RussiaRussia ReviewReview GRIFFIN CAPITAL 20 March 2000 IN BRIEF Contents “Panem et circenses” [Bread and Circuses] IN BRIEF ..................................................... 1 Juvenal X 81 POLITICS AND GOVERNMENT .................. 3 MACROECONOMY ..................................... 5 MEDIA AND COMMUNICATIONS ............... 13 ENERGY ...................................................... 24 SPORTS ...................................................... 25 UPCOMING EVENTS ................................... 27 INDEX TO THIS ISSUE ................................. 28 with NATO as to pursue his ruthless crackdown in Chechnya. Not since the Bolshevik Revolution of 1917 has a Russian leader been less bound by ideology. Putin the pragmatist will focus his country’s con- siderable resources on the task of rebuilding the Putin Rallies the Troops - and Voters (Reuters) weakened former Superpower as an assertive, if not dominant, economic and political player. We’re All Aboard and Ready to Go He has the broad support of an electorate whose national pride was wounded by the West’s Described by its prominent passenger as a “pow- assertiveness in Kosovo and Russia’s reduced erful and obedient machine”, a Sukhoi jet fighter status on the global stage. today spirited presidential campaigner Vladimir Putin to a pre-election morale and image boost- And with less than a week before the election, ing appearance in Grozny, the devastated capi- Putin pledged to start withdrawing troops from tal of Russia’s war torn province of Chechnya. Chechnya. Russian troops occupied Grozny by From Taipai to the IMF to Russia, this is a big “Modern Russian society does not week for election campaigns, with all their at- identify a strong and effective state tendant promises and posturing. The hot favor- with a totalitarian state: Russia needs ite in Russia’s Sunday presidential election, act- a strong state power.” ing president Vladimir Putin, is all things to all people: both pro-market and pro-welfare and as Vladimir Putin keen to engage the West through reconciling 31 December 1999 Griffin Capital New York +1 212 759-6678/fax 759-6783 [email protected] This material is compiled for the private information of the recipient, and neither Griffin Capital nor its affiliates are soliciting any action or making any recommendations based upon it. This material is based on information provided by sources we deem reliable including Reuters, Bloomberg, PRNewswire, Prime-Tass, Kommersant, Interfax Vremya, The Moscow Times CentreInvest Research,Euroweek, ABN AMRO, com- pany data and other sources, but we do not represent that it is accurate or complete and it should not be relied upon as such. This information does not have regard to the specific investment objectives, financial situation or the particular needs of any individual or entity who may receive this material. Investors should seek financial advice regarding the appropriateness of investing in any securities or implementing investment strategies discussed or recommended in this material and should understand that statements regarding future prospects may not be realised. Vol. III, No. 3 page 1 of 31 RussiaRussia ReviewReview GRIFFIN CAPITAL 20 March 2000 IN BRIEF (Continued) Since the capture of a prominent Chechen war- force on 6 February. lord, Russian Minister for Mass Media and the Press Mikhail Lesin has declared that quoting “The necessary contingent will stay and carry suspected terrorists in print or allowing them to out their duties,” Putin said in comments car- speak on television or radio is forbidden. Very ried on Russian television NTV. “But as for the little adverse war coverage now appears in the excessive part, as I said, there is no reason to local media. These media restrictions resemble hold it here, as we want to get along with our those imposed to little effect by the British gov- obligations over flank limits in Europe.” ernment in the 1980’s in regard to their own sepa- ratist movement in Ireland led by the IRA. Putin, the expected first-round winner in Sunday’s election, has done little open cam- In a continuing series of courtly visits with the paigning, relying instead on almost daily televi- great and the good of the West, Putin and his sion appearances for working trips to Russia’s wife hosted British Prime Minister Tony Blair and regions. Putin’s popularity has risen in line with his wife on the 10th in St Petersburg where they Russian’s support for the war against Islamic attended the opening of Sergei Prokofiev’s “War militants in Chechnya. and Peace” in the Marlinsky Theater. The next day, Putin met with World Bank President James Wolfensen to discuss money matters. “Vladimir Putin is like a mirror where everyone sees what they want to. “Russia is, in principle, The lack of a concrete manifesto a self-sufficient country”, is designed to avoid alienating but “if credits are given any part of the electorate.” it is simply stupid to turn them down.” “It would be wrong to break our relations Yury Levada, Director with international financial institutions ... VTsIOM polling institute But it would be wrong to beg for anything.” In December, Putin said the end to military ac- Vladimir Putin tion in Chechnya was “close.” Putin today gave 8 February no indication of when troops would be withdrawn. Elsewhere, Gazprom Chairman Viktor Earlier this month, Russian artillery and war- Chernomyrdin visited New York City on 22 Feb- planes blasted a village in southern Chechnya ruary as a soft-spoken, “open-for-business” en- where the Associated Press reported 700 rebels trepreneur. He appeared at a meeting organized were fighting Russian attempts to push them by Eurasia Group in New York at the same time out. A week earlier, the AP reported 85 Rus- as former Deputy Prime Minister and Alfa Bank sian paratroopers were ambushed by Chechen Vice Chairman Oleg Susuyev. Susuyev reas- fighters in Chechnya’s southern mountains. suringly opined the Putin administration would not support negative restrictions on foreign par- ticipation in joint ventures. “Putin will trample on citizens’ rights in the name of a powerful state.” This week, Sergei Kiriyenko, Former Prime Min- ister of the Russian Federation will be in New Alexander Kabakov York and Washington DC. He previously cau- Kommersant tioned a western audience in their planned in- Vol. III, No. 3 page 2 of 31 RussiaRussia ReviewReview GRIFFIN CAPITAL 20 March 2000 IN BRIEF (Continued) vestment in the energy sector, given the uncer- tainties over who will be the key power brokers following Putin’s expected March election. On 13 March, Putin co-chaired a session of the Foreign Investment Advisory Council in Moscow, a refreshing change from his closed predeces- sor Boris Yeltsin. However, it remains to be seen what he intends to do after listening to the ad- vice of foreign investors. And the uncertainties over who will be the key power brokers follow- ing Putin’s expected election remain, with many investors taking a “wait and see” attitude before new appointments are made. All these visits with the West were preceded by Putin’s astonishing interview with David Frost on the BBC, where he said there is no reason why Russia shouldn’t join NATO. This startling est pace in a decade. remark was promptly downplayed by Igor Ivanov, Russia’s Deputy Minister of Foreign Affairs. Moscow police detained two residents from the Vladimir region, northeast of Moscow, and con- “Putin has no ideology. fiscated Faberge eggs and other works of art In this sense he reflects the state worth $300,000 stolen from the home of a promi- of Russian society nent Moscow antique collector last November. which is tired of being held hostage to history and tired of chaos.” POLITICS AND GOVERNMENT Vyacheslav Nikonov Operation in Chechnya Ended Politika Fund “The military operation in Chechnya ended. And in yet another well orchestrated pre-elec- We can say that the terrorist and tion move, Russian publisher Vagrius published separatist forces were crushed.” on-line a series of interviews with Acting Presi- dent Putin. It may be of some significance that Igor Ivanov the interviews were conducted by staff journal- Russian Deputy Minister of ists from Kommersant, a respected newspaper Foreign Affairs acquired under murky circumstances and now Speaking at the National controlled by Boris Berezovsky. The material Chamber of Commerce contains no policy revelations and may be viewed Santiago, Chile at http://www.vagrius.com/html/books/putin 13 March (Bloomberg) The benchmark Russian Trading System stock index rose to a 21-month as investors who were 10 Mar (Interfax): 85 Russian paratroopers were burned by the country’s default and devaluation ambushed by Chechen fighters in Chechnya’s in 1998 return to an economy growing at its fast- southern mountains on 29 February according Vol. III, No. 3 page 3 of 31 RussiaRussia ReviewReview GRIFFIN CAPITAL 20 March 2000 7 Mar (Interfax): While visiting the textile center POLITICS AND GOVERNMENT (Continued) of Ivanovo, Russia’s Acting President Vladimir to Russian Defense Minister Igor Sergeyev. “A Putin made a series of statements, which seem great number of bandits were eliminated, but to reflect a liberal bent in his economic views. unfortunately our guys were killed too, Sergeyev ...Comment: Putin suggested Russia’s future said, adding, “We will be killing them until the economic development would depend on en- end,” the agency reported. suring freedom for all economic actors, reduc- ing the tax burden, and eliminating artificial