February 2007 Archives

As reported on this blog yesterday by our guest journalist Grigory Pasko, a number of city mayors in Russia have increasingly come under aggressive investigations by the procuracy in a campaign that Pasko describes as "clearing the way" for the installation of FSB plants to manage pipeline projects.

Today, Pasko was proven correct in at least one aspect, as Vladivostok Mayor Vladimir Nikolayev was stripped of his authority by prosecutors who accuse him of illegally doling out land plots.

The Associated Press reports:

``In this connection, prosecutors of the city Vladivostok have protested 20 illegal decisions on land allocation,'' prosecutors said in a statement.

Irina Nomokonova, a regional prosecutor's office, said in televised comments that Nikolayev had also allegedly misspent city budget fund, authorizing some $765,000 to back a car racing team.

Prosecutors said five other related criminal investigation have also been opened, including of the city's deputy mayor. Interfax, citing unidentified sources, said the funds allegedly embezzled by Nikolayev and other top city officials topped $3 million.

Nikolayev, was backed by the pro-Kremlin United Russia party, won the mayoralty in 2004 after a scandal-plagued campaign atmosphere, in which candidates traded accusations and resorted to underhanded methods to beat their opponents.

His opponent in the 2004 race was Viktor Cherepkov, who was also accused of corruption and incompetence during his tenure as mayor in the 1990s and who waged often epic political battles with the governor of the Primorsky region, Yevgeny Nazdratenko.

Nikolayev - a businessman whose criminal nickname allegedly was Winnie the Pooh - was arrested in 1998 and accused of making threats, hooliganism and extortion, but he was amnestied and freed a year later under a decree by the lower house of parliament.

In Vladivostok's main square, dozens protested the court decision to strip Nikolayev of his authority. Several carried signs reading ``Hands Off The Mayor'' and ``How Much Does It Cost to Remove Nikolayev?''

At a televised news conference, Nikolayev said he would fight the charges.

``This is all completely made up. The evidence shows not one shred of proof, not one bank which could show this,'' he said.

Today La Russophobe is running the translation of a Gazeta.ru article on the politicization of Russia's lawyers.

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Sergey Stepashin
Sergey Stepashin, the chairman of the Russian Jurists Association, intends to carry out a purge of the ranks. The businessman Dmitriy Shumkov, the secretary of the commission for legal culture and promoting law, has become the first candidate for departure. He is accused of using the association as a headquarters for presidential candidate Dmitriy Medvedev.

The Russian Jurists Association [AYuR] back in the autumn of last year declared itself a community, which will, possibly, support First Deputy Prime Minister Dmitriy Medvedev in the elections in 2008. Gazeta.Ru wrote that the founding conference of the AYuR in its current incarnation took place on 15 November and sources in the association's leadership back then told Gazeta.Ru that it might become a prototype electoral headquarters for "the successor" Medvedev. At the same time the AYuR, whose head at the time was Oleg Kutafin - who twice initiated Vladimir Putin's nomination as president - announced plans to open a network of organizations in the Russian regions offering legal assistance to the population. This, the experts noted, would enable almost the entire territory of Russia to be enveloped by Medvedev's "emissaries" under election conditions. By the end of January this year, the AYuR had already manifestly taken Medvedev's side. The "successor" visited a session of the AYuR presidium, where he declared that a special legal television channel for citizens would be set up - Pravo-TV - which was also regarded as an addition to "the successor's" media assets.

However, on Monday [19 February] a flaw appeared in the harmonious picture of relations between the AYuR and Dmitriy Medvedev. Sergey Stepashin, the current chairman of the AYuR (elected in January 2007) as well as the head of the Comptroller's Office, suggested carrying out a purge of the AYuR ranks. Anyone seen using the association's resources for political or commercial purposes should be stripped of their membership. The first candidate for departure is businessman and professor of the Civil Service Academy Dmitriy Shumkov, who is close to Medvedev.

"We have decided to clean out our ranks. We have, in particular, a certain Dmitriy Shumkov who declares everywhere that he is creating an election headquarters for Dmitriy Medvedev - some public receptions. And he has now even got as far as Sochi, has engaged in Olympic matters," Stepashin stated on Monday. "In short, we must look very seriously at who is in association with us today."

Stepashin added that a re-organization of the ranks was already in full swing: "We have decided to strengthen the association's board, Pavel Krasheninnikov has been elected its chairman, he heads one of the most complicated committees in the State Duma, on legislation. A program has been adopted, which we have approved at the presidium, so a great deal of very serious work lies ahead."

From today's statement by Stepashin, it follows that he has little idea of which Shumkov he is talking about, otherwise he would not call him a "certain" head of the AYuR. Dmitriy Shumkov occupied quite a prominent position in the reform of the AYuR. Thus, at the same presidium sitting in January at which Stepashin was elected head of the association, an AYuR commission for legal culture and promoting law was founded and its members included Deputy Prosecutor-Generals Aleksandr Bastrykin, Aleksandr Zvyagintsev, Yevgeniy Zabarchuk, FSB [Federal Security Service] Deputy Director Yuriy Gorbunov, Deputy Interior Minister Oleg Safonov, Senator Lyudmila Narusova, Deputy Aleksandr Khinshteyn and others. Shumkov became executive secretary of the commission and was responsible in the first instance for the creation of the legal centers. Moreover, as Krasheninnikov said in an interview to the Kommersant newspaper after the January session, Medvedev even praised Shumkov for his work in developing the network of 24,000 free legal consultation offices.

However, even last week Stepashin had started to hint that he did not like some politicized figures in the association. The head of the Comptroller's Office started to speak for the first time about unscrupulous members of the AYuR, admittedly without mentioning names, at the conference "Notaries, State Power and Civil Society" which took place in Moscow on 15-16 February. Talking about the legal centers project, Stepashin stated: "I would like to take advantage of the situation to say that, unfortunately, someone in our ranks has tried to use this aspect of our work. Legal Ostap Benders [REFERENCE to the hero of the Russian novel Dvenadtsat Stulyev] have appeared who have nothing to do with the Jurists Association. They are trying to present such centers as the headquarters for one of the candidates for the post of president, although there are not yet any candidates."

We were unable to get any comment on Stepashin's speech in the AYuR. Deputy Aleksandr Khinshteyn, a member of the commission for legal culture and promoting law, for the moment refuses to given any comments on the "purge" of the association's ranks. Shumkov himself is not accessible for comments either.

In the opinion of Aleksey Mukhin, the director of the Center for Political Information, the entire situation looks like a "misunderstanding". "It looks like a provocation both on the part of Shumkov and on the part of Stepashin," he explained to Gazeta.Ru. The expert does not rule out that Shumkov could have been misunderstood. In actual fact, this is quite possible since there are no clear assertions by AYuR officials in the press that the network of legal centers being created are Medvedev's campaign headquarters.

If you take into account the fact that the topic of lawyers as part of the political battle is not being raised for the first time, it cannot be ruled out that the chairman of the association has himself decided to start a political battle. "This may mean that Stepashin has joined in the political battle on the side of another successor candidate," Mukhin thinks. Taking into account the fact that Sergey Ivanov, the new first deputy prime mister, is now another identifiable candidate, the head of the AYuR is coming out on his side. Nevertheless, the expert thinks that we need to wait for new explanations from the association.

Dmitriy Shumkov is a professor at the Civil Service Academy and is considered a member of Medvedev's entourage. Moreover, he heads a legal company, "Shumkov and Partners", the Pravokom group of companies and the Allure Foundation. It was as head of the foundation that Shumkov acted as partner of the bid committee for the holding of the Olympics in Sochi in 2014. Reports appeared last week that the Allure Foundation had acquired 50 percent of the shares in the French company Lacroix Luxe Sport, which produces skis. The owners of the company intended to invest around 300 million dollars in Sochi, together with representatives of the Russian state structures. However, on Sunday Skis Lacroix denied the reports in the Russian media about the sale of a share holding to the Russian entrepreneur.

Speaking to the media in Athens yesterday, Claude Mandil of the International Energy Agency once again gave a clear warning to Gazprom that he is concerned that their lack of investment could cause a supply shortfall.

From the Budapest Business Journal:

Output at Gazprom's gas fields is decreasing, and the IEA is concerned the company, the world's largest gas producer, may not be able to supply all the fuel needed by western Europe as early as 2010, IEA director Claude Mandil said in an interview in Athens yesterday, where he attended an energy conference. „The gap could be of several billion cubic meters a year by 2010-1015,” Mandil said, referring to the difference between what Gazprom is contracted to supply to western Europe and what it would be able to supply, according to the IEA estimates. „Gazprom is saying that it is investing, but doesn't want to give us its own estimates, so we're not very confident.”

Yesterday the media reported on comments made by US Navy Admiral and current Director of National Intelligence Mike McConnell before the Senate Armed Services Committee, who said “The march to democracy has taken a back step. Now there are more arrangements to control the process and the populace and the parties and so on, to the point of picking the next leader of Russia." We post here a PDF of his prepared statement.

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Mike McConnell testifed on Capitol Hill yesterday
RUSSIA - SUCCESSION MANEUVERING

As Russia moves toward a presidential election in March 2008, succession maneuvering has intensified and increasingly dominates Russian domestic and foreign policy. Against that backdrop, the last year has seen expanded Kremlin efforts to stifle political opposition and widen state control over strategic sectors of the economy. Those trends are likely to deepen as the succession draws closer. Meanwhile, high energy prices and abundant oil and gas reserves continue to fan Kremlin aspirations for Russia to become an energy super-power. A flush economy and perceived policy successes at home and abroad have bolstered Russian confidence, enabled increased defense spending, and emboldened the Kremlin to pursue foreign policy goals that are not always consistent with those of Western institutions. Indeed, Russia is attempting to exploit the leverage that high energy prices has afforded it, increasingly using strong-arm tactics against neighboring countries.

RELATIONSHIP WITH US AND THE WORLD

Russian assertiveness will continue to inject elements of rivalry and antagonism into US dealings with Moscow, particularly our interactions in the former Soviet Union, and will dampen our ability to cooperate with Russia on issues ranging from counterterrorism and nonproliferation to energy and democracy promotion in the Middle East. As the Litvinenko murder demonstrates, the steady accumulation of problems and irritants threatens to harm Russia’s relations with the West more broadly.

It's no great secret that in recent years, Russia has sought to enlarge its role in international affairs through a diverse array of energy, arms, and political deals, from Brazil to Iran to Japan. This renewed assertion of power on the world stage was bound to raise some hackles among U.S. policymakers, who have seen their ability to influence events thwarted by a number of factors. Today the Wall Street Journal is running a longer piece focusing on how Russia's economic and political presence, in the Middle East specifically, is creating a considerable clash of interests in the region.

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From www.wsj.com

For as much as the United States is deeply entangled with complex problems in the region, from the military commitment in Iraq, the confrontation with Iran, the ongoing Israeli-Palestinian conflict, and the dependence on Mideast oil supplies, Russia similarly has critical issues at stake and equally complex relationships. As an energy producer, Russia needs to coordinate with Iran and Qatar, and encourage the Saudis not to increase oil production (the Saudis are also considered the key to the Chechnya problem). The Russians are also keenly aware that the influence in the Middle East is one of the critical pressure points to use against the United States, and so with support of Hamas, debt forgiveness to Syria, and major arms deals to Iran, Russia has significantly increased its clout in the UN Security Council and demonstrated the rewards of its friendship to other countries in the region.

The Wall Street Journal reports:

For four months last autumn Moscow used its U.N. veto power to fight successfully against U.S. and European efforts to impose tough sanctions on Iran's nuclear program. Russia finally agreed in December to a much more narrowly tailored resolution that targeted only parts of Iran's nuclear and ballistic-missile programs.

In January, while the U.S. and Europe were working to isolate Iran and U.S. forces were detaining Iranian officials in Iraq, Mr. Putin reacted warmly to an Iranian proposal for Russia and Iran, two countries with the world's largest reserves of natural gas, to form an OPEC-style alliance. The idea drew a swift negative response from Washington and Europe. Earlier this month, in a speech in Germany that raised fears in the West of a new Cold War, Mr. Putin said American military aggressiveness was the reason countries like Iran are seeking nuclear weapons.

"Russia is a huge problem on the Iran front," says John Bolton, who frequently wrestled with Moscow as President Bush's ambassador to the U.N. until December. "When it comes to Russia and Iran, it is hard to say who is whose client state."

Current administration officials who work closely with Russia aren't quite so harsh, but concerns over Moscow's intentions in the Middle East -- as well as its overall foreign policy -- are rising. "When it comes to Iran, the Russians want to have their cake and eat it, too," said one senior U.S. official. "They want to look tough in working to keep Iran from getting nuclear weapons, while also standing in as Iran's friend and weapons provider."
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Russian officials from Mr. Putin on down barely disguise their relish when they highlight setbacks for U.S. policy in the Middle East and recount Moscow's prewar warnings that the invasion of Iraq was a bad idea. "Today, America is viewed as the great loser in the eyes of the Russian establishment," says Yevgeny Satanovsky, president of the Institute of Middle Eastern Studies in Moscow.

At the same time, years of careful courting of Iran and the Arab countries of the Middle East are paying off for the Kremlin as political and economic ties to the region flower in a way not seen even during the Cold War.

Russia is unencumbered by the communist dogma that made the Soviet Union anathema in large swaths of the Middle East. "There are no countries in the Arab world left that we have any differences with," Mr. Putin told al-Jazeera before his recent trip to the region.

As on his other visits, his delegation was packed with representatives of big Russian companies looking for deals in areas like energy, arms and nuclear power. While Western capitals routinely criticize the Kremlin for rolling back democratic institutions, Middle Eastern leaders have publicly called for Mr. Putin to defy a constitutional ban and remain in office when his term ends next year.

"There's no more ideology, there's just business," says Mr. Satanovsky.

"A Graveyard of Ambitions"

A recent Stratfor report on Russia in the Middle East also puts things in perspective, pointing out the region has historically been a "graveyard of ambitions" - not just American ones:

In sum, the Russian position in the Middle East is at least as complex as the American one. Or perhaps even more so, since the Americans can leave and the Russians always will live on the doorstep of the Middle East. Historically, once the Russians start fishing in Middle Eastern waters, they find themselves in a greater trap than the Americans. The opening moves are easy. The duel between Saudi Arabia and Iran seems manageable. But as time goes on, Putin's Soviet predecessors learned, the Middle East is a graveyard of ambitions -- and not just American ambitions.

Russia wants to contain U.S. power, and manipulating the situation in the Middle East certainly will cause the Americans substantial pain. But whatever short-term advantages the Russians may be able to find and exploit in the region, there is an order of complexity in Putin's maneuver that might transcend any advantage they gain from boxing the Americans in.

The Yukos-ification of TNK-BP seems to be intensifying - in fact BP's Chief Executive Lord Browne has been whisked away to Moscow to play out the end game with the Kremlin in a last ditch attempt to save his corporation's most valuable investment in Russia.

Here's what the Financial Times is reporting tonight:

Oleg Mitvol, the official who led the state campaign against Shell’s oil and gas venture in Sakhalin2, said Russia’s Natural Resources Ministry would not budge on threats to revoke TNK-BP’s licence to develop its vast east Siberian Kovykta gas field in three months time.

“The conditions can be changed only one way,” said Mr Mitvol, on TNK-BP’s calls to soften licence terms that it says are impossible to meet. “You tear up the license agreement and the state sells it off at an auction anew.”

Mr Mitvol’s ministry has declared TNK-BP in violation of conditions to develop the field and has given the joint venture group three months to start producing 9bn cubic meters of gas, as the license stipulates, or have its license revoked.

TNK-BP produces a fraction of that amount and has said the terms are impossible to meet as there is not enough demand for that volume of gas in the local region.

The attack on TNK-BP’s Kovykta licence is seen by many industry watchers as part of a wider political strategy as TNK-BP moves into a crucial phase and the state tightens its grip over the energy sector.

Complete article here, previous posts on Kovykta here and here. Derek Brower's post on Russia's environmental crusader Oleg Mitvol here.

The Oil Drum has posted an extensive and well researched article by a Marshall scholar about the East Siberia-Pacific Ocean oil pipeline in Russia, a point of serious geopolitical tension.

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Some excerpts:

Siberian Nights: The East Siberia-Pacific Ocean Oil Pipeline

As the 2008 Russian presidential election approaches, no one is more concerned about Russia's future policy direction than those that stand to benefit from Russia's energy largesse. In particular, China and Japan are very anxious about the final routing of the East Siberia - Pacific Ocean oil pipeline (VSTO - its Russian acronym), which is expected to be the world's longest oil pipeline (2,500 miles), originating in East Siberia at Taishet and extending to a Pacific port at Kozmino Bay. VSTO is Russia's first pipeline to East Asia, ultimately unlocking the supposedly vast oil reserves in East Siberia, an area that has been likened to the final frontier of hydrocarbons exploration. Whomever is elected (ie, appointed) president in 2008 will be the one who determines which country will benefit most from VSTO.

What makes VSTO so critical to the Chinese and Japanese is the changing energy and geopolitical landscape. In 2003, China surpassed Japan to become the world's second-largest consumer of oil. Chinese state oil companies (CNPC, Sinopec, and CNOOC) are pursuing a "going-out" strategy, where promises of Chinese investment in other sectors of a nation's economy secure guaranteed supplies of hydrocarbons, such as China's good-will investment in the Tehran subway system. The Chinese are rightfully worried about their dependence on Middle Eastern oil sources and the routes by which that oil is transported. China receives 51% of its oil from the Middle East. The vast majority of that oil is shipped through the Strait of Malacca, and therefore, is threatened by U.S. naval dominance. Thus, the Chinese are seeking to diversify their energy supply base, not only by increasing production of coal and hydropower, but by developing oil and gas pipelines with neighboring Kazakhstan and Russia.

More than any other region of the world, energy is seen in East Asia as something of a zero-sum game: Japan increasingly views China's positive gains in securing energy supplies as its own loss. Even though the Chinese still don't have a ministry-level agency to coordinate energy policy, Japan feels that it is a step behind. Eighty seven percent of Japanese oil is imported from the Middle East - an extraordinary amount that also must pass through the Strait of Malacca.

Hence VSTO begins to take on hues of geopolitical significance. While technically the routing of VSTO is not important from a market perspective (any oil purchased at world prices from VSTO by either Japan or China will simply free up oil supplies elsewhere), in light of the strategic chokepoints through which oil traverses - chokepoints that are critical to both the Chinese and Japanese economies (and subsequently, social stability in China) - Russia's ultimate decision is of paramount importance to both nations.

After years of Sino-Russian and Japanese-Russian memoranda of understanding, joint communiques, and declarations of intent, each ostensibly negating the one before, in 2005 the "final" route chosen by Moscow was the best (or worst) of both worlds. VSTO was planned to extend from Taishet to Perevoznaya Bay, just south of Vladivostok, with a branch line running from the Russian border town of Skovorodino to Daqing (Kozmino Bay would later be selected over Perevoznaya as the terminus). The road to that decision was more than circuitous.
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However, during the second half of 2003, a pipeline feasibility study had still not been approved by the appropriate Russian agencies. Nezavisimaya Gazeta reported that the lack of a coherent framework for action by the Russian government was leading Russian oil companies - including Yukos - to act independently. Increasingly, it appeared that there was a behind-the-scenes struggle occurring between Yukos and Transneft, the state-owned pipeline monopoly, over the final route. Transneft, with everything to gain by constructing the longest route possible, was pushing for a pipeline to the Pacific, not China.

Read complete article here.

Yesterday blogger Vilhelm Konnander posted an excellent article examining Russia's recent trend of nationalizations, and evaluating the impact it has had on the economy.

First I should say that I am happy to see that there are still some people out there who grasp the bigger story of Khodorkovsky and Yukos beyond the abbreviated newspeak which has unfortunately come to encapsulate the debate for lazy reporters (an example of the revisionist history: the 1990s were chaotic, Russia claims that this individual owes them taxes, his supporters disagree, they throw him in jail after a show trial, steal the assets, period.).

However there is so much more going on to this story, and one has to look at Khodorkovsky's business outlook and strategy in the energy sector to better understand the motivations behind his unfair persecution. Konnander writes the following:

"What really was at stake, were the large investments into energy infrastructure that Yukos planned to make - the various pipelines the company wanted to build. If these plans had been realised, they would have made Khodorkovsky more or less politically independent from Russian state leverage. Still, economically, such investments would potentially have brought profits and prosperity to Russia's economy and, indirectly, to its people. Furthermore, they were exactly the kind of investments that were economically sound and would have developed the energy sector in a positive direction. Thus, by victimising Yukos for political reasons, Russia was rendered an economic loss that the state was unable to compensate for. Consequently, as Khodorkovsky's 2005 nine-year jail sentence serves to show, the interests of the state and private business are far from always compatible."

Khodorkovsky's plans for Russia's energy sector - the construction of new, independent and competitive export routes to China and the United States, advocating the break up of state monopolies, and the near-closed deal to sell a majority stake of Yukos to a Western oil major were fundamentally adverse to the Kremlin's plan to centralize control of both the economy and politics. All of these business and economic ideas, combined with his comments against state corruption and graft were unacceptable to the siloviki elements of the government.

However, later in the article, Konnander examines whether or not nationalization benefits the Russian people. Pursuing this line of inquiry takes for granted that the Russian state has actually assumed possession of anything. At least in the case of Yukos and the acquisition of the main production arm of Yuganskneftegaz, it is extremely important to recognize the elements of personal enrichment before assuming that the state actually earned a single ruble out of these assets. The fact is, as proven by the Rosneft IPO, the so-called Yukos "nationalization" was actually nothing more than the transfer of assets from one set of private hands to another set of private hands - an outright theft of billions benefiting only a close inner circle in the Kremlin.

I remind readers of the comments made by former economic advisor to Vladimir Putin, Andrei Illarionov during an event we participated in together last November at the Cato Institute (I post here an article from the Cato Policy Report Jan/Feb edition 2007 which summarizes the speech). Illarionov pointed out during his speech that following the IPO of Rosneft (a company which was pregnant with value from the seizure of major Yukos assets), none of the billions raised on the London Stock Exchange ever went back into the state coffers, but rather into the pockets of unspecified individuals. Considering this swindle, one cannot really consider the seizure of Yuganskneftegaz as an actual nationalization that would benefit the Russian state.

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Andrei Illarionov, photo from Cato Policy Report, Jan/Feb 2007, pp. 19

Earlier in the speech, Illarionov also elaborated on the differences between the privately run Yukos and the state-run energy companies:

"The first area is economic - economic efficiency, corporate governance and public transparency. Between 2000 and 2003 Yukos became one of the most effective, best governed, and most transparent Russian companies.

The second area is related to Russian society - the scale of charity financially supported by Yukos. The company created Open Russia, a nongovernmental organization that taught tens of thousands of Russians democratic principles of organization for society and the state, mass media freedom, civil rights, how to operate in a free country, and how to create one. None of the other Russian companies has done anything similar to what was done by Yukos. That is why Yukos became one of the most dangerous enemies for those who did not want to see Russia a free country.

The third area is politics. Khodorkovsky himself openly challenged political monopolization. He stated clearly that he wanted to participate in the political process according, not to the rules set by the Kremlin administration, but to the rules that he saw as necessary elements of a politically free country.

The main conclusion from the Yukos affair is that people who create effective, transparent, dynamic, charity-providing companies in Russia have a very good chance of going to Siberian camps." - Andrei Illarionov

But regardless of the misunderstanding over the false nationalization of Yukos, I resolutely agree with Konnander's logic and conclusions regarding the debilitating effect this trend of interventionism is having on the Russian economy. He writes:

Still, what the modern world is about is cooperation to the common good of those who participate in it. Thus, what Putinist ideology disregards is a fact so obvious that it needs neither stating nor reiterating: Modern power derives from the relative gains of cooperation - not from conflict or absolute capabilities. Making it alone is simply not an option in the modern world, and still this is the absolutist approach that Putinist Russia is opting for. That it is no viable long-term option for any state, seems of no concern to the country's leadership. Sooner or later, Putin's path will, regretfully, come back with a vengeance to Russia and its people.

In the meantime, the common assets of Russia are utilised to the detriment of the country and its people. Nationalisation is not good for Russia, and thus the Russian people may gradually come to understand that Putinism is simply not good enough for them. Until then, Russia is caught in a nationalisation trap.

Following yesterday's high-level meetings to discuss energy and trade between Russia and Japan, some in the English language blogosphere out of Japan are looking upon the relationship negatively.

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Here Rising Sun of Nihon catalogues five reasons why the Japanese don't trust the Russians:

1. Russia's government will intervene in private-sector matters. Gazprom and Sakhalin-2 energry project come to mind.

2. Regulations on foreign companies are not applied equally.

3. Russian laws change without notification.

4. Bribery is too common at customs.

5. Russia has two tiny islands north of Hokkaido that Japan thinks belong to them and Russia will not give back.

Still, with Russia's economy growing and the country's rich natural resources, "relations based on economy and business can be built higher."

And then, maybe Japan can get some concessions from Russia...until the Bear changes its mind again.

Russians are good people...its government, like many in the world, is self-serving and crooked.

Do you think doing business with a person leads to increase trust? Or should there be trust first and then business?

This approach is certainly out of line with the warm reception given to Russia yesterday by Japanese officials.

Putin Clears the Field – but for Whom?

By Grigory Pasko, journalist

Russia has recently been witnessing an epidemic of prosecutions of city mayors. For example, Tomsk mayor Alexander Makarov is currently sitting in an investigative isolator prison: four criminal cases have been opened against him – he has been charged with abuse of office (Article 285 of the Criminal Code) and extortion (Article 163), as well as abuse of office with a mercenary motive.

The former mayor of the closed territorial-administrative formation [the technical term for a “secret city”—Trans.] of Lesnoy, Alexander Ivannikov, has been sentenced to five years of deprivation of liberty. Ivannikov had been charged under Articles 285 (abuse of office) and 286 (exceeding official authority) of the Criminal Code. The court found him guilty of having granted tax concessions to four enterprises, thereby causing 13 billion rubles’ worth of harm to the state, and

In my article about my recent visit to Vladivostok I wrote: “The second news was about the arrests of several businessmen of the city, who were being called everything from “authorities” [a high Russian underworld rank—Trans.] to “bandits” to “mafiosi”. This despite the fact that they still hadn’t gone on trial and nobody had yet proven their guilt. They say that this also has something to do with the oil pipeline: Putin is “clearing the field” for his people from the FSB. There’s simply no place for former local “authorities” in this scheme.”

To this ought to be added that he is clearing out this field both for himself and for his successor, whom he will continue to direct even after he leaves the post of president.

Several days ago, the Russian media reported another piece of news having to do with Vladivostok. A criminal case has been opened against Vladivostok mayor Vladimir Nikolayev under Article 285, part 1 (“abuse of official authority”) of the Criminal Code of the RF. It is known that earlier, the procuracy had opened a criminal case with respect to officials in the city administration on evidence of the sale of plots of land at reduced prices. As was reported at the press service of the Primorsky Kray procuracy, “at the present moment 11 facts of the sale of plots of land at a price summarily undervalued by more than 38 mln rubles have been identified by the investigation In addition to this, the procuracy is conducing a check of the unlawful granting by the administration of Vladivostok of several plots of land with an area of from 1.3 to 7 thsd. square meters into lease concurrently to one and the same persons for individual housing construction”.

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Vladivostok mayor Vladimir Nikolayev

It just happens that both Article 285 of the Criminal Code and Nikolaev himself are well-known to me. It was under this Article (later repealed by the Supreme Court of Russia) that I was convicted by the Vladivostok Military Court in 1997. And I was locked up in the investigative isolator of that same Vladivostok at the same time as Vladimir Nikolayev was locked up there as well. Needless to say, we ran into one another there.

First about the Article. It belongs to the category of crimes against state power, the interests of state service and service in the organs of local self-administration. Part one of the Article says that they simply want to remove Nikolayev from an elected post (the measure of punishment under this Article varies from a fine to deprivation of liberty for a term of 4 years). If the procuracy – which, naturally, is acting on orders from Moscow – had been given the order to throw Nikolayev in jail (once again), then they would have used part two of the Article, which prescribes deprivation of liberty for a term of up to seven years. As it happens, though, they just decided to frighten the guy a bit, at the same time removing from his post a person who doesn’t fit into the Putin team’s plans to have absolutely Putinist people in place everywhere in the Russian regions. That is, the next mayor of Vladivostok is going to be a person either directly connected with the FSB, or working behind the cloak of this organization. Some kind of local variant of “Serdyukov the furniture man”.

It goes without saying that the opening of the criminal case with respect to Nikolayev has nothing to do with legality and fighting corruption. If there were such an intent, then first, Nikolayev would have been in jail a long time ago. And second, not only he would be in jail, but also Primorsky Kray governor Sergey Darkin. And speaking of Darkin, I think that he is probably getting more and more uncomfortable given the events taking place in the Kray right now (arrests, checks, interrogations, replacement of power-structure heads): he could be next.

Backgrounder: V. Nikolayev was born in the city of Vladivostok on 10 October 1973. He graduated from the Far-Eastern state technical university of the fisheries industry (Dalrybvtuz) with a major of “Engineer-economist” (1996). Candidate of juridical sciences. Defended a dissertation on environmental problems at the Russian university of the friendship of peoples (RUDN) [better known in the West by its cold-war name, Patrice Lumumba University—Trans.] (2004).

Upon graduation from college, V.Nikolayev commenced labor activity in the TURNIF (Pacific ocean Administration for fisheries Exploration and the Scientific-Research Fleet). In 2001, he was advanced by the inhabitants of the city of Partizansk as a candidate for deputy to the Legislative assembly of Primorsky Kray. V.Nikolayev is deputy secretary of the Political Soviet of the regional branch of the party “United Russia”, deputy head of the Kray pre-election headquarters of presidential candidate V.V. Putin. On 18 July 2004, he was elected head of the administration of the city of Vladivostok.

Conservative commentator Paul Greenberg has posted a column on Vladimir Putin's Munich speech over at Townhall.com, which argues that Russia's lack of an ideology is a distinct improvement from the Cold War. In the same column, he applauds the sacking of the administration's most belligerant voices, Donald Rumsfeld and John Bolton, and return of the rational "old conservatism of quiet good sense." (For my thoughts on U.S. partisanship and the Russia debate, see this previous post.)

From Townhall.com:

Russia's new autocrat has a point. Freedom, democracy, fair elections of course they're in America's national interest. But they also benefit those nations that adopt them and the world in general. Because a freer world would be a safer world. Democracies may have their differences, but free and slave societies tend to have wars.

As familiar as all this Cold War rhetoric is, something's missing. Where's the call for international revolution, for the masses to rise up in revolt? There wasn't a trace of anything like that in Vladimir Putin's polemic. Because now the United States and the West in general are being assailed by a Russian leader, not a Soviet one, and Russia no longer represents a dynamic, revolutionary ideology. Today its leader speaks only for, to borrow a phrase, "the foreign policy interests of one country." The Russian bear has reverted to its 19th Century role as one more great power playing the Great Game of realpolitik, nothing more.

Winston Churchill's old theory about what motivates Russian foreign policy is acutely relevant again: "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma, but perhaps there is a key. That key is Russian national interest."

As the ideological wrapping comes off Russia's actions, they are revealed as those of just another imperial power seeking to assert itself. Now free of the Marxist dogma and the impulsive decisions it inspired - like deploying nuclear missiles in Fidel Castro's Cuba - Russia's actions become less dangerous, more predictable.

This not-so-new Russia is basically asking only for what the old, czarist one sought: power, respect, fear. Not worldwide revolution. That's a definite improvement.

And here is Greenberg's argument that the Bush administration is becoming more multilateral:

The idea that conservative rhetoric should show a decent restrain is being revived. The Ann Coulters are still valued, but only for their entertainment value. The old conservatism of quiet good sense, even good humor, is making a comeback, the neo brand is being phased out.

The realization dawns that there's no need to respond in opposite but equally strident tones to every vitriolic attack on American policy from a Putin or Chavez or Ahmedinejad. That, too, is a decided improvement. This republic, unlike Russia's resurgent autocracy, is too powerful to have to emphasize its power.

One keeps hearing demands from this president's critics that he change his ways, adopt a more multilateral approach, and generally moderate his foreign policy. Let's not spoil their fun by pointing out that he has already done so.

Despite Russia's looming natural gas crisis and supply worries in Europe, the country's largest producer is frivolously burning off 2 billion cubic meters of gas a day - throwing away one of the world's most precious resources. This environmentally damaging practice of "gas flaring" has been widely condemned as the result of Gazprom's pernicious monopoly of the processing plants and pipelines, which allows it to purchase only as much as it wants at the price it wants while investing next to nothing. Oddly, the Kremlin is really shooting itself in the foot here, as for once the main victim of this non-competitive market is state-owned Rosneft.

As though we needed yet another reminder of the disastrous inefficiencies of Russian state ownership oil and gas assets, especially right before yet another round of Yukos auctions.

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Russia's unnecessary flaring of natural gas shows is caused by monopoly

From tomorrow's Moscow Times:

Gazprom buys 1.5 billion cubic meters of gas per year from Yuganskneftegaz, the former Yukos unit that Rosneft scooped up at a forced state auction in December 2004. Yet Yugansk burns well over that amount, poisoning the environment and losing out on substantial revenue because there is currently nowhere for the gas to go.

"In Siberia and beyond, almost all gas goes through Gazprom infrastructure," Rosneft vice president Sergei Kudryashov said on the sidelines of a news conference in Moscow last week. "There is no point seeking out the domestic market, which is dominated by Gazprom.

"Who chooses the price? The buyers do -- that is, Gazprom. They have to get us interested, and all that interests us is price."

Gazprom pays just 280 rubles, or just under $11, per 1,000 cubic meters of gas from Yugansk, the production unit's general director, Vladimir Bulba, said on a recent Rosneft-sponsored tour of the Priobskoye field. In marked contrast, Belarus recently agreed to pay Gazprom $100 per 1,000 cubic meters, while customers in Europe pay an average of $230.
...
If Gazprom fails to develop the fields that it has been sitting on for decades, such as Yamal and Shtokman, while continuing to squeeze out independent gas producers, the government will eventually have to choose between turning down the taps to either Europe or customers at home, analysts said.

"There is plenty of gas in the ground in Russia and identifiable projects that haven't been developed because of politics," said Chris Weafer, chief strategist at Alfa Bank. "Oil companies could produce significantly more gas if only they could pump through Gazprom's pipelines. At some point in the not-too-distant future, the state is going to have to step in, but this will be complicated by the fact that the respective heads of Rosneft and Gazprom sit at opposite ends of the Cabinet table."

Below I am posting today's leader from the Financial Times entitled "Engage Russia with realpolitik, not rhetoric."

The article contains nothing that is rationally objectionable, however it uses the wrong terms to describe the right idea, completely abdicating the important role that international legal norms and treaties must play in Russia's foreign relations.

I do not believe that the FT is using the term "realpolitik" to provide a cover excuse for unabated energy imperialism or the recent extortion of foreign oil and gas companies in Russia. Surely what they mean to say is that the United States, Europe, and Russia should be dealing with each other on the basis of an identifiable legal and political framework, grounded in international law and treaties (such as the European Energy Charter), which would build trust among all sides and provide a more solid basis for evaluating each other's conduct. A rule-based system is needed in order to help guide expectations, and decrease the current level of uncertainty in Russia's foreign relations. With this understood, the problem is not "an explosion of rhetoric," but rather the gap between perceptions created by a distinct lack of organization and coherence in the West's approach to Russia.

So many voices in the Russia debate have been asking if a new Cold War has begun, but that's not really the point. We need to be asking at what point the United States, Europe, and Russia itself abandoned the hard work toward cooperation as promised under the Charter of Paris? The Cold War didn't end overnight, and many of the commitments have been derailed by so-called "realpolitik." Today the United States and Europe have to be strong and tough with Russia on its own terms, and create the necessary incentives to bring this increasingly distant partner back into the fold.

From the FT:

Engage Russia with realpolitik, not rhetoric

US and Russian officials have done well to defuse the recent row over Washington's plans to place missile defence sites in eastern Europe and Russian president Vladimir Putin's -outspoken attack on US "unilateralism".

The world does not need a new cold war, or even cold war-style rhetoric, when there are so many global issues that would benefit from better co-operation between Washington and Moscow. As was demonstrated in the collaboration between the US, Russia and China in the deal over North Korea's nuclear programme, the world's powers have much to gain by working together on security. With the wider Middle East in crisis, much more remains to be done that can only be done by co-operation.

Washington must recognise that its unilateralist security policies raise suspicions elsewhere. It is reasonable for Russia to question US plans to site interceptor missile bases in Poland and the Czech Republic. American officials argue these defences are not directed against Russia but against rogue states such as Iran, which yesterday claimed it had fired a missile into space. However, Moscow is entitled to raise questions, especially as there are doubts about both the capacity of rogue states to develop effective intercontinental missiles and the US's ability to shoot them down.

The US, like any nation, is entitled to prioritise its own security. It is also justified in responding to perceived threats by tapping its huge military and technological resources. But it must bear in mind that riding roughshod over the security concerns of others - especially Russia, a former superpower - breeds insecurities which could make the world less safe for all, the US included. The fight against state-sponsored terrorism - whether from Iran or elsewhere - is one that should unite the US and Russia.

But Moscow is a difficult partner. It is trying to recover from the loss of the Soviet empire by reasserting its authority in the region. As well as using energy as a political weapon it is resorting to cruder means such as recent remarks about targeting nuclear missiles at the proposed Czech and Polish bases. Threats to pull out of arms control treaties reassure nobody. How can Moscow hope to make common cause against extra-European threats such as global terrorism while aggravating divisions within Europe?

The Kremlin's authoritarian domestic policies also generate insecurity. Democracy is the globe's most stable and secure form of government. Mr Putin's assault on Russian democracy, including his ruthless plan to win victory for a hand-picked successor in next year's presidential election, is potentially seriously destabilising for Russia and for its neighbours.

However, even if Russia is a far from ideal global partner, the US must do what it can to work with Moscow on global security. Realpolitik, not rhetoric, is the key.

Masha Lipman has a new column at PostGlobal addressing the tone of the Munich speech, NATO enlargement, and "malignancy in recession."

Excerpts:

Open Communication is Crucial

The tone of Vladimir Putin’s Munich speech evoked memories of Cold War rhetoric raising understandable concerns about Russia’s foreign policy. But if the speech tells us anything about Putin’s vision, its that he’s looking backward rather than forward. In Munich, Putin presented a list of Russia’s previous grievances. He was not making a new policy statement.
...
Strobe Talbott, the architect of the U.S. Russia policy during this period of NATO expansion recalls in his book “The Russia Hand” the words of the Estonian president Lennart Meri who called Russia a “malignancy in recession” and insisted that it would relapse into authoritarianism at home and expansionism abroad.

The view of Russia as a “malignancy” implied that Russia itself was evil, not the brutal Communist regime that exterminated its own subjects even more zealously than those of the countries it occupied. This view implied that Russia’s concerns were illegitimate. Talbott writes that he thought that Meri’s pessimistic view of Russia ”could be self-fulfilling” and that it would be wrong if NATO adopted “an anti-Russian rationale” for taking in new members because it would “tip the balance of forces in Russian politics in the direction that we -- along with Meri, Walesa and Havel, not to mention many Russians…most feared”.
...
The Cold War is over and will not come back. The world has changed too much over the last two decades. But there are elements in today’s relations between Russian and the West that are reminiscent of the Cold War. One of them is the desperate lack of adequate communication. Unless this communication failure is overcome, the relations will be locked in a vicious circle of ad hoc moves and responses, tipping the balance of forces in Russian politics further in the authoritarian and anti-Western direction.

Read full article here.

For the past eight months, Lithuania's only oil refinery, Mazeikiu Nafta, has been deprived of its supply of crude oil from Russia, as state monopoly Transneft has cut off the link from the Druzhba pipeline citing apparent "leakage problems." Now it seems the Lithuanians are willing to leverage this grievance to disrupt the EU-Russia talks scheduled for next week, much like Poland did last time during its dispute with Russia over bans on meat exports.

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This weekend, the media reported the following comments:

"We would like the issue [of crude supply] to be discussed at the spring European Council" meeting of EU leaders, Deputy Foreign Minister Zygimantas Pavilionis told reporters. ... "We think that the EU should influence the process. We have asked the [EU] presidency, but nothing has happened," he added.

Pavilionis said unless the EU put pressure on Russia to reopen the Druzhba link, "There is an idea to block the mandate for talks with Russia."

"We can become another Poland," he said, referring to the Polish decision late last year to veto the launch of EU-Russia talks on a wide-ranging cooperation agreement.
...
"The leak can be fixed in several weeks, but eight months have passed already and nothing has happened. It is a political act," Pavilionis said.

The Lithuanian Foreign Ministry said earlier last week it still expected Russia to provide a schedule for the pipeline repairs.

Russia's political motivation for cutting off the oil supply to Mazeikiu Nafta is particularly illustrative of the standard operating procedure of the new energy imperialism. A few years back, Yukos owned a majority stake in Mazeikiu Nafta, and last year an agreement was reached to sell this stake to the Polish firm PKN Orlen. This move infuriated the Russians, who had wanted the Mazeikiu stake to be usurped by Gazprom or another state-held company at a discount price, and has since embarked on a campaign of obstruction to starve the Lithuanian refinery of value until PKN Orlen abandons the acquisition.

A closer look at most of the recent supply cut offs reveals that the objective of the Kremlin is usually to acquire majority stakes in refining, transportation, and distribution networks in the countries they are targeting. It is this kind of anti-competitive behavior that violates market principles for politics, and creates dangerous distortions in asset value and oil and gas prices, not to mention the negative impact on Russia's reputation as a reliable supplier.

In a fair market, a property should go to the highest bidder, not to the party that wields the biggest threat.

From the Associated Press:

Solzhenitsyn: Russia dogged by problems similar to those that led to 1917 revolution

MOSCOW: Nobel laureate Alexander Solzhenitsyn warns in the preface to a newly republished article that Russia is still struggling with challenges similar to those of the revolutionary turmoil of 1917 that led to the demise of the czarist empire.

The article — which will appear Tuesday in the influential government daily Rossiyskaya Gazeta — analyzes the roots of the February revolution 90 years ago that forced the abdication of the last czar, Nicholas II, and helped pave the way for the Bolsheviks.

"It's all the more bitter that a quarter of a century later, some of these conclusions are still applicable to the alarming disorder of today," Solzhenitsyn wrote in a preface to the article first written in the early 1980s.

Solzhenitsyn's wife, Natalya, said it should serve as a reminder to Russia's political class about the dangers stemming from the huge gap between the rich and the poor, and the stark contrast in lifestyle and moral attitudes in the glitzy Russian capital compared to the far less prosperous provinces.

"Alexander Isayevich is deeply worried by this gap," Natalya Solzhenitsyn told a news conference Monday. "It's necessary to pay attention to that. If the government fails to do that, consequences would be grave."

Read full article here.

The Power Is so Cowardly that it Fears Everything…

By Grigory Pasko, journalist

The cowardice of the Putin regime has recently manifested itself particularly vividly in the decision to get the State Duma to vote on a bill that would prohibit rallies and processions for two weeks before elections and two weeks after elections. Having understood that they’d overstepped even their own boundaries, the Putinites refused to take this decision.

…The power, of course, is afraid of Khodorkovsky. Indeed, it is afraid of all smart, brave, decisive, and independent people. And I will never believe that Putin’s sidekicks had nothing to do with the murder of Anna Politkovskaya. It was beneficial precisely for the Putin power to have her killed, because it is precisely the Putin power that fears those such as Anna.

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Another way you can see that the power is afraid is from its continual loud protestations that it’s not afraid. Here, for example, is the opinion on the filing of new charges against Khodorkovsky and Lebedev of Nikolai Bezborodov, member of the committee of the State Duma for defense (“United Russia” faction): “Nobody is afraid of anything. With the new charges, the state wants to show that Russia is entering into the market economy on civilized conditions. While the intensification of security measures is to protect Khodorkovsky himself; after all, surely there will be found those who will want to provoke disorders”.

The whole world has already noticed what unprecedented security measures the filing of the new charges against Khodorkovsky and Lebedev was accompanied by. What for? Bezborodov – no doubt just like those who adopted the decision about the mask-show with machine guns – considers that this is “for the sake of Khodorkovsky himself”. They might have added that the next victim, following in the footsteps of Politkovskaya and Litvinenko, might be Khodorkovsky. That’s why they say they’re protecting him and this is, after all, in his own interests.

I will allow myself to assert that such a position is a brazen-faced lie. I’ve already encountered it before. In the strict-regime prison camp where I was sent after trial, rumors reached me (they were probably intentionally sent to me) that someone wanted me killed. This was on the eve of a court hearing on granting me early release on parole. I declared to the camp administration that I was fed up with these rumors, and that the administration was wasting its time sending its snitches out to spread them.

The administration’s reaction was immediate. The deputy chief of the colony for security proposed that I go to… the punishment isolator. For my own well-being and my own security, you see. Nobody would be able to get me there, in the punishment isolator. In so doing, naturally, the officer neglected to mention that placement in the punishment isolator would automatically mean I could kiss my parole goodbye, along with meetings with lawyers and family members. Work with documents…

I categorically refused. And here’s why. From talks with experienced people, I already knew that no placement in the camp’s punishment isolator could protect someone with a contract out on him. While all of these so-called “security measures” were in actuality directed against the arrestee, against his mental strength. Because all these machine gunners, mask shows, and faces with moronic expressions – all of this is called upon only to mentally break the prisoner, to force him to be nervous and worried, to make mistakes during the time of studying documents at the investigation or in court.

It is precisely this array of lawlessness that we’re seeing today with respect to Khodorkovsky and Lebedev.

It is therefore not difficult to assume that the new court examination with respect to the new charges will also take place in that same faraway, godforsaken Chita. And the power couldn’t care less about the violations of legality that inevitably arise – and have already arisen! – in connection with such a strange and wild attitude towards the two arrestees. Arrestees whom the power is afraid of very much and for a very long time.

I agree fully with the opinion of Alexander Konovalov, president of the Institute of strategic studies [and analysis], who noted: “…It would seem, should one fear the appearance of a strong opposition party? Nevertheless, never before have preparations for an election campaign been so thorough as now. Of course, if Khodorkovsky and Lebedev get another term, the power will feel itself calmer. Maybe because in Khodorkovsky is seen a political threat”.

And, of course, I agree with the opinion of Khodorkovsky’s lawyer, Yuri Schmidt, which he expressed during the time of our recent meeting in Chita: “The power is persecuting Khodorkovsky because it is afraid of him. Because it has seen: he did not bow down in defeat, but has continued the fight”.

The power doesn’t like independent people. But even more, it doesn’t like those who resist – those who do not lose their freedom and independence even when they’re thrown in a cage.

khristenko.jpg

Today Russia's Minister of Energy Viktor Khristenko met with Japanese Foreign Minister Taro Aso, and later this week Mikhail Fradkov is expected to meet with Prime Minister Shinzo Abe. The main issues on the table are oil, gas, investment in Sakhalin, and increasing trade ties. The Ministers promised increased cooperation, and Khristenko promised that a proposed 4,300 kilometer pipeline would indeed reach Perevoznaya on the Pacific coast, as had been lobbied by Japan. The Japanese have long been eager to ween themselves off an excessive dependence on Middle East oil, and given the fairly positive comments given by Aso, it seems like Japan may have gotten over their resentment following the hits they took during the Sakhalin-2 fiasco (Mitsui and Mitsubishi were pressured to sell to Gazprom along with Shell).

Kommersant is reporting today that one of the Czech Republic's most wealthy businessmen, Karel Komarek, is considering the purchase of shares in six oil and gas projects in Russia. According to the report, Komarek's company, Moravske Naftove Doly (MND), may seek partnerships with Neftemontazhspetsstroy and Saratovneftegeofizika, and could place a bid at the upcoming auction to buy the Chukhlorsky oil reserves in the Khanty-Mansiysky Autonomous Area.

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Karel Komarek, leading Czech businessman

However, as is often the case for investors in Russian energy, the Kremlin will likely require something in return from the Czech Republic. The Czechs are unique among their neighbors for having successfully parried the advances of Gazprom through diversification, and maintaining control over the transmission, distribution, and retailing of natural gas. The MND acquisition of energy assets in Russia could go hand in hand with a Gazprom deal to build a 400 million cubic meter underground storage unit in the Czech Republic, and last June there was news of Gazprom interest in taking a direct stake in MND.

Original date of statement: February 21, 2007

'The General Procuracy did not find evidence of Khodorkovsky’s and Lebedev’s guilt; it simply declared all of their activity criminal'

On 16 February 2007, the General Procuracy of the Russian Federation published the fantasy charges filed against Mikhail Khodorkovsky and Platon Lebedev on its website. Like our clients, we on the defence team are interested in seeing the consideration of these charges in as public a manner as possible. At the same time, the investigative organs have undertaken numerous attempts to silence defence counsel, requiring them to sign non-disclosure statements to maintain the secrecy of the investigation. In connection with this, we are doubly grateful to the General Procuracy, because in publishing the text of the charges, it has greatly simplified our task of proving the innocence of our clients.

We believe that any person, even someone with no legal education, can see for himself the absurdity of the charges being made against Khodokorvky and Lebedev, just by carefully reading this document. These charges are so ludicrous that nobody can be left with any doubt about the political nature of the claims against our clients.

We do not consider it necessary to subject the charges to a detailed analysis or to refute each and every sentence of this document. That would be simply impossible to do, inasmuch as the document simply does not contain any charges. What the General Procuracy has provided is the professional biographies of Khodorkovsky and Lebedev, merely replacing the words “company management” with “organized criminal group”, “transaction” with “theft”, and “financial report” with “spurious documents”.

The absurdity of the charges can be seen most vividly from the following example: According to the procuracy, in the years 1998-2003, Khodorkovsky and Lebedev allegedly “stole” 347 million metric tons of crude oil valued at 1 trillion 304 billion rubles. At the average exchange rate of 29 rubles per dollar for this period, this comes to approximately 45 billion dollars. At the same time, the gross earnings of the company YUKOS for this same period comprised 47.1 billion dollars!

It is not by accident that the sum of the “theft” nearly coincides with the company’s total earnings. The General Procuracy did not find evidence of Khodorkovsky’s and Lebedev’s guilt; it simply declared all of their activity criminal. It is obvious that the investigative organs had been given an assignment to come up with charges, and, not having found real crimes, they incriminated imaginary ones.

We once again call on society to notice the blatantly political nature of the persecution of our clients. We assert that Khodorkovsky and Lebedev are innocent. Any objectively-thinking person can convince himself of this by impartially studying the materials of the charges so graciously provided by the investigation.

Yuri Schmidt
Karinna Moskalenko
Robert Amsterdam

Apologies for the tabloid headline. Many people are blogging about the extensive Steven Lee Myers piece which came out in the International Herald Tribune today titled "Putin keeps them guessing on his successor" (the piece is also scheduled for this Sunday's NYT magazine). Among the many interesting points raised, Myers reports on the black campaigns to smear the reputations of two opposition candidates, including Aleksandr V. Donskoi, the mayor of Arkhangelsk, who has even had to fight off rumors about "gypsy hypnosis" and his sexuality.

On the day in November when I first met Donskoi in Moscow, intrigued by the audacity of his decision to run for president of all Russia, investigators raided his office up in Arkhangelsk. As we spoke, his wife, Marina, and an aide answered insistent phone calls from home and relayed progress reports. "I realize all the responsibilities," Donskoi, a supermarket tycoon, told me. "I understand there could be difficulties, including physical threats. It's already taking place."

A month later he was back visiting Moscow and called a sparsely attended news conference to denounce an intensifying campaign against him. He denied having falsified his diploma and went on to explain, among other things, his interest in "gypsy hypnosis." Marina Donskaya interrupted him, having lost patience with the pressure. "He's not gay!" she shouted, referring to slurs that had been appearing in the Ark-hangelsk press. "He impregnated me."

By February, prosecutors had opened three cases against him. Donskoi, only 36 years old, unknown outside of Arkhangelsk and perhaps better off for it, would stand little chance in a real campaign to be the leader of a country as sprawling, complex and deeply troubled as Rus-sia. That's not the point. The point is that Putin's Russia does not dare to hold an open competition for the highest office in the land - one where even a long shot like Donskoi could at least make a case for himself. That, more than anything else Putin has done, is the biggest threat to democracy.

Yesterday Mexican blogger Leon Krauze, the founder of Letras Libres, posted an interesting comment on PostGlobal comparing Vladimir Putin's grip on Russia to that of the Institutional Revolutionary Party (PRI), which dominated Mexican politics and economy in a similar fashion from 1928 through 2000. Most likely, if we recklessly go in this direction, the closest comparison to Putin could be that of a poor man's President Lázaro Cárdenas (1934-1940), who also thrived on economic populism and expropriated Mexico's oil to create state-run behemoth PEMEX (however Cárdenas did compensate the companies).

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Does Vladimir Putin emulate the tactics of 1930s Mexican President Lázaro Cárdenas?

A Perfect Dictatorship?

By Leon Krauze

In 1990, during a debate with Octavio Paz, Mario Vargas Llosa described Mexico's political system as "the perfect dictatorship". Vargas Llosa was referring to the way the PRI, Mexico's monolithic political party, had controlled almost every aspect of the country's life for over sixty
years.

Vargas Llosa was right, of course: the PRI held sway over Mexico's energy sector, its media and the country's judicial system. During those six decades, the PRI also managed to emaciate the competition: with the almost quixotic exception of the PAN, almost no other political party tried -- or managed -- to break the PRI's reign.

Vargas Llosa's definition now applies to a growing number of countries. Vladimir Putin's Russia is, clearly, the most powerful member of the club. Until a few years ago, Russia was all talk. The country had yet to emerge from its deep economic malaise. But now, after the energy boon, Putin's Russia has suddenly grown claws. It seems intent in reclaiming its long lost petro-bully fame. The dramatic stories of Alexander Litvinenko, Anna Politkovskaja and Mikhail Khodorkovsky prove that the old Soviet ways are back. Still, the question remains: how dangerous is this reinvigorated Russian bear?

Clearly, Vladimir Putin is acting out of anger. As the genuine autocrat he is, Putin thought that, after supporting NATO's expansion and America's military presence in Russia's backyard, the world would turn a blind eye to his perfect dictatorship. Clearly -- and thankfully -- he was mistaken.

The West has not only continued criticizing him, it has kept on demanding Russia's support in the international arena, sometimes in matters that can't make Putin completely happy, like the recent Security Council resolution against Iran.

Thus, Putin's Munich rant. Putin should be dealt with carefully. Even if Russia is no longer the imposing counterbalance it once was to the United States, it still holds an important number of cards in its hand. Russia's cooperation will be invaluable if the world is to resolve the crisis in the Middle East.

Russia's influence is also crucial when dealing with China. Naturally, this doesn't mean the world should ignore Putin's growing disregard for freedom and democracy. As Mexico soon learned -- and Venezuela, alas, eventually will -- there is, ultimately, no perfection in dictatorship. Intelligent pragmatism is what's needed now. Condoleezza Rice has always been a renowned Soviet specialist. It's time for her to display her talents.

The banter over the United States missile defense plans for Eastern Europe continues. Click here to read the transcript of the press briefing with Dan Fried, Assistant Secretary for European and Eurasian Affairs and Air Force Lt. General Henry A. Obering, Director of the U.S. Missile Defense Agency.

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Excerpts:

LTG OBERING: Now my last one: I want to talk a little bit about some of the issues that have been raised, first of all, the Russian reaction. It's been briefed that they consider this a threat and it changes the strategic balance between the United States and Russia. And frankly, speaking from a technical perspective and a programmatic perspective, we just don't see that.

First of all, these interceptors, the radars, are not designed against the Russian threat. You're not going to counter the hundreds of Russian ICBMs and the thousands of warheads that are represented by that fleet with 10 interceptors in a field in Europe. The radar that we were putting there -- first of all, it is designed against the Middle Eastern threat, not against the Russian threat.

With the radar that we have there that we have proposed, it is a very narrow beam radar. It has to be queued. And so even if we wanted to try to track Russian missiles with that radar, we could only track a very, very small percentage of those missiles. And even if we could, passing that information off and having an interceptor try to intercept the Russian missile, we can't do it. The interceptors that we would place in Europe are not fast enough to catch the Russian ICBMs. We're in a tail chase from a location in Poland and if you'd like, in that -- in response to any questions, I can show you some slides on that as well.
...
ASSISTANT SECRETARY FRIED: My colleague made points about the threat from Iran. He also made points about the Russian reaction and it's important to emphasize this: Russia is not the intended target and the Russian offensive, the Russian strategic nuclear deterrent, is not intended to be the target of this system and the Russians know this. Everything that has been briefed to you today has been explained both to NATO allies and in the NATO-Russia Council and to the Russians bilaterally in a series of detailed discussions, both at high level and at expert level, and these discussions are going to continue. We have not developed this system in the dark. We have not developed this system without intensive consultations with both Europeans and the Russians and that is how it should be.

We were, of course, surprised by General Solovtsov's remarks earlier this week in which he said that Russia could target Poland and the Czech Republic if they accepted elements of a defensive system on their territory. We were surprised by those remarks and frankly, found them both incomprehensible and negative. A threat against Poland and the Czech Republic makes no sense in the early part of the 21st century and we assume and hope that the General was not speaking for the entire Russian Government.

And indeed, I noticed that Foreign Minister Lavrov, the following day, spoke to this issue in far more measured and reasonable tones, saying, among other things, that Russia would not respond hysterically -- his words -- not hysterically to a missile defense system deployed in Europe. And that is indeed how it should be. This is not directed against Russia. The Russians know this. Their technical people are certainly aware of the capabilities of the system -- what it can do and what it cannot do, and what it cannot do is threaten Russia.

But questions have also come up earlier this week about the Russian reaction and whether this portends a new period of U.S.-Russian tensions. I don't think it does, and I certainly hope it does not. But let me say something about U.S.-Russian relations generally, since that's generated a lot of interest. We have a relationship with the Russians which is very broad and includes a great deal of cooperation. And Secretary Rice pointed out after President Putin's speech at Werkunde that his speech did not seem to reflect the reality of the cooperation ongoing with Russia in areas such as counterterrorism, counterproliferation, cooperation on issues such as North Korea and Iran.

Yesterday I spent most of the day in productive and useful discussions with one of my Russian counterparts discussing some issues of European security, and we had good discussions. So there was a mismatch between the public tone and the private diplomatic reality. Certainly that mismatch was extreme with respect to General Solovtsov's remarks about the Poles and Czechs. We hope to get past this. There's a lot of work we have to do with Russia and work we look forward to doing with Russia.

This week Aeroflot, Russia's state-owned airline, saw its multibillion dollar deal to purchase 22 Boeing 787 Dreamliner aircraft blocked by the Russian government, which seems to now be pushing the Airbus A350 instead (some news sources say the deal is just on hold). It is widely assumed by analysts that the deal was blocked for political reasons.

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It is truly regrettable how the current Kremlin administration is somehow unable to see the difference between private corporations and governments. I don't think that the international business and investment community needs another reminder of how business decisions in today's Russia are too often dictated by political calculations rather than shareholder value. This further example of non-market decision-making is repellent to basic principles of the GATT. Coming the same week as the Democratic overtures on Jackson-Vanik it is something of an exisite irony. Score one more for the Russophobes.

Click here to listen to the report from Marketplace:

STEPHEN BEARD: Aeroflot had placed a preliminary order for 22 of Boeing's forthcoming 787 Dreamliner jets, but the Kremlin now wants the airline to buy the planned Airbus A350.

This appears mainly to be about America. Relations between the U.S. and Russia have worsened. This week Putin accused the U.S. of "overstepping its borders in every way."

What's more, says Nick Redman of the Economist Intelligence Unit, Putin is miffed that the U.S. has not done more to clear the way for Russia's membership of the World Trade Organization.

NICK REDMAN: The United States not yet having rewarded Russia, I don't think Putin feels any need to reward the United States, in the form of Boeing, by giving this contract.

Boeing's loss will be Airbus' gain.

The European company could certainly use some help. Today the French and German leaders meet to try to restart Airbus' stalled restructuring program. Ten thousand jobs across the company could go.

Many of you will recall that last September this same Aeroflot-Boeing deal almost fell through before billionaire Alexander Lebvedev (and 30% Aeroflot stakeholder) saved the deal by putting up $40 million of his own collateral. Here's what he told the Washington Post:

"We are hurting ourselves much more as a country by damaging Aeroflot than anything we gain by snubbing the Americans, if this is the purpose," said Lebedev, who is also a member of parliament for the ruling United Russia party. "This is a very, very attractive contract for Aeroflot, and if it goes away, then Aeroflot will have to find long-range aircraft from somewhere, maybe leasing companies, and it will cost not less than an extra $800 million."

Additional information of interest: The chairman of Aeroflot is one Viktor Ivanov, a former KGB officer and close confidant of Vladimir Putin. The freezing of the Boeing deal also comes the same week as a presidential meeting with Foreign Minister Philippe Douste-Blazy and French Defence Minister Michele Alliot-Marie (as well as First Deputy Prime Minister Sergei Ivanov). During this meeting Putin alluded to acquiring a larger stake in EADS (the parent defense company of Airbus), and Douste-Blazy expressed enthusiasm about Russian companies buying Airbus.

Here are some excerpts from the transcript:

PRESIDENT VLADIMIR PUTIN: France is one of the main shareholders in the European EADS Group. We have already said that the acquisition of a stake in EADS by one of our banks is not a step towards some kind of hostile takeover. This is absolutely not the case. We are ready for constructive cooperation and we are hopeful that our companies will be able to reach an agreement on just such cooperation.

If agreements are not reached, then our financial institutions will simply work with these securities on the stock market, and nothing more than that. But I think that meaningful cooperation would be a lot more useful and interesting for manufacturers here in Russia and for our European partners.

FRENCH FOREIGN MINISTER PHILIPPE DOUSTE-BLAZY: We are very pleased that you have raised this issue, Mr President, because we have two major aircraft manufacturing companies in our country, and we would be very happy if Russian companies were to buy our Airbus 350 planes. I am not saying this because I represent Toulouse.

Furthermore, we are very interested in Russia’s Beriev aircraft, and we are requesting European certification for them at the moment. It would be good to create a whole fleet of these Russian aircraft in order to fight summer fires.
...
FRENCH DEFENCE MINISTER MICHELE ALLIOT-MARIE: As far as our cooperation in the aircraft manufacturing industry is concerned, we have been working a lot in this area together with Mr Sergei Ivanov. We have strengthened our cooperation over the last years. We are very interested in Russian heavy helicopters.

SERGEI IVANOV: Our MI-26 helicopters.

MICHELE ALLIOT-MARIE: The French army is very interested in these helicopters. We are also interested in reconnaissance aircraft, in unmanned aircraft. We are likewise interested in new-generation aircraft. I think that our designers could work together and this would give a real boost to our cooperation.
...
VLADIMIR PUTIN: I hope that we will reach agreements on a number of other promising areas for cooperation, including the energy sector, during Mr Chirac’s visit to Russia at the end of March. We already have some ideas and proposals to make.

Oh, and if you haven't been paying attention, despite the recent agreement on cutbacks, the Germans have been getting pretty angry at the French in the management of EADS since the problems of the A380 and Daimler.

English Russia has posted a series of wildly subversive spoof advertisements created by an internet artist named "Mr. Evil." The ads, which feature aggressive, visceral images of violence, hate, and just plain ugliness linked to popular capitalist brands (both Western and Russian such as state tourism, McDonald's, and Ikea), apparently earned the artist a visit from the police, who confiscated his works and ordered him to leave the city.

This graphic arts movement is generally understood as a radical instrument of protest known as "Culture Jamming" (see Mark Dery's extensive essay on the subject). Regardless of what we think of the political commentary made by this artist, no one should be getting harassed by the police simply for practicing their freedom of expression.

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A spoof on popular Russian clothing brand Extra by "Mr. Evil"

A blog called "Grow with Chess" has posted the full transcript of a speech made by Garry Kasparov before the Foreign Policy Association on February 12, 2007.

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Extracts:

I would like to thank the National Endowment for Democracy and the Foreign Policy Association for inviting me to speak here today. I would also like to thank the president of the NED, Carl Gershman, who is not able to be here today but has been working tirelessly to support our cause. It is essential to have voices around the world committed to the understanding that human freedom is the most important of society's values. I hope that together we can bring that message to every corner of Russia and the world.

What is left of Russian democracy is on the endangered list and this crisis has implications for the world, not just for Russians and our neighbors. It matters because of the harm a dictatorial or chaotic Russia can cause. It matters because of the benefits a free and democratic Russia could provide as a true member of the free world. It matters because "justice" and "freedom" are not mere words. History teaches us they are ideas worth fighting for and worth dying for. History also teaches us that injustice and oppression rarely obey borders, especially where Russia is concerned. Instead they spread like a cancer.

The current Kremlin regime under Vladimir Putin is in some ways a new and difficult cancer to diagnose and treat. But it is not completely resistant yet and I hope we may yet force it into remission, or cut it out entirely, without killing the patient. It will take strength and courage to achieve this. As Dwight Eisenhower said in his 1953 inaugural speech, "History does not long entrust the care of freedom to the weak or the timid."
...
The many investors rushing to make a quick buck in Russia will not escape their share of responsibility either. You need only look at what happened to Yukos and Mikhail Khodorkovsky to see how the game is played. Foreign companies and investors are not immune, as Shell found out when the Kremlin pushed them out of the Sakhalin 2 gas fields at the end of last year. If you want to invest in "KBG Incorporated" you must remember that they are very, very active shareholders. [laughter]

Also remember that when a new government comes in, a liberal one or a new mafia boss, all the old deals are going to be opened up. That quick buck could, if you are lucky, end up costing you slow years in litigation, or in prison.

One thing is certain: If Western leaders continue to ignore the signs and to enable the Putin crackdown, they will be complicit in the crimes to come. If you do anything to reward Putin's regime during this period you share the responsibility when they use brutal force to preserve their power. Putin only respects action and action from the top man. Not from the State Department. As long as Bush remains silent, Putin will understand that he can always get his way.

We are going to fight regardless, no matter what Bush and Blair say, or don't say. We do not ask too much. If the West wants to live up to its rhetoric, it must be made clear to Russia, and from the very top, that the free ride is over. Send a message to Putin and those who would succeed him, that the world is watching. Stop pretending there is a dialogue with Putin when in reality there is no common language with this Kremlin regime. Let Mr. Bush defend the words of the founder of his party, Abraham Lincoln, who was born on this very date, when he said, "No man is good enough to govern another man without that other's consent." Mr. Putin, you do not have our consent.

Read the complete speech here.

Andy at Siberian Light has posted the second in his series of interviews with English-language Russia bloggers, this time with Sakhalin resident Tim Newman of White Sun of the Desert. The first interview in Andy's series was with La Russophobe, and more can be read about Vladivostok from a Grigory Pasko dispatch to this blog.

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On the same page?

Following a few weeks of prickly exchanges, officials for both the United States and Russia seem to have decided to issue some soothing words today in an effort to calm everybody down. Nevertheless, the tension over the missiles in Eastern Europe did not exactly go away (or perhaps Igor Ivanov missed the memo).

Vladimir Putin in ITAR-TASS:

“Russia is a peace-loving state, which respects its partners. We are not threatening anyone and we are not working out any aggressive plans,” Putin said. In his words, “We are going our way with those who value peace and stability, who is ready to fight terrorism and counteract any forms of aggression.”

The Financial Times also quotes National Security Advisor Stephen Hadley and Sergei Yastrzhembsky:

Mr Hadley also held talks with Mr Putin during a visit that seemed designed to project a more conciliatory stance after the sharp exchanges that have taken place since the Russian president’s Munich address.

“We do not see President Putin’s speech as an invitation to confrontation and do not believe it was made with that intention,” Mr Hadley said.
...
“We are no longer in ideological conflict with the west,” Mr Yastrzhembsky added. “Russia is a totally different country.”

This week's Economist is running a story arguing that Vladimir Putin's appointment of former warlord Ramzan Kadyrov as president of Chechnya is representative of the coming political zachistka (purge) which shall characterize the upcoming elections. They write, "Under Mr Kadyrov in Chechnya, as under Mr Putin in all Russia, economic improvements have come at a cost of corruption, opacity and lawlessness."

Excerpts:

Chechnya's fate and Mr Putin's have long been intertwined. He rose to power on the back of the Chechen war launched in 1999. Mr Kadyrov's elevation (to be rubber-stamped by the Chechen parliament) is designed to ensure Chechnya's stability in the nervous run-up to Mr Putin's putative departure from office in 2008. It formalises the de facto power that, with his feared militia, Mr Kadyrov has long wielded anyway. But it also reflects, as Chechnya tends to, the wider political situation in Russia. It is part of what Vladimir Ryzhkov, an independent member of the lower house of parliament, the Duma, describes as a political zachistka (purge): a word mainly used to describe bloody Russian raids on Chechen villages.

The raids on Russia's constitution are incremental but no less insidious. The 5% threshold to win seats in the Duma, already set high enough to keep out all the liberal parties at the 2003 election, will be raised to 7% for the parliamentary poll later this year. Parties are barred from forming coalitions to get over it. Candidates may come only from party lists; in the previous system half were directly elected by district (that enabled Mr Ryzhkov, for example, to survive). Candidates can be debarred for “extremism”; that includes slandering a public official. Minimum turnout rules have also been scrapped, as has the option of voting “against all”. So boycotts and protest votes can no longer be used to register dissent.
...
There are other obstacles for the outsiders. After the example made of Mikhail Khodorkovsky, a former oil tycoon now facing fresh criminal charges from his Siberian prison, businessmen are disinclined to fund Mr Putin's critics. Meanwhile, the Kremlin's grip on the media ensures such voices are rarely heard.
...
But television—from which most Russians get their news—is another story, as even Kremlin officials admit. Political news is dominated by flattering coverage of Mr Putin's day. All the main channels are in effect controlled by the Kremlin. The general trend, says Masha Lipman of the Carnegie Moscow Centre, is to safe, non-political subjects.
...
That is another way in which Chechnya reflects, in extreme form, the general situation. Under Mr Kadyrov in Chechnya, as under Mr Putin in all Russia, economic improvements have come at a cost of corruption, opacity and lawlessness. Both regimes rest on highly personalised rule that looks secure but may yet prove unstable.

Excerpts from Anders Aslund's new article:

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Putin ponders strategy to retain power

By ANDERS ASLUND

During his launch into an anti-American tirade in Munich recently, Vladimir Putin was only speaking his mind .

He accused the United States of having "overstepped its national borders in every way: in the economy, in politics, and in the humanitarian sphere it imposes its policies on other states.''

Given the U.S. troubles with Iraq, it's natural the Russian president would thrive on American weakness. But his speech was as notable for what it said about his own and Russia's domestic politics.

Putin obviously thinks he is riding high. The Russian economy is booming. Incredibly, in the past seven years, Russia's gross domestic product has grown by 500 per cent, measured in current dollars (from $200 billion in 1999 to $1 trillion last year).

The world is desperate for Russia's oil and gas, and Putin remains astoundingly popular at home. His successor is certain to be hand-picked by him. One can only marvel at how adeptly he handles a 3 1/2-hour televised news conference, with detailed answers, alternating charm and combativeness.

Despite all that, Putin has painted himself into a corner as he faces the end of the two terms in office that the Russian constitution allows him. This is a man who speaks the language of a modern leader trying to rebuild his country, when in fact he and his cronies have really just wanted to enrich themselves. Having spent his time as president undermining democracy, property rights, the free press and the rule of law by taking over Yukos oil (and throwing its owner into a Siberian prison) and then other big companies, Putin and his coterie must now cling to power somehow, or risk losing it all if they cannot stage-manage a transition to the proper person.

The tolerance of corruption in the Putin regime is astounding. Recently, for instance, a Swiss court established that Leonid Reiman, Russia's minister of communications and a close friend of Putin's, was the owner of telecommunications assets in Russia worth more than a $1 billion. But this has not been reported in major media in Russia, and Reiman remains at his post without having offered any explanation or apology -- only an implausible blanket denial.

How can Putin and his cronies give this up?

It seems clear that Putin has these worries in mind when he fulminates on the world stage against the United States. Such words have the effect of increasing his popularity and therefore his grip on the country, which has been suffocated by his near-total control of television stations, newspapers, nominations of candidates, political parties and even public meetings. The evidence of a growing Russian authoritarianism is clear: Russia is one of the few countries that has declined since 2000 from "partly free'' to "not free,'' according to Freedom House's meticulous ratings.
...
Nevertheless, Putin has managed to charm some Western leaders -- among them former German chancellor Gerhard Schroeder, former Italian prime minister Silvio Berlusconi, outgoing French President Jacques Chirac and, most notably, U.S. President George W. Bush.

Just this month, Bush told the Wall Street Journal: "Vladimir Putin has kept his word on everything he's said to me.''

Well, then he cannot have said much. Putin reciprocated in his anti-American Munich speech: "I consider the president of the United States my friend. He is a decent person.'' He could as well have said: "He is a useful fool.''
...
Given what's at stake, the United States and the EU can no longer be a mere bystander in this drama. Six years of soft policy on Russia have done nothing but encourage the Kremlin's anti-Western stand.

Bush could learn a lesson from Mikheil Saakashvili, president of Georgia, to carry a big stick when dealing with Putin. When Bush compliments Putin, he evokes only contempt in the Kremlin.

Former president Ronald Reagan knew how important it was to speak the truth loudly and clearly. Vice-President Dick Cheney's speech in Vilnius, Lithuania, last May was a welcome departure, which enraged the Kremlin. It's the time for the White House to follow through.

A new op/ed on Vladimir Putin's Munich speech from Igor Khrestin, a research assistant for the American Enterprise Institute, in the Daily Standard argues that despite the recent hostile exchanges, the fundamental US-Russia relationship faces the same old problems.

Thus, the parting of ways after the 9/11 "honeymoon" in U.S.-Russian affairs seems more predicated on an inevitable values clash. Setting aside the incompatible political systems and the failure to integrate Russia into Atlantic institutions, the Bush administration's fervent adherence to the "democratic peace" theory has run counter to the Kremlin's cold, realpolitik calculations. As such, the Russians balk at what they perceive to be American hegemonic impulses in its own backyard, which have included support for the "color revolutions," a Congressional resolution supporting the entry of Georgia and Ukraine into NATO, and the recent stationing of U.S. military hardware in former Warsaw Pact states.

While Putin has the right to ask the "against whom" question, the United States has firmly reserved the right to point out the new geopolitical realities of the post-Cold War era: Kiev, Tbilisi, and Riga are no longer Russian vassal entities, but sovereign states. Their choice of government, leaders, and foreign policy is entirely independent of what Moscow might wish that choice to be. While the Russian state (or by extension, the Gazprom energy monopoly) no longer has to subsidize the economies of post-Soviet states, it must respect their sovereignty.

Putin, the Munich "shoe-bang" moment aside, realizes that openly hostile competition with the West is not only undesirable for his goal of "restoring Russia's greatness," but simply impossible. Economically, notwithstanding the impressive growth of recent years, per capita GDP has just returned to pre-1990 transition levels. Russia's military spending, even taking into account purchasing power parity, is at least ten times lower than that of the United States.

Read complete article here.

In response to the European Commission's anti-trust chatter in recent weeks suggesting that large scale energy champions should break up into smaller companies to increase competition, Alexander Medvedev of Gazprom has hit back with a firm, defensive attack on Brussels yesterday:

"It is the most absurd idea" Mr Medvedev told journalists in a video conference from Moscow on Wednesday (21 February), when asked to comment on the European Commission's proposal to separate energy production from distribution networks, known as unbundling.

"It is like selling cars without wheels", Gazprom's vice-president said, adding it would be "against basic market rules" to demand that a company must abandon some of its activities after heavy investment.

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Gazprom Chief Medvedev: Stockholm's spying concerns over construction of the Baltic Pipeline "reminds me of a James Bond movie."

More specifically, Medvedev singled out the Commissioner Neelie Kroes for her comments that long-term contracts pose a threat to competition:

Gazprom's deputy CEO referred to such remarks as "irresponsible" while saying "I hope that the EU will return to its previous statements about long-term contracts being fundamental for the gas market."

"We invest billions of dollars in infrastructure" Mr Medvedev said hinting the Russian giant expects stable revenues from long-term deals in return.

It is interesting that Medvedev has chosen to be so hostile toward the Commission, especially when he can count on the French to cut down any proposal of unbundling to protect EDF (they succeeded in leading a move to table the proposal).

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From the Financial Times (emphasis ours):

Sberbank issue to fall short of Russian record

By Catherine Belton in Moscow and Joanna Chung in London

Sberbank, the largest savings bank in Russia, is set to raise $8.8bn in a share offering that has fallen short of hopes that it could be Russia's biggest.

Alexei Kudrin, Russia's finance minister, yesterday said Sberbank's supervisory board had set a price of $3,398 per share, a small discount to the current market price. But the volume of shares to be issued will fall short of the maximum 3.5m shares on offer. One person familiar with the situation said a maximum 2.6m shares would be placed. The deal has become the second largest in Russian corporate history, after the $10.6bn Rosneft raised last year.

The offering has been dogged by complaints about bureaucratic hurdles and lack of transparency and some observers say that led to lower demand. However, some investors said the pricing of the share sale at just below the market rate meant it was a success.

"This is the first international placement where they didn't even bother to translate the prospectus into English," said Eric Kraus, a fund manager at the Nikitsky Fund. "It looks like they're starting to get arrogant."

Big western investors had taken part anyway, Mr Kraus said, because "if you want a large piece of Russia this is the only way to get it". With more than 60 per cent of the nation's retail deposits and 20,000 branches, Sberbank is seen as one of the best ways to invest in Russia's consumer sector.

Two people familiar with the situation said international institutions had placed orders for about $3bn worth of shares, while Russia's Central Bank, which controls Sberbank via its 63.7 per cent stake, would buy 34 per cent of the issue, or $3bn worth of shares.

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David Ignatius over at the Washington Post has posed the following open question for readers to sound off on:

Russia's back, with President Putin blasting the U.S. and NATO. Is Putin justified in criticizing NATO expansion? Does his rhetoric signal a return to Cold War tensions? Should Russia's neighbors worry?

Please visit if you are so inclined and leave your opinions.

During a speech today in Russia, Congressman Tom Lantos surprised some by calling for the repeal of the Jackson-Vanik Amendment, a draconian piece of legislation dating from 1974 Trade Act which denies Russia and other countries normal trade relations with the United States based on their policies of emigration.

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Rep. Tom Lantos

The AP reports:

"It's time to put behind us this relic of the Cold War,'' Rep. Tom Lantos, D-Calif., said at a news conference. "I will spare no effort to bring this about and I have every expectation that I will be successful.''

Moscow has long urged the United States to abolish the Jackson-Vanik amendment tying Russia's trade status to whether it freely allows Jewish emigration. President Vladimir Putin and other Russian officials and lawmakers long have criticized Washington for failing to repeal the legislation, saying the refusal to do so undermined trust between the two nations.

Originally designed as a non-military policy innovation to fight communism without directly punishing its victims, Jackson-Vanik helped bring close to 500,000 Russian emigrees to settle in the United States. Today, and largely since the end of the Cold War, Jackson-Vanik remains in place serving an entirely different function: a protectionist shield benefiting certain industries with bi-partisan blocs in both the House and Senate.

I wholeheartedly applaud Rep. Tom Lantos's decision to pick up the ball on Jackson-Vanik, however I do not view it as a conciliatory gesture - just common sense for mutual benefit. As I have said numerous times in the past, those of us who want Russia to enter the international fold, to observe and be bound by international law, should not only urge the United States government to repeal this discriminatory legislation, we should furthermore support Russia's entry into the World Trade Organization.

Such policy decisions are not rewards for President Vladimir Putin's stewardship of Russia, they are not endorsements for the Kremlin's backslide into authoritarianism, but rather they represent important incentives for the government to make improvements, and an opportunity to deepen business and political ties. Normalizing trade relations with Russia will ensnare the government in a much more effective and comprehensive legal environment, importing an important series of rules and processes that can help protect all individuals from state impunity.

Numerous people have also commented that there are contending visions in Washington in regards to Jackson-Vanik, but a failure to repeal it may have the effect of emboldening the most lawless elements within the Kremlin:

Most religious and political freedom groups agree that Russia no longer violates the terms of the original amendment, but that hasn't stopped some congressional leaders from creating new, ad hoc reasons for keeping Russia bound by it. In April, Senate Majority Leader Bill Frist said that Jackson-Vanik graduation would hinge on Russian cooperation with the United States on the Iranian nuclear crisis. And while Frist will be out of office next month, he is being replaced by a host of other congressmen, including California Representative Tom Lantos, who would link graduation to a broader assessment of Russian human rights. What's more, accompanying Frist out the door will be Pennsylvania Representative Curt Weldon, one of the most vocal advocates of graduation on the Hill. As Elizabeth Stewart, a foreign policy adviser to Oregon Senator Gordon Smith, predicted at an American Enterprise Institute panel in October, "I think it is unlikely the administration will be given a free pass on Russia the next two years."

But it's the next few months that really matter. Congress will be under pressure to bring Russia's standing under Jackson-Vanik to a vote early in the next session, because Russia's WTO accession talks will begin early this year and its graduation is an informal requirement for them to succeed. If Congress votes no, or just tables the issue, the trade organization is unlikely to override what is essentially a U.S. veto and allow Russia into its fold.
...
The fear among Russia watchers, then, is that a WTO failure would delegitimize the liberals and hurt Putin while elevating the anti-Western siloviki. If they gain power, then Russian intransigence could turn into Russian antipathy, or even aggression: As Bremmer and Charap note, the siloviki see NATO and the United States as active threats, talk of revanchist plans for the former Soviet republics, harbor anti-Semitic and xenophobic views, and are openly derogatory of democracy and free markets. Nor is that the worst-case scenario--a disorderly realignment could empower the extremists, who, unlike the siloviki, have no pretense of abiding by the rule of law or international agreements. In an ironic twist, then, a failure to lift the Jackson-Vanik restrictions could end up reviving the very specters it was enacted to combat.

It is also interesting to note that Rep. Lantos did bring up his opinion on Mikhail Khodorkovsky during this visit:

"I consider him a political prisoner," Lantos said. He added that the Khodorkovsky case had cast a "severe shadow" on Russia's reputation.

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This week Vladimir Putin hit the slopes

As Vladimir Putin gracefully sashayed across the slopes of Rus Sanatorium in Sochi (which coincidentally or not coincidentally is a former property of Yukos, one of the first to be seized by the government), skiing alongside the smiling faces of strategically placed children, one had to ponder whether Julie Andrews’ “The Sound of Music" theme would begin to fill the air. Surely that was one image this elaborate photo shoot was going for, as Mr. Putin laid down the charm offensive on the IOC (International Olympic Committee) and the press to promote in to Sochi for the 2014 Winter Games. Among his platitudes for the natural beauty of Sochi, Putin also waxed poetic on a utopia of endless development funds (regardless of whether or not they win the bid):

We will not spend this money on guns, on ammunition, on fighting aircraft, or on tanks. We will spend this money so that people from all over the world congregate here in Sochi, in Russia, and join hands. We will do everything to make Sochi a worthy capital of the 2014 Olympic games.

So this money isn't for guns or fighter jets? Wonderful! Oh wait....

Utopian comments aside, it seems that some of Putin's biggest opponents are not in Salzburg or Pyeongchang, but are rather right there are home - Russia's environmentalists and preservationists. Given the decreased space in which most civil society organizations are able to work in Russia, the robust activity of the environmentalists in regards to the Sochi bid is admirable and impressive (they even have the IOC touring the sensitive areas).

Unlike the competing bids for the games, Sochi is far more underdeveloped, and would require numerous heavy construction projects which some say would pose a threat to the area's "comparatively pristine" nature, including a wide array of plants, trees and wildlife. According to one leading environmentalist, the projects proposed for Sochi are in violation of international and environmental law.

Kommersant:

Igor Chestin, director of WWF Russia and member of the Russian Public Chamber, has warned Vladimir Putin that Sochi’s bid to host the Winter Olympic Games is “in threat” because “flagrant violations of environmental requirements”. Mr. Chestin referred to the federal program to develop Sochi as a ski resort which did not go through the compulsory state environmental expertise. The program was adopted last June with the total of 314 billion rubles allocated to prepare the city for the Olympics.

However, Sochi is no Sakhalin, so it seems doubtful that Oleg Mitvol will come running with the same urgency that was applied toward Shell.

From the Eurasia Daily Monitor:

On February 19, Ukrainian Fuel and Energy Minister Yuriy Boyko indicated that the government might transfer parts of Ukraine’s gas distribution networks to Gazprom. Speaking in the wake of talks with Gazprom president Alexei Miller, Boyko said, “Russia is not interested in anything other than distribution networks in Ukraine.” Gazprom has proposed specific options to exchange Russian extraction assets for Ukrainian infrastructure assets. Ukraine’s State Property Fund is currently preparing sales of minority stakes in distribution companies in certain Ukrainian oblasts (Interfax-Ukraine, February 19).

Swapping Ukrainian infrastructure for “access” to Russian oil and gas deposits does not seem to be a viable proposition. Ukraine is hardly able to provide the high inputs of technology and investment capital required by extractive projects in Russia. More likely, such “access” would become a cover for non-transparent transfers of Ukrainian infrastructure portions to Gazprom or to companies and individuals fronting for Gazprom.

Another reminder that the Kremlin's spy instincts, paranoia, and tough talk toward Eastern European nations can encourage an opposite outcome. When it comes to US missiles in Poland and the Czech Republic, it seems that carrots would function better than the stick.

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Is Europe beginning to believe Jaroslaw Kaczynski's warnings about Russia?

From the Financial Times:

Russia has warned Poland and the Czech Republic against hosting elements of a US anti-missile defence shield. For the former Soviet satellites Moscow's sabre rattling underlines the need to forge strong military links with the US. ...

"Considering the relative weakness of the EU's common foreign and defence policies, it comes down to a single question, 'Do we want the Americans in or do we want the Americans out?'" said Eugeniusz Smolar, president of the Centre for International Studies, a Polish foreign policy think-tank. ...

Although no one foresees Russian tanks clanking westwards any time soon, Warsaw is apprehensive about overdependence on Russian energy.

For years warnings about Russian intentions were treated as Polish paranoia by west Europeans, who had no experience of Soviet occupation. But the recent murder in London of Alexander Litvinenko, the former Russian spy, and cuts in oil and gas supplies have tarnished Moscow's image in the west.

[RA's anonymous political technologist in Russia sends in his latest dispatch...]

The Cowardice of Thieves

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By The Polittechnologist

Apologies for the long delay since my last posting. It’s just that I’ve been observing the unfolding of events that were actually quite predictable. And I wanted to give readers of the blog a chance to observe for themselves and try to reach their own conclusions about these events.

In fact, it would be interesting to read some of your opinions about all that’s going on with Mikhail Khodorkovsky and Platon Lebedev. So I’m hoping to get some feedback from you.

And now, as promised in my last posting, a few words about the cowardice of those who are trying to steal everything from Khodorkovsky – including his life.

Criminals are always cowards. Otherwise they’re not criminals. Having stolen property from the true owners of YUKOS, the thieves are starting to fear retribution. They understand that it will come; they just don’t know from what quarter. They’re scared. Want proof? Look no further than the insane accusations they’re making against Leonid Nevzlin, or the snipers on the roofs of the buildings around the courthouse and jail in Chita.

As they see it, someone’s going to pay for this theft. At this point, only Nevzlin is still at large and able to act freely. They are afraid of him, and the way they are trying to do battle with him is beyond ridiculous. “Nevzlin poisoned Litvinenko and killed YUKOS shareholder Golubovich.” That’s what the Kremlin thieves think. They’re wrong, because they know perfectly well who actually poisoned Litvinenko. They have a split personality. People get sent to mental institutions for that.

They’re afraid Khodorkovsky will run away, so they’re keeping him under tight security. Or, more precisely, they’re keeping themselves under tight security as protection from him. He’s not running anywhere, and that scares them even more, because nothing’s happening. Nobody’s attacking the forgotten little Siberian town.

It’s not Khodorkovsky’s money they’re afraid of. You can always steal money (which they’re doing with considerable success). What you can’t steal are ideas. Khodorkovsky’s enemies sitting in the Kremlin have inconceivably large amounts of money. But they don’t have ideas. Stalin and Hitler had ideas, and the people of their countries believed in these ideas. Today’s power in Moscow doesn’t have a thing. If they’re attacked, the people won’t come out to defend them. This is their main fear.

Mikhail Khodorkovsky has ideas. They may be bad or they may be good, but at least he has them. Mikhail Khodorkovsky came up with the phrase “Open Russia”. His enemies were already scared then – he’d thought of something, but they hadn’t. Trembling, they started developing “United Russia”, “Just Russia”… They even tried to steal ideas! But they couldn’t. I once spoke to a person from the Russian provinces who had participated in some “Open Russia” projects. He said that a whole community of people had formed in his little town who clearly understand what their rights are. And who can voluntarily get together if the need arises.

Nobody from “United Russia” or “Just Russia” gets together voluntarily. They are always invited. The founders of these organizations inside Kremlin understand this, and they are afraid. This fear gnaws at their gangsterish souls from the inside. They become even more cruel and evil. Their cowardice becomes conspicuous. They are desperate and capable of anything. A nice rest cure in a psychiatric hospital would do them good…

You don’t think so? Drop me a line.

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By Samuel Rosenshine

From constructive criticism to cause for concern, Russia has created a curtain left slightly ajar. The curtain represents greater political swagger within the international economy and even in U.S. / Russia relations as seen in the former giving the latter ever increasing leeway. Mr. Putin has publicly lambasted the United States in speech, with as little disregard as seen in the past seven years, criticizing Washington's role on the world stage and in global security. " The United States has overstepped its national borders in every way," was stated at a recent conference over international security. Nobody feels secure anymore, because nobody can take safety behind the stone wall of international law." With such nonchalance comes greater questions, perhaps pertaining to whether Putin believes Russia is a candidate for a role model to the world. Such an idea raises even more questions.

How can Mr.Putin categorically denounce the furthering of an institution such as NATO, when from opening to closing "bell", Russia's own power conglomeration is near transparent? As documented through its purchase and amalgamation with SUEK (the Siberian Coal Energy Company), to recent manipulation of the electricity exchange to further wunderchild-like Gazprom, Russian economic reform dons a visage of immaturity and a "me first " mentality. This ever expanding Gazprom is paramount to a notion of Russian immaturity, responding, for example, to Belarusian taxation by cuts to the Friendship Pipeline to Belarus leaving European Union resolutions narrowly averted. Such a normative response served as a catalyst for the Ukraine, Lithuania, and Belarus to seek out and incorporate "alternatives to Russian Oil Supplies" and has been met with disapproval from the European Union. To critique the expansion of NATO and to bombast the United States as an insecurity instigator seems ironic from a nation willingly shutting oil pipelines to dependent nations whilst simultaneously “dragging its feet” at the UN Security Council on slowing Iran’s nuclear weapons grade capability.

This “Arc of Stability “ has not yet been completed and will continue, through its obvious promotion and the tactics therein of Gazprom to produce an aura of instability on an international scale behind a new curtain of political and economic ordinance.

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Nicholas I, Emperor of All the Russias 1825-1855 - a role model for Vladimir Putin?

History Lessons

By Grigory Pasko, journalist

On 8 February of this year, at a conference at the University of the Ministry of Foreign Affairs of the Russian Federation (MGIMO) timed to coincide with the 125th anniversary of the birth of US president Franklin Roosevelt, deputy head of the Kremlin administration Vladislav Surkov drew a direct parallel between the activities of Roosevelt and Putin. “Just like Roosevelt in his time, Putin today is forced, and required, to strengthen administrative management and use the potential of the presidential power to a maximum degree for the sake of overcoming a crisis”, said he.

Comparing Putin with some historical personage has long ago become a tradition for all manner of officials and obsequious journalists. Only once did I hear another kind of comparison, from a very famous Russian stage and screen actor – he compared Putin with a white moth.

Surkov’s speech inspired me to find historical parallels on the theme “Putin and someone else”. Here’s what I came up with.

And so, we have Putin. A poor, forgotten C-student from the hinterlands outside Leningrad. A person with a huge inferiority complex. Exceedingly vindictive; never forgives or forgets. Like any dependent person, he is devoted to his master to the point of subsuming his entire self to this devotion. And his master is the KGB system.

Comparisons with Peter the Great simply don’t hold any water whatsoever: Putin absolutely can not be compared with the emperor on any count – not in brains, not in courage, not even in height. Peter pulled Russia, out of the feudal backwoods of historical non-existence. Putin is stubbornly returning Russia back to socialism.

The best example for comparison (and even this is a pretty lame comparison, inasmuch as Putin is such a characterless personality that you really can’t compare him with anybody) would be the emperor Nicholas I.

The historian M. Rakhmatullin (“Nauka i zhizn” No. 2/2002) writes that Nicholas I “was doomed to take on the role of ‘strangler of the revolution’.”

Nobody doomed Putin: he chose for himself the role of strangler of Russia’s young democracy – as deformed as it was in some respects, like some “ugly duckling”. The way he took care of the free press was absolutely brilliant (from the point of view of a thick-headed martinet). Putin was lucky in that there wasn’t that much of a free press to begin with. Now nearly all the press sings Putin’s praises. And it seems that Putin himself likes this a lot. When he is being praised, he only smiles shyly, like the little gay thief Alkhen in Ilf and Petrov’s novel “The Twelve Chairs”.

Following in Nicholas I’s footsteps, Putin could also say that he too has “cleansed the fatherland of the effects of the infection that was lurking so much in its midst.” By “infection”, Putin has no doubt often understood the oligarchs in general, but he has gotten rid of only a few in particular. Why these specific ones? Because one had brought him to power (and tyrants have always, in all times and ages, gotten rid of those who had brought them to power). The second considered himself no stupider than Putin and didn’t hide this. The third dared to fund the opposition. Dozens of other oligarchs are flourishing, plundering Russia clean, and don’t disturb Putin. And he doesn’t disturb them. It is possible that by “infection” Putin may have meant the human rights community, opponents of that criminal organization known as the KGB, independent journalists, environmentalists, and intelligent, honest, and normal people in general? In this case, he has certainly succeeded if not in cleansing the fatherland of them, then at least in forcing them to either go hide in their niches or fight for their very existence.

Nicholas is famous for the fact that in 1825, he created the Third Department of the Special Chancellery, with Benckendorf as its head. Nobody in Russia is talking about how the infamous Fifth Administration of the KGB has renewed its criminal activities in full force. But it is enough that one of the prominent suppressors of dissidents, the KGB chief for Leningrad City and Oblast, the initiator of the “Nikitin affair”, general Cherkesov, is now one of the main leadership officials of Putin’s Russia. In principle, all of today’s KGB (or, as they have named it, the FSB) is one sheer Fifth Administration. They are supposedly fighting terrorism, but in the meantime all of Russia is convinced that it is the KBG and not anyone else that is bombing apartment houses. They are supposedly catching spies, although the whole world including all of Russia is convinced that there isn’t a single real spy among these. For this reason, the main objective of the existnec of the KGB is obvious – to protect the regime and prevent any attempts to change the totalitarian order under which power in the country belongs entirely to the KGB. Putin is merely the placeman for this system. Thank goodness he’s not the smartest of placemen. Although even under him, the KGB is present in absolutely all spheres of the life of the country – either in the form of managers-officials from the KGB, or in the form of the multitude of toadies and stoolpigeons (in the words of A. Hertzen – “listening up and listening in” [slushayushchikh i podslushivayushchikh].

As under Nicholas, the chief of the Third Department (in our case, the director of the FSB) “judged all, repealed court decisions, and interfered in everything” with the blessing of the tsar. There are more than enough examples of this today.

Wherein lies the difference? Under Nicholas I, the people looked down with disdain on the “blue uniforms”, and scorned even simple acquaintance with the spawn of this agency. In our time, everybody’s trying to get into the KGB; the Ministry of Internal Affairs, Ministry of Emergency Situations, Customs, the Army, taxmen, governors, and just about everybody are kowtowing before them!

If the “cast-iron” Censorial Statute was created in 1826, then now even the publication of such a monster isn’t needed: officials and hireling journalists are prepared to oblige the KGB in any which way all by themselves, of their own free will, without any further incentive, as long as today’s system is benevolent towards them. Under Putin, we are seeing the founding of alternative organizations such as the Union of Journalists (the Mediasoyuz) or economically “correct” civic organizations, up to and including the odious Public Chamber. But we’re also seeing the rebirth of old, tried and true groups, such as the Pioneers, the Komsomol, and voluntary people’s guards attached to the police. And then there are the “innovations” with an openly fascist character – “Going together” and “Nashi”.

Like it was under Nicholas, under Putin people have begun to bray about “getting back to the sources” and about the “Russian spirit”. Neo-fascists are being encouraged, albeit not openly. The rah-rah patriots are ready to burn books that are, in their opinion, bad. Xenophonia and spy mania are on the rise, as manifestations of the “defense of Russia” from enemies who are everywhere and all around. Inasmuch there is practically no economy at all, the you can always cast the blame on spies and “democraps” [der’mokraty].

Russia under Putin is counterposing itself against Europe more and more. But this, like so much else, is taking place in a two-faced manner. On the one hand, Russia is worming its way into Europe, into the EEC, the IMF, the WTO, NATO. On the other hand, it is criticizing these institutions every which way through the mouths of compliant journalists.

If Putin has ever read Karamzin (by the way, we were never told about how reactionary the thought of this historian was), he would no doubt like Karamzin’s words about how in Russia, the sovereign is “living law”: he shows mercy on the good, and puts the evil to death. At the same time, Putin will be quick to add that he doesn’t meddle in the affairs of the courts, although even an idiot can see that when you have supine courts grovelling on their bellies, it is enough for the president to say nothing at all or to mutter something obscure.

Judicial reform deserves a separate discussion. Under Nicholas I, as we know, the person in charge of judicial reform was the former governor-general of Siberia, Mikhail Speransky. A man of exceptional intelligence. And progressive, in contrast to Karamzin. He proposed, for example, making the judicial power elected. The executive power would merely oversee the forms of judicial proceedings. And the executive power itself would have to be accountable to the legislative power.

And what do we have now under Putin? Even Putin’s comrade in arms Kozak, responsible for judicial reform, has declared that the judicial system has broken down. Lots of noise, but it’s all just hot air. Cosmetic changes to the status of judges and to the criminal-procedure and criminal codes. And that’s it. Nothing substantive. We don’t have a judicial power; all we have is cowardly judges who adopt their decisions dependently on the supreme power – the KGB and the governors. The Russian courts have even acquired a new label – Basmanny. The executive power doesn’t execute laws, the legislative power is essentially subordinate to the executive. The “aggressively obedient” majority in the State Duma, to use a term coined by Yuri Afanasiev, is a quagmire in which common sense drowns. The new Duma will no doubt confirm this many a time yet.

The electoral system is nothing short of a parody of democracy. Only those who are advantageous for the power “win”. This is proven by the most recent State Duma elections. We needn’t expect any better from the upcoming elections.

Under Nicholas I, there were departmental courts – military, naval, mining, railway, and so forth. We’ve got them under Putin too – military courts.

Military courts are a true grimace of totalitarianism, a clear rudiment on the way to judicial independence.

Just like the toughening of entry and exit into and out of Russia. Quietly, without any fanfare, Putin has brought back a concept some thought was gone forever: nevyezdnoy [a person prohibited from foreign travel—Trans.] Scientists are now not allowed to travel abroad – in the opinion of the KGB, they are potential spies. For all the rest, like in the times of Nicholas I, it has become harded to get a foreign-travel passport. Like under the tsar, under the communists the only way to get permission to obtain a foreign-travel passport is through the KGB. So far, thank goodness, travel abroad has not been prohibited. But who can say for sure that this will always be so? And as concerns entry into Russia, wel, last year, former world chess champion Garry Kasparov, now an opponent of Putin’s, actually had a problem entering his own country. And dozens of foreign journalists have had and continue to have problems when they are not granted entry visas into Russia.

Reading the papers or watching TV, you sometimes hear the thought: we have nothing to learn from beyond the border. A popular contemporary comedian has become famous for his phrase about the Americans: “Boy are they dense!” His routines often propagandize a thought that was already being voiced by Nicholas I: “Our imperfection is in many ways better than their perfection”.

The issue of supporting the domestic producer is constantly being massaged. The government is acting particularly absurdly and awkwardly on the automobile market. Domestic coffins-on-wheels are being advertised like Rolls-Royces, but the only thing they have in common is the price.

By the way, I’ve noticed the following subtlety: if the mass media want to praise something in Russia, they mention the name of the president, just like they used to mention Stalin and Brezhnev in their day. And if they need to berate, then they say: “The government of so-and-so (Kasyanov, Fradkov)…Zurabov’s Ministry…Chubais’s Agency…”. But what do premiers and officials have to do with anything, if the head of the executive power is the president?

Under Nicholas I, in order to avoid “intellectual ferment”, they closed down publications of progressive orientation: A. Delvig’s “Literaturnaya gazeta”, N. Polevoy’s “Moskovsky telegraph”, and N. Nadezhdin’s “Telescope”.

Under Putin, we’ve had the closure of the magazine “Itogi”, the newspaper “Segodnya”, and the television channels NTV and TV-6… Putin never does anything blatantly. He acts under the guise of observing legality. The strangulation of freedom of speech is taking place under the cover of the phrase “dispute among economic agents”.

One can confidently say about Putin, and about Nicholas I for that matter, that he, not possessing economic knowledge, did not particularly interfered in the economic management of the state. By the way, under Putin, it seems that nobody is particularly interfering in the economic management of the state. Other than the oligarchs, who are concerned about their own pockets and a cloudless future for their own great-great-grandchildren.

But then political management is something Putin considers his personal turf. Putin himself is praised for the creation of the vertical of power. At the same time, nobody can actually explain what this is and why the hell anybody needs it. The visible result of this vertical – the creation of the “semiboyarshchina” [state of the seven boyars—Trans.] – an additional armada of officials in the person of the staffs of the plenipotentiary representatives of Putin in the newly created seven federal districts. At the same time, the plenipotentiaries interfere with the governors and have a fierce hatred of them – and the feeling is completely mutual. No doubt it was to liquidate this feud that it was decided to no longer elect governors, but to appoint them.

Like Nicholas I, Putin expresses a commitment to a mighty centralized administrative apparat. To this day, nobody knows for sure what the central Putinite administrative apparat, and in particular the president’s administration, consists of. The know-how of today’s power is in the creation of a multitude of funds and foundations – economic, political, to support the KGB and veterans of the KGB. Nobody stops to think whose money all these hundreds of funds exist on. But then foreign grant-giving foundations are living in expectation of unpleasant changes and the total liquidation of their activities in Russia.

But when we take a look at the militarization of the apparatus of state, Putin leaves Nicholas I behind in the dust. Under the emperor, only three out of 13 ministires had civilian ranks. Today, it’s the same thing. Plus seven generals in the rank of plenipotentiary representatives (the only exception/misunderstanding being in the person of Kiriyenko). Under Putin, the quantity of “power structures” [military and paramilitary government agencies—Trans.] has increased to twenty – we didn’t have such a thing under Stalin or under Brezhnev. It has gotten to the point where at the parade of Victory in May 2002 along Red Square, we watched as a column marched by of the new mighty military organization – the ministry for emergency situations. According to certain assessments,the numerical composition of these “power structures” comprises in excess of 6 million persons. The uniform, the money, the privileges, and the power – this is what attracts young people into these structures.

Liberally paraphrasing S.M. Solovyov, we can say that under Putin, the “military person” (perferably from the KGB), like a stick, as someone not accustomed to reasoning, but to carrying out orders, and capable of teaching others to carry out orders without reasoning, was considered the best, the most capable commander.” The myth that the KGB was the elite of Russian society was already deficient under Stalin. Under Putin, it has acquired a new lease on life only because Putin himself comes from the KGB. However, this myth has absolutely no substance underneath it. Furthermore, a multitude of facts testifies that everything the KGB sets its hands to collapses with a crash, be it running the country and the economy, catching spies, or fighting terrorists.

Like it was under Nicholas I, under Putin, with the accession of KGB men to all posts, ignorance, tyranny, corruption, lies, and hypocrisy have set in everywhere.

Nicholas I spoke of “strict unconditional legality”.

Putin is famous for his phrase about “dictatorship of the law”, under which he was even unable to reach the procurator-general on the telephone in his time. The usual reply of the “man of law” Putin to a question that worries the Western world is “I’m not up on what’s going on there; this is a purely legal question”.

Like Nicholas I, Putin, it seems, is not in a condition to understand, to cite the historian M. Rakhmatullin, that “the movement of true life needs to go not from the top down, but from the bottom up”.

Like Nicholas I, Putin has surrounded himself with people who carry out orders obediently and don’t show any initiative. How can we not, after the manner of the historian, remember the words of the marquis de Custine: “There are no big people in Russia, because there are no independent characters”.

Today, I don’t see a single area of human endeavor in Russia in which lies and double standards, ugliness and indolence, arbitrariness and just plain idiocy do not reign supreme. Those who try to exhibit intellect and honesty or at least a different point of view about what’s going on are constantly and in every way running up against lies, idiocy, and… (see above). In many ways, the existence of such a system has become possible thanks to the personal efforts of comrade Putin.

If Pushkin is our, Russia’s, everything, then Putin is our nothing.

The saddest thing is that Putin is for a long time. Nicholas I, as we know, occupied the throne for 30 years.

These two videos detail the blowback following Vladimir Putin's Munich speech:

The FT has posted an interesting speech by their energy correspondent, Carola Hoyos.

Geopolitical Shifts:

Russia:

While Europe and the US clung to history, making comparisons with the 1970s, and worrying about the rising power of the Middle East (remember President Bush’s concern about the US’s addiction to Middle Eastern oil in his 2006 “State of the Union” address) it was in fact outside the Gulf that some of the most concerning changes were happening.

I landed in Moscow in late-October 2003 just as thousands of miles east, Mikhail Khodorkovsky, the chief executive of Russia’s biggest and most dynamic oil company was being handcuffed and taken to prison in Siberia.

Unbelievably, Yukos did not cancel the interviews my Moscow bureau chief and I had lined up the next day and we literally watched from inside as the company’s walls collapsed around the rest of its management under the relentless onslaught of the Kremlin.

Neither of us could have imagined that the exercise would end with Khodorkovsky still imprisoned years later and western investors sealing the Kremlin’s actions with a $10 billion kiss by allowing Rosneft, bolstered by Yukos’s assets, to launch (late last year) a successful IPO on the London Stock market.

Of course, Russia’s actions did not stop with Yukos. The story continued, with major chapters including Sakhalin II and Moscow’s gas disputes with Ukraine and Belarus. And as Yukos’s death built Rosneft, the Kremlin’s successful wrestling match with Shell and other IOCs has benefited Gazprom.

From the other side, the US, Europe and Nato watched with concern. Bush had clearly misread Putin’s soul as he famously looked into his eyes. In Washington disillusionment has set in as the world has watched the newfound power oil prices have afforded the Kremlin erode democracy, shut down free speech and fuel corruption.

During a speech in Europe this weekend, Robert Gates, the US’s new defense secretary and an old cold warrior, said he was almost nostalgic for a less complex time. The former director of the CIA said he “wondered” about Russian policies that seemed to work against international stability, bluntly giving as an example: “Its temptation to use energy resources for political coercion.”

The impact of Russia’s actions has also been detrimental on its longer-term energy supplies. The double digit oil production growth the country had achieved as recently as 2002 has slowed to a trickle and the IEA worries Gazprom is investing too little to be able to meet its future commitments to Europe. Meanwhile, the promising new energy frontier of the post-Soviet era has turned into a difficult, dangerous or impossible place to do business for many international oil companies who had been scrabbling to strike deals such as the one BP achieved when it created TNK-BP.

Meanwhile, downstream, Russia’s new muscle has led to deep distrust as European national champions have emerged and sentiment is growing to keep Russia - and also Algeria - from being able to market directly to customers.

Robert Amsterdam has a column running on JURIST of the University of Pittsburgh:

As many know from reading media reports or my blog, I have been involved since 2004 in the international defense of Mikhail Khodorkovsky, once Russia’s most successful businessman and current political prisoner of the Kremlin. While much public attention has focused on the unlawful nature of Khodorkovsky’s persecution and seizure of his company Yukos (as detailed in our recent White Paper), many people fail to realize that the Kremlin’s campaign has extended far beyond just the defendant and his company to target the very lawyers who are simply doing their job of defending the constitutional rights of their client.

Perhaps one of the first unmistakable signals of the Kremlin’s attack on the Khodorkovsky legal team was my middle-of-the-night visit from plainclothes FSB officers and my subsequent expulsion from the country. This was followed by the tragic and baseless imprisonment of lawyer Svetlana Bakhmina last April. And now, with hearings resuming over the new money laundering charges being applied to Khodorkovsky, again his legal team is facing a barrage of threats, acts of intimidation, interference, and arbitrary arrests.

In response to this harassment of the legal team, we are posting here an important nine-page statement from noted human rights defender Karinna Moskalenko, which details the violations and irregularities perpetrated against counsel by the Russian Federation in this case. The fact that these aggressive tactics are still being used in the 21st century, and the fact that the rulings of Russian courts are still being granted the presumption of regularity by foreign courts, poses a threat to all of us, as the Russian procuracy feels increasingly emboldened with the impunity to treat lawyers as they see fit. Unless the basic rights of lawyers are protected, and a minimum level of professional standards are observed and enforced, there is little hope for rule of law to ever take root in Russia.

Moskalenko’s statement must serve as wake up call to the international legal community to demand that Russia respect the rights of counsel to defend their client. While today it might just be the Khodorkovsky case, tomorrow these tactics may extent to your business or simple civil dispute. Russia’s courts must not be allowed to become a mere instrument of the executive.

Russian Military restructures to controversy over electoral implications and the Possibility of a Third Term

From the Eurasia Daily Monitor:

A huge bureaucratic surprise occurred in Moscow on February 15 when Russian President Vladimir Putin announced new appointments in the government, typically providing very little explanation for his sovereign decisions.

Most attention was focused on defense minister Sergei Ivanov’s elevation from deputy to first deputy prime minister. He now is equal in rank with Dmitry Medvedev, which perfectly aligns Putin’s two presumed “successors” (Vremya novostei, February 16; Rossiiskaya gazeta, February 17).

Russian media is full of comments about the new equilibrium between Ivanov and Medvedev in the presidential race. However, there are three less obvious -- but probably more meaningful -- implications of this round of Kremlin “musical chairs.” First, Putin has proven yet again that he is the “decider” and should not be mistaken for a lame duck. While he has not fired anybody this time around, he has shown that the power to reward and punish remains entirely in his hands (Grani.ru, February 16). Not only did he gain some maneuvering room by pitting the two key contenders so neatly against each other, he also demonstrated his ability to pull yet another surprise and reserved the option to appoint a “dark horse” as prime minister and fresh favorite in the contest. Since the political elite has finally accepted as fact that Putin is really going to step down next year, announcing the “difficult decision” to accept a third term could be a perfect surprise indeed.

In regards to the preliminary investigation, Yuri Schmidt, counsel to Mikhail Khodorkovsky, issued the attached statement.

STATEMENT IN CONNECTION WITH THE COMPLETION OF THE PRELIMINARY INVESTIGATION

In their statements, complaints, and petitions, the lawyers for M.B. Khodorkovsky and P.L. Lebedev have on many occasions noted the unlawfulness of their transfer to Chita and the conducting of investigative actions in that city, and demonstrated that this grossly violates the rights of the accuseds, including the right to a defense.

Being obligated under any circumstances to carry out their professional duty, and in an attempt to minimize the negative impact for our clients, we have appealed numerous times to the head of the investigative group of the Procuracy-General of the RF with a request to present us in a timely manner with a timetable for the conducting of investigative actions, considering that the distance of Chita from Moscow and St. Petersburg requires advance planning of journeys. In doing this, we notified the investigative group that we are compelled to establish a rotation for our presence in Chita.

For a while, we had the impression that they had reacted to this request with understanding. However, the reasonable timetable that was announced began to be violated immediately: either right in Chita we would be notified on the eve of departure of the continuation of investigative actions, or notifications about their conducting would be sent within time frames that ruled out the possibility of arriving by the date indicated. Thus, a notification about the conducting of investigative actions from 10:00 AM on 31 January 2007 was sent to St. Petersburg by fax… at 20:27 in the evening on 30 January. On 6 February, the continuation of investigative actions for another week was announced to us at the end of the work day in the Chita investigative isolator (despite the fact that the previously announced deadline was to end on 7 February), while on 8 February we were notified that the investigative actions would continue through 3 March 2007, inclusive.

On 16 February, when none of the out-of-town lawyers that make up the main defense team for Khodorkovsky and Lebedev were in Chita, they were suddenly notified – once again violating the previously announced timetable – that all investigative actions had been completed and that the case was moving on to the next stage – the presentation of the gathered materials to the accuseds. And that the materials would be presented the very next day, 17 February 2007 (which, just as a matter of fact, happens to be a Saturday).

Article 215 of the Code of Criminal Procedure of the Russian Federation demands that the defenders of the accused be notified of the completion of investigative actions; moreover, if they “can not appear at the appointed time for valid reasons”, familiarization with the case is to be postponed for a period of up to 5 days. Fax notifications were sent to the lawyers in St. Petersburg and Moscow on 16 February. The investigation knew perfectly well that none of us had the physical ability to arrive in Chita the next day; therefore, I evaluate the announcement that familiarization with the case materials was to begin on 17 February not even as the latest violation of the rights of the accuseds, but as sheer mockery.

It will be remembered that the transfer of the accuseds to Chita was initially explained by the need to conduct individual investigative actions with them, although it was perfectly obvious that there was no necessity (not to mention legal grounds) to conduct these in Chita. Nevertheless, only intensifying the lawlessness, on 3.02.07 the deputy Procurator-General of the RF, V.Ya. Green, issued a decree on the determination of Chita as the place of the preliminary investigation. Since 2003, the investigation has been taking place in Moscow. All procedural decisions were adopted, interrogations, searches, and seizures conducted, and expert studies appointed and carried out in Moscow. And it was in Moscow that the decrees declaring Khodorkovsky and Lebedev to be accuseds were issued.

So why was it that on 3.02.07, the preliminary investigation, which has been going on in Moscow for several years, was transferred to Chita two weeks before its completion? My previous press statement says that according to the decree of the deputy Procurator-General, this was done pursuant to Art. 152 of the CCP RF “with the aim of ensuring fullness, objectivity, and compliance with procedural deadlines”. That same statement offers an analysis proving that the transfer of the investigation from Moscow to Chita did not meet a single one of these conditions, but pursued entirely different objectives.

But even if we allow that during the time of the preliminary investigation, it was specifically and only in Chita (for two weeks out of 3 and a half years!) that “fullness, objectivity, and compliance with procedural deadlines” could be ensured, then today, when the investigative actions have been completed, the Procuracy-General no longer has any grounds to allude to these contrived reasons any more. Furthermore, if it truly is concerned about “compliance with procedural deadlines”, then it is perfectly obvious that familiarization with the case materials in Moscow will have a most beneficial effect on such compliance, inasmuch it will take significantly less time than in Chita.

In the next few days, the defense will file a petition on this matter, and if it is denied (which is difficult to doubt), then all the masks behind which the power has been attempting to conceal its true objectives will have been removed once and for all. It will become perfectly clear that the power intends to conduct the trial in Chita as well, where – considering the circumstances, which it is still premature to talk about – it will be absolutely impossible to conduct a fair and objective trial and ensure even a formal observance of the rights of the accuseds.

-- Yuri Schmidt

From the Moscow Times:

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"Every time we go with new hopes to these sales, and every time we are disappointed," said Yana Dubeikovskaya, chief spokeswoman of OGK-1, a generating company that owns six power stations and produces about 5 percent of the country's electricity.

Natural gas accounts for about 60 percent of the fuel used to make electricity in the country. By law, Gazprom must sell a fixed amount of gas to power producers at a price set by the state. But this amount is seldom enough for producers to meet their quotas, forcing them to buy more fuel on the free market.

Because demand is so high, market prices send production costs soaring, but producers are kept from passing the cost onto their clients by the state-regulated price of electricity. This turns most of them into loss-making businesses.

Gazprom's planned merger with SUEK (the Siberian Coal Energy Company) is raising some eyebrows, including those of German Gref. Too bad he has no influence.

From the Moscow Times:

"Gazprom's purchase of SUEK's coal assets is a dangerous extreme in economic policies. We should preserve competition in our country," Gref told reporters on the sidelines of an economic forum in Krasnoyarsk.

From Radio Free Europe:

In recent years, Russia's state-controlled gas monopoly Gazprom has purchased oligarch Roman Abramovich's oil major Sibneft and has forced the Royal Dutch Shell oil company into surrendering part of its ownership in the Sakhalin-2 project. But the gas giant wants more.

Gazprom recently announced that it plans to merge with a Russian coal supplier, the Siberian Coal Energy Company (SUEK). The merger, if approved by the federal antimonopoly watchdog, would create a holding company worth about $12 billion -- by far the largest in Russia's power sector -- with Gazprom in majority control.
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Gazprom's advance on the coal company comes as national utility Unified Energy System (EES) is broken up and sold to investors. Gazprom itself owns an 11 percent stake.

It is no secret that EES head Anatoly Chubais and the Kremlin have had differences since Putin was first elected. Chubais has been strongly critical of Gazprom's expected inability to meet domestic gas demand. He has said that this will necessitate closing down a number of regional energy-generating enterprises and could lead to shutdowns and brownouts.

He has also said that the Kremlin-controlled Gazprom is squandering funds on nonessential activities, while neglecting development of new gas fields in Russia.

Moreover, Chubais's strategy to liberalize the Russian power-generating market by selling off generating companies is not seen as being to the Kremlin's liking.

Chubais has never been regarded by Putin's team as an "insider." He is seen as the last remaining member of the Yeltsin "family." If he were forced out of EES and power generation switched over to Gazprom, inefficient as it might be, it would please the Kremlin no end.

From the Times of London:

Mr Gref is the first Cabinet minister to criticise Gazprom openly. He said: “If all Gazprom’s assets, which are already worth over $300 billion, [£153 billion] are used across all economic sectors, we will find ourselves with the monopolistic state capitalism of the 19th century, and that will be a very backward step for our country.”

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From the St. Petersburg Times:

When a Gazprom-led consortium begins laying the foundation for a major new pipeline to pump Russian gas under the Baltic Sea directly to Western Europe, it is likely to run into problems — thousands of them.

The North European Gas Pipeline, or Nord Stream, is due to snake along the seabed over an area covered with hundreds of thousands of unexploded mines and munitions dating as far back as World War I.

Officials and environmental groups in several of the countries that border the Baltic say construction of the 1,200-kilometer pipeline threatens to disturb the resting places of the deadly weapons, which include free-floating mines and decades-old canisters of mustard gas.

“There are major questions that have not yet been fully addressed by the consortium,” Bjorn Skala, Sweden’s ambassador for small arms, said by telephone from Stockholm. “The proof [of environmental safety] is not yet there.”
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Polish Defense Minister Radoslaw Sikorski last year likened the project to the secret pact made between the Soviet Union and Nazi Germany at the start of World War II to divide up Poland.

The country had hoped that instead of choosing the Baltic route, Gazprom would expand the Yamal-Europe pipeline that currently runs across its territory. To push their dissatisfaction at being left out, Poland and the Baltic states may now try to beat Russia at its own game, analysts said.

“These concerns over munitions are just politics,” said Lev Fyodorov, the head of the Union for Chemical Safety in Moscow. “There are no scientific or ecological questions here.”

That argument is eerily reminiscent of the one that the West leveled at the Kremlin last year, when steadily building pressure by environmental authorities was widely taken as a means of pushing Royal Dutch Shell and its Japanese partners into selling a controlling stake in Sakhalin-2 to Gazprom.

RA offers this translation of Yuri Schmidt's press statement today. The original can be found in Russian here.

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"We are forced to turn to all people of good will with a request to demand that the Russian authorities cease violating Khodorkovsky’s rights"

Press statement

And so, M.B. Khodorkovsky and P.L. Lebedev have been charged again. This time around, as representative of the Procuracy-General of the RF M. Gridneva has declared, they are being charged “with theft of shares owned by the state, misappropriation of oil and legalization of funds received from the sale thereof”. From 1998 through 2003, they allegedly stole oil worth 850 billion rubles or, approximately 33 billion US dollars.

In such a manner, when on 5 February 2007, having just managed to read the nearly 150 pages of text of the decree declaring Khodorkovsky an accused, we attempted to come up with a grand total by doing the sums by hand with the ten-digit numbers of “stolen” rubles, and then converting them into dollars, we lost nearly 10 billion! By the way, this unintentional mistake is more likely to the benefit of the defense, because according to the clarification made by the Procuracy-General, the charges look even more insane than they had seemed at first. It is not by accident that this time around, the procuracy has not only not published the bill of indictment on its site, it has even undertaken harsh measures to protect the “secrecy of the investigation”, figuring that it would be able to preserve its monopoly on informing the public by requiring defense counsel to sign statements of non-disclosure of the data of the preliminary investigation.

However, it is not just we, but the procuracy too that has troubles with elementary mathematics (albeit with large numbers). In actuality, the procuracy has charged Khodorkovsky, Lebedev, and another ten YUKOS managers with theft by means of misappropriation (Art. 160 (3) CC RF) of 147,187,184,248 metric tons of crude oil in the period 1998-2000 from OAO «Samaraneftegas», OAO «Yuganskneftegas», and OAO «Tomskneft» VNK, with a total value of 492,486,604,892.92 rubles, and of 202,214,394 metric tons of crude oil in the period 2001-2003 from these same companies, with a total value of 811,549,054,000.00 rubles.

By summing these numbers, we get a total value (in the procuracy’s opinion, naturally) of oil stolen in 1998-2003 of 1 trillion, 304 billion, 35 million, 658 thousand, 892 rubles and 92 kopeks. Excuse me, but this is 454 billion rubles more than in the official information from the procuracy. Perhaps the procuracy allowed this “error” in an attempt to preserve the secrecy of the investigation?

In this statement, we are not setting ourselves the task of showing the complete groundlessness of the charges. This will be done later, and moreover with the involvement of the most authoritative specialists in the given sphere. At the same time, the public needs to know where these astronomical “theft” and “legalization” numbers come from, numbers that are not only several times greater than the company’s profits for the period indicated, but are also – as many observers have rightly pointed out – the planned costs of all the National Projects. They are likewise comparable with Russia’s annual budget at the beginning of the 2000s.

These numbers have no relation whatsoever to the real state of affairs, and they have emerged as the result of several arithmetic operations carried out in the comfort of an office. The investigation has declared stolen all the crude oil produced by YUKOS’s upstream subsidiaries – OAO «Samaraneftegas», OAO «Yuganskneftegas», and OAO «Tomskneft» VNK – and has calculated its value (i.e. the value of the “theft”) at world market prices.

What does it matter that far from all the crude was sold on the external market, inasmuch as the normatively established export quota comprise only 30% of production? It is all the same to the procuracy that a market as such did not exist inside the country, where the bulk of the “stolen” crude was sold, and that prices were significantly lower than world market prices.

In actuality, there was no theft at all, even though the sale price to the end user within the country was higher than the so-called transfer price at which YUKOS acquired the crude from its production subsidiaries. The use of such prices was absolutely legal, based on the norms of civil and tax legislation. They were used – and continue to be used to this day – by all of Russia’s large oil companies, including the state-owned «Rosneft». We will not explain the specifics of price-formation mechanisms within vertically-integrated companies here. We will only note that all purchase and sale transactions were reflected in the reporting of both the “mother company” and the subsidiaries. Indeed, the reports were received by every shareholder, even minority shareholders, who knew about the true state of affairs in this way, and had the right to take legal action in commercial [arbitrazh] court in the event of disagreement with the sales price.

As is known, in the first case of M.B. Khodorkovsky and P.L. Lebedev, the purchase by YUKOS of crude oil from subsidiary enterprises through the creation of companies in regions with preferential taxation and its sale at higher prices was not regarded by the investigation as theft. They discerned only tax evasion in these operations. So why then has the Procuracy-General now decided to select another route, having made a contrived charge of misappropriation? The answer is simple. First, the punishment for misappropriation (Art. 160 CC RF – up to 10 years of deprivation of liberty) is higher than for tax evasion (Art. 199 – up to 6 years). Second, (and this is the most important one), Article 199 of the CC RF precludes the possibility of a charge of legalization of criminal income (Art. 174-1 – up to 15 years), while Article 160 offers such an opportunity.

As concerns the “theft of shares owned by the state”, we will say very briefly: what we have here is an attempt with improper means, inasmuch as in actuality, on the basis of decisions adopted at a high official level, the supposedly stolen VNK shares had been temporarily transferred to YUKOS under a bilateral transaction, and were returned to the state in 2001. There were no claims against YUKOS from the State Property Committee or the Russian Federal Property Fund. And inasmuch as there was no misappropriation, the charge of legalization falls away by itself.

It is known that the Procuracy-General of the RF had intended to file the new charges back in June of 2005. However, apparently having weighed all the pros and cons, the power changed its mind at the last moment, understanding that the negative political consequences of a second case would be unjustifiably great.

So what has forced it to change its previous decision today? We believe that there are several reasons for this. No doubt the possibility of the early release of the convicts on parole played its role – and in a year of elections to the State Duma no less. A possibility that had become particularly real when the court of the city of Krasnokamensk ruled one after another that three of the four reprimands that had been laid on Khodorkovsky had been unlawful. Of course, the power could have continued its attempts to make a malicious violator not eligible for early release out of him, but the groundlessness of the claims of the colony administration had become so obvious that 100 members of the European Parliament and the chancellor of Germany came out with an open protest against this. New charges and a new measure of restraint eliminate the problem of early release…

But the main reason most likely continues to be that YUKOS – battered and eviscerated, although still possessed of no small measure of assets – has not only not stopped fighting, but has carried the struggle over to international judicial instances, where its chances of success are evaluated as sufficiently high. And the power is taking this very seriously. One after another, the necessary stages are being gone through on the way towards consideration of the applications of Khodorkovsky and Lebedev themselves in the European Court of Human Rights. So, the opening of a new case on new charges can easily be considered a counter-move by the power, and regarded as an attack for the purposes of defence, of holding on to “captured positions”.

We have already declared on numerous occasions that the proceedings in the case have been moved to Chita – a city located 6500 km from Moscow – first and foremost in order to remove it from the control of the public and the press, to muffle public reaction in our country and abroad. It is plain that such a decision could not have been adopted on the initiative of either investigator Karimov or even Procurator-General Chaika himself. In the given situation, the procuracy – an organ called upon to implement oversight of compliance with legality – has carried out the unlawful directives of the Kremlin with a lackey’s zeal.

Pursuant to Art. 152 of the CCP RF, a preliminary investigation shall be carried out at the place where the criminal act was committed. If several crimes have been committed, then the case shall be investigated at the place where the most severe of these was committed. The bill of indictment names Moscow as the place of commission of the crimes, including the most severe one – legalization of stolen funds.

An exception is permitted from the general rule established by the CCP article mentioned above: an investigation may be carried out at the place where the accused is located “with the aim of ensuring fullness, objectivity, and compliance with procedural deadlines”.

And so, in order to conduct a preliminary investigation not in the place where the criminal act was committed, two conditions must be met concurrently. At the same time, according to the sense of the norm, the “place where the accused is located” bust be some objective reality, and not an artificially created circumstance. In the given case, the “place where the accused is located” was determined completely arbitrarily, contrary to the sense of the law, in exactly the same was as previously, the place where they were to serve their sentences was determined contrary to the sense of the law.

On 14.12.06, investigator Karimov issued – and Deputy Procurator-General V.Ya. Green sanctioned – a decree on the transfer of Khodorkovsky to the investigative isolator of the city of Chita from the city of Krasnokamensk, and of Lebedev from the settlement of Kharp of the Yamalo-Nenetsk Autonomous Okrug. They could just as easily have been transferred to Magadan, Yakutsk, Anadyr, or Petropavlovsk-Kamchatsky, with a subsequent declaration of any of these cities as the “place where the accused is located”, with all the consequences deriving therefrom.

The preliminary investigation with respect to the present case has been conducted by an investigative group of the Procuracy-General of the RF since the year 2003 in Moscow. All procedural decisions were adopted, interrogations, searches, and seizures conducted, and expert studies appointed and carried out in Moscow. The decree declaring Khodorkovsky an accused was issued in Moscow as well. And although all the petitions and complaints in which the defense insisted on the conducting of investigative actions with the participation of Khodorkovsky in Moscow were denied, not a single document denied the fact that the investigation was being conducted in the city of Moscow.

Not wanting to admit the true reasons for the transfer of Khodorkovsky and Lebedev to Chita, the investigation nakedly asserts that the transfer was carried out precisely “with the aim of ensuring fullness, objectivity, and compliance with procedural deadlines”. In actuality, this assertion is just as much a lie as the long-ago declaration by FSIN director Kalinin about how there were no free places at a single colony closer than Krasnokamensk at the moment Khodorkovsky was sent to serve his sentence.

In Chita, there are no special (indeed, there are none at all) conditions to ensure the “fullness” of the investigation, inasmuch as there is absolutely no evidence whatsoever subject to being gathered with respect to the given criminal case in the given region. Nor is it clear what “objectivity” is ensured by conducting the investigation in Chita, and why such objectivity can not be ensured someplace closer. As concerns “compliance with procedural deadlines”, everything here is exactly the other way around. All the materials that the investigation has presented to Khodorkovsky in the investigative isolator of the city of Chita has been shipped in from Moscow. And the members of the investigative group themselves regularly come in from Moscow on assignment. Taking into consideration that the lawyers of the accuseds are likewise forced to fly a great distance, they can not react promptly to a change in the schedule of investigative actions or substitute for one another in the event of unforeseen circumstances. As a result, it is not always possible to conduct the investigative actions on the days they are planned. It is obvious that this not only does not promote “compliance with procedural deadlines”, quite the opposite – it places them under threat of disruption, which would have been precluded were the investigation being conducted in Moscow.

On 3.02.07, investigator Karimov in Moscow issued two decrees: on declaring Khodorkovsky an accused and on the initiation of a petition on the selection of a measure of restraint in the form of detention. This petition was directed to the Ingodinsky Court of the city of Chita. On that same day, Deputy Procurator-General of the RF V.Ya. Green issued a decree on the determination of Chita as the place of the preliminary investigation. Until then, as is said above, the investigation was being carried out in Moscow, and only “investigative actions with Khodorkovsky and Lebedev” were being conducted in Chita.

So why was it that in the fourth year of investigation, a decision was adopted on changing the place where it was being conducted? The answer is right on the surface. Pursuant to Art. 108 of the CCP RF, a petition on the selection of detention in the capacity of a measure of restraint shall be considered “at the place where the preliminary investigation is being carried out”, that is not in Moscow, as it had been until 03.02.07, but in Chita.

In such a manner, yet another reason to permanently tether this case to Chita was created, artificially and completely arbitrarily. We have every reason to assume that the plans of Khodorkovsky’s persecutors are not limited to the conducting of just the preliminary investigation here. They clearly intend to hold the main trial itself in Chita as well. Or maybe even further away – in Krasnokamensk, where an investigative isolator is being erected with shock-worker tempos on the territory of correctional colony IK-10. This will signify the ultimate trampling on all the rights of accuseds guaranteed not only by the laws and international treaties of our country, but by the Constitution of Russia as well.

The remarkable coordination of the actions of the Procuracy-General and the “independent” judiciary is worthy of note. At a time when the procuracy is grossly violating the rights of Khodorkovsky and Lebedev, completely ignoring the petitions and appeals of the defense, or substituting responses on the merits with motiveless runarounds, the Basmanny Court of the city of Moscow “loses” a complaint against the unlawful transfer of Khodorkovsky to Chita, which by law must be considered during the course of 5 days from the moment of submission. True, three weeks later it is “found”, but the sense of considering it has completely disappeared, inasmuch as the lost time has turned out to be just enough for the filing of new charges against Khodorkovsky and the consideration of a petition about the selection for him of a measure of restraint in the form of detention in a court of the city of Chita.

The press has written much about how the consideration of the petition took place, how the blocks adjacent to the court were literally put under a state of siege, how snipers were stationed on the roofs of the buildings next to the court building. There was even one story on television about this. We would like to add to this picture with some unknown details.

On 5 February, the investigation informed us that the court session for consideration of the petition on the selection of a measure of restraint would take place at 14:00 on 7 February in the investigative isolator. Naturally, the defense passed this information on to the press, commenting on the proposed consideration of the case in the SIZO as yet another violation of the rights of the accused. At 10:00 in the morning on 7 February, when one of the lawyers arrived at the Ingodinsky District Court in order to familiarize himself with materials presented by the investigation, the judge, in the simplicity of her soul, said that she didn’t know yet (!) where the session would be taking place, and asked that he phone her at one o’clock in the afternoon. At one o’clock she announced that she would be considering the case in the court building. It is absolutely appropriate here to ask who in fact had adopted the decision and reported to the independent judge where the case ought to be considered?!

The conducting of the preliminary investigation – and quite likely the trial as well – in Chita has a minimum of one other purpose: the create additional difficulties for the accuseds in putting up a defense. (There is no sense in talking about the difficulties that this creates for the lawyers, although it is easy to imagine what sadistic pleasure our opponents experience from the fact that the lawyers, among whom are people who are no longer young and some who are not in the best of health, are being forced to waste time and effort on flights many hours in length and on adapting to the local time – six hours difference with Moscow – and to continue working after the end of the work day in hotel rooms, in conditions not adapted for this, in the absence of the necessary literature and office equipment).

Considering the complexity and the scope of the case, we are forced to divide up spheres of responsibility. We need to consult with specialists and search for additional materials that do not exist in Chita, and for this reason were forced to establish a rotation timetable for our journeys. All of this reflects negatively on the rights of our client, who does not always have the opportunity to get the legal assistance he needs at a given moment. At the same time, we need to regularly inform the client and one another of the work we have done and to adopt joint decisions. We end up having to do all of this by telephone or with the use of electronic mail, which creates the opportunity for unlawful control on the part of interested parties.

The further conducting of the preliminary investigation – and perhaps the trial as well – in Chita is fraught with an aggravation of the violations of our client’s rights. We are forced to turn to all people of good will with a request to demand that the Russian authorities cease violating Khodorkovsky’s rights and, first and foremost, transfer him to Moscow and conduct the process in compliance with all the norms of fair judicial proceedings.

Lawyer Yu.M. Schmidt

Moving the furniture around isn’t the same thing as remodelling

Grigory Pasko, journalist

On my recent trip to Vladivostok, I made the acquaintance of Michael Johnson, an American environmentalist, researcher of the Russian hinterlands, and expert on the “mysterious Russian soul”. Michael told me right off the bat that he reads Robert Amsterdam’s blog and the articles I write for it. I was flattered. And curious, so I asked him what exactly he liked. Turns out, it’s the fact that I have my own opinion, which occasionally differs from the opinions of many others.

Knowing that Michael will certainly read this next article, I’ve got to issue a warning immediately: Michael, disappointment awaits you this time around. On the subject of the cabinet reshuffle in Putin’s government, only a true grovelling toady could possibly make the mistake of saying all kinds of garbage about the “far-sightedness” of the “peerless” president when the true essence of the events is clear and evident.

But for starters, Michael, let me relate the following story. Once upon a time, in the call of duty and not because I was particularly curious, I had to go visit one o my subordinates in his home. He met me with open arms, sat me down on the sofa, and asked me: “Well, what do you think of our remodelling?” I said something appropriately vague and polite in reply, although in actuality, even at point-blank range, I honestly didn’t see any change in the appearance of his tasteless living room. But he simply wouldn’t let go of the topic, and eventually I couldn’t take it any more and asked him: “Are you poking fun at me or something? What the hell remodelling are you talking about?” And he explained: “I’ve moved the furniture around”, he said. Then it was my turn to explain to him that absolutely NOTHING had changed for the better from HIS moving HIS furniture around in HIS apartment!

…Of course, president Putin very literally, in the true sense of the word, saved his pal Ivanov from further disgrace for the state of affairs in the Russian military (Although I’ve got serious doubts that the concepts of “honor, disgrace, conscience” are in use among the so-called “former Chekists”). Of course, there was no necessity for the interests of the state in such a castling maneuver. Of course, this can only be seen as a continuation of president Putin’s pre-election hustle and bustle. And, of course, this will not reflect in any way whatsoever on the state of the economy or on the efficiency of the government’s work: the “apartment” of the Russian state remains as shabby looking as ever. Because the furniture shouldn’t just be moved around – it needs to be removed completely and thrown away. Hopefully on the garbage heap of history.

And that’s all I have to say.

Today the Russian procuracy provided the world with yet another reminder of its near-total inability to administer justice during the first proceedings (jury selection) of the retrial for the suspected murderers of Forbes bureau chief and corruption muckraker Paul Klebnikov. However, the judge had to suspend proceedings until March because the two main suspects, Kazbek Dukuzov and Musa Vakhayev, were nowhere to be found (it is quite puzzling that these two men have been spending the past three years freely wandering the streets).

Many of you will recall that after Klebnikov was brutally murdered in front of his office on July 9th, 2004, the Russian authorities conducted a notoriously sloppy investigation followed by a rushed trial under judge Vladimir Usov (the same judge who sentenced Alexei Pichugin) which found the defendants not guilty. Last November, the Supreme Court overturned the acquittal, however the problem of transparency in the court proceedings persists, and the Russians have been very stubborn in persuing other lines of inquiry outside this particular group of Chechens.

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Paul Klebnikov, a brave and honorable journalist whose memory deserves justice

The IHT quotes Paul's brother, Michael:

"We continue to think that the best way for this to be done — for it to be just and fair — is to do it openly," he said by phone from New York, where he lives. "Secondly, we have a question of why they were not in custody in the first place. They are murder suspects."

And here's what the Committee to Protect Journalists has to say about it:

Authorities failed to guarantee the safety or impartiality of jurors after the proceedings, sources close to the trial told CPJ. Jurors were not sequestered and could be readily approached entering or exiting the courtroom. The then-presiding judge, Vladimir Usov, and other court officials, did not stop the defendants or some defense representatives from making threatening statements in court that could have affected the jury, a CPJ source said. Those and other allegations of procedural violations raised doubts about the validity and fairness of the trial.

"We call on Russian court officials to hold an open trial," CPJ Executive Director Joel Simon said. "The first trial was riddled with procedural violations that were hidden from the public with closed-door proceedings and a gag order on all participants. We call on Russian court officials to open the hearing to the public to ensure a fair trial.”

For four months following the May 5 verdict, court officials effectively blocked the Klebnikov family’s appeal to the Supreme Court by failing to provide them and their representatives with a transcript of the trial proceedings, which they needed to prepare a detailed appeal. Since the trial proceedings were sealed, and audio and video recording in the courtroom was prohibited, the transcript was the only document detailing the hearing. Russia’s Law of Criminal Procedure requires that access to the transcript be given to the plaintiffs within three days. The Klebnikovs filed their request for access in May and received the transcript in September.

Six months after the verdict, on November 9, 2006, Russia’s Supreme Court overturned the acquittal of Dukuzov and Vakhayev and ordered a retrial. Even then, court officials stalled the process by waiting over two months to set a start date for the new trial, and by failing to take the two suspects in the pre-trial custody, CPJ sources said. Dukuzov and Vakhayev were not in custody on Wednesday and it was unclear whether they would be present in court for the trial’s opening.

The Silence of the Ambassador

Grigory Pasko, journalist

Before we start, imagine the following situation: A person was walking down the street. He was attacked and beaten, and his wallet and gold watch were taken. Then, this watch was put up for sale. A certain Enio was invited to this sale. Enio knew where the watch had come from and how it had ended up being put on sale. But he told himself and others “I have long dreamed of such a watch; my participation in the transaction is purely commercial, no politics involved.” And, he bought the watch.

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Vittorio Claudio Sudro, Italian Ambassador to Russia

I recently approached the Italian ambassador to Russia, Mr. Vittorio Claudio Sudro, and asked if he would answer three questions for me. Here they are:

1. In recent times, certain mass media have been spreading information about how the Italian energy company ENI is interested in buying “Yuganskneftegas”. Then these rumors were even partially confirmed by the company’s management: the chairman of the company’s management board, Vittorio Mincato, declared that he is interested in the Russian market in principle, but under the condition that controlling blocks of shares are acquired or if there will be an opportunity to implement entrepreneurial control. Then ENI’s interest was confirmed in the Italian Ministry of Industry. A representative of this agency likewise declared that Italy has an interest in the purchase of the assets of Russian companies. In addition to this, there is information that «Gazprom» is planning to buy the assets of YUKOS through German banks and Italian companies.

How can you comment on this information?

2. As is known, Vladimir Putin had especially warm relations with the former premier of Italy, Silvio Berlusconi – the only political figure in the EU who publicly supported the Russian president in the “YUKOS case”. How does today’s Italian leadership assess Russian policy in the realm of trade in hydrocarbons on the European market? The situation with the sale of YUKOS assets? Do you agree with the point of view that if an Italian company goes forward with a deal with «Gazprom», then it will have to take into consideration all possible political risks associated with the purchase of “Yuganskneftegas”?

3. The Committee on Legal Affairs and Human Rights of the Parliamentary Assembly of the Council of Europe approved a report on the “YUKOS case” prepared by former German Minister of Justice Sabine Leutheusser-Schnarrenberger. In its Resolution, the Committee noted that the circumstances of the arrest and indictment of YUKOS managers allow one to assume that they had been “arbitrarily selected as targets” in violation of the principle of universal equality of rights before the law.

In connection with this, could you give concrete examples of the participation of Italian society and politicians in helping Russia to follow a democratic path of development and observe human rights?

After receiving these questions from me, Mr. Guido de Sanctis, a representative of the Italian embassy in Moscow, promised to get in touch with the ambassador and to answer my questions. However, even after three days, he had neither telephoned me nor answered my questions. I eventually was able to find Mr. de Sanctis and ask him if the ambassador would be able to answer my questions after all.

It seems that the embassy counsellor wasn’t expecting such persistence on my part and really didn’t want to talk about this topic. He said literally the following: “Unfortunately, we can not answer your questions, and the ambassador himself said this. Everything is too detailed with you. We do not possess information of this kind and do not know it to such an extent. Call the ENI representative office in Moscow, but I don’t know their number.”

I managed to convince Mr. Guido de Sanctis to try and look a bit harder for the company’s telephone number. Surprisingly, he found it quite quickly. I phoned the company, and was told there that only in the Rome office of the company would they be able to answer a question about ENI’s participation in the purchase of YUKOS assets. I phoned a representative of the ENI press service in Rome, Mr. Gianni Di Giovanni, the Head of External Communication. His secretary wrote down my question and asked me to call back later. But Mr. Di Giovanni didn’t pick up the phone later, nor did he pick it up later than that. The telephone of Erika Mandraffino (Financial and International Media Relations) was silent as well. Now I’m getting worried: maybe something had happened to these ENI employees – even long before the sale of the YUKOS assets?

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A journalist acquaintance of mine who has a good knowledge of Italy, its mentality, the workers of the Italian embassy in Russia, and apparently the principles of Italian politics, told me that I ought to have expected just such a development. “The Italians are very cautious in such matters. They’re afraid of losing profits, even if gaining them is connected with some kind of murky affairs. Someone else might be able to walk away from a shady deal even if it means taking a loss. But not the Italians.” That’s how he explained the situation with the reluctance of the Italian ambassador to answer my questions, which I didn’t think were that complicated at all.

(Enio would no doubt buy the gold watch even knowing that it had been acquired in a mugging).

…By the way, I did say to Mr. Guido de Sanctis that the ambassador’s unwillingness to answer my questions was also an answer in its own way.

But it is hard to understand a position according to which a vague refusal to answer completely innocent questions ensues. Let us assume that Ambassador Vittorio Claudio Surdo really can’t or doesn’t want to know the plans of Italy’s largest oil company. Or he doesn’t want to or can’t comment on the upcoming sale of YUKOS assets (after former premier Silvio Berlusconi, who was the only one in Europe to openly support Putin’s policy in persecuting Khodorkovsky).

But why did he refuse to provide concrete examples of the participation of Italian society and politicians in helping Russia to follow a democratic path of development and observe human rights? That doesn’t make any sense. After all, I, for example, know well that many Italians have been deeply moved by the death of Anna Politkovskaya. For them it was the same as the death of a person they know very well, their next-door neighbor or someone who lives across the street. For them, it has already been clear for a long time just who Putin is. I don’t understand, does the Italian ambassador knows about this?

But then another thing is understandable: why the mass media are interested in ENI’s possible participation in the purchase of YUKOS assets. Because many regard the point of view of certain experts, according to which any bank, any company, anywhere in the world, should avoid participating in something that is an egregious and systematic violation of human rights, lest they find themselves in the expropriation business.

There are grounds to assume that ENI might go forward with a deal together with «Gazprom». It is known that last year, «Gazprom» and Italy’s ENI had signed a strategic partnership agreement. Within the framework of this agreement, «Gazprom» will extend the term of current contracts for the delivery of gas to Italy from 2017 to 2035. In addition, it will get the opportunity starting next year to implement direct deliveries of gas to Italian end users; the volume of these will rise to 3 billion cubic meters by 2010.

In addition to all this, analysts are noting the likelihood that ENI will take joint part with «Gazprom» in the acquisition of YUKOS’s oil-and-gas assets, which will very soon be put up for sale at auction. The Italians are hoping to be invited as contractors on the development of the gigantic Shtokman field. On top of that, ENI, which not that long ago took part as a subcontractor on the construction of «Gazprom’s» “Blue Stream” pipeline to Turkey, is apparently counting on an expansion of cooperation in this promising area.

…Enio has long dreamed of a gold watch. Even if it is stolen.

In this week's Economist:

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In their early enthusiasm for Mr Putin, some diplomats clearly made a classic error in Western thinking about Russian leaders: wishful thinking. What some saw as a strategic choice for partnership with America seems, for the Kremlin, to have been instead a tactical alliance. In return for what the Russians saw as concessions—tolerating America's military presence in Central Asia; swallowing NATO's expansion to Russia's Baltic border—the Russians expected something back. Instead, they feel, there was mounting criticism of their domestic affairs, disdain for their views on Iraq and resistance to the international ambitions of Russian companies.

Mr Putin's assault, from 2003, on the Yukos oil company and its boss, Mikhail Khodorkovsky, helped to bring these resentments to the surface. But the most important watershed came in autumn 2004. After the Beslan school massacre, something in Mr Putin seemed to snap; he denounced unnamed foreign powers that, he said, were intent on weakening Russia. Then came the Kremlin's cack-handed efforts to intervene in Ukraine's presidential election. The Russians saw their defeat in Ukraine as evidence of perfidious American meddling in Russia's sphere of influence. For the Americans, the debacle showed that a truth plain in Mr Putin's domestic policies—that he was not a real democrat—would affect his country's foreign behaviour too.
...
But there are two reasons to fear that the relationship is more likely to get worse than recover. One is what is sometimes called the “values gap”. Mr Putin exposed this gap in Munich, when he aired some very Russian neuroses along with his standard critique of American power. He said the OSCE—an international body that has mildly and correctly criticised rigged elections in some ex-Soviet states—was becoming “a vulgar instrument designed to promote the foreign-policy interests of one or a group of countries.” He again insisted that non-governmental organisations active in Russia but funded from abroad were the tools of foreign governments. In an interview this week with al-Jazeera, Mr Putin made plain the basic conviction underlying these moans: that all American talk about Russia's democratic failings was so much realpolitik. Critics of Russia's human-rights record, he said, “are using this kind of demagogy as a means to pursue their own foreign-policy goals in Russia.”

The other worry is that this gap applies not only to Mr Putin and the other ex-KGB types who make up much of his entourage, but to many ordinary Russians too. General Russian attitudes to America are hardening, and suspicion of American motives spreading, even as American-style comforts and living standards become more accessible. Alexei Levinson, a Russian sociologist, says many Russians exhibit a “deep ambivalence” towards America, which has persisted after communism's collapse.

In fact, admiration and revulsion have always co-existed, albeit in varying proportions: Stalin himself recommended “the combination of Russian revolutionary élan with American efficiency.” In a country whose media is as tamed as Russia's, public opinion is largely formed by government propaganda. But there is evidence—on the streets, as well as in opinion polls—that the crescent nationalism of Mr Putin's foreign policy is catering to the Russian mood as much as shaping it.

From Charles Krauthammer in today's Washington Post:

Is this a return to the Cold War? It is true that the ex-KGB agent occasionally lets slip a classic Marxist anachronism such as "foreign capital" (referring to Western oil companies) or the otherwise weird adjective "vulgar" (describing the actions of the Organization for Security and Cooperation in Europe, which infuriated Putin by insisting upon a clean election in Ukraine). He even intimated that he might undo one of the unequivocal achievements of the late Cold War era, the so-called "zero option" agreement of 1987, and restore a Soviet-style, medium-range ballistic missile force.

Nonetheless, Putin's aggressiveness does not signal a return to the Cold War. He is too clever to be burdened by the absurdity of socialist economics or Marxist politics. He is blissfully free of ideology, political philosophy and economic theory. There is no existential dispute with the United States.

He is a more modest man: a mere mafia don, seizing the economic resources and political power of a country for himself and his (mostly KGB) cronies. And promoting his vision of the Russian national interest -- assertive and expansionist -- by engaging in diplomacy that challenges the dominant power in order to boost his own.

He wants Gromyko's influence -- or at least some international acknowledgment that Moscow must be reckoned with -- without the ideological baggage. He does not want to bury us; he only wants to diminish us. It is 19th-century power politics at its most crude and elemental. Putin does not want us as an enemy. But at Munich he told the world that, vis-à-vis America, his Russia has gone from partner to adversary.

Following Vladimir Putin's reshuffle of his cabinet this week, many in the media have been speculating on what these new appointments reveal about his preferences for a successor.

Yesterday Putin promoted Defense Minister Sergei Ivanov to first deputy prime minister, placed Anatoly Serdyukov (who as head of the Tax authorities was responsible for drawing up the fictional back-tax claims against Yukos) as the new defense minister, and Sergei Naryshkin of Rosneft as deputy prime minister. The promotion of Ivanov puts him on equal footing with the favored candidate and head of Gazprom, Dmitri Medvedev, and places pressure on Prime Minister Mikhail Fradkov, considered a lame horse but not without potential of being installed as a puppet president.

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Does the promotion of hawkish Ivanov serve as a warning to the West?

So what are we to interpret from this cabinet shuffle? I'm actually not inclined to believe that very much has been revealed at all, aside from the fact that Putin is insulating himself with his closest former KGB friends from St. Petersburg. The inner circle is becoming tighter even yet. The promotion of Ivanov serves two immediate purposes in my mind: 1) Just following the Munich Cold War speech, nudging forward the hawkish Ivanov serves as an explicit warning to the West to ease back on NATO, OSCE, and missile defense in Eastern Europe (it is widely assumed that the business community would much prefer to see Medvedev get the presidency, who proved at Davos he can talk the talk with the diplomats). 2) Putting Ivanov on equal footing with Medvedev serves an important PR function - the illusion of some type of competition within this "managed democracy." However like most things happening within the Kremlin, no one can really be sure what any of this means.

Numerous papers are running through all theories, but yesterday Stratfor posted these interesting scenarios:

The key bits of information missing at this time are the status of the two most powerful people on Putin's team: First Deputy Prime Minister Dmitry Medvedev and Prime Minister Mikhail Fradkov. Their fates will determine whether this is a simple reshuffle to prepare for the 2008 presidential election or Putin's final decision on which path he feels Russia should follow.

Scenario No. 1: Medvedev and Fradkov stay in their current positions.

Medvedev and Ivanov are widely anticipated to be the two people to whom Putin plans to transfer power when he steps down as president in 2008. Assuming Medvedev is not dismissed, the two would formally and legally be on equal footing. This would indicate no real change since everyone already sees the two men as trusted confidants of the president -- and already equal in Putin's eyes. Based on current information from U.S. government officials, this seems the likeliest scenario.

Scenario No. 2: Medvedev is promoted to prime minister and Fradkov is fired.

Fradkov has no power base of his own and is a disposable bureaucrat whom Putin installed to absorb and deflect any criticism over unpopular policies. Dismissing him and moving Medvedev into his slot would be very similar to the first scenario, with one exception. Fradkov is not only Putin's bureaucrat, but also belongs to Russian oligarch Mikhail Fridman. If Fradkov is dismissed, it would be a huge blow for the Fridman camp, and would indicate that Fridman's assets -- such as oil major TNK-BP -- could be about to face significant difficulties as Kremlin politics realign.

Scenario No. 3: Medvedev is dismissed.

While this is the least likely scenario -- as of now we have detected no indication of any falling out between Medvedev and Putin; if anything, their relationship is strengthening -- this would indicate that Putin already has decided that the time has come for a far more militarily aggressive strategy for Russian policy, both foreign and domestic, and that Ivanov will be his successor. While Ivanov is a pragmatist, he also leads the country's siloviki faction of national security personnel who want to see Russia re-attain its status as a great power. The appointment of an economist from St. Petersburg -- Serdyukov -- to the Defense Ministry would be intended to serve as a check on the siloviki's power, ensuring that what resources it does manage to access are used prudently.

And in regards to Russia's unusual new defense minister? From ArmsControlWonk:

So who is Anatoly Serdyukov? What are his qualifications for defense minister? I am going to guess he is buddies with Putin.

Serdyukov is an economist. He started his career in St. Petersburg and after graduating college in 1984, he was manager of a furniture store. From 1993-2000 he was deputy manager, marketing director, and general director of a very big furniture company in St. Petersburg. Fast forward through high-level St. Pete tax ministry appointments, a fancy new tax system, and by 2004 he is head of the Federal Tax Service. After reorganization in 2005, he had the power to appoint all the top tax officials throughout the country.

So in summary, the man knows how to collect and enforce those taxes. How a career in tax collection prepares one for military reorganization and foreign policy, I have no idea.

However, it looks like Ivanov will not be giving up his control of significant money channels. AP reports that he will continue to oversee Russia’s arms trade.

A by-lined article by Robert Amsterdam was published in today's San Francisco Chronicle.

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Chevron shouldn't play Russian roulette

Robert R. Amsterdam

Friday, February 16, 2007

The announcement last week that Chevron may be interested in acquiring some of the remaining $33 billion in energy assets from the controversial carve up of Yukos, once Russia's largest oil company, has put the company at the center of a dangerous, high-stakes game involving unlawful state expropriation, political prisoners and serious litigation risks, all of which raise a number of urgent questions for company shareholders to consider ("Chevron allegedly nibbling at Yukos," Feb. 10).

Of primary concern are the enormous ethical and financial dilemmas posed by the next Yukos auction, which represents little more than the fencing of stolen property following the persecution and imprisonment of the former head of Yukos, my client, Mikhail Khodorkovsky. Shareholders should consider not only the risk these stolen assets carry, but also the reason why the Russians have pre-emptively announced Chevron's interest in them (Chevron itself has neither confirmed nor denied participation).

It is highly suspicious that the news about Chevron's possible interest in Yukos came not from either company, but rather from one Russian bankruptcy official, as well as the CEO of state-owned Gazprom, which will likely take home the lion's share in what is sure to be a rigged auction. Announcing this news just four days after new, trumped up charges were applied against Khodorkovsky, the Kremlin appears desperate to use Chevron's good name to paint these proceedings with an image of credibility in response to the growing chorus of outrage from the international community.

The widespread disapproval of the Kremlin's attack on Khodorkovsky and Yukos has reached the highest levels in both Europe and North America, including the U.S. State Department. On Feb. 5, State Department spokesman Sean McCormack stated that "the continued prosecution of Mikhail Khodorkovsky and the dismantlement of Yukos raise serious questions about the rule of law in Russia. ... Many of the actions in the case against Khodorkovsky and Yukos have raised serious concerns about the independence of courts, sanctity of contracts and property rights, and the lack of a predictable tax regime." U.S. Rep. Tom Lantos, D-San Mateo, chairman of the House International Relations Committee, among other members of the House and Senate, has similarly denounced the latest round of attacks on Khodorkovsky and Yukos.

To truly grasp the risk and liability posed by Chevron's possible acquisition of Yukos assets, take a look at the history of the Kremlin's campaign. In a few short years, Russia's largest private taxpayer and most successful and well managed oil company, Yukos, has been brought to the brink of ruin, all because Khodorkovsky made two "mistakes." First, he got involved in politics through the support of opposition parties and civil society NGOs. Second, he threatened state-owned energy companies by out-competing them, advocating a free market for the Russian energy industry and welcoming investments by U.S. partners, such as ExxonMobil and, ironically, Chevron.

The Kremlin's elimination of this political, economic and ideological threat was brutal and lawless. As meticulously detailed in a white paper we released last week, the Russian authorities committed a grave series of violations of Russian law and due process to imprison Khodorkovsky and confiscate his company's assets. They piled on retroactive tax assessments that eventually reached $28 billion - even though that figure meant levying an absurd $8 of tax for every $1 of revenue in 2004. With a straight face, the Kremlin declared Yukos insolvent and, in violation of Russian law, took over the company's core production unit for a fraction of its real value, in an auction riddled with illegalities. This was the biggest theft in the annals of the global oil industry, and it happened in broad daylight.

Now the Kremlin wants what is left of Yukos, and has charged Khodorkovsky with money laundering to serve as a cover. He is accused of laundering an astounding $23 billion -- and supposedly did so by managing to hide those funds from rigorous audits and due diligence by foreign accounting and legal professionals who reviewed Yukos's books to prepare for a major U.S. investment in the company.

Chevron may be eager to be back in the Kremlin's good graces after it suddenly lost out on the bid for the $20 billion Shtokman gas development, and there are a number of other potential development projects that could entice Chevron to overlook this ethical and legal dilemma.

Regardless of how or why the Russians have named Chevron to help endorse this injustice, shareholders need to stand up now and demand more information regarding these potential bids, and urge Chevron's board of directors not to be drawn into a round of Russian roulette with the Kremlin.

Robert R. Amsterdam, partner at Amsterdam and Peroff in Toronto, is international counsel to former Yukos head Mikhail Khodorkovsky. He maintains a blog at www.robertamsterdam.com.

This article appeared on page B - 11 of the San Francisco Chronicle

From the International Herald Tribune:

"The reason is that Putin's true colors were revealed," said Marek Ostrowski, a Polish foreign policy expert. "We Poles are used to Russia trying to split the European allies and the trans-Atlantic relationship. But this time around everyone could sense his arrogance — which is why he provoked little sympathy." ...

Analysts believe that if Putin had been less aggressive, he could have encouraged opposition to the missile shield and Washington's war on terror.

"The thing about Putin's speech was that he never once mentioned shared values, which the Germans love to speak about when they refer to Europe's relationship with Russia," said Franç¸ois Heisbourg, director of the Institute for International Affairs in Paris.

Tellingly, two German cabinet ministers who spoke at Munich, Foreign Minister Frank-Walter Steinmeier and Defense Minister Franz-Josef Jung, did not even refer to Putin's speech.

"Putin's speech was purely and simply about power," Heisbourg said. "Here was Putin saying that Russia was no longer going to be humiliated as it was during the 1990s when it had lost the Soviet Union and when it had to accept the expansion of NATO to its borders. Energy has made Putin powerful, confident and arrogant. It was as if he was saying take it or leave it."

Click here to read our earlier analysis of the speech.

Today the Times of London is running a piece titled "Bizarre Love Triangle" on the relations between India, China, and Russia.

Excerpts:

For decades a powerful trio remained separated by political rivalries, border disputes and atavistic fears. But the meeting in Delhi yesterday of the foreign ministers of India, China and Russia underlined the extraordinary changes forging a powerful new geostrategic alliance. Together with Russia’s 143 million people, the world’s two most populous nations, each with more than a billion, account for about 40 per cent of the world’s population, a fifth of the global economy and more than half its nuclear warheads. The three are fast emerging as the world’s new great powers, dominating global manufacturing, energy supplies and, increasingly, the service sector. And as their societies grow richer and their global reach longer, their interest in asserting their collective economic and political strength becomes ever greater. ... Yet for all their public emollience, the underlying message to Washington is clear: the three countries are challenging America’s status as the sole superpower, and want to build a “multipolar” world. This was reinforced by their emphasis on strengthening the United Nations, feeble as it is. India, China and Russia have far more in common with the US than they are generally prepared to concede, including their concerns about Islamic extremism, which will become an increasingly pressing issue for all three. ... Washington should look with equanimity on this rapprochement. China and India have no intention of sacrificing links with America. Both may act as a moderating force on what seems to be the paranoid resentment coming from Moscow. Both can provide a stable framework for the rapid advance of the Asian region. And all three have a vital interest in securing a predictable trading environment, to enrich their impatient, populous and demanding audiences at home.

Andy at Siberian Light has posted a very interesting interview with La Russophobe today.

Among numerous other comments, she has this to say about Europe's dependence on Russian energy:

15. What changes in policy (if any) do you think the European Union should implement to deal with Russia’s increasing dominance over energy supplies?

Obviously, the EU should diversify and wean itself from the Russian sources of energy as Russia tries to do in this century with oil and gas what it tried in the last century with ICBM’s and tanks. It should view Russia’s clumsy recent actions as a godsend, a wakeup call that a better regime that Putin’s might not have delivered. If the EU moves away from fossil fuels entirely, that would be a big boon to the environment as well. But the EU should also realize that the Kremlin’s power is based on selling fossil fuels to Europe, and this gives the EU considerable power. It should galvanize behind NATO and use that power, especially to tell the Kremlin that places like Ukraine and Georgia are off limits. Russia’s “sphere of influence” stops at Chechnya.

The White Paper is now available in Russian. It can be downloaded in English here, and in German here.

ЗЛОУПОТРЕБЛЕНИЯ ГОСУДАРСТВЕННОЙ ВЛАСТЬЮ В РОССИЙСКОЙ ФЕДЕРАЦИИ: Почему Ходорковский является узником российского государства. Новая «Белая книга» адвоката Роберта Амстердама

Адвокатом Робертом Амстердамом недавно обнародована очередная «Белая
книга», освещающая и тщательно анализирующая нарушения законодательства
и злоупотребления государственной властью в современной Российской
Федерации в связи с политическим преследованием Ходорковского М.Б. и
государственной кражей НК «ЮКОС». В докладе обсуждается
несостоятельность новых обвинений, предъявленых Ходорковскому М.Б. и
Лебедеву П.Л., а также исторический контекст так называемого «дела
ЮКОСа» - откат РФ в направление авторитаризма, произвола, укрепления
«вертикали власти». Теперь этот основополагающий документ предлагается
также и в переводе на русский язык.

Today Le Monde is running Mikhail Khodorkovsky's statement on the front page (download scan here).

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Click here to listen to an RA interview on "To The Point", a news program on KCRW of California.

Is the New Russia Looking More Like the Old?

Vladimir Putin berated the US this weekend in terms that echoed the Cold War. Is the New Russia looking more like the old? We look at Kremlin takeovers of energy and the media. What about the imprisonment and mysterious killings of business rivals and political critics? Plus, Iran denies US charges that it armed Shiite groups in Iraq with armor-piercing weaponry. On Reporter's Notebook, the Dixie Chicks and the politics of pop music.

RA is quoted in tomorrow's Moscow Times:

Gazprom, Norilsk to Bid for Yukos

By Miriam Elder
Staff Writer

Gazprom, Itera and Norilsk Nickel stepped forward Wednesday as the latest interested buyers in the upcoming Yukos auctions, a spokesman for the company's bankruptcy receiver said.

The three Russian companies join U.S. oil major Chevron and ESN Group, an Italian-Russian consortium, in hoping to bid for Yukos' assets. Several other large international companies have expressed interest in bidding, spokesman Nikolai Lankevich said, but he declined to name them.

The final valuation of the assets is due to be completed by the end of February, after which bidding will formally begin, Lankevich said.

State-controlled Rosneft and Gazprom are widely expected to snatch up the bulk of the nearly 200 Yukos assets due to be sold off this year. A preliminary valuation put the assets' value at $22 billion, falling short of the company's total liabilities, which stand at $26.6 billion.
...
Analysts said Rosneft and Gazprom could be aligning themselves with foreign and domestic partners in a bid to avoid the legal mess that marked the battle for Yuganskneftegaz, Yukos' main production unit, in December 2004.

A legal injunction from a U.S. court prompted Gazprom to withdraw its bid for the unit, and it went to a new company called Baikal Finance Group instead. Rosneft took over the group a few days later.

"The fate of the major assets will be decided by the Kremlin, rather than these auctions," Alfa Bank chief strategist Chris Weafer said.
...
Robert Amsterdam, a lawyer for former Yukos chief Mikhail Khodorkovsky, who was indicted last week on new charges, warned: "We will go on a campaign day and night that ensures that any company that buys those assets will pay the price."

Full article.

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Is the bear back?

From Peter Brookes of the New York Post:

So what are we to make of Putin's intimidating broadsides in Munich?

First, the speech was meant as much for domestic consumption as for the Americans/Europeans. Putin has been on a tear to restore Russia's tattered global prestige since becoming president. (Standing up to the West still appeals to some Russians.)

Second, Putin's attack was also meant to signal he wasn't going to brook any nonsense from the United States or his yippy European neighbors on Russia's internal politics or energy dealings. (The good news? Putin's comments may help bridge the Atlantic rift.)

Third, it's evident Russia will pursue an independent foreign policy based on raw national interest. Russia can be helpful, but it can - and will - play the role of spoiler. (This isn't good news on issues like Iran.)

Last, in a way, despite the brushback pitch, we should be grateful Putin clarified Russia's stance. There is no need trying to decipher the often mysterious Russian tea leaves. The message is clear: The Bear is back.

Full article.

Today we are posting an exclusive 9-page PDF of the latest motion filed by Karinna Moskalenko in regards to the ongoing harassment, gag orders, acts of intimidation, false statements, and interference on behalf of the Russian authorities toward counsel in this case.

Given this fundamental disregard for an individual's right to properly defend himself, I believe the conduct of the procuracy of the Russian Federation in this case can be compared to that of an organized criminal group, one whose activities should be condemned by every prosecutorial organization that attempts to uphold the rule of law.

The Kremlin is clearly applying some lessons learned from the first round of attacks on Khodorkovsky and Yukos. Lesson No. 1 - when you want to want to carry out a highly unlawful show trial of a political prisoner, do so out of the public eye. For this reason the upcoming hearings will be taking place in the farthest reaches of Siberia, where the cancellation of a single flight can eliminate all observers (it is a violation of Russian law to hold the hearings in a different venue than the location of the alleged misconduct). Lesson No. 2 - when you want to invent perposterous new charges, make sure the media is barred from the proceedings. For this reason the next round of proceedings will be held inside the Chita Isolator prison facility, which will be able to deny the right of entry to anyone it chooses. Lesson No. 3 - when you want to make these ridiculous charges stick, begin an aggressive campaign of slander against the character of the defendent while at the same time prohibiting his lawyers from discussing the charges. For this reason, the procuracy has forced the Khodorkovsky defense team to sign a variety of strict non-disclosure agreements, which function as gag orders while the procuracy is free to speak to the media openly about the baseless allegations.

If there remains any question whatsoever about the immense importance of Mikhail Khodorkovsky to Russia and the rest of the world, consider carefully the enormous illegitimate lengths that Russian officials have gone to in order to bury the truth, hide evidence, and stifle public debate. If they had a real case to try, none of this would be necessary.

The arbitrary arrests of both Yuri Schmidt and Karinna Moskalenko coming into and leaving Chita, simply to do their job of defending their client, are largely symbolic of the fraud and deception that has come to characterize the Russian procuracy. As someone who has worked under this environment of intimidation and hostility toward lawyers, I strongly urge all those in the legal sector reading these words to contact every professional organization of which they are members to denounce this unacceptable conduct, and demand security and fair treatment toward all lawyers working on politically sensitive cases in Russia.

- Robert Amsterdam

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Bush Downplays Putin's Criticism of US

Washington - US President George W Bush acknowledged Wednesday disagreements between the United States and Russia on key international issues but emphasized the mutual interests the two countries have in confronting international challenges.

Bush's comments were his first public remarks since Russian President Vladimir Putin's harshly criticized US foreign policy at a defence conference in Munich.

'There's a lot we can work together on,' Bush said of his relationship with Putin, pointing to both countries' desire to prevent Iran from developing nuclear weapons.

'It's a complicated relationship. It's a relationship in which there are disagreements,' Bush said at a news conference at the White House. 'But there's also a relationship in which we can find common ground to solve problems.'

Observers of Russian affairs have been quite busy this week discussing President Vladimir Putin's scathing indictment of U.S. foreign policy last weekend at the Munich Conference on Security Policy. I've taken a few days to absorb the comments and consider the international response before posting my analysis.

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No footwear was harmed during the filming of this speech

His comments were angry, blunt, hyperbolic, undiplomatic, and, worst of all, for the most part they were seemingly correct and legitimate grievances. It is a true pity that recent foreign policy of not only the United States but also Europe gives Putin the chance to debate ethics and question the rule book. However, bravado is not the same as leadership, and upon closer examination, one can see this speech as riddled with inconsistencies (as catalogued by Bret Stephens in the Wall Street Journal). For example, Russia could also be accused of many of Putin’s central complaints - being a destabilizing force through numerous arms deals with rogue nations, or disaggregating Germany’s foreign policy through his proxy Gerhard Schroeder.

Predictably, the reactions to this speech are falling into the usual camps - those who think Putin's opprobrium and economy of diplomacy was a sign of oil-fed strength and hubris (the brash entrance of a new global power to the world stage), and those who believe the vitriol was more indicative of instability, pre-election nerves, and fear.

For those who need reminding, I include a video news excerpt and some of the choicest bits of text below. The entire speech transcript can be read here.

VLADIMIR PUTIN: This conference’s structure allows me to avoid excessive politeness and the need to speak in roundabout, pleasant but empty diplomatic terms. This conference’s format will allow me to say what I really think about international security problems. And if my comments seem unduly polemical, pointed or inexact to our colleagues, then I would ask you not to get angry with me. After all, this is only a conference. And I hope that after the first two or three minutes of my speech Mr Teltschik will not turn on the red light over there. ... Incidentally, Russia – we – are constantly being taught about democracy. But for some reason those who teach us do not want to learn themselves.

I consider that the unipolar model is not only unacceptable but also impossible in today’s world. And this is not only because if there was individual leadership in today’s – and precisely in today’s – world, then the military, political and economic resources would not suffice. What is even more important is that the model itself is flawed because at its basis there is and can be no moral foundations for modern civilisation.
...
Unilateral and frequently illegitimate actions have not resolved any problems. Moreover, they have caused new human tragedies and created new centres of tension. Judge for yourselves: wars as well as local and regional conflicts have not diminished. ...

Today we are witnessing an almost uncontained hyper use of force – military force – in international relations, force that is plunging the world into an abyss of permanent conflicts. As a result we do not have sufficient strength to find a comprehensive solution to any one of these conflicts. Finding a political settlement also becomes impossible.

We are seeing a greater and greater disdain for the basic principles of international law. And independent legal norms are, as a matter of fact, coming increasingly closer to one state’s legal system. One state and, of course, first and foremost the United States, has overstepped its national borders in every way. This is visible in the economic, political, cultural and educational policies it imposes on other nations. Well, who likes this? Who is happy about this?

Putin's rancor and hostility toward the United States in this speech is not as sudden nor as unexpected as many in the media are making it appear, but rather has been slowing building over recent months. First he committed numerous callous gaffes in response to the murder of Anna Politkovskaya, only later to be faced with the accusations following the murder of Litvinenko, and his truculent attitude toward the investigation requests of Scotland Yard. Adding to the unease of the West, the Kremlin continued its policies of energy extortion against both Belarus as well as Royal Dutch Shell (and possibly BP next), and for good measure slapped Mikhail Khodorkovsky with additional accusations so preposterous no creditable institution would even consider the possible merit. After exchanging some tough words over the U.S. installation of missile systems in Poland and the Czech Republic, Putin's speech in Munich represented only the logical extension of this confrontational trend. All of the incidents listed above could have been handled with greater care and deeper cooperation with the international community, but choices were made by the Russian leadership according to strategic expediency.

The aggressive tone of the speech and the fond memories expressed for the days of the Cold War should not have come as a surprise to anyone well versed in the dominant current of thought in the Russian government. In many ways, the politics of the newly empowered Russian state does not have any defined objective to strive for as a society nor any ideological goal (as argued by Perry Anderson in the London Review of Books), and into this vacuum an illusory goal is being constructed to simply lift the state back to an image of great power status, with its horns locked with the United States in permanent detente.

Don't take my word for it, look at the kinds of documents circulating the Kremlin. One seminal document we obtained this past summer entitled "On a Likely Scenario of Actions by the United States Toward Russia 2006-2008", is particularly illustrative of the overwhelming suspicion with which Russia views the United States. Prepared by Valentin Falin and Gennady Yevstaviev, this paper was widely distributed to State Duma deputies last September, and by all appearances, Putin is merely following its recommendations and preparing his foreign policy to defend against these perceived threats. To defend Russia's "sovereignty" and prevent any American influence in its near abroad, the paper argues that democracy, civil society, international law, human rights, and corruption standards are merely points of weakness that the Americans would exploit to create another Orange Revolution. This paper epitomizes the unfortunate perspective that many high-ranking Russian officials hold toward genuine political competition and open societies - rather than ideal goals to pursue they are seen as security threats (threats to their grip on power, anyways).

So with this in mind, we can turn back to Putin's speech in Munich. To what audience were these messages meant to be communicated? Clearly, if the president is being honest, and truly desires a Cold War international atmosphere over the flawed but largely functioning Pax Americana of “unipolarism,” he must have been sorely disappointed by the tepid reaction of Robert Gates, who saw the cheap provocation for what it was and calmly replied "One Cold War was quite enough." But far more important than the smug satisfaction of giving Uncle Sam a good jab, is considering what Putin would get out of such extreme comments?

It is my view that far from the international confidence and muscle of a president getting fat on oil revenues, this speech was a worrying symptom of weakness, instability, and fear. Challenging the foolish Middle East policies of a deeply unpopular, outgoing president who lacks support even at home may have been an easy way to make some quick friends abroad, but the real audience for this power pageant was Russia itself.

It is incredibly difficult to get a reliable sense of the competing powers within the Kremlin, but there have been numerous indications that with the upcoming elections Putin's influence could be slipping as contenders jockey for position behind Russia's next leader. One of the more popular theories behind the Litvinenko murder mystery is that rogue elements within the FSB carried out the job to force Putin to stay in office. As Russia expert Anders Aslund points out in a new column, Putin realizes he is at the peak of his power:

"...things can only get worse. He no doubt realizes that it would be best for him to resign after two terms, but he has painted himself into a corner. His only apparent option is to stay on as president. Even if Putin were to become chairman of the Constitutional Court and tried to impose his professed "dictatorship of the law," he could not control the country because of insurmountable strife among his former underlings. The fundamental problem is that Russia no longer possesses institutions that can grant legitimacy to any successor."

So really when it comes down to it, it can be argued that Putin has lambasted the United States for undermining global stability as a measure to bolster Russia's own perilous political stability. By attacking the United States with dramatic showmanship and poetic embellishment, Putin may be looking to instill some discipline in his restless ranks, earn some political capital, and buy some time. There are certainly other possibilities, but I would credit the president with knowing that this would be the only guaranteed outcome of the speech.

New New Vasyuki

By Grigory Pasko, journalist

Vladivostok met us with sunny, frosty weather – and an announcement about the arrival of Russian president Putin: he was returning to Moscow from India through Russia’s Far East. The simple and innocent headline in one of the local newspapers read “The magician unexpectedly flew in…”.

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Vladivostok, photo by G. Pasko

The “magician” spoke a whole bunch about the development of the distant fringes of the fatherland and noted that the main task is the construction of… an oceanarium. Only not in that place where the Patroclus cove has spread and into which hundreds of thousands of rubles have already been thrown, but in another – on Russky Island, to which a kilometer-and-a-half-long bridge will need to be built. Also mentioned was the possible holding of an APEC summit in the capital of Primorsky Kray in 2012. And that means we have to start getting ready, create the infrastructure, hotels, roads… All in all, the president promised to allocate 100 billion rubles from the state budget for everything. (Local officials had already started to divvy up this money-pie in their minds, but minister [of the economy] Gref brought them down to earth with his Muscovite commentary: this sum will be earmarked in the budget no earlier than 2010. Which begs the question: when is this money going to be spent, if the summit is supposed to take place in 2012 already?).

It should be noted that together with Putin, the glorious city of Vladivostok was visited by ministers Lavrov, Ivanov, and Levitin, plenipotentiary representative of the president in the Far Eastern District Iskhakov, and Rosneft president Bogdanchikov. Each of them also spoke about something. Minister of defense Ivanov, for example, promised that apartments would be built for military personnel in precisely that place where it was initially planned to build the oceanarium. (I know this place well; my brother, a serviceman, used to live there a long time. It would be difficult to find a more disgusting place to live: the road is bad, it’s far from the center of town, there are constant winds and fogs…). In addition, Ivanov declared the readiness of the ministry of defense to remove all military units from Russky Island. Why specifically an oceanarium on the island? – nobody had any explanation. Here’s what I think: Putin has decided to build himself his latest new residence there. He’ll come by, to inspect the oil pipeline (Bogdanchikov wasn’t traveling with him by chance) that it has already been decided to run all the way to the Kozmino cove, and while he’s here, he’ll also take a nice rest from his heavy labors on Russky Island. Of course, the place is currently heavily infested with military types. Truda cove alone is a fetid pool filled with ships containing oil and fuel that had been sunk in it.

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Vladivostok, photo by G. Pasko

What else did the officials under the leadership of the “magician” talk about? About the need to reconstruct (how many times have we heard this one!) the airport; build a bridge across the Golden Horn cove (I’ve been hearing about this for 25 years already!); build roads and hotels; a nuclear power station, an aluminum plant, and an oil refinery; an LNG plant; light commercial-type planes; a new university… All these vast plans reminded me of Ilf and Petrov’s classic book “The Twelve Chairs”, in which the hero, Ostap Bender, has pie-in-the-sky dreams of creating a world chess capital in the sleepy village of New Vasyuki. Ever since, the term “New Vasyuki” has become shorthand for any hot-air pipe-dream thrown to the winds with words.

I also recalled a session of the security council under the leadership of Putin in December of last year, which happened to have been devoted to problems of the development of Russia’s Far East. They adopted a decision then to create a “commission for the deciding of questions”. There are already dozens of such commissions, but people continue fleeing the Far East as before.

It is noteworthy that the next day after the arrival of Putin & Co., it snowed in Vladivostok. A snowstorm covered all the roads, and life in the city became severely paralyzed. “New New Vasyuki” ground to a halt: none of the stores were open for business, there were constant automobile accidents and traffic jams on the roads, the ferry to Russky Island wasn’t running, and all the planes were grounded. The only thing that moved were all-wheel-drive Japanese cars, the import of which into the country the Putin government is attempting to prohibit permanently.

I asked a local taxi driver what he thought about the construction of bridges to Russky Island. “Morons!”, he replied without hesitation. “Better they should do the road along the Amur inlet and let trucks go on it”. By the way, I’d already heard about the reconstruction of this road from former mayor of Vladivostok Viktor Cherepkov. He’s earned a place for himself in the city’s history by having built several vitally needed roads in the city, which have ever since been known as “the Cherepovsky roads”.

From the latest news in Vladivostok I was told the following: soon there won’t be any Chinese in the city and trade in their goods in the city’s markets and bazaars may cease completely. This has to do with the entry into force of an Edict of “magician” Putin’s on the priority of native vendors at markets. Actually, it’s the Chinese who are the native vendors at Vladivostok’s markets. Since pre-tsarist times, in fact. But in Putin’s times they have become outlaws.

The second news was about the arrests of several businessmen of the city, who were being called everything from “authorities” [a high Russian underworld rank—Trans.] to “bandits” to “mafiosi”. This despite the fact that they still hadn’t gone on trial and nobody had yet proven their guilt. They say that this also has something to do with the oil pipeline: Putin is “clearing the field” for his people from the FSB. There’s simply no place for former local “authorities” in this scheme.

At yet another recent instalment of The Putin Show – his press conference in Moscow – the Vladivostok press asked the president about how he intends to fight the thieves and bandits in Vladivostok.

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Vladivostok, photo by G. Pasko

Putin’s reply was so original that I will cite it partially here:

“I think that we nevertheless must – if we want the citizens of the country as a whole and the population of individual regions to feel that they are a part of the life of their country, their Oblast, Kray, or City – we nevertheless must do this together… Of course, we must intensify and we will intensify various instruments of control, prosecution including criminal prosecution, for unlawful acts. But this will never be enough, if you and we don’t realize, don’t direct society itself into the struggle with this evil. So in this sense, of course, a great deal depends on you”.

I swear to God, Ostap Bender was more convincing about New Vasyuki!

…I flew out from Vladivostok from that same airport that they’re planning to reconstruct. The fact is that repairs there have been going on there permanently for around 20 years already. My flight for Moscow left after a six hour delay. Yet nobody even bothered to announce the reason for the delay, to say nothing of a hot dinner and apologies.

It’s not about throwing money at some kind of needs. It’s about mindset and way of life. If there’s nothing around but vulgar louts and sycophantic minions, state gangsters and a corrupt power, then no amount of money is going to make life in this region any better.

The literary hero Ostap Bender understood this. But does the “magician” Putin understand it? Somehow I highly doubt it…

David McDuff over at A Step at a Time has posted an interesting Stratfor piece on Russia's great power strategy:

Putin now clearly wants to escalate the confrontations with the United States and likely wants to build a coalition to limit American power. The gross imbalance of global power in the current system makes such coalition-building inevitable — and it makes sense that the Russians should be taking the lead. The Europeans are risk-averse, and the Chinese do not have much at risk in their dealings with the United States at the moment. The Russians, however, have everything at risk. The United States is intruding in the FSU, and an ideological success for the Americans in Ukraine would leave the Russians permanently on the defensive.

The Russians need allies but are not likely to find them among other great-power states. Fortunately for Moscow, the U.S. obsession with Iraq creates alternative opportunities. First, the focus on Iraq prevents the Americans from countering Russia elsewhere. Second, it gives the Russians serious leverage against the United States — for example, by shipping weapons to key players in the region. Finally, there are Middle Eastern states that seek great-power patronage. It is therefore no accident that Putin’s next stop, following the Munich conference, was in Saudi Arabia. Having stabilized the situation in the former Soviet region, the Russians now are constructing their follow-on strategy, and that concerns the Middle East.

The latest from Yulia Latynina in the Moscow Times:

On the eve of his visit to Saudi Arabia, President Vladimir Putin told Arab news channel Al-Jazeera that Russia "no longer had any disagreements with Arab countries"; during last Saturday's security conference in Munich, Putin criticized what he referred to as today's "unipolar world," which "bears nothing in common with democracy." In short: With Iran and Syria we haven't any disagreement, but with the United States -- we have.

This wasn't news for the Russian media, but it must have come as a bit of a surprise for those at the Munich conference. Prior to this, the export version of the Kremlin's ideology ran more along the lines of "our friend, George."

The modern world is not unipolar -- it is free.

Complete article here.

Anders Aslund has a good column running in tomorrow's Moscow Times:

Wednesday, February 14, 2007. Issue 3596. Page 9.

Reverse Is the One Way Out of This Cul-de-Sac

By Anders Aslund

A pivotal 12 months lies ahead for Russian politics. According to the Constitution, President Vladimir Putin has to leave office at the end of his second term, in March 2008, and he has maneuvered himself into a lose-lose situation. He needs to stay on for a third term, because his popularity is the key source of legitimacy in current Russian politics. Yet if he prolongs his rule in violation of the Constitution, he will lose his legitimacy.

During his presidency, Putin has systematically diluted the country's nascent democratic institutions. The members of the Federation Council are now appointed, as are regional governors. Formally, the State Duma is still elected, but the parties, nominations, media coverage and the elections themselves are now so manipulated that nobody can take them seriously.

As a consequence, few elements of political legitimacy remain in Russia. Putin's election in March 2004 was the last free election, although the OSCE rightly labeled it not fair. Today, no Russian election can be sufficiently free and fair to lend any credence to the "winner." The Putin regime's profound dilemma is that it has deprived itself of all means to generate political legitimacy.
...
Another reason why a smooth succession is unlikely is that, in the best Machiavellian tradition, Putin has encouraged a maximum of strife between his subordinates to ensure that they cannot collude against him. According to most accounts, the relationships between his underlings are on the verge of open warfare. Whomever Putin chooses as his successor will be seen as a dangerous enemy by his or her colleagues, who will insist that Putin stay.

Putin's top people currently control huge amounts of wealth through state companies. Because they do not officially own these companies, they have to operate through informal contracts, often worth billions of dollars. But they cannot defend these informal contracts in court. People kill for less, and Russia has already seen a regression to the high-level commercial murders of the mid-1990s. Regardless of who takes over, many of Putin's top officials will likely fear the loss of their fortunes and will do whatever they can -- meaning a lot -- to ensure that a real transition does not take place.

The final reason no orderly transition is likely stems from Putin himself. He is notorious for making decisions as late as possible. Inevitably, he will make this final big decision very late, if at all, because he is afraid of becoming a lame duck. In all probability, he will miss the most favorable time to make his exit. His recent statement that he will announce his preference at the beginning of the election campaign presumably means less than three months before the scheduled election date.

Complete article here.

Bret Stephens writes to Putin in the second person in today's Wall Street Journal:

Naglost: Your speech in Munich contained a curious broadside against the Organization for Security and Cooperation in Europe, which you denounced for "imposing a regime that determines how these states should live and develop."

That may not have been the most eye-catching of your comments, but it was the most revealing. Among its other benign functions, the OSCE bureaucracy monitors elections among its 56 members. That never raised an eyebrow until the OSCE raised a red flag over the Ukrainian election of November 2004, which had been rigged in favor of your preferred candidate, Viktor Yanukovych. The OSCE's verdict was crucial to having the results overturned and a new election called. You've never forgiven it. Since then, the OSCE's election-monitoring office has come under a relentless barrage of criticism from your foreign ministry and from other former Soviet republics with questionable democratic credentials, all with the view to putting the monitors under your political control.
...
Naglost: "In the energy sector Russia intends to create uniform market principles and transparent conditions for all," you said on Saturday. "It is obvious that energy prices must be determined by the market instead of being the subject of political speculation, economic pressure or blackmail."

Perhaps you define the words "market principles," "transparent" and "blackmail" differently in Russia than we do in the West. In December, the Russian government offered transparently phony environmental reasons -- "unauthorized tree felling" -- to force Royal Dutch Shell to relinquish control of its $20 billion Sakhalin-2 oil-and-gas project. In January, state-owned Gazprom used the threat of supply disruptions to gain control over Belarus's gas-pipeline network. This month, state prosecutors filed new charges against former Yukos CEO Mikhail Khodorkovsky that will keep him in a Siberian gulag past the 2008 elections. Could you tell us just what might be in store for March?

Things are going according to plan at Sakhalin-1, says ExxonMobil

By Tom Nicholls in Houston

Peak production at Russia’s Sakhalin-1 project of 250,000 barrels a day has been reached and the Russian government is satisfied with the way the offshore oil and gas field is being developed, according to Rex Tillerson, chief executive of project leader ExxonMobil.
“So far everything is going well under our Sakhalin-1 agreements,” Tillerson said on the sidelines of the Cera Week conference in Houston, Texas. “We’re having no issues at this time whatsoever.” He added: “I think they [the Russian government] are happy with our performance.”
There has been some speculation that Moscow would interfere in the ownership structure or contract terms governing Sakhalin-1, after the foreign companies developing the nearby Sakhalin-2 project were forced, late last year, to cede a stake of 50%-plus-on-share in the project to Gazprom.
Sakhalin-1 differs because the consortium already involves a state-owned Russian company – Rosneft, albeit with a stake of just 8.5%. Also, cost overruns at the ExxonMobil-led project have been overshadowed by overspending at Shell-led Sakhalin-2. Cost overruns are a sensitive subject with the Kremlin because, under the production-sharing agreements that govern both these Sakhalin Island projects royalty and tax payments to the state are delayed because the developers are entitled to recoup costs first. Nonetheless, there have been suggestions that the general drive towards greater state control of energy resources in Russia would result in some kind of renegotiation of the terms of the Sakhalin-1 project.
Meanwhile, Tillerson said discussions with China National Petroleum Corporation (CNPC) over possible gas exports from Sakhalin-1 continue, following the signing last year of a heads of agreement for gas sales. However, Tillerson added that the consortium continues to consider other options and is talking to customers in Japan and India. India’s ONGC has in the past expressed an interest in liquefying Sakhalin gas for export.
Sakhalin-1 began producing oil and gas in October 2005, with gas deliveries being made to Russia's Khabarovsk region and oil being exported via the De-Kastri oil terminal on Russia’s east coast.
ExxonMobil's partners in Sakhalin-1 include Rosneft, India's ONGC and a group of Japanese companies. Sakhalin-1’s recoverable resources are estimated at 2.3 billion barrels of oil and 17.1 trillion cubic feet of gas.

Today Michael Economides of the University of Houston and other authors have published an extensive survey of Russian natural gas, concluding that if current trends continue, the country will face a severe gas shortage by 2010. While the authors highly recommend that Gazprom's monopoly be broken and more foreign capital and technology be invited into Russia to help develop reserves, there is a geopolitical dependency on the Russian state's use of its national champion to project political power.

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Some excerpts from the survey:

Gazprom, often referred to as a “state within a state,” holds about one-third of the world’s natural gas reserves and produces about 80 percent of Russia’s natural gas. The remaining percentage comes from independent producers. The company operates 90,000 miles of natural gas pipeline and 43 compressor stations. As the world’s largest producer and exporter, Russia is also a huge consumer of natural gas. The country produces an annual 21 Tcf, consuming 14.5 Tcf and exporting the rest (2002 numbers). Despite the country’s huge reserves, natural gas production has remained essentially flat over the past several years, with a mild production increase (1.3 percent) forecast for 2008. In contrast, oil production has flourished, especially during the Yukos years.

The immediate future of natural gas production in Russia does not allow for much optimism. The overall production decline forecast for Gazprom is quite steep, as shown in Figure 4.

Considering that Russia’s domestic consumption is increasing by 2.5 percent annually, the current demand in Europe, Turkey, and the C.I.S. for up to 325 billion cubic meters, and China’s demand for 38 billion cubic meters, it’s clear that additional sources of natural gas must be found if Russia wants to play a major role in the natural gas market. It’s equally clear that the problem of Russia’s looming gas shortage can only be solved by optimizing existing fields and through the rapid development and production of major fields such as Yamal, Shtokman, and Sakhalin. Obviously, implementing these solutions will require a substantial investment that Gazprom is unable to raise. Making matters worse, the state-owned company indirectly contributes to a continued production decrease by precipitating further government regulations and difficulties for independent producers. These obstacles include:

- Insinuated takeover threats by Gazprom;
- Increased government transportation tariffs; and
- Independent producers’ lack of access to the gas transportation system.

The only real solution to Russia’s looming financial deficit is foreign investment in Gazprom, but this would strike at the heart of its monopoly, and the Putin government does not want that. It is clear that gas production in Russia might have looked very different had the government encouraged independent producers and investors to get involved with Gazprom. One scenario for the potential contribution of independent producers shows a net increase of 100 billion cubic meters per year by 2010.

Investment from foreign companies could, by 2020, help increase production from fields such as Yamal (180 to 190 Bcm per year), the Nadym-pur-Tazovsky area (440 to 445 Bcm per year), and Kovyktinskoye (16 Bcm per year). For Shtokman, foreign investment could allow production to reach 10 Bcm per year by 2010.

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Yearning for the halcyon days of the Cold War

From the Washington Post:

Mr. Putin suggested that the United States was responsible for "a greater and greater disdain for the principles of international law," and that consequently "no one can feel that international law is like a stone wall that will protect them." Tell that to Britain's Scotland Yard, where investigators are unable to pursue their probe of the murder of one of Mr. Putin's critics because the two leading suspects are being shielded behind a legal stone wall in Moscow.

...

Mr. Putin, who has described the collapse of the Soviet Union as a "catastrophe," spoke nostalgically about the Cold War: "We are indebted to the balance of power between these two superpowers," he said. "This was certainly a fragile peace and a frightening one. But . . . it was reliable enough. Today it seems that the peace is not so reliable." With its soaring oil revenue and its hold over European energy supplies, its modernizing nuclear forces, and its willingness to provide weapons and nuclear technology to such states as Iran, Syria and Saudi Arabia, Russia would regain a status such that the United States would be "afraid to make an extra step without consulting." That, anyway, is Vladimir Putin's clearly stated ambition.

George H. Wittman of the anti-terrorism group "Committee on the Present Danger" has a column on Vladimir Putin's Russia today in the American Spectator.

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Excerpt:

Vladimir Putin has chosen in his final year in power to challenge Washington's international political leadership. It is a very calculated move based on his perception that American foreign policy during the later Bush years has so alienated the rest of the world that the time has arrived where Russia once again can become the second superpower -- this time without the Communist ideological strictures.

The Cold War mentality suits best the longtime professional intelligence officer that is V.V.Putin. He is far more comfortable intellectually with the United States as a principal opponent rather than a friend. It's a move only a former Soviet stakhanovite chekist could pull off.

It's a clever but dangerous tactic in the game of realpolitik chess. But the man who once was called "Little Putka" has already shown he is adept at the unexpected gamble. It might be well for him, however, to study the possibility that what he has judged as a chess match may turn out to be Russian roulette.

From the IHT:

President Vladimir Putin of Russia concluded an overnight visit to Saudi Arabia on Monday and then traveled to Qatar, where he and the emir announced plans to explore the creation of a natural gas cartel.

Russia and Qatar are top producers of natural gas. "We do not reject the idea of creating a gas cartel," Putin said, according to a report Monday evening from The Associated Press. "But this initiative requires more study."

European countries import a quarter of their natural gas from Russia and leaders of the European Union have said they do not want to see Russia gain increased powers in this market.

The three-day Putin trip is focusing both on expanding Russia's strategic role in the region and on cementing business ties.

In the Saudi capital, Riyadh, Putin signed numerous memorandums of understanding and met with Saudi businessmen, seeking to encourage bilateral trade and technology cooperation, and even pledging to help Saudi Arabia develop the capability to generate nuclear power.

The Train from Moscow to Russia

Grigory Pasko, journalist

An acquaintance from Vladivostok asked me where I’d been traveling for so long. I quickly replied that I had been traveling on the «Moskva-Rossiya» train. “Sure”, he said. “That sounds about right: Moscow hasn’t been a part of Russia for a long time already”. [The name of the train, which translates as “Moscow-Russia”, suggests that it goes along a route “from Moscow to Russia”—Trans.]
I wanted to answer back that it had simply been a slip of my tongue. After all, I had actually been traveling on the «Moskva-Vladivostok» train, of course. But then I understood that my slip of the tongue had actually turned out to have been true in essence – Moscow really isn’t Russia. Russia is what I saw out the window of the train «Rossiya» between Chita and Vladivostok.

… The train they call «Rossiya» left the Chita station at around 2 in the morning. I stood on the platform waiting for about ten minutes, but at a temperature of 28 degrees below zero Celsius, that was more than enough to chill me to the bone.

I discovered that I was the only one in my compartment on the train. Conductress Marina Vladimirovna said that she doubted anyone would be coming on board before Khabarovsk.

On the morning of the next day, I could already observe the wide open spaces of the Trans-Baikal region. The landscape beyond the window didn’t change for a very long time: dreary gray wooden peasant houses, from which a thin trail of smoke from what was left of the previous night’s wood-stove fires was slowly rising in the early morning light. The houses cool down overnight in the freezing cold, so you need to start up a new fire first thing in the morning. Which is why you could see a strategic reserve of firewood piled up beside every home. Timber, a valuable natural resource, was literally going up in smoke. I can see why the monopoly concern «Gazprom» prefers to sell its gas beyond Russia’s borders, and not inside its own country. But I can’t see why the country’s leadership prefers to allow such a thing to happen. This can be possible only in one situation – if «Gazprom» and the country’s leadership are one and the same people.

In a word, Russia is sitting on the firewood [A Russian phrase meaning “sitting around doing nothing”—Trans.]. And as long as it has forests, that’s exactly what it will continue to do.

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House and firewood

…Meanwhile, at those infrequent stations where the «Rossiya» made a stop, the local populace came out to the train and offered passengers its simple goods: magnolia-vine branches twisted into rings; pirozhki [small baked or fried filled pastries, convenient for travel—Trans.] of unknown provenance that had frozen rock-hard in the cold; vareniki [boiled filled dumplings—Trans.], and boiled potatoes. There were no takers. Maybe they were afraid of the cold, or perhaps they had serious doubts about the quality of the goods on offer.

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Natives selling dumplings

For the most part, the passengers ate what food they had brought with them right in their seats. At any rate, in my three days on the train, the only people I saw in the restaurant car were a group of young people from England traveling to Australia via Vladivostok and Singapore.

I was quite surprised by the meager selection in the restaurant. For example, there were absolutely no dairy products or hot porridge available.

The Trans-Baikal Railroad is 350 kilometers in length. All this time there is nothing but flat land outside the window. They say that soybeans, corn, and barley are grown here… As I understood, life in these parts exists only along the railroad. It is noteworthy an automobile highway runs parallel to the railbed in many places. You can’t look at some sections of it without tears in your eyes. There were four men riding in the compartment next to mine. They were heading to Vladivostok for Japanese cars [As Grigory Pasko has mentioned in a previous article, the majority of cars in the Russian Far East these days are used imports from Japan, brought in through ports such as Vladivostok and then often driven by private car traders to their destination.—Ed.] These men – car-runners – were discussing the road. In places, they said, it is practically nonexistent. I was surprised. How could this be? After all, last year president Putin had announced the opening of a bridge across the Amur River, describing it as the final link in the creation of a Vladivostok-to-Moscow federal highway. “Putin doesn’t drive on these roads”, the men replied to me.

At night we passed through Skovorodino (they say that this is the coldest spot on the whole Trans-Siberian – the temperature can fall to 50 below zero here), Magdagachi, Svobodny… Then we went through Seryshevo, Belogorsk, Zavitinsk, Pozdeyevka, Vozzhayevka, Arkhara, Obluchiye… Many of the names reminded me of my classmates at military school: they had served in these places, the majority of which are nothing but military garrisons. The history of the creation of the railroads of Russia is really the history of the appearance of camps for prisoners and garrisons for soldiers. For example, Belogorsk. This is not simply a station, but a huge garrison, the former headquarters of a deployed army and with a population of around 90 thousand, the second largest city in Amur Oblast after Blagoveshchensk. It is in Belogorsk that the ribbon of steel turns south, towards the Amur and Blagoveshchens.

At the present time, many of the garrisons have already become ghost towns, the military units disbanded. A huge territory of the country was previously at least settled by soldiers. Today, it is deserted and uninhabited here. Guidebooks about Russia don’t write about these places and don’t call tourists to come here and visit. At the same time, this too is Russia. A thousand kilometres. 24 hours on a train. And not a soul in sight.

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“Mari” outside train window

And now a few words about the landscape outside the train’s window. People who know explained to me that “mari” are endless bogs lying on permafrost. Mounds frozen in the bogs in the winter. Berries, mosquitoes, dampness, squishing and sloshing with every step you take in the summer. As one traveler wrote, “the infantry won’t be able to pass and an armored train won’t be able to speed through”. In the writings of this same traveler I found a description of a typical settlement along the rail line. The settlement of Zilovo was taken as an example. Here’s how he described it: “Zilovo is a small settlement on the Trans-Siberian mainline. The houses are wooden, single-story; the streets are dusty; the post office is a wooden hut, ordinarily closed; two or three commercial shops with prices higher than in Moscow; a small river; a large rail yard and a huge station building. Next to the station building is a new but already neglected monument to the combatants of the war, created in honor of the 50th anniversary of Victory. The appearance of the settlement did not instil any desire to remain there to live. Around could be seen sloping mountains covered in forest.”

I have to say that nothing saw through the windows of the «Rossiya» train instilled in me any desire to remain there to live.

…The night before Khabarovsk was marked by two people with whom I was sharing my compartment – a vice-admiral and a major-general – getting drunk. Marina Vladimirovna told me many stories about her work as a conductress on a long-distance train. The majority of them had to do with generals getting drunk. One particular story had me laughing to tears. I then asked Marina Vladimirovna if anything had changed outside the windows in those 30 years that she had been a conductress on the «Moskva-Vladivostok» train. She pondered for a moment, and then replied: “Nothing, really…”.

Fred Hiatt on Garry Kasparov in today's Washington Post:

Putin, who traveled to Munich this weekend to alternately bash and condescend to the West, certainly doesn't seem to worry, and why should he? German prime ministers jump onto his payroll as they leave office. Foreign oil executives thank him obsequiously as he pockets their fields. Political opponents abroad turn up poisoned, neighboring countries are bullied, and Putin pays no price. He sells weapons to Iran, and U.S. officials are grateful that he's not doing worse.

At home, meanwhile, he has systematically neutered anyone and anything that might challenge him: the press, big business, parliament, political parties, governors, mayors, civic organizations. Kasparov, who has helped gather the remnants of opposition from across the ideological spectrum into an umbrella group called Other Russia, admits it's an uneven match.

The regime raided Other Russia's office in December and confiscated all the books and documents it could find. When the group tried to stage a rally, 600 people were detained on their way to Moscow, and the few thousand demonstrators who made it were surrounded by police in far greater numbers. Noting how stolen elections became the focus for popular uprisings in Ukraine and elsewhere, Putin changed election law to make it almost impossible for an opposition candidate to qualify for a spot on the ballot.

"If we have to evaluate our chances today -- slim to none," Kasparov says, noting how the absence of political space constricts any strategizing. "If you're at risk of being mated in one or two, you can't think about pawn structure for the long term."
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Ultimately the regime's vulnerability lies in its basic nature, Kasparov suggests. In the system Putin has created, Kasparov sees elements of feudalism ("local bosses loyal to the top man in exchange for rights to loot the region"), Mussolini-style corporate fascism and old-style KGB brutality. But in the end, "this is not the geopolitical monster of Soviet times. This is all about money. The government is business. It's about Gazprom, it's about Rosneft."

Read the complete column here.

It's bluff

By Derek Brower, Journalist

IF THE last few years of energy relations between Russia and the West have shown anything, it is that the Kremlin's enthusiasm for an expansionist energy foreign policy is matched only by the West's paranoia about it. The latest fuss about the creation of a gas Opec is part of the same story. For good measure, it even includes the bogey country, Iran.

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Ivanov: dropping in to chat about arms, uranium and gas cartels

On the face of it, Russia seems keen on a gas cartel. President Putin said last week that it was an "interesting idea" and one Russia will explore. For governments in Europe already worried about their dependence on Russian natural gas supplies – and Gazprom's apparent willingness to shut down those supplies whenever it gets into an argument with a transit country – Putin's words caused more panic.

Adding substance to the notion of the gas cartel has been a busy few months of Russian diplomacy involving the world's biggest gas powers. Last month, Russia's security council, Igor Ivanov, was in Tehran openly discussing the gas Opec idea with Ayatollah Ali Khamenei. Later this month, Putin will visit Saudi Arabia and Qatar. And in March, all of the potential members of such a cartel will meet in Qatar talk about it.

Those four countries are also the world's wealthiest in terms of natural gas (see table 1). All are members of the Gas Exporting Countries Forum (GECF, see table 4), a body that on paper, at least, looks scary enough to most consumers. The GECF's members control some 73% of the world's natural gas reserves and 42% of its production, according to Datamonitor, a consultancy.

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From Europe's point of view, it all looks ominous, especially given Gazprom's ever-closer relations with Algeria's state oil and gas company, Sonatrach. Between them, Russia and Algeria control almost 40% of Europe's natural gas supply. For some countries, like Italy, the figure is far higher. And, of course, as Europe's own production declines, Russia's and Algeria's share of Europe's gas market will grow.

Calm down
Whether all of this amounts to a concerted effort to create a gas cartel is a debatable. But what we do know is that such a cartel would be a disaster – not just for consumers, but for the main exporters as well. That being the case, the last thing the West should be doing now is ratcheting up any rhetoric that might push these countries even to attempt a cartel.

Such an attempt would fail because a gas cartel is fundamentally unworkable. Why? First, because of the way natural gas is traded, typically through long-term (10- or 20-years) contracts involving pipelines and a take-or-pay commitment from the buyer. Gazprom's strategy in the EU, its main market, has been to pursue such contracts in order to guarantee its own "security of demand", to use one of the company's favourite expressions. Gazprom is not interested in the kind of short-term liquid markets in which cartels are most successful.

The second reason is the difference between oil and gas and the way they make their way to market. Oil produced in the Middle East, Opec's heartland, is exported through a handful of key exporting hubs. When the members agree to shut in exports of oil, the procedure is relatively straightforward. Production in excess of the export quota that the members have agreed on goes into storage. In the simplest terms, shippers who turn up at one of the exporting hubs arrive to find fewer barrels of oil for sale. That pushes the price of oil up around the world.

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The same doesn't happen for gas, not least because no equivalent spot market for gas exists, and its markets are still local, not global. That could change one day, if the liquefied natural gas (LNG) sector develops into the short-term market many expect. But the volumes of LNG shipped in one trade – some $30m or more worth of gas – are so large that they make liquidity in that market difficult. And for the time being, most LNG is tied up in long-term contracts. Furthermore, if exporters were to manipulate that market, they would need to shut in output from LNG liquefaction trains – or keep tankers loaded with LNG afloat for as long as any quota restrictions exist. Again, difficult.

There are other market and infrastructure reasons why the cartel couldn't work. But the main one is political. Whose interests would it serve? Iran seems to be the most enthusiastic promoter of the cartel. But its exports are marginal – despite its wealth of reserves, Iran isn’t even in the top 10 of exporting countries (see table 3) – and all of them go to Turkey. As Turkey is over-supplied with natural gas, Iran can't even manipulate that market, never mind anyone else’s. Saudi Arabia? It doesn't export any gas and has no plans to do so. Riyadh is more interested in developing its domestic gas market so that it can increase oil exports. Qatar will soon become the world's largest LNG exporter and could theoretically play the role of swing-producer in world LNG markets. But its policy has been staunchly supportive of consumer countries. It likes long-term contracts. Of the countries that are said to be interested in the cartel, that leaves Algeria.

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If we exclude the possibility of persuading Norway – never an enthusiastic participant in these kinds of bodies – to join a cartel, joint cooperation on prices between Algeria and Russia could still be a serious problem for consumers in Europe. Withholding sales in order to increase prices, the nuts and bolts of the cartel business, would mean breaking existing contracts and damaging Europe's economy.

One could argue that such a situation would do Europe a favour. Although Brussels has identified the continent's main energy security problem – over-reliance on Russian supplies – it has not yet found the political will to do anything serious about it. Faced with a cartel, it would.

That, though, is exactly why Russia will not pursue it. Why would it? Russia's method of making money through exports relies on volume, not price, points out Datamonitor. So it would have little incentive to withhold exports in order to help smaller members of a cartel. And, in any case, Gazprom has Europe exactly where it wants it: addicted to Russian gas and asking for more. Forcing Europe to examine that addiction properly would not be in Moscow's interests – and Moscow, whose energy foreign policy remains light years ahead of Brussels' – knows that.

If that's true, then why are Russia and Iran talking about a gas Opec? For one thing, keeping consumers on their toes has been good for Russia so far. The notorious "gas war" with Ukraine in 2006 has encouraged European politicians to cut their own bilateral deals with Gazprom. That is what the Russian monopoly wants. Talking up a gas Opec helps to remind consumers of who their supplier is – and how much power it has. And so Russia will continue to deny its interest in forming a cartel – as its energy minister, Viktor Khristenko, did again on Friday – but it will also continue to allow its spectre to hang over its relations with consumers. It's good for business.

Poor old Iran

But the biggest loser behind this facade is not the West. Consumer countries need only call the bluff of the cartel-hopers. The real victim is Iran, which seems genuinely to believe that Moscow is seeking some kind of alliance with Tehran. It isn’t.

Russia understands that Iran is the only country that could eventually challenge its pre-eminence in the gas world. So its strategy is to keep Iran from realising its potential as a gas exporter. It does this in two ways. First, by supporting Iran's nuclear ambitions. Russian gains from that twice over: it can sell technology to Iran at the same time as it ensures that Iran will remain the international bogeyman. The second part of that is crucial to keeping Iran under sanctions and, therefore, badly needed Western capital out of the country's gas sector.

Russia's second method is to sew up countries like Armenia and Turkey that could become future transit states for Iranian gas (to read more about that, go here).

That rivalry with Iran is why, despite the kind words, Moscow is unlikely to endorse any kind of genuine alliance in the gas sector with Tehran. And without Russia, the gas Opec would be stillborn. Instead of worrying about a new cartel, governments in the West – and especially Europe – should remind Russia that its future lies in a transparent and reciprocal relationship with consumers in Europe; not in a shady geopolitical stitch-up with the Ayatollah. Expose the cartel idea for the fraud it is.

And at the same time, those Western governments should also realise what Russia realises: that Iran remains the only country that could genuinely diversify Europe's supply of natural gas. If they're serious about solving the security of supply problem, they should be serious about engaging Iran as a partner, too.


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www.derekbrower.wordpress.com

Russia's natural resources ministry has just announced that TNK-BP has indeed committed numerous violations in its development of the Kovykta gas field. Don't say we didn't warn you - here comes Sakhalin part deux.

From the FT:

The setback comes just two months after Royal Dutch Shell was forced to cede control of its Sakhalin-2 venture to state-controlled Gazprom after months of pressure from the same agency over alleged environmental violations.

Gazprom has long been eying a stake in Kovykta. But talks over its participation in the field appear to have reached deadlock.

Alexander Medvedev, Gazprom’s deputy chief executive, last month said a recent TNK-BP statement that it could reach a deal with Gazprom on its participation in the first half of the year was “over-optimistic”.

The mounting pressure over Kovykta is seen by many as part of a broader state plan to gain control of TNK-BP itself. Analysts say TNK-BP’s Russian shareholders are preparing to sell their stakes to a state-controlled energy major such as Gazprom or Rosneft this year when a moratorium on ownership changes expires.

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(Photo from the wonderful English Russia)

Today the Guardian has a report on Russia's new $189 billion missile package:

The sharp rise in expenditure comes at a time of growing coolness in US-Russian relations. Vladimir Putin has been incensed by the Bush administration's intention to site missile defence systems in Poland and the Czech Republic.

The US says the installations are being built to shoot down possible long-range missiles fired by Iran or North Korea. But Mr Putin has dismissed this claim as ludicrous, and has said the real target of the missile shield is clearly Russia and its vast nuclear arsenal. In a speech tomorrow in Munich, the president is expected to deliver Russia's scathing response.

Defence and security leaders are to meet in the German city over the weekend to wrestle with issues such as Kosovo, Afghanistan and Iran. President Putin and Mr Ivanov will deliver speeches, as will the new Pentagon chief, Robert Gates, the German chancellor, Angela Merkel, and Ali Larijani, the key Iranian official for Tehran's suspect nuclear programme.

Yesterday analysts said Moscow was worried the defence shield in eastern Europe could turn into a Trojan horse.

"This is irritating for Russia," said Yevgeny Miasnikov, a senior research scientist at Moscow's Centre for Arms Control. "When the Soviet Union collapsed a vacuum was created in the countries of the former Warsaw bloc. The US has tentatively moved into the vacuum and is creating infrastructure that might threaten Russia. The Bush administration's system is not justified. Iran doesn't have a missile capability yet to hit the US. The logical place to put a defence system would be in Turkey, or in Russia itself."

In his speech to Russia's parliament, Mr Ivanov announced that the military would get 17 ballistic missiles this year, compared with an average of four in recent years. The plan envisages the deployment of 34 new silo-based Topol-M missiles and control units, as well as another 50 such missiles mounted on mobile launchers by 2015, he said. Russia has already deployed more than 40 silo-based Topol-Ms.

Writing in a Munich newspaper yesterday, Mr Ivanov said: "The deployment of American missile defence in Europe has not only a military but also a symbolic significance. Fifteen years after the end of the cold war a situation is obviously being created in which the continent again can only manage with American protection and with reinforced American military presence."

Today a Greek oil tanker carrying 110,000 metric tons of Russian crude ran aground in the Gulf of Finland, but for the moment appears to have maintained its cargo without an oil spill, reports Reuters.

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However, analysts at Stratfor believe that this accident will further exacerbate the European's environmental concerns over their dependence on Russian energy:

The Russian government enjoys the income from its robust energy sales to Europe, along with the political deference such European dependence generates. Though Europeans hotly deny it and the Russians certainly hotly deny they ever exercise such influence, the truth is that the European Union regularly gives the Russians more attention and less flack since Russia is Europe's premier energy supplier, providing it with roughly one-quarter of its oil and natural gas needs.

This open secret has been complicated lately, however, as Russia has experienced problems getting its energy to Europe. In January 2006, a dispute with Ukraine temporarily reduced natural gas shipments to Europe, while this January a similar dispute with Belarus interrupted oil shipments. To reduce its dependency on such transit states, Russia has prioritized the development of what it calls the Baltic Pipeline System (BPS). This network links many of northwestern Russia's oil pipelines into a single export hub at Primorsk on the Gulf of Finland, which is an extension of the Baltic Sea.
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The Russians also want to lay a pipeline under the Baltic Sea -- to be called the Nord Stream -- to ship natural gas directly to Germany. The pipeline would broadly parallel the route oil tankers like the Propontis sail, bypassing all those troublesome transit states. The Baltic states and Poland hate the idea since the project was designed expressly to cut them out of the loop, while Sweden quietly but forcefully has expressed opposition on environmental grounds.

Formally, Russian state energy major Gazprom has struck a deal with a German-Dutch consortium to build the line, but so far no one has offered a cent to fund it, and the Russians lack the technical skill for underwater work. No doubt one reason for the hesitation of potential underwriters is that the Russians first claimed the project could be completed for a mere 4 billion euros (about $5.2 billion). In the past few months, that estimate has been revised upward to 12 billion euros (about $15.6 billion), a figure that is likely still far shy of the true price for what aims to be the world's largest-ever underwater construction project. As of Feb. 8, the European Investment Bank said it would not get involved in the project because such a move would require unanimity among its stakeholders -- which include all of the Baltic littoral states save Russia itself.

But though Russia's Nord Stream plans might be sinking into the deep, exports from the BPS are not about to slow. Unlike most infrastructure projects promulgated by the Russians, the BPS network was built entirely by Russians with Russian money. And now the Russians plan to expand its capacity from the current 1.5 million barrels per day (bpd) to 2.5 million bpd over the next three years. Unlike Nord Stream, the Russians have the technology and the cash to make this vision a reality by themselves. So, despite Europe's protests, more and more ships will be plying the Gulf of Finland -- and sooner or later, one will not be as lucky as the Propontis.

Peter Foster in today's Financial Post denounces Canada's relative silence on the persecution of Khodorkovsky:

The U.S. State Department has professed profound concern about the implications of the Khodorkovsky case for the rule of law in Russia. Among others who have protested Mr. Khodorkovsky's treatment are German Chancellor Angela Merkel, European Commission President Jose Manuel Barroso, former Czech president Vaclev Havel, former Irish president Mary Robinson, former Polish president Lech Walesa and Amnesty International. Where are Canada's protests?

Anybody who imagined that Mr. Khodorkovsky's case didn't send out a wider warning for business has been disabused by the Kremlin's recent pressure on international oil giants Exxon Mobil, Shell and BP over their Russian holdings.

Perhaps the most terrifying indication of the lawlessness of Mr. Putin's Russia is the number of murders, both inside and outside the country, that appear to be politically related. The most spectacular was the poisoning last year of former KGB agent Alexander Litvinenko with polonium 210. Other cases include the executions of investigative journalist Anna Politskaya and crusading Bank of Russia official Andrei Kozlov. It would be easier to believe in the Kremlin's innocence if it expressed more interest in solving these cases. Instead, in the Litvinenko affair for example, the Kremlin is being obstructive. One of the reasons for failing to co-operate with British authorities may be that Britain has offered refuge to other former executives of Yukos.

Why should we care about Mr. Khodorkovsky? Because his persecution is a straw in a very dangerous wind. As Mr. Khodorkovsy's defence team point out, "The weak responses to Russia's backsliding have been a shocking surrender to sinister forces within the Russian leadership, and an overt signal to them that their belligerent authoritarianism will be tolerated -- in exchange for preferential treatment in energy relations."

Mr. Putin said before Mr. Khodorkovsky's trial and imprisonment that Russia would not allow businessmen to influence political life. He suggested that anybody who disagreed should look to the example of others who had tried and failed. "Some are gone forever," he said, "and others are far away." Perhaps the wonder is that Mr. Khodorkovsky is still only "far away" rather than "gone forever." All civilized people should press for his release.

Attached is a translation of a recent interview with Robert Amsterdam in the German magazine Stern:

"The Kremlin is pulling the strings”

By Katja Gloger, Washington

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Former Yukos President Mikhail Khodorkovsky, currently serving a prison sentence of 8 years, may face a new trial. Russian authorities want to lay further charges. A sentence of 15 additional years is possible. “The charges are invented,” his lawyer Robert Amsterdam tells stern.de

Oil billionaire Mikhail Khodorkovsky, was former President of Yukos, and one of the richest of the rich in Russia. Then the oligarch got too powerful and critical for the Kremlin’s liking. In 2003, he was arrested and sentenced to eight years imprisonment in what can only be described as a show trial. Now new charges are being laid, and an additional jail sentence of up to 15 years is possible. His lawyer Robert Amsterdam spoke to stern.de about the background to the case.

stern.de: Mr. Amsterdam, how is your client doing?

Robert Amsterdam: He’s extremely disappointed, sad. The new charges against him are so absurd, it’s hard to imagine how anyone came up with them. It’s a disgraceful farce, as he himself says.

The former president of the oil enterprise Yukos had already been sentenced to eight years in a labour camp. Now he’s being charged with money laundering and embezzlement of up to 25 billion dollars, the prison sentence could be up to 15 additional years.

Yes. All that is further evidence of the absolute arbitrariness of the Russian procuracy. It’s not trying to give the charges even the slightest appearance of justice.

What do you know of Khodorkovsky’s everyday life?

He was sent for 18 months to the labour camp Krasnokamensk. There, in the Gulag...

...Gulag, the system of camps under Stalin in which millions died…

...it’s still a Gulag. It is dangerous. People die of diseases like tuburculoses, are victims of random violence. Khodorkovsky has repeatedly been put into solitary confinement for spurious claims – for instance, for leaving his work station without permission in order to report a broken machine. Or for supposed illegal possession of printed material, in this case a copy of the prison rules. He was victim of a knife attack by someone who wanted to stab out an eye, to deface him.

Where is he now?

Two months ago, he was sent to Chita in eastern Siberia. He’s in a remand prison there. The trial is to take place in Chita.

Why there?

Chita is thousands of kilometers away from Moscow. It’s hard to get there, for foreigners virtually impossible. It’s much easier to control things that way. Khodorkovsky’s Russian lawyers were arrested at the Moscow airport last week. They were on their way to Chita for the reading of the charges.

They were only let go after a radio station and news agencies reported the arrest.

There’s more. 150 heavily armed special units of the militia were sent to Chita, supposedly for security reasons. They are not accountable to local authorities. And the trial is not to take place in a courtroom but rather in jail. That way, they can bar anyone entry. That means that there will be no independent reporting. The accused is definitely not to have a fair hearing.

Why is the new trial happening now?

For one thing, under Russian law, Khodorkovsky would be eligible to apply for premature release this year. That would make a new ruling impossible. In addition, many in the Kremlin would profit personally from a new conviction because the last auction in the Yukos case is soon to take place, the selling off of the supposedly bankrupt parts of the business. We’re talking about theft here. Incidentally, Khodorkovsky is sure that he’s going to be found guilty.

Yukos used to be the most powerful oil company in Russia, it was then bought up by Khodorkovsky in a questionable way. After Khodorkovsky’s arrest in 2003, Yukos was dismantled, large parts of it ended up under state ownership, for example as part of Gazprom.

The powers that be in the Kremlin are pulling the strings in the Khodorkovsky case. And now they want to legitimise the final auction, the last sale, using new charges. “Money laundering” sounds good – they think something criminal is bound to stick. It’s fraud of the highest order. The whole world knows that. And does nothing. It’s easier to keep quiet. The West has become prisoner of Russian energy politics. Gazprom, this unbelievably corrupt oil company, was even able to obtain the former Chancellor Schröder for its own PR purposes and he’s doing very well by it.

This weekend, President Putin is opening the security conference in Munich. What should the West be doing?

A man like Putin has a deadly fear of opposition. He speaks often of the "dictatorship of the law.” In reality, there’s a lot of dictatorship and no law. At the moment, judicial processes are covering up the corruption in Russia. This kind of arbitrariness, these lies, shouldn’t be possible in the 21st century. Western companies such as the Italian ENI should not participate in the auction, which is rigged from the outset. We must demand rule of law from Russia. And the release of Mikhail Khodorkovsky.

Today Stratfor is reporting that on Thursday President Vladimir Putin met with a high ranking envoy from Tehran to receive a direct message from Supreme Leader Ayatollah Ali Khamenei. However, the envoy wasn't the usual Foreign Minister Manouchehr Mottaki or National Security Chief Ali Larijani - it was Ali Akbar Velayati, the former foreign minister of Iran, and one of the closest people to the Ayatollah. By sending a formerly inactive envoy of such high standing, many observers believe that Khamenei has brushed aside the technocrats and taken on a much larger role in guiding Iran's foreign policy. If the United States depends upon Russia to be the interlocuter for their relationship with Iran, Russia will be sure to use that leverage to its advantage.

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Ali Akbar Velayati

Stratfor writes:

Velayati's sudden return to the diplomatic arena, especially when U.S.-Iranian dealings over Iraq are reaching an impasse, is a sign that Khamenei has decided to directly take over foreign policy matters. It also means the executive branch has been asked to confine itself to the more mundane matters of governance.

This is why it is Velayati who has been dispatched on a special mission involving Russia. Moscow has been able to mediate between the United States and Iran -- a role the Kremlin thinks will help it to advance its own interests. The Russians have offered to help the United States get out of Iraq if Washington cuts back in its support of anti-Moscow elements in Ukraine. Such mediating also gives Russia an enormous amount of international clout.

Aware that the Iraq issue cannot be solved without Iranian help, and knowing that directly dealing with Tehran is not something that will sit well domestically for the Bush administration, Washington has likely taken Russia up on the offer. That said, there is another critical issue that weighs heavily in the U.S. decision to accept Russia as a go-between -- Moscow has recently sold the TOR-M1 anti-aircraft missile system to Iran.

Tehran and the Kremlin are also negotiating the sale of the Russian S300 missile. This is something the United States does not want to see realized because these missiles would make it difficult for U.S. warplanes to conduct airstrikes against Iran, should Washington ever take the military option in dealing with Iran.
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Larijani, who also reports directly to Khamenei, will attend the Munich Conference on Security Policy on Feb. 9-11 in Germany. World leaders including Putin, German Chancellor Angela Merkel, Israeli Foreign Minister Tzipi Livni and U.S. Defense Secretary Robert Gates will also be in attendance. Larijani said Thursday that he will be holding talks with several Western officials. Since Gates dealt with the Iranians during the Iran-Contra affair in the 1980s and also was involved in the Iraq Study Group that recommended that Washington approach Iran diplomatically on Iraq, a Gates-Larijani discussion on the sidelines of the conference is not out of the question, though it likely would be through middlemen.

Regardless of what happens in Munich, it appears as though a serious and complex diplomatic game involving the United States and Iran is under way.

Today the Russia expert Amy Knight (author of "How the Cold War Began: The Gouzenko Affair and the Hunt for Soviet Spies") has published a very compelling op/ed on the new charges against Khodorkovsky in the Globe and Mail.

Why Kremlin v. Khodorkovsky still matters

AMY KNIGHT

Why should the West be concerned about the new charges filed by Russian prosecutors this week against imprisoned Yukos oil company founder Mikhail Khodorkovsky and his associate Platon Lebedev? Because President Vladimir Putin is again using his unchallenged, autocratic powers to send a message that the Kremlin, with its total control of the country's security and legal organs, can destroy any Russian entrepreneur who does not co-operate with its agenda. This message has alarming implications for Western governments and investors who want to do "business as usual" with Russia.

Mr. Khodorkovsky, a 43-year-old father of four, has been in prison since his arrest for alleged tax evasion in October, 2003. A self-made businessman, he embarked on his amazingly successful career as a computer salesman when Mikhail Gorbachev launched his perestroika plan in the late 1980s. After establishing one of Russia's first private banks, Menatep, Mr. Khodorkovsky acquired oil giant Yukos in 1995 as part of the controversial loans-for-shares auctions in which the government sold its oil and metal companies to financiers at rock-bottom prices.

Mr. Khodorkovsky's business dealings, which made him at one point the richest man in Russia, were hardly pristine. As he later admitted, the process by which he acquired his wealth, while not illegal, was unethical by Western standards. Like most of the other Russian businessmen who became wealthy very fast during the Boris Yeltsin years, Mr. Khodorkovsky simply took advantage of the chaos that made the Russian economy a free-for-all. In those days, he observed, "if you conducted yourself too much in a Western manner, you were simply torn to pieces and forgotten."

By the end of the nineties, Mr. Khodorkovsky had changed his ways. With a view to attracting foreign investment and globalizing his company, he introduced full transparency, including publishing Yukos's accounts according to generally accepted accounting principles and paying all taxes legally due.

So why did the Russian government decide to arrest him? After all, there were plenty of other oligarchs who became rich in the same manner and continued to thrive under Mr. Putin. Mr. Khodorkovsky was targeted by the Kremlin because he violated the rules by becoming involved in politics. In 2001, he and other Yukos shareholders established the Open Russia Foundation, which sponsored projects that promoted democratic reform. While other oligarchs, such as Chelsea Football Club owner Roman Abramovich, were funnelling cash to support the Kremlin's political aims, Mr. Khodorkovsky donated money to opposition parties in the 2003 parliamentary campaign.

Worse still, Mr. Khodorkovsky became openly critical of Mr. Putin's "managed democracy" and the growing political influence of the siloviki (security and military officials). He said in an interview just days before his arrest: "The biggest threat is that we do not have a civil society, and so there are people, groups of people, who want to have the power in their hands, basically bypassing democratic procedures, by keeping the shell but taking out the meaning."

The Kremlin had an additional reason for going after Mr. Khodorkovsky and Mr. Lebedev. After serving half their sentences in a Siberian prison camp, the pair would have been eligible for parole this year.

But the Kremlin wants them behind bars during the parliamentary and presidential elections in December and in March of 2008, and while Yukos, which is in Russian receivership, is liquidated. Hence the new charges of embezzlement and money laundering, which could carry prison sentences of up to 15 years.

Tuesday, the day after the charges were announced, Mr. Putin met with a group of Russia's leading businessmen to discuss future economic strategies. He made a point of saying: "I hope that business sees the benefits of strictly observing the established rules and the tax regime." Mr. Putin was doubtless aware that several of those present (including his friend Oleg Deripaska, owner of aluminum giant RusAl, who has been barred from entering the United States because of racketeering) have made their money by plundering Russian assets and putting their earnings into tax havens abroad.

The President's intention was apparently to remind the oligarchs that their privileged status depends on continued loyalty to his government. Otherwise, they could suffer Mr. Khodorkovsky's fate.

Author John Banville has published a review of Martin Amis's new book "House of Meetings" in the new issue of the New York Review of Books. House of Meetings tells a story about two brothers who lived through the hell of a Stalin-era Gulag work camp, one of whom returns to Russia as a wealthy ex-patriot to tour the prison system and mourn the loss of his country.

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Here are some excerpts from the review:

It is the beginning of September 2004, and news is coming in of the Beslan atrocity, in which Chechen terrorists took over a school in North Ossetia and resisted a three-day siege which ended with the deaths of 344 civilians, 186 of them children. For the narrator, then, present and past horrors play against each other in frightful counterpoint. He broods on the plight of the children in the school:
They are parched, starved, stifled, filthy, terrified—but there is more. Outside, the putrefying bodies of the people killed on the first day are being eaten by dogs. And if the captives can smell it, if the captives can hear it, the sounds of the carrion dogs of North Ossetia eating their fathers, then all five senses are attended to, and the Russian totality is emplaced. Nothing for it now. Their situation cannot be worsened. Only death can worsen it.

He has already quoted "an old Kremlin hand"—in fact it was Viktor Chernomyrdin, former Russian prime minister and now a billionaire oligarch—saying "We wanted the best, but it turned out as always." Chernomyrdin was referring to a disastrous episode in the Kremlin's attempts at economic reform that he oversaw in the early 1990s, and his statement has become a popular sardonic proverb among Russians. "They didn't want the best, or so every Russian believes," Amis's narrator bitterly insists of the Russian government, and also, by implication, of the Russian people in general. "They wanted what they got. They wanted the worst." And surely Beslan was, if not the worst, then very nearly: "It is not given to many—the chance to shoot children in the back as they swerve in their underwear past rotting corpses."
...
Amis tells us that he read a shelfful of books in preparation for the writing of Koba the Dread; many of the same books inform House of Meetings. Indeed, the title itself is taken from the heading of a subchapter in Anne Applebaum's definitive Gulag: A History, in which she writes of the visits to prisoners that relatives would sometimes be allowed to pay. Wives would travel thousands of miles, by train, by hitching rides, and finally on foot, to spend a day with their husbands at a designated "House of Meetings" on the edge of the prison camp. One survivor described such a house, with its cotton curtains, its window boxes of flowers, its two neatly made beds:

There was even a lampshade over the electric-light bulb. What more could a prisoner, who had lived for years on a common bunk in a dirty barrack, desire of this model petit bourgeois dwelling? Our dreams of life at liberty were based on that room.

The same witness, the Polish novelist Gustav Herling, noted that such meetings often went disastrously wrong, with the men despairing of their sexual competence after years of privation (Amis's narrator recalls that his relationship with his "ladyfriend" at the camp, which held male and female prisoners, was, like many camp romances, platonic: "The only impulse resembling desire that Tanya awoke in me was an evanescent urge to eat her shirt buttons, which were made from pellets of chewed bread"). The wives, for their part, were exhausted from weeks of travel and, in some cases, distracted and guilt-ridden by the fact that what they had come for was not a romantic tryst, but to ask for a divorce in order to break the damaging link to a political prisoner, which made it hard to find work and get housing back home. "I came to the conclusion," Herling wrote, "that if hope can often be the only meaning left in life, then its realization may sometimes be an unbearable torment." Possibly it was this sentence that gave Martin Amis the inspiration for a major strand in the intricate tapestry that is House of Meetings, for it is after a visit from his wife Zoya to the prison camp that the narrator's brother loses his faith in life and life's possibilities.

A translation from Khodorkovsky.ru.

The deputy chairwoman of the public Committee for public support of Mikhail Khodorkovsky, Marina Savateyeva, has been detained by police.

After the city authorities of Chita had prohibited the conducting of a picket in support of Mikhail Khodorkovsky, Marina Savateyeva came out on Thursday onto Decembrists’ Square as a solo picket. However, even this seemed too much. At the present time, Marina Savateyeva is found in the Central ROVD [precinct police station—Trans.] of the City of Chita, where she has been charged under Article 20.2.1 of the Code on Administrative Offences of the RF with “violating the established order for organizing or conducing picketing”. The case will be heard tomorrow at 10:00 local time.

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Together with Marina Savateyeva on Decembrists’ Square today was Sergey Taratukhin (formerly Father Sergey) [Editor's note--Father Sergey, formerly the chaplain at the
Krasnokamensk labor camp, was defrocked and left without a livelihood
last year after publicly expressing concern for Mikhail Khodorkovsky's
plight.]. As a participant in the picket, he was also charged with an administrative offence (Art. 20.202 of the CoAO RF).

A police car and bus with people in black uniforms with the inscription OMON began to keep guard on Decembrists’ Square as of 10:00 AM, report eyewitnesses. After Marina Savateyeva and Sergey Taratukhin were driven away to the police station, yet another picket took place on Decembrists’ Square. Around a dozen people were giving out postcards with a portrait of Mikhail Khodorkovsky to passers-by.

Before coming out to picket, Marina Savateyeva sent her Statement to the Khodorkovsky Press-center:

Picketing for Khodorkovsky prohibited in Chita besieged by OMON!

For the first time in 20 years of active socio-political activities, city authorities in Chita have refused to allow the conducting of a picket.

On February 5, members of the public Committee for support of Khodorkovsky notified the administration of the city of Chita about the conducting of a picket. Its aim: to attract public attention and contribute to the release of Mikhail Khodorkovsky and Platon Lebedev from places of deprivation of liberty early on parole. As well as to express its attitude to the new charges.

On February 7, they reported from the mayor’s office that the picket can not be conducted. However, there will only be a written reply on the morning of 8 February. In it was reported that the applicants had violated the time period for submission of notification.

The Chita mayor’s office has difficulties doing arithmetic in its head. Information with respect to the notification received must be provided during the course of 24 hours. But the notification on the conducting of a picket is provided three days ahead. But we knew that everybody knows that 8 minus 5 equals 3, while 5 plus 1 equals 6.

The decision of the mayor’s office will be appealed in court. But at the announced time today, 8 February 2007, from 16:00 to 18:00 on Decembrists’ Square, a solo picket will take place, notification about which is not prescribed by law.

Marina Savateyeva
deputy chairwoman of the public
Committee for public support of Mikhail Khodorkovsky

Today Robert Amsterdam wrote an op/ed article on the situation of his client Mikhail Khodorkovsky, published in both Wall Street Journal Europe, as well as the US edition of the paper. Scanned clips are available for download here and here (there are slight differences), and the text is included below:

Mikhail Khodorkovsky

By ROBERT R. AMSTERDAM

February 9, 2007; Page A10

The Kremlin this week showed that democracy, human rights and the rule of law are dead in Vladimir Putin's Russia. With extraordinarily cynical timing, new charges -- this time, money-laundering -- were brought against Mikhail Khodorkovsky, who once ran Russia's largest oil company, Yukos. These charges have nothing to do with upholding Russia's laws. They have everything to do with the fact that Mr. Khodorkovsky would have been eligible for parole later this year, having served half his eight-year sentence on a politically motivated tax evasion conviction handed down in 2005. Another show trial will surely propel the machinery of so-called justice toward another preordained guilty verdict.

The fresh case means that Mr. Khodorkovsky will be unable to support democratic opposition parties in December's Duma elections or the 2008 "presidential coronation." And it means that the Kremlin will continue to wield pervasive control over the energy sector in which he had done so much to promote market-based competition and growth.

Before his arrest in 2003, Mr. Khodorkovsky set out his vision for Russia. He encouraged the development of civil society and the growth of alternative political parties. He worked to provide schools across with access to the Internet and supported charitable and cultural programs. He publicly confronted the president about the need to stamp out corruption in Russia.

When it became clear that the state did not share his vision and was not going to tolerate dissent, Mr. Khodorkovsky did not flee. He cooperated with the justice system -- convinced of his innocence, and convinced, also, that he could challenge what seemed to be an attempt by corrupt officials to intimidate him. He did not foresee how ruthlessly the law would be disregarded in the Kremlin's drive to crush him. Nor did anyone quite foresee the blatant theft of Yukos assets.

By jailing Mr. Khodorkovsky and stealing Yukos, the Putin regime cleared the energy sector of any competitors. It enabled the Kremlin to use energy as a political weapon against Russia's immediate neighbors and the whole of Europe. Mr. Khodorkovsky and his company, in other words, had to be destroyed for Mr. Putin's non-market, state corporatism and energy imperialism to thrive. So now, no one will build competing pipelines; no one will advocate the breakup of state monopolies; no one will promote the corporate governance and transparency that are anathemas to the state-owned enterprises. The new charges against Mr. Khodorkovsky are, in fact, intended to provide a smokescreen for the Russian government's illegal sale, later this year, of the remaining assets of Yukos, valued at $33 billion, to those very companies.

The Russian regime has lost the moral authority to dispense justice. Its exploitation of prosecutorial and regulatory powers, though shielded by state immunity, has become criminal. Selective enforcement of tax and environmental laws is the favored means of stealing assets from both domestic and foreign owners. Extortion is entrenched as a method of acquisition by the state.

The Yukos saga was followed late last year by the shakedown of Royal Dutch Shell at its Sakhalin-2 project. With each such case, the Kremlin is less concerned about even keeping up pretenses. Moscow calculates it has space to maneuver around legal and moral obligations, whether with respect to existing treaties, or negotiations over developing the giant Shtokman gas field, or its commitments to supply gas and oil dependably without political interference.

When Mr. Khodorkovsky was interrogated about the new charges, he declared that he had no faith in Russian justice, and that he will refuse to cooperate with the prosecutors in another politically driven farce of a trial. This week he appealed to the world not for himself but for all Russians: "Their only chance is the timely voluntary transfer of power in Russia by the means of honest, fair and transparent elections. . . . [The new president] should have nothing in common with the giant corruption machine that has paralyzed Russia."

Even in a Siberian gulag, Mr. Khodorkovsky has the courage to say: Enough! His fate is far more important than most people in the West realize. Some Western leaders such as Angela Merkel of Germany and José Manuel Barroso of the European Commission have raised his case with the Russian president. The dictatorial feathers were not ruffled and both were summarily brushed off. And so, another Khodorkovsky trial will soon be upon us. Let's be sure that this time we all recognize that Mikhail Khodorkovsky's fight is for the future of Russia and its relationship with the rest of the world.

Mr. Amsterdam is international defense counsel for Mikhail Khodorkovsky, and is based in London after being deported from Russia.

Today the Economist Intelligence Unit is reporting on the changing winds in Belarus, and how Russia's sudden oil cut off and gas price hikes are forcing the odious dictator Alexander Lukashenko toward rapprochement with the West.

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What, me worry? Slogan in the poster reads "We will attain the further uplifting and flourishing of all collective farms of the country!"

They write:

Having spent years fulminating against Western aggression and double standards, Mr Lukashenka's recent pro-Western statements are obviously somewhat surprising. On occasions in the past he had also professed a desire for better relations with the West, but rarely has he gone as far as in recent weeks. He and his officials have lately, and repeatedly, declared an interest in a partnership with the West, even going so far as to offer to be Germany's "eager pupil" and adopt the Euro.

The recent deterioration in energy relations with Russia is clearly the catalyst for Mr Lukashenka's about-face. Late last year he discovered that his country—despite its loyalty to Russia and shared desire for a common state—is no longer exempt from the higher prices that Russia now charges to gas customers in the former Soviet Union. This is a serious threat to the Belarusian leadership, which has depended on subsidised energy prices to keep its unreformed economy afloat. It therefore spent much of December and January bickering with Russia over gas import prices and over Russia's insistence that Belarus hand over most of the windfall profits it earns from processing cheap Russian crude for export to the West.

This echoes a similar sentiment voiced by Lionel Beehner (who also does some great work on Russia for CFR) in the New Republic in January, taking the argument even a step further to contend that Russia's imperialism is good for the west in that without enormous Soviet-era subsidies, Lukashenko's dictatorship will crumble to pieces.

He writes:

But these arguments fail to mention an important point: Higher energy costs could help unseat Belarusian President Alexander Lukashenko. His Stalinist-style regime has been labeled Europe's last "outpost of tyranny" by the U.S. State Department. Western governments have tried to undermine the mercurial ruler for years, but he has survived thanks to the economic, political, and military support of Moscow. Yet the gas crisis--which lasted for 60 hours before Lukashenko lifted the transit tax--may portend worse relations ahead. A proposed political union--a decade-old plan between Minsk and Moscow to establish open borders, a common currency, and eventual political integration--has been delayed if not permanently derailed. And, without Russian handouts, Belarus's economy will suffer and Lukashenko's power may unravel. Meanwhile, his domestic opposition, emboldened by a strong showing at the polls last year, will gain more strength amid such an economic slowdown.

Certainly we have no sympathy for Lukashenko's oppressive regime, but I find it hard to give the Kremlin any credit in assisting this perceived move toward democracy. Clearly, the energy row came down to dollars - and although Russian officials have defended their conduct reasoning that they only want to get fair market prices for their gas from ALL consumers, cutting off supply lines to Europe, breaking contracts, strong-arming negotiations, and holding the consumers hostage in the middle of winter is no way to go about building a partnership of trust. (also it is important to note that by the end of the gas prices row, Belarus still ended up with much lower prices than Ukraine).

Furthermore, it isn't enough to just pull the plug on energy subsidies and expect a vibrant civil society to arise out of nowhere to install a benevolent social democracy. This is the same kind of reasoning that has kept the U.S. embargo on Cuba with no effect for more than three decades (In reference to this case, Cato writes, "Economic sanctions have not been responsible for the region-wide shift toward liberalization ... They have, in fact, failed to bring about democratic regimes anywhere in the hemisphere), the humanitarian crisis caused by sanctions on Iraq (which a 2002 Harper's article details here), and the current disengagement with Iran. You don't encourage democracy by punishing those who happen to have the misfortune of living under an undesirable autocrat. Much more needs to be done to help Belarusian civil society to grow and become an influential force in building a free country - raising the heating bills won't make this happen automatically.

I'm more inclined to agree with the Economist's conclusion that Lukashenko will likely exploit any trust the EU extends toward him, and will consider all possible angles to ensure his political survival at the cost opening up the country, both politically and economically. At best, we can expect him to "fake" some moves toward reform modernization - but don't buy the spin.

The Economist:

The EU is demanding that he dismantle this entire edifice as a precondition for even being considered for a set of vague and distant concessions. Mr Lukashenka will never risk that transformation, and will at most try to fake it. He might hope that some token gestures—including a bit more freedom for the marginal independent press and even amnesty for certain jailed opponents—will suffice to improve his dialogue with the West. Some concessions, as seen in the case of the Helsinki Committee, certainly seem possible, particularly as Mr Lukashenka's domestic position is relatively secure: the fractious opposition enjoys little popular support, while its recent in-fighting has neutralised it far better than even the regime could have done. Moreover, with the January 2006 local elections now over, the next chance for the opposition to mobilise around an election is years away. ... The question is whether the Belarusian economy can survive that long. While the country secured a good deal by regional standards, natural gas prices have still doubled relative to last year, and the budget is going to lose most of its windfall oil earnings. Already deeply uncompetitive after years of under-investment, state-mandated wage hikes and insufficient reform, Belarusian manufacturers will struggle under the weight of higher energy prices. They can only get so much help from the state, which will struggle to lavish even more subsidies on both consumers and enterprises at a time of depleted revenue inflows.

Presuming that preferential treatment from Russia is now far less forthcoming, the sustainability of the Belarusian economic model is obviously the thing to watch. For the time being, Mr Lukashenka is most likely safe. Even though the macroeconomic performance in 2007 will be considerably shakier than in past years, Mr Lukashenka can depict himself as the defender of Belarusian sovereignty and complain about Russian pressure, and thereby retain at least a critical mass of support. But sooner or later he will face a tough choice—namely whether to embrace the liberalisation needed to adapt his economy to new realities and secure meaningful Western help, or else to return to the Russian fold. Given the nature of Mr Lukashenka's regime, the latter remains by far the likelier option.

This evening the Times of London website published an article about the latest in the Litvinenko murder case, in which Russian officials have conditioned their cooperation in Scotland Yard's investigation (namely, the extradition of key suspects Andrei Lugovoy and Dmitri Kovtun) upon the extradition of Kremlin-critic Boris Berezovsky and Chechen separatist leader Akhmed Zakayev.

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An indecent proposal

How low can Russian justice go? And then there is this enfeebled response on behalf of the British government to send a delegation to Russia of 20 CEOs led by Trade Secretary Alistair Darling just shortly after someone commits murder via the import of nuclear materials. I'm not sure which is more obscene. A procuracy general which openly sees opportunity in murder really represents a "great" trading partner for Tony Blair's Labour government.

Is this representative of the kind of values Britain has come to symbolize? After all, the City's morally reprehensible and loose oversight of public offerings led it to host the IPO of Rosneft, an operation designed to launder money from one of the greatest thefts of all time. If this kowtowing to Moscow continues, Britain will soon lose its ability to judge the conduct of others.

However, in my view, the Russians have few illusions that the British will actually extradite Berezovsky and Zakayev as a "swap" to proceed with the Litvinenko investigation (they have tried so many times in the past, and there is no reason to believe this "swap" will produce better results). They have put forth the condition simply as a pretext to freeze the case - an excuse to end cooperation, and, for whatever reason, protect two murder suspects. Observant readers will recall that I was one of the first people to come to Putin's defense following the death of Litvinenko, and argue for his presumption of innocence. However, the Kremlin's willful obstruction of justice in this case is a crime in itself. If Vladimir Putin truly wants to put an end to the "unfair suspicions" he so often complains about, one would think that he would cooperate with Scotland Yard eagerly, and not let his KGB instincts take over to see opportunity in murder.

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Post: Mr. Putin "will not lose much sleep" over the State Dept.'s ability to stand behind its strong words on Russia's lacking rule of law

In today's Washington Post:

Potemkin Justice

Mr. Putin's legal system at work

Thursday, February 8, 2007; Page A20

WE WON'T accuse Russian President Vladimir Putin of being subtle this week. On Monday, Russian prosecutors leveled charges against a pair of Mr. Putin's one-time political enemies that are beyond implausible. The outcome from Russia's pliant legal system is all but inevitable: convictions and more jail time for ex-billionaire Kremlin critic Mikhail Khodorkovsky and his former business partner, Platon Lebedev.

Russian prosecutors in Chita, a small Siberian outpost far from reporters and the defendants' lawyers, accuse the two of laundering an astonishing $20 billion by moving cash from one Yukos subsidiary to another. Mr. Khodorkovsky apparently managed to pull this off at a time when PriceWaterhouseCoopers regularly reviewed Yukos's books. Yet the two were supposedly moving vast sums of money through the company without anyone noticing -- not its bookkeepers, its shareholders or the Russian authorities watching Yukos at the time.

Precisely why Mr. Putin wants to keep these two men in jail for another 15 years or so is still up for speculation. Observers of Russian energy politics see it as a way to assist the Kremlin in grabbing the remaining bits of Yukos's assets inside and outside the country. Human rights advocates note that the two would have been up for parole before this year's parliamentary elections; a new conviction would ensure that Mr. Khodorkovsky does not rally anti-Kremlin political forces then or in the presidential election next year.

Mr. Putin has systematically dismantled the institutions of democracy inside Russia while bullying his neighbors and jailing his opponents. After the new charges were announced, a State Department spokesman said that the proceedings "raise questions about Russia's commitment to the responsibilities which all democratic, free market countries embrace," and that American policymakers will discuss the issue with the Kremlin "at an appropriate time and at the appropriate level." We doubt that Mr. Putin will lose much sleep over that prospect.

In our efforts to maximize distribution of this white paper, the attached press release was sent out internationally today. You can download the English verison of the paper here. Within a couple of days, the full version of the paper will be available in both Russian and German - please check back to this blog to download it.

FOR IMMEDIATE RELEASE

New White Paper Details Broader Implications of Khodorkovsky Affair

LONDON 8 February, 2007 ---“Abuse of State Authority in the Russian Federation,” a new White Paper issued yesterday by Robert Amsterdam, Mikhail Khodorkovsky’s international defense counsel, says the United States and Western European governments have failed to effectively protect and advance their own values and foreign policy interests in Russia, willfully ignoring the Russian government’s increasing repression at home and its use of energy resources as a weapon against its neighbors.

“The Russian authorities’ campaign against Mr. Khodorkovsky and Yukos cannot be regarded as a purely internal Russian matter,” the White Paper says. “The campaign has played out in the context of deepening authoritarianism in Russia. The Russian political system is mutating rapidly, with serious implications for the rule of law in Russia, jeopardising the protection of human rights and legal guarantees of private property, including foreign investments.”

Yet the White Paper says Western governments have so far “shied away from anything more than tepid expressions of concern over the Khodorkovsky case...a shocking surrender to sinister forces within the Russian leadership, and an overt signal to them that their belligerent authoritarianism will be tolerated---in exchange for preferential treatment in energy relations. This is a dangerous signal to send to a regime that has taken to wielding power with recurring disregard for both Russian and international law.”

Released just three days after new charges were brought against Khodorkovsky and his business partner, Platon Lebedev, in Chita, Siberia, the White Paper accuses the Kremlin leadership of using Russia’s courts to silence Khodorkovsky and other dissidents, and to justify the re-nationalisation of what remains of Yukos, once Russia’s most efficient and most profitable energy company.

“A new cast of wealthy and influential property owners has emerged in Russia, and they operate within President Putin’s entourage,” the White Papers says, adding that Khodorkovsky will never receive a fair trial in Russia as long as the Kremlin leadership has a direct and personal financial interest in the outcome.

“The timing of the new charges is not accidental. Russia’s image abroad has been badly tarnished by a series of highly publicised murders, both in Moscow and in London, while there is intense behind the scenes jockeying for favour and power inside the Kremlin as the 2008 change in presidential leadership nears,” the White Paper states. “The Kremlin may hope that the continued persecution of Mr. Khodorkovsky will divert attention from Russia’s international and domestic problems.”

The 75-page White Paper provides cogent analysis---buttressed by massive documentation of facts---to underscore its principal contention that the Khodorkovsky Affair is not an isolated example of the dangerous economic, political and foreign policy developments which are now apparent in Russia. “In the name of justice and as a clear signal of their concern,” the White Paper says, “foreign governments and human rights organisations should support freedom for Mr. Khodorkovsky and other Yukos executives or employees who have been wrongfully incarcerated.”

The full text of the White Paper can be downloaded from:

http://www.robertamsterdam.com/

Today the FT is reporting that the initial public offerings of two Russian companies on the London Stock Exchange, Polymetal and Sitronics, are being met with "lacklustre" demand, perhaps signaling the end of the love affair with Russian stocks. Among the reasons cited for this waning enthusiasm is the enduring lack of transparency typical of Russian companies, as well as the numerous risk factors - not to mention the likely non-democratic coronation of Russia's next president, which could make big waves in the financial sector.

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From the FT:

"Russia is no longer an automatic buy," said Christopher Weafer, chief strategist atAlfa Bank. "Therefore, new issues will have to be very attractively priced to persuade investors to invest. [Investors] are demanding on price, on risk and on trans-parency."

He added: "An issue will have to offer something really special and unique to attract the sort of valuation that it would have expected this time last year."

Vitaly Nesis, chief executive of Polymetal, yesterday told the Financial Times that sentiment for Russian flotations was less positive than in the past.

"There is an increasing wariness among investors who feel that some of these offerings in the past have been overpriced and did not perform as well as expected."
...
Tom Troubridge, head of the London capital markets group at PwC, said: "Sometimes the pendulum swings too much in one direction in terms of whether it's a buyer's market or a seller's market and it can swing very quickly. So it is probably premature to read this week's activities as a sign of waning demand for Russian offerings."

However there remain many more share offerings in the pipes ($30-$35 billion over the next year) - some of them representing good opportunities from solid and well managed private companies, despite the hostile business and political environment they operate in. If the Russian government wants these private businesses to have greater success in London (and New York, for that matter), serious steps need to be taken toward deepening transparency, improving corporate governance and accounting standards, and curtailing their habit of interference and over-management of the economy.

The negative impact on share offerings caused by the Kremlin's policies should not be underestimated. Don't forget Alexander Temerko's recent comments on the nefarious influence of state ownership in companies on offer:

"Russia has created a form of capitalism never seen before. Unless you have your own private mole in government, you will never be able to predict your returns with any confidence. Directly or indirectly, corporate authority ultimately rests with the state in Russia. ... Having raised more than $17 billion in 2006 -- 50% more than was raised over the past five years combined -- Russian companies coming to market in London should have been heralding bigger opportunities. Instead, they represent the ruling elite's bet that Russia Plc can exploit capitalism for its own purposes."

And more specifically, in the energy sector, Russia's state-encouraged economic nationalism is also damaging important relationships. Today Richard Lambert, the director-general of the Confederation of British Industry, one of Britain's most important business lobbies, asked Russia to resist this trend and allow more foreign investment in developing its energy infrastructure.

"Given the importance, both to the Russian economy and those of its gas export markets, of maximizing its gas output, the mixed signals that have been sent over whether the expertise of western energy companies is really welcome here creates real difficulties for long-term business planning," Lambert will say.

"I hope that Russia will want to reap the long-term benefits of full participation in the global economy and resist the temptation of opting for any perceived short-term gains from economic nationalism."

Download the full text (pdf) of the White Paper (78 pages).

We're proud to debut the public distribution of this seminal document, which contains not only an extensive review of the Kremlin's legal violations and misconduct in their persecution of Mikhail Khodorkovsky and the theft of Yukos, demonstrating the illegitimacy of the new charges, but also places these events within a systemic perspective of Russia's backslide into authoritarianism and the consolidation of the "vertical of power." The research and facts gathered herein should be considered required reading for Russia observers, irregardless of the immediate concerns of or positions on the individual case. What follows is the executive summary - for citations, evidence, and further detail, please consult the full text version.

ABUSE OF STATE AUTHORITY IN THE RUSSIAN FEDERATION

THE NEW POLITICALLY-DRIVEN CHARGES AGAINST MIKHAIL KHODORKOVSKY

EXECUTIVE SUMMARY

In the spring of 2003, the Kremlin decided that Mikhail Khodorkovsky’s vision and actions in favour of a vibrant civil society, and market-based competition in the energy sector, were incompatible with its ideology and political goals. Mr Khodorkovsky’s subsequent arrest, show trial and disproportionate sentence on trumped-up charges were used as a legal pretext to incarcerate him in a Siberian prison camp. Bogus and exorbitant tax assessments were used as a cover to steal the prime asset of Yukos – Russia’s most successful energy company, headed by Mr Khodorkovsky.

The Kremlin has brought new charges against Mr Khodorkovsky for reasons that have nothing to do with justice, a legitimate concern for upholding Russian law, or punishing criminal behaviour. These charges are brought to:

• Ensure that Mr Khodorkovsky is not released in October 2007, when he would be eligible for release under current Russian law and practice;

• Ensure that Mr Khodorkovsky has no opportunity to play an active role shaping Russia’s political future, or opposing Russia’s current course;

• Legitimise the past state campaign against Mr Khodorkovsky;

• Legitimise a series of upcoming fraudulent acquisitions by Russian state-owned enterprises of the remaining Yukos assets, worth $33 billion; and

• Legitimise the seizure of whatever remaining assets Mr Khodorkovsky may have abroad through the artifice of money laundering charges.


Before his arrest in 2003, Mr Khodorkovsky had publicly set out a clear vision for Russia. He exercised his civil rights to become involved in politics, providing support for a more vibrant political system. He was committed to the growth of civil society and had become the first great modern Russian philanthropist, supporting pro-democracy programmes. When it became clear that the state was going to move against his vision and beliefs, he stayed to fight. He could have fled, but in a testament to his character and to his conviction of innocence, he stood his ground.

Mr Khodorkovsky had hoped his country would become a socially progressive, market-oriented democracy. As the head of the country’s largest oil company, he was an advocate for the integration of Russia into the global market through Russian free enterprise over state monopoly. He promoted a variety of initiatives: the construction of new, privately funded pipelines to facilitate energy exports to China and the United States; the liberalisation and the break-up of state monopolies; the adoption of Western standards of corporate governance; and increased investment by international oil companies to augment off-shore production. Mr Khodorkovsky also spoke out about the need to stamp out the pervasive state corruption which had created tremendous economic distortions. This vision clashed with the Kremlin’s agenda, and as a result of Khodorkovsky’s persecution, Russia has moved not toward democracy, but toward authoritarianism, not toward liberalisation, but toward monopoly, not toward justice, but only toward attempts to mask corruption with legal fictions.

The new proceedings against Mr Khodorkovsky are a miscarriage of justice in the context of a system of total injustice. There is nowhere in Russia that this defendant can have a fair trial, because those who have the power to control the legal system have an interest, both materially and personally, in the finding of guilt.

Rather than being isolated events, the persecution of Mr Khodorkovsky and expropriation of Yukos were pivotal developments in the implementation of the Kremlin’s political agenda – the elimination of any competing centres of power, and the eradication of any effective separation of powers through the consolidation of a “vertical of power” in the Kremlin.

In fulfilling this political agenda, the Kremlin has:

• Consolidated power into the hands of the so-called military and security siloviki, who have eliminated or marginalised voices for market-based economic reform in Russia;

• Pulled back from the development of democracy, human rights and the rule of law in Russia;

• Instrumentalised the legal system to engage in the ongoing capture of energy assets of both domestic and foreign investors; and

• Manipulated energy assets to project Russian state power over the near abroad and Europe, and destabilised international security through the uncontrolled sale of nuclear and arms technology to gain further energy leverage with key competitors.

As a result, the ongoing persecution of Khodorkovsky, the theft of Yukos, and the implementation of the Kremlin agenda has far-reaching implications for the international community. It threatens the national security, energy security and political stability of all democratic nations committed to the rule of law.

Those who bring these charges against Mr Khodorkovsky have overseen the greatest theft in modern history – the theft of Yukos. They have destabilised the world’s energy markets, extorted some of its largest companies, co-opted some of its leading political figures, and their actions have been met largely with complicity and silence. They have turned Russia back into a country where property rights are politically determined, and where contract murders of journalists and reformers occur regularly, this practice apparently having been recently exported. One man has faced them down. This White Paper deals with his fate.

Click here to download the full text.

As soon as she landed in Moscow on February 7 after her ordeal in Chita airport earlier that day, Mikhail Khodorkovsky's lawyer Karinna Moskalenko rushed to the "Echo Moskvy" radio station to give an exclusive interview on what had just happened with her, including the details over the documents the procuracy general tried to force her to sign under duress.

RA.com's translator has given us the entire transcript of the interview, available for download here.

Here are the answers to first few questions:

ECHO: Hello. Karinna Moskalenko, lawyer for Mikhail Khodorkovsky

MOSKALENKO: The only thing that absolves me is that I came to you right from the airport.

ECHO: Oh come now, there is much that absolves you. We are not those who intend to accuse or adjudge you for something.

MOSKALENKO: You don't say!

ECHO: Please, tell us everything in the order it happened. Because we're already getting questions from listeners. First the basic facts. What happened there? What did they force you to sign.

MOSKALENKO: First a small preamble. I consider that there are exactly two serious problems with respect to this case. One problem is the Procuracy General's. The Procuracy-General doesn't under any circumstances want that these, as we say, mad, absurd, groundless (to say it more diplomatically) charges become known to our population. They've told our population that he's guilty of grave crimes, but they don't want to say what these crimes consist of. They don't want to give us the opportunity to refute them rationally.

ECHO: What do you mean, they don't want? They named the articles [of the Criminal Code under which Khodorkovsky has been charged].

MOSKALENKO: Yes.

ECHO: Theft plus laundering.

MOSKALENKO: You said that, not I.

ECHO: I said that, but illiterately.

MOSKALENKO: No, you said what they said illiterately, they accused him before all of Russia. And now we want to tell all of Russia from what substitutions - that's what I call it - these charges are put together. But they're not letting us. How can you keep lawyers from doing this? They're free people. In a free, democratic country. In that case you need to artificially introduce some kind of prohibition. The prohibition is set forth in the code of criminal procedure for a specific category of cases, and when the secrecy of the investigation demands the silence of the participants in the processes, it gives the opportunity to obtain a signature of non-disclosure of the data of the investigation. It is rather difficult to fight against this; Article 310 about criminal liability for this act is quite vague. It really ought to be given some thought in the context of the constitutionality of this norm; indeed, to demand through the Constitutional Court. But there's no time. For us, for the defense. They're already now starting to press us, indeed press us this way: It would seem that it is within their capability to force us to sign [a non-disclosure statement] with respect to the case for which we have been invited to Chita. And, in general, to do so at least lawfully, at least creating the appearance of the law, let's put it that way. But what do they do? They make a substitution. They say: Here, sign that you won't disclose information with respect to case number - and there we notice a long number that we have never seen before.

ECHO: This is an unknown [case] number?

MOSKALENKO: An unknown number. But there must be a dozen of these numbers, probably. Not only did we not know about this number, we were warned and invited to the city of Chita with respect to another case number that was known to us. And we came. But here they're telling us: not knowing what, not knowing about what, sign here that you will not disclose this. But my friends, I don't know what it is I'm not supposed to be disclosing. This is simple human logic talking: Karinna, wait. You're not signing about yourself; the man you are defending is behind you. You have a duty, this is your professional duty, to act in his best interests. If they shut your mouth in the case about which you don't even know what it's even about, then you'll not only cause yourself harm, you might even accidentally find yourself criminally liable. Because there won't be any delays at the Procuracy-General. They've been threatening me a long time. If you recall, in this very studio in the next room we talked about how they've been promising for a long time to take away my high calling of "advocate" [i.e. disbar me] which it was not they who had given me. And here, can you imagine, criminal liability plain and simple. Signing a document obliging me not to leave town and various frightening bloody boys. And so, in order not to do this, in order not to cause harm to myself as a lawyer, because I'm needed in the case after all, and not to cause harm to my client, because, in my opinion, he's already had so much harm caused to him anywhere and everywhere that you've simply got to take pity on the person. And I decide for myself: I am not going to sign a document that in essence represents a counterfeit document. Fabricated. And I state this position, I state it yesterday, on the 5th, and Yuri Markovich Schmidt states pretty much the same thing, that this case number is unknown to us, and we can't sign. On the 6th they don't touch us with this. Although we're being taken around practically like a prisoner convoy, because those same convoy guards who escorted us into the security zone don't give us the opportunity to go out onto the street, but demand that we go to through to the chief of the institution. The chief of the institution has nothing against us. This is a calm, decent lieutenant-colonel person. But there we meet the investigative group, which, firstly, is running around like it owns the place, there in the investigative isolator. You remember how much we fought for the independence of the penitentiary system from the organs of investigation. So, we lost, becasue we had somehow managed to attain this for them, but they absolutely don't know how to hold on to their independence in their own hands. They're walking around like servant girls, serving the interests of the Procuracy-General. And not even legitimate interests of the Procuracy, I might add. The Procuracy-General is in command there, step up here, put your signature there. Sign here to receive this. We say: Excuse us, but maybe after all you'll do this not after 6 PM in the evening, someplace in some office, where we can have a seat and review the documents. In general, the character of the documents is incorrect. Let's discuss. You put your signature right there or we'll file a report right now that you're refusing to sign. Okay, file away, no problem, you've already filed so many anyway.

ECHO: And what's this?

MOSKALENKO: That we are acting wrongfully and are disturbing the conduction of their actions with respect to taking signatures from us. So that's how it all was. We were escorted there, we spent some time there, eventually did get copies of these document, eventually they filed, probably, some kind of papers about how we're nothing but a bunch of refuseniks. And that seemed to be the end of that. And in the evening I get a call from an investigator, a lady, she's sweet, she always behaves so daintily and politely, she says: so you're leaving tomorrow at 9:30. Okay, everything's clear. I tell her at this time that I've got a seriously ill child, that I have already finished work with my client. I also add that he's already written that he does not need my participation in these actions, I'm going to continue work on my way with the European Court. So I say, as they say, have a nice stay.

ECHO: By the way, how are things there?

MOSKALENKO: That's no "by the way" question. Let's get to the end of one question. So, yes, she says: I'll call you back. And she calls me back in a very bizarre manner. The littele bell rang today at 8 in the morning, when they came up to me after passing through security, I finally got to the Chita airport, that is by car. After going through all kinds of screenings. Shoes off, overcoat off, without suitcase, with suitcase, without purse, with purse. They went through everything, even when they had doubts, I say: I'd better open the suitcase for you. Everything was very polite.

During President Vladimir Putin's "friendly" meeting with the Russian Union of Industrialists and Entrepreneurs, he urged the influential leaders of the private sector (and what remains of it in energy) to do more of their production domestically and put an end to Russia's raging case of Dutch Disease (however, as we have noted, economic diversification becomes harder when you have high oil prices).

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LUKoil's Alekperov would rather ignore the market and follow the Kremlin's instructions to avoid Khodorkovsky's fate

Here's what Putin said:

First and foremost we need to develop our system for processing raw materials. To do so we need to significantly increase the share of high value-added processing industries. We need to learn not only how to profitably export crude oil, gas, ore minerals and wood, we also need to process natural resources within Russia and to produce full-value high-tech products for foreign markets. In other words, to maximise profits from each tonne of ore, coal, other hydrocarbons, wood, and other raw materials extracted in Russia. Russia must receive significantly greater profits from developing its truly enormous mineral reserves.

Seeking to diversify Russia's economy away from commodity exports is certainly a good thing to strive for, however, the country has a long way to go in terms of education, training, and technical expertise in order to become competitive in these areas. President Putin's efforts to strong-arm Russian companies, especially given the location of this meeting just days after applying new bogus charges to Mikhail Khodorkovsky, is yet another step in the wrong direction.

The FT remarks on how the meeting carried a veiled threat:

Vladimir Putin’s choice of location for this week’s annual audience with Russian business leaders seemed symbolic. Whereas in recent years the event has been held in a cramped meeting room, this year it returned to the grand St Catherine’s Hall in the Kremlin, where it last took place in 2002.

That meeting five years ago was marred by sharp words between the president and Mikhail Khodorkovsky, the founder of Yukos, now seen as a harbinger of the legal assault launched in 2003 on the country’s then richest man and his oil company.

Mr Putin’s choice of venue this year may have been in honour of the 15th anniversary, celebrated this week, of the Russian Union of Industrialists and Entrepreneurs, the business lobby nicknamed “the oligarchs’ union”. Or it may have been a sign of the “settlement” the president has reached with Russia’s remaining, Kremlin-loyal, businessmen, even though the Yukos affair rumbles on.
...
But Mr Nemtsov says the Putin administration’s hyper- centralisation of control and cowing of business – particularly through the Yukos affair – has prevented the RSPP from becoming a genuine equivalent to western business lobbies. “It mainly exists for members to prove their loyalty,” Mr Nemtsov says. “I don’t think anyone really listens to them inside the [Kremlin] walls.”
...
Even during this week’s affable Kremlin meeting, Mr Putin had a reminder for participants, the day after new money-laundering charges were brought against Mr Khodorkovsky. “I hope you now appreciate,” he said, “the benefits of following strict rules and tax discipline.”

And, as demonstrated by Vagit Alekperov, the head of LUKoil, the threat was exceedingly effective - he practically mimicked Putin's exact comments on the need to refine his crude in Russia:

The number one priority for Russian oil companies to refine all of the oil that they produce in Russia, Lukoil (RTS: LKOH) President Vagit Alekperov said at a meeting with Russian President Vladimir Putin on Tuesday.

He said that currently 50% of the oil produced is exported and 50% of the products are refined. Russia needs 25%-27% of the refined products, he said.

Refining enterprises will need to invest $5 billion to change over to the Euro-5 standard by 2015, Alekperov said. Moreover, additional resources and a concentration of worker resources are needed in order to build new petrochemical production enterprises, he said.

Today Russia, Bulgaria, and Greece endorsed the Burgas-Alexandroupolis oil pipeline project, which as we earlier reported will seek to relieve the bottleneck at the Bosporus Straight in Turkey between the Black Sea and the Mediterranean. Some analysts don't think this pipeline makes much economic sense, and is a ploy by the Kremlin to pressure Turkey's control of a critical transit route.

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According to AP, Russia (with participation of Gazprom and Rosneft) will control its typical 51% of the project - the minimum share required for opacity and their preferred style of shareholder relations:

No immediate details were announced about the cost of the privately funded project, in which a 175-mile pipeline will be built, but experts had estimated it at between $1 billion and $1.3 billion.

The pipeline will bring Russian oil from Bulgaria's Black Sea port of Burgas to Alexandroupolis in northeastern Greece, bypassing the environmentally vulnerable Bosporus Straits. Russia is expected to have a 51 percent share in the deal, with Bulgaria and Greece splitting the remaining 49 percent.
...
The Burgas-Alexandroupolis pipeline, tentatively scheduled for completion by 2010, would initially carry 700,000 barrels of oil a day port through a 36-inch pipeline, with capacity set to eventually rise to more than 1 million barrels a day.

Russia's Gazprom-Neft and Rosneft are to participate in the venture, along with Russian-British venture TNK-BP (nyse: BP - news - people ), Bulgargaz and Terminal Universal Burgas from Bulgaria, and Greek companies Hellenic Petroleum and Thraki.

Money Talks: On the Rising Salaries of Russian Judges

By Grigory Pasko, journalist

90 thousand applications – an indicator of quality

President Putin’s Edict about increasing the salaries of judges was published in Russia on February 3, 2007. Now, a judge in Russia will receive more than three thousand dollars a month. The Edict states that the raise in salaries is being carried out “with the aim of granting material guarantees to judges for the full and independent effectuation of justice”.

It is known that as far back as the end of 2004, at the All-Russian Congress of Judges, Putin had promised to do everything to make the judge’s robe more attractive for jurists. Since that time, the salary of judges has increased by nearly three times. Today, the profession of judge has become one of the highest-paid in Russia. But far from the most respected by those who turn to Russian courts to seek justice. The whole judicial system of the country has for a long time already been carrying the figurative title of “Basmanny justice”. And eloquently testifying to the quality of the administration of this justice are the applications of Russian citizens to the European Court of Human Rights in Strasbourg: according to the data of PACE experts, over 90 thousand applications from Russians have piled up in this court today.

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Mironov says the Duma should be able to dismiss judges

In connection with this, I recall a speech in February 2004 by the speaker of the upper chamber of the parliament of Russia, Sergey Mironov. He was intending then to come out with a proposal to allow the senate to not only appoint judges, but also to dismiss them. In so doing, he said: “We need to identify the bad apples and remove them from the basket – I am prepared to report about this to the president, an administrative reform is taking place just now”. In the capacity of an example… of vigilance Mironov reminded his listeners about numbers cited by Supreme Court head Vyacheslav Lebedev – 8 nominees for the post of federal judges were rejected in Moscow alone “inasmuch as they are directly associated with criminal groupings”.

To damn your judges

There is an ancient saying whose origins are lost in the mists of time: “Everybody has the right during 24 hours to damn his judges”. It would seem that in today’s Russia, “everybody” not only has the right, but actually makes use of it, judging by the vast number of complaints – fully justified, I suspect! – that have accumulated today about the quality of the work of Russia’s courts.

There was once a time when the country’s chief judge, Vyacheslav Lebedev, said in an interview with “Izvestia” that “openness and transparency are the most important things for the effective existence of a judicial system”. Funny, I thought that for a court the law should be more important…

But let us return to that declaration about “openness and transparency”. I have every right to assert that these things Lebedev finds “most important” are hollow words for thousands of Russian judges. They not only frequently ignore the requirement of the law for court sessions to be open to the public, they also create a mass of obstacles for citizens’ claims to even appear before them for consideration. Let’s look at the Moscow City Court as an example. In order to file a claim or an appeal, you need to spend several hours standing in line. They will accept your papers only if you’ve complied with a dozen conditions (dates, stamps, fees, particulars, deadlines…). Then, to use an expression of president Putin’s, “you will torture yourself swallowing dust” as you wait for your claim to be considered.

Another method often used in that same Moscow City Court: You receive a notification that a court session on your claim will take place on such and such a date at 11 o’clock in the morning. You arrive, and are told that the session has already taken place! But not at 11 – at 10. Without you being present, naturally. But the procurators were there – they had been informed of the change in time.

What next? Next, as Lebedev proposes in his interview, “appeal this decision in the cassational instance”. And so it is that people are forced to spend years trying to achieve justices, bouncing around from a queue to the Moscow City Court clerk’s office to another queue to the office of the Moscow City Court Presidium and later to the Supreme Court of Russia.

The uncouthness of judges has become a byword. I, for example, was so outraged by the behavior of one of the judges of the Moscow City Court towards my lawyer that I spoke out publicly in this regard even before the adoption by the judge of a decision with respect to my appeal (for the purposes of this story, it doesn’t really matter that the decision wasn’t in my favor). Next I wrote an appeal to the qualifications collegium of judges of Moscow with a request that it conduct a review judge B.’s actions. The final answer of the deputy chairman of the Moscow City Court, V. Gorshkov, was this: inasmuch as you are indicating that B.’s actions diminish the authority of the judicial power, then you are in fact raising the question of the lawfulness of the judicial ruling rules with respect to the case. That means, Gorshkov summarizes, file a supervisory appeal of B.’s ruling.

You can call Gorshkov’s reply what you will – hair-splitting or Jesuitism. But one thing you can’t call it is a document that meets the requirements of the law.

There was a time when judges used to complain about their low salaries. Now they don’t complain about that any more – with a salary of three thousand dollars a month, they can probably allow themselves to issue a just ruling every now and then. But now they’re saying that there aren’t enough judges. Indeed, there are only around 20 thousand judges in Russia. In Germany, by comparison, there are 60 thousand. But I’m very worried about the quality of training of today’s judges (at times, their lack of legal sophistication simply takes one’s breath away). And if they were to draft and appoint thousands of new ones, then where’s the guarantee that these will be any better than today’s lot?

A few words about training. As a rule, Russian judges get their education in the judges-and-procurators departments of law schools. Maybe this is where they first establish their “Siamese twin” relationship with the procuracy? Why not – just an idea here… – introduce the practice of training judges in judges-and-defense-lawyers departments? Oh wait, we don’t have those! Then we should! We need to change the psychology of judges from accusatory to objective. A judge has to be an arbiter between the prosecution and the defense. Otherwise, any words about an adversarial process will remain just words.

Replace the judges – or the president

I would start changing the psychology of the judges by replacing the majority of today’s court chairmen [chief judges—Trans.], starting with Lebedev. I believe that the quality of the work judges do depends in large part, if not totally, on the person of the court chairman. Well, and the fact that so many court decisions are “made-to-order” or “contract” verdicts – that just goes without saying… Of course, a lot here depends on the President, who, as can be seen, is perfectly satisfied with both Lebedev and the entire community of judges in the country. In this case, we need to start talking about the quality of the work of the president, and not only that of judges.

It is noteworthy that judges themselves often speak about the openness of trials. That same Lebedev reported that a decree of the plenum of the Supreme Court of the RF “On the publicness, openness, and transparentness of Russian justice” is being prepared. Before that, information was floating around in the mass media about the need for the creation of a specialized court TV channel. Last year saw the publication of the memoirs of the former chairman of the Supreme Court of the USSR, Vladimir Terebilov, in which he writes about “openness, as the best guarantee of the independence of a court”. Even earlier, I saw a book with the intriguing title “The Court Needs the Support of the Media”. Among other things, its author – former chairman of the St. Petersburg City Court, Vladimir Poludnyakov – notes with complete justification that “dispassionate, regular information about court decisions must coincide with our (the judges’—G.P.) participation in the explanation of decisions in cases that attract the elevated attention of the public… And this is completely within our capabilities”.

Indeed, it is hard to imagine that the judges of the Basmanny court, or of the Moscow City Court for that matter, don’t know how to talk at all. In that case, what or who is keeping them from speaking out about the prominent cases that have literally shaken the Russian public to the core? Cowardice? More likely dependence on the executive branch of power. And the more money the power gives out to the judges in salaries, the stronger this dependence is going to manifest itself.

- Harassment of Khodorkovsky's defense counsel continues -

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A translation from Novaya Gazeta:

Khodorkovsky's lawyer Karinna Moskalenko, who was detained in Chita by officers of the procuracy and forced to sign a statement on non-disclosure of investigation data, tells the details to a "Novaya Gazeta" correspondent:

"Before flying out from Chita, I was approached by airport employees who asked me to follow them for an additional security check. There happened to be journalists from one of the television channels next to me. They got interested and asked the airport workers what was
happening. The employees replied that they would not speak with the journalists, only with me. I objected: journalists are my witnesses. I said I wasn't going anywhere, and that there couldn't be any additional security check. I had already gone through a thorough search, opening up all of my baggage myself. I suggested to them that they take my handbag from me. Then the airport employees supposed that there was something wrong with my boarding pass. This could not have been true. I showed them my boarding pass and asked what they really wanted from me. It was declared to me that inasmuch as I am refusing to cooperate, I will simply be removed from the flight. This is the only flight for 24 hours. I could not allow a delay, because in Moscow I have a sick child and work that can't wait. The previous day I had told about this to the investigator. He asked me again when I'm flying out, and then revealed himself here in this strange way. All this time, the journalists were phoning the International Commission of Jurists, to other organizations. The people who had attempted to take me away got confused and didn't know what to do.

"Two officers of the procuracy appeared. The first - a young man - behaved sufficiently politely. I said: 'I'm sorry that you have to begin your career in law with such an abomination. The second, a man of unpleasant aspect, even refused to give his name. I demanded that he get away from us. He was taken aback by that, and stepped aside. I announced that I am being forced to sign a non-disclosure statement, I wrote in the document that I am doing this under duress, and promised the procuracy officers that I would immediately file a complaint with the Procuracy-General. They tried to force me to sign yet another document, signed by investigator Karimov: it said that my refusal to sign the non-disclosure will be regarded as a criminal offense".

Adding to the heightened tensions with the international community over arms sales to Iran, the spat with the United States over the installation of anti-missile defense in Poland and the Czech Republic, and the Kosovo situation, Russia has racheted up the heat with the unveiling of plans to spend $189 billion on 17 new ballistic missiles.

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The Russians plan to deploy 34 more silo-based Topol-M missiles

You've got to love the Russian's sense of timing on this one.

From the Journal:

President Vladimir Putin and other Russian officials have described the Topol-M as a bulwark of Russia's nuclear might for years to come, and hailed its ability to penetrate any prospective missile defenses. Mr. Putin last week dismissed Washington's claims that missile-defense sites it hopes to establish in Poland and the Czech Republic were intended to counter threats posed by Iran, and said that Russia would respond by developing even more efficient weapons systems.

A rising tide of oil revenues gave Russia a chance to increase its defense spending following a desperate money shortage that plagued the military throughout the 1990s. "The economic growth and the scientific achievements allow us to reach a qualitatively new level in military procurement," Mr. Ivanov said. Russia's defense budget which stood at 214 billion rubles in 2001 nearly quadrupled to 821 billion this year, Mr. Ivanov said.

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