12 posts tagged “russia”

Some stream-of-consciousness impressions of Kyiv, Ukraine...

We arrive in Kyiv (formerly "Kiev"), Ukraine on board an Aerosvit Boeing 737--a comfortable ride after my recent Aeroflot experience. From the air, it's immediately apparent that there are immense wide open spaces in Ukraine with dark, fertile soil that is reportedly the most fertile in Europe, but because of political and bureaucratic obstacles it is often not farmed or used for other agricultural purposes.

Judging from the languages spoken around me in the passport control line at the airport, it's clear that the vast majority of visitors to Kyiv are Russian. One young lady beside me pokes fun at the Ukrainian's "funny way of speaking." This is a rather common outward sign of Russia's condescension toward Ukraine, and perhaps their resentment toward the Orange Revolution and its aftermath.

But did a real "revolution" occur here? This is the question I ask myself as I walk around the city.

Indeed, this is a fascinating time in Ukraine, but a turbulent one. A few weeks ago, Ukrainian president Viktor Yuschenko dissolved the country's parliament (the "Rada"), and called for new elections, causing an uproar across the country that has been publicized worldwide. Indeed, Ukraine remains hostage to its legacy as a former Soviet republic. Divided by east and west. Stuck in a Soviet legacy where change is avoided...even feared. More specifically, as one senior U.S defense official tells me, "there are those have travelled to the west and have had their eyes opened and those who haven't. Those who fall into the former category favor integration into the West and to Europe; those in the latter category--The Party of Regions, led by Prime Minister Viktor Yanukovych--do not. There is a more worrisome development that is largely invisible--because salaries are so low and with the recognition of opportunities for better work and careers in Western Europe, Ukraines best and brightest are leaving in droves.

Driving through Kyiv's city center, there is a scattering of demonstrations that seem remarkably well-organized...too organized, in fact: there are encampments with colorful tents and large nylon embroidered party flags in various city parks and squares, strategically positioned so that they face each other. And yet, each side remains remarkably civil to the other.

Ukraine is in the midst of a constitutional crisis. After 20 members of parliament who were formerly loyal to Yuschenko defected to Yanukovych's Party of Regions (it's widely believed that they were bribed to do so), President Yuschenko dissolved the Ukrainian parliament. Yanukovych challenged Yuschenko's decree, and the matter now rests with the country's constitutional court to decide. No one quite knows how the court would ultimately decide this case--the court is evenly split, with only two or three swing judges. Even the Constitutional Court's objectivity has been thrown into suspicion after allegations that some judges may have been bought off. In any event, the pressures currently placed on the court are enormous--five judges have said that as a result of the pressure they are under, that they wish to recuse themselves from the case.

It is precisely this political pressure (in addition to the fact that the constitutional grounds for the dissolution of the Rada are shaky at best) that may well cause Yuschenko to decide to suspend his decree and come to a compromise with Yanukovych in order to avoid a certain political train wreck. In the meantime, it's a near certainty that the court will do everything it can to avoid making a decision.

What does all this say about Ukraine? A Danish diplomat I spend some time with remarks, "If Turkey was described as the 'Sick Man of Europe,' Ukraine is absolutely the 'Naive Man of Europe." He's one of the pessimists. Short-term optimists, it turns out, are nearly impossible to find here. Another diplomat I speak to is a long-term optimist: "While Yuschenko may have squandered the opportunity for rapid political change," he tells me, "the social winds of change are in full gale."

Nonetheless, Ukraine's current trajectory is plainly worrisome as it is drawn closer and closer to the Russian center of gravity. The Russians want to restore their empire, and as another diplomat tells me, "For them, Ukraine represents the jewel in the crown."

Russia opposes Ukraine's accession into NATO with every fiber of their being, because it would establish a precedent for other former Soviet republics (Armenia, Azerbaijan, etc) to follow suit. Restoring Russia's empire, they know, is not possible without Ukraine. This, therefore, is Yanukovych's distinct advantage--in addition to his political acumen: he has Vladimir Putin's full support and influence, as well as the financial backing of the Kremlin and Ukraine's richest man, Rinat Akhmetov--worth a reported $12 billion (I subsequently discover that he also owns the Pearl Hotel, where we're staying).

Yanukovych has been able to use his substantial financial leverage to his own political advantage by hiring a K Street Lobbying firm in Washington, D.C. headed by power lawyers Paul Manaford, Phil Griffin and Bruce Jackson to lobby the Bush Administration and Congress on behalf of Yanukovich and his Party of Regions for an initial sum of $9 million. They continue to work on Yanukovich's behalf, but reportedly have not applied through the State Department as foreign agents. Astounding....

Yanukovych single-handedly rolled back Yuschenko's NATO accessions plans in an uncoordinated surprise visit to Brussels last year. And yet, even Yanukovych recognizes the dangers in ceding too much control to Russia. He saw the dramatic result of handing over control of Byelorussia's pipeline rights to Gazprom in return for short-term gains of relative price stability for energy. The result was a measurable loss of sovereignty and an effective re-assimilation into Russia's sphere of influence. U.S. officials seem to agree that loss of Ukrainian sovereignty is not something Yanukovych would accept were he to have complete control either.

From a U.S. perspective, Ukraine will always have a close relationship with Russia. "We can change a lot," one official says in a resigned tone, "but geography isn't one of them." We regard Ukrainian membership in NATO as a Ukrainian choice. The door to NATO is wide open and would surely be fast-tracked whenever they do elect to join NATO--but the choice is theirs alone to make (not Russia's).

Kyiv is a beautiful and clean city, filled with ancient European architecture dating back to 900 AD. We tour the St. Sophia's Cathedral and have the opportunity to see one of the oldest standing churches in all of Europe. It has been magnificently restored to show the original frescoes and mosaics, as well as the original architectural components of its construction. It's a remarkable site. In these former Soviet Republics, history has often been revised extensively to fit the visions of tsars, kings, queens, generals, patriarchs and dictators. Ukraine is no exception. Conflicting accounts of this region's history abound, with muddled versions inspired by the invasion of the Mongol hoardes, Tatars, the conquests of the Vikings, Polish-Lithuanian Empire and the Austro-Hungarian Empire, not to mention the Bolsheviks and Soviets. With the ghosts of empires past, I've learned, it's best to look for the ground-truth in what has been left of the architecture (as well as what is known to have been destroyed).

With all of Ukraine's issues, the people are clearly its great strength. Change is a difficult thing for the older generation who lived during Soviet times to accept, let alone embrace. But the younger generations of Ukrainians who crave economic opportunity, integration and equality with the rest of Europe will most certainly be the future super-agents of change for this country, as well as the long-term cause for optimism.

The question here in Kiev is whether you are a optimist or pessimist about Ukraine's future.

After my own visit here, I'm a cautionary long-term optimist for Ukraine....

I am now departing St. Petersburg after a full day and overnight visit. We took an overnight train/sleeper car from Moscow yesterday, departing at around midnight and arriving at 8:00 am-- so we awoke in St. Pete fully rested. It's certainly an excellent way to travel, and cheaper than flying! We check into the Grand Hotel Europa--and I'm immediately impressed by its layout, design and luxury.

Just down the street, I meet a friend at "Dom Knigi" on St. Petersburg's main avenue--Nyevsky Prospect. It's a Russian version of Barnes and Noble, in a multiple story building with a very distinctive signature glass globe towering above it. It caters to a multinational consumer audience and has a nice cafe on the second floor. On our way to a breakfast cafe, we passed the popular "Coffee House" which has become a chain throughout Moscow and St. Petersburg--it's an unauthorized and unabashed Starbucks clone that bears every likeness to it's U.S. counterpart. I'm told that the Starbucks name in Russia has been legally copyrighted by an opportunistic businessman in Russia who reportedly is asking a wildly expensive dollar amount for its acquisition--Starbucks has reportedly declined to pay his asking price. Western business investment in St. Petersburg is lagging behind Moscow, but has accelerated in the past year from 6% to 14%. Nonetheless, the current environment favors large corporations--especially those with West European foreign subsidiaries who can more easily pay the "incentive" fees (read "bribes") to city officials in establishing there presence here. U.S. companies are not authorized to pay bribes in any form. The city's corporate-centric approach penalizes multinational small businesses from gaining a foothold here by subjecting them to at least 13 separate and distinct inspection regimens...tax inspectors, building inspectors, safety inspectors, business license inspectors, cleanliness inspectors...the list goes on and they can descend at any moment, en masse, on all small businesses that fall out of favor with city officials--especially if they are deemed to be more competitive than their favored Russian counterparts. Corruption remains a substantial dis-incentive for small businesses in Russia. On the other hand, I'm told that the consulate is now rarely required to weigh in on business disputes between St. Petersburg city officials and U.S. corporations, which they regard as a promising sign for the future.

The weather in St. Petersburg is spectacular as we make our way through the ancient Russian cathedrals with their breathtaking frescoes and mosaics of saints, past patriarchs, the holy spirit (manifested as a silver dove) and the risen Christ. We climb the narrow outer stairwell of the St. Isaac's Cathedral, and emerge at the top dome with a superb 360° view of the tremendous Italienate and Russian Orthodox architecture--a rare occasion for a port city that is often enshrouded by clouds and mist.

As we walk, we suddenly find ourselves in the massive square behind the Hermitage Museum. Young boys on skateboards and bikes race around the square, entire families are out too, walking together arm-in-arm in short sleeves. Spring seems to have finally arrived in St. Petersburg! I'm struck by the large number of Russians who are flooding into the Hermitage to visit the exhibits. When I was here two decades ago, there were not nearly as many Russian visitors. Today, they fill the hallways, and tourists like me appear to be relatively few. By contrast, I'm told that during the Summer months the tourist population increases a hundred-fold as the Baltic cruise ships arrive and dump their (mostly elderly) passengers out on St. Petersburg's ports--some of those elderly tourists have trouble coping with the heat and the crowds, and ultimately succumb to the bustle and heat--meeting their maker in St. Petersburg!

My second visit to the Hermitage is as fascinating as my first. This is without question the most impressive art museum in the world, with works dating back to the Stone Age. Through the maze of massive elaborate rooms are displayed countless masterpieces--sculptures by Michelangelo and Bernini; paintings by DaVinci, Renoir, and Monet; ancient marble sculptures of Jupiter, Dionysis, and Mercury.... Walking around the Hermitage, it is difficult to visualize this as an actual residence or palace of the tsars until you find yourself walking through the recreations of those rooms--the White Room, Catherine the Great's's Bourdois in red, the Gold Room.... You leave awestruck and a bit exhausted from all the walking and the blur of masterpieces you have seen throughout its six buildings!

St. Petersburg is indeed a beautiful city and well-deserving of the title "Window to the West." I leave this remarkable and historic city, wishing I could stay longer....

This OpEd from The Times dates back to May 2005, but now--a year and a half later--it seems an ominous portend of recent events in Europe and Russia....

From Russia with secrets

By Vanora Bennett

Until recently, Mr Litvinenko was a lieutenant-colonel in the Russian secret police. He claims to know some of the darkest dealings of his country's recent past

There's something very un-English about murderers who dispatch their victims too flamboyantly. Louis Untermeyer expressed British puzzlement when faced with showy foreign killers perfectly in the lines:

Although the Borgias
Were rather gorgeous
They liked the absurder
Kind of murder.

That's why people in this country find stories about the KGB so extraordinary. The sheer swaggering theatricality of the kind of killings the Soviet secret police were said to favour, beggars the average English person's belief. Tell an Englishman that an assassin might choose to kill someone innocently waiting for a London bus by jabbing him with an umbrella tip containing a pellet of the rare and virtually untraceable poison ricin, and the Englishman's first reaction will be to laugh in disbelief. Why bother with such elaborate cloak-and-dagger tactics? If you want to bump someone off, why not just push him under the bus?

Yet, however much it sticks in English gullets, that is exactly the way the KGB did behave. Ricin was used in the James Bond-style murder in London in 1978 of the Bulgarian dissident writer Georgi Markov. He was jabbed with a poisoned umbrella tip while waiting for a bus on London Bridge, and died four days later. The KGB was blamed.

Anyone who thinks the secret police learned to behave better after the Soviet Union disintegrated - and the Soviet KGB was reformed and renamed the Russian FSB - will definitely want to gasp and stretch their eyes at almost everything a more recent arrival in London has been saying since he got here.

Alexander Litvinenko came to the British capital five years ago. He's a fair-haired man of about 40 with quiet ways and watchful eyes. He has a wife and a son coming up to his teens. They've all lived unobtrusively in a leafy bit of suburban London since leaving Moscow...READ MORE

This article from the Washington Post does a good job of reviewing the Russian Energy giant's record with Europe and the United States. Is Gazprom's position really that strong? It's an interesting question. As Gazprom raises their prices domestically and for Europe, European banks and U.S.-based Conoco and Chevron seem to be conveying that their reserves are over-valued. You can bet this was one of the talking points for Vladimir Putin with EU leaders this week.... Meanwhile, on the periphery of all these dealings, you have Gazprom's major shareholder, Suleiman Kerimov, recovering from a near fatal car crash in Nice, France earlier this week.

Russian Gas Giant Battles Negative Energy

By Steven Mufson
Washington Post Staff Writer
Friday, December 1, 2006; D01

For a company that has a market capitalization about the size of Microsoft or Citigroup and natural gas reserves that would make most OPEC members blush, Gazprom still finds itself with a lot of explaining to do.

The Russian state-controlled natural gas monopoly has openly proclaimed its goal of becoming the world's dominant oil and gas company, and in the process it has raised hackles everywhere, from neighboring Ukraine to the boardrooms of major international oil companies and the capitals of Europe and the United States.

It has jacked up gas prices to once-subsidized neighboring countries, pressured U.S. and European companies for stakes in overseas projects and pipelines, blocked access to its pipeline network in order to leverage its way into existing exploration deals and shelved a prized gas project because it wasn't satisfied with foreign bids.

Now the company is seeking to polish its image in the United States, where it has a small office in Houston looking for investment opportunities. Moreover, among the biggest Gazprom shareholders are U.S.-based emerging-market mutual funds.

This week, the company's deputy chairman, Alexander Medvedev, will attend a hockey game between a Gazprom-sponsored team and former Boston Bruins players. Yesterday he spoke at a U.S.-Russia Business Council luncheon at the exclusive Metropolitan Club here. And on Monday he delivered a speech at Harvard Business School about whether energy can be a bridge between the United States and Russia.

But there hasn't been much construction work on that bridge, one energy company executive quipped. And recently Gazprom has come under fire for using its Russian state-backed muscle to expand beyond its core business into areas from real estate and hotels to media, petrochemical and oil deals while neglecting its own massive natural gas business.

In a report issued Monday, the Organization for Economic Cooperation and Development in Paris called the expansion of state ownership a "step back" for Russia's economy. "Of particular concern is the state-owned gas monopolist OAO Gazprom's seemingly insatiable appetite for asset acquisitions, often at the expense of a focus on its core business," the report said. "At the same time, the absence of any significant steps to restructure the gas industry as a whole constrains the growth of other producers even as concern about the sustainability of Russian gas supply is growing."

Gazprom has responded to growing criticism by unveiling a $40 billion investment program devoted solely to bringing on new gas production in the Yamal Peninsula in northwest Siberia. But yesterday, Russia's government put off a plan to boost subsidized domestic natural gas prices to world market levels over the next five to 10 years, a move that would increase revenues for Gazprom and tame Russia's surging domestic demand.

"We are not an instrument of policy because it cannot comply with our commercial structure," Medvedev said in an interview yesterday.

But ever since a contract dispute with Ukraine led to a cutoff of Russian gas exports on New Year's Day, Europeans who rely heavily on Russian gas have worried about security of supply. Russia, meanwhile, has argued that Gazprom needs to expand into the European and U.S. distribution business to assure Russia of "security of demand."

Many experts say that Gazprom is unwieldy and poorly run and will have trouble meeting gas delivery obligations regardless of the politics of supply. Vladimir Milov, president of the Institute of Energy Policy in Moscow and former deputy energy minister, said yesterday that Gazprom had spent $18 billion in the past three years on acquisitions outside the gas sector, more than it has spent in the past decade to increase gas production.

Gazprom's relatively flat gas output was no surprise, Milov said. "To grow, you have to invest," he said. As long as Gazprom was a monopoly, he added, it would have little incentive to bolster production in Russia. "Monopolies are motivated to conquer new markets, not to develop markets already conquered."

When Gazprom does invest, it often does so inefficiently. Much of the company's recent spending has gone to building new pipelines and repairing aging ones. Yet one study Milov quoted said that every mile of new pipeline built by Gazprom costs two to three times as much as those built in the rest of the world.

Gazprom's Medvedev defended the company's non-gas ventures, calling the newspaper it bought, Pravda, a "pure commercial decision" and not a tactic for controlling public opinion. He said many of the non-energy ventures were being managed by Gazprombank.

Moreover, he said the company would meet its gas commitments thanks to the new capital spending and anticipated dampening of Russian demand as higher prices kick in. "We will invest as much as necessary to develop our upstream business, transport business, and to diversify our activity," he said.

A recent Deutsche Bank Securities analyst report warned that "Gazprom will have to begin its Yamal expansion relatively soon. On the supply side, Gazprom likely won't be able to maintain production without new investments."

Medvedev defended Gazprom's controversial decision to raise gas prices to former Soviet states. He said that since 1991, Russia had provided subsidies worth a total of $45 billion to Ukraine alone. As for Georgia, which faces a doubling of the gas price, "they have a possibility if they want a local price, not an import price, they have a possibility, not an obligation, to offer us assets, which we would consider as a partial payment."

Industry publications reported that Gazprom was close to such a deal with Belarus, swapping lower gas prices for partial control over that country's pipeline network.

Russia experts and energy consultants say that individual Gazprom positions may not be unreasonable, but the fact that they coincide with political tensions has worried other countries that rely on Russian exports.

Similarly, many energy consultants and executives question whether environmental problems with Royal Dutch Shell's project on Sakhalin Island were discovered to give Gazprom leverage to increase its ownership stake. Medvedev, who said he was born on Sakhalin, said the government's environmental concerns were genuine.

Just recently, the development of the deep water Shtokman gas field in the Barents Sea was seen as an opportunity for U.S.-Russia cooperation. It would include plans for liquefied natural gas exports to the United States. But Gazprom turned down bids by five companies, including U.S.-based Chevron Corp. and ConocoPhillips Co.

Medvedev said that the bids did not put a high enough value on the Shtokman reserves, pricing them lower than reserves in Libya or Burma. "We were not happy with the valuation of our reserves in comparison with the reserves which have been offered to us by our potential partners and [the] valuation of reserves of comparable caliber in other parts of the world," he said. "We believe that the time will come when the Russian reserves will be properly valued."

But Deutsche Bank, which downgraded its recommendation for Gazprom, said that downside risks, included prolonged domestic subsidies, cost overruns, loss of market share in Europe and "the controlling shareholder (i.e. the state) forcing the company to implement decisions based on its political agenda rather than the company's financial best interests."

Salon: Who poisoned the KGB agent?