May 2007 Archives

[I am pleased to announce a special guest column from the political analyst and Trinity College Scholar Michael Alguire, who recently completed a Specialist Program in History at the University of Toronto. In this highly detailed and rigorously researched examination of Turkey and Iran's competing energy interests in Central Asia, Alguire elaborates a theory of a new, soft empire exercised by Russia, controlling energy resources in the absence of territorial control. I highly recommend that those interested download a PDF copy of the article to benefit from the copious footnotes. - Robert Amsterdam]

The Turkish-Iranian Rivalry in Central Asia and the Caucasus and Its Impact on Russia

By Michael Alguire

While the global news media has given extensive coverage to the geopolitics of energy resources in the former Soviet Empire, little attention has been paid to the competition between Turkey and Iran in Central Asia and the Caucasus, and its impact on Russia. Firstly, Russia's fear of a rising Turkic nationalism among its Turkic minorities has been one of the factors that have led Russia to seek an alliance of convenience with Iran. Secondly, while competition for spheres of influence in the Caucasian and Central Asian regions exists between all three powers (Russia, Turkey, and Iran), Turkey's alignment with the West on energy issues has served to create a common interest between Russia and Iran in preventing the emergence of Turkish and Western dominance over Caspian Sea energy resources. Finally, Russia appears to be using ethnic tensions in the Caucasus to secure its dominance of the region, and prevent the European Union (EU), the United State (U.S.), Turkey, and Iran from bypassing Russia in their quest for energy resources.

When Turkey and Iran compete, guess who wins?

The origins of the Turkish-Iranian rivalry lie in the competition for hegemony in the Middle East between the Ottoman and Persian empires under Persia's Safavid (1501-1724) and Qajar (1795-1925) dynasties. From the late 19th century onward, several new factors emerged that affected the nature of the rivalry. Firstly, during the late 19th and early 20th century, there was the emergence of the ideology of Pan-Turkism (which strives for the cultural and physical unity of all peoples of Turkic origins). The second factor was the founding of the present-day Republic of Turkey as a secular state under the country's founder, Mustafa Kemal Atatürk, in the aftermath of the First World War. The final factor was the Iranian revolution of 1979 that transformed Iran into an Islamic theocracy. All of these elements coalesced to define the renewed Turkish-Iranian rivalry that began with the formation of the states that compose the Commonwealth of Independent States (CIS states) in the aftermath of collapse of the Soviet Union in 1991.

The Soviet Union's collapse left a power vacuum in Central Asia and Azerbaijan that was quickly filled by Iran and Turkey. The rivalry between the two countries has two-dimensions: firstly, each promotes its own form of government i.e. Turkey advocates secular democracy, while Iran promotes its model of Islamic government. The second dimension involves the exploitation of ethnic and linguistic ties. Turkey promotes Pan-Turkism, patronizing the Turkic-speaking populations of Kyrgyzstan, Turkmenistan, and Uzbekistan; Iran has attempted to extend its influence into Tajikistan, whose inhabitants are culturally Iranian and speak an eastern dialect of Persian. More recently, Turkey has voiced its opposition to the Iran's alleged quest for nuclear weapons. This rivalry has multiple implications for Russia, particularly with regard to Turkey's position in this contest.

To begin with, the ideology of Pan-Turkism was created by Turkic groups like the Crimean Tartars living in Russia during the late 19th and early 20th centuries as a response to efforts by the Russian state to assimilate them into Russian culture. Russia feared a revival of this ideology after 1991. The present-day Russian Federation has significant Turkic minorities living within its borders, and an upsurge in Pan-Turkism could lead certain regions, such as Tataristan, Baskirdistan, and Yakutistan, to seek independence. Turkey is also a long-standing ally of the United States, and the U.S. has been trying to extend its influence into the former Soviet empire (and particularly the energy-rich Caspian Sea region), since the early 1990s. Furthermore, Turkey has also been working closely with the EU in efforts to create a natural gas pipeline running from Central Asia across the Caspian Sea, through Azerbaijan and Turkey into the Mediterranean, thereby reducing the EU's dependence on Russian energy pipelines. In 2006, the EU and Turkey announced the approval of Nabucco gas pipeline, which is scheduled to begin construction in 2008 and will route the gas of the Caspian region through Azerbaijan to Austria, via Turkey, Bulgaria, Romania, and Hungary. The pipeline is scheduled to start transporting gas in 2011.

Yet Russia has managed to match this achievement. On May 12, 2007, the governments of Russia, Turkmenistan, and Kazakhstan announced plans to construct a natural gas pipeline that will pump gas from Turkmenistan through Kazakhstan to Russia. Russia already buys Turkmen gas at below-market levels, and also effectively controls Turkmenistan's gas reserves through its network of Soviet-era pipelines owned by Russian energy giant Gazprom. Thus, this newest pipeline will both increase Russia' controls over Turkmen gas reserves, as well as allow Russia to continue exporting its own gas to Europe more profitably. While Russia has won an important victory in the competition for Caspian region resources, the struggle for these resources continues, particularly in the Caucasus. In that region, Russia, Turkey, and Iran either have used or appear to still be using ethnic tensions as a means to impede their competitors' ability to gain a solid handle on energy resources. These ethnic tensions have a complex history.

After taking power in late 1917, Vladimir Lenin appointed Joseph Stalin as the Commissar of Nationalities, responsible for carrying out the new government's policies towards the former Russian empire's numerous nationalities. Both Lenin and Stalin were committed to retaining as much of the empire as possible, and Stalin adopted the policy of "divide and rule," setting boundaries of the Soviet republics in such a way as to leave large ethnic minorities in each republic, separating ethnic groups across two or more republics. These minorities would then serve as fifth column inside these republics, preventing a particular republic from separating from the Soviet Union in order to avoid potentially harsh treatment under a particular independent republic's ethnic majority. Such was the case with the three breakaway regions in the Caucasus: Abkhazia and South Ossetia in Georgia, and Nagorno-Karabakh in Azerbaijan.

Abkhazia was incorporated into Georgia in 1931 by Stalin, and in 1992 the Abkhaz began fighting for independence from Georgia (allegedly with Russian assistance), which they declared in 1993. A CIS peacekeeping force composed mostly of Russian soldiers has been stationed in the region since 1994, and Russia continues to use a military base at Gudauta, despite a 1999 treaty that committed the Russians to abandoning the base. Russia has made it easy for residents of Abkhazia to obtain Russian passports, which most people now hold. In addition, the Russian ruble is widely used in the region.

South Ossetia, the other region which has broken from Georgia, was originally part of a united Ossetia that was divided between the Georgian and Russian republics by the Soviet authorities in the 1920s. The Ossetian struggle for independence from Georgia began in 1989, ending in 1992 with an agreement for the deployment of Russian, Georgian, and Ossetian peacekeepers in South Ossetia. Russian peacekeepers remain in the region today, although the Georgian parliament has called for them to be replaced with an international force. As in Abkhazia, most South Ossetians have Russian passports and the Russian ruble is commonly used in trade. In January 2006, the Georgian government accused Russia of orchestrating several explosions on a gas pipeline in North Ossetia, thereby sabotaging Georgia's main gas pipeline. The Georgians claimed that this operation was carried out in response to the Georgian parliament's demand that Russian troops be removed from South Ossetia. Russia claimed that the explosions were carried out by pro-Chechen insurgents. Russia has also pressured Georgia to sell its pipeline network to Gazprom. The Russian military presence in Georgia proper will end in 2008, when Russia will vacate its two remaining military bases inside the country. However, so long as Russia maintains its troops in these breakaway regions and supports their separatist governments, it will be able to preserve its sphere of influence in this part of the Caucasus as well as compete with the United States (which is providing training and support to the Georgian military) and Turkey (which serves as an exit point for the Baku-Tbilisi-Ceyhan (BTC) pipeline that transports oil under Georgia). Russia will also be able to counter any Iranian initiatives in the area.

Finally, there is the disputed region of Nagorno-Karabkh, a de facto independent region that is surrounded by Azerbaijan's territory. Like Abkhazia and South Ossetia, the Soviet authorities established the Nagorno-Karabakh Autonomous Region within Azerbaijan in the early 1920s as part of a policy of "divide and rule." The Region was populated predominantly by Armenians, and Armenian discontent with this situation smoldered throughout the Soviet period. Ethnic Armenian-Azeri frictions exploded into further violence in the late 1980s. As the violence escalated, the ethnic Azeri population fled Nagorno-Karabkh and Armenia, while ethnic Armenians fled the rest of Azerbaijan. Outside powers used these ethnic tensions to their advantage.

Both Russia and Iran were angered by the staunchly pro-Turkish stance which the Azeri government adopted in its foreign and domestic policies following independence, policies which were formulated on the basis of the Azeris being a Turkic ethnic group. Russia wished to maintain its long-standing influence in the country. Iran wished to use a common religious heritage (both Azerbaijan and Iran have Shi'a Muslim majorities) to influence the country. It also strove to prevent the rise of a strong Azerbaijan that could push for unification with Iran's own large Azeri population. In pursuit of these goals, both Iran and Russia provided encouragement and financing to ethnic communities inside Azerbaijan that were resisting the government's policy of "Turkification." To a certain extent, this included the Armenians of Nagorno-Karabkh. The Nagorno-Karabkh conflict ended in 1994 with the signing of a Russian-backed ceasefire that left Nagorno-Karabkh under ethnic Armenian control. Sporadic fighting has occurred since the ceasefire, and in December 2006 the territory held a referendum in which 98% of the voters supported a constitution that declares the region to be sovereign state that is completely independent of Azerbaijan. This development is interesting in light of the fact that Russia still operates a military base in Armenia itself. Furthermore, in April 2006, Russia purchased Armenia's pipelines and a power plant in exchange for setting domestic Armenian gas prices at half of European levels until 2009. This deal also gives Russia control of a pipeline which runs from Iran into Armenia, allowing Russia further influence over Iranian policy in the Caucasus. The Armenians welcome the Russian military presence as a counterweight to its western neighbor and diplomatic foe, Turkey. Thus, given that Armenia is already a diplomatic ally of Russia, and in spite of Azeri government's insistence that the referendum was illegal, a resolutely independent Nagorno-Karabkh could serve as a client state for the Russians inside Azerbaijan, in the same way that Abkhazia and South Ossetia appear to be serving as its client states in Georgia.

All of these separatist regions allow Russia to maintain its influence throughout the Caucasus in absence of the direct territorial control it enjoyed in the Soviet era. This apparent policy of "divide and conquer" may eventually lead to Russia gaining near complete control of the energy resources of Central Asia and the Caspian Sea. Thus, while the Turkish-Iranian rivalry has helped to make Russia and Iran allies of convenience, Russia's policy of "divide and conquer" in the Caucasus could lead to Iran losing the battle for definitive control of the Caspian region's energy resources.

In search of a modern-day Potemkin village
OR How Putin went to the countryside…

By Grigory Pasko, journalist

The man whom I hired to drive me around Samara turned out to be a policeman. He told me the following story. Vladimir Putin visited Samara Oblast for the first time in the year 2000. This was in September. Putin was supposedly shown a village with a potato field. But it turns out, according to the policeman, that the potatoes had been specially planted just for the important guest’s visit. They built a special concrete helipad in the middle of the field. And they also specially built an asphalt road, so that Putin could be driven to the potato field. When the guests left, the road and the helipad remained. But the potatoes were dug back out immediately.

“You actually saw all this yourself?”, I asked the policeman.

“An acquaintance of mine was standing there in the cordon”, he replied.

Because this story sure smelled like it had been made up, I decided to find out for myself. The fact is that Putin really did visit Samara Oblast in September 2000. They say that Putin asked governor Titov where his dacha was located. Titov replied that it wasn’t far from Samara – about 150 kilometers away. And offered to take Putin there to show him around. Besides, the governor added, there was a museum dedicated to the famous Russian painter Ilya Repin there. Putin took him up on his offer.

And so it was that we set out for this village – I and my new Samaran acquaintance, the former boxer Sasha, and the current police senior lieutenant Vadim, who, it turns out, had been born in the village of Shiryayevo (where the Repin museum was) and whose father still lives there to this day. Needless to say, none of us actually believed in this tall tale about the potatoes. But it was perfectly within the realm of possibility that a whole road could have been built for the president of the country in one night. Especially because roads are much less expensive than any other “Potemkin village” project, which Russia’s history is so rich in.

Photo of protected areas along the Samara Bend in the Volga by Grigory Pasko

At the very same time that we were driving to the village, Putin was meeting Angela Merkel and Jose Manuel Barroso at the “Volga crag” within the framework of the Russia-EU summit (the hamlet of Usolie, where their meeting took place, is not far at all from Shiryayevo), and they were getting ready to eat ukha [a traditional Russian fish soup that foreign guests to the Volga region are often treated to—Trans.] in the «Burlaks’ retreat» restaurant. Our drive took us through a picturesque region along the banks of the Volga. Somewhere in these parts, 163 years ago, the 26-year-old Ilya Repin had made the sketches for what would become what is probably his most famous painting – “Burlaks on the Volga”, also known as “The Volga Boatmen”. [Translator’s note: “Burlaks” were serfs living along the banks of the Volga who hauled boats upstream – a job generally reserved for draft horses and mules in other countries.]

“Burlaks on the Volga” by Ilya Repin (1870-1873)

The road to Shiryayevo was actually good – it had been built 60 years ago by German prisoners of war. There were many mine shafts visible along the road – limestone used to be mined here back in the old days. Soon we arrived in Shiryayevo. After the levee came an asphalt road leading to the artist’s museum. “This is the road I was telling you about,” said Vadim. “The one they built just for Putin’s visit. My father told me this; he actually got to see Putin then.”

Photo of the smoothly paved “Putin road” into Shiryayevo by Grigory Pasko

The director of the art museum of Samara, Anneta Bass, recalled that during the time of the president’s visit, everything was “very democratic, and the president’s security even told the people who had clustered together in expectation of Putin to act naturally.” When Putin walked into the museum, his first question was if everything here was real. (Freud would have had a field day with this question: if you yourself aren’t all real, then you distrust everything else, too).

When we walked into the administrative wing of the museum, the first thing that caught my eye was a photograph of Putin writing a comment in the museum’s guest book. Hanging in a separate frame was his actual comment: “With a sense of satisfaction, pride and gratitude for your work in preserving our national heritage.” (Right next to Putin’s comment was one from the then plenipotentiary representative of Putin in the Volgan Federal District, Sergey Kiriyenko, who today is the head of Rosatom of Russia).

Not part of the Repin Museum’s regular collection. Photo by Grigory Pasko

She also told us that governor Titov’s dacha is located in the settlement of Solnechny. We later got to see this “dacha” from afar: massive stone mansions sticking out like sore thumbs in their opulence against the background of the squalid village huts.

Aramova showed us the house-museum, and told us how in the 1970s, a Shiryayevo pensioner, the former teacher Alexandra Portugalskaya, had found Repin’s house, which, after endless Soviet bureaucracy and red tape, eventually became the museum.

Photo of the I.E. Repin House-Museum in Shiryayevo by Grigory Pasko

Needless to say, we didn’t find any mysterious potato fields or helipads in Shiryayevo. The road was there, though. We found out that the helicopters had just landed on the levee, not on some specially built helipad. So it turns out the policeman had lied.

The facts bear witness that on that visit, Putin didn’t ever enter the city of Samara proper. In 2000, his helicopter had touched down in the village of Kuzkino of Shigonsky Rayon, where he had opened the new academic year at a school. After this, he flew to Shiryayevo.

Once upon a time, as the local newspapers wrote, Shiryayevo had been a model village. Anneta Bass wrote about Putin’s arrival in one of her articles: “Museum workers dream that the village would become a tourist preserve. But the eternal budget deficit did not yet permit funds to be allocated for the construction of a hotel. Perhaps the visit of the president will help in this. And Putin, they say, would personally not be against buying a cottage in Shiryayevo…”

Photo of Lidiya Grigorievna Aramova, curator of the Repin Museum, by Grigory Pasko

For now, Putin still doesn’t have a cottage in Shiryayevo. I asked Lidiya Grigorievna if maybe the museum hadn’t devoted too much exhibition space to Putin. After all, they’ll soon need to change this exhibit… She thought a moment and then replied: “If we need to, we’ll change it”.

Below is a 45-minute documentary on Russia's demographic crisis aired on Britain's Channel 4 titled "Death of a Nation." (hat tip to LR and an anonymous commenter for the links).

From the Washington Post:

Anti-American rhetoric has become a staple of Kremlin-controlled television and many Russian political speeches, a reflection according to analysts of both genuine grievances and a desire to assert Russia's revival as a world power under Putin. The Kremlin views Western lecturing on democracy in Russia as an attempt to derail Putin's carefully orchestrated succession plans.

Putin said last week that criticism of human rights is an attempt to make Russia "more pliable" on other issues. "The death penalty in some Western countries -- let's not point fingers, secret prisons and torture exist in Europe, problems with the media in some countries, immigration laws which in some European countries are not in line with the general principles of international law or democratic order -- these things, too, fall under common values," Putin said after meeting with Portugal's prime minister Tuesday.

He went on to say: "Let's not talk about having immaculate, white fluffy partners on one side, and on the other a monster who has just come out of a forest with claws and horns growing instead of legs."

Lev Ponomarev has sent us the attached open letter he has signed, along with more than 20 other prestigious human rights and civil society leaders (including Elena Bonner, the widow of Andrei Sakharov), urging the leadership of the G7 to ask Russia for the release of political prisoners, to end the persecution of human rights defenders, and stop the repression of peaceful opposition marches. A PDF of the letter can be downloaded here - please distribute and reproduce widely.
-----------------------------------------------------------
Distinguished heads of states and governments of the Italian Republic, Canada, the United Kingdom of Great Britain, the Federal Republic of Germany, the French Republic, the United States of America, and Japan!

On 6-8 June, within the framework of the annual Summit of the 8 largest industrially developed democracies of the world, you will be meeting with Vladimir Putin, the President of the Russian Federation, and – in accordance with the current Constitution of our country – the guarantor of human and civil rights and liberties.

We call upon you to explicitly and unambiguously bring to the attention of Mr Putin – your partner in diplomatic negotiations – your concern about the gross, mass, and defiant violations of the most fundamental human rights and democratic freedoms by the authorities of the country they govern.

We call upon you to renounce the practice of “Realpolitik”, turning a blind eye to an anti-democratic course in exchange for shifts of position with respect to political and economic issues.

The experience of the Second World War and the confrontation with totalitarianism has shown the vital importance of observing fundamental human rights in order to ensure international security. It is for this reason that the Universal Declaration of Human Rights was adopted in December of 1948. The Helsinki Act, signed in August of 1976, enshrined a most important principle – that governments do not have the right to violate rights and liberties by pleading state sovereignty.

It is precisely for this reason that we insist that the leaders of the world’s largest democracies stress that the suppressions of democracy and the repressions taking place in the Russian Federation today are unacceptable to them.

The general directionality of the political evolution of the system of power in Russia is ever more irreversibly approaching a point beyond which is found an already openly authoritarian regime, run by persons who have come from the special services and security structures.

We regard as critically dangerous for democracy in the whole world the de facto liquidation of democracy in Russia, and specifically:

• the creation of a managed court and law-enforcement system, which creates unlimited opportunities for persecuting political and civic activists, human rights advocates and their relatives (who in such a manner are transformed into true hostages), for broad-scale persecutions on political, ideological and ethnic grounds. There already exist dozens of persons in Russia who have been recognized as victims of political repressions by human rights advocates;

• the suppression of freedom of the press, and of the freedom of self-expression more generally, the transformation of the principal mass information media – first and foremost the nationwide television channels – into an instrument of state propaganda, based on a cult of the head of state and of military power;

• torture, and inhuman and degrading treatment, are widely practiced within the Russian penitentiary agency, and there exist special places of confinement for torture – a “new GULAG Archipelago”.

We bring attention to the scandalous situation in connection with the violation of the right of citizens of Russia to the freedom to conduct rallies and meetings and to form associations.
This is:

• the unlawful prohibitions and barbarous dispersals of peaceful demonstrations in Moscow (16 December 2006, 31 March, 14 April, 5 and 27 May 2007), in St. Petersburg (3 March and 15 April 2007) and in Nizhny Novgorod (24 March and 27 April 2007), the persecutions of participants in a rally in Samara on 18 May – that had been permitted by the authorities – and the demonstratively mocking detainings of those who were preparing to fly out to Samara;

• the mass persecution of hundreds of civic and political activists, who were suspected of a desire to participate in “Marches of the Discontented” and Social Forums.

We call upon you to:

• seek the release of Russian prisoners persecuted on political grounds – those convicted in the YUKOS case, the Chechen woman Zara Murtazaliyeva, the political essayist Boris Stomakhin and – as indicated in a PACE resolution of 19 April – the scientists Igor Sutyagin and Valentin Danilov and the lawyer Mikhail Trepashkin.

• pay the most diligent attention to the use of charges of extremism for the persecution of human rights advocates and opponents of the regime;

• call upon the President of Russia not to violate the rights – guaranteed by Russian legislation – of the participants in the peaceful Marches of the Discontented planned for 9 (St. Petersburg) and 11 June (Moscow), and to prevent new beatings and cruel detainings of the demonstrators.

Lyudmila Alekseyeva,
Chair of the Moscow Helsinki Group,
Foundation In Defence of Rights of Inmates

Elena Bonner, human rights advocate

Sergei Kovalev,
President, Human Rights Institute

Lev Ponomarev,
All-Russia Public Movement “For Human Rights”

Yuli Rybakov,
human rights advocate,
member of the Bureau of Yabloko party

Yuri Samodurov,
Director of the Andrey Sakharov Museum and Public Centre

Clergyman Gleb Yakunin,
Public Committee In Defence of Freedom of Conscience

Malva Landa,
human rights advocate

Alla Gerber,
Holocaust Foundation

Alexey Simonov,
Glasnost Defense Foundation

Ernst Cherny,
Coalition “Environmental Biology and Human Rights”

Yelena Grishina,
Director of Public Information Centre

Boris Vishnevsky,
Novaya Gazeta columnist, member of the Bureau of Yabloko party

Mikhail Gorny,
The St. Petersburg Strategy Centre

Mikhail Kriger,
human rights advocate

Elena Sannikova,
human rights advocate

Andrei Buzin,
Chair of Inter-Regional Association of Voters

Vladimir Oyvin,
“Glasnost” Foundation

Antuan Arakelyan,
Chair of the Saint-Petersburg Intersectoral Coalition “Dialogue and Cause”

Alexander Vinnikov,
Movement “For Russia without Racism”

Sergey Sorokin,
Movement against Violence

Eduard Murzin,
member of the State Assembly of Bashkiria

Vadim Belotserkovsky, author, human rights advocate

Gregoriy Amnuel, author

For those already exhausted with the cloak-and-dagger spy-murder mystery plots currently unfolding between London and Moscow, it seems that a fresh new controversy has hit the pages of the tabloids: Russia claims to have uncovered a sinister Western plot to deploy a biological weapon to make Russians sterile. Really.

This planned assault on Russian virility, as detailed in a bioterrorism report from the FSB to the president, is being blocked by the institution of a ban by the Russian Federal Customs Service (FTS) on medical specimen exports, including human hair, blood, cells, organs, and other biological samples. The ban was imposed because of alleged bio-weapons research by the following organizations that receive specimens from Russia: Harvard School of Public Health, the American International Health Alliance, the Environment and Natural Resources Division of the US Department of Justice, the Swedish Karolinska Institute and Agency for International Development, and the Indian Genome Institute. These institutions deny any involvement in bio-weapons research.

As Kommersant reports, this is no laughing matter - an export ban on specimens has serious costs to both patients and the economy:

As of May 28, the export of materials for clinical research and analyses is forbidden until further notice. This move could threaten the lives of dozens of patients in the country and completely paralyze clinical research trials being conducted by Western pharmaceutical companies in Russia, a business that is estimated to be worth $100-150 million annually.

Representatives of the pharmaceutical industry told Kommersant yesterday that two courier firms, DHL and TNT Express, informed their clients yesterday that as of May 29 a decision by the FTS prohibits the sending of biological materials out of Russia.
...
According to data from TNT, every day around a hundred packages of biological materials are sent abroad by Russian hospitals for clinical analyses (they comprise the majority of biomaterials sent out of Russia), meaning that the ban on the export of biological materials will affect the health of thousands of Russian patients every month. Children's Oncology Center deputy director Alexei Mashchan told Kommersant yesterday that "if this is true, it is a cannonball to the gut for us." Much of the analyses that require the export of biological samples can only be done abroad, such as the selection of bone marrow donors, which is commonly done in German clinics.
...
Glaxo Smith Kline (GSK) spokesman Alexei Brevnov told Kommersant yesterday that "this decree will be a serious blow to our nation's health – it will set it back years. It makes conducting clinical trials in Russia much more difficult." According to Mr. Brevnov, GSK recently had an similar run-in with the Russian authorities over a pediatric vaccine trial in a private clinic in Volgograd: the local prosecutor's office sued the company, alleging that the study was illegal, and pressed criminal charges against three doctors. In Russia, clinical trials are an obligatory step in the approval of any new drug for introduction into the Russian market.

One would assume that if the Russia's enemies were so motivated to carry out such a heinous act, that they would select something of greater tactical efficacy than seeking to induce sterility. As widely reported in articles on Russia's demographic crisis, it is arguable that fertility is already a serious homegrown problem (just like in Germany or Japan), and that Russia may already be facing depopulation without any foreign meddling. The Russian government is certainly not the only one to use a culture of fear as elections approach, but the ingenuity of pitching this threat as an attack on Russian manhood itself is breathtakingly clever.

Update: Cyrill Vatomsky had a post up about this yesterday, and Siberian Light today.

Turkmenistan has been the most popular Central Asian country in the news lately, what with Russia's continued energy imperialism in the Baltics, Gazprom's bruising attack on BP at Kovykta, and the Kremlin's seemingly limitless success in disaggregating EU solidarity - it appeared as though a direct tap to the Turkmen gas reserves could serve as a crucial counterweight to the Moscow's highly political energy monopoly. And especially with the passing of the Turkmenbashi, everyone embraced the hope that new relations with the EU could be founded to diversify suppliers.

So far this hasn't been successful, and indeed it looks like Moscow is playing a much stronger diplomatic hand, but that doesn't mean that the think tanks aren't just now catching up. For example, British academic Michael Denison of the Centre for European Policy Studies (CEPS) just recently published a new policy brief titled "Turmenistan in Transition: a Window for EU Engagement?" The paper contains some excellent intelligence on the meaning of the transition and the political dynamics at play - it should be required reading for any European policy maker.

Below is an excerpt.

The death of Niyazov has given rise to considerable speculation that the new government may seek to diversify its natural gas export options by reaching a commercial agreement on gas sales, either with individual EU member states, or with the EU collectively. Turkmen gas would be delivered by way of a subsea Caspian extension to the new Baku- Tbilisi-Erzerum (BTE) South Caucasus pipeline which, in turn, would be connected to the projected Nabucco pipeline servicing the major European gas junction situated at Baumgarten in Austria. President Niyazov rejected such an option, preferring to maintain a core gas relationship with Gazprom, while developing projects to export supplemental volumes south-east, through Afghanistan to Pakistan and India (the now largely defunct TAPI pipeline project) and, pursuant to a preliminary agreement signed in April 2006, east to China.

The export of significant onshore gas volumes in a westerly direction is possible but unlikely. Russia, through Gazprom, maintains a tight grip on the existing pipeline infrastructure in Central Asia and has a 25 year supply contract covering almost all of Turkmenistan’s current gas export capacity. Turkmen gas output has stalled since the collapse of the Soviet Union and requires external technology, capital and expertise, which Gazprom will provide, to restore production to Soviet levels. The Russian-Turkmen relationship is symbiotic. Gazprom provides a steady revenue stream and is responsible for pipeline maintenance and upgrading, and attaches no conditionality on human rights and democratisation issues. Russia/Gazprom has (or can adopt) a Soviet modus operandi with which the Turkmen elite feels comfortable. From the other side, Turkmen exports enable Gazprom to service its lucrative European contracts, and provide an important supply bridge before the Yamal peninsula project comes onstream. Thus, Gazprom will not surrender its hegemony in Turkmenistan lightly and, as yet, there is insufficient incentive for the Turkmen leadership to look seriously elsewhere.

However, while the principal onshore eastern fields have been effectively ‘booked’ by Russia (and the new Yolotan field by China), there is potential for European international oil companies (IOCs) to look carefully at developing some of the more interesting offshore fields, notably the Livanov-Barinova-Lam (LBL) structures, which are geologically integrated with the large Azeri Chirag-Guneshli (ACG) deepwater oil and gas fields, currently under commercial development by BP. While these prospective fields will not substitute entirely for Russian gas supplies, they will substantially augment existing Caspian basin volumes, and have relatively inexpensive tieback potential to western Caspian infrastructure, without disturbing Gazprom’s existing contracts and provoking a reaction against European IOCs working in Russia.

The focus on downstream activities has led European policy-makers to completely neglect very serious governance issues in the domestic energy sector. No part of the state apparatus experienced more upheaval in the final eighteen months of Niyazov’s rule than did the state energy bureaucracy. The frequent dismissal and rotation of state officials and ministers was characteristic of Niyazov’s rule. However, the purging of the sector’s most senior and competent personnel from May 2005 was supplemented by drastic structural reorganisation (see Appendix for structure as at mid-2005, to which the new government may revert). The resultant bottlenecks effectively precluded officials from executing policy, engaging with foreign operators, or monitoring effectively existing commercial operations.

The two most powerful and longstanding members of Niyazov’s entourage – Deputy Prime Minister for Oil and Gas Yolly Gurbanmuradov and Head of the Presidential Administration Rejep Saparov – were both dismissed, tried and given long prison sentences for embezzlement in the early summer of 2005. It is believed that each was briefing against the other, and Niyazov took no chances by sequentially removing both.17 They were followed by a procession of other officials: the chairmen of Turkmenneftegaz, Turkmenneft, Turkmengaz and Turkmengeologiya, four of the country’s five state energy agencies, were removed and jailed, along with the head of the Turkmenbashi oil refinery and the chairman of the Central Bank. Nearly all of their replacements were, in turn, removed over the ensuing year, creating a form of ‘permanent revolution’ in the upper reaches of the energy bureaucracy. It is difficult to gauge to what extent the charges laid were real or imagined, although official toleration of some level of corruption in the oil and gas business was believed to exist. It is possible that Rejepov and Gurbanmuradov had overstepped permissible limits or that they were seeking to transform their financial leverage into political muscle.

The damaging shortage of experienced personnel was compounded by Niyazov’s decision on 2 September 2005 to abolish the Competent Body (the interface with foreign oil companies) and transfer its responsibilities and operations, along with those of Turkmenneftegaz, to the Ministry of Oil and Gas. Three quarters of the core staff concerned with the negotiation, licensing and control of contracts were sacked, and there were no clear lines of demarcation or authority within the Ministry for the implementation of executive decrees or new legislation. Such was the paralysis that ensued (allied to the fact that the legal signatory of Production Sharing Agreements with foreign companies is the Competent Body), that Niyazov informally reconstituted the Competent Body on 15 December 2005 to act on a strict case-by-case basis under his personal control, reportedly signing off personally LNG sale contracts of only $10,000.

One of the most important issues facing President Berdymuhammedov was to reconstitute the state oil and gas bureaucracy and restore the negotiation, licensing and control functions to the Competent Body. This he did on 12 April 2007 with the creation of a new State Agency for management of hydrocarbon resources, which essentially assumed the functions of the disbanded Competent Body and will be an important step in facilitating further foreign investment in the sector. Turkmenistan’s relative diplomatic isolation can be partly explained by the acute shortage of competent personnel working at mid and upper levels of government, and their consequent lack of confidence and vision in dealing with IOCs and international institutions. Not knowing what to do, officials have chosen to do nothing. This has been to the immeasurable benefit of Russia and Gazprom. There is, therefore, an important role for the EU in helping to equip a new generation of civil servants and technical specialists to serve effectively in government.

In a surprising gesture of support for free press, the normally pliant Mikhail Gorbachev hosted the launch of a new posthumous book of Anna Politkovskaya's writings in Moscow to coincide with the summit of the International Federation of Journalists. One must wonder how this event plays with his friends in the Kremlin, who have grown used to his strongly supportive and apologetic public posturing. As the head of a civil society group, Gorby is extremely vulnerable to political interference - a situation that is widely assumed to guide and constrict the public expression of his opinions.

Upon presenting a new Anna Politkovskaya collection, Mikhail Gorbachev called for results in the investigations

From Reuters:

Gorbachev, 76, hosted the launch at his political institute in Moscow alongside Politkovskaya's son, daughter and estranged husband, who edited the book.

"Anna may have died, but she is still with us and it (the book) is very important because we need to know more about people like her, especially in a country which is still trying to find its way," Gorbachev told the press briefing.
......
"It's very important that this work is in Russian," Politkovskaya's 28-year-old son Ilya said.

"My mother's only book in Russian was in 2002 and was called 'The Second Chechen War'. But there were problems printing it and distributing it."

The 988-page hardback book, entitled "What for" and priced at around 600 roubles ($14), arranges work by Politkovskaya around different themes.

On Wednesday the prominence given to Politkovskaya's book at shops in Moscow varied.

At the Moscow Bookstore near Red Square, one of the Russian capital's most famous and mainstream bookshops, about six copies of Politkovskaya's book had been jammed into the political memoirs section.

From CJ Chivers of the IHT/NYT:

Mikhail Gorbachev, the former Soviet president and a co-owner of the newspaper that Politkovskaya brought fame, joined her editors, friends and family in calling for the crime to be solved.

He said the case was especially important because much of Russian society thinks that law enforcement officials were involved in her killing. He also spoke, using words that did not to criticize Putin directly, of Russia's need for independent journalists.

"There is a great need for such people," he said. "Maybe now the need is even greater than before."

Gorbachev held a copy of the book and suggested that while her writing was painful for some to read - it often accused government officials, soldiers and police officers of crimes - it was ultimately helpful to the Russian state. "It is bitter," he said. "But it is a medicine."

In case you weren't aware, this week Moscow has been experiencing a record heat wave, with temperatures soaring to 32.1 C (close to 90 F). These surprisingly high temperatures have sent droves of people to seek relief in city fountains, ponds, and the river, causing more than a few alcohol-induced drowning accidents, an apparent negligence toward undergarments (thank you, nEUrosis), and a robust appetite for ice cream.

Reuters: 28 die in heatwave drunk-drownings

Twenty-eight people, many of them drunk, have drowned in the Russian capital this month as Muscovites cool off from a record heatwave in ponds, fountains and canals, rescue services said on Wednesday.

"The main reason for the deaths is that people bathe in places were they are not supposed to ... but at the same time 75 percent of them are not sober," said Vladimir Plyasunov, the head of Moscow's lifeguards.

Novosti: Muscovites eat 200 tons of ice cream per day in heat wave

"Ice cream makers have been unable to deliver enough ice cream," the Russian ice cream union head Valery Yelhov said. "Between 150-200 metric tons is being sold daily in the capital, and sales have grown 50-60% in the past few days." ... Yelhov said that ice cream makers have been running out of ingredients and have had to dip into their reserves. He added that ice cream production grew 20-25% compared to the same period last year.

New survey data released last week from the Public Opinion Foundation shows that the majority of Russians do not believe that elections are an accurate reflection of public opinion. Only 7% of those polled believed that the upcoming Parliamentary elections would be free and fair. Click here to see all the results, as well as links to other recent opinion polls.

Election Procedures in Russia

Most Russians strongly and increasingly distrust elections as an institution, according to the results of a recent poll conducted by the Public Opinion Foundation. Today only 35% of those surveyed believe that elections reflect public opinion accurately, while many more (50%) think they do not. Respondents’ opinions about elections do not show any correlations with age groups, income levels, education or place of residence. However, opinions do strongly correspond with respondents' attitudes towards President Vladimir Putin: those who distrust Putin distrust elections 76% of the time, and those who trust him are also distrustful of elections, but to a lesser extent (42%).

Russians’ increasing distrust in elections is illustrated by the changing description of their own electoral behavior. The percentage of respondents who say that they ‘always’ vote in elections has decreased from 49% in 2003 to 34% today. Twenty percent (18% in 2003) say they ‘often’ vote, while 27% say they ‘rarely’ do so and 16% say that they ‘never’ vote (compared to 21% and 10%, respectively, in 2003).

Peoples' opinions about Russian parliamentary elections is similar to what they think about elections in general: 26% of those surveyed believe parliamentary elections in Russia have been free and fair over the past fifteen years, and 34% think that these elections were mostly not free or fair.

Six percent of all adult Russians know or have heard about cases in which procedures were violated during the last parliamentary elections. The violations they witnessed or were told about included bribing voters ("they gave us money, and our whole neighborhood drank for a week"), forced voting ("they demanded that you sign a pledge to vote for a certain candidate, otherwise they would fire you"), campaigning continued at the polling station while ballots were filled ("they told people who to vote for"), filling and casting votes in the name of persons who didn’t come or even were dead ("only five people on our street voted, but the records say everyone voted, including me"; "somebody cast a ballot for my parents - and they're dead"), and ballot rigging ("I gave a ride to a member of the audit chamber, an I know how they counted the votes").

We asked respondents who believe parliamentary elections have generally been unfair over the past 15 years to suggest ways to make elections free and fair. Most of the time, respondents suggested tighter control and supervision (4%), fighting violations and corruption, tougher punishment for fraud (4%), better public relations and campaigning ("we cast our votes for persons we don’t even know. Meetings should be held in every region for voters to get to know their candidates" – 1%). Some insisted that the whole electoral and even political system of Russia should be changed ("the whole of our society has to be changed"; "the electoral system should be changed"; "everything should be changed, beginning with the Duma itself" – 2%). Others placed their hopes in honest candidates and electoral commission members ("candidates should be fair"; "only honest people should be appointed to election commissions" – 4% ).

Most Russians (61%) think the parliamentary elections in December 2007 won’t be any different. Only small groups of respondents (7% each) expect them to be more free and fair or less free and fair. The distribution of expectations was similar in the run-up to the 2003 elections.

Yesterday a local court in Beslan, Russia, granted amnesty to three policemen who had stood trial for criminal negligence in their handling of the 2004 school hostage crisis, opening up old wounds of what is indisputably the most reprehensible terrorist act in contemporary Russian history.

A woman mourns at the memorial wall dedicated to the victims of the School No. 1 hostage crisis in Beslan

The verdict was met with outrage by victims' groups, who allege a government cover up in the botched rescue attempt. Reports indicate that about 25 women who lost their children and relatives in the crisis erupted into a small riot, smashing courtroom windows, overturning furniture, and tearing down a Federation flag. Many observers were furious over the irregular procedures of the trial:

"The victims' patience has run out. We think the justice system ... is forcing us to take such steps because they have no interest in uncovering the truth about the Beslan tragedy," said one of the women, Susanna Dudiyeva. ... Dudiyeva, who lost a child in the siege and is one of the leaders of the Beslan Mothers campaign group, said the trial of the three policemen had been a whitewash designed to protect their superiors from blame.

She said her group did not recognise the court's ruling because it was not made in the courtroom and the defendants were not present. "The trial should carry on until its conclusion, with the accused present," she said.

"All the witnesses should be heard to determine the degree of guilt of each of them, and to find out all the reasons for this crime and all the reasons for this tragedy, to extract lessons from all of this."

It is understandable that the Russian government may prefer to have this tragedy simply be forgotten - like the Kursk and the Nord Ost theatre stand-off, the president performs extremely poorly during times of crisis. So while the country's main television stations played Brazilian soap operas and the movie "Die Hard" during the bloodiest sequences of the battle for the school, and spread considerable disinformation during the brief news reports (including lies about the number of hostages, the identity of the terrorists, and details about the rescue effort), the president took a little more than an entire day and a half to address the nation after the conclusion of the tragedy. The government's handling of the Beslan crisis exhibited all of the traits that we would come to know so well over the years in dozens of circumstances - secrecy, opacity, dishonesty, and opportunism. The president used the opportunity to rail against Russia's "weakness" as the cause of the Beslan tragedy, fondly invoking the authoritarian benefits and imposed ideological unity of the Soviet Union. Here's an excerpt of the speech he gave:

Russia has lived through many tragic events and terrible ordeals over the course of its history. Today, we live in a time that follows the collapse of a vast and great state, a state that, unfortunately, proved unable to survive in a rapidly changing world. But despite all the difficulties, we were able to preserve the core of what was once the vast Soviet Union, and we named this new country the Russian Federation.

We all hoped for change, change for the better. But many of the changes that took place in our lives found us unprepared. Why ?

We are living at a time of an economy in transition, of a political system that does not yet correspond to the state and level of our society’s development.

We are living through a time when internal conflicts and interethnic divisions that were once firmly suppressed by the ruling ideology have now flared up.

We stopped paying the required attention to defence and security issues and we allowed corruption to undermine our judicial and law enforcement system.

Furthermore, our country, formerly protected by the most powerful defence system along the length of its external frontiers overnight found itself defenceless both from the east and the west.

It will take many years and billions of roubles to create new, modern and genuinely protected borders.

But even so, we could have been more effective if we had acted professionally and at the right moment.

In general, we need to admit that we did not fully understand the complexity and the dangers of the processes at work in our own country and in the world. In any case, we proved unable to react adequately. We showed ourselves to be weak. And the weak get beaten.

Following this speech, the president's well-timed proposal to abolish gubernatorial elections and centralize power by appointing the regions's representatives himself was met with great acclaim by the weary and grief-stricken populace. While most news reports cite the final count of victims around 330 (more than half of which were children), it is impossible to measure the collateral damage of Beslan suffered by the entire population of Russia in terms of their democratic freedoms, and the painfully obvious demonstration that their broadcast news is under tight government control.

Russia: Fools and Roads, Part II

By Grigory Pasko, journalist

[Editor note: As mentioned earlier, our regular contributor Grigory Pasko actually managed to get into the city of Samara during the recent EU-Russia summit held there, and has already contributed several exclusive reports about his experiences there. In this, the penultimate article of the series, he continues the theme of Fools and Roads he had addressed in an earlier article on this blog, and discovers that Samara’s roads are among the worst in Russia – even after the sprucing up they supposedly were to receive for the summit.]

Summits are a big deal in Russia. Not only are they useful for raising the country’s prestige in the eyes of the rest of the world, but they also serve as a convenient excuse for satisfying all manner of utilitarian needs. For example, for repairing bad roads. Or giving a sorely needed fresh coat of paint to the houses past which the motorcades carrying the foreign VIPs to the summit will be driving.

They didn’t even do that. Where did the money go? This is the third most popular question in Russia, after “Whose fault is it?” and “What is to be done?”

In order to have the kind of roads they’ve got in Samara, you need to have a very deep hatred for your city, for the people living in it, and for the cars that drive there. By the way, most of the cars driving around in Samara are «Zhiguli» [more popularly sold under the “Lada” brand name abroad—Trans.] – that same brand that president Putin gave a new lease on life to after a recent visit to the Togliatti automobile plant (yes, that same brand about which specialists have said that it should have been taken out of production 20 years ago because it’s a dangerous and very bad car).

I do a lot of traveling by car around Russia, but never have I seen the kind of roads I saw in Samara. True, it is said that there is another city where the roads are even worse – that would be Saratov.

After having experienced the streets and highways of the city of Samara and of Samara Oblast firsthand for three days, I heard a joyous announcement on television by Samara Oblast governor Konstantin Titov about how the roads in Samara had become… simply wonderful. And all this thanks to the Russia-EU summit.

Remarkably, the governor did not even choke on his words as he uttered this whopping lie. Probably because lying is a norm of life for today’s Russian state. Lies in everything – in state policy, in the “cover-up operation” for all the dark little dealings of the chekist power and its henchmen in the gubernatorial ranks.

Photo of a typical street in Samara by Grigory Pasko

Of course there are roads in Samara. But driving on them is sheer torture. In other cities of Russia, you might experience pits and potholes in one place. But in another – a couple of kilometres of roadway that is perfectly suitable for travel. That’s not how it is in Samara. In Samara, ALL the roads are disgusting. And this despite the fact that they repair them quite often. The technology of the “repairs” looks like this: First, they take a high-pressure air hose and blow out all the mud and dust from the cracks in the asphalt. Then they fill the crack with hot tar or, as they call it, “liquid asphalt”. That’s it – the road has been “repaired”. Even a schoolchild knows what rising and falling temperatures are and what water in cracks after a rainfall is.

They say that nobody has ever concerned himself with the roads in Samara. I’m interested in something else: Does governor Titov travel on some other roads than these? Or maybe he only moves around in a helicopter?

On the eve of the Russia-EU summit, they repaired only one road – the one from the airport to Moskovskoye chaussé. And not even all of it, but only those several kilometres along which it was supposed that president Putin and the guests of the summit would drive by.

Apparently, Putin was aware of what state the roads are in in Samara. Therefore, he and his guests flew in a helicopter to the «Volga crag» sanatorium, which is located 150 kilometers from Samara.

I drove these 150 kilometers in a private car and driver I had to hire because all the taxi drivers in town categorically refused to drive that far on the hideous roads. And the 150 kilometers back to Samara too, of course, because as you can imagine, all the helicopters were in use that day… Along the entire length of the highway stood policemen of various stripes – MVD internal troops conscripts, “gaishniki” [highway police—Trans.], and some kind of unspecified people in uniform with machine guns… I got the impression that Samara Oblast was under siege, occupied by aliens in gray uniforms.

Photo of police standing every few meters along the Samara-Togliatti-Zhigulevsk highway by Grigory Pasko

We were stopped three times. But they only checked the driver’s documents, and when they asked him “Who’s that that you’re driving?”, he’d answer “Friends I’m taking to the nature preserve”.

Personally, the whole trip to the Samara Bend nature preserve, which is indeed where we were going, reminded me of some kind of science fiction movie where aliens have invaded planet Earth. The aliens in their gray police uniforms had been planted all over the place and would sometimes suddenly appear out of the most unexpected places – from behind bushes, cars parked by the side of the highway, and even highway lighting posts. Oh, I should add that the heat stood at 27 degrees Celsius above zero (81 Fahrenheit). So, needless to say, the policemen in their full dress uniforms – white shirts, neckties, and large hats – were not having an easy time of it trying to look presentable in such circumstances.

The road was no better from Zhigulevsk to the Samara Bend nature preserve. But at one point, the highway suddenly became smooth. Not very wide, but extremely smooth and of evidently good quality. But I could see that it was actually very old. My local driver later explained the mystery to me: it turns out that it had been built by German prisoners of war sixty years ago!

Photo of a typical Russian scene of a “gaishnik” highway policeman waiting for his prey by Grigory Pasko

We took a detour to the village of Shiryayevo (about which I’ll tell in my next article), and returned to Samara along another highway – the one that is supposedly old and a secondary route and along which neither Putin, nor even the journalists covering the summit, had travelled. This secondary road actually turned out to be a bit better than the “new” highway we’d taken in the morning. And there were plenty of police along it as well.

Back in Samara, we happened to see a small rally. It turns out that these were pensioners protesting against… the march of those who disagree, which was supposed to take place the next day. I asked one little old lady whom of the organizers of the march she knows and why she’s protesting against the march. The granny replied with a memorized phrase: “Our pensions are small, while ‘A Just Russia’ (a clown party, created by the Kremlin in order to bring a little more variety to the political arena with yet another obedient party to spite “United Russia”—Author’s subjective opinion) promises to raise them”. I understood that the little old lady had been instructed to stand there holding a poster, and that she hadn’t the vaguest idea about who the leaders of “The Other Russia” were or what the “March of Those Who Disagree” was.

Photo of a pensioner protesting against the march of those who disagree by Grigory Pasko

That evening, back at the hotel, I read an article in one of the local newspapers that included the following words: “About the fact that the state of the road network of Togliatti leaves much to be desired is far from a secret for the townsfolk. Local motoring enthusiasts have long ago gotten used to driving around on broken asphalt and getting stuck in endless potholes. But so the participants in the upcoming summit would not find confirmation of the saying that everybody knows about the two Russian misfortunes – fools and roads – in our city, the city authorities have decided to give at least the second of these a bit of a facelift. But in order to bring the roads in the entire city in order, the money…”

It wasn’t interesting to read any farther. Although this article was about the city of Togliatti, you could easily have put in the name of ANY other city of Russia – and the sense article would remain exactly the same. It seems quite clear that in Russia, fools and roads just naturally go together, literally joined forever. The one can not exist without the other. As long as fools remain in power in Russia, the roads will remain bad too.

There were two other interesting phrases I heard that evening. Speaking yet again on local television, governor Titov said: “For us, the summit is a big holiday…”. While the inspectorate of road traffic for Samara officially announced that repairs of ALL the main roads of the city had been scheduled for 18 May (the day of the march of those who disagree). And they added: the repairs would be carried out using the “pouring of liquid asphalt” method…

Liquid asphalt for a bad road is about as useful as a hot water bottle for a corpse. It’s like a softening of the brain on the eve of a scholarly discussion. For example, a discussion on the subject of the quality of roads and the dependence thereof on the quantity of fools.

Afterword: According to official data, 3 billion rubles were allocated from the federal budget before the summit for the repair of roads in Samara city and Oblast, 800 million rubles from the Oblast budget, and 40 million rubles from the city budget.

Today I have the honor of giving a talk at Stanford Law School's Center on Democracy, Development and the Rule of Law. If any of my blog readers are in the Bay Area, I invite you to come out and see the speech (sorry for the late notice).

The seminar will be titled "The Khodorkovsky Case: Human Rights and Rule of Law in Putin's Russia" - but per usual, we will use much of the time to discuss energy politics and contemporary issues in Russia's relationships with Europe and the United States.

Later on today I will post up some notes from the talk, and let everyone know what kinds of questions, opinions, and debates on Russia are currently taking place in California's academic community. I expect it will be a very interesting afternoon.

Yesterday I read with great interest the news of the Austrian Prosecutor's investigation into transactions made between Diskont Bank in Russia and Raiffeisen Zentralbank (RZB) of Austria. Given both the timing of this disclosure and the fact that a Raiffeisen subsidiary is responsible for the management of half of RosUkrEnergo, the notoriously shady joint venture with Gazprom that brought an end to the Ukraine-Russia gas dispute and is alleged to facilitate corruption in the gas trade from Turkmenistan, it seems that there are some new urgent questions regarding RZB's role in Russia.

Like the well known adage, follow the money

Diskont Bank, which had its license revoked by the controversial reformer Andrei Kozlov two weeks before his tragic assassination last year, had made a transfer of $4 million that was flagged for suspicion of money laundering. The Austrian authorities froze that amount, and are investigating "a much larger amount" that has passed through Raiffeisen Zentralbank from Diskont but has already been diverted out of the country.

Although the Russian prosecutors say that the Kozlov case is closed, and seem to have settled upon banker Alexei Frenkel as the prime suspect (indeed, with fortuitous timing, just yesterday the court announced the rejection of Frenkel's appeal against the charges), the report from the Financial Times on this Austrian money laundering probe shows that there is some disagreement as to whether the case could have involved official corruption:

In an official report on money laundering in Austria, the Austrian interior ministry questioned the Russian findings and said it could not rule out "official corruption" as being behind the killing of Kozlov.

"There are many more signs implying such a link," it said in a report focusing on the probe it launched.

The ministry said the Russian authorities had failed to provide information on the transfers through Raiffeisenbank that it had cracked down on with the help of Kozlov, despite requests, after his death.

The interior ministry report said it had tracked more than $112m from three offshore companies going through the Moscow bank's correspondent account in Austria to another 50 offshore companies in the space of just four days preceding the account freeze.

It said more than $44m had entered Diskont Bank's dollar account and in one day were transferred in 34 transactions to a series of offshore companies when it received the suspicious transaction report.

The investigator in charge of the case, Ernst Mahr, declined to comment further.

A spokesman for the Austrian prosecutors' office said they were continuing their investigations, together with their counterparts in Latvia where some of the cash was transferred, but added: "We don't have everything we need yet from Moscow."

Does the Austria connection reveal a government link to murder of Andrei Kozlov and the trial of Alexei Frenkel?

Once again it seems that Russia is reluctant to cooperate with an international investigation, and, as usual, this reluctance is encouraging suspicion. With the ink still drying on a dozens of business deals between Austria and Russia signed during Putin's official state visit last week (including a major agreement between OMV and Gazprom), it is reasonable for the Austrian prosecutor to demand all the information that Russia can provide them with on this case.

While there are still far too many unknowns to put forward theories on RZB's involvement in Russia, we will be following this story very closely, and posting up new information as it becomes available. Stay tuned for more background.

This week the International Federation of Journalists is holding its 2007 World Congress in Moscow, an event which is known as the largest global gathering of international journalists. The week-long Congress kicked off with the presentation of a special conference held yesterday titled "Challenging Impunity: the Global Campaign for Justice in Journalism," which announced the formation of a committee to investigate unsolved murders of journalists in Russia.

Here is what the conference background paper says with regard to the investigation:

Outside the war zones, the campaign against impunity is being waged on the borders of Europe. On 12 December 2006 the IFJ organised in London a crisis meeting of representatives from all the world’s major press freedom groups and media employers, plus journalists’ unions from Russia, Germany, France, Italy, UK, Netherlands, Sweden, Finland and Denmark who agreed to launch an International Commission of Inquiry into the killings of journalists in Russia.

The action followed the assassination of investigative journalist Anna Politkovskaya in Moscow on October 7. This inquiry will be professionally driven and will be carried out in Russia by Russian journalists and experts who will report on their findings and recommendations to the International Commission.

The investigation will carry out a review of the killings of more than 200 journalists in Russia since 1993, including unexplained disappearances, which have caused concern to the international community of press freedom defenders, journalists and media organisations.

There will be a specific and detailed examination of four sample cases during this period which expose failures, whether related to incompetence or negligence on the part of investigators and judicial authorities or caused by external interference, which have contributed to the failure to find and successfully prosecute those responsible for the killings of journalists or those who authorized such killings.

The members of the International Commission believe that the death of Politkovskaya has brought to a head growing international concern over the crisis of impunity in Russia that requires co-ordinated international action by media, journalists’ groups and press freedom defenders.

There are also plans to publish a tribute book of the work of contemporary Russian journalists reflecting the independent spirit of Anna Politkovskaya which will be launched at the time of the conference in Moscow in May 2007.

There was also coverage from RFE/RL, which emphasized the dire lack of government attendance of the conference - including a last-minute cancellation by Mikhail Gorbachev:

According to the IFJ, Russia is now the most dangerous place to be a journalist, after Iraq. John Crowfoot, an analyst with the IFJ, has produced a database that outlines the deaths and disappearances of 289 journalists in Russia since 1993.

The youngest to have died is a 19-year-old reporter killed last September; the oldest, a retired journalist of 80, was stabbed to death in his home a few years ago. Forty-seven of those killed were women.

The figures are staggering. But Crowfoot says the deaths are one of just numerous indicators of how dangerous it is to be a journalist in Russia.

“There are attacks on journalists, there are attacks on editorial offices, there is cyber-warfare against websites, there are all kinds of different means of pressure," he said. "In some parts of the country, it's said that you don’t need to actually commit much violence because there are already so many levers -- control over printing presses and so on, which remain in the hands of the local authorities.”

Unsolved Cases

The IFJ used the May 28 forum to launching a commission to investigate impunity in the killings of five journalists in Russia whose cases remain unresolved. (The journalists are Valery Ivanov, Aleksei Sidorov, Eduard Markevich, Dmitry Kholodov, and Vladimir Kirsanov.)

Miklos Haraszti, a representative for media freedom at the Organization for Security and Cooperation in Europe, said the lack of government action in defending journalists has created an atmosphere in which violence can flourish.

“There is only one thing more intimidating for free speech than harassment, physical attacks and murder of media workers -- and that is when governments tolerate harassment, attacks and murders,” Haraszti said.

The guest of honor at the preliminary session -- and one with at least a tentative link to the current government -- was to have been former Soviet leader Mikhail Gorbachev. But minutes before the opening, he telephoned to say he would not be attending.

At the end of last week, corruption watchdog Transparency International issued its annual global report with respect to corruption of the world's judicial systems. The full report is well worth reading, as Russia is heavily featured as one of the countries that has significantly backtracked against international standards with political corruption of the courts. Below is an excerpt of an analysis written by Tom Blass, freelance journalist and consultant with the Foreign Policy Centre, taken from Chapter 2 ("Independence, political interference and corruption") of the new TI report. (click through to the PDF version to see all the footnotes.)

Combating corruption and political influence in Russia’s court system

Tom Blass

Prior to the perestroika process, the judiciary was largely perceived as: ‘Nothing more than a machine to process and express in legal form decisions which had been taken within the [Communist] Party.’ The independence of the judiciary was one aspect of the changes called for by Mikhail Gorbachev in his groundbreaking speech to the 27th Party Congress in 1986.

The reality – a supine, underpaid judiciary, ill-equipped to withstand corruptive practices and the influence of economic or political interests – has proven slow to change, despite a series of reforms by Boris Yeltsin and his successor, President Vladimir Putin.

A 1991 decree by the Supreme Soviet of the Russian Federation established the judiciary as a branch of government independent from the legislature and the state. The following year, a Law on the Status of Judges was introduced that granted judges life tenure after a three-year, probationary period; new powers to review decisions by prosecutors regarding pre-trial detention; and established the role of the judicial qualification collegia – self-governing bodies, composed by and responsible for the appointment and regulation of members of the judiciary. The Yeltsin regime transferred control over the financing of courts from the Ministry of Justice to a judicial department attached to the Supreme Court, further distancing the judiciary from the executive branch.

After Putin was elected president in 2000, he made numerous assertions about the importance he attached to the judiciary. ‘An independent and impartial court is the legal protectedness (sic) of citizens,’ he said in 2001. ‘It is a fundamental condition of the development of a sound, competitive economy. Finally, it is respect for the state itself, faith in the power of the law and in the power of justice.’

President Putin’s Programme for the Support of Courts 2002–06 was structured to increase funding for the court system as a whole, including judges’ salaries. Top pay is now around US $1,100 per month for judges, although average judicial salaries are closer to US $300 per month. More recent developments include a move toward publishing details of court judgements.

While elements of these reforms are positive, new threats to the independence of the judiciary have emerged, with the International Bar Association, the OECD, the International Commission of Jurists, and the US State Department all expressing concerns at practices they perceive as not conducive to the independence of the judiciary.

Judicial appointments

Not all judges welcomed Putin’s attempts at reform. Among his initial targets were the qualification collegia, established in the early transition and responsible for appointing and dismissing judges. Originally these were constituted entirely by judges, but the 1996 Constitutional Law on the Judicial System was amended in 2001 so that one third of the membership would be constituted by legal scholars appointed by the federation council – which is appointed by the president. Under the Law on the Status on Judges 1992, judicial appointments were made by the president ‘based on the conclusions of the collegia relative to the court in question’. The same process applies to the appointment of court chairpersons, whose tasks include allocating cases and overseeing the running of courts. They wield substantial influence over the careers of their fellow judges.

In a 2005 report on proposed changes to the structure of the collegia, the International Bar Association (IBA) said it was ‘particularly concerned by a number of cases of judicial dismissals where undue influence appears to have been wielded by Court chairpersons or other parties’. ‘A system which could allow chairpersons to cow or eliminate independent-minded judges’, it noted, ‘is in practice the antithesis of recognised international standards for the judiciary’.

The IBA cited a number of instances in which it was alleged that undue influence had been brought to bear. In the case of Judge Alexander Melikov, dismissed by a qualification collegium in December 2004, it said it had studied the judge’s allegation that his dismissal followed his refusal to follow the directive of the Moscow City Court chairperson ‘to impose stricter sentences and to refuse to release certain accused persons pending their trials’. The IBA said that it was ‘impressed by his credibility’ and was satisfied there was no legitimate ground for dismissal.

Another recent case further highlighted the role of chairpersons. Judge Olga Kudeshkina was dismissed from Moscow City Court in May 2003 for ‘violating the rules of courtroom conduct and discrediting the judiciary’ after she claimed to have been pressured by the public prosecutor and the chairperson of the court to decide in the prosecutor’s favour in an Interior Ministry investigation.

In a widely publicised letter to President Putin in March 2005, Kudeshkina said the judicial system in Moscow was ‘characterised by a gross violation of individual rights and freedoms, failure to comply with Russian legislation, as well as with the rules of international law’ and that there is every reason to believe that the behaviour of the chairperson was possible because of patronage provided by certain officials in the Putin administration.

Perceived extent of corruption

While it is difficult or impossible to quantify the validity of Kudeshkina’s claims, her letter was in tune with the lack of public confidence in the judiciary. Research by the Russian think tank INDEM goes so far as to quantify the perceived average cost of obtaining justice in a Russian court. At 9,570 roubles (US $358), the figure is still less than the 2001 figure of 13,964 roubles.

Another Russian survey found that over 70 per cent of respondents agreed that ‘many people do not want to seek redress in the courts because the unofficial expenditures are too onerous’, while 78.6 per cent agreed with the statement: ‘Many people do not resort to the courts because they do not expect to find justice there.’ The same organisation estimated that some US $210 million worth of bribes is spent to obtain justice in law courts in a year, out of a total US $3.0 billion in bribe payments.

Senior court officials also hint at corruption within the judiciary. Veniamin Yakovlev, former chair of the Supreme Arbitrazh court, said that while mechanisms had been, and continue to be, put into place to root out corruption and the ‘overwhelming majority’ of judges conducted themselves lawfully, ‘it would be wrong to maintain that the judiciary has been purged of all traces of bribery’. In an interview with Izvestia, Valery Zorkin, current chairman of the constitutional court, was more forthright when he said that ‘bribe taking in the courts has become one of the biggest corruption markets in Russia’.

Anecdotal evidence (including from lawyers within Russia who would not wish to be named) suggests that the corruptibility of courts increases, moving down the judicial hierarchy13 and further away from Moscow.

Legal scholar Ethan Burger points out that large financial stakes and asymmetry between the parties in a court proceeding increases the likelihood of corruption,14 and that it is more likely to occur in trial courts than in the appeal courts since it is ‘easier to bribe a single trial court judge than a panel of appellate judges or members of the Supreme Arbitrazh Court’. Due legal process is altered in one of two ways, according to Burger: a judge may decide a case on its merits, but ask for payment before making a judgement; or the judge may ‘simply favour the highest bidder’.

Recommendations

The challenge now is for the Russian judiciary to build on the various reforms which have already taken place and to win the confidence of court users, regardless of the level of proceedings in which they become involved. But such a transformation will require more than structural or procedural reform.

Successive laws pertaining to the judiciary passed since the dawn of glasnost have reinforced or reiterated its independence. Despite some adjustment of their membership structure, the Judicial Qualification Collegia remain essentially self-governing. Salaries of judges and court officials, while low in comparison to those in Russia’s private sector and the West, have been significantly raised in the past 15 years. Civil society groups in Russia and outside (including TI) have been vocal in calling for greater transparency and openness within the judicial system.

Russian courts already have what is required to be fair, open and transparent. These elements need to be encouraged and consolidated. What follows are six concrete recommendations that can assist in consolidating what is fair, open and transparent in the Russian court system:

● The government should resist any further dilution of the judicial composition of the Judicial Qualification Collegia.
● Judges’ salaries should be regularly reviewed with a view to achieving near-parity with private sector salaries in order to reduce the incidence of bribe taking and to retain talent within the judiciary.
● The programme for publishing court decisions should be accelerated and expanded, with an emphasis on explaining the legal basis of judgements, the nature of disputes, the sums at stake and awards given.
● Local and national public awareness campaigns should be initiated to educate on the role of judges, the concept of judicial awareness and future expectations of the judiciary.
● The government should review existing penalties for corruption within the judiciary.
● Judges should be allocated cases on a randomised basis to minimise bias toward one party.

There's an amusing story in the Journal today about one of Russia's best-selling vodka brands, Putinka, which has largely seen a surge in its market share thanks to the similarity to the president's name. This technique of merchandising Russian populism is big business, having brought the company $500 million in annual revenue, and extending into other product areas such as jarred eggplants, bar snacks and cakes.

Putinka hasn't had any trademark problems because it uses a cute diminutive form of Putin's name and sounds similar to "an obscure Russian fishing term." The Journal reports:

Mr. Putin, "has an extraordinarily negative attitude towards attempts to use his name for commercial purposes," says spokesman Dmitry Peskov. But the president has no legal means to block it, Mr. Peskov said.

Vinexim says it hasn't received any complaint from the Kremlin about Putinka.

"No legal means" to prevent the commercial exploitation of his name? Since when has that stopped the Russian government from exerting its will?

Yesterday, this letter to the editor from the Polish Defense Minister and two academics was published by the FT:

From Mr Radek Sikorski, Mr Maciej Olex-Szczytowski and Mr Jacek Rostowski.

Sir, European Union solidarity was excellently, if belatedly, demonstrated to President Vladimir Putin by Angela Merkel, the German chancellor, and José Manuel Barroso, president of the European Commission, at the recent EU-Russia summit at Samara in central Russia. Thoughts of renewing a comprehensive EU-Russia partnership agreement must be quelled until Russia stops its egregious harassment of its EU neighbours.

True to historic form, when confronted the Russian leader is contemplating tactical withdrawals. Already he has publicly told his henchmen to "solve" the "problem" of Polish meat sales (translation: "Find me an excuse quick to lift the groundless embargo which I myself have mandated"). Let us hope Russia will also cease its electronic attacks on Estonia, its oil blockade of Lithuania and so on. But Russia's divisive strategy still seems in place, so expect new tests for EU solidarity even if such "problems" are "solved".

With their new, clear view of Mr Putin, now is the time for the German chancellor and the European Commission to bin the Nordstream gas pipeline between Russia and Germany under the Baltic, planned by Gazprom, the state-controlled Russian gas monopoly, as controlling partner and BASF and Eon as minority players. The most outrageous attempt by Mr Putin to divide and damage the EU, it would be an economic and geopolitical disaster for the Union.

The pipeline was initiated by Gerhard Schröder, Chancellor Merkel's predecessor, with no consultation with Germany's EU partners.

Economically, Nordstream is absurd. Its cost (estimates up to €12bn are quoted, but there is no official figure) would be three to five times that of doubling up existing land links. Financing it should be tough as the European Investment Bank has balked and German taxpayer guarantees for Russia are questioned by the Commission. But in any event, the bill would be met via the tariff by German and other EU producers and consumers.

They would be paying for increased market dominance over themselves by Russia-Gazprom and its allies, in raging contradiction to European policy on liberalisation. Ineluctably, there would be higher energy costs and lower German and EU competitiveness. And fossil fuel usage would be entrenched, to the detriment of cheaper and cleaner nuclear power.

Geopolitically, Nordstream secures for Russia not just increased EU subservience in energy. Russia gains the ability to decouple old and new members by differentially turning off the tap, as done to Belarus, Georgia and Ukraine and more recently to Estonia and Lithuania. For this principal reason Poland, Estonia and Lithuania are vehemently opposed (Sweden has reservations on ecological grounds).

Post Samara the Russians have announced a new "bypass" pipeline to the Baltic, this time for oil, which may make existing westward links needlessly redundant ("Pipeline set to tighten Russian grip on energy", May 22). If indeed Mr Putin hopes that in energy matters he can still divide and rule, the best way to show him his error is to scrap Nordstream and enact explicit energy solidarity within the EU.

Radek Sikorski,
Minister of National Defence, Poland, 2005-7

Maciej Olex-Szczytowski,
Warsaw 01-557, Poland

Jacek Rostowski,
Professor of Economics,
Central European University,
1051 Budapest, Hungary

This weekend Jim Hoagland of the Washington Post gives his take on the conflicting historical narratives used by both the West and Russia to push their interests. In the past, RA has blogged about Russia's victim narrative.

Much of the grief in transatlantic relations of the past decade has stemmed from the conflicting narratives that the United States and Europe wove about the causes of the collapse of the Soviet Union and the rise of a new Russia.

Triumphal Americans -- the Bush administration has been overstocked with them -- celebrated Ronald Reagan's defense spending and confrontational strategy as the keys to Western "victory." European leaders, led by Germany's Gerhard Schroeder and France's Jacques Chirac, gave all the credit to the Helsinki peace process and other diplomatic maneuvers that allegedly enshrined reason as the arbiter of Russian and international politics.

Both narratives obscured the reality of the internal collapse of an overextended empire -- and left Russian reformers and gangsters to battle each other for control of a wildly lurching ship of state. In the confusion, the personalization of power replaced consistent policy prescriptions for the Bush 41, Clinton and Bush 43 administrations.

"As long as they got along" with Mikhail Gorbachev, Boris Yeltsin or Putin, Western leaders "saw no reason to worry," Delpech writes. "We can now observe the results of that policy. Western influence on Russia is nonexistent."

Putin offers his own narrative to muddy the waters even more. It is a narrative of his regime rescuing the country from a chaos that was deliberately injected, like a virus, into Mother Russia by the West. His regime has turned its oil and gas reserves and its role as a monopoly energy supplier for much of Europe into real power that makes Russia invulnerable and gives it commanding status over a weakening West. It is in the name of Russia that his regime treats with open contempt Britain's extradition demands or Germany's attempts to negotiate a "strategic framework."

Complete article.

Steven Lee Myers of the New York Times gives a week in review take on the UK-Russia extradition drama.

Art by Paul Rogers

Excerpt:

In Mr. Putin’s seven years as president, a Soviet-style cynicism about the law has returned, one in which justice, like diplomacy, is simply a series of political calculations laced with ulterior motives, as opposed to a dispassionate search for truth, fairness and accountability.

The cynicism has been a hallmark of Mr. Putin’s presidency, allowing him to consolidate power by using the law to weaken the media, marginalize opposition parties and imprison political enemies. It is now being used to paint Britain as wielding its judicial system in Mr. Litvinenko’s murder in the same way Russia often wields its own — manipulating the law for political ends.

On Thursday, Mr. Putin suggested that criticism of Russia’s record on democracy and human rights was just an effort by the West to make Russia give ground on a host of international disputes, from Iran to missile defenses to independence for Kosovo. “One of the aims is to make Russia more pliable on issues that have nothing to do with democracy or human rights,” he told reporters while visiting Luxembourg.

This is at the heart of what bothers many in the West about Mr. Putin’s Russia. Rather than embracing the common legal values that united Europe after the totalitarianism of Nazi Germany and the Soviet Union, Mr. Putin shuns them as weapons intended to weaken Russia.

Today an FT editor breaks down the main arguments currently driving the bitter divide between Russian and the West in the attached op/ed:

Murder and oppression will not earn Russia respect

By Stefan Wagstyl

The killer of Alexander Litvinenko, the former KGB man poisoned in London last year, assumed he would get away with it. That is why, the police think, he used radioactive polonium, a deadly but almost undetectable toxin.

But doctors found the traces in Mr Litvinenko’s ravaged body. And last week British prosecutors decided to press for the extradition of Andrei Lugovoi, another ex-KGB officer, for murder. What was designed to stay in the shadows of deniability has been exposed to the glaring light of day. Mr Lugovoi denies wrongdoing – and has said in the past that he is ready to come to London to clear his name. But the Russian authorities say the constitution bans the extradition of Russian citizens.

Claims that Vladimir Putin, the Russian president, is criminally responsible for Mr Litvinenko’s death are rightly condemned by the Kremlin as absurd. No evidence has emerged to support such allegations. But the Russian leader is morally responsible for presiding over a country in which murder has become a tool in politics and business. Anna Politkovskaya, the campaigning journalist, and Sergei Kozlov, a senior central central bank official investigating fraud cases, are two other recent prominent victims. In a democratic country, the president would be given a political grilling over such killings.

But there’s the rub. Russia is not a democracy in any normal sense of the word. It is an authoritarian state in which the rule of law is based not on the rights of the citizen but on the dictates of the Kremlin. The fact that Mr Putin is hugely popular does not detract from the argument. He is profiting from Russia’s biggest economic boom in a century. History is full of authoritarian leaders who have been lucky with their economic timing.

Mr Putin and his supporters retort that the west is in no position to give lectures, given its own shortcomings. “Every country has its strengths and weaknesses” is a favourite argument. The American adventure in Iraq as an oft-cited example of how even well- established democracies go wrong.

Some in the Putin camp add that since western countries took centuries to reach their current (imperfect) levels of democracy, Russia should be given more time. With some justification, they say the years since the collapse of the Soviet Union in 1991 are a brief moment in the long march of history.

The Kremlin is often backed by western business people making money in Russia who do not want western politicians rocking the economic boat. They accuse the Kremlin’s critics of judging Russia by impossibly high standards. The same criteria are, they say, rarely applied to other countries of political and economic interest to the west – notably China.

To these points there are three answers. First, the fact that the west often fails in achieving its own ideals argues for patience and respect in criticising others. But it does not undermine the value of those ideals.

Second, even if the road to democracy is long it is important to be heading in the right direction. On the eve of Mr Putin’s presidency in 2000, Russia was an unstable country with rapacious oligarchs accumulating power and money at the Kremlin’s expense. Mr Putin was right to try to reimpose order. But he and the other ex-KGB officials whom he brought into the Kremlin have gone far too far. Officials have combined the consolidation of political power with the pursuit of control over economic assets as ruthless as that of the oligarchs. This is not the construction of a platform for democracy, but the building of an authoritarian fortress. The elite is not preparing to share power, however slowly. It is digging in for a decade.

Finally, the China argument. It is true the human rights standards applied by the west to Beijing are less demanding than those set for Moscow. The levels for much of the rest of the developing world are lower still. But this is what many educated Russians want. With their long history of engagement with the rest of Europe and their spectacular contributions to European culture, they see themselves as Europeans, not citizens of the developing world. They aspire to a European standard of living and talk hopefully of Russia becoming “a civilised country” – by which they mean a country like Germany, France or the UK.

They also seek respect. The collapse of the Soviet Union was an enormous blow to Russian prestige. Many Russians quite reasonably take pride in the country’s recent economic resurgence and its new-found willingness to assert itself among its neighbours. That is, after all, what powerful nations do, not least the US.

But the Kremlin must learn that respect comes not from bullying neighbours, still less from oppressing their own citizens. If Russia’s leaders really want it to be seen as a “civilised” country they must embrace “civilised” standards, including standards of human rights. There is no more important human right than the right to life, as Mr Litvinenko found to his cost.

The writer is the FT’s east Europe editor

From Irwin Stelzer in today's Times:

Putin’s goal is not the mere profit maximisation that guides decision-making in market economies. It is to gain influence over the foreign policies of European countries and, to a lesser extent, America. He has already shown that he is willing to cut off gas to Europe, and cooperates with Opec to damage the American economy by keeping oil prices high. A nuclear umbrella prevented the Soviet army from rolling across Europe, but it is no match for supply cut-offs that can throw western economies into recession.

Complete article - "Don’t let Russia turn gas into a new weapon"

Historian Niall Ferguson, author of the excellent books "Empire," "Colossus: The Rise and Fall of the American Empire," and most recently "The War of the World: Twentieth-Century Conflict and the Descent of the West," has long made a career out of analyzing the collapse of regimes - and today in the Sunday Telegraph, he gives some historical contrast to the Vladimir Putin phenomenon in Russia:

To be sure, Vladimir Putin is no Hitler. A former KGB officer rather than a lowly Bavarian corporal, Putin is as coldly calculating as Hitler was febrile and impulsive. Hitler regarded the German economy as merely the servant of his megalomaniac will. Putin, by contrast, is effectively the chief executive of Russia Inc - the principal shareholder in a system that increasingly resembles what Marxist-Leninist theorists once condemned in the West as "state monopoly capitalism". Moreover, Putin has advantages the German dictator had to fight for: vast "living space" and, more importantly, abundant oil and gas.

Nevertheless, Putin's regime still looks alarmingly like that backlash against "Weimar on the Volga" that we predicted seven years ago: a backlash against both foreign creditors and domestic profiteers, exploiting a loss of public faith not only in the rule of law but also in free markets, parliamentary institutions and international economic openness.

As we anticipated, one of Mr Putin's earliest moves was to launch a campaign against the "oligarchs" who had been the principal beneficiaries of Boris Yeltsin's (admittedly crooked) privatisation, securing the imprisonment of Mikhail Khodorkovsky and the destruction of his Yukos oil company. Having frightened the other oligarchs into exile or submission, Mr Putin set about renationalising Russia's energy resources through the state-controlled giants Gazprom and Rosneft.

Foreign investors have also felt the backlash. Having successfully reduced Shell's stake in the Sakhalin-2 oil and gas field, Moscow now seems intent on doing the same to BP, which has a substantial interest in the Kovykta gas field. As before, the tactic is to accuse the foreign company of violating the terms of its licence. All that remains to be decided is how much of its stake in Kovykta BP will have to yield up to Gazprom.
...
To repeat, there is no such thing as the future; only futures. One conceivable future is that after (if?) Mr Putin steps down next year, Russia will become more liberal in its politics. But that is not the future on which I would put my money. A more plausible future is that, having more or less stifled internal dissent, Russia is now ready to play a more aggressive role on the international stage. Remember: it was Mr Putin who restored the old Soviet national anthem within a year of becoming president of the Russian Federation. And it was he who described the collapse of the Soviet Union as a "national tragedy on an enormous scale".

It would be a bigger tragedy if he or his successor tried somehow to restore that evil empire. Unfortunately, that is precisely what the Weimar analogy predicts will happen next.

Click here for full article.

Party Card for an Armored Train from the Past

By Grigory Pasko, journalist

When I was 13, or maybe 14, I remember standing on a stage and reciting Alexander Bezymensky’s poem “The Party Card” [Partbilet]. This was no ordinary poem, but a thriller of sorts, with a cleverly intricate plot. Essentially, it’s about how enemies killed one communist and the bullet pierced through his party card, which, naturally, he kept in his breast pocket, close to his heart. Because of the death of this one person, according to the author of the poem, the entire party nearly collapsed. I remember one of the lines went something like this: “Just one small, one card lost, but in the body of the party – a gaping hole…”

I really wished a gaping hole would open up when I was on stage: I forgot one of the lines of this long poem. I was able to recite just about all of Mayakovsky and Rozhdestvensky from memory without a pause, yet here – I’d collapsed. To me it seemed like I must have been silent for a whole eternity, while at this time the poor unfortunate mighty communist party was collapsing someplace – into a gaping hole, naturally. Worst of all was that nobody else besides me knew this near-religious work, so there wasn’t anybody to help me out by whispering the forgotten line to me from backstage. Somehow it came back to me; I gamely stuck it out to the end and then walked off the stage on legs that felt like soft noodles.

I was later told that I hadn’t been silent for long at all, and that hardly anybody had noticed anything. And it was then that I first understood that I was holding the tokens of my country’s ideology too close to my heart. Say what you will, but to this very day none of my classmates from school can recall ever seeing me wearing an October star, a Komsomol badge, or a Pioneer neckerchief.

There’s a whole separate tale with my membership cards. Once, after a Komsomol meeting, I, as usual, stuffed my Komsomol card into one of the cigarette packs that hung on my bedroom wall like museum exhibits, glued to a piece of cloth. “Marlboro”, “Kent”, “Winston”… This was 1975 or 1976. A month later, before the next meeting and payment of dues [a record of monthly dues paid was kept right on the card (see photo below)—Trans.], it turned out that my dear mother had decided to incinerate my exhibit. Together with the Komsomol card, as I logically deduced. I was in shock from what awaited me. I couldn’t help recalling the poem: “Just one small, one card lost…” It was a miracle that they didn’t kick me out of the Komsomol.

Communist Party of the Soviet Union card No. 00000006, issued to the “Old Bolshevik” Kliment Voroshilov for the year 1954. The table on the right side shows his monthly income of 13000 rubles along with the 3% party dues of 390 rubles deducted every month and certified by the signature and stamp of his local party committee treasurer.

They issued me a new membership card, and in a couple of days, after many meetings, reprimands, and admonitions, the old card was found as well.

For some reason they issued me yet another one in military school. Then I became a candidate for membership in the CPSU, then a full CPSU member. At the publication where I came to work after graduating from the higher military school, they appointed me to be a “young communist, working in the Komsomol” – that is, secretary of the Komsomol organization of the editorial and printing plant staff. And… they issued me my fourth Komsomol membership card!

Whenever I recall myself as a member of some kind of organizations, everywhere the most important thing was always some piece of paper – a membership card, a protocol, a character reference, a log book, etc. The individual is at the bottom of the heap.

It is interesting that one of the very first acts in the life of the multiple-headed – like a Hydra – “United Russia” party became the making of party cards with embedded electronic chips: so they wouldn’t get lost. Or else, you understand – a gaping hole and all that… With a competitor in the form of Mironov’s “Just Russia”, the uniteds can’t allow that to happen.

And while we’re on the subject of a return of tokens, how about this?: Pioneer organizations have been resurrected in forty of Russia’s regions [about half—Trans.]. With neckerchiefs, naturally. And there are Komsomols, too. And I’m sure they’ve got membership cards. In Smolensk, they’ve resurrected awarding top workers in production with a red (!) challenge banner [that passes on from winner to winner every month—Trans.] and socialist competition. In Moscow, in the district where I live, Honor Boards with photos of the best citizens of the district have appeared.

It seems that totalitarianism can’t resurrect without its tokens. With such a move backwards, to the past, they’ll no doubt soon introduce amendments and additions to the law on parties along the lines that a party isn’t a party unless all of its members have cards, badges, and neckerchiefs with them at all times and photos of the party and state leaders in their offices and above their beds at home. And that a party has to have at least a million members. Only after that will it be able to take part in elections. Oh, I almost forgot: all party cards have to have embedded microchips. And naturally, the central electoral commission isn’t going to accept any lame excuses about how these aren’t the most important things or that a party doesn’t have the money for such nonsense. Then we’ll get to see what the results of elections will be.

The funniest thing is that all this party fetishism was phony and a waste of time and effort from the very start. Neither a Komsomol card, nor even a party card, was ever legally recognized as an identity document. Nor are they such today, even if you were to stuff three microchips in each one. Which is why I genuinely feel sorry for the poor Russian party functionary who is forced to carry a bunch of identity cards in his pockets at all times – everything from a Duma deputy’s card to a “Putin Lovers’ Club” card to a “Union of Voluntary Helpers of the KGB” card…

A parody of a public service poster. The man is holding a CPSU party card in its protective red jacket. The text reads “CITIZENS! remember! loss of a party card is punishable by law!”

The more little papers a person has, the less free he is. In principle, a citizen of a normal country ought to carry only three cards in his wallet: a driver’s license (which doubles as an identity card), a plastic credit card, and a photo of his family. The rest is rubbish. Look in your pockets, my fellow citizens! Well, did you find a lot of rubbish there? If you didn’t, then that means you aren’t a member of a party, and you don’t love Putin or the KGB. And come to think of it, that makes you quite a “suspicious character”. Maybe you don’t love the Motherland either? What? You say you do love it? Okay, then how come you don’t know the words to the national anthem? We’d better take your fingerprints…

The more little papers a person has, the easier it is to keep track of him, the simpler it is to control this “papered person”. And what totalitarian state would say “no” to totalitarian surveillance of its citizens? From the point of view of such a state, a person needs to have everything – a face (both profile and full-face photos), clothing (preferably with a number on the pocket), thoughts (approved by a party congress and the criminal code), and, of course, a party card and various and sundry other forms of ID (see above). If you ask the state for some kind of certification as a helper of the police or as a young naturalist, and no doubt it will issue you one. But if you ask for a chance to say a word, the state will most certainly ask you in the words of the Dragon in Yevgeni Schwartz’s poem: “What do you need a word for? What are you going to do with it?”

Party cards, badges and t-shirts with a depiction of the president, busts, monuments to him – all of this is idolization, an inevitable creeping towards a cult of personality. Not for nothing did Francis Bacon note that in order to achieve fairness, we need to pull down all the idols from our mind.

The CPSU died one fine day not because it had strong opponents, but because it consisted of party cards. There were practically no people in it. I recall how after the court had found me not guilty of the false charges of espionage in my first trial, the records administrator at the publication where I worked proposed that I drop by her office. I dropped by. It turned out that since August 1991, that is since the time I had entered the academy of the Ministry of Defense, she had kept on forgetting to return me my… party card, which had been left with her for safekeeping. And it also turned out that since I wasn’t in the office in the days of the 1991 putsch, I was the only one there who had formally not withdrawn my membership in the communist party. Total insanity! Me, the guy who was the last to be accepted into this party due to lack of desire on my part, the guy they wanted on several occasions to kick out for not participating in party life, the guy who was constantly criticizing it for whitewashing the truth and its formalism – I turned out to be just about the last of its Mohicans!

The situation had phantasmagorically mutated in comparison with the one described by Bezymensky in “The Party Card”. There, a single card may have fallen out of the monolithic wall, but the wall that was the party stood firm. But here, everything was exactly the opposite: there was no party left any more, but by some twist of fate, one party card had survived intact.

I put it with my four Komsomol cards. As a reminder of the idiocy of totalitarian systems.

Daniel Fried, assistant secretary of state for European and Eurasian affairs, testified today before the Helsinki Committee in Washington, remarking that although the United States wants to build positive relations with Russia, it would hold the country to high standards on human rights.

The press release can be read here, and the full testimony here. Even by the latest standards of escalating rhetoric, Fried's comments are very strong.

Some excerpts - on repression:

The State Department has publicly protested, including at the OSCE Permanent Council, the recent police brutality employed to break up opposition marches in Moscow, St. Petersburg, and Nizhny Novgorod. The EU also protested those actions. Authorities sought to prevent the marches from taking place at all: they denied permission to stage the events or tried to marginalize them by changing their venues; they harassed and detained Russians traveling to participate in these peaceful rallies; on the day of the events, disproportionate police presence wielded undue force against the protestors as well as journalists reporting on the events. Some of the same efforts were directed against members of the Russian opposition seeking to express their opinions ahead of the EU-Russia Summit in Samara May 18. The fact that the authorities allowed pro-Kremlin youth groups to engage in activity from which opposition activists were prohibited demonstrated selective use of the law. Nonetheless, it is encouraging that independent groups, despite harassment, were able to gather, garner supporters, and attract public attention.

On media:

The increasing pressure on Russian journalists is likewise troubling. Vigorous and investigatory media independent of officialdom are essential to dynamic, healthy processes in all democracies. In Russia today, unfortunately, most national television networks media-the primary source of news for most Russians --are in government hands or the hands of individuals and entities allied with the Kremlin. The growing agglomeration of print media in the hands of government officials or those allied with them likewise undercuts press freedom. Attacks on journalists, including the brutal and still unsolved murders of Paul Klebnikov and Anna Politkovskaya, among others, chill and deter the fourth estate. Self-censorship remains a growing problem. Some space for free discussion remains, particularly on the Internet, as the vigorous and sometimes sympathetic coverage in the print media of recent opposition marches indicates, but it still appears to be shrinking.

On relations with the former satellites:

Russia's relations with its neighbors and with Europe remain an issue of considerable concern. Moscow often still approaches its neighbors with a zero-sum mentality, particularly when it comes to those countries, such as Georgia and Ukraine, which choose to pursue closer Euro-Atlantic ties. We and European countries have spoken out against Russia's use of energy to apply political and/or economic pressure on neighbors, such as in the case of Ukraine in 2006. We are concerned by apparently political interference with infrastructures, as in the case of claimed structural deficiencies that restricted traffic on a bridge to Estonia this month, prolonged "repairs" to an oil pipeline to Lithuania, or the closing of Russia's only legal border crossing with Georgia last year.

Russian-Georgian relations, after a period of extreme tension, have shown tentative signs of limited improvement, but Moscow could do much more to normalize relations. Russia maintains the economic and transportation sanctions it imposed against Georgia last fall. Likewise, it continues to take actions that call into question its professed support for Georgia's territorial integrity by supporting separatist regimes in Georgia's South Ossetia and Abkhazia regions; it provides the same support to the separatist regime in Moldova's Transnistria region. The United States continues to call on Russia to end these policies and work with our European partners to implement confidence-building measures designed to bring the sides in each conflict closer together. At the same time, we encourage Russia to play a more constructive role and to use its influence with the separatists to advance a peaceful resolution of each conflict in Georgia. The United States has had productive high-level discussions with Russia on these issues. Russia recently sent officials to Tbilisi to discuss reducing tensions in South Ossetia, and publicly scolded South Ossetian de facto authorities for violations of existing agreements. We have also encouraged both sides to ameliorate their relationship and understand that Russian and Georgian officials are scheduled to meet soon for this purpose.

On Wednesday, I published a brief opinion on Russia's claim that their constitution prohibits the extradition of any Russian citizen - a claim that came forward from the Prosecutor General's office in response to Britain's request to extradite Andrei Lugovoi on a murder charge for the death of former spy Alexander Litvinenko in the much-publicized polonium poisoning in London last year.

I take the opportunity to reiterate here that I am not trying to take a position on the Litvinenko affair, a passionate debate that is crowded with opinions as is, but rather I only wish to discuss the legal precedent which has surfaced as a result, and give my opinion of the optics of Russia's decision.

Today I received the following comment from a gentleman named Dmitriy Velikovskiy on my earlier extradition argument:

You are wrong considering Russia`s reservations to the European Convention on Extradition of 1957. Look:

Declaration contained in the instrument of ratification deposited on 10 December 1999 - Or. Engl./Russ.

With respect to sub-paragraph "a" of paragraph 1 of Article 6 of the Convention the Russian Federation declares that in accordance with Article 61 (part I) of the Constitution of the Russian Federation a citizen of the Russian Federation may not be extradited to another State.
Period covered: 9/3/2000 -

http://conventions.coe.int/Treaty/Commun/ListeDeclarations.asp?PO=RUS&NT=&MA=999&CV

In response, I respectfully disagree with Mr. Velikovskiy. The key issue at stake is the difference between "may not" and "shall not." It is common in international law for governments to leave this option open on extradition issues, allowing them the discretion to protect their citizens from foreign courts. However, by using the language "may not," it is also arguably implied that Russia "may" extradite. Furthermore, it is not a credible argument to say that Russia can never, under any circumstances, extradite a citizen for a crime committed abroad. If that were the case, Russians would have the impunity to murder and steal abroad with no consequence.

Extradition is most commonly denied when the fairness of the courts are called into question, or when there is reason to believe the charges are politically motivated. The Lugovoi case is about a murder suspect. It is not about anyone's political convictions, or similar kinds of cases that might justify a refusal to extradite. Just after the "may not" language of Article 61, the Russian Constitution states in Article 63 that extradition of criminal suspects "shall be carried out on the basis of the federal law or the international agreement of the Russian Federation." Russia's declaration with respect to the 1957 should not be applied in the Lugovoi case.

Clearly the politics of extradition are playing a major factor here, as Russia is justifiably miffed over several long-standing extradition requests to Britain. Of course the Federation cannot be forced to extradite anyone - but for the Russian government to argue that they are constitutionally prohibited from such action instead of simply admitting that they refuse the request is disingenuous.

However, simply for the sake of appearances, I think they should extradite Lugovoi. What no one has mentioned is the enormous opportunity for Russia that this extradition request represents. Putin and his supporters have complained endlessly about the unfair treatment they have received from media and observers on their judicial, human rights, and democracy record. Yet here is the chance, on a silver platter, to put actions behind their words, and deliver an individual charged with a crime to stand a fair trial. What stronger statement could possibly be made to say that Russia has nothing to hide, and is not afraid of the truth or getting to the bottom of this sordid affair? Instead, they have defaulted to instincts, and are viewing the extradition request as an insult to their sovereignty, and cooperation with the investigation as some sort of geopolitical gesture of weakness. It's a shame. Russia had a chance to put meaning behind their claims, instead now they look like they are sheltering an alleged murderer, regardless of anyone's guilt or innocence.

Attached is a translation of an interview with Robert Amsterdam published in the German newspaper Hamburger Abendblatt. A scan of the clip can be downloaded here.

Justice: The Lawyer for Former Yukos Head Jailed in Siberia Makes Accusations against the Moscow Leadership and Speaks of “Barbarity”

“The Khodorkovsky case is an act of revenge from the Kremlin”

HAMBURG, 25 May – It has been two years since Robert Amsterdam last saw his famous client. In September 2005, a Moscow criminal court upheld the verdict against Mikhail Khodorkovsky, Russia’s richest man and at the time still the head of the oil company Yukos, and sent him to jail for eight years for alleged tax evasion and fraud.

Now the Russian Prosecutor’s Office has filed new charges against Khodorkovsky. This already incarcerated man risks another 15 years prison for alleged money laundering. “The way Khodorkovsky is being treated has reached a new level of barbarity,” Amsterdam told the Abendblatt. Therefore, Amsterdam has been meeting with politicians and human rights groups for weeks, in order to draw attention to the Khodorkovsky case again. “This no longer has anything to do with the law, but with personal enemies sitting in the Kremlin.” The first tribunal, Amsterdam said, was already a political trial. “Former Justice Minister Sabine Leutheusser-Schnarrenberger can confirm that; she observed the trial for the Council of Europe,” said Amsterdam. Documents were falsified and untrue assertions made up, he added.

It is hard for Khodorkovsky’s lawyers to contact their client. Several defence attorneys have already been arrested. Robert Amsterdam was also expelled from the country – allegedly for not having a visa.

Khodorkovsky’s penal camp is located more than 6,000 km from Moscow. “The camp is a gulag,” said Amsterdam. Access to television and newspapers is only limited. Khodorkovsky has lost weight dramatically. The now 43-year-old man’s hair has become totally white in the interval. “Prison conditions are very hard for him,” said Amsterdam. His client is de facto cut off from the outside world. Amsterdam can contact Khodorkovsky only through intermediaries.

For Amsterdam, the trials against Khodorkovsky are political revenge on the part of the Kremlin. “Khodorkovsky has done nothing which was not legal at the time,” said Amsterdam.

In the 1987, the then 24-year-old Mikhail Khodorkovsky took control of a Komsomol company, which he apparently privatised. Later, he succeeded in establishing important political relations to those around President Boris Yeltsin. This gave him an advantage when state companies were privatised. At an distress auction in 1995, Khodorkovsky secured a majority of shares in the state oil company Yukos for U.S.$309 million, a sum far below the then market value. He became chairman and turned the company into one of the most profitable oil companies in Russia. Later, he intervened increasingly in Russian domestic politics, financed Yeltsin’s re-election, supported the opposition parties in 1999, and called for the creation of an open civil society.

When he sought to open up his company to American investors in 2003, he was arrested. There was allegedly an agreement between the Russian oligarchs and Putin by which violations of the law during the “robber baron phase” of the Yeltsin era would not be investigated, so long as industry and commerce stayed out of Russian politics. Amsterdam said, “Khodorkovsky knew that he would be arrested someday.” However, he wanted to build a civil society under rule of law. “And that didn’t sit well with some people.”

Imagine my dismay when I picked up the International Herald Tribune today, only to read the following headline on front cover:

Europe's Energy Giants Call for Business as Usual with Russia

Yes, it seems that with particularly bad timing, Eni of Italy, Gaz de France and E.ON Ruhrgas of Germany have jointly called for business-as-usual with Russia, despite growing tensions between Moscow and Brussels over a broad range of issues.

Once firms become beholden to Gazprom and the Kremlin in long-term deals, it seems they must fulfill an unspoken contractual condition to evangelize against the national interest of their own countries.

At a moment in which the European Union is struggling to achieve solidarity and commit to a common energy policy, enticing the Russians to ratify the Energy Charter and creating a fair and equitable rule-based system to de-politicize the energy trade, here come three opportunistic firms seeking to undermine energy security and pursue their own bilateral deals with Gazprom.

There are some particularly choice quotes in the article that range from ironic to outrageous:

"It is about long term contracts, infrastructure joint ventures and asset swaps," said Uwe Fip, senior vice president of E.ON Rurhgas.

Edouard Sauvage, vice president of the supply division of Gaz de France, said the strategy toward Russia was to have reliable and secure contracts for energy delivery.

"Russia is our neighbor," said Jean-Marie Devos, secretary general of Eurogas, the agency that represents the industry. "We should take energy on its own merits and not let the political climate affect it."
...
"The business community knows that gas is not a weapon in order to threaten Europe, which the media say," he said. (Vladimir Kotenev, Russia's ambassador to Germany)

In light of this call for business as usual, shareholders need to ask their board of directors at Eni, Gaz de France, and E.ON Ruhrgas a number of urgent questions. First, has Russia exhibited a pattern of using energy to apply political pressure, and does increasing Europe's reliance of Russian energy increase its vulnerability to the influence of an autocratic state? The evidence overwhelmingly points to yes.

Second, what impact does Europe's uncritical patronage of a Russian state-held energy giant have on human rights and democracy? Here there is also abundant evidence - and not just the destruction of rule of law in the trial of Mikhail Khodorkovsky. Consider how Gazprom's revenues have been used to eat up independent media, creating a recklessly nationalistic cult of personality for the president on Russian TV, 24 hours a day, and making independent journalists, such as the late Anna Politkovskaya, increasingly isolated and exposed to threats. If Eni, Gaz de France, and E.ON Ruhrgas are not the corporate underwriters of repression in Russia, please tell me the last time they have uttered a single word about human rights, democracy, or corporate social responsibility in Russia?

And lastly, shareholders need to be more skeptical of Eni, Gaz de France, and E.ON Ruhrgas's near total lack of regard for competition and for reciprocity of energy investments. Russian state owned companies have surged ahead in Europe, buying up companies and properties in all phases of energy production, distribution, and commercialization, yet European companies wanting to invest in energy in Russia are by law relegated to minority positions, and are frequently harassed in politically motivated campaigns to expropriate major stakes in their projects. Gazprom's monopoly of the pipeline infrastructure and leadership in forming the exploratory committee for the new Gas OPEC also further contribute to long established pattern that steadily diminishes the environment for competition.

This call for "business as usual" is the clearest indication yet of the near-total co-optation of major European energy companies by the Kremlin. These companies have made themselves lobbyists against the rule of law in a country that has dangerously retreated from reform and market-oriented policies towards a belligerent autocracy.

The EU is increasingly concerned that Russia's market transition and reliability as an energy supplier are far from guaranteed. People are now finally beginning to make the connection between the Kremlin's consolidation of control over natural resources and its brutal suppression of political opposition and competitive markets. The strength of the burgeoning state-controlled energy conglomerates has been built through numerous incarcerations and thefts on a grand scale, all officially sanctioned by the state.

The most recent dirty business - involving everything from cyber-war to the refusal to extradite a murder suspect - only makes the timing of this "plea" by Europe's gas giants all that much more nauseating. It shows an incredibly insensitivity that these companies couldn't even wait one week - until the Lugovoi extradition story blows over - completely discredits these companies and makes them look like the handmaidens of the Kremlin.

Who will lament the crocodile tears shed by these predatory oligopolists, who have not only underwritten a corrupt regime, but also undermined the security of European consumers? E.ON Ruhrgas willingly promotes the ecologically dangerous and economically senseless pet project of the Kremlin - the Nord Stream pipeline - that will serve Russian foreign policy by cutting Poland out of the transit process? Meanwhile Eni opportunistically acts as a proxy for Gazprom through participation in rigged state auctions of stolen goods. Do these companies really believe they can somehow escape the fates of Shell at Sakhalin, BP at Kovykta, or even Yukos, if their interests come up against the private agendas of the siloviki?

Austria’s OMV is the latest to fall for Gazprom’s charms

By Derek Brower

YESTERDAY’S agreement between Austria’s OMV and Gazprom has left the EU’s strategy another few feet closer to the shredder. The memorandum of understanding, signed during a visit to Austria by Russia’s President Putin and Gazprom chief Alexei Miller, covers joint development of the Central European Gas Hub at Baumgarten, a wholly-owned subsidiary of OMV.

OMV said the agreement would help Brussels’ energy strategy. “These integrated projects mark another milestone in the cooperation between our companies and will make a significant contribution to security of natural gas supply in Europe,” said Wolfgang Ruttenstorfer, the company’s chief executive. Miller said the deal showed Gazprom’s strategy “corresponds to the dynamic development of the energy sector in the EU”.

Not really. The deal will see Gazprom take a stake in Baumgarten, increasing Gazprom’s security of demand at the same time. What it won’t do is help Brussels’ strategy to diversify its sources of gas away from the Russian company, which it considers to be unreliable and a dangerous monopolist with little ambition to assist the EU’s energy liberalisation project.

From Gazprom’s point of view, its agreement with OMV is another masterstroke. By taking a stake in Baumgarten, the Russian company is hedging its bets as competition between two rival supply pipelines to Europe, Nabucco and the Blue Stream extension, heats up.

Nabucco has long been a twinkle in Brussels’ eye. The pipeline, believe politicians like energy commissioner Andris Piebalgs, could break Central Europe’s dependency on Russian energy by importing up to 31bn cubic metres a year of gas from Central Asia and the Middle East through a pipeline stretching from Turkey to Baumgarten. OMV leads the consortium of five companies that is developing that $6bn project. Up to 70% of it is being funded by the European Bank for Reconstruction and Development and the European Investment Bank.

The rival Blue Stream project would extend an existing Gazprom line between Russia and Turkey through the Black Sea. It would run up through the Balkans to Hungary. Since a memorandum of understanding between Moscow and Budapest last summer, Hungary’s MOL, which is one of the five companies involved in Nabucco, has increasingly been leaning towards the Gazprom project. Both pipelines are unlikely to go ahead, given that they target the same markets.

Gazprom has waged a successful campaign to undermine Nabucco. In the downstream, its alliance with Mol has enhanced the viability of the Blue Stream project. In the midstream, Gazprom has increasingly developed relations with Turkey, the key transit country for both Blue Stream and Nabucco. And at the source, Russia’s recent agreement with Turkmenistan and Kazakhstan has effectively put control of Central Asian gas exports in its hands. That manoeuvring has left Nabucco on the death bed.

But the latest agreement with OMV could, ironically, breathe some life into Nabucco. Unfortunately for Brussels, if it does it will be at the expense of the pipeline’s original strategic purpose – diversifying away from Gazprom. In taking a share of Baumgarten, the Russian company will control some of the gas that comes into it. Baumgarten processed 7.7bn cubic metres in 2006. Volumes this year could be double that.

Ruttenstorfer said some time ago that Nabucco could share other “synergies” with Gazprom’s Blue Stream project. That could mean that it takes supplies from Gazprom. For the developers, that would solve its problems in finding gas to fill Nabucco. But if that happens, the EU’s development banks could ask why they have been instructed to subsidise another project that will effectively increase Europe’s reliance on Russian energy imports. Even if Nabucco goes ahead without Gazprom’s gas supplying it in the upstream, Gazprom could exploit EU rules to demand access to the pipeline’s capacity.

Budapest might also be worried by Gazprom’s deal with OMV, given that it knows now that its special relationship with the Russian company wasn’t so exclusive after all. The new deal effectively pits Mol and OMV against each other in a battle to see which company will develop Gazprom’s Central European gas hub most quickly. Either way, Gazprom will remain the dominant and decisive player. Thanks to Europe’s companies, Brussels’ energy diversification strategy is increasingly looking like a pipedream.

From "For Human Rights," a Russian NGO led by civil society hero Lev Ponomarev, we offer the attached translation of a newsletter which chronicles the episodes of persecution of protesters and dissidents during the EU-Russia Summit in Samara last week. Below are just some excerpts, download the full document here.

The application for the holding of the “Dissidents March” in Samara was submitted on May 3. The authorities reacted immediately. On the same day, about twenty police officers came to the press conference held by the organizing committee of the March. They copied data from the passports of all those present, including the journalists. The officers probably intended to verify the names of the participants to the event with those included in the lists of disloyal persons.

On the 4th of May, at the railway station, the officers from the Directorate for Combating Organized Crime [hereinafter – UBOP] detained Dmitry Treshchanin. He was first delivered to the military registration and enlistment office and then to the oblast clinical hospital. The medical examining board found him fit for the military service. On the 21st of May, Dmitry came up to the recruit reception center; otherwise, he would have a criminal case initiated against him. That day was his little daughter’s third birthday. Reportedly, the draft board had been instructed to pay special attention to Treshchanin.
...
Since May 9 until today, the organizer of the “Dissidents March” Anastasia Kurt-Adzhiyeva is under outdoor surveillance. Employees of different services repeatedly tried to get into her apartment.

In Samara, at two o'clock in the morning of May 9, during the sticking of leaflets with the materials related to the “Dissidents March”, the police patrol service officers detained the citizen of the Republic of Belarus Igor Shchuka and the resident of the city of Orenburg Evgenia Kosourova. They were delivered to the Zheleznodorozhny district police station. The police confiscated all the readership circulation. Up till now, we can not find out where they are kept. For what it’s worth, Igor Shchuka and Evgenia Kosourova are in one of the lock-up wards in Samara. According to the available information, they will have to stay in detention for not less than thirty days. Police refuses to provide any official comments in this respect. May we remind you that they had been detained as far back as the 8th of May in the Zheleznodorozhny district of Samara for the sticking of leaflets with the information on the “Dissidents March”.
...
On the 10th of May, the organizer of the “Dissidents March” in Samara Anastasia Kurt-Adzhiyeva and Lyudmila Kuzmina (the Association of “GOLOS” appeared on the radio channel of “Echo of Moscow”. After the radio program, they had some problems. As soon as Anastasia came back home, she found out that under her windows there were not less than ten police officers having arranged there a kind of police post. Since yesterday, she has been constantly accompanied by two cars with tinted glasses.

On the 10th of May, the camera crew from the Ren-TV channel and the journalist from the “Kommersant” newspaper Pavel Sedakov were detained in Samara. After the interview with Mikhail Gangan, the UBOP officers invited the journalists to drive with them to the police station to have their identities established. Two and a half hours later, they were released.

In the evening of the 10th of May, the officers from the UBOP and the “K” department combating crimes in the high-tech sphere came unexpectedly to search the office of the Association of “Golos”. The pretext for the search was the use of unlicensed software – three system blocks were seized. The same pretext was used on the 11th of May, when they came to the editorial office of the newspaper “Novaya Gazeta v Samare” . Here, they also seized all the computers. The police officers did not produce any official papers

Coinciding with Vladimir Putin's recent visit to Austria, the attached opinion article authored by Robert Amsterdam was published in the Austrian newspaper Die Presse.

During his time in Vienna, Putin made a big show out of commending Austria's respect for war memorials, closed a considerable amount of business deals (including gas), criticized the U.S. missile shield, and faced a few groups of demonstrators who came out to denounce human rights abuses (one Danish artist was even arrested at the protests because his posters apparently depicted Putin shooting journalists. He said "This is crazy. I wouldn't expect this to happen in Austria.")

Activists hold banners during a protest against Russian President Vladimir Putin at Heldenplatz square in downtown Vienna. AFP

Below is the English translation of RA's article in Die Presse - the original newspaper scan can be downloaded here.

The Russian Capital Invasion

By Robert R. Amsterdam

Should Austrians be worried about large-scale Russian investments in their country’s economy?

Last month, Oleg Deripaska, a 39-year-old Russian billionaire, acquired 30 percent in the Strabag construction consortium, paying €1.2 billion for the assets. Last week it was announced that Mr Deripaska will invest about €1.13 billion in Canada’s Magna International, ultimately giving him equal voting control with the company’s Austrian-born émigré Chairman, Frank Stronach. Magna maintains an assembly plant and engineering and development centre in Graz. This week, Die Presse reported that Mr Deripaska is said to be interested in purchasing Bawag’s stake in Oesterreichische Lotterien.

Before the Magna deal was finalised, Mr Stronach visited with Russian President Vladimir Putin to seek his blessing. Evidently, Mr Stronach had to kiss Mr Putin’s ring in order to seal the deal. Such cosying up to the Kremlin raises the critical question: in making these business deals, are we helping Russia to integrate Western business practices and standards of corporate governance – or is Russia teaching us to tolerate autocracy?

Austrians should welcome the win-win kind of investment that Mr Deripaska has brought to their country. Yet in doing they should be careful to draw a line and maintain principles on the broad abuses that have been engendered by the same Kremlin that happens to shelter Mr Deripaska’s business dealings. This is a Kremlin that has flaunted, and continues to flaunt, the rule of law; that tramples human rights; and that engages in anti-competitive energy imperialism.

Under Mr Putin, the Kremlin has consolidated a “vertical of power” – a political structure antithetical to the separation of powers underlying normal market-based democracies. With a firm grip on all levers of power, the Kremlin has developed a culture of impunity typical of a classic autocracy. This culture is on display at the highest levels, giving a cue to the rest of the country to disrespect the law when doing so can be done without consequence. A viral and pervasive spread of corruption, and lack of faith in the law, both result from the vertical of power and the abuses it engenders.

Many have traced this downturn to the incarceration in 2003 of my client, Mikhail Khodorkovsky, then CEO of the Yukos Oil Company. Mr Khodorkovsky had turned Yukos into a model of business success and corporate governance. He was on the verge of a major tie-up with an American company. He was also highly outspoken, militating against corruption and in favour of modern business, and he promoted civic and human rights. After a show trial that was a mockery of justice, Mr Khodorkovsky was imprisoned on an eight-year sentence, and sent to the Siberian gulag. The assets of Yukos have been pillaged by state-controlled companies.

The Khodorkovsky case was not about one man or one company. The imprisonment of Mr Khodorkovsky was a stern message to the Russian people: do not dare. Do not dare to take seriously the freedoms you have on paper, to stand up for principles, to speak your mind, to challenge, to rise up. If you dare, you will be crushed. You must live in perpetual fear that the whip will be cracked. The state will stop at nothing to tame critics and consolidate control over the country’s natural wealth.

Events subsequent to the Khodorkovsky trial indicate that the power to prosecute has become the instrument of choice in the Kremlin’s means of achieving its desired political and commercial outcomes. The Kremlin wields great influence through the constant threats of intimidation, incarceration or expropriation.

Paradoxically, the law, which has been so blatantly disrespected by the Kremlin, continues to serve as a pretext where convenient for the exercise of intimidation or control by the state. The instrumentalisation of law that was so openly on display in the expropriation of Yukos has now been replicated elsewhere, such as the Sakhalin shakedown, with seemingly less and less concern for a pretence or semblance of credibility. Extortion has been entrenched as a method of acquisition by the state. An increasingly hubristic Kremlin has calculated that it has space for manoeuvre in disregarding legal and moral obligations where convenient – whether with respect to treaty obligations, or business ventures such as the Shtokman development, or commitments to send gas and oil through pipelines without political interference. It is this hubris that allows the Kremlin to ignore the fact that it has signed and is legally bound by the Energy Charter Treaty.

Despite these developments, too many foreign business and political leaders have chosen to deny, dismiss or discount the gravity of what has been occurring. Russia is an important business partner, and therefore, so goes the argument, a strong Kremlin is good for stable business relations, even if we have to sacrifice our principles along the way.

This argument is short-sighted and flawed. Undoubtedly it is important to secure stable market conditions for foreign companies active in the Russian economy. It is also important to secure long-term energy supplies from Russia. However, doing so while remaining mum on the Kremlin’s transgressions is not the right approach in the long term.

Engaging Russia through large-scale investments – and membership in the World Trade Organisation – is critical for all of the benefits that a healthy, stable Russian economy will entail for the rest of the world. However this engagement must be anchored in real respect for fundamental principles of market economics, the rule of law and democratic processes.

The place of Russia in frameworks of partnership with the rest of the world, in a shared marketplace and a shared space of justice and human rights, demands the attention of all concerned whenever and wherever fundamental principles are under attack. The flagrant abuses of the current regime in Moscow suggest that those in power believe that their conduct is without consequence. This is what “business-as-usual” with the outside world has taught them.

A new relationship with Russia must be built upon solid foundations to ensure growth, prosperity and security for the future, both in Russia and the rest of the world. If not, the international community may soon face troubles on an even more serious scale, with a wealthy and hubristic post-Putin regime that is even less committed to prolonging any appearances of democracy and a market economy.

We should not lull ourselves into a false sense of security, equating a domestically omnipotent Russian president with stability in our business relations. For behind the façade of strength, the political system in Russia is gravely ill. The healing mechanisms that exist in any healthy market-based democracy – found in a separation of powers – have been destroyed in Russia. Stability depends not on institutions, but rather on a few individuals. Yukos has taught us how quickly, and with what force, the winds can change in Russia.

So let us raise a glass to toast new Russian investments in Austria. But in the meantime let us not lose sight of the corruption that is rotting Russia to the core, and devouring many good people in the process. Eventually, we in the West will not escape the consequences.

Travel Notes: Journalists in Samara

By Grigory Pasko, journalist

There’s a magazine in Samara Oblast called «Soyuz». The editor-in-chief of this magazine is Alexander Komrakov. Before I left for Samara to cover the EU-Russia summit for this blog, I made arrangements to meet with Alexander and interview him while there. After five minutes of conversation, I realized that Alexander was no ordinary journalist, but an editor-in-chief, and not just plain Alexander [as a colleague might call another colleague—Trans.], but Alexander Vasilievich [a respectful form of address, suggesting social distance—Trans.] Alexander Vasilievich explained to me why he publishes an “apolitical” magazine and does not share the views, for example, of the participants and organizers of the march of those who disagree.

But the editor-in-chief did add that the methods used by those who fight with those who disagree don’t make any sense to him, either.

As I got to know the journalist better, it became clear that he is, in fact, actually quite political after all. The publication’s heroes include former KGB employees, businessmen loyal to today’s authorities, regional leaders of the «United Russia» party… One of Komrakov’s lead articles says it all – “We want to be liked”. In it, he writes, in part: “There is nothing bad in the fact that each of us wants to look better than we really are… We evaluate people by the extent to which they correspond to their declared promises.”

Photo of Alexander Komrakov by Grigory Pasko

On the outside, the magazine «Soyuz» looks quite good indeed. But I’m prepared to argue with some of its internal content. For example, in one of the articles, the author writes about the “deplorable state of the roads in Samara”. A good topic, very newsworthy. “The problem will not suffer delay”, exclaims the author. But he doesn’t write a single word about how it is the local authorities who are to blame for this “deplorable state”. Instead of criticism, he offers the hope that employees of the GIBDD [State Road Traffic Safety Inspectorate] ought to “clean house more vigorously”. Such is the lamentation on the strong arm of the GIBDD.

In a word, the promises of the magazine did not correspond to my expectations as a reader.

Although the editor’s position on non-interference in the political life of Samara is completely understandable. All the more so in a period when the publisher could shut the magazine down at any moment, and the editor would have to go looking for work for himself and two dozen of his employees.

And now, another kind of journalist. Young, intellectually curious, knows exactly where his sympathies lie (or so it seemed to me), including his political sympathies. Pavel Sedakov works in the Samara office of the newspaper «Kommersant». That was he and his colleagues from REN-TV whom I mentioned in an article a few days ago, who were detained on the eve of the Samara EU-Russia summit and on the eve of the conducting of the march of those who disagree in Samara by employees of the regional UBOP [Administration for Fighting Organized Crime] just because they were trying to interview an organizer of the march, the National Bolshevik Mikhail Gangan.

Pavel told me how the detaining took place, and expressed the opinion that the power is afraid of those who disagree, and that is why it deals so ruthlessly with them and with everyone who sympathizes with them or supports them.

Photo of Pavel Sedakov by Grigory Pasko

There is in Samara yet another office of yet another well-known Russian newspaper – «Novaya gazeta» [one of the last remaining free journalistic voices in the country; the murdered journalist Anna Politkovskaya worked there—Ed.]. It goes without saying this office was paid a visit by people in uniform and in civilian attire. In the office of «Novaya gazeta» and the information agency «Volga-inform», employees of the Oblast GUVD [Main Administration of Internal Affairs] confiscated the system blocks of computers and financial documentation for three years. The editor of the Samaran «Novaya», Sergey Kurt-Adzhiyev, was detained subsequent to his daughter Anastasia – one of the organizers of the march of those who disagree in Samara.

It is noteworthy that all of this occurred AFTER the local power had given official permission for the march to take place.

Anastasia herself told the following: “They detained us and Yuri Chervinchuk (an activist of the Samaran “Limonovites”—author’s note) [National Bolsheviks—Trans.] when we were simply walking down the street. Two beefy goons said that we have grenades in our bags and that they need to establish our identities. My dad, who drove up to rescue us, was also detained. We sat three hours at the ROVD [District Branch of Internal Affairs (the local police station)—Trans.]. They confiscated all our leaflets, although after submission of an application on the conducting of an action, according to the law «On rallies, demonstrations and processions» we have the right to conduct agitation. After five hours passed, they let us go.”

Photo of Anastasia Kyrt-Adzhiyeva courtesy of the «Yezhednevny zhurnal» website

What do all the marches of those who disagree that have already taken place in Russia have in common, besides repressions in relation to their organizers? Repressions in relation to journalists attempting to cover the event – that is, to do their job in accordance with the law. At times the journalists got treated even more harshly than the participants – it is enough to recall how a Japanese journalist got his skull fractured and German journalists were severely beaten in St. Petersburg.

So we end up with the following picture: if a journalist is doing his job honestly, then he may be arrested like Sedakov and the Kurt-Adzhiyevs, beaten like Boris Reitschuster – a journalist from the German magazine Focus – and many others have been on numerous occasions, or simply not allowed to get to the place where the event is occurring…

But if he writes articles about how he wants everybody to like him, then perhaps they won’t even notice him.

The Lugovoi Extradition Request: Another case of à la carte legalism

The next chapter in the Alexander Litvinenko poisoning opened this week as the UK identified its prime suspect in the case. Andrei Lugovoi, who returned to Russia after leaving a trail of radioactivity behind him in London, had met with Litvinenko for tea at the Millennium Hotel on November 1 last year, apparently the day that Litvinenko was poisoned.

Russian officials have rejected the UK's request to extradite Lugovoi, making vague references to the Russian constitution's limitations on extraditions of Russian citizens to foreign countries.

Moscow's decision to shelter a murder suspect once again proves that the Russian legal system is politically-driven and dysfunctional.

Article 61 of the Russian Constitution says that a Russian citizen "may not" be extradited from Russia to another country. Article 63(2) uses stronger language - "shall not" - to state that no extraditions will proceed where the suspect is being "persecuted for political convictions" or for actions that are not recognized as a crime in Russia. Murder is, of course, recognized as a crime in Russia. Article 63(2) goes on to state that the extradition of criminal suspects "shall be carried out on the basis of the federal law or the international agreement of the Russian Federation."

Enter the European Convention on Extradition of 1957, signed by Russia in 1996 and then ratified in 1999. The reservations or declarations that Russia made when joining the Convention were about taxation cases and procedural considerations that do not apply to the Lugovoi extradition request.

Furthermore, if we go back to the Russian Constitution, Article 15(4) states the following:

"The universally-recognized norms of international law and international treaties and agreements of the Russian Federation shall be a component part of its legal system. If an international treaty or agreement of the Russian Federation fixes other rules than those envisaged by law, the rules of the international agreement shall be applied."

Can Russia credibly assert that it joined the Extradition Convention with no intention ever to extradite a Russian citizen suspected of murder?

While, as described above, the Russian Constitution declares that Russian citizens "may not" be extradited - and while the Extradition Convention contains an opt-out clause regarding a state's own nationals, how can Russia expect comity in international legal cooperation if it invokes these narrow exceptions in all cases involving its citizens - especially for a grave crime such as murder? And what signal does this send to Russian criminals or would-be wrongdoers about the consequences of committing serious misdeeds abroad?

In November 2006, Russian prosecutors signed a memorandum of understanding with their British counterparts, intended to facilitate extraditions between them. Clearly, that agreement is now in tatters.

After desperately seeking extradition to Russia of various political opponents over the past several years, the Kremlin's refusal to yield one of its nationals in this remarkable murder case is yet another example of "à la carte" legalism - invoking the law when it achieves objectives and ignoring it when convenient to do so.

Just look at the expropriation of Shell at Sakhalin on environmental grounds, and the imminent expropriation of BP at Kovykta on unfair production quota grounds.

The Kremlin clearly enjoys having its cake and eating it too.

But Moscow should not be surprised at how European courts respond to its requests for judicial cooperation, or how Europe reacts to the extradition requests of a regime that perpetrates fraudulent prosecutions and grand-scale state-sanctioned theft, using its police and investigators as tools of intimidation. To comply with requests from Russia's prosecutorial system demands that it meet minimum levels of modernity, justice and legal rigour. All are sorely lacking.

Blogger and Economist reporter Edward Lucas has the following op/ed running in the Daily Mail. On his site, Lucas writes, "Do not read further if you want balanced commentary and thoughtful nuance. This piece is written for a mass-circulation tabloid. Many other things could and should be said on this subject. It does not represent the view of The Economist, and certainly not of my colleagues there. But it comes from the heart."

Back to the Cold War - Putin's Russia threat to Britain

Murder on our streets. Blackmail over oil supplies. Cyber- terrorism. Putin's Russia poses a grave threat to our way of life.

By Edward Lucas

So now it's official: the nuclear terrorist attack on the streets of London that killed Alexander Litvinenko and contaminated 17 others was not by 'person or persons unknown'.

The British authorities have publicly named the man many have long seen as the prime suspect: Andrei Lugovoy, a multi-millionaire ex-KGB agent with close ties to the Kremlin.

His trail leads through London and Hamburg, marked by traces of Polonium-210, the lethal radioactive isotope that condemned the Russian defector to a grisly death.

Many mysteries remain.

Mr Lugovoy vehemently protests his innocence.

Was he set up by the real assassins? Or was he a bungler? Professional KGB killers would never have left so many clues.

Maybe the Kremlin wanted to send a powerful message, condemning a man they saw as a traitor to a slow, agonising and public death?

And how serious was Mr Litvinenko, with his increasingly wild allegations of paedophilia in the Kremlin and Russian support for Al-Qaeda?

In spy novels, such puzzles are neatly unravelled by the end of the story. But this real-life thriller has only just begun, and there are few answers to any of the terrifying problems that it poses.

The truth is that Russia, under Vladimir Putin, has become a nation that matches the resources and ambition of a superpower with the ruthlessness and ingenuity of gangsters and terrorists.

As even the most sentimental and feeble-minded westerners are beginning to realise, Russia poses a profound threat to our way of life, and one that we are still pitifully ill- equipped to counter.

The first and most blatant weapon in its armoury is murder. As Paul Joyal, a prominent American expert on intelligence and Kremlin dirty tricks - and a friend of Mr Litvinenko's - said on an American television programme: "A message has been communicated to anyone who wants to speak out against the Kremlin: 'If you do, no matter who you are, where you are, we will find you and we will silence you - in the most horrible way possible.' "

A week after that interview was broadcast, Mr Joyal was gunned down outside his home near Washington DC.

Initial reports said it was just a sinister coincidence. Mr Joyal himself, his internal organs torn to pieces by the attacker's bullet, was in a drug-induced coma for nearly a month.

Since then he has said little. But when I spoke to him, he said that the behaviour of the attackers and the fact that they left his wallet, briefcase, computer and car (as well as other objects that must stay confidential for now) mean it is virtually impossible that it was mere street crime.

That suspicion might also be shared by America's FBI, which - highly unusually - is assisting the local county police in their investigation.

Kremlin death squads have killed others.

Zelimkhan Yandarbiyev, an exiled Chechen leader, was blown up in February 2004 in the Qatari capital, Doha, along with two bodyguards and his young son.

The perpetrators - officers in Russia's elite GRU military intelligence service - were caught, tried and imprisoned.

As part of a deal with Russia, they were returned home, supposedly to serve out the rest of their sentences. Instead, they received a heroes' welcome and were released.

So much for legality in Russia, a country that has passed a law authorising the murder of its enemies abroad. The definition of enemies, incidentally, includes "extremist" - a word that Russian officials use to describe anyone who disagrees with them.

Russia shows a similarly cavalier attitude to its business dealings with the outside world.

Tearing up contracts without the slightest hesitation, it uses blackmail against its neighbours in a way that would have been unimaginable even in the depths of the Cold War.

Lithuania and Estonia, two brave Baltic nations that cast off the shackles of communist tyranny in 1991, are in the front line of Russian energy sanctions.

A vital oil pipeline to Lithuania's Mazeikiai oil refinery - the mainstay of that country's economy - has been cut off, supposedly for urgent maintenance.

But the repair works have been going on for nearly a year and are set to continue indefinitely.

When Lithuanian officials protested, a senior Russian visitor told them: "Sorry, you should have sold the refinery to us" (Lithuania had sold it to the main oil company in friendly, neighbouring Poland).

Among other sanctions on Estonia, Russian officials have crippled trade by closing that country's main road bridge from Russia, again claiming that it needs "urgent repairs".

Given Europe's dependence on Russian energy, that is already alarming. But it is another kind of onslaught unleashed against plucky Estonia that has set deafening alarm bells ringing in Brussels and Washington.

Last month, Estonia's government decided to move a Soviet war memorial in the centre of the capital, Tallinn, to a nearby military cemetery.

That prompted demonstrations by local Russians, egged on by the Kremlin's spies and provocateurs, which soon turned into riots and looting.

In the chocolate-box streets of medieval Tallinn, familiar to many British holidaymakers as one of the friendliest and most charming capitals of Europe, drunken Russian hooligans emptied shops and burnt cars, chanting "It's all ours" and "Soviet Union for ever".

In Moscow, thugs blockaded and attacked the Estonian embassy - a flagrant breach of the Vienna convention. When the Swedish ambassador visited, they tried to turn over his car.

But that was only a taste of the havoc to be wreaked in cyberspace. Estonia's most vital computers experienced a cyber-attack on a scale and ferocity unknown in the history of the internet.

Techniques normally employed by cyber-criminals, such as huge remote-controlled networks of hijacked computers, were used to cripple vital public services, paralyse the banking system and cut off the government's websites from the outside world.

By cutting Estonia off from the world, the Kremlin's propagandists could freely peddle their poisonous lies about a "fascist revival" in this peaceful, prosperous and democratic country.

Luckily for us, Russia's goons and spooks have overplayed their hand. Outrage in Germany about the way Vladimir Putin's thuggish regime crushes opposition and bullies its neighbours makes it easier for the steely Chancellor, Angela Merkel, herself a former inmate of the grim Communist prison camp of East Germany, to show her own distaste.

The European Union's summit with Russia in Samara last week was a frosty affair - a welcome change from days of Silvio Berlusconi, Jacques Chirac and Gerhard Schroder, infamous for their sleazy backslapping with Russia's leaders.

But we in Britain have yet to catch up - thanks, paradoxically, to our open, globalised economy. Russia's energyfuelled wealth has given it a vital bridgehead, creating a powerful lobby of banks and business partners that overlooks any crimes in the hope of profit.

BP's imminent loss of its most prized investment in Russia, the $6 billion Kovykta gas field, is a punishment for the British authorities' temerity in charging Mr Lugovoy.

That shows how high the stakes are.

Even now, the Kremlin's slimy spin-doctors are trying to downplay the Litvinenko murder: he was a "provocative" figure, one of them murmured to me.

But since when has being "provocative" attracted a death sentence, meted out without judge or jury on the streets of London?

The dismal truth is this: during the Cold War, capitalists and freedom-fighters were on the same side.

Now that Russia has adopted capitalism - albeit its own barbarous version - a fifth column has marched straight into the heart of the British establishment.

What will it take to counteract it?

Amnesty International's Secretary General Irene Khan held a press conference in London today to present the group's 2007 global report on human rights. As expected, the section on the Russian Federation was particularly critical, and mention of the status of Mikhail Khodorkovsky is also made. (see excerpts below). Khan also penned a column on the Guardian blog, calling for the end of the politics of fear.

From the Russian Federation section of the 2007 Amnesty International Report:

Human rights defenders and independent civil society came under increasing pressure. The authorities clamped down on the peaceful exercise of the rights to freedom of expression and assembly. Journalists were intimidated and attacked and one, Anna Politkovskaya, was killed. The authorities failed adequately to tackle racism and discrimination against people because of their ethnic identity or sexual orientation. Racist and homophobic attacks, some of them fatal, continued. Violence against women in the family was widespread and the state failed to provide adequate protection for women at risk. Police frequently circumvented safeguards designed to protect detainees against torture. Extrajudicial executions, enforced disappearances and abductions, torture including in unofficial detention centres, and arbitrary detentions continued in the North Caucasus region, in particular in Chechnya. In Chechnya, impunity remained the norm for those who committed human rights abuses, and people seeking justice faced intimidation and death threats. The European Court of Human Rights ruled that Russia had violated the rights to life, to liberty and security, to respect for private and family life and to an effective remedy, and to the prohibition of torture. The government failed to co-operate fully with international human rights mechanisms against torture. .....

Attacks on journalists

Attacks on journalists Journalists were intimidated, faced with groundless criminal proceedings and attacked. Human rights defenders were subjected to administrative harassment and some received anonymous death threats.

- Russian journalist and human rights defender Anna Politkovskaya was shot dead on 7 October at the block of flats where she lived in Moscow, in all likelihood because of her work as a journalist. Her courageous coverage of the conflict and human rights situation in Chechnya since 1999 for Novaia Gazeta (New Newspaper) had won her numerous awards, and she had also written extensively about violence in the army, state corruption and police brutality. She had been subjected to intimidation and harassment by the Russian and Chechen authorities because of her outspoken criticism. A vigil in her memory on 16 October in Nazran, Ingushetia, was broken up violently. At least five human rights activists were detained by police and charged with administrative offences. Four were cleared, but the vigil organizer was fined.

- On 3 February, Stanislav Dmitrievskii was sentenced to a suspended two-year prison term and four years’ probation for inciting “race hate” after he published articles by Chechen separatist leaders that advocated neither racism nor violence. The NGO he led, the Russian-Chechen Friendship Society, was ordered by a court to close in November. The decision was motivated in part by Stanislav Dmitrievskii’s conviction, applying a new NGO law forbidding individuals convicted of an “extremist” crime from heading an NGO.

Demonstrations

Many bans on demonstrations did not appear to be legitimate or proportionate restrictions of freedom of assembly. Peaceful protesters were detained despite informing the authorities of their intention to demonstrate as required in law.

- Anti-globalization protesters were detained on their journey to St Petersburg in the run-up to the G8 summit in July, apparently sometimes on spurious grounds.

- In April officers of a special police unit (OMON) reportedly used excessive force to disperse over 500 men, women and children protesting at alleged corruption by local authorities in Dagestan. Murad Nagmetov was killed and at least two other demonstrators were seriously injured after police reportedly fired tear gas canisters directly into the crowd without warning. The local procuracy opened investigations.
...
Fair trial concerns

Prisoners served sentences after trials that failed to meet international fair trial standards, and in which their lawyers considered the charges to be politically motivated.

- Former YUKOS oil company head Mikhail Khodorkovski and associate Platon Lebedev, serving nine-year prison sentences following convictions in 2005 for fraud and tax evasion, were denied the right to serve their sentences in or near their home areas. Mikhail Khodorkovskii was unlawfully held in a punishment cell for two weeks in January for having a copy of publicly available government decrees on prisoner conduct. He was also held in a punishment cell for a week in March for drinking tea in an unauthorized place.

- Mikhail Trepashkin, a lawyer and former security services officer, was denied adequate medical treatment for chronic bronchial asthma. He was serving a four-year sentence in a prison colony imposed by a military court in 2005 following conviction on charges including divulging state secrets. He was reportedly placed in an unheated, unventilated punishment cell by the prison administration in an attempt to make him withdraw complaints about the fairness of his trial and his treatment.

Thanks for this link to blogger David McDuff, here is an interesting excerpt of an interview with Igor Yakovenko of the Russian Journalists' Union, which recently was evicted from its headquarters.

From Radio Free Europe:

RFE/RL: Finally, some people here and in the West point to the example of the Ekho Moskvy radio station — how can there be no media freedom in Russia if a radio station like this exists that can be rather critical of the government?

Yakovenko: Even in the most stagnant days of the Soviet Union, in the 1970s, there were so-called “air vents,” which allowed some freedom of speech. They were like pipes that allowed the steam of disgruntlement and criticism to escape, little islands for lovers of freedom and pluralism. And in the Soviet Union, this “little island” was “Literaturnaya Gazeta,” which was granted permission, from on high, to print the sorts of things that were forbidden to everyone else. This newspaper was able to carry out investigative journalism. They even made comments on the mafias that existed at the time in the Soviet Union. And so these air vents, these oases in the middle of a desert of censorship, are now in the hands of Ekho Moskvy radio and the Novaya Gazeta newspaper. And they really do enjoy relative freedom. One can say that Ekho Moskvy undertakes about 90 percent of the journalism in this country, because it has employed all the people who were sacked from state television channels, who have now become presenters. Journalists of all inclinations have flocked there. It really is the only free, pluralist radio station in Russia, you could say a quasi-social channel, I mean in terms of content.

Say what you will about President Vladimir Putin, but no one would dispute his firm grip on power in Russia. However it appears that his grasp of finance is not nearly as tight. Both Gref and Kudrin shuddered to think of this Hugo Chavez-style proposal.

Putin proposes state investment in domestic stocks

Russian Finance Minister Alexei Kudrin, analysts critical of the proposal

By Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- Russian President Vladimir Putin's proposal that his government invest energy revenues in the domestic stock market to prop up prices is bad news for investors, analysts say.

In a cabinet meeting Monday, Putin "suggested studying the possibility of investing funds received from sales of Russian energy in Russian blue chip stocks, in light of the stock market's stagnation during the first quarter of 2007," according to a release published on the Kremlin's official website.

"It'd be a rather ill-advised move to pump up the stock market," said Lars Christensen, senior analyst at Denmark's Danske Bank. "The government should stay out of that."

"We have far too much liquidity in the Russian equity and property market," he said. "And that could be inflationary and an asset bubble could develop."

Rory MacFarquhar, analyst at Goldman Sachs European Economic Research, agreed.

It's "bad news -- even for the equity market, the supposed "beneficiary" of this proposal, since it opens up a new risk of state intervention in what had been until now a relatively well-functioning and un-politicized market," MacFarquhar said in a research report.

"There is no macroeconomic justification for such intervention, especially as shares are not widely owned by the Russian population and the level of equity market has no perceptible impact on household consumption," he said.

Russia's benchmark RTS stock index has declined 3.2% year-to-date, a disappointing performance given that it was the second-best performer among major world stock indexes in 2006.

Full article here, Kremlin transcript here.

Here's a big surprise. In an interview to be published tomorrow in the German magazine Capital, Gazprom's Deputy CEO Alexander Medvedev is denying the possible formation of gas cartel.

"Our business is based very much on long-term supply contracts. It is therefore impossible to develop a cartel mechanism like OPEC," Capital quoted Medvedev as saying. ... "We're just as dependent on the export revenues -- which account for two thirds of our sales -- as our customers are on our deliveries," he told the magazine.

The controversy of the Gas OPEC is really just semantics - coordination is already well under way.

Medvedev isn't saying anything new here (in fact, you may recall similar denials right before the Doha meeting, saying that no agreement would be signed. Of course, that also turned out to be a lie when the producers established a high-level exploratory committee). Here Russia's Gas Czar is using the same tired argument that many analysts have used to resolutely discard any concern over the increasingly close relations between gas exporters based on the narrow view that cartels can only function by their ability to influence price. I am surprised that he didn't also argue that the cartel isn't possible because of Gazprom's reliance of pipelines, lack of global market, differing policy agendas with other producers, fear of sanctions, and the high capital requirements for natural gas infrastructure - because that would be about the complete list that the naysayers usually tick off.

I hate to sound like a broken record on the gasfinger issue, and it is true that the implied threat of the gas cartel has political expedience in and of itself, but I have made it clear many times in the past that 1) the gas cartel is not a problem for the short term, but rather one to watch for the long term, and 2) that such a cartel would not function like OPEC with production quotas - rather it would carve up markets and reduce competition.

Many months ago, we were warning that the aggressive resource diplomacy exercised by the Russians with Algeria in Central Asia represented the key tactics of how the new gas cartel would operate - and now look what has happened. Still, only some fringe elements are catching on to the trend and seeing the Turkmenistan gambit in light of the gas cartel. Ariel Cohen of Heritage has similarly done some excellent research on this issue, noting that a Russia-led gas OPEC would likely be gradual, stealthy, and by most appearances, reasonable.

For Alexander Medvedev to come out of no where and reassure us that there isn't any gas cartel - especially when the issue has been cold in recent weeks - shows that Gazprom is eager to work on its public image and calm down consumers following the rough meetings held at the EU-Russia summit and some recent bad press. However, we know from past experience how awkward and uncomfortable Gazprom finds the task of appealing to the public.

Alejandro Litovsky, a senior advisor at AccountAbility, has an interesting column running on OpenDemocracy that argues the importance of civil society's role in building accountability mechanisms for Russia's government and private sector to heal the EU-Russia divide.

Litovsky:

A lesson from Moscow

The report demonstrates that more collaborative forms of governance are possible between policy-makers, energy companies and civil-society activists when there are processes in place to realise mutual interests, roles and responsibilities. This was a conclusion of a two-day dialogue organised in Moscow by AccountAbility in partnership with the Russian electricity sector holding RAO-UES, the United Metallurgical Company, BP Russia, the World Bank and a consortium of Russian environmental and social NGOs.

Behind Russia's international bullying lies the shadow of a domestic energy crisis, dominated by under-investment in infrastructure, heavily subsidised energy prices and a pervasive energy inefficiency across all sectors of the economy. This delicate balance is financed with the revenues of energy exports to the EU.

Russian businesses and NGOs, producers and consumers, share a concern and are seeking to find ways to work together effectively. How to direct international finance to the Russian energy sector is key. International financial institutions demand accountability, such as stable legal frameworks, in order to invest in long-term projects. The revamp of the electricity sector is one example. Half of Moscow has no energy-metering; energy consumption is set on an unsustainable path and even an energy giant like Gazprom will find it difficult to meet a growing demand at such subsidised prices.

The AccountAbility dialogue in Moscow showed that traditional forms of accountability are unfit for the new challenges of development. We learned how the "effective" accountability mechanisms of the Moscow city government - which are vertical, complex bureaucratic procedures - did not equip public servants with the incentives or the skills to work together with the Russian NGOs and their energy-efficiency proposals, even though they agreed with them.

Complete article here.

Ever since Donald Rumsfeld's famously successful division of Europe before the Iraq war, other nations seeking to benefit from European incoherence and indecisiveness have enthusiastically begun practicing this Machiavellian doctrine of diplomacy. No one has been more successful in this regard than Vladimir Putin, whose strategy to re-assert Russia's status as a global power, has brought the full weight of the state's control over oil and gas supplies to bear upon and exacerbate European disagreements.

Leading up to the EU-Russia Summmit in Samara last week, many commentators had observed that today's Kremlin has the uncanny capacity to bring out the worst in EU inter-state relations, and act as a mirror to reveal the EU's most uncomfortable and fundamental conflicts of culture, values, and identity. Whether it is the constant undermining of a community energy policy caused by bilateral energy agreements, views on missile defense sites and Nato expansion, or the elusive sense of "solidarity" when new member states engage in symbolic battles with their former occupiers.

However, this week we may be seeing the tides turn. It is possible that Russia overplayed its hand in Samara, and that patience is wearing thin. What is perceived as Russian arrogance, and the near total lack of any conciliatory language, may now be creating the opposite effect that the Kremlin has been seeking, causing disparate member states to unite and build solidarity.

The AP reports:

"There is a general rethinking that being divided doesn't help anybody in the EU anymore," said Katinka Barysch, an analyst with the Centre for European Reform, an independent London think tank.

"It is not a sustainable system — the Germans siding more with the Russians than their own EU partners. I think that has become fairly clear."

Not only were EU officials willing to raise human rights and restrictions on protesters during the summit, but EU President Jose Manuel Barroso warned Russia that it must deal with a united EU — a clear reference to Russian pressure on new members such as Poland, which faces a Russian meat embargo.
...
"Never has the European Union shown so much solidarity with Poland," the leading Polish daily Gazeta Wyborcza said in a front-page commentary. "Barroso made it clear that the Union will not allow Russia to sow discord among its members — that the principle 'one for all and all for one' still stands."

In Lithuania, the director of the Vilnius International Relations and Politics Institute, Raimundas Lopata, noted that "Russia is constantly testing the boundaries of EU solidarity by pushing one or another newcomer."

"This," Lopata added, "has resulted in the first timid attempts to unite forces and act as one strong organization."

The Telegraph reports today on the UK Energy White Paper, which although it doesn't mention Russia or Gazprom by name, they are "the elephants in the room."

This has put Gazprom in a powerful position. So influential has Gazprom become that critics talk of Russia's "pipeline troops" or "gas guerillas". Moscow is no longer a military superpower. But this resource-rich country is fast becoming an energy superpower. advertisement

Mark Spelman, head of global strategy at the consultancy Accenture, says: "I don't think that we recognise the pace at which things are going to move over the next four to five years.

"In the middle of the next decade we will suddenly wake up and say to ourselves: wow, look at how many assets Gazprom owns," he said.
...
In Russia, energy prices are subsidised, reducing revenues for Gazprom. Poor infrastructure and storage facilities mean it's simpler and cheaper to push gas beyond Russia's borders. This gives Britain leverage when dealing with Gazprom's growing power. But, says Spelman, it would work better if Britain operated in unison with its EU partners.

"Countries are doing bilateral deals. They should work together. What is needed is a rapid dialogue between Gordon Brown, Angela Merkel and Nicolas Sarkozy on how they can deal with Gazprom's dominance," he said.

Political polls are a funny thing in a non-democratic countries - I imagine it must make an impact on the answers people give when there is a profound and widespread certainty that their vote will make absolutely no difference.

Nevertheless, the big news today - apart from some little tabloid blurb regarding the British government charging a Russian with the murder of a former spy in London (or something like that) - is that Dmitri Medvedev, after a brief period spent in the shadows, has regained the lead in the polls from his fellow Deputy Prime Minister Sergei Ivanov.

A new poll from Levada shows that Medvedev is up to 34% from 29%, while Ivanov has remained at 31%. The conventional political analysis has always painted Medvedev as the relatively more liberal, Western minded of the two, while Ivanov does a better job playing hawkish bad cop. Indeed, when Condoleezza Rice visited last week, Ivanov was given most of the heavy lifting and Medvedev was no where to be found (which was a big change from his star-studded days at the World Economic Forum, when it seemed certain that we were watching the next president of Russia take a turn on the catwalk). Apparently Putin likes to use one to intimidate and the other to charm.

But these polls, impressions, and canned analysis shouldn't be fully trusted. Ask any of your friends who watch Russian television lately, and they will tell you that Medvedev is getting the royal treatment and hours of flattering coverage. On the other hand, many people close to Ivanov say that the "hawkish" trait is an exaggeration, and not a fair representation of what his policies would be like - for example, they say his daughters enjoy spending lots of time in the United States, so he probably isn't as ready for the new Cold War as some analysts threaten. The biggest problems with polls and perceptions in the Russian succession is that there is a considerable dark horse factor (Kozak and Fradkov say hi) - like any good monarchic drama, it is possible that candidates will be brought forth for purposes of misdirection, and that the real successor cannot be exposed until the timing is right.

For those who think they've got what it takes to pick the next president of Russia, put your money where your mouth is. A while back, the website Trade Sports opened up a speculative market of futures contracts for the 2008 President of Russia:

Currently Vladimir Putin is the favorite, with 7.5 to 1 odds, while Kasparov is running a 10 to 1 contract, and Zhirinovsky with 11 to 1 odds. Obviously it is still way too early. Even the political futures market is affected by the general atmosphere of risk in Russia - if you look at the volume column, even Putin has only sold 116. Hopefully once the market becomes more liquid later on, we can begin to track the daily swings in value of these contracts to see who the Vegas oddsmakers believe will hold down the halls of the Kremlin - which is probably as reliable if not more trustworthy than a Levada poll. (for an example of a liquid political futures market, see the US GOP nomination or the resignation of Attorney General Alberto Gonzalez - I imagine that the Russia books will close the margins in later months).

Look to the gas and oil wars

One important key to predicting who Putin's successor will be can be found in the country's labyrinthine energy politics, where political and legal fallout from the plunder of Yukos is creating certain instabilities in the delicate balance between Gazprom and Rosneft, and creating rifts between the ambitious, competing siloviki behind these state-owned firms. For example, a recent article in Stratfor identified Medvedev's low profile with the conclusion of the Yukos auctions, reflecting Putin's increasing worries that by a Kremlin managed by Medvedev would be incapable maintaining the delicate peace in that den of thieves:

If Putin leaves his position to Medvedev, nothing would stop Gazprom from swallowing up the rest of Russia's energy infrastructure. However, Putin is trying to ensure balance and is strengthening Gazprom's rival, energy company Rosneft, before he leaves to ensure Gazprom is kept in check. Though Medvedev knew of Putin's plans to do this, it still must have come as a shock to see Rosneft take most of bankrupt Russian oil firm Yukos' assets in auctions over the past few weeks. Gazprom did snatch a few pieces, but the auction catapulted Rosneft into the position of Russia's largest oil company, and made it a power to reckon with.

For the past few weeks, Medvedev has been keeping his head down while Rosneft publicly rejoices in its victory and he and his political backer, Vladislav Surkov, determine how to proceed. Moreover, Medvedev needs to prove that Gazprom is still the Kremlin's most-valued asset and show Putin that he can rule a balanced Russian government.

Medvedev and Surkov are apparently looking to move Gazprom into large fields it has yet to attempt or dominate, such as coal, telecom and media. Gazprom is said to be the potential buyer of Russian telephone company Rostelcom; it is expected to take over Russian coal giant SUEK; and it also has been in secret negotiations to take over Germany's largest coal mining company, RAG. Medvedev is the one heading up these plans, which would diversify and enlarge Gazprom without directly competing with Rosneft.

But the issue remains: can Medvedev rein in his ambitions for Gazprom and its aspirations for total supremacy enough for Putin to give him the top spot? Medvedev already is missing some of Russia's most defining moments, while Ivanov has been basking in the spotlight. Medvedev has to find a way to balance his own agenda and Gazprom in Putin's master plan -- he cannot upset Surkov, hurt Gazprom's supreme identity or alter his strong public image. If Medvedev does not pull all of this together by the end of the year, he could see himself missing not only media appearances, but also a spot on ballots in March.

So who do you have your money on?

Veteran travel writer Paul Theroux has just published an extensive travel piece / political polemic about Turkmenistan in the new New Yorker. Theroux, who has never been confused as a cultural relativist, reserves a special disdain and morbid fascination with the late dictator of Turkmenistan, Saparmurat Niyazov, and finds a way to describe the flamboyant autocrat's insanity every other paragraph. See excerpt below - click here to download an 11-page PDF of the full article. Other RA articles on Turkmenistan can be read here, here, and here.

Excerpts:

The cruelty of Turkmenbashi's policies was obvious when you contemplated the tableau of toy huts, a visible plea for housing. Homeless people abounded in this fabulously wealthy country. (Natural-gas exports alone accounted for an estimated three billion dollars in revenue in 2006. This month, Berdimuhammedov signed a lucrative deal to run a new pipeline to Russa.) Bashi fancied himself a city planner; he'd ordered that hundreds of houses be bulldozed, compounds flattened, and the neighborhoods of Ashgabat dispersed, so that he could build oversized white marble apartment blocks that now stood empty because they were, in their deluxe absurdity, unaffordable. He rarely compensated the owners of the houses he tore down; nor did he rehouse them. They now lived precariously, in temporary huts on the outskirts of the town. ....

Because I was being watched by the ministry of Foreign Affairs, I had to be careful. But having Turkmenbashi as an enemy was also helpful, because when Western diplomats tried to explain my predicament to me they were often revealing about his quirks.

“He hates people meddling,” one diplomat told me. “He hates N.G.O.’s” – non-governmental humanitarian organizations. Turkmenbashi had banned local human-rights groups and religious groups and environmental groups – all the more readily if they received assistance from foreign partners. He’d place tight restrictions on the Peace Corps, and he refused to ask for help form the international Monetary Fund or from the World Bank, no doubt fearing that if he opened Turkmenistan’s finances to international scrutiny he would be sharing information about his personal finances as well. “That’s his big secret,” another diplomat told me. “He’s a billionaire many times over.”

Does a cyber-attack constitute a military attack? Anne Applebaum discusses Estonia, Russia, and Nato in a new column:

Of course, as is the way of these things, the attacks' precise origin cannot be determined: Unlike classic terrorism, the essence of modern cyber-warfare is its anonymity. Though some attacks did appear to come from PCs belonging to the Russian presidential administration, others came from as far afield as Brazil and Vietnam. As a result, even the Estonian government's experts have backed away from directly accusing the Russian government. After all, angry hackers can organize a " botnet" -- computers that have been remotely hacked and forced, unwittingly, to send out spam or viruses -- anywhere. Indeed, "patriotic" Chinese hackers have made a specialty of this sort of assault, using computers all over the world to attack both Japanese and U.S. government Web sites at moments of high tension.

Both the anonymity and the novelty may turn out to be part of the appeal, particularly if, as some in NATO now believe, the attacks are Russian "tests" of the West's preparedness for cyber-warfare in general and of NATO's commitment to its newest, weakest members in particular. Some believe the Russian government is experimenting with different tactics, trying to see which forms of harassment work best: whether the verbal attacks on Estonia, the Russian oil pipeline to Lithuania that mysteriously needs repairs, or the embargos on Polish meat products and Georgian wine.

It appears the ransom paid by BP for its Siberian gas field was not enough.

Today's news that the company's investment in the Kovykta field, one of its most important in Russia, is "days away" from having its license revoked provides several clear lessons for energy investors.

1.) There is a "sticky power" to doing business with the Kremlin - foreign firms are drawn into self-perpetuating unlawful and corrupt practices to gain favor with the authorities, mirroring the conduct of a lawless state and its politically guided energy arms. 2.) The further a foreign company is drawn into the state's embrace, the weaker it becomes and the more vulnerable to the leverage of blackmail. 3.) Weakness, cooperation, and loyalty are not respected - when Russia wants to steal something from you, it is going to go forward and do it, even if you follow their instructions to the letter. 4.) A foreign firm under state attack should fight back hard, and urgently seek to address their claims in fair third-party courts and arbitration forums.

Shareholders say BP "was not without choices" when confronted with Russia's energy blackmail. (image: "BP Exec - Nick Turner)

The case in point for British Petroleum's problems in Russia has a long history - we first started blogging on it last November when their executives came under trumped-up criminal investigations just days after TNK-BP settled a questionable back-tax bill. Like Yukos and Royal Dutch Shell, over the past few years BP has teetered on the brink of suffering major damages from the Kremlin's gradual and consistent moves to extent majority state control over all of Russia's most important gas and oil production sites.

Now one of the most important natural gas projects in Siberia is being scrutinized by environmental watch (attack?) dog, Oleg Mitvol, the same chief regulator that pressured Shell at the Sakhalin-II project over environmental violations, forcing the companies to give up a controlling stake to Gazprom. (It pretty much goes without saying that once the state gets its desired stake in the project, the environmental concerns disappear.) Mitvol, under Moscow's instructions, is demanding that BP fulfill its license requirements at Kovykta and begin producing at least 9 billion cubic meters this year. Certainly BP would love to start pumping out that much gas if they had any chance of selling it outside Russia - but due to Gazprom's monopoly on the pipelines, the gas is currently trapped for distribution to the low-paying domestic market. The Financial Times reports that tomorrow hearings will be held at an Irkutsk court (good luck with that) to determine whether the license requirements actually demand that BP produce 9 billion cubic meters this year, or just enough to meet local demand, which most say is less than 3 billion cubic meters.

Essentially Gazprom and its friends in the environmental regulatory agency are attempting to create an crippling financial situation to bleed BP dry, making them produce enormous amounts of gas that they can't sell. Oleg Mitvol, even if he sincerely believes in his mandate, is being instrumentalized as a veil of legality to make regulatory compliance more costly than the forfeit of a majority stake to the state.

But it is difficult to summon up much sympathy for BP. After all, they are probably the most surprised by the ongoing pressure at Kovykta, as they likely considered the matter solved when former CEO Lord Browne paid homage to the court of Putin to present his successor. It was assumed by many observers and shareholders, not just myself, that BP had been convinced to participate in the rigged auctions of stolen Yukos properties to gain favor from the Kremlin - in my opinion, they probably were led to believe that dragging the corporate name through the mud would be a sufficient gesture to end the problems at Kovykta. (apparently it wasn't enough to throw $1 billion into the Rosneft IPO or form unattractive LNG joint ventures with Russia's state-owned firms - there seemed no end to what BP is willing to do in Russia to maintain good relations).

Yet today Lord Browne's strategy to ingratiate BP before the Kremlin and maintain proximity to power as the guiding principle to doing business in Russia appears to have thoroughly and tragically backfired. The company has damaged shareholder value, sacrificed its reputation, and helped prop up an increasingly undemocratic regime that beats dissenters in the streets and offers little prospect for fruitful and cooperative relations with the international community.

Here's a news segment from CNBC Europe, featuring interviews with various talking heads debating to what extent Europe itself should be blamed for its lack of unity on Russia policy.

Samara Policeman Sysuyev: “I’m not going to beat the demonstrators…”

By Grigory Pasko, journalist

On the eve of the march of those who disagree, the Samara police held a dress rehearsal of how they intended to cordon off the potential demonstrators in the area of Fountain Square and the ridiculous monument to some kind of longboat [the kind pulled by the “Volga boatmen” of historical fame—Trans.] that looks more like an ordinary slab of concrete. I was at this dress rehearsal. From 6 to 10 PM, a good hundred policemen (the ones I could see, at any rate) stood around at various ends of the square and the monument (as well as in nearby houses, streets, small squares, and the river embankment) with only one purpose – to demonstrate their readiness to carry out the assigned task to the chief of the UVD of Samara Oblast [the Oblast police chief—Trans.], major general of the police Alexander Reimer. Reimer finally showed up at around 9 at night: with a gigantic belly and a huge retinue of colonels and personal security guards fluttering around him. They proceeded to the square before the cement boat and proceeded to observe the gorgeous sunset over the Volga. Then they proceeded to discuss something – no doubt the opposition march scheduled for the 18th, which the authorities (in the person of Reimer himself, actually) had permitted to take place – after some very strong hints from the European Union and even personally from Bundeskanzler Angela Merkel.

Why the Samara police had literally paralyzed traffic in the city and denied residents the opportunity to relax on the waterfront on a warm May evening was completely beyond comprehension. After all, the march wasn’t scheduled to take place for another day. For some reason, I was reminded of the words of the general, which he pronounced soon after being appointed to the post of chief of the UVD: “The activities of the police must be open and comprehensible to citizens”.

Photo of Samara policemen undergoing vital training in crowd control by Grigory Pasko

Comprehensible to the citizens?! The activities of the police weren’t comprehensible even to the police themselves! A friend of mine, an officer with the city administration of internal affairs [UVD] of Samara, was sending me text messages from his cellular telephone all this time. Here’s what he wrote:

18:15 I’m at the longboat
18:46 Still hanging out at the boat. What the **** are we waiting for?
18:58 Still no all-clear command…
19:33 Meet me on the little square (we finally had ourselves a beer there—author’s note)
20:28 “He” is on his way

Photo of General Reimer and his entourage by Grigory Pasko

“He” and his entourage left shortly after 10 at night. And the next morning – the day of the “march of those who disagree” – the entire city was ensnared in police checkpoints. There was a police roadblock beside the fountain on Osipenko Street prohibiting cars from turning onto the street.

After the march, my pal sent me another text message: “18:23 Everything is essentially over, but they’re still not letting us leave”. In a while, he sent me a reply to a question I had asked him: “What face-smashing? An ordinary drunken party is more exciting than this was”.

Photo of the “opposition to the opposition” by Grigory Pasko. Samara pensioners counter-demonstrating against the March of Those Who Disagree. The slogans read “Don’t dare offend our victory”! [a strangely irrelevant reference to the Soviet victory over the germano-fascists in the Great Patriotic War (1941-1945) that had been celebrated several days earlier] “March against Russia, not needed by Russia! and “We are for friendship with Europe against those who disagree”. The posters look suspiciously professional in quality, except for the punctuation.

And so, in the words of senior lieutenant of the police Vadim Sysuyev, the march of those who disagree lasted exactly 23 minutes. Then there was a short rally at the longboat. Short, because “The Other Russia” leaders Eduard Limonov and Garry Kasparov had been detained in Moscow and denied the opportunity to fly to Samara. And all this despite the words of president Putin about how the marches of those who disagree do not bother him. Twisting words, as always… The marches DO bother him. And not only the marches. He and his accomplices in crime are bothered by everything that doesn’t fit neatly into their understanding of “impure democracy”.

… After the training session on blocking those who disagree, Vadim and I decided to finish off the wasted evening with some of the local «Zhigulevsky» beer. I asked my friend the senior lieutenant if he was going to beat the demonstrators on the day of the march.

“No, I won’t”, he replied. “Because they have every right to demonstrate and to freedom of expression”.

“And if they order you to?”, I insisted, recalling the beatings of people during the time of marches in Moscow and St. Petersburg.

“I still won’t”, said Vadim.

Photo of senior lieutenant of the Samara police Sysuyev, who does not want to beat Russians just because they disagree with something, by Grigory Pasko

… The march in Samara, as is known, took place without any excesses. But this does not mean that they won’t start beating people during the upcoming marches on 8 June in St. Petersburg and 11 June in Moscow. Because Putin’s power still does fear these marches and is bothered by them. And no doubt the power is beginning to suspect that not all policemen are prepared to beat their own people the moment they’re ordered to do so.

So much for the "Friendship" Pipeline - the supply artery carrying up to 1.2 million barrels of Russian crude a day across Belarus and on to consumers Poland, Germany, Slovakia and the Czech Republic (10% of Europe's oil).

The big news breaking today is that Russia has given approval to carry out unnecessary bypass surgery on Europe's energy supply coronaries.

Perhaps the Kremlin didn't enjoy getting scolded last week at the EU-Russia Summit in Samara, when EC President José Manuel Barroso sternly remarked that "Poland's problem is a pan-European problem, just as Lithuanian or Estonian problems are problems for all of Europe." Irregardless of possible political motives, the announcement today that approval has been given for the expansion of the Baltic Pipeline System (which will take oil to the Russian port of Primorsk) feels fortuitously timed.

Attentive readers of this blog will recall our coverage of the supply disruption of the Druzhba pipeline last January, as well as the gas war between Minsk and Moscow. You can't say we didn't warn you. Back in late December and early January, when Gazprom was threatening to cut off supply to Belarus, Alexander Medvedev argued that Russia was simply asking the former Soviet republics to pay "market prices," and that he was tired of the West vilifying Russia for simply following commercial sense. Many in the media bought this excuse - the same line of reasoning used during the Ukraine fiasco.

Those who believed that argument must be feeling naïve today.

How interesting is it that the Primorsk pipeline announcement comes just three days after Russia finally closed the deals to take control over Belarus's pipelines? As we pointed out months ago, market prices are all well and good, but those price disputes provided convenient cover for what the Kremlin was really after - Beltransgaz - a controlling stake in the transit company, providing Moscow with one more pressure point from which to squeeze Europe.

When Russia plays hardball with the former satellite states on energy prices - the last thing they are looking out for are their accounts receivables. It is a deficit creation strategy, which forces critical transit countries to give up key concessions in transit, delivery, and point of sale companies. The last thing they want is money (there's no shortage of that) - they seek to create a situation in which the only way out is to give up strategic infrastructure. Furthermore, if Gazprom were really only looking to get market prices from Belarus, then why are they now paying only $100 per 1,000 cubic meters of Russian gas in 2007 (just 40% of the “average” price in Europe)?

The Financial Times reports:

The Beltransgaz deal, which was 13 years in the making, will increase Gazprom’s lock over gas networks to the west just one week after Russia, Turkmenistan and Kazakhstan agreed to expand shipments out of Central Asia via Russia in a blow to western governments’ efforts to build alternative pipelines bypassing Russia.

Gazprom signed a $2.5bn (€1.9bn, £1.3bn) agreement with the Belarus government on Friday for the 50 per cent stake. It is to pay Belarus $625m for a 12.5 percent stake in Beltransgaz in the next 20 days, while the remaining 37.5 per cent of the pipeline operator’s shares are to be transferred from 2008 to 2010.

“It is a big question: which is the centre of power [in Russia] – the Kremlin or Gazprom?” said Mr Kirkilas. (blogger's note: Gediminas Kirkilas, Lithuania’s prime minister).

Warning of instability in the run-up to Russian parliamentary elections later this year, he added that he expected to see “a lot of people from Gazprom” in the Duma. “During the cold war, Russia was a more reliable partner than it is today,” he said.

So what does this all really mean? The most immediate message to take home is that Russia wanted to remind Europe that it will continue its "divide and rule" strategy of bilateral energy deals so long as it pleases. By approving the extension to Primorsk on the Monday following the summit, the Kremlin is calling Barroso's bluff - if Europe really wants to stand behind new members at the cost of good relations with Russia, then prove it.

But the Primorsk extension is also very real. Apparently it could be completed in as little as 18 months, and would allow for Russia to divert some if not all supply that currently go through the Druzhba (back in April they said they would probably send half of Druzhba's oil to Primorsk). Not that that is going to be the automatic outcome. I think that the Primorsk line will likely exist as the "threat alternative" - Druzhba will still be the most cost-efficient way of getting oil to major markets such as Germany, and now that Gazprom has a 50% share in Beltransgaz, Russia can collect transit fees from its own supply (which sounds like another RosUkrEnergo - a shell company that could allow Russian officials to siphon and launder money).

While Russia may be eager to become less reliant on transit countries, never underestimate the attractive pull of an opportunity for corruption. The Primorsk extension will certainly weaken Belarus and Europe's bargaining position during price negotiations, but for now it seems like the crude will continue to flow through the Druzhba as long as the price is right.

With whom should the intelligentsia be?

OR The fifth wheel on the armored cart

86 years from the day Andrei Sakharov was born has come to pass on 21 May

By Grigory Pasko, journalist

With the deaths of Andrei Sakharov and Dmitry Likhachev, the ranks of the Russian intelligentsia lost its benchmarks, its measuring sticks, as it were, for purity of convictions and decency of relations. Including relations with the power. (We won’t even talk about people from the world of show business: for them, these relations are often merely an extension of show business).

Mark Zakharov, artistic director of the theater named after the Leninist Komsomol in Moscow, once wrote: “I am convinced: one must work together with the power, and not sink into mute opposition. Especially if one holds a state post and does not refuse to receive his salary”.

I do not hold a state post, and I do not get a salary from the state. Furthermore, after having served 20 years in the armed forces, it turned out that I didn’t even earn myself a pension – contrary to the law, they denied it to me upon the instruction of the FSB.

So I don’t have a pension. Fine. Truth to tell, it would actually even be somehow unpleasant to be receiving one from THIS state. But that’s not my point. What I’m discussing today is: must one work together with the power? This is actually a very difficult and even painful question. It arises all the time, for example, for human rights and environmental activists, when they get together at their conferences and adopt resolutions and appeals. When the Civic Forum was being held in 2001 and state officials and president Putin were supposed to speak at it, not everybody chose to participate in this event. Precisely because they considered working together with the power to be a preposterous proposition. And, it turns out, they were right: working together didn’t work out. Of course, things didn’t turn out quite the way the power would have liked, either: it failed in its effort to line up all the human rights advocates in neat ranks and incorporate them into its notorious vertical so it could subsequently interact with them by means of instructions and commands.

I could provide many examples of when the intelligentsia wanted and even attempted to work together with the power. And it’s still trying even today, as witnessed by the sessions of president Putin’s various commissions and councils.

There is barely any benefit from this. The return from working together with the power turns out to be miniscule. Because for the power, the intelligentsia is like a fifth wheel on a cart (or on an armored BMW, whichever image you prefer).

And besides, the power today, woven as it is out of chekists, is such that it doesn’t even regard the intelligentsia as a fifth wheel, but as a fifth column – it sees “enemies of the people” everywhere.

So with whom should one work together? With the “civilian” first vice-premier and former minister of defense Ivanov, whom environmentalists have been taking to court for many a year already because he refuses to declassify the lists of accidents that took place on nuclear submarines? Or with FSB director Patrushev, whose agency apparently can’t live a day without false spies? Or maybe with Sechin – the invisible bane of the “oligarch” Khodorkovsky?

I recall how the intelligentsia communicated with Putin in the year 1999, at the time when he was chairman of the government. This was at the premises of the Russian PEN-center. Then one of the writers asked Putin a question: why such a despicable organization – the FSB? Putin replied: How the people are, so is the FSB. It is noteworthy that practically no one of the participants in that meeting has become a member of any committee or council under Putin. Apparently the people who had attended that event weren’t the right kind of writers, and they hadn’t asked the right kind of questions…

So, must one work together with a power that has done so much to persecute those who think differently and to bury in graves the first young shoots of democracy in the country?

Supporters of working together with the power call on us to remember the great Russian writer Anton Chekhov, who, in his famous letter to his brother about what it means to be an intelligent person [i.e. a member of the intelligentsia—Trans.], gave the advice to never to walk out and slam the door behind oneself saying “it is impossible to live with you!” Or Andrei Sakharov, who, at his own initiative, entered into a dialogue with the CPSU Central Committee in the 1970s, in order to develop his ideas of convergence, the integrating of socialism with a modern market economy.

And speaking of Sakharov… “We still continue to live in a spiritual atmosphere created by this epoch. And the state, as before, applies repressions towards those few who do not submit to the prevailing consensus of accommodation. Along with judicial repressions, the most important and decisive role in preserving this atmosphere of internal and external submission is played by the power of the state… Indifference to social questions, a consumerist and egocentric position develops in broad strata of the population… What is needed is a systematic defense of human rights and ideals, and not a political struggle, which inevitably pushes towards coercion, sectarianism and devilry”.

This lengthy citation is from the article “Sakharov about himself”, dated 31 December 1973. It now already seems unthinkable that in those years, which have been given the name “years of stagnation”, a person – even just one lone person – could have written something like this, could have thought something like this. Today’s years are being called the years of the establishment of democracy in Russia, the construction of a state governed by the rule of law, the strengthening of the vertical of power, etc. Nowadays many people are writing and thinking in the same way that Andrei Dmitrievich did in his time.

But here’s the rub. Even after twenty-four years, the atmosphere of internal and external submission to the prevailing consensus of accommodation still has not disappeared. And after a quarter century, the repressions still continue, including judicial ones. (A vivid example being the new political prisoners in Russia). And after a quarter century, one of the mass forms of protest is the desire to leave the country. And after a quarter century, there exist people who are disgusted by the putrid spirit of the resurgent ideology of giving priority to the interests of the state over human rights.

It can be said that fear and passivity have returned to our country. And we can also recall – once again, as we so often do – Andrei Sakharov and his words about the INERTIA of fear and passivity. And it will turn out that there WAS fear, and there WAS passivity. It’s just that they had dozed off for a while, lulled by words about how democracy and a rule-of-law state were just around the corner. The fear and passivity were rudely awakened by the chekists who finally managed to clamber into power.

Not so long ago, I had a chance to interview an officer in the reserves. This still-young person said: “I could tell you a lot about the state of today’s army, because I live on the territory of a military unit and am constantly talking with those who are still serving. But… I’m afraid. What if they come for me…? at night… arrest me…?”

You can see that this is a manifestation not of fear as such, but of the INERTIA of fear. The fear had always been inside this officer. And this fear had awakened. Or maybe in never was asleep in the first place.

When I look at our servile journalism, I understand that the power has nothing to fear about introducing censorship legislatively. THIS journalism doesn’t need censorship. THESE journalists have already introduced it by themselves.

Against the background of the never-ending and endlessly-discussed “soap opera” of obviously illegal trials in our country, Sakharov’s words about a “judicial machine that is blind, often unjust, for sale, and dependent on the powers and the local ‘mafia’” ring out as clear as a bell. These words were said in 1975.

And we see that nothing has changed here either in these twenty-seven years. Although… The cynicism of the judges has become more cunning, the lawlessness more sophisticated, the lack of control more complete. And even the introduction of the institution of jury trials has in any way shaken the depraved foundations of the judicial community. And once again, like many years ago, in our country “people are totally dependent on the state, and it will consume everybody, without choking…”

When in one of his addresses to the federal assembly president Putin said that “human rights, civil and political liberties will be provided for in full measure” in Russia, we somehow didn’t really believe him. We didn’t believe him then, and we don’t believe him now, when he speaks about how there is democracy in Russia.

But we do believe Sakharov, who spoke of the inertia of fear and passivity. Because his words don’t require any proof – it’s enough just to take a look around ourselves.

And, after having looked around, to ponder yet again: exactly whom in SUCH a power must we work together with, and why exactly must we work together with THIS power?

Some recent statements by the Russian intelligentsia about the power:

Film director Eldar Ryazanov: “On the occasion of a jubilee I am invited to Novo-Ogarevo [the official residence of the president outside Moscow—Trans.] by Vladimir Vladimirovich Putin. And during the time of discussion he asks: what creative plans have you got? I know that I don’t have any creative plans, but it is awkward for me to appear to be a person without a future in front of the president, so I recall an old project proposal… Putin asked: ‘And how much is this going to cost?’ I started to improvise, named an outrageous number. Vladimir Vladimirovich made a funny sound, but said: ‘We will help you. The government will give something, something we will ask from the oligarchs.’ And I left, absolutely spellbound by the president.”

Anatoly Chubais, head of RAO UES (about a press conference by V.V. Putin): “A very high level, this doesn’t happen often. I simply felt a rare sense of pride. It’s frightening to say – pride in our own leadership. But that’s exactly what happened.”

Yuri Bashmet, violist: In the moment of perestroika I had this feeling that I am a representative of the third world. Contacts were maintained only out of professional respect. And only in recent years have they begun to give us any kind of consideration at all. Our president expressed everything that is taking place and everything we feel inside in his Munich speech.

Writer Vasily Aksyonov: “Dmitry Anatolievich [Medvedev] invited writers for a cup of tea, which, but the way, in reality turned out to be a sumptuous dinner. The dinner took place in the fireplace hall of the CDL [Central House of Literati], where the party committee used to meet once… I really liked him [Medvedev]. He’s intelligentsia. He’s got a sharp mind. He quickly grasps what is being spoken about, and instantly gives an interesting answer.”

From the Guardian:

A group of journalists at a state-controlled broadcast news agency in Russia have resigned en masse in one of the few open rebellions in recent years against censorship imposed by the Kremlin.

Eight reporters from the Russian News Service said they could not work under new rules that required them not to interview or mention opposition leaders such as Garry Kasparov and to ensure 50% coverage of "positive news".
...
With the exception of one vibrant radio station, Ekho Moskvy, Russia's broadcast media has largely been transformed into a propaganda machine since Mr Putin came to power in 2000.

Yesterday, about 300 demonstrators gathered in Moscow to protest against the increasing censorship.

Artyom Khan, one of the reporters who resigned, said restrictions were introduced when new management was imported last month from Channel One, the state television station that documents Mr Putin's every move.

Democracy, Putin Style

On events in Samara on the eve of the Russia-EU summit

By Grigory Pasko, journalist

Photo of Volga riverbank in Samara by Grigory Pasko

The manager assured me over the phone that the «Rossiya» hotel is located right in the center of Samara. Once I actually got there and looked at a map, it turned out that the «Rossiya» is actually right on the edge of the city. A bit later it became clear that the city of Samara really doesn’t have a “center”, because it is geographically stretched out along the banks of the Volga River. And the central area for mass public rest and recreation turned out to be the riverbank in the vicinity of the Riverboat Station – which was indeed right next to the «Rossiya» hotel.

The most beautiful place in Samara is the riverbank along the Volga. Fishermen have their lines out from early morning. People jog along the embankment. Alcoholics quaff their beer. Taxi drivers sit and complain about the roads. Young people hang out in the little park areas, with a bottle of beer in hand as a piece of standard equipment. Often the label on the bottle says «Zhigulevsky» – the locally brewed stuff, of quite decent quality.

Photo of Samarans enjoying a day in a riverside park by Grigory Pasko

On the eve of the Russia-EU summit, there were reports from the region that officers of the UFSB [regional FSB unit] for Samara Oblast had apprehended an inhabitant of Primorsky Kray who was on a federal wanted list and had been travelling from city to city in Russia representing himself as a US citizen. As it turned out, he had been moving about the territory of the RF under the guise of a US citizen and native of Thailand who did not speak Russian, with the aim of visiting entertainment establishments, meeting young people, journalists at no cost to himself. No doubt this was an accidental “catch”, because they clearly weren’t on the hunt for such petty hustlers. (For example, in St. Petersburg, they uncovered a plot to assassinate the governor – now that’s a success for the special services. True, it’s hard to believe this story, because it smells more like a PR stunt by the FSB than the truth).

Two weeks before the opening of the summit, the procuracy of Samara Oblast detained the mayor of the nearby city of Togliatti, Nikolai Utkin, and the head of the administration of land resources of the Togliatti mayor’s office, Natalia Nemykh, on charges of receiving a bribe in a large amount – 150 million rubles for the right to lease out a parcel of land for construction.

The local newspapers couldn’t contain their excitement writing about how three billion rubles had been allocated from the federal budget for the conducting of the summit, and that the Oblast would add another 800 million and the city 40 million. Part of the funds will go specifically for the improvement and redevelopment of the Oblast center [i.e. the city of Samara itself].

I can testify that the quality of the roads in Samara did not get better from such a quantity of allocated money. Who knows, maybe after the summit, the procuracy will find the time to open a probe to discover just where these gigantic sums that never made it to road construction disappeared.

Embezzled money isn’t news in Russia. What WAS news was that the Samara authorities had actually given the opposition permission to hold a “march of those who disagree”. True, they only did this after a corresponding declaration by the European Union and Angela Merkel. Later, in the days of the work of the summit, the march took place. But the leaders of the opposition weren’t present at it: they hadn’t been allowed to leave Moscow.

On the eve of the summit, the local police authorities carried out unprecedented repressions in relation to the organizers of and potential participants in the march. Here is a far from complete list of the diligence of the police and FSB:

3 May: an application is filed for permission to conduct a “March of Those Who Disagree” in Samara on 18 May 2007.

8 May: the measure of restraint for criminally convicted National Bolshevik Ilya Guriev is changed from early release on parole to half a year in a colony for violation of the terms of parole.

8 May: Igor Shchuk and Yevgeniya Kosourova are detained for posting leaflets.

10 May: a search is conducted in the office of the human rights association “Golos”, which had spoken out in support of the detainees; police seize computer hard disks and documents; on the same day, a decree of the mayor of Samara is issued on the termination of the city’s lease contract with the association.

Photo of Samara police keeping an eye out for dangerous elements by Grigory Pasko

10 May: a “Kommersant” correspondent and a film crew from REN-TV doing a report on the preparations for the march are detained.

11 May: police confiscate computers from the Samara bureau of “Novaya Gazeta” and the information agency “Volga-Inform” on suspicion of “use of unlicensed software”.

11 May: police undertake an unsuccessful attempt to accuse Mikhail Gangan of violating the terms of his parole with the aim of changing for him the measure of restraint from suspended to actual.

11 May: official permission for the conducting of the «March of Those Who Disagree» is received in the evening.

12 May: the organizers of the MoTWD were supposed to come to city hall to sign documents, but officers of the UBOP [Administration for Fighting Organized Crime] were standing on duty at the entrances to their apartment buildings; only after a phone call from the mayor to the UVD [Administration of Internal Affairs – the local police department] were two of the organizers able to get to city hall, while a third, Mikhail Merkushin, was detained along with his girlfriend, supposedly because “they look like the criminals who beat up an 11-year-old child at the poultry market”.

12 May: Kirill Ulchuk and Lyudmila Kharlamova are detained for posting leaflets; Ulchuk cuts open his veins.

13 May: AKM [Vanguard of Communist Youth] activists Andrey Kopeikin and Alexey Minayev are detained; agitational materials are taken from them.

13 May: activists of “The Other Russia” movement Anton Starodymov and Gleb Kochetov are detained by the police, supposedly for verification of identity.

13 May: RUBOP [District Administration for Fighting Organized Crime] officers detain a member of the march committee, Anastasia Kurt-Adzhiyeva, and the National Bolshevik Yuri Chervinchuk.

14 May: Veronika Vinogradova, an activist of the Vanguard of Communist Youth (an organization planning participation in the march), is abducted.

14 May: representatives of the Helsinki Group Sergey Shimovolos and Natalia Chebotareva, who had arrived in Samara in the capacity of observers, are detained.

Also detained were editor-in-chief of “Novaya gazeta in Samara” Sergey Kurt-Adzhiyev and correspondent of the newspaper «Kommersant» in Samara Pavel Sedakov. On the eve of the march, program coordinator of the Moscow Helsinki Group Alexander Lashmankin was violently beaten (with baseball bats). One of the organizers of the march, Dmitry Treshchanin, was urgently drafted into the army on the eve of the action. (this “know-how” of the Russian special services will subsequently be repeated on 19 May in Chelyabinsk – author’s note). Some time before the start of the action, officers of the law-enforcement organs detain without declaring the reasons one of the leaders of the United civic front, Denis Bilunov; a journalist from the German magazine Focus, Boris Reischuster; and one of the leaders of the youth movement “Smena”, Stanislav Yakovlev. Likewise, the law-enforcement organs detained the leader of the youth movement “Pora!”, Andrey Sidelnikov, in Samara.

Photo of “those who disagree” gathering for their march by Grigory Pasko

This is far from a complete list of the victims of the Putin regime. I think the only reason they didn’t kill anybody was because such a task hadn’t been assigned.

At the same time as Putin was swearing to the high heavens in the “Volga Eyrie” about his commitment to democracy and asserting that the marches of those who disagree are being conducted by “marginals” [fringe groups] and do not bother him personally, the special services were detaining “The Other Russia” leaders Garry Kasparov, Eduard Limonov, head of the public movement “For human rights” Lev Ponomarev, as well as Wall Street Journal correspondent Allan Cullison, Dutch TV reporter Allard Detiger, Daily Telegraph reporter Adrian Blomfeld in the Moscow airport Sheremetyevo… In all, 27 persons were detained and barred from boarding flights to Samara under various pretexts.

Journalist Pavel Sedakov told me that at the police station where he was taken after being detained, he heard policemen talking about how they’re doing all this on orders “from above”. It’s not hard to guess that the headquarters of the struggle with those who think differently in Russia is found today in the Kremlin.

It was life as usual in Samara on the eve of the march of those who disagree. But after the march, many people no doubt got to thinking about why it is that people, despite all the repressions undertaken by the authorities against them, nevertheless came out on the streets with the slogans: “Down with the police state!”, “Russia without Putin and the successors!”, “The enemy of the people is the FSB!”. In a small square by a stone longboat one of the representatives of the Samaran youth told me that he will go to the march at the very least in order to take a look at those who did not fear the orgy of repressions on the part of the authorities.

We're proud to announce an upcoming series of eyewitness reports from our contributing Russian journalist Grigory Pasko, who traveled to Samara last week to observe the EU-Russia Summit. Unlike many other journalists who were obstructed, harassed, and prevented from traveling to Samara - Pasko was one of the fortunate few who made it there unscathed. He has now safely returned to Moscow, so check back frequently as he begins posting his reports over the next few days.

(Photo)

The Financial Times has come out with a plethora of great articles about Siberia today:

1. Industrial giants tap into frozen wealth

Here are concentrated the bulk of Russia's reserves - 85 per cent of its natural gas, 80 per cent of its oil and coal, plus gold, platinum, nickel, diamonds, silver and other metals, and timber. As Alexander Khloponin, governor of Siberia's Krasnoyarsk region - four times the size of France - jokes: "We've got rich reserves of just about the whole periodic table."

2. Crowning of the undisputed frontier king

Rosneft was an active player in east Siberia before the auction. But, says Valery Nesterov, an oil analyst at Troika Dialog, the acquisition of Lot Ten "established the state company as the undisputed king of Russia's last oil frontier".

Yukos's remote east Siberian projects looked speculative when the company began investing in the late 1990s. Little exploration had been undertaken, oil prices were low and there was no pipeline to export markets.

In business terms, Yukos's smart move was to hook energy hungry China to east Siberian oil delivered by railway from its Angarsk refinery. Mikhail Khodorkovsky, the former chief executive of Yukos, who heard about the sale in an east Siberian jail where he is serving a 10-year jail sentence for fraud and tax evasion, negotiated a 25-year oil supply deal with the Chinese coupled with joint plans to build a pipeline linking east Siberia with Daqing, in northern China.

3. Corporate governance is ticket to the international stage

The desire to go public is forcing Russian mining companies to address issues of transparency and corporate governance. Polyus and Polymetal now regularly report their earnings and prepare their accounts according to international standards. But some commentators say there is still much to do, such as having independent directors on company boards and improving the transparency of related-party transactions.

Alex Gorbansky, managing director at Frontier Strategy Group, a political risk consultancy, says: "A lot of these companies have improved the optics of their corporate governance to enable themselves to be listed in London and New York. They are making progress, but they are still many steps behind western companies. As they get more investment from the west, there will be more incentives to improve transparency."

4. The challenge is exploiting a gift to minimise a curse

Experts have discussed for years whether Siberia is a curse or a blessing for Russia. It seems a little of both. The challenge is making the best use of the gift - and minimising the negative effects of the curse.

5. Rusal plans to invest $5bn

Now that the integration of Rusal and Sual is mostly complete, UC Rusal is pushing ahead with an ambitious programme of building new smelters and expanding existing operations, most of them in Siberia. By2010, the group aims to produce 5.5m tonnes of aluminium ayear, an increase of almost 40 per cent.

Alexander Bulygin, chief executive of UC Rusal, says his group is spending $5bn over the next five years on its Siberian smelters, and plans to invest even more in new smelter projects in Russia's far east.

6. Hopes of wealth flow from 'risky' pipeline

Transneft, the Russian state oil pipeline monopoly, launched construction last year of a 4,000km pipeline across the remote wastes of east Siberia that will open a direct highway for Russian oil exporters to the growing energy markets of the Asia-Pacific.

The grandiose pipeline project forms a cornerstone of the Kremlin's plans to establish Russia as an energy superpower trading oil in all corners of the globe.

Western analysts say the pipeline project is an economic gamble. Key questions remain unanswered. No one knows if enough oil will be found in east Siberia to justify building a multi-billion dollar export pipeline whose full cost has not been quantified.

Michael Bradshaw, professor of geography at the University of Leicester in the UK and an expert on the Russian far east, says: "This is a classic state project where geopolitics and prestige take precedence over economics. The hard-nosed questions that the private sector might pose are being ignored."

Our friends over at Global Witness have posted a Channel Four report from last year about the shady backroom deals that brought closure to Ukraine-Russia natural gas dispute. The company in question, RosUkrEnergo, a Switzerland-based front company for Gazprom and other shadowy shareholders, appears to have been created with the sole purpose of siphoning rents from interstate gas deals.

Yesterday's news of the reunification of the Russian Orthodox Church (ROC) and the breakaway Russian Orthodox Church Outside of Russia (ROCOR) not only represents a major historical milestone in Russian society - the end of a 90-year-old feud dating back to the Bolshevik Revolution - but also sheds light on an oft-ignored feature of Vladimir Putin's vision of the Russian Federation: the new relationship between church and state.

The Russia Church Abroad, which is headquartered in an Upper East Side mansion in Manhattan, had long been powerfully opposed to reunification under a "godless" regime. It took a significant amount of official encouragement, diplomacy, and maybe even some arm twisting from the Kremlin to bring this about - an IHT article mentions the 2003 meetings between Vladimir Putin and ROCOR quotes him as saying "I want to assure all of you that this godless regime is no longer there. ... You are sitting with a believing President."

Naturally there are a lot opinions circulating about the President's interest in pushing for reunification. Time Magazine has gone so far as to describe the new, unified church as the "state's main ideological arm and a vital foreign policy instrument." Here Stratfor speculates on Putin's aim to extend influence via the reunification:

But Putin brought to the office a new perspective on the church. He knew the church could be useful in consolidating power within Russia -- especially since approximately two-thirds of Russians consider themselves Orthodox, and large institutions outside Russia were looking to reconcile their historic issues with the ROC. It is not uncommon for states to use the church as a political and cultural tool, but this had not been done in Russia since the fall of the empire. Though Alexy II attempted to prevent the Kremlin from using the church in this way, he knew his job would be on the line unless he surrendered to the Kremlin's agenda. Moreover, the Kremlin has lined up a successor, Archbishop Kalinin, in case Alexy II needs to "step down early." Kalinin already has been promoting the Kremlin's agenda abroad, especially with the Roman Catholic Church.

During the past year, rumors of a reconciliation between the ROC and the Roman Catholic Church have surfaced, along with reports that Alexy II could soon hold a meeting with Pope Benedict XVI. For his part, Putin has been pushing for closer ties with the Orthodox and Catholic churches, particularly in Italy, where the Roman Catholic Church is deeply embedded in politics and the prime minister is a devout Catholic. Putin clearly sees this as an opportunity to use the church to further his goal of a stronger Russia.

The ROC represents the majority of Russians, so it is only natural for the Kremlin to maintain control over it after reunification. The Kremlin can also use the ROC to push for the development of Russian nationalism under the umbrella of the church. The ROC is politically tied to Orthodox churches inside the former Soviet Union, meaning it wields influence in Central Asia, Georgia, Ukraine and Belarus. However, the reunification of the ROC and ROCOR -- if only under the rhetoric of unity -- will allow the Kremlin to extend its influence to any of the 400 churches outside the former Soviet Union and push its agenda of a more powerful Russia abroad.

Simon Tisdall made mention of a briefing note released a few days ago on the EU-Russia Summit prepared by Katinka Barysch of the Centre for European Reform.

The full 11-page PDF can be downloaded here, and below I include some interesting excerpts:

Russia’s political elite has never loved the EU. Now many deem it acceptable to be rude about it. I heard one Russian politician recently describe the EU as “the area people fly over to get to Asia”. Another said that only “uneducated journalists and stupid commentators” could describe Russia as anything but a liberal democracy. Yet another claimed that the EU was worse than the Soviet Union because it is run by the “diktat of bureaucrats”. ...

For years, the Europeans have been trying to persuade Russia to ratify the Energy Charter Treaty, a set of international rules for investment and trade in the oil and gas sector, supplemented by a protocol on energy transit. But the Kremlin cherishes the power that comes with controlling not only the exports of Russian hydrocarbons but also those from the Caspian and Central Asia through its pipeline monopoly. The EU is now trying to get some of the principles from the Energy Charter Treaty included in the post-PCA agreement. In return, it offers Russia a free trade agreement. However, Moscow has limited interest in better EU market access. Three-quarters of Russian exports to the EU now consist of raw materials that are hardly affected by trade rules.

What do we mean by reciprocity?

If this trade-off does not work, the EU may be looking for a deal within the energy sphere. Here, the buzzword is reciprocity. Everyone from President Putin to Chancellor Merkel to Commission officials now insists that this is the way forward in EU-Russia energy co-operation. Reciprocity implies mutual advantage and long-term interdependence. The idea is that Russia should make it easier for companies from the EU to invest in the Russian energy sector, which could help to avert possible future supply shortages. Russia in turn, gets ‘security of demand’ in Europe, not only through long-term supply contracts with European utilities as in the past, but now also through direct access to gas consumers.

However, this kind of balanced relationship, while superficially attractive, would not translate easily into practical agreements. In fact, the EU and Russia mean different things when they talk about reciprocity, in line with their very different approaches to energy policy: market and rules-based in the EU; state-controlled in Russia. For Europeans, reciprocity means a mutually agreed legal framework that facilitates two-way energy investment. For Russia, reciprocity means top-level talks to identify assets of similar market value, and then swap these assets. Since the EU is not making headway on the Energy Charter Treaty, while Gazprom has been acquiring more and more downstream assets in Europe, it looks like the Russian idea of reciprocity is prevailing at present.

Belarus took a beating from Gazprom both on the ice and through the pipes. (Photo from IIHF World Championship, not Gazprom match referred to in the article).

From Time Magazine:

Heavy Hitter

By Yuri Zarakhovich / Moscow

Passions were riding high Jan. 8, as the hockey team of Russia's state-run energy giant Gazprom locked horns with the Belarus national team in the final game of the annual Belarus President's international hockey tournament in Minsk. In a desperate moment, a Belarusian tripped the Gazprom captain with his stick, but the Russian scrambled back to his feet to pass the puck in a lightning movement that led to a goal. Gazprom won the game 4-3, and the cup. And well it should, smiled the Gazprom captain Alexander Medvedev, 51, because Gazprom always wins.

Just ask Shell or Yukos or Ukraine. Don't even mention it to ExxonMobil. When he's not skating, Medvedev is deputy chairman of Gazprom's management committee and general director of Gazpromexport, Gazprom's export arm, which accounts for 80% of the revenue of the world's second largest energy company and supplies a quarter of Europe's natural gas--and 100% of Belarus'. Medvedev's remark hit home for his fellow hockey buff and adversary--the forward who had tripped him up so uncouthly, also known as the President of Belarus, Alexander Lukashenko. On a tense New Year's Eve night a week earlier, Medvedev forced Lukashenko to accept a price hike that more than doubled the cost of natural gas, from $46 to $100 per 1,000 cu m. To save his economy from collapse, Lukashenko caved, after having dug in his heels for years: he also sold 50% of his national gas-pipeline operator Beltransgaz to Gazprom.

That is what you call a power play. Be it a scuffle with foreign consortiums on Russian soil, or in pricing battles with Russia's neighbors, Gazprom wins very much in style of the proverbial Soviet Army steamroller: inefficient, unwieldy and mismanaged, it crushes foes by its mammoth weight and monopoly gas supply. In January 2006, for instance, when the Ukrainians balked at Gazprom's price, Medvedev turned off the taps. Pay or freeze, he told them. They paid.

Zarakhovich neglects to mention that Gazprom's key competitive advantage is that it can count on the Kremlin to assault its competitors, write its monopoly status into law, and help sweeten a bid by throwing in infrastructure, arms, debt forgiveness, or merely the threat of political revenge.

Complete article can be read here.

Simon Tisdall of the Guardian has a column today on the Samara Summit, examining the challenge Europe is facing from Russia in diversifying its energy relations. He argues that Russia is winning this grand game in part because Moscow is not at all bothered by those pesky human rights issues that hamper EU relations with alternative energy exporting countries like Azerbaijan, Uzbekistan, or Turkmenistan. Tisdall hints that soon Europe too will go the way of Russia and begin to ignore such details.

All smiles for President Putin at the EU-Russia Summit. "Russia is increasingly setting the agenda for EU-Russia relations while EU policymakers are struggling," said Katinka Barysch.

Guardian:

All the same, effective EU action to diversify energy supplies faces particular difficulties that do not trouble Moscow. These include concerns about good governance and human rights in partner countries.

The political show trial of a former economy minister mounted this week by the democratically challenged rulers of Azerbaijan, a key producer and transit route for central Asian gas and oil, has highlighted these contradictions. Azerbaijan's 2005 presidential election was blatantly stolen; it has an appalling human rights record, and the use of torture is said to be endemic.

But for now at least, all this is largely tolerated in the west - just as long as Azerbaijan's feudal oligarchs keep on the "right side" in the high-stakes energy war with Russia.

Following Robert Amsterdam's speech at Harvard, the university newspaper is running the following story. Comments made by RA during the speech were also mentioned in a Boston Globe editorial, and a cover story from the weekly Boston NOW.

Robert Amsterdam (right) lays out his case in the talk ‘The Destruction of Yukos and Russian Energy,’ while Davis Center fellow Stefan Hedlund listens. Staff photo Jon Chase/Harvard News Office

At CGIS, Attorney Amsterdam Blasts Russian Federation, Others

By Ruth Walker

Special to the Harvard News Office

“We’ve got to stop blaming Vladimir Putin,” Robert Amsterdam told his listeners at the Center for Government and International Studies Tuesday morning (May 15). “That does us no good.

“The blame is with ourselves — with all of us who invest in banks and other institutions that have become the enablers of the kleptocracy of the Kremlin.”

Amsterdam is the London-based defense counsel to Mikhail Khordokovsky, the imprisoned former chief of the Russian oil giant Yukos — and a onetime political rival of Putin’s. The title of Amsterdam’s Davis Center-sponsored talk was “The Destruction of Yukos and Russian Energy.”

Khordokovsky has been imprisoned in Siberia since 2003 on charges of fraud and tax evasion, and Yukos has been dismembered and sold off in a series of what Amsterdam called “obscene auctions,” widely seen as rigged in order to deliver significant national energy assets into the hands of Kremlin cronies and outsiders they have co-opted.

Amsterdam urged the international community to cease its complicity in what he described as a new wave of Russian resource nationalism. “Our companies have got to stop playing by Kremlin rules.”

Before leaving London for the United States, Amsterdam released a statement decrying reports that Russia has offered India a 1 percent stake in Rosneft, a Russian energy company that is nominally private but seems to be controlled by the Russian Federation.

“The Russian Federation is blatantly seeking partners in the laundering of stolen goods,” Amsterdam charged. “Indeed, it is the theory of those oligarchs surrounding President Putin that the more companies they manage to tie to the Yukos assets, the more likely it is that they will be safe from personal prosecution and liability in the period after they depart from office.”

Amsterdam blitzed onto the Harvard campus for less than an hour to speak to the Comparative Economics Seminar before starting for his next destination, Houston. He articulated his new theory of energy risk.

“Resource nationalism,” he said, “is predicated on various factors that are self-sustaining, and those factors are the destruction of the press, the destruction of the independence of the judiciary, the inverse relationship of freedom to oil prices, as outlined by Thomas Friedman, and the motivation that comes from use of energy assets from a strategic rather than a market basis.”

He had particularly harsh words for countries that have let their foreign policy be “captured” by corporate interests. He singled out Germany under former chancellor Gerhard Schröder. Schröder, he said, “has profited handsomely from selling out German energy interests and remaining mute and silent while some of the best and brightest in Russia were imprisoned.”

He added, “Those countries that have not allowed their foreign policies to be ‘captured’ like Poland for instance are increasingly dependent on an alliance with the United States that becomes increasingly unpopular as the American administration’s credibility and rationality come under question.”

Amsterdam alluded to Germany’s current chancellor, Angela Merkel, as “the most gifted leader Germany has had in I don’t know how long,” but complained about German reluctance, at least until recently, to criticize Russia.

German historical sensibilities tend to make Berlin feel it needs to keep making up to Russia, Amsterdam suggested — but the result is that the two countries make deals that hurt others, notably Poland.

Russia under Putin seems particularly inclined to make bilateral deals, especially ones that drive wedges between neighbors — between Austria and Hungary, for instance. “There is nothing Russia fears more than the EU, and nothing Russia wants more than to engage bilaterally with countries that are energy dependent on itself.”

“People say, ‘He’s a thief, but he’s not an imperialistic thief … . He just wants to make money.’ Well, I don’t accept this.”

Amsterdam was also sharply critical of the Bush administration for failing to respond to Russian attempts after the Sept. 11 attacks to make some form of rapprochement with the United States — opportunities that were “never properly handled,” Amsterdam said.

However grim his assessment of the Russian situation, he did identify some grounds for hopefulness: “There’s always hope. There’s no ideology behind this. And there’s nothing tying these people together except greed.”

And he had a prescription for constructive action: Ask for public hearings. “The first thing we can do is shine a light on companies that empower Putin,” he said, calling for a boycott of companies that “empower Russian energy imperialism.”

He also called for support of Russian fractious democrats and hailed chess superstar Garry Kasparov’s efforts to unify them. “There are thousands of hardworking, intelligent, democratic-minded liberals,” he said, adding, “They unfortunately are more splintered than a dense forest after a bombing.”

From the new Economist, a few excerpts below... (the artwork summarizes the jist of the article).

Art: Peter Schrank, Economist

Few things give Russians as much sense of their own importance as a spat with America. “They like to counter America. It makes them feel good,” says one senior American official.

Russia's self-esteem has long been inseparable from its relationship with America. To have America as an enemy in the cold war gave the Soviet Union a sense of urgency and purpose. The end of the cold war deprived Russia of a vital adversary. It is only logical that Russia should now demonstrate its resurgence by sparring with America again. America's troubles in Iraq make this an apt moment for Russia to return to the world stage.
...
The danger is not that Russia will prevent the independence of Kosovo or the placement of American missile defences in eastern Europe (both will go ahead, whether Russia likes it or not, Ms Rice said in Moscow). Nor is it that Russia will pull out of arms-reduction treaties. The bigger fall-out will be in Russia itself. Hatred of America gives cover for growing authoritarianism, nationalism and concentration of money and power in the hands of former and present members of the security services. If this continues, Ms Rice's successor may need to review what constitutes the real threat to America's security.

Jonathan Eyal, the director of international security studies at London’s Royal United Services Institute, has published an op/ed in the FT titled "European appeasement will worsen Russian aggression," arguing that "at every stage, the Union has given the indication that it is prepared to compromise over the interests of its new members in order to maintain good links with Moscow." I wholeheartedly agree - this is something that has been already been proven in the energy sector.

Angela Merkel and Vladimir Putin today in Samara

Eyal writes:

It is time to own up to the bankruptcy of this approach. By conducting a weak, confused policy that often consisted of nothing but the appeasement of Russia, the EU has ended up with the worst of both worlds: it has encouraged further Russian obstruction and alarmed the central Europeans at the same time.

Here is an +10 minute AlJazeera English news report on this week's EU-Russia Summit, including interviews with Oksana Antonenko of the International Institute for Strategic Studies, Dmitri Suslov of the Council on Foreign and Defence Policy, and Ariel Cohen of Heritage Foundation in Washington DC.

For those without the patience to watch, Antonenko accuses the new EU member states of "holding the negotiations hostage" because they want the EU, their new patron, to address historical grievances with Russia. Antonenko doesn't seem to question the legitimacy of the Polish meat ban or the Estonia issue. Suslov says that Russia is actually thankful for Poland's veto of the Commission's mandate on the Strategic Partnership Treaty, as the negotiations would have made it more difficult for Russia to pursue its interests in energy and trade. Ariel Cohen says that the United States is increasingly concerned about European dependence on Russian energy, and even points out the agreement with Algeria and the potential of a future gas cartel. Dr. Cohen also directly picks up the ball from Suslov's comments about Russia's distance from the EU, and asks who, exactly, is Russia getting closer to?

Yesterday I had a speaking engagement at the Energy Risk USA 2007 conference in Houston, Texas.

My brief talk was entitled "The New Calculus of Political Risk," and focused on how rule of law, property rights, and democracy are damaged and discouraged by energy investors' seemingly endless appetite for political risk. With so many calculator-toting quantitative risk analysts filling the conference, I confess that I was like a fish out of water - yet in some ways I think that advisors on political risk will soon learn that they must combine the results from their complicated algorithms with qualitative intelligence, local expertise, and a much more comprehensive understanding of geopolitics. (no offense to any of my quant friends!)

Many of my comments were drawn from an article I authored for the magazine last October (titled "Risking it in Russia," which can be downloaded here), in which I argue that in Russia there is a disturbing gap between the academic measure of risk and the financial estimates - in other words, too many energy firms have a distorted sense of the risk vs. reward, and are going to find themselves much more exposed than they originally had estimated.

I wrote the following in this article: There exists a new reality in risk management for Russian energy investment. A new inverted risk calculus is already being used by some groups, which have concluded that the quality of a political relationship with the local government and state-owned firms is just as important as the financial details of a potential deal. Because of the flexible and discretionary approach to property rights and contract law in Russia and the ever-weakening rule of law, the risk manager is not likely to have an accurate degree of certainty of what the risk actually is. The pricing is no longer dispositive, and some banks and finance groups are already adapting to this enlarged role of geopolitical risk, which goes far beyond simple elections to include a measurement of active cooperation in helping the government and national champions secure their objectives.

In my speech yesterday, I expanded this theory and contrasted it against different cases. In Russia, Venezuela, and Nigeria, I discussed the different strategies implemented by Yukos, Royal Dutch Shell, BP, ExxonMobil, Chevron, and China's big three state-owned firms when faced with government harassment or political instability.

My comments on the Russian cases can be found in other entries on this blog. However, it is with the Venezuelan case that some interesting contrasts can be found. These days, everyone generally thinks of Venezuela as an international pariah that you would never put an investment dollar near, but many people forget that Hugo Chavez's re-nationalization of the oil sector was a gradual process, accompanied by many promises that "this is the last time" or "it's a one-off experience" or "OK, sure, we're going to take this away from you, but I promise you can keep X, Y, and Z." In other words, Venezuela in the late 90s and early 00s became the instruction manual for the Kremlin.

Look at this quote from a 1999 press release from Richard Matzke, then president of Chevron Overseas Petroleum Inc., following Chavez's election:

"We feel as good about the potential of Venezuelan oil right now in '99 as we did back in '46 when Chevron discovered the Boscan oil field! Except today the outlook for growth is even more rosy, thanks to Venezuela's development of its people resources, its decision to reopen the oil industry to both international expertise and international funding, its import of cutting-edge technologies, and the renewed interest of the international investment community.”

Now fast-forward to May 1, 2007, as Hugo Chavez celebrates the final takeover of the last private oil fields in the much-desired Orinoco Belt oil fields. Naturally Chevron was far from alone when it lost its investments in Venezuela (ConocoPhillips, ExxonMobil, Chevron Corp., Total, Statoil and BP Amoco PLC previously controlled the projects), but it was ExxonMobil who consistently had the strongest (and best reaction) to Chavez's interventionism: they stick to their guns and demand that contracts be respected. In summary, the Venezuelan experience is a lesson in how to not trust a resource nationalist. The poverty of skepticism shown by Chevron and others in Venezuela early on came back to haunt them - and right now this poverty of skepticism is hurting multinational energy firms in Russia - and further contributing to the distortion of energy risk. (However, it is very interesting to note who is still winning in Venezuela - the answer is Russia, whose LUKoil and Gazprom are snapping up Orinoco licenses. It is difficult for Shell and ConocoPhillips to compete with an energy company that can throw a fleet of fighter jets into the deal).

China's state-owned firms such as CNOOC are thriving on political risk in Nigeria, and seem willing to put up with corruption, violence, and kidnapping for access to resources

The experience in Nigeria is less one of resource nationalism and more a story of political corruption, democratic collapse, and human rights tragedies - though important parallels can still be drawn. For several years now the political situation has been rapidly deteriorating in the oil-rich Niger Delta, and many international oil companies are shutting down stations and evacuating hundreds of employees to protect them from rampant violence and kidnappings. Recently Shell took a major hit in Nigeria, while Chevron suffered another kidnapping of its staff on May 1 (the same day that Chavez completed his plunder of their Orinoco fields). Because of this instability, oil exports have fallen by 25% over the past year.

Despite this dismal outlook and at a time in which most investors are pulling back from Nigeria, Chinese state firms are thriving (and India is not far behind). Last year, CNOOC Ltd. outbid Indian state rival ONGC for a 45% stake in a major oil production site, and then more recently Chinese state firms were awarded the lion's share of auctions for oil licenses in a poorly attended process that many say was rigged. Then, just weeks later, the outgoing government of President Olusegun Obasanjo held one of the most fabulously corrupt and fraudulent elections in recent African memory (and that's saying something). In less than a month since the elections, there have already been 30 kidnappings of expatriate oil workers.

In Venezuela, oil companies presumed regularity and were punished. In Nigeria, China is so desperate to participate in production projects that the government has no reason to reform or democratize - the capital will keep coming no matter what they do. All around the world, energy producing states are rushing toward resource nationalism and rent-seeking because the rewards are greater and because investors have lost their ability to correctly measure political risk.

So what are the lessons to be drawn from the experiences of energy risk in Russia, Venezuela, and China? My unifying theory, somewhat basically illustrated in the diagram below, is that increased appetite for risk is creating increasingly unfavorable outcomes for energy investors, consumers, and citizens of petro-states. Tentatively, I am calling it "The Self-Perpetuating Cycle of Resource Nationalism and Energy Risk."

We can generally agree that geopolitical instability, be it the war in Iraq or conflicts elsewhere, is driving up prices to record highs. With the price of crude at this level, many governments, such as Russia, believe that they were cheated by private investors when the prices were lower and now want a bigger piece of the pie. In other countries, the high prices bring forward an irresistible temptation for rent seeking and corruption. The result in both cases is increased resource nationalism. However, it's no secret that state-run energy firms are wildly inefficient - just look at Gazprom misdirecting all of its earnings away from production, causing a potential gas shortage, or the declining production experienced under PDVSA in Venezuela. This falling production, due to state control, drastically increases the pressure on multinational firms to secure access in production projects at almost any price, raising their tolerance for political risk. The glut of liquidity and the diversity of global portfolios have also helped investors seek more and more exposure. It is my contention that this willingness to take on almost endless risk for access to energy is helping to encourage further resource nationalism, which damages rule of law, democracy, and human rights, and helps breeds lawless regimes that powerfully contribute to geopolitical instability - back to point one - further holding up high prices.

Naturally, I haven't yet completed exhaustive empirical research to link each of these phenomena, but early indications are supportive. Many political and international finance experts agree with me that energy is the next great topic to guide international relations, and taking steps toward understanding "the big picture" of what motivates regime decision-making will be a key aspect of maintaining and managing global stability.

From a late night editorial posted to the Financial Times titled: It’s high time for a blunt talk with Mr Putin

Russia's President Vladimir Putin chairs a cabinet meeting at Moscow's Kremlin May 14, 2007. REUTERS/ITAR-TASS/PRESIDENTIAL PRESS SERVICE (RUSSIA)

Tomorrow’s six-monthly summit between the European Union and Russia is likely to be a tetchy affair. In spite of valiant efforts by Germany, in the EU chair, to launch negotiations on a new partnership pact, fresh sources of friction have emerged to block progress. Russia blames the new member states of the EU for making mischief. Yet the reality is that Moscow’s high-handed attitude towards its former dependencies is largely to blame. It is up to Angela Merkel, the German chancellor, to deliver that message bluntly to President Vladimir Putin. ...

Russia’s thinking seems to be that the EU has few bargaining chips. Many member states, led by Germany, rely on Russian energy. They want to do business with an oil-rich Russia. And they want to avoid giving Russia any extra excuse to veto the United Nations plan for the independence of Kosovo from Serbia. But the reality is that Russia needs the EU as a market as much as the EU needs Russia. That is the message Mr Putin needs to hear.

The Streetwise Professor (Dr. Craig Pirrong) has a post today urging the State Dept. to get its act together in regards to the creation of alternative export routes for Central Asia's gas and oil supplies.

He writes:

While the Americans and Europeans engage in long distance happy talk, they are not doing the face-to-face horse trading (almost literally–Putin left Kazakhstan with a beautiful stallion) needed to do business in that part of the world.

Not to say that it is easy. The governments in the region are authoritarian and corrupt. Moreover, Russia is next door, while the US and Europe are far, far way; like I said many months ago, Turkmenistan is so close to Russia, so far from God. These governments fear color (color revolutions, that is)–as does Russia; Turkmenistan and Kazakhstan fear that US/EU support will be tied to demands for reform, demands that the Russians will never make. Moreover, Kazakhstan has a large Russian population. It is surely paying close attention to how Russian nationalists are making trouble in Estonia. Indeed, I would not be surprised to learn that the FSB is stirring up the Nashiniks in Estonia in part to send a message to other countries with a large Russian population.

It is one thing to lose when the odds are against you. It is something else altogether not to get in the game at all. The Russians have some strategic advantages in this region, but we certainly have some arrows in our quiver as well, but we are not even forcing Putin to break a sweat. The matter should be particularly pressing for the Europeans, but they can’t seem to get their energy act together.

And here are some recent posts on the subject from RA:

Russia Moves to Block the Trans-Caspain Export Route

Russia's Capture of Central Asian Energy

And some intrigue from Global Witness: It's a Gas. Funny Business in the Turkmen-Ukraine Gas Trade

Edward Lucas, blogger and Economist reporter extraordinaire, is currently touring Moldova this week and is posting some diary entries commenting on institutional weaknesses, Soviet legacies, and the problematic breakaway region of Transdniestria. (For further info, Lyndon at Scraps of Moscow has done some of the best blogging on this conflict).

From Part I:

MOLDOVA is not only the poorest ex-communist country in Europe; it is also last in the queue for love and attention. It lacks central Europe’s glorious culture, the pungent romance of the Balkans, the charm and excitement of the Baltics, or the huge strategic importance of Central Asia and the Caucasus. Its main role is that of a country so obscure that it can safely be ridiculed, as it was in a book about a hapless British comedian’s attempt to play tennis with the national football team.

Moldova is indeed flat, small, isolated, and ill-run. But it is not ridiculous. Its sadnesses spill over to other countries in the form of smuggling and prostitution. Bits of it—chiefly the breakaway puppet state of Transdniestria—are sinister. Its fate is tremendously important. As it wobbles between east and west, Moldova may be the first country that the Kremlin wins back from the west since the 1970s.
...
Only the most flimsy euphemisms disguise his real views: Moldova is run an incompetent provincial Soviet elite that has lost the confidence not only of the outside world, but also its own people. They are signing up for Romanian passports en masse—he reckons 800,000 out of a population of 4.5m. Romania’s newly won membership of the European Union makes its citizenship—available to most Moldovans—irresistibly attractive, and the process of unification unstoppable.

From Part II:

MOLDOVA is run by Vladimir Voronin, the only serving head of state in the world to have won a contested election on a communist ticket. His views have changed a lot from 2001, when he said he would make his country the “Cuba of eastern Europe”. Now he is pro-market and pro-European Union. He’s pro-democracy too, in theory. But the justice system is dismal and the security services powerful. The authorities treat journalists they don’t like with silly vindictiveness. The opposition finds it hard to get on telly: in short, it’s a typical bureaucratic and fairly authoritarian presidential republic, a bit like Ukraine used to be before the “Orange Revolution”.

The story the Moldovans want to tell is of their conversion to radical economic reform. It is certainly needed. Moldova is the poorest country in post-communist Europe; 47% of the population lives below the poverty line. At least 25% of the working age population has emigrated. Their remittances keep the place going.

Now Mr Voronin has announced an amnesty for illegal capital and unpaid taxes, and a sweeping tax cut for business. The idea, ministers and officials say with unconvincing confidence, is to make Moldova like Estonia.

From Part III:

IN THEORY, Transdniestria is scary. It is the sort of place where thugs in leather jackets tote their guns in restaurants, a place where anything can be smuggled, laundered, bought or disposed of. Bad things can happen to the unwary or unlucky Westerner, and if they do, nobody will help you. Chisinau-based diplomats shun the illegal, unrecognised “Transdniestrian Moldovan Republic”.

The place is run by a Ministry of State Security—”MGB”, for its Russian initials—which has close and unexplained ties to powerful people in Moscow. That outfit is run by Vladimir Antufeyev, who—in the eyes of his enemies at least—is a villain straight out of a James Bond film. He is physically imposing, brainy, ruthless and has a suitably chequered background. He arrived here years ago under an assumed name, having staged an unsuccessful putsch in Latvia.

In response to reader requests, I have created a new sidebar section which lists some of the various by-lined articles I have authored in recent years for easier navigating. As part of the effort to catch up and post a few older articles up to the blog, below you'll find a piece I wrote for the Financial Times Deutschland in October of 2006. While clearly some of my opinions have longer shelf-life than others, a good amount of these issues remain important as the EU and Russia prepare to meet in Samara this week. The original German PDF can be downloaded here.

A Different Ostpolitik

By Robert R. Amsterdam

Financial Times Deutschland, October 11, 2006 (English translation)

While leaders from the spheres of politics, business and academia meet in Dresden this week for the annual Saint Petersburg Dialogue on German-Russian relations, the world is witnessing dramatic developments in Russia, from the politically-motivated killing of Anna Politkovskaya, to the roundup and deportation of Georgian citizens, to an imminent billion-dollar state asset-grab from Shell.

Where does Germany, and the Saint Petersburg Dialogue, stand on these developments?

The relationship between Germany and Russia has never been stronger. Since Chancellor Willy Brandt achieved his historical breakthrough with Ostpolitik three decades ago, focusing on conversation rather than confrontation, solid foundations have been built for the tremendously successful diplomatic and business relations of today. Yet as evidenced by the constant stream of negative developments over the last few years, today’s Russia is increasingly incongruous with the Russia that Germany hopes for.

It was not by chance that just before this year’s Saint Petersburg Dialogue, the German Foreign Ministry revealed that it has elaborated a new Ostpolitik for relations with Russia. The blueprint, a product of the Social Democrats dominating the Foreign Ministry, calls for closer relations with Russia not only for Germany, but also for the EU, which will be presided by Berlin for six months starting this January.

Chancellor Angela Merkel appears to be in favour of a more cautious approach towards Russia. She is said to be sceptical of any renewed Ostpolitik that does not adequately take into account the interests of Poland and the Baltic States, and which ignores altogether issues of human rights.

Indeed, Chancellor Merkel has met three times this year with her Russian counterpart. She has differentiated relations with Russia to place civil and political freedoms and rule-of-law issues on the agenda. She has met with Russian non-governmental organisations. She has highlighted human rights issues related to Chechnya. In a letter to Guido Westerwelle, Chancellor Merkel went as far as to express concern over the “unacceptable” treatment of Mikhail Khodorkovsky, the oil company head jailed for political reasons.

In contrast, the new Ostpolitik being espoused by the Foreign Ministry is a shocking surrender to sinister forces within the Russian leadership, and an overt signal to them that their belligerent authoritarianism will be tolerated by Germany – 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 law and international law.

Throughout his chancellorship, Gerhard Schroeder consistently ignored Russia’s drastic retreat from commitments to a competitive market economy, democracy and the rule of law. Even worse, Mr Schroeder derailed attempts to exert Western pressure on Moscow over its growing abuses of power. While Russia was backsliding, Mr Schroeder focused only on deeper commercial and political ties for Germany.

Perhaps unwittingly, Mr Schroeder’s Germany was complicit in entrenching the corrupt figures that have consolidated their power in Russia. He has been the leading apologist of a regime that has done away with regional elections, muzzled the free press, seized control of courts, imprisoned or expelled its opponents and expropriated billions of dollars worth of private property – including that of foreign investors.

Such developments should have been taken as warnings about the true nature of those who have come to power in Russia. Yet too many German business and political leaders have chosen instead to deny, dismiss or discount the gravity of what has been occurring. Russia is an important business partner, and therefore, so goes the argument, a strong Kremlin is good for stable business relations.

This argument is short-sighted and flawed. Undoubtedly it is important to secure stable market conditions for the 10,000 German companies active in the Russian economy. It is also important to secure long-term energy supplies from Russia. However doing so through a mix of opportunism and cowardice is not the right approach, and it has already begun to backfire.

Germany has shamelessly employed a double standard in its official positions on Russia. The successes of German firms in the Russian market have been built upon “constitutional dumping” – tolerance for legal standards so low that they would never be accepted in Germany. Yet the place of Russia in frameworks of partnership with the West, in a shared marketplace and a shared space of justice and human rights, demands the attention of the West whenever and wherever fundamental principles are under attack. The flagrant abuses of the current regime in Moscow suggest that those in power believe that their conduct is without consequence. This is what Germany’s unwavering support has taught them, at least until now.

If the new Ostpolitik becomes a reality, the world may begin to view Russia’s human rights violations as Germany’s human rights violations. Every time a political party is outlawed, Germany’s signature will be on the paper; every time an opponent of the state is imprisoned without fair trial, Germany’s hand will be on the key; and every time an outspoken journalist is savagely murdered, there will be blood on Germany’s hands. Is drawing these connections the only way to awaken the ethics among the blindly pro-Russian Social Democrats?

Engaging Russia is critical for all of the benefits that a solid partnership entails both East and West. However this engagement must be within a constructive framework, built upon real respect for fundamental principles of market economics, the rule of law and democratic processes.

The time for self-interested opportunism has passed. As has been understood by Chancellor Merkel, a new relationship with Russia must be built upon solid foundations to ensure growth, prosperity and security for the future, both in Russia and in the rest of Europe. Germany’s own best hope can only be based on an unwavering commitment to its own principles, following the path of Chancellor Merkel – active engagement on honest terms. If not, Germany may soon find itself isolated from its EU partners, and facing serious troubles with a post-Putin regime that is less beholden to prolonging the romance with Berlin.

This year’s Saint Petersburg Dialogue may well reveal who in Germany has their hands tied, who lacks the courage to speak out, and who will have the leadership to lay the foundations for Germany’s future as a truly independent partner rather than as a dependent little brother of Russia.

Following Robert Amsterdam's speech at Harvard yesterday, the Boston Globe published the attached editorial. Stay tuned for a video of the event right here.

Being cool with Putin

Globe Editorial

May 16, 2007

DURING HER visit to Russia Tuesday for a meeting with President Vladimir Putin, Secretary of State Condoleezza Rice did what a diplomat ought to do: She asked for a cooling of "overheated" rhetoric. "I don't throw around terms like 'new Cold War,' " Rice noted, prudently. "It's a big, complicated relationship, but it's not one that is anything like the implacable hostility between the United States and the Soviet Union."

There is wisdom in Rice's attempt to keep provocative oratory -- as when Putin recently seemed to compare US behavior to that of the Third Reich -- from making US-Russia relations even more strained than they already are. But as much as the Bush administration may need Russia's cooperation to prevent nuclear proliferation in Iran and North Korea, or to counter terrorist networks, most of the stress in relations between Washington and Moscow is caused by Putin's regime. And it does no good to pass over in complete silence the rapacity, the crookedness, and the bullying of that authoritarian regime.

Rice did meet Tuesday with selected Russian human rights activists and journalists. She used them as a sounding board to gauge popular Russian reactions to a United Nations plan that would grant postwar Kosovo a form of independence from Serbia. She was told that if the plan was implemented against the will of the Serbs, it could induce an "anti-American hysteria" in Russia.

It is all well and good to harvest such advice from human rights defenders and independent journalists, but they desperately need more solidarity and public support than they have been receiving from the West. This failure of solidarity has been more conspicuous among governments of Western Europe than in Washington, and it has caused tension between former Soviet satellites, such as Poland and Estonia, and the Kremlin's avid energy customers in Western Europe.

Speaking to a seminar at Harvard's Davis Center for Russian studies Tuesday, Robert Amsterdam, a lawyer for Mikhail Khodorkosvky, the imprisoned former CEO of the Yukos oil company, described the European banks, corporations, and governments doing business with the Kremlin's state-owned energy corporations as "enablers of kleptocracy." Russian journalists who have seen brave colleagues assassinated in unsolved murders and human rights activists who are treated like traitors or spies deserve a public sign of support from Rice and envoys from the democratic nations of Europe.

True, the Soviet Union has vanished, and the Cold War is over. But if Putin's kleptocrats are allowed to have their way, their Western energy customers will become as vulnerable to the Kremlin's thuggish ways as the isolated, endangered democrats within Russia.

As German Foreign Minister Frank-Walter Steinmeier made a last minute, unscheduled trip to Russia this week to carry out some crisis control ahead of Friday's EU-Russia Summit in Samara, Moscow's relations with the West are looking quite bleak. With each passing day, the tensions are being further ratcheted up - be it a ban on Polish meats, cut offs of energy supplies to Lithuania to bankrupt a refinery desired by the Kremlin, a threat to veto Kosovo autonomy, a range of attacks on Estonia over the memorial dispute, saber-rattling over proposed missile defense sites, and a variety of energy security and pipeline politics moves which have effectively exploited the most critical divisions in Europe and shattered unity.

Merkel is having trouble juggling Russia with the rest of the EU

On many political issues, Germany is frequently seen to be taking Russia's side over that of the European Union, much to the shock and dismay of new EU members.

For Moscow, the strategy has been an unparalled success. The most troubling example of Germany's betrayal of the EU can be seen in terms of energy security, as it is their energy firms have thrown their lot in with Gazprom to build the North European Gas Pipeline (Nord Stream), it is their banks who have helped finance Russia's aggressive resource nationalism and unlawful takeover of privately held energy assets, and whose policymakers, the heirs of Chancellor Gerhard Schroeder in the SPD, are pursuing an immensely outdated and self-destructive policy of Ostpolitik.

Why doesn't Ostpolitik work?

As a largely uncritical policy toward Russia, Ostpolitik is based on a number of fundamental misconceptions. For one, many in Europe fail to grasp the integral role that energy now plays in Russian politics. Two, there is a misguided assumption that the promotion of business ties is mutually exclusive from the promotion of democratic values. And three, the potential damage and threat to security posed by the anti-competitive tactics of Russian state-owned firms is vastly underestimated.

As Russia's most important economic partner in Europe, Germany is in an excellent position to positively influence Moscow. So far, however, that has not been the case. (chart FT)

From my experience working on the defense team for Mikhail Khodorkovsky, I can assure you that in today’s Russia, energy is politics, and politics is energy – something that still seems to be unclear in Europe, judging by Wintershall’s most recent agreements with Gazprom. During the historic show trial which turned my client, one of Russia’s most successful businessmen, into a political prisoner and energy hostage, the attacks were conducted in incremental steps as the Kremlin discovered to what extent the West would tolerate flagrant violations of international law and outright theft of property from a publicly listed company. Largely emboldened by the active participation of German businesses and the passive approval of German government, Russia became more and more audacious in its violations of law and its shocking backslide into authoritarianism.

And now, a year and a half since my forced expulsion from Russia for my outspoken defense of my client, I am seeing the history being repeated. The quasi-legal extortion of Royal Dutch Shell and BP and Gazprom’s politically motivated supply cut offs to the former satellites cannot be divorced from Wintershall, E.ON Ruhrgas, and Dresdner Kleinwort’s enthusiastic and uncritical embrace of Russia. Likewise, as these entities underwrite the return to authoritarianism under the rubric of Ostpolitik, the blood spilt from the murders of courageous journalists and the street beatings of marching dissidents by riot police lands on the hands of German energy consumers. Russia alone cannot be blamed for the direction it is taking – her silent partners are also responsible.

We are all familiar with the shameful opportunism of Chancellor Schroeder, who exploited his position in office to push for the Nord Stream project which he would later personally profit from. This proposed project is a classic example of Ostpolitik logic – like the Molotov-Ribbentrop Pact Part II, Schroeder and Vladimir Putin shrewdly divided Europe into so-called spheres of influence, casting aside its obligations of security and solidarity with EU countries in favor bilateral priorities. This painful betrayal of new member’s hard-earned sovereignty from Soviet occupation is extremely detrimental in building consensus for a common Union policy on Russia.

Many German firms profiting from the fracture of European energy security defend their Russian partners, and argue that their decisions are made on a purely commercial basis. Yet this is contradicted time and time again by the aggressively monopolistic behavior of Russia in the energy trade, which refuses to ratify the Energy Charter, refuses to liberalize its monopoly on the pipeline infrastructure, and has arguably violated EU competition law Article 82 EC for its abusive refusal to supply and discriminatory treatment of customers for political motives. In a recent opinion article, Ukrainian politician Yulia Tymoshenko has even argued that the EU must address Gazprom in the same way it has addressed Microsoft as a monopolistic entity.

The most important thing to recognize is that Russia is benefiting enormously from the split it is creating in Europe, and that Germany is the key country capable of mending this rift and leading a successful European engagement of Russia. The good news is that Germany continues to enjoy a significant reservoir of goodwill in Moscow, and stands a better chance than anyone else to help bring about progress in the EU-Russia relationship, and institutionalize energy relations in a fair and equitable rule-based system. To do this, Germany must bury Ostpolitik with Willy Brandt, and come up with a Europolitik that puts the collective interests of the Union first.

The longstanding injustices suffered by Mikhail Khodorkovsky serve as a powerful cautionary tale of what can happen to an energy hostage of the Russian state, but with the creation of the proper incentives and a successful Europolitik, Germany can help lead the way for the return of a responsible partnership, a competitive market, and real rule of law that would make show trials a relic of the Soviet past – as they should be.

The Land Where You Sit: Khodorkovsky, Chita, and the Decembrists

By Grigory Pasko, journalist

The term of confinement for Mikhail Khodorkovsky and Platon Lebedev in the investigative isolator of Chita was extended by decision of the Ingodinsky District Court to 2 July of this year. This decision was no doubt coordinated with and approved by the investigative brigade of the Procuracy-General of Russia, which for some reason presented new charges to the former managers of the YUKOS oil company in Chita. By law this ought to have been done in Moscow, that is in the place where the crime was allegedly committed.

Photo of Chita today by Grigory Pasko

Until recently, when the Moscow City Court upheld a Basmanny District Court decision that conducting the investigation in Chita was indeed unlawful, Khodorkovsky, Lebedev, and their lawyers had been studying the materials of the new criminal case. Nearly 130 volumes. At this time, it is a big question when this process will recommence – and where. Everybody knows the Duma elections are coming up later this year, and it is safe to assume that nobody will want the new trial to vie for public attention with the active phase of the pre-election battles.

The question on the minds of many today is: where will the trial on the new charges take place? Many factors would seem to suggest that it still might be Chita. For one thing, it’s far away. This makes it difficult for the defense lawyers to function at their best. It would certainly limit the influx of journalists and politicians, which in its turn would create a certain informational vacuum as far as coverage of the trial goes.

Second, in Chita they’ve already got the system of police support for the delivery of the accuseds from the isolator to the procuracy and the courts all worked out. Third, the public in Chita, in the main, is inert, which doesn’t augur mass actions against the arbitrariness of the courts and in defense of Khodorkovsky and Lebedev. (And today’s power in the Kremlin is very afraid of mass actions). And finally, fourth, Chita is historically the place in Russia for deportation and hard labor in exile of anybody inconvenient that those in power don’t want to see around.

It is this historical aspect that we’ll talk about today. It so happened that at the end of last year and the beginning of the current one, the staff of the Decembrists’ Museum in Chita were celebrating two memorable dates – the 180th anniversary of the arrival of the first consignment of convicted Decembrists for penal servitude at hard labor in the Blagodatsky mines, and the 180th anniversary of the arrival of the Decembrists in Chita.

Watercolor of Chita in the time of the Decembrists (reproduced from museum brochure)

It just so happened that Khodorkovsky and Lebedev were staged to Chita from the colony where they were serving their sentences under the first verdict also in December. So they too are Decembrists of a sort…

What do we remember about THOSE Decembrists? It is known that on 14 December 1825, there was an unsuccessful insurrection in St. Petersburg organized by guards officers – members of a secret political society. Eighty five of these officers became exiles to Chita – a small village at the time.

And why Chita? Historians say it is because the system in place at that time for sending people to perform hard labor in the factories of Eastern Siberia threatened to blow up into a general rebellion. Sending the Decembrists to such a faraway backwater as Chita deprived them of the opportunity to influence the mass of thousands of criminals and settlers.

Photo of portraits of Decembrists in the museum of Chita by Grigory Pasko

Chita Oblast today is still a faraway backwater of sorts. It’s unlikely that Khodorkovsky in his current situation is in any position to influence many thousand-strong masses, but in such regions as Moscow and the central Oblasts of Russia, there would be many more opportunities to disseminate information about his and Lebedev’s trial. And the people in these Oblasts is politically more active. That means the likelihood of mass demonstrations is also large. This is why the power, in order not to tempt fate, went through the effort of sending these inconvenient people it doesn’t want to see around to Trans-Baikal region.

It can’t be ruled out that the power will become so scared that it will actually decide to conduct the court sessions in Krasnokamensk – the place where Khodorkovsky was serving his sentence in a camp. This little town today is practically as much of a faraway backwater as Chita was 180 years ago!

On my most recent visit to Chita, I visited the Old-Chita Michael-the-Archangel church – the only wooden building from the 1700s still left standing in the city. Nowadays, since 1985, this church building has been the home of the Decembrists’ Museum. The church still remembers the actual Decembrists themselves. In 1828, it witnessed the betrothal of the Frenchwoman Pauline Gueble and the Decembrist Ivan Annenkov. By the walls of the church you may see two graves – those of the wife of the Decembrist Zavalishin and of the daughter of the Volkonskys. The exhibition in the museum is modest, but interesting. Many documents, works of pictorial art, books, household objects, the personal things of the Decembrists. The particular attention of visitors, as a rule, is attracted by the tools of the convicts, their shackles.

Photo of Michael-the-Archangel church in Chita today by Grigory Pasko

There exist many testimonies of how the Decembrists lived in Chita. The museum booklet “Prisoners of the Chita Fort” tells how in time free from work, the Decembrists cultivated a garden, taught the Chitans how to grow hitherto unheard-of vegetables; they established the first sundials in Chita; they set up workshops, including a bookbindery. They conducted topographic research of the environs of Chita; conducted meteorological observations; provided free medical aid to the local inhabitants…

Michael-the-Archangel church 180 years ago, from a watercolor by the Decembrist N. Bestuzhev (reproduced from museum brochure)

…I recall how Khodorkovsky – far from the stupidest person in Russia – had expressed the desire to become an instructor at the school in the Krasnokamensk colony. He was denied in this. Under the tsarist regime, the Decembrists were NOT denied the opportunity to be teachers to the Chitan merchants and gold miners. Probably because the tsarist power may have been cruel, but it was at least somewhat magnanimous.

Today’s power is not only cowardly – it is vindictive too.

Russia and Estonia may be at each other's throats over the decision to move a war memorial, but that doesn't mean there aren't other areas of cooperation - such as helping each other out in the Eurovision pop song contest. It seems that the relatively younger sovereign states of Eastern Europe carry a distinct advantage over Western Europe, as they allegedly form "musical voting blocks." But then again, perhaps the British are just baffled by their inexplicable failure to win the contest. Talk about a values gap! (for those interested, for better or worse Siberian Light has posted videos of every single Russian Euroevision entry to date).

From the FT:

Rumours have persisted for years of secret voting pacts between neighbours, but nevertheless some of these deals seem remarkable. After all, not so long ago the region was racked by war - now they're voting for each other's crooners.

Even Estonia seems to be in on the game. It gave maximum 12 points to Russia, even though it is in a bitter dispute with its mighty neighbour over the moving of a Soviet war memorial from Tallinn city centre. (The big Russian minority in Estonia may have helped.)

The losers come from western European countries, who either don't bother to fix the votes or have rubbish songs.

Amazingly the top 16 entries in this year's contest all came from eastern Europe, while Britain and Ireland (home of Coldplay, U2 and the rest) came last.

Bret Stephens of the Wall Street Journal publishes a compelling defense of Russian lawyer Karinna Moskalenko, whom this blog has long supported.

'Nobody Is Untouchable'

Karinna Moskalenko is Russia's most distinguished human-rights lawyer. Vladimir Putin wants her disbarred.

Ms. Moskalenko, 53, is the founder of the Moscow-based International Protection Center. For more than a decade, she has been arguing cases before the European Court of Human Rights in Strasbourg, France, to whose judgments Russia has been legally bound ever since it incorporated the European Convention on Human Rights in its 1993 Constitution. "We started with dozens of cases," she says, recalling the IPC's earliest days during the Yeltsin era. "We are now dealing with hundreds of cases."

Today, her clients include the imprisoned former Yukos CEO Mikhail Khodorkovsky, chess champion and opposition leader Garry Kasparov and the family of murdered journalist Anna Politkovskaya. She also represents the victims of the 2002 "Nord-Ost" Moscow theater hostage crisis, and the relatives of Chechen civilians who have been tortured, murdered or disappeared in Russian "counterterrorism" operations.

With its minuscule staff of eight lawyers and 20 trainees, the IPC receives roughly 12,000 requests for representation a year, though most lack adequate documentation to be brought to trial. Still, her current caseload in Strasbourg, totaling about 180, represents the lion's share of the court's docket, and she knows how to get results: Her victory in the 2002 Kalashnikov case -- involving a man who had been held in pre-trial detention for five years in cramped and disease-ridden conditions -- forced the Russian government to embark on its first serious attempt at modernizing its prison system.

Such work has earned Ms. Moskalenko no shortage of formal tributes outside of Russia. In 2003 she was elected to the International Commission of Jurists; in 2006 she won the International Helsinki Federation's Human Rights Recognition Award. Within Russia it's a different story. Mr. Putin's government assault on the IPC began by questioning the validity of its original registration. Next it proceeded to a tax audit -- a favorite Putin tactic against financially strapped human-rights NGOs -- on the theory that the IPC had used funds from the National Endowment for Democracy and the Ford and MacArthur Foundations for profit-taking. Though the government's claims were easily disproven, it refuses formally to close the case.

But for sheer chutzpah nothing approaches the government's attempts to disbar Ms. Moskalenko on the grounds that she has incompetently represented Mr. Khodorkovsky -- a remarkable bit of solicitude for a man whose sentence to a Siberian prison camp has just been extended. According to a motion filed April 18 by the prosecutor general's office with the Russian registration service, Ms. Moskalenko failed her client in February when she was forced to leave a lawyers' conference with Mr. Khodorkovsky a day early to attend to her sick 14-year-old son. "This [motion] has been decided at a high level, though we don't know who exactly ordered it," says Ms. Moskalenko. Prosecutor General Yuri Chaika was until last year Mr. Putin's minister of justice.

The story of what happened to Ms. Moskalenko on that visit to Siberia is worth telling, if only for the light it sheds on the government's efforts -- by turns petty and sinister -- to harass her and her team. On Feb. 4, she arrived at Moscow's Domodedovo airport to discover that the rest of her legal team had been "detained" by police and Interior Ministry officials who seized their passports, ransacked their luggage and inspected confidential documents related to cases before the Strasbourg court, including Mr. Khodorkovsky's, before allowing them to board the plane. On her return, Ms. Moskalenko was again detained by officials who forced her to sign papers forbidding her from disclosing the details of the government's new case against Mr. Khodorkovsky. On account of her son -- whose ill health the authorities were aware of -- she signed.

Ms. Moskalenko speculates that the current disbarment action stems from the legal fuss she raised about the incidents at the airport. "After I complained to the prosecutor general they reconsidered what to do about me. They stopped abusing me at the airports. Instead, they decided to finish my career." The motion will first have to wind its way through a special committee of the Moscow bar, but failing that the government can file for her disbarment in court. "There's no precedent that I know of for this," she says. "They will make an experiment of me."

Disbarment would effectively put an end to Ms. Moskalenko's career in Russia, including her efforts (the latest as recently as yesterday) to defend Mr. Kasparov's political activities in court. It would also require her to seek approval from the presidency of the Strasbourg court every time she sought to bring a case to trial, just the sort of humiliation in which Mr. Putin's government delights.

Yet it's the broader ramifications of the government's actions that most concern Ms. Moskalenko. While she scrupulously avoids mentioning Mr. Putin by name -- "I am strictly not a politician," she says more than once -- she is under no illusions about his methods. In today's Russia, "it isn't necessary to put all the businessmen in jail. It is necessary to jail the richest, the most independent, the most well-connected. It isn't necessary to kill all the journalists. Just kill the most outstanding, the bravest, and the others will get the message. Nobody is untouchable. I tell Kasparov: 'Look, you are not untouchable.'"

For now, however, it is Ms. Moskalenko herself who is in Mr. Putin's sights -- a dangerous place to be, given the experience of so many of her clients. Characteristically, she isn't budging. Robert Amsterdam, a Canadian lawyer on Mr. Khodorkovsky's defense team, recalls that when he was arrested in September 2005 by Russian security services, she was the first person he called. "These thugs from the secret police wouldn't give us their IDs," he says. "So Karinna takes her cell phone and clicks their pictures. The woman is completely fearless. And there's nothing that scares these people more than someone who is fearless, someone who puts principle above safety or social standing."

Mr. Amsterdam's story is a testament to the courage and tenacity of a woman in the face of a regime whose threats must never be taken lightly. One wonders whether Condoleezza Rice, now in Moscow to meet with Mr. Putin, can show if she's made of the same stuff. Raising Ms. Moskalenko's case would be a start.

Robert Amsterdam is interviewed here by the Canadian Press regarding Oleg Deripaska's new stake in Magna International (a Canadian auto parts manufacturer).

Canadian corporations shouldn't be kissing Putin's ring: lawyer

Canadian Press: JENNIFER DITCHBURN

OTTAWA (CP) - Canadian corporate leaders shouldn't be "kissing the ring" of Russian President Vladimir Putin before they enter into deals with his country's top companies, says the lawyer for a jailed Russian oil magnate.

Robert Amsterdam, a Canadian based in London, reacted with dismay to the revelation that Magna International president Frank Stronach met the Russian leader before striking a multimillion-dollar pact with billionaire Oleg Deripaska.

That $1.54-billion agreement will give Deripaska equal voting control with Stronach over his auto parts giant.

Amsterdam said the business side of the deal is no problem, it's Putin's role he questions.

"Mr. Deripaska brings synergies to the table and if that's what the shareholders and management believe, that's fine, but the idea that somehow this needed to be blessed by Mr. Putin sends every Canadian and every Russian the absolute worst message, and that's what we need to resist," Amsterdam said Monday in an interview during a short trip to Canada.

"We need to have our top companies and the world's top companies stop empowering autocracy."

Like Deripaska, Amsterdam's client Mikhail Khodorkovsky is one of a number of tycoons who became wealthy in the years following the collapse of communism in Russia with the help of key government policies.

But while Deripaska has kept close to Putin and the Kremlin, even marrying a granddaughter of former president Boris Yeltsin, Khodorkovsky found himself facing fraud charges in 2003.

Khodorkovsky's empire built around the oil company Yukos was then worth $15 billion and he had begun funding Russian opposition parties and publicly calling on Putin to stamp out Kremlin corruption.

Yukos has now been dismantled and sold off, with the participation of some European firms that Amsterdam accuses of "reputation laundering" to remain in Putin's good graces.

Khodorkovsky was convicted and sent to a Siberian jail and is expected to face even more charges soon.

"I want Canadians to understand that a government that is capable of that should not be treated at face value and should not be given this presumption of regularity," Amsterdam said. "This is a show trial. That's why they have him in the Gulag, that's why they've put him over a uranium mine in Siberia, because they're trying to kill him and they've stolen his company."

Amsterdam has been lobbying governments, including Canada, to take a stand against corruption in Russia and within Russian corporations. He would like to see Parliament hold hearings on the issue.

In Britain, public discourse on Russian corruption has been more vigorous. In April, several top Russian officials boycotted a regular meeting of English and Russian business leaders because of such accusations.

Petro Canada is currently in talks with Russia's state-run OAO Gazprom to ship liquefied natural gas through a location in Quebec. Prime Minister Stephen Harper promoted such deals last year during G8 meetings in St. Petersburg.

But Amsterdam said that Gazprom is notorious for its lack of transparency and its close ties with Putin. Allegations of corruption should give big Canadian companies pause, he said.

"Petro Canada needs to make sure it counts its fingers going in and going out of that deal."

Miriam Elder at the Moscow Times has a front page article running in tomorrow's edition about the sham auctions of Yukos assets. RA is also quoted in the story.

Tuesday, May 15, 2007. Issue 3656. Page 1.

Yukos Auctions All Smoke and Mirrors

By Miriam Elder

The mysterious sale of Yukos' headquarters to an unknown firm for nearly $4 billion sealed -- and exemplified -- the fate of what was once the country's largest privately held company.

The most competitive struggle for Yukos assets in bankruptcy auctions over the past two months was not -- as analysts had predicted -- for the company's major oil or gas production units, but for the office building in central Moscow that once housed the firm.

At least that's how it was billed by the office of receiver Eduard Rebgun, appointed by the courts in August 2006 to sell off the company's assets when it was declared bankrupt.

Questions about the lot's composition were only posed after a company named Prana waged a three-hour battle Friday against Rosneft, nearly quadrupling the starting price to $3.9 billion and forcing Rosneft out of the game.

The lot included Yukos' main trading firm, Trading House Yukos-M, which former Yukos vice president Alexander Temerko said held $2 billion to $3 billion in cash. "They should have said that the money was there. Instead, they said, 'Look, a building is up for sale.' They hid it," he said by telephone from London on Monday.

State-controlled Rosneft, which has scooped up the lion's share of Yukos assets since the legal onslaught began against former CEO Mikhail Khodorkovsky four years ago, has spent two-thirds of the $31.5 billion raised by the recent auctions. The total was $4 billion more than creditors were seeking.

Rosneft could also end up walking off with the Yukos building -- and the trading house -- if Friday's sale is annulled.

No market sources have heard of Prana, and a source close to the auctions would only say that its general director was named Vladimir Yesakov.

"We have not yet approved [Prana's] application," said Yelena Nagaichuk, spokeswoman for the Federal Anti-Monopoly Service. A decision will likely be made by the end of the week, she said.

The anti-monopoly service has already disqualified one winner, rejecting Promregion Holding's victory in a May 3 auction for southern oil and electricity assets after citing the company's obscure shareholding structure and failure to declare for whom it was buying the assets.

Electricity consultancy Halcyon Advisors had been negotiating with Promregion Holding before the auction to buy up some of the assets, Halcyon managing director David Herne said. Market sources said some of the assets were also due to fall to LUKoil, and one source said the Promregion bidder was actually a LUKoil representative.

Halcyon was also negotiating with Monte-Valle, a real estate firm run by American Stephen Lynch, to buy up the electricity assets it won in an April 17 auction, Herne said. "It's complicated to participate yourself," he said when asked why Halcyon did not directly take part.

Nikolai Lashkevich, Rebgun's spokesman, said a creditors' committee would likely decide by the end of the week whether to hand Promregion Holding's lot to the second-highest bidder, Rosneft subsidiary Neft-Aktiv.

In Yukos' heyday under Khodorkovsky, Rosneft was a middling oil concern that struggled to place 8th in the list of the country's largest oil producers.

Less than four years later, it now stands as the country's No. 1 oil firm, largely thanks to its acquisition of Yukos' three main production units, Yuganskneftegaz, Samaraneftegaz and Tomskneft.

"Rosneft is the rebuilt Yukos," said Joseph Stanislaw, senior energy adviser to Deloitte & Touche and a longtime friend of Khodorkovsky.

Rosneft acquired Yuganskneftegaz for $9.4 billion via a forced auction in December 2004, tripling its production overnight. It paid a further $13.2 billion for Samaraneftegaz and Tomskneft at auctions earlier this month, bringing its production to 2.1 billion barrels per day.

To fund its recent purchases, which totaled $20.8 billion and included a 9.44 percent stake in itself and a clutch of service companies, it took a $22 billion loan from a consortium of Western banks.

Thus, through a combined investment of $30 billion, Rosneft has gone from an estimated value of just $6 billion to $86 billion.

Yet to replenish its coffers, Rosneft can also expect to recoup $10 billion from the proceeds of the Yukos auctions, as it has successfully laid claim to being the bankrupt oil firm's largest creditor after the Federal Tax Service. Its IPO in July 2006 raised $11 billion.

Khodorkovsky has accused Rosneft board chairman Igor Sechin, who is also President Vladimir Putin's deputy chief of staff, of being behind the legal onslaught on Yukos. "[The Kremlin] has been staging auctions which are ... fraudulent and designed to bring out the lowest bid," said Robert Amsterdam, a lawyer for Khodorkovsky.

Khodorkovsky is serving an eight-year sentence in the east Siberian region of Chita on charges of fraud and tax evasion, and was recently slapped with new charges of embezzlement and money laundering. "This will be the first corporate-sponsored show trial in history," Amsterdam said.

Anton Drel, a member of Khodorkovsky's Moscow-based legal team, said he had been given no indication when the trial would begin, or whether it would be held in Moscow or Chita.

Khodorkovsky's lawyers have said they expect the trial to take place before the State Duma elections in December.

Khodorkovsky was arrested in October 2003, just before elections for the Duma in which he was funding opposition parties. He was thought to be close to selling a stake in Yukos to a U.S. major, either Chevron or ExxonMobil.

"It was a struggle for personal power among individuals," said Stanislaw. "He was in a situation of wealth in terms of financial power and political power."

"We thought [at first] it was something that could be dealt with," said Tim Osborne, the director of GML, formerly Group Menatep, Yukos' largest shareholder. "It didn't seem like they had every step planned, but clearly the plan was to make Yukos disappear."

The dismantling of Yukos, by the levying of $33 billion in back taxes, heralded a new era of increased state control over the oil and gas industry.

Yet former Yukos officials insist the company's bankruptcy was contrived.

"The company could have paid, we've never recognized the bankruptcy ruling," Temerko said.

Three minor auctions scheduled for later this month will bring an official end to the bankruptcy process.

"If this bankruptcy were legal, there should have been enough money just to pay off the creditors," Temerko said. "Every one of these auctions has shown that the whole process is a farce."

One source close to the auctions who declined to be identified said certain companies were prevented from taking part. Most auctions had just two bidders, the minimum required by law. While some companies' applications were denied outright, at least one was presented with technical obstacles that prevented its participation, the source said.

"One of the participants came to deliver [the company's] documents to the anti-monopoly service," the source said. "All they had to do was deliver documents and get a receipt," the source said.

The company representative was told the receipt machine was broken and to come back at a later set time. When he showed up, no one was there and the company was barred from taking part, the source said.

"Not everything was done in an entirely orderly fashion," said Alexander Komarov, a spokesman for the Federal Property Fund, which organized the auctions. "But that's not our problem. All the demands were fulfilled -- the auctions took place."

Analysts agreed that the auctions were orchestrated, with most results decided before bidding opened. "These things are not transparent," said Al Breach, chief strategist at UBS. "They are not open auctions. There were political decisions about who gets what."

It was a political decision that kept Gazprom from directly participating in the auctions, Breach and other analysts said. First Deputy Prime Minister and Gazprom chairman Dmitry Medvedev, a possible presidential hopeful for 2008, could not open himself up to the possibility of legal action, they said. Gazprom pulled out of the Yuganskneftegaz auction at the last moment after a U.S. court injunction.

Gazprom appeared to win just one of the bankruptcy auctions, signing a call option with Italian firms Eni and Enel to buy a chunk of the gas assets, including a 20 percent stake in Gazprom Neft they won at the second sale on April 4.

And the outcome, the victory of Rosneft, appears to be about politics and Kremlin influence rather than commercial factors. "When it comes down to the major issues, it seems Rosneft has more power than Gazprom," said Chris Weafer, chief strategist at Alfa Bank.

Below is an exclusive translation of long feature article on Russia-Czech relations quoting RA from the Prague-based magazine Týden.

The Possible Results of Upsetting a Russian

By Daniel Deyl, Týden weekly

Czech businesses on the rocks, deserted hotels, rationed energy… This is one of the visions of how the Russian retaliation for placing the American anti-missile radar base on the area of the Czech Republic may end up if it actually would come to it. The problem is that the Czech dependence on Russia is deepening in every respect – and as far as it seems, it will keep deepening in the future.

Photo: Reuters

When Václav Klaus was leaving for Russia in late April, he indeed was not in the mood of confrontation. The party of entrepreneurs that accompanied him expected lucrative commissions from the trip and, at the same time, kept a lesson from the past on their minds. Sixty years ago, Jan Masaryk returned from Moscow as a “Stalin’s groom”, and in 1968, the Czechoslovak delegation headed by Alexander Dubček spent considerable part of their Russian sojourn in handcuffs. Klaus thus got off of the plane on the Moscow Vnukovo airport in a helpful, accommodating spirit. This is how his gesture of rejecting interpreters and ordering obligatory Russian even to his entourage can be explained. Because it works well in Russia to bet on this card: for those who speak Russian well, many doors are open. On the other hand, a man in question finds himself in a diplomatic defensive because, first, he does not have too much time to think his answers over, and second, he always speaks worse than his host.

"We have the right to retaliate"

Although the Czech president might have conceived his Russian-language gesture as an expression of helpfulness, the Kremlin ruler Vladimir Putin did not reciprocate. When the negotiations hit the most sensitive topic of the visit, i.e. the anti-missile radar base which the Americans plan to build in the Czech Republic, the Czech president tried to reassure the Russians of the best intentions, saying that, “The radar will not be directed against Russia in any case.” Putin replied that he believed him with the greatest pleasure but that the Czechs would definitely have no say as to the purpose of the given device. Klaus later claimed that Putin could not have spoken otherwise; nevertheless, the words of the Russian president that his country “has the right to retaliate” were registered on a global scale.

Klaus continued in his journey and his delegation brought the contracted tens of billions back home, but there remained the question: How would such a Putin’s retaliation for the radar be and what kind of nuisance would it mean for the Czech Republic? If the Russians wanted to fulfill their threats, they have three main channels to manifest their dissatisfaction at disposal: a diplomatic one, an economic one and, in the extreme case, also the military channel. Putin made it clear how these three are interconnected, sending a message to the West after the negotiations with Klaus, that Russia considers the possibility of withdrawing from the treaty on reducing the number of conventional arm forces in Europe (see the subhead “Where Putin has his nuclear arguments“ below on p. 22). That would bring a surprising twist even into the unpredictable conditions of the Russian post-Soviet policy.

Friends from Germany

Putin thus de facto told Berlin, Paris and Brussels to calm down the anti-Russian sentiments in the new post-Communist members of the European Union. If the issues remain reserved to only a diplomatic pressure, their impact on the life in the Czech Republic will “solely” be of transferred character. The position of Czech politician in Brussels can weaken into such an extent that they find themselves unable to effectively enforce their interests. For example Vlastimil Tlustý, the former Czech Minister of Finance, vetoed higher taxation of beer, and thus the increase of beer prices in Brussels in the period when he still held the post. As soon as the Czech priority in the EU is to advocate the construction of the American radar, such step can definitely turn much more troublesome. The Russian pressure thus may indirectly reflect itself in the arbitrary sphere of dissention within the EU. All those who think this is only a “grey theory” can look for the living examples of Estonia and Poland.

The local politicians in Tallinn made it hot for themselves when they decided to play on the Russian card in their pre-election campaign and to remove the sculpture of a member of the Red Army, liberator from Nazism and Stalinist occupant. Moscow dispatched a delegation to Estonia whose members proclaimed even before their departure that the Tallinn government should resign. However, if the Estonians expected the EU support at that moment, they waited in vain: the German Chancellor, Angela Merkel, whose country holds the half-yearly chairmanship of the Union, sent a message to both sides, asking them “not to escalate the tension.” After deciphering the diplomatic jargon, the message for Tallinn is clear as a day: Berlin is not going to come out against Russia.

The Poles, then, were banned to import Polish meat by the Russians in 2005, reportedly due to hygenic reasons. Warsaw subsequently vetoed the ratification of the new treaty on the mutual relations between the EU and Russia. The situation is now blocked up for as long as seventeen months and Polish exporters, who became accustomed to find a decent market in Russia, are out of the game. “The Russian tactic makes sense,” said the ex-Polish Minister of Foreign Affairs, Radek Sikorski, to the International Herald Tribune daily. “The opportunity to set the old and the new Europes against each other was too alluring for the Russians to resist it and to make use of it.” “It has become vitally important for Poland to receive stronger support from the countries of the Union,” said the Canadian lawyer, Robert Amsterdam – a person intimately familiar with the Russian conditions and, amongst other things, the former attorney of the once richest Russian, Mikhail Khodorkovsky – to the Týden weekly (Khodorkovsky, the former boss of the oil company, YUKOS, today serves his eight years’ sentence in Siberian prison, and the state prosecutor’s office prepared yet another charge against him which may bring him the threat of another 15 years’ imprisonment.) “Kremlin is aware of its own weaknesses in both domestic and foreign policies. That’s why it is dangerous and that’s also why it performs its policy in the divide and rule style in order to prevent the whole of the European Union to oppose it,” Amsterdam opines.

The Brussels response to the Polish problem is approximately the same as to the case of the Estonians. The EU’s aversion to confront Moscow is demonstrated by the planned program of the EU vs. Russia summit that begins on 18 May. Its organizer, Merkel, plans to devote most of the time there – guess! – to the global warming. She wants to do so at the moment when the non-ratified treaty on mutual relations lies on the table, when the worries of the energy dependence of Europe on Russia are on the rise (this will be discussed later), and when the Russians threaten to re-launch massive armament after the twenty years’ break. “For Russia, the radar in the Czech Republic means the same as the deployment of the Pershing missiles once did,“ claimed Putin, referring to the American-Soviet argument from the 1980s. He, moreover, encouragingly added that the intercontinental Topol class ballistic missiles, capable of carrying nuclear charge, “represent a significant step towards reinforcing Russian security system.”

The future of the American radar nevertheless remains utterly uncertain. Last week, the corresponding committee of the House of Representatives of the American Congress proposed to turn down President George Bush’s plan to spend 310 million USD on building a strategic system in Europe. On Friday, in the first reading, the Czech left wing in the Parliament enforced the draft of the law which would open the way to the referendum on the radar’s construction. If the law is passed (which is more than improbable), the chances that the Czechs reject the radar are rather real. The latest polls testify that about 70 per cent of Czechs are against the radar. The Russian combative rhetoric at the same time does not mean that the inhabitants of the Brdy townships and villages should necessarily expect a blitz of the Russian Tupolevs or a blow of the eulogized Topols, although such words were in fact heard from the Russian generals.

Detrimental dependence

The clearest explanation of the above-mentioned is that Moscow simply does not need this, because it has another, almost equally effective weapons at hand: oil and, especially, natural gas. The Czech Republic depends on the Russian supplies more than it’s good for its healthy development. While Western Europe takes approximately 30 per cent of its overall consumption from Russia, the Czech Republic must import as much as 74 per cent. This is a security danger in the full sense of the word. “The disruption of the natural gas supplies to a European country in the midst of winter would result in life casualties and economic damages comparable to a military attack carried out by conventional weapons,” claimed the American Senator, Richard Lugar, at the recent conference of the German Marshall Fund. Let us add that Lugar is in no way either a grim Russia-phobiac or an extravagant neo-conservative; he deserves credit for many sane parts of the American policy directed towards both Soviet Union and Russia and is, for example, the co-author of the successful program of the Russian nuclear disarmament.

And indeed, if the flow of Russian natural gas was cut off from the Czech Republic, either for political or other reasons (see the subhead “How much dependent we are“ below), we would feel the impact of this situation quickly and quite palpably. One of the reasons is that the highest percentage of people employed in the industrial sector on the European scale can be found in the very Czech Republic. The hangover of the Communist enthusiasm for industrial production could have severe consequences in the case of energy conflict with Russia (but also in the case of a successful terrorist attack on the gas pipeline). “Many businesses have dual source of energy, gas and electric power,” as the power engineer, Pavel Janeček, said to the Týden weekly. “If the gas supplies are disrupted, these companies will to for electricity. And it is for certain that the electricity network would be unable to survive this. The result would be the domino effect. As soon as one part of the network collapses, the remaining ones will follow automatically, since the entire system thus loses its stability. It would simply be a decent blackout, similar to that which was recently experienced by the States.”

The strong Russian card

Such a scenario, however, is blacker than black. The Czech Republic has strategic supplies of natural gas for 110 days (while the law requires 90 days’ supplies). Therefore, if Gazprom tries to employ the last year’s Ukrainian model and turns the natural gas tap to the left, the collapse would not come about that easily. “The problem is that if electricity was to substitute natural gas, the necessary capacity of the network cannot be built in three or four months,” Janeček explains. “The Energy Regulatory Office would have to implement drastic regulation of gas consumption.” This would, of course, most affect the companies for whom gas is indispensable. Many of them would be forced to either limit or completely stop their operation. The damages caused by such a situation to the entire Czech economy – from mass dismissals of employees to countless bankruptcies – could easily amount tens or hundreds millions Czech Crowns.

As concerns the energy dependence of the Czech Republic on Russia (and we haven’t discussed the Russian oil and fuel for the Temelín nuclear power plant yet, let alone the pro-Russian orientation of the ČEZ management), it is quite obvious that the Russians hold a very powerful card in their hands. And this is not only the case of the Czech Republic. Putin declared that, “Gazprom represents the most effective tool of foreign policy,” and decided to codify its position of a monopoly exporter of natural gas. But if he succeeds to control the infrastructure in the client countries – i.e. something that he endeavors vehemently – he will get even more effective weapon. He already owns 35 per cent of Wingas, the German natural gas distributor; he owns part of the Baltic-region infrastructure; he owns 10 per cent of the gas pipeline that connects Belgium and Britain, and he strives for a similar share in the gas pipeline leading from the Netherlands to Britain. “It does not suffice us to supply a quarter of the entire global gas consumption,” the British weekly The Economist quoted Alexander Medvedjev, man no. 2 in the Gazprom hierarchy. “We want to become the largest company in the world.”

The natural gas market therefore finds itself in an unenviable situation: the total of 60 per cent of global gas production is controlled by Russia, Iran and Qatar. The Gazprom expansionist policy moreover brings along side risks; one of them being that foreign investments of the company prevent it from modernizing its production. This, paradoxically, results in the lack of natural gas, and Gazprom is thus forced – also due to the increasing local consumption – to replenish its reserves via supplies from Turkmenistan. The ambition to become the largest company in the world does not come for free. The Russian way to the eventual “retaliation” for the radar, however, is far from solely leading through energies. The volume of Czech trade with Russia (see the subhead “Volume of trade between the Czech Republic and Russia” below on p. 20) is on constant increase and no twist of the trend can be expected. It is quite logical: Czech companies find their sales outlets more easily in the East than in Western Europe, since the competition in the latter is harder, the economic growth is slower – 2.2 percent in average as compared to the Russian 6.6 per cent in the past decade – and the markets are more saturated.

It is thus apparent that the economies of the Czech Republic and Russia are going to become more and more interconnected, or, “to establish closer ties“, as a Communist rhetorician would put it. However, to do business in Russia and to make money there can mean two completely different things. The most simple step by which Russia can make the life of Czech businessmen more difficult is, for example, to increase the import taxes on the local products (or, eventually, to increase some other type of taxation). This can pay off to Moscow well in the market segments where the Czechs have dominant or at least strong market position. If, for example, the PPF group – with its Czech leadership, although it is, nominally, Dutch – succeeds with its instalment sales similarly as the Home Credit did, it can expect worse tax rates if it comes to the disfavor of the Russian authorities. At that moment, the overall Czech investments in Russia (see the subhead “What Klaus brought back from Russia” below on p. 17) would be endangered into much more substantial measure than they have hitherto been.

One of the commonplace ways of bullying entrepreneurs is changing the norms. Consider the Škoda company from Mladá Boleslav, producing cars in Russia for the local market. It is not a single problem for the Russian authorities to adjust the technical norms to the needs of other – and, preferably, local – producers. Good illustration of this “policy” is the above-mentioned issue concerning the Polish meat. But the strategy of a “silent order” is yet more effective than taking the official routes. Putin succeeded in gaining the authority to personally appoint all governors who thus have lost the measure of autonomy against Kremlin which they got used to under the reign of Boris Jeltzin. A single phone call is enough to arrange the desirable trouble to Czech companies. “There are always loads of certificates, the necessary bumfs, which you are obliged to have as an entrepreneur,” says power engineer Janeček, who can pride himself of countless experiences with entrepreneurship in Russia. “You can get the necessary certificate, a document, in a week, but you also may get it in two years. No company is able to last that long.”

Tightening the visa policy

If the dissension with Moscow was to end up with what one is and has, the consequences will of course affect many other fields as well. For example, the contemporary boom of Russian tourists (see the subhead “For how long they stay in our country” below on p. 18), who sojourn to the Czech Republic the longest from amongst all foreign guests, can easily be suffocated. It can readily suit the purpose if the Russian side somehow tightens the visa regime. The Czech Republic would thus be forced to react in a similar manner, and the number of tourists would decrease correspondingly. Withal, the Russians keep a good number of Czech entrepreneurs in the travel business afloat. “Our country is visited by nothing but the second-rate guests from the Western Europe. Those who think that we are able to attract jet-set guests are wrong,” opines Jiří Milský, director of the Imperial hotel in Carlsbad. “The Russians are those who are willing to spend their money here.”

Not everybody shares Milský’s opinion, though. “Since the Russians have become to come here in droves, my customers are unsatisfied,” claims the female owner of a Carlsbad travel agency which exclusively focuses on Western-European clientele. “The Russians behave dreadfully, and are arrogant. The hotels increase their capacities because of them in order to keep the pot boiling, but the other guests do not like them at all and there is a threat that they start frequenting other destinations.“ This is also why the Russians in Carlsbad form as much as 42 per cent of the total of the spa guests (the Germans with their 30 per cent occupy the second position, and there is only 9 per cent of the Czechs). This sole fact represents a risk: if the Russians decide to spend their dollars elsewhere similarly as the British did, while the latter began to visit the Baltic region instead of Prague, the spa entrepreneurs are done for. The analogy with power engineering is in no way accidental here. “We know we should do something about Russia but we have no idea as to what it should be,” said a “high rank” from the EU who, understandably, wished to stay anonymous. His words sound like a motto of the entire problem. However, it definitely is not too encouraging to hear this from a representative of an institution which, as practically the one and only, should be capable of a more tangible reaction.

US Secretary of State Condoleezza Rice said today that the relationship with Russia needs intensive diplomacy, but said that relations were not at all comparable to the Cold War.

''I don't throw around terms like 'new Cold War,''' Rice told reporters as she flew here. ''It is a big, complicated relationship, but it is not one that is anything like the implacable hostility'' that clouded ties between the United States and the Soviet Union.

''It is not an easy time in the relationship, but it is also not, I think, a time in which cataclysmic things are affecting the relationship or catastrophic things are happening in the relationship,'' Rice said.

She said, ''It is critically important to use this time to enhance those things that are going well and to work on those things that are not going well.''

She noted that the United States and Russia were working together in numerous areas, including on dealing with Iran and North Korea's nuclear programs as well as cooperating in the fight to stop the global spread of weapons of mass destruction and Middle East peace efforts.

''Russia is not the Soviet Union, so this is not a U.S.-Soviet relationship, this is a U.S.-Russian relationship,'' said Rice, an expert on the Cold War who first visited Moscow in 1979. ''A great deal has a changed.''
...
Russia views U.S. activity in its former sphere of influence with growing suspicion and just last week, Putin denounced ''disrespect for human life, claims to global exclusiveness and dictate, just as it was in the time of the Third Reich.''

The Kremlin insisted that Putin had not meant to compare the Bush administration's policies with those of Nazi Germany but the reference appeared to highlight Russia's annoyance at what it sees as U.S. domination of world affairs and meddling in Russian politics.

Rice did not address Putin's comments but suggested that sometimes emotionally charged remarks by Russian officials were not constructive, saying she had urged counterparts to avoid ''rhetoric that suggests the relationship is one of hostility.''

She couched criticism of Russia's democratic progress under Putin with a caveat alluding to the country's troubled history -- from Czarist empire to communist monolith -- a nation now struggling to find its role in the world and at home.

''This is a big and complex place that is going through a major historic transformation ... things are not going to change overnight, but frankly we would like to see them change faster than they are changing, and for the better,'' Rice said.

Just one day after we posted an article about Russia's energy agenda for Central Asia, a major pipeline deal is announced that further consolidates Moscow's control over energy exports from the region, outflanking Western attempts to open up a trans-Caspian export route independent of Russian participation to diversify suppliers. In the various articles cited below, the representatives did their best to downplay the political significance of the new deal, but the skepticism remains reasonably high. Although the trans-Caspain option is "not off the table", apparently as both Russia and Iran have veto rights on such a project, it seems highly improbable.

From the AP:

Mr. Putin said the new pipeline may carry "at least" 20 billion cubic meters of gas annually by 2012.

Russia bought about 42 billion cubic meters of Turkmen gas last year at a price of $100 per 1,000 cubic meters, well below its $250 price for customers in Europe. Building the pipeline and modernizing old ones would allow Russia to buy as much as 80 billion cubic meters of gas from Turkmenistan, said Alexei Miller, the head of Russia's state OAO Gazprom gas monopoly.

Turkmen President Gurbanguli Berdymukhamedov and Kazakh President Nursultan Nazarbayev signaled Saturday that the trans-Caspian pipeline may also be considered in the future.

The latest deal means Russia would control the bulk of Central Asian energy exports, boosting its role as a major supplier of oil and gas to Europe and strengthening Western fears that Moscow could use its energy clout for political purposes. Mr. Putin sought to assuage such fears, saying, "we very responsibly take our role in the global energy sector." But when asked whether others could join the new pipeline project, he answered "No."

From Kommersant:

In the final drafts of documents from the meeting, the three leaders agreed to prepare a multilateral agreement and commercial contract for the creation of a consortium to manage the Caspian shoreline pipeline before the next summit in Turkmenistan in September 2007. According to Russian Industry and Energy Minister Viktor Khristenko, the three sides will draw up documents for a larger-scale project than was earlier planned: the Caspian shoreline project (currently named the Central Asia–Center 4 gas pipeline) is slated to be expanded from its current carrying capacity of 1-2 billion cubic meters a year to 10 billion cubic meters within the next five to seven years. In addition, the existing Central Asia–Center 3 (SATs-3) pipeline, which delivers gas from Turkmenistan to Russia via Uzbekistan and Kazakhstan, will have its yearly capacity boosted by 20 billion cubic meters. By 2014, Russia can count on an increase in the flow of gas from Central Asia to Russia to the tune of 60-90 billion cubic meters per year.

However, none of the sides have commented yet on how and who will be selling an additional 30 billion cubic meters of gas produced by Turkmenistan, Kazakhstan, and Uzbekistan (Uzbek President Islom Karimov signed the declaration from the Turkmenistan summit ahead of time, during his May 9 meeting with Mr. Khristenko). Gazprom has not guaranteed that volume. During the first meeting of the summit, which took place between Vladimir Putin and Nursultan Nazarbayev in Kazakhstan, it was agreed that the 15 billion cubic meters of gas that will be refined by Kazakhstan's Orenburg gas refinery annually from gas condensate extracted from the Karachagansky gas reserves in Kazakhstan will be sold in Europe by Kazrosgas, a joint partnership between Gazprom and Kazmunaigaz.

From ISN:

All three leaders sought to play down the diplomatic implications of the pipeline. But the deal comes amid rising Western concerns over Russia's use of its energy riches for political purposes -- a charge Moscow denies.

Turkmen President Gurbanguly Berdymukhammedov praised the agreement: "This project has obvious benefits for all parties. We guarantee the delivery of the required volume of Turkmen natural gas and for the period that will be determined by the results of the reached agreement."

Prior to the signing, Kazakh President Nursultan Nazarbaev, who this week pledged to keep most of his country's oil flowing through Russian pipelines, had called the agreement "a purely pragmatic commercial project," adding: "There is no politics there."

Still, Berdymukhammedov said plans for a rival US-backed trans-Caspian pipeline that bypasses Russia had "not been completely dropped."

However, Russian Energy Minister Viktor Khristenko said he believed there was now little chance of it going ahead. He said that the "technological, legal, and ecological risks are so big that it will be impossible to find an investor unless it is a political investor who does not care how much gas there is to pump through."

Julian Lee, a senior analyst at London's Center for Global Energy Studies, says that one key issue with the West's desired trans-Caspian pipeline is that neither Russia nor Iran, which have veto rights as countries that border the Caspian, are likely to agree on the project.

"It seems at the moment, at least, very clear that both Russia and Iran are likely to veto any plans to build either gas or oil pipelines underneath the Caspian Sea. So I think it will be perhaps very difficult to see either gas or oil moving from Central Asia by pipeline toward Europe without bypassing Russia," Lee says.

Dancing On the Graves

By Grigory Pasko, journalist

God is my witness – I really didn’t want to write on this subject. Because in any event, I’m taking it out of the blue. Let me start by saying that I don’t fully share the view of the overwhelming majority of Russians, including certain opposition democrats, relative to the decision of the Estonian authorities on moving that notorious monument. (The key word here is “moving”. Not tearing out of the ground, not turning inside out, not destroying, but specifically moving to another place, and not necessarily a worse one).

Photo of graves of Russian sailors in Izumiosu, Japan by Grigory Pasko. These graves are tended by the Japanese.

The appraisal of the actions of the Estonian authorities, in my opinion, is more an emotional one: how dare they… hallowed ground… memory… ancestors. Yes, it is all so. The decision wasn’t very well thought through. At first glance. But let us suppose there is another way of looking at it. From THAT side. Democracy, after all, is just this – the existence of several points of view and the ability (and willingness) to heed another opinion, one that differs from yours.

Let us suppose that you’re living in your house. And one fine day, strange people come to you and say: now we’re going to live with you, and you’re going to live according to our rules. Then they put up a monument to their dead relatives in your apartment. And so you all live like this for a long time, and not always happily. And then the strange people go away. Not exactly of their own free will, either. Indeed, they never had any intention of leaving. It’s just that circumstances happened to unfold in such a way that they were compelled to leave.

But they left their monument. In the middle of your apartment.

You, like the decent people that you are, continue for many years to step around this monument in your apartment, respecting the memory of the strange people towards their fallen kin, and of those who had fallen before the country and the apartment. (Including your own apartment, because they say that these people helped to liberate your apartment from other unasked-for guests – fascists. True, they also say that these people killed a few Estonians as well afterwards, but that’s another story).

And then your children grow up and start asking: why is it that we’ve got a strange people’s monument standing in our apartment? You explain to them as best you can. But the children say: we understand, but ask that the monument be moved into the yard at least. With ceremony and honor to the memory of the strange people, but still – moved.

And so they moved it.

And if it weren’t for all the hullabaloo created by today’s Russian power, its insistence on proving to the whole world that it – the world – is made up entirely of enemies of Russia, this monument would just quietly continue to stand in its new place without any dancing at its base and even right on top of it.

And the dancing were somewhat wild. Some Russians are proposing moving Estonia’s embassy in Moscow to another place, a former minister of defense calls for not buying Estonian yogurt, in Tambov Oblast it is decided to put special labels with an indication of the country of origin on Estonian goods in the stores in order to ensure that customers are making an informed choice… Not to mention the blatantly criminal deeds by specially instigated young people against representatives of the Estonian diplomatic corps in Russia and against Estonia itself right in Estonia.

Of course I was ashamed for the leadership of my Russia. And not for the first time, either. Before this there were the situations with Georgia, Ukraine, Belarus… You might start to think that today’s leadership of Russia has made a conscious decision to put the country at odds will all the nearest neighbors. Europe – and probably the whole world, really – is one big house. Russia and its nearest neighbors are like neighbors in the same stairwell. And if one disorderly neighbour contrives to get into a brawl with everybody in this stairwell, then it’s not likely that all the neighbors are at fault in this.

I won’t be surprised if all the neighbors decide to remove from their apartments all those monuments that the disorderly neighbor had put up all over the place in its day. (By the way, these are often rather mediocre looking monuments. Judged by its aesthetic value, the one in Tallin doesn’t even hold a candle to the one in Berlin’s Treptower Park, for example.)

By the way, the disorderly neighbor has a whole bunch of monuments-graves of its fellow countrymen all over the world. But Russia never has the time or the money to maintain and repair its cemeteries beyond the boundaries of the country. I took a special trip once in Japan and saw in what condition the Japanese maintain Russian burial sites. They keep them up in good condition. Despite the fact that Russia doesn’t care about this one iota.

Photo of grave in Russia by Grigory Pasko. Many Russian gravesites look like this.

The Japanese, to keep up our analogy, do not live in the same stairwell as the disorderly neighbor. But there may come a day when they, too, get tired of taking care of someone else’s monuments.

And it’s hard to imagine what will happen if everybody suddenly proposes taking the graves of all 9 million Russians buried beyond the boundaries of the country back to Russia.

We should silently care for graves, not organize loud dances on them. And it was perfectly possible to come to a negotiated agreement with Estonia about the monument, finding an optimal solution for both countries.

Vladimir Putin and Turkmenistan President Gurbanguly Berdymukhammedov together for the groundbreaking ceremony for the Alexander Pushkin Russian-Turkmen School. Here Putin decides in which direction the cement (and natural gas) will flow. (Photo by Sergey Guneev)

Coordination of competing energy suppliers is a key aspect of Russia's strategy to maintain and build upon its dominant position as an energy empire vis-à-vis Europe. No where is this more apparent than its stranglehold on Central Asia's export routes for its vast energy supplies, which, if at once unleashed in free and fair competition with Russia, would arguably reduce Moscow's ability to deploy the energy weapon as a foreign policy tool, and would significantly increase energy security not only for Europe, but also for China.

Despite the high stakes and a demonstrated awareness of the region's importance from both the EU and the United States, Russia has so far managed to outmaneuver the West with its energy diplomacy in Central Asia. But a number of recent events show that their grip may be slipping. The results from Vladimir Putin's trip to Central Asia this week have been the following: Kazakhstan's president called for a an expansion of the Caspian Pipeline Consortium's (CPC) oil pipeline to Black Sea, the new president of Turkmenistan reiterated his loyalty to Russia, and agreed to the joint construction of a new gas pipeline along the Caspian coast, and Uzbekistan made a deal with China National Petroleum Corp. (CNPC) to build a gas pipeline. And most recently, the presidents of Poland, Ukraine, Lithuania, Georgia and Azerbaijan (and a personal envoy from Kazakhstan) agreed at a meeting in Krakow on a project to build an oil pipeline bypassing Russia.

The United States and Europe want Central Asia's energy to cross the Caspian to Baku, out of Russia's political reach - the Russians are prepared to make concessions elsewhere to prevent that

The Caspian Challenge

At first glance it may seem as though Russia's dominion over Central Asia is beginning to crack. Not so fast. The Uzbek pipeline will definitely create some undesired competition between Russia and China, but Russia still views Asia as a secondary consumer to Europe. The proposal to expand the CPC, which is majority owned by Chevron and is the only majority privately owned pipeline passing through Russian territory, may seem at first glance like a setback, but indeed Kommersant has scooped a hugely important angle that Kazakhstan is pushing the CPC expansion in exchange for giving up on the Caspian route - which would be a huge blow to Western interests:

It follows from comments made by the Russian side that Russia is offering Kazakhstan the opposite choice – an increase in oil shipments to the EU through Russia. Putin made exactly the same proposal to Nazarbaev concerning gas from the Prikaspiiskoe deposit. In April of this year, during his visit to Moscow, new President of Turkmenistan Gurbanguly Berdymukhammedov proposed that Russia participate in the Transcaspian gas pipeline, an alternative to the Prikaspiisky. There is a principle difference between the two. The Prikaspiisky pipeline, which does not cross the Caspian Sea, would connect to Gazprom export pipelines, while the Transcaspian, which crosses the Caspian but not Russia, would connect to the Baku-Tbilisi-Erzurum line. ...

Al things considered, the compromise between Russia and Kazakhstan will be for Russia to give in to oil issues and Kazakhstan in gas. But Turkmenistan has to be included in that formula. Berdymukhammedov may let his views be known about how and how much Russia should pay for Turkmenistan not to participate in projects that are unprofitable for Gazprom. The solution to that problem may come today at the summit of CIS and Eastern European leaders in Warsaw. An agreement among Russia, Kazakhstan and Turkmenistan on oil and gas is unprofitable for that group as a whole.

Controlling Turkmenistan's energy flows is perhaps even more important for Russia than the Kazakhstan and Uzbekistan issues. Turkmenistan has gas reserves of 2.9 trillion cubic metres, according to the BP annual statistical review of world energy. Annual exports are about 60 billion cubic metres. Following the death of the flamboyantly corrupt "Turkenbashi", Saparmurat Niyazov, near the end of last year, a brief window of opportunity was opened up for Europe to gain direct access to Turkmen gas. However, in the charm offensive, it seems that Russia is for now winning the battle, and will continue to purchase all of Turkmenistan's gas to ensure that Europe remains dependent on Gazprom.

From ISN:

Turkmenistan's recent commitment to expand energy cooperation with Russia could significantly strengthen Moscow's position in the struggle for control over Central Asia's natural resources. Moreover, Russia hopes to negotiate construction of a new pipeline that would carry gas from Turkmenistan into Europe across Russian territory. Undoubtedly, such a deal would cement Moscow's regional energy supply dominance and deal another blow to Washington's ongoing attempts to circumvent it.

Washington would like to see Turkmen gas delivered through a pipeline across the Caspian Sea to the west, tapping into the gas pipelines that cross the South Caucasus and bypass Russia. That would meet a US and European strategy of securing sources of crude and gas outside the Middle East, and drawing Caspian states away from Russia and closer to the West.

So how is it that Russia is consistently able to outflank Europe and other consumer countries in redirecting Central Asia's energy flows? For one, there are very clear and sensible security concerns given their geographic position - just ask Georgia how much it costs to not follow Moscow's orders. Two, Russia is seemingly willing to throw in a lot of quid pro quo infrastructure investments, and also has the advantage of leveraging pressure on countries by offering the tantalizing assistance of nuclear power development through state agencies Rosatom and Atomstroiexport (they just closed a deal for a uranium enrichment center in Kazakhstan - which should help push along Gazprom's deals). Analysts too often fail to connect the dots and see that nuclear power assistance is just yet another arm of Russian energy imperialism.

But perhaps the most compelling motivation for Central Asian leaders to go with the Russians is their tolerance for corruption (see the detailed report by Global Witness on Turkmenistan's corruption in the energy industry). If we are talking about rational decision making, the smart long-term move for these countries would be to diversify their energy infrastructure, and send oil and gas out to as many sources as possible. After all, why wouldn't they want more customers for their energy resources? But most of these leaders are only concerned with the short term, and often seek to exploit the resources for personal gain. They also likely fear that close collaboration with the West on energy could come with strings attached, requiring them to loosen their grip on power, respect human rights, and improve social policies.

With Russia, they can rest assured the democratic reforms would never be requested, and may in fact be actively discouraged (Estonian President Ilves recently remarked that Russia feels threatened by democracy even at its borders).

Today we received an interesting item in the mail regarding a mass blogging project to generate diverse debate before the Russian parliamentary elections. This appears to be the pet project of Swiss blogger Jürg Vollmer, and while we're aware this could be an elaborate exercise in self-promotion, I'm happy to contribute an article. As demonstrated by recent bitter exchanges on the endless comment lists at some Russia blogs, I hope Jürg understands the cacophony of opinions he just invited upon himself!

Privet!

Today is the launch of the world's first ever dual-language "Blog-Carnival Russian media". All English-speaking and German-speaking bloggers are invited to publish contributions on the Russian media on their weblogs between 1 and 30 June 2007 (see more www.krusenstern.ch/p716.html ). The launch date for the "Blog-Carnival Russian Media" has not been chosen by chance for today, 11 May 2007 , the "Novaya Gazeta", one of the last independent newspapers in the Russian Federation , is to be awarded the renowned "Henri Nannen Prize" 2007 in Hamburg for its services to press freedom.

How does the Blog-Carnival work?

The name "Blog-Carnival" goes back to the stone age of blogdom (September 2002!), when American bloggers organised an event called the "Carnival of the Vanities" designed to bring together the widest possible range of opinion using the simplest of means.

The principle behind our Blog-Carnival is the same: the initiator sets a topic (the "Russian media") and deadlines for registration (11 to 31 May 2007) and publication in English or German (1 to 30 June 2007) and summarises the results, providing links and a commentary.

What is the aim of the Blog-Carnival?

The aim of the Blog-Carnival is to gather together as many different viewpoints and pieces of information as possible on the subject of the Russian media. Behind this initiative is the notion that the closer we get to the Russian parliamentary elections in October 2007 and the presidential elections in March 2008, the more the Putin government is clamping down on the media in Russia.

This Blog-Carnival is an opportunity for bloggers of both East and West to learn about the media that appear in the Russian Federation or report on it from abroad. The Blog Carnival will therefore bring the contributing bloggers new information, new contacts and a stronger network transcending national borders and language barriers (see more www.krusenstern.ch/p716.html )
Poka, poka!

A Very Likely Candidate

An exclusive interview with one of the leaders of the Russian opposition, Sergey Gulyaev

By Grigory Pasko, journalist

One of the organizers of the recent March of Those Who Disagree in St. Petersburg was a former deputy in the Legislative Assembly of Russia’s “northern capital”, Sergey Gulyaev. This was already the third march with his participation and under his organization. The most recent march ended with Sergey’s arm being broken by the gallant defenders of law and order. And based on the results of the first march, an administrative case has been opened in relation to Gulyaev, which in today’s Russia within the framework of the new law on counteracting extremism may very possibly be recategorized as a criminal offence at any moment.

Photo of Sergey Gulyaev being interviewed by Grigory Pasko

Recently, «Kommersant» wrote about how the leaders of the opposition movement “The Other Russia” are conducting negotiations on nominating for the post of president of the country with former head of the Central Bank Viktor Gerashchenko and former deputy of the Petersburg Legislative Assembly Sergey Gulyaev. The newspaper also cites the opinion of the well-known Russian political scientist Stanislav Belkovsky in this regard: “By summer, there will be three of them [candidates for president – Author’s note] – Kasyanov, whom the Peoples’-Democratic Union (NDS) will advance and who will be supported by several movements, the most famous of these – Eduard Limonov’s Natsbols [National Bolsheviks], a prominent representative of the nomenklatura of the 1980s-1990s and, very likely, one of the politicians who is already found within the framework of ‘The Other Russia’, for example Sergey Gulyaev”.

Now, it just so happens that Sergey Gulyaev and I have known each other for nearly a quarter century – we studied together in the Lvov Higher Military-Political School. And we stayed in touch since then too, even though fate had thrown us to opposite ends of the earth – him to Afghanistan, and me to the Pacific Ocean. So I’m sure the reader will understand why this interview has a much more personal tone to it than might be appropriate for such a prominent figure.

Sergey, why are you a “former” deputy? Why are you in the opposition?

I’m “former” because in January of this year, the Petersburg electoral commission refused to register candidates for the Legislative Assembly of St. Petersburg who had been advanced by the regional branch of the “Yabloko” party. I was on that list. What is noteworthy is that they tried to make a deal with us:

It was proposed to us that we abandon our initiative to hold a referendum on the construction of the “Gazprom-city” office building in St. Petersburg in exchange for registration. The “Yabloko” leadership didn’t agree to this. I said at the time that you mustn’t play by their rules with sleazy people.

What have you done that the power is so dead set against you?

Together with colleagues from “Yabloko”, I spoke out against the mass violations of the rights and liberties of the citizens of Petersburg with respect to intensive property development, the demolition of buildings in the historical part of the city, against transferring 180 hectares of land to Chinese investors for the construction in Petersburg of a Chinese city, against the reclamation of new territories on Vasilievsky Island, against the construction of the insane 400 meter tower “Gazprom-city” at the expense of the city budget at a cost of 2.5 billion dollars. We came out against the reappointment of Valentina Matvienko for a second gubernatorial [term], and we paid a price for that – by being removed from the elections.

Why aren’t there people like you in the opposition – people who’ve been through the Afghan war, through Chechnya?

They’re there. But they don’t run around advertising themselves. Many of those who share my views are now settled comfortably in the mainstream. That’s a lot safer than doing open battle with the power. They’ve had enough of war already. Some, it is true, are just sitting and waiting until the situation changes by itself. It won’t change by itself. We need to help it change.

Your foray into power didn’t turn you into just another government bureaucrat. I think I can guess why, but the blog’s readers may be interested in hearing it for themselves.

Because I’m not a “bird from their nest”. They’ll tell you themselves – they’re all part of an “in-crowd”. They’ve got a regular mutual-support fraternity there. Of course, that doesn’t keep them from stabbing each other in the back. You know, sometimes I’d look at them and just feel sorry for them. It won’t be the avenging sword of the law that will punish them, it will be life itself. Here, for example, a well-known governor… It seems he’s got everything he could ask for – prestigea, glory, he’s one of the insiders. But his personal life is an absolute zero. His son’s a drug addict. So what good are all those lies and machinations to him? Only to ensure that he remains part of the in-crowd?

Having been at all sorts of meetings, I’ve observed an almost ritualistic picture: when officials who are part of the in-crowd greet each other, they always kiss. Like under Brezhnev. You can compare them with dogs, who sniff each other when they meet. That’s their way to signal that they all belong to the same in-crowd. And I’m not one of them.

That’s why you didn’t go on any ski junkets to Courchavel, but stayed around and met with citizens and tried to help your constituents?

Among other reasons. True, I give myself only modest marks for success as a deputy. Because you need to fight not with individual persons, but with the whole system. The people in power today are thieves and corruptioneers. A kleptocratic power with a notorious vertical. That said, none of our democratic amendments passed in the legislative assembly.

So you took to the streets, so to speak, to the barricades. And got bashed on the head with a truncheon for your troubles…

Not just the head. The last time they injured my arm. Before that, at the previous march of those who disagree, they whacked me so hard on the body that my mobile phone was smashed into smithereens. I was laughing in order not to show that I was afraid of them. And that it hurt.

Do you have a team of like-minded people? Who are these people?

There is a team. These are the people who help me with elections to the legislative assembly, my friends. These are the people whom I defended and whom I helped solve their problems when I was a deputy. There are many of them. They are the so-called middle class, representatives of small business. They are all kinds of different people, and not only from Petersburg.

Photo of Sergey Gulyaev at the St. Petersburg March of Those Who Disagree from the personal archive of Sergey Gulyaev

In one of the interviews you talked about the panicked fear of Petersburg governor Valentina Matvienko in the face of any alternative thinking in the city. But the same thing could surely be said about Putin, too? Do you really believe that the power is afraid? Or are you oppositionists just pacifying yourselves with illusions relative to the power’s fear?

Oh, the power is definitely afraid, no doubt about that. Yes, today the power has cultivated defenders for itself – the OMON, who are already defending not so much the power as their own shadow business. For example, providing a “roof” for prostitution, the drugs trade. And they say about the opposition that it’s been bought by Berezovsky That’s sheer psychosis! Our slogans are plain and easy to understand: “Out with Matvienko!”, “Putin. Skis. Magadan.” [Translation: Give the man a pair of skis and drop him off in a far corner of the country that was once known as “the heart of the GULag”.] And the power fears these slogans, because they’re truthful. We’re witnessing the psychosis of the power. The march of those who disagree showed this, it showed the power that the opposition is ready for decisive measures. And the power got nervous. People wrote, called, and told me after the first march that they were ashamed they had sat the first one out at home. They asked when the next march would take place, so they could come out and be counted.

And when will the next march take place?

On the day of the city, 27 May. We will organize an alternative carnival. We have an opposition council, which includes representatives of many movements and organizations.

Are you ready to be arrested?

Kasparov was summoned to the FSB for interrogation. Kasyanov got subpoenaed. In relation to me, they opened a case as far back as the first march. They could accuse me of organizing mass disorders. I’m constantly being watched, they wiretap my telephones 24 hours a day. I try not to give them any cause. But there is heightened attention towards me.

I know you’ve got three children. And I know what it’s like when children grow up without a father.

…And you also know that it’s better to sit in your enemies’ captivity than to ever be ashamed to look your son in the eye. My Ivan is a year and a half old.
He has to live in a normal country. Sometimes I think: surely he’s not going to have to live in a country where he’ll always have to be afraid, instead of living a normal human life?

Many solve the problem radically – they leave the country. For example to Canada. I’ve seen such families there.

I’ve got friends who left and are living in Canada. Emma with a programmer husband and two children. A family – they’re young, smart, happy people… And they left. They didn’t see any future in their own country. Emma also used to say: I don’t want my child to have to fight in Chechnya. She understood that under such a power, there would be a war found for him too. Our country is losing people like these. Millions are leaving. Not to mention the millions who are dying for various reasons, including social ones.

You once had this fanciful thought that all those thieving governors, all those representatives of the corrupt power, would be unwelcome in the West, that Western leaders would refuse to shake hands with them. And yet, Western leaders continue to meet with them…

But notice that they don’t kiss each other! New leaders are coming in the Western countries. Merkel has come, so has Sarkozy, tomorrow Bush will be gone, and Blair too. So the world is changing. Even if Putin stays around for a third term, still there will already be a totally different attitude towards him. Of course the leaders of Western countries are pragmatists, and are guided by the interests of their countries first of all. But only for the time being. Including for as long as we here remain silent, until we start to say openly and directly to everyone that our power – is thieves, murderers, and corruptioneers.

What do you think of Khodorkovsky?

Khodorkovsky refused to strike a deal with the power. Yes, he differed from the oligarchs in that he was engaged in socially useful projects, instead of buying up yachts and palaces for himself, he supported a children’s home. He was developing computerization in the country… Not within the framework of some national PR-project, but for real. And his «Open Russia» project? I myself received training at «Open Russia» seminars. I think that Khodorkovsky will remain behind bars until there’s a regime change in the country. I, of course, wish him health and endurance. And patience.

Who is going to come to replace Putin?

I will [Sergey smiles as he says this – Author’s note]. Not now, of course, but later. I think that the opposition will get stronger and stronger and in the end will develop a unified tactic. Why do such disparate people gather together? Because we want to live in another country. And because many Russians support us.

What is your attitude to the construction of the North European Gas Pipeline along the bed of the Baltic Sea?

This is folly. There’s no sense in this construction along the seabed specifically. This is the manifestation of somebody’s complexes, it’s a policy of isolationism. We’ve already alienated all of our neighbors. And here’s yet another round of confrontation with the countries of the Baltic region.

What’s keeping you busy these days?

Right now I’m founding the People’s Liberation Movement