliating performance at the World Cup: an overhaul of the squad and the injection of fresh blood. 

Russia’s former national coach, Oleg Romantsev (now retired), and his team found themselves on the receiving end of a heavy wave of criticism following the team’s failure to reach the playoff stage in South Korea and Japan in June. Romantsev was blamed for his inability to make his squad play modern soccer. The team’s performance was criticized as archaic and slow-paced, compared to the teams in the running to clinch the crown. 

Russia’s best performance ever in a world soccer championship dates to 1966, when the USSR won 4th place in England. In 1956, the Soviet squad won the gold at the Melbourne Olympics and the USSR won the European title in 1960. In 1988, the USSR won the silver medal at the European Championship in Germany and the Olympic gold in Seoul. 

The Russian press, headed by the mass-circulation Sport Express, urged the Russian Football Union to bring young talent into the national squad, instead of aged veterans, and named teenage strikers Dmitry Sychov (left) and Alexander Kerzhakov, along with midfielder Marat Izmaylov (see Russian Life Jan/Feb 2002) as the future of Russian soccer. 

Some even urged the hiring of a foreigner as the national team’s head coach, saying that the Russians who had held the post had dismally failed to clinch any success in the international arena. Top managers at Russian oil giants Lukoil and Yukos, Leonid Fedun and Vasily Shakhnovsky, made a headline-grabbing offer to pay up to $1 million to employ a top foreign coach for Russia’s team for the next two years. “We both are ashamed and affronted with our team’s performance in Japan,” Fedun told Vedomosti daily. 

However, after looking at foreign candidates, Russia’s soccer boss, Vyacheslav Koloskov, offered the job to Valery Gazaev, 48, who now heads one of Russia’s most dynamic teams: Moscow CSKA. Koloskov said the money offered would not have been enough to hire one of the world’s top ten best coaches, and other foreign coaches, confronted with the disorganized state of Russia’s soccer, would fail at the job. Whereas ex-coach Romantsev was, in his playing days, a defender for Spartak, Gazaev is a former striker, and is thus expected to make Russia’s game more offensive. 

Gazaev said a lot of changes were in the making. Indeed, he will need to form his squad quickly, as the 2004 European Championship qualifiers start soon. This September Gazaev takes his first serious exam, as Russia will play Ireland in its qualifying group for Euro 2004.

 

Blood Letting

Young Spartak star 

set for foreign play

 

Spartak Moscow’s 18-year old forward Dmitry Sychov (see photo, left)—dubbed in Europe “Moscow’s Michael Owen” (referring to the British soccer star), became the only Russian soccer player to draw the attention of rich foreign clubs after Russia’s dismal performance at the World Cup.

Sychov scored two goals out of Russia’s four in Japan, but he also impressed soccer experts with amazing dribbling skills and a great flair for goal opportunities for penalty shots. Thus, at press time the official site of the prestigious Italian club “Milan” announced that Milan’s leadership was ready to acquire Russia’s most talented player, offering Moscow’s Spartak $9 million. Yet, for now, Milan reportedly is only ready to buy the rights for Sychov; during the ongoing soccer season Sychov will continue to play for Spartak. Meanwhile, the rising star of Russian soccer scored the decisive fourth goal in Spartak’s crucial 4-3 match against St. Petersburg’s Zenith, thanks to a spectacular powerful shot under the crossbar. 

 

Yagudin Rising

Russian ice skater Alexei Yagudin was voted the world’s second sexiest athlete in the world in a poll of female readers of Sports Illustrated last June. US short track skater Apollo Anton Ohno came first in the polling with 15,347 votes. Yagudin got 2,308 votes and baseball star Derek Jeter came in third with 756 votes.  Meanwhile, Yagudin announced an unprecedented plan to combine his amateur and professional careers. Yagudin was invited to take part in one of the most prestigious American ice shows and will shortly sign a performance contract. Yet, unlike his colleagues Yelena Berezhnaya and Anton Sikharulidze, who will also perform in the show and thus skip the next season in amateurs, Yagudin intends to continue skating in amateur competitions, namely in Grand Prix tournaments. If he succeeds, Yagudin will become the world’s first figure skater to perform on both professional and amateur ice. 

Solomonic Solution

Anna Kurnikova is having a hard time stopping her losing streak. Last June at Wimbledon she lost in the first round to fellow Russian Tatyana Panova: 1-6, 6-4, 4-6. It was Kurnikova’s fourth consecutive loss at official tournaments. It seems that, no matter how hard Anna and her new US coach Harold Solomon try (Solomon helped Jennifer Capriatti rise from the ashes and attain the #1 spot in the world), the Russian tennis diva still can’t get her act together on the court. “It is still the same picture,” wrote Yevgeny Fedyakov in Sport Express daily, “she’s got the strokes, but not the game.”

Fencing off Hungary

Russia won as many as 12 medals (3 golds, 4 silver and 5 bronze) and first place in the overall team ranking at the European Championship in fencing, held in Moscow in July. Its nearest competitor, Hungary, brought home seven medals.

Third’s a Charm

Russia’s best basketball player of 1999-2000, Elena Shakirova, became the third Russian to play in the WNBA this season. On June 27, Shakirova played her first game for the Charlotte Sting. The other two Russian players in the WNBA are Svetlana Abrosimova (Minnesota) and Oksana Zakalyuzhnaya (Detroit). 

Yuzhny Wins

Russian tennis player Mikhail Yuzhny won his first career ATP tournament, beating Argentina’s Guillermo Canas in the finals in Stuttgart and pocketing a $64,850 purse. Yuzhny’s victory was all the more welcome because from September 20-22 Russia will play Argentina at home in a Davis Cup semifinals. Before he clinched his title, Yuzhny beat such well-known players as Hicham Arazi, Nicolas Lappenti, Younes El Aynaoui and Lars Buergsmueller. 

Russia Dominates the Track

Russia led in total medals (24) at the European Track & Field Championships in August, winning seven golds, nine silver and eight bronze medals. Britain came second with 14 medals. Pole vaulter Svetlana Feofanova, 22, who has already broken five world records, was a standout, winning gold with a 4 meter 60 cm vault. Yet she says she is ready to become a “Sergei Bubka”in women’s pole vaulting and surpass 5 meters in the near future.

Kuznetsova Wins First WTA 

Seventeen-year old St. Petersburger Svetlana Kuznetsova won her first WTA event, beating Denisa Chladkova in the finals in Helsinki 0-6, 6-3, 7-6. She is the fourth Russian to win a WTA tournament, including Yelena  Likhovtseva,  Anastasiya Myskina and Yelena Bovina.  

 

of the pot and the kettle

“After the US financial scandals ... a number of Russians are feeling a sense of affirmation that their graft-riddled corporate culture is no worse than in the West. The American Chamber of Commerce, impressed with how some Russian companies have of late been cleaning up their act, intends to tell the US Securities and Exchange Commission that it should take a lesson from Russia.” 

Moscow Times.

 

dictatorship as flood insurance

“Only structures built under Alexander III and Joseph Stalin survived the floods.”

Macabre joke popular in Southern Russia last summer 

during the disastrous floods (see Facts & Figures). 

 

a not so subtle hint

“I am not telling you that these accounts will be frozen
tomorrow, but if that happens … excuse my simple language, but you will be tormented as if choking on dust trying to unblock these accounts in court.” 

President Vladimir Putin, speaking at a Congress of the Russian Chamber 

of Industry and Commerce, urging domestic businessmen
to repatriate their capital.

the duty free shop is behind the missiles

“Maybe it’s a good idea to carry residents of Kaliningrad into Russia on this submarine? Let them try to 

demand a visa then ...”

Komsomolskaya Pravda suggesting a better use for the new Russian submarine Akula (Shark) in response to the visa flap over Kaliningrad (see page 7).

 

imagine that

“We have a government in Moscow that now seems to 

‘get it’ as far as what it needs to do to attract foreign 

investment.”

US Ambassador to Russia, Alexander Vershbow. 

 

thankfully, politicians don’t sell out

“More than 50% of the players who played for the national soccer team have sold their feet to foreign clubs. Moreover, on top of selling their feet, they have also sold their heads.”

Duma deputy Vasily Shandybin, venting his anger over the 

performance of the Russian national team in the World Cup of Soccer. (Itogi) 

 

The European Bank for Reconstruction and Development plans to invest $350 million in oil and gas projects in Russia in the next few years. The EBRD has so far invested about 800 mn Euros in the energy sector. ! Russia reported a 22.8% reduction in its trade surplus in the first four months of 2002 vs. 2001, to $13.9 billion. The value of imports rose 10.5%, while exports declined 7.3% in value. (Goskomstat) ! Russia’s population has dipped again. Between January and April 2002, there were 454,900 births vs. 795,100 deaths. Russia is due to hold its first post-Soviet census in October. The last one was carried out in 1989. (Goskomstat) ! Russia’s Central Bank is pursuing a gradual ruble depreciation, to a rate of 33 rubles to the dollar by the end of the year. ! There has been a 34% rise in crimes against foreigners in Russia (to over 4,000 incidents), but police say it is theft, not nationalism, that is behind the rise. (Interior Ministry) ! More than 500,000 scientists have left Russia since the collapse of the Soviet Union to seek more lucrative work abroad. Russian scientists abroad earn $3,000 to $7,000 per month, compared to R3,000 (about $95) at home. ! 2.6 million Russians submitted tax returns in the spring of 2002 (most workers get the flat 13% tax deducted from their wages) ; this is one million fewer tax returns than in 2001 and 10 million less than expected. Budget proceeds resulting from tax returns totaled R4.2 billion (as much as last year). ! An anonymous military source said 4,200 Russian troops have been killed since the start of the Chechen-led incursion into Dagestan in August 1999. (Interfax) President Putin put the number at 1,670 in November 2000. The same source said that 13,500 Chechen rebels have been killed since October 1999. ! Inflation in Russia for 2002 will amount to 10-12%. GDP growth will be around 4%. (Economic Development and Trade Ministry) ! Foreign manufacturers presently have a 65% share of the Russian pharmaceutical market (vs. 48% in 2000 and 63% in 2001). Within three years, that could climb to 90-95%. (Nizhfarm) ! Only 20% of Russians can take advantage of Russia’s new housing mortgage program, largely due to the income vs. housing price disparity. (Russian State Housing Committee) ! Disastrous summer floods that hit Southern Russia last June caused damage estimated at nearly $440 million. Some 10,827 homes were destroyed, 62,302 were damaged, more than 330,000 people were injured and 109 died. (Ministry of Emergencies) The government has offered R50,000 (nearly $1,600) for each family whose house was destroyed in the floods, and R20,000 per family who lost part of their belongings. The state prosecutor’s office launched four investigations against local officials for criminal negligence. ! Despite  a recent boom in movie theaters, Russian-made films account for just 2% of those being shown. The Culture Ministry wants to produce 100 movies a year, which could move this share up to 25% by 2006.