Category: News

By the Highest Standards
Kommersant, Russia
Dec 18 2004
The year 2003 was a year of large-scale mergers and acquisitions for
Russia. They included the formation of the BP–TNK alliance, the
buy-up of the Georgian power industry by Russian natural monopolies,
and Shell’s commitment to invest $10 billion in the Sakhalin-2
project. However, the volume of failed deals is even more telling.
British Petroleum–Tyumen Oil Company
Photo: Aleksei Kudenko
Under the leadership of Sergei Bogdanchikov (in the photo), Rosneft
acquired AO Northern Oil for $600 million (one of its co-owners,
Andrei Vavilov, is shown in the photo on the lower right)
On February 11, the owners of Tyumen Oil Company (TNK) announced that
they were merging their assets with those of British Petroleum (BP)
in Russia and Ukraine to form a single company. The final agreement
between the shareholders was signed in London on June 26. The amount
BP paid for its share in BP–TNK was reduced by $600 million to $2.4
billion. TNK’s shareholders received $6.85 billion from the
Anglo-American British Petroleum for the right to set up a joint oil
company with TNK. In order to do this, TNK’s largest owners, Mikhail
Friedman and Viktor Vekselberg, had to give up the title of oil
magnate, since TNK shareholders receive only 50% in the new company,
called BP–TNK. Friedman believes that the next deal of this size
involving Russian businessmen will have to wait for at least two or
three years.
In many respects, the deal with BP stemmed from the Anglo-American
company’s less than successful development in the mid-1990’s,
particularly the muddled and complicated business with SIDANKO, which
bankrupted TNK. However, TNK made no secret of its intentions to form
a partnership with BP by any possible means. The deal will probably
enter textbooks on strategic management: it was the first time a
Russian company had successfully convinced a Western partner that it
was more advantageous to work with it than to expand in Russia
independently.
Rosneft–Northern Oil
Photo: Vasily Shaposhnikov
Andrei Vavilov
On February 12, Rosneft announced the acquisition of AO Northern Oil
(Severnaya neft) for $600 million.
The oil industry was the leader in the number of large deals at the
beginning of the year, although in January everyone expected problems
in this sector: it was assumed that war in Iraq would lead to a drop
in prices. Nevertheless, Russian oil became a very attractive asset
in the first quarter of 2003. For example, the owners of Northern
Oil, who included former deputy finance minister Andrei Vavilov, sold
the company to Rosneft for an even $600 million. In a departure from
Russian business tradition, the parties paid for Northern Oil through
Sberbank of Russia rather than through offshore or Western banks.
With this deal, Northern Oil set still another record as the only
relatively large oil company to increase its market value
approximately ten times between 1999 and 2003, while increasing oil
production on the same scale. It was rumored that after the head of
Rosneft, Sergei Bogdanchikov, had familiarized himself with Northern
Oil’s operations, he gave orders not to make any major changes, but
to turn the company into a model subdivision of the state company
that they could show to foreign delegations and visiting government
officials.
The Northern Oil deal sparked a lot of hearsay and false rumors. In
particular, there was talk about a huge kickback received by
structures of the presidential administration for supporting it.
Nevertheless, this deal was important primarily because it gave the
entire market an excellent reference point. A company that had grown
from zero to $600 million in only a few years was worth that much for
Rosneft as a business, not as a source of oil reserves or as a means
of increasing capitalization.
Mechel–Korshunov Ore Mining and Processing Plant
Photo: Valery Melnikov
The main event in the area of railway reform was the formation of AO
Russian Railways, headed by Minister of Railways Gennady Fadeev
Mechel’s acquisition of Korshunov Ore Mining and Processing Plant
(Koshunovsky GOK) was the last big old-style deal in the
metallurgical industry. The history of the sale by SUAL-Ruda GOK,
which supplied raw materials to Siberian steel plants, began with the
standard Russian scandal: the Korshunov plant was bankrupt, and
Mechel’s rivals from Evrazholding made no secret of their intentions
to fight for Korshunov GOK using all available means, including
force.
Nevertheless, Mechel obtained a final decision on the question at the
negotiating table and in the arbitration court, although during the
struggle for Korshunov GOK, the company had used more habitual means
of fighting for industrial facilities, e.g., legal actions, police
officers, “dropping in” on the plant’s management, and other romantic
stuff of the mid-1990s. The question cost Mechel 2.4 billion rubles,
a sum that included the amount of the deal along with Korshunov’s
debts, which the owner assumed in order to get the company out of
receivership.
The Korshunov plant was the last large ore mining and processing
company without a major corporate partner. The other ore companies
had long ago become part of Russian metallurgical companies. Not
everyone was lucky: some Russian steel companies were left without
their own raw material sources. Their only option is to buy mining
assets from other owners. Therefore, both metallurgists and analysts
believe that the investment attractiveness of Russian ore mining and
processing companies will increase.
The tension is heightened by the rapid increase in world prices for
steel raw materials resulting from increased demand for ore in
Southeastern Europe. Another source of raw materials for steelmakers,
scrap iron and steel, is inadequately collected in Russia and cannot
be relied upon.
It is not surprising that the last ore mining and processing company
went to Mechel. In 2003, Mechel had already expanded its operations
beyond Russia and the CIS and had started buying companies of its
profile in Romania and Slovakia. Thus, the company had an acute need
for a raw material base, and it had to buy this base in a way that
would not raise doubts among future partners and investors in Europe
and in other parts of the world. A reputation is worth money, so
there was simply no question of settling the situation with Korshunov
GOK by force.
Troika Dialog–Rosgosstrakh
Troika Dialog Investment Company (IG Troika Dialog) paid 661 million
rubles for the right to control Rosgosstrakh, one of the best known
brand names of Soviet times. On the results of three auctions, Troika
Dialog became the owner of 49% of Russia’s oldest insurance company
at the end of 2001. The government owned a block of 26% minus one
share of Rosgosstrakh, which it also put up for auction. Bidding for
the share package of the former Soviet insurance monopoly took all of
three minutes, beating the record set at the Slavneft auction by one
minute. As a result, Troika Dialog became the owner of 75% minus one
share of Rosgosstrakh.
The amount collected from the sale of the former giant hardly
disturbed anyone except Duma deputies, who even tried to annul the
auction. “The winning consortium of investors led by Troika Dialog
has to solve the very urgent problem of attracting investments to the
Rosgosstrakh system, ” the system’s press secretary, Igor Ignatev,
told Kommersant. According to Ignatev, Rosgosstrakh will require
about $50 million to develop automobile liability insurance programs
alone.
The government intends to keep a blocking parcel of Rosgosstrakh
shares at least until 2004, according to Kirill Tomashchuk, deputy
head of the State Property Fund. The Ministry of Property Relations
wants to use the blocking parcel as a guarantee of debt payments
under policies written by Gosstrakh (Rosgosstrakh’s Soviet-era
predecessor). However, at Rosgosstrakh, they told Kommersant that
judging from the pace of the debt offset program, it will take at
least ten years to pay off all the debt.
National Reserve Bank–Aeroflot
Monopolies, both past and present, are becoming more and more
attractive to Russian businessmen. National Reserve Bank (NRB), which
was once closely connected with both Gazprom and RAO UES of Russia
(RAO EES Rossii), turned its attention to former Soviet monopoly
Aeroflot and bought 26% of the company’s shares for $135 million, a
record amount for the Russian airline industry.
It is not hard to understand why the bank headed by Aleksandr Lebedev
wanted the shares. Aeroflot flatly refuses to buy Il-86 airplanes,
and NRB is actively involved in an Il-86 production program. Now that
it has seats on Aeroflot’s board of directors, NRB is counting on
convincing the company of the undeniable advantages of Russian
aircraft over Airbus and Boeing. A scandal is anticipated. Aeroflot
has repeatedly stated that problems with access to Western airplanes
are having a negative impact on the company’s business. Despite some
improvements in Aeroflot’s financial indicators, the company’s
situation is far from ideal. At the end of the year, Aeroflot began a
“rebranding” campaign to bring its image more in line with its
Western competitors.
Ministry of Railways–Russian Railways
AO Russian Railways (Rossiyskie zheleznye dorogi; RZhD), perhaps the
largest Russian company in terms of assets, was formed in Russia at
the end of September. Anna Belova, who at the time was still Deputy
Minister of Railways, announced that the ministry would be
transferring property worth 1600 billion rubles to Russian Railways.
RF Minister of Railways, Gennady Fadeev, was appointed president of
the company split off from the Ministry of Railways. The Ministry is
expected to be eliminated by combining it with the RF Ministry of
Transport, but Russian Railways has already started operating. It is
still difficult assess the results of the deal, since there are no
noticeable practical differences in Russian Railways’ operations
compared with the Ministry of Railways.
Georgia–Russia
The business calm in Russia did not prevent two Russian economic
giants, Gazprom and RAO UES of Russia, from carrying out an economic
blitz with record speed in a country that was previously not very
welcoming to Russian investors. The two unreformed monopolies
captured Georgia’s power industry in about a month.
On July 1, Aleksei Miller, chairman of the board of Gazprom, signed a
cooperation agreement with Georgia’s Minister of Fuel and Energy,
David Mirtskhulava, which gives Gazprom the prospect of acquiring up
to 100% of the Georgian gas market. Then in early August, RAO UES of
Russia bought 75% of the shares of the Telasi power distribution
network in Tbilisi and two power-generating units of the Tbilisi
Thermal Power Plant with a total capacity of 600 MW (this represents
a large part of Georgia’s power industry) from the American company
AES Silk Road and its partners.
On August 1, RAO Nordic, a subsidiary of RAO UES of Russia, bought
all of the American group AES’s Georgian business, which amounted to
nearly 50% of Georgia’s power facilities. RAO Nordic paid $70 million
for the assets; the only reason for such a low price was that the
assets were burdened with monstrous (by Russian standards) debts,
both payable and receivable.
The Georgian opposition accused President Eduard Shevardnadze of
betraying national interests, but neither RAO UES of Russia nor
Gazprom seems to have had any particular political aims. Although
accusations of “selling the homeland” played a certain role in the
Georgian president’s resignation, immediately after the coup,
contrary to expectations, the new Georgian leaders said nothing about
a possible review of the deals. Gazprom’s only actual interests in
Georgia are the long-distance gas pipeline to Armenia and replacing
Itera Oil and Gas Company (NGK Itera) on the Russian domestic market.
This second aim is already succeeding in a way: the first thing the
new managers of Tbilisi’s gas supply systems did was to cancel the
contract with Itera.
Russian natural monopolies had never carried out this sort of blitz
before, but RAO UES of Russia did not stop there. In keeping with
chairman Anatoly Chubais’ political policy of creating a “liberal
empire” through economic domination of the entire CIS, the company
bought 33% of the shares of a Ukrainian company owned by ten regional
power companies. RAO UES of Russia intends to continue expanding into
Ukraine next year. Gazprom’s plans include the formation of a joint
venture with the Belarussian company Beltransgaz, investments in
Central Asian gas pipelines, and a whole set of “imperial deals”.
SUAL–Fleming Family & Partners
In February 2003, OAO SUAL announced the formation of a transnational
corporation that included SUAL’s aluminum assets, the coal company
Access Industries (Eurasia), and two facilities of the English
company Fleming Family & Partners in Cuba and Mozambique. Chris
Norval, former vice-president of strategic planning of the South
African company BHP Billiton, was appointed general manager of the
SUAL International industrial group and president of SUAL Holding.
Despite of its lack of publicity, the deal between SUAL and the large
English private fund was one of the signal events of 2003. SUAL is a
company able to compete with Russian Aluminum (Russky alyuminii),
which has a virtual monopoly on the aluminum market, and Viktor
Vekselberg is one of biggest players of the “oligarchic” political
scene, which increases the investors’ risks. Nevertheless, the
Flemings approved the deal, which made similar investments in Russia
an acceptable risk for other serious partners. After all, the matter
concerns a resolutely nonpolitical deal that is also one of the
year’s ten largest transactions, which in theory should form the
basis for an increase in foreign investments in Russia and
globalization of the Russian economy.
Shell–Sakhalin-2
On May 15, 2003, the Sakhalin Energy (SE) consortium, shareholder of
the Sakhalin-2 project, decided to begin the second phase of the
project. The partners, the main one of which is Shell, committed to
invest $10 billion in Sakhalin-2.
SE had planned to make the decision to start the second phase of
Sakhalin-2 in the first half of 2003; but after SE’s management
expressed a number of complaints about legislative guarantees of the
safety of future investments (particularly the inconclusive
settlement of SE’s rights to set tariffs for oil and gas pipelines
from fields offshore Sakhalin to ports on the southern part of the
island), there was talk of suspending the project. According to
unofficial versions, SE and its shareholders (Shell, 55%; Mitsui,
25%; and Mitsubishi, 20%) wanted to postpone the decision on starting
the second phase until fall 2003 or even later.
The main factor in making the decision to start the project was
apparently a contract concluded between SE and the Japanese company
Tokyo Gas for delivery of 1.1 million tons of liquefied natural gas
(LNG) per year for 24 years. Philip Watts, Shell’s CEO, recently
announced that the company plans to conclude similar contracts for
LNG deliveries to Japan, South Korea, Taiwan, and the United States
in the near future. However, it is not inconceivable that Shell
decided to speed things up as a result of unofficial statements from
Gazprom to the effect that if something happened, Gazprom’s status as
coordinator of gas field development in Eastern Siberia and the Far
East and gas exports from Russia to countries in the Asia-Pacific
region might be extended to Sakhalin-2 as well. Shell decided not to
wait until Gazprom’s hints turned into concrete actions and announced
the start of the largest investments in Russia’s history.
No Deal
Despite the impressive appearance of the first ten deals, the list
would have been much more impressive if a number of large deals in
Russia’s most important economic sector, the fuel and energy complex,
had taken place or been concluded.
First of all, the future of the merger of YUKOS and Sibneft into the
unified company YukosSibneft, the largest deal in Russian business
history, is still unknown at present. On April 22, 2003, YUKOS and
Sibneft announced the start of the merger into YukosSibneft. In the
first phase, Sibneft shareholders were to sell 20% of their shares to
YUKOS for $3 billion; and then in the second stage, they would
exchange their remaining Sibneft shares for about 26% of
YukosSibneft’s securities. However, after the head of YUKOS, Mikhail
Khodorkovsky, was arrested, Sibneft announced a suspension of the
deal that might have formed a company worth $50–55 billion, making it
the largest company in Russia in terms of capitalization and giving
it control of nearly one-third of Russian oil production.
Two other failed megadeals also have a chance of taking place in
2004. The first is a deal to give a consortium made up of Gazprom and
the Ukrainian company Naftogaz of Ukraine control of all of Ukraine’s
gas pipeline infrastructure (for an estimated cost of no less than
$25 billion). One of the main reasons for the holdup is Kiev’s
obstinate insistence on including Kazakhstan, Uzbekistan, and
Turkmenistan in the gas transport consortium (gas from these
countries is exported through Ukrainian pipelines, but their
membership in the consortium means that Gazprom would lose its
monopoly position as natural gas exporter to Europe.
The second is the creeping privatization of Bashkortostan’s oil
production and oil refining industries. In early August, the
government of Bashkortostan reorganized the property structure of AO
Bashneft and Bashneftekhim, which had previously belonged to it in an
ownership chain, with the aim of protecting them from possible
privatization. Now the companies control their own capital according
to a complex scheme. The problem is that as a result of the deal the
republican budget lost assets worth at least $2 billion. The deal is
also being contested and is directly dependent on the outcome of the
pre-election fight between President of Bashkortostan Murtaza
Rakhimov and his rivals.
The last two deals are the attempted acquisition of Surgutneftegaz by
Sibneft shareholders, which led to an unprecedented increase in
Surgut shares in spring 2003, and the would-be sale of a large
package (25 to 40%) of YUKOS shares to either ExxonMobil or
ChevronTexaco. Based on estimates of the company’s market value, the
deal should have been worth $20–35 billion, which beats the record
set by BP–TNK by several times. Strangely enough, President Putin was
the first to officially announce that negotiations were going on. The
company itself is keeping dead silent; and Lee Raymond of ExxonMobil,
who met with nearly all members of the government and oil and gas
industry elite in Russia last October, has not said a word about the
results of these meetings.
It is certain that three of these five deals have not taken place
because of active interference of the Russian authorities. The YUKOS
affair in particular, which arose as a result of the initial efforts
to form YukosSibneft, became the determinant for businessmen who had
been planning deals two or three orders of magnitude smaller. By the
end of 2003, there were noticeably fewer of them than at the
beginning of the year; and this should be considered one of the
year’s main results.
by Dmitry Tatarinov
;node=469&doc_id=439336
–Boundary_(ID_+NBVOOPN0inPkcPDmjRF/A)–

The Australian, Australia
Dec 18 2004
Fenech’s man champion
By Petr Kogoy
A FIREWORKS display interrupted yesterday’s flyweight world title
fight in Florida, but when the smoke cleared Australia had a new
world champion.
The Jeff Fenech-trained Vic Darchinyan claimed the IBF flyweight
title with an 11th-round knockout win over Colombian Irene Pacheco.
The contest was even after nine rounds before officials took the
unusual step of stopping the bout after the fireworks display.
Following a 10-minute delay, Darchinyan came out in the 10th round
and dropped Pacheco for the first time in the fight with a left hand.
Pacheco, 33, took a mandatory eight count, got up and made it to the
end of the round. He was dropped again in the 11th round with another
pile-driving left hand. Then Pacheco’s corner called a halt.
Darchinyan’s win took his record to 23-0, with 18 knockouts.
Darchinyan became Fenech’s first boxer to win a world title.
“I’ve finally got the monkey off my back,” Fenech told The Weekend
Australian.
“I went into the fight with a plan for Vic and it worked. The
Colombian took a lot of punishment before he hit the canvas the first
time in the 10th.
“The straight left Vic threw at him in the 11th that finally ended
the fight was a piledriver. The punch would have stopped a raging
bull in its tracks.”
Born and raised in Vanaezor, Armenia, Darchinyan was spotted by
Fenech at the Sydney Olympics in 2000.
“I’ve waited for this chance a long time,” Darchinyan said.
“While I’m proud of my Armenian heritage, I am also proud to be a
naturalised Australian.
“I’m so happy, having my girlfriend Olga Stovvoun in my corner
tonight.
“This is a dream come true for me. I’ve been a fighter for 20 years.
But I knew if I wanted to win, to beat Pacheco, I needed to throw
more punches. He proved to be a tough and very strong opponent.”
Meanwhile, Kostya Tszyu’s manager Matt Watt yesterday questioned the
professionalism of promoters Frank Warren and Vlad Warton after
continuing conjecture about a fight between the IBF super-lightweight
champion and mandatory contender Ricky Hatton.
Watt and Tszyu have spent two weeks denying the Australian-based
fighter has signed to defend his title against Hatton in Manchester
next year.
However, Warren insists he has a deal with American pay television
network Showtime for a fight between Tszyu and Hatton in April or
May.
Bombarded by calls from Australian journalists seeking confirmation
of the fight, Watt has repeatedly said Tszyu has yet to sign a deal.
English promoter Warren has been dealing with Tszyu’s American-based
promoter and former manager Warton, but neither has had any recent
contact with Watt.
Watt said he had not held any discussions with Warren and it had been
at least three weeks since his last conversation with Warton,
although in that time there had been “written correspondence of a
very generic, non-specific nature” between them.
Watt said he was waiting for Warren or Warton to explain why it made
sense for Tszyu to fight in the challenger’s backyard at a proposed
local time of 4am to accommodate American and Australian television
schedules.

ARMENIA TO HOST WORLD’S FIRST ONLINE CHESS COMPETITION
RIA Novosti, Russia
Dec 18 2004
YEREVAN, December 18 (RIA Novosti’s Gamlet Matevosyan) – Yerevan,
Armenian capital, is hosting the world’s first international online
chess tournament.
Dedicated to the 75th birth anniversary of Tigran Petrosyan, 9th
world chess champion, the event opened today to last into Thursday,
December 23.
To make Armenia a known presence not in chess alone but in other
fields is the main tournament goal, say spokesmen for the Armenian
Chess Academy Director.
Armenian, Russian, French and Chinese teams are competing. Pyotr
Svidler, Alexei Dreyev, Alexander Halifman and Vadim Zvyagintsev are
on the Russian team, strongest for its average coefficient, 2,688.
The tournament will have two rounds, each competitor playing white and
black. Every participating country has one referee, to be appointed by
the host country. International judge Ashot Vardapetyan is representing
Armenia, Igor Bolotinsky – Russia, Lin Feng – China, and Jean-Claude
Timpler – France.
The prize fund is $55,000: $20,000 for gold, $15,000 silver, $12,000
bronze, and $8,000 to the 4th.
Chess-lovers from the whole world are welcome to the site
, which offers information in five
languages-Armenian, Russian, French, Chinese and English.
Roughly $80,000 has been earmarked to hold the event, arranged by the
Armenian Chess Academy and the Armenian Chess Federation, both close
partners of the U.S.-based Internet Chess Club. The WEB provider is
responsible for communications.

Glendale News Press
LATimes.com
Dec 18 2004
NOTABLE QUOTABLES
“The issue needs to be recognized unconditionally as a violation
against humanity, regardless of whether Turkey is an enemy or an
ally.”
— Armen Carapetian, government relations director of the Armenian
National Committee Western Region on federal recognition of the
Armenian Genocide.
–Boundary_(ID_cx6SoyBzlhfMvPEFSQsfMw)–

PRIMATE PERFORMS OPENING PRAYER FOR BURBANK CITY COUNCIL MEETING
BURBANK, CALIFORNIA, December 17 (Noyan Tapan). Upon the invitation of
Council Member Stacey Murphy His Eminence Archbishop Hovnan Derderian,
Primate of the Armenian Church of North America Western Diocese,
offered the opening prayer for the Burbank City Council meeting held
on December 14, 2004. According to the Press Office of the Diocese,
the meeting was presided over by the Honorable Mayor Marsha Ramos.
His Eminence prayed, “Tonight, we pray especially for Mayor Ramos
and City Council Members Borght, Campbell, Golinski and Murphy
who work diligently for the City of Burbank and the members of the
community. Give them the strength to steadfastly serve and protect
the citizens of this blessed country for the glory of God’s Holy name”.
“It is important that we become proactive in further developing the
church’s good relationship with the City of Burbank. The Diocesan
Cathedral, soon to begin construction, will be the first and only
Cathedral in the city of Burbank. We will work closely with city
officials to ensure that as the Diocese grows, so too will our
friendship with the City of Burbank,’ stated the Archbishop.

“All the Boots we Received were the Right-Foot Ones”
Kommersant, Russia
Dec 18 2004
Eighty years ago, at the end of 1924, the de-centralization of the
supply system of the Red Army began. The responsibility for the
procurement of food and uniform was transferred onto the shoulders of
regiment commanders, the idea being that this could help to finally
arrange the normal life of the Red Army men. Vlast’s columnist Evgeny
Zhirnov has studied the results of the experiment.
When I served in the army in the second half of the 70-s the army was
viewed as the school of courage. Quite justly so – you needed courage
even for ingestion. For example: cans with goby in tomato sauce,
which were produced some twenty years ago and have already gone bad,
are delivered from some reserve stock, opened up, thrown onto pans,
fried and then poured into millet porridge. It was only cooked
semolina with small fry (boiled soft with scales and giblets) that
could compare to it.
Lapping over the tunic that could be wrapped twice around me (“As if
made just for you!” the master sergeant said tenderly giving out the
uniform) I remembered a joke about overdeveloped socialism: you can
already buy nothing with money whereas nothing is handed out free of
charge yet. However, according to the documents, in the history of
the Russian army normal provision of soldiers has always been an
exception from the rule.
“Red Army Men are Involved in Plundering and Panhandling”
At the time of the Civil War self-provision was the main way of food
procurement in the Red Army – requisition (a euphemism for the
plunder of the population). It took time and effort for the troops to
fall out of this habit after the war.
Photo: RGAKFD/ROSINFORM
To find out how long a Red Army man could do without food and uniform
the commissaries (see the photo) used their favorite method – probing
action.
The report on the condition of the RKKA (Workers’ and Peasants’ Red
Army) for July, 1922 read: “The previous report mentioned the
rowdiness of the Red Army men in the Nikolaev and Kremenchug
provinces, which was manifested in unauthorized requisitions and
plunders. At present this phenomenon is observed in the Podolsk
province.”
As time passed no grave changes took place. The September report of
1922 mentioned: “The provision of the units stationed in the
Samarkand and Fergana regions is dreadful. At times the units
stationed in the Fergana region received one fourth of a pound of
bread a day … All this results in the following: the Red Army men
plunder and panhandle, which extremely exasperates the aboriginal
population of Turkestan that is already quite negative in their
attitude towards the Soviet power.”
However, food was not the only item in demand. In October, reports on
the shortage of uniforms flooded in: “Armenia holds the first place
in terms of lack of winter uniform – they have none whatsoever. Then
it is the Bryansk province (85% shortage), the Kostroma (70%
shortage), Tsaritsyno (50%) and Pskov (40%) provinces. Such phenomena
are manifested to a lesser degree in the Smolensk, Kursk, Tula,
Kaluga provinces, in the Tartar republic, in Kuban, in the Siberia
(the Omsk and Irkutsk provinces), in the Orenburg, Bukeevo, Tyumen
provinces, in the naval units of Arkhangelsk, in the Gomelsk province
and in other places…”
Photo: RGAKFD/ROSINFORM
A Red Army man washed himself in the same water that he had washed
his shirt in (above); he fed himself on what he had managed to
recover from the collective farm peasants in the battle for the
harvest (below).
Once the Red Army was more or less dressed the problems with footwear
were aggravated. The report for April-May, 1923 read: “The shortage
of footwear is especially tangible. It reaches the level of 80% in
the Voronezh province; in the units of Zabaykalye, Severo-Dvinsk,
Vyatka, the Tartar republic – 50%, in the border troops of Georgia –
40%, Fergana – 25%. Units of the Ryazan province (the Red Army men
wear bast shoes), the Irkutsk, Vitebsk, Priamurye, Vologda,
Yaroslavl, Tyumen, Pskov, Kursk, Votsk, Omsk, Mari, Primorsk
provinces and Karelia (21 provinces all in all) need footwear.”
Once they just managed to somehow solve this problem (one of the
regiments “received small-size boots, all of them being the
right-foot ones”) it turned out that the bulk of the food, which was
channeled to the troops, was not of the best quality to put it
mildly: “The 8th division of the Western Military District got 1,107
poods of bad meat. In July and August 15,000 poods of corned beef
were scrapped in the 6th corps of the South-Western Military District
and 1,500 poods in the 3rd Kazan division. Off-test flour and cereals
were distributed in many units of the West Siberian Military
District. Almost in all districts the quality of bread baked is
unsatisfactory as a result of which intestinal diseases are spread.”
Apart from that “the absence of blankets results in the quick wear of
overcoats, which are used instead of blankets”.
“Red Army Men have to Sleep on the Bare Ground.”
The unending circle of supply problems was explained not only by the
difficult economic situation in the country. The supply branch
officials of various ranks made good money on the practice of the
emergency stopping of gaps. For example, in 1922 in the North
Caucasus Military District the case of a high-raking supply official
was investigated – deputy commissioner on haying Ivan Rakityansky.
Rakityansky was charged with the episodes, which had little in common
with haying – striking patently unprofitable deals with private
dealers for the supply of textiles, sacks, salt and wire. Apart from
that he was charged with receiving bribes for the deliveries of meat
and with extorting mediatory interest for certain goods ordered for
the Red Army units from abroad.
Photo: RGAKFD/ROSINFORM
However, in defending himself the commissary was most persistent and
consistent. For some reason the Workers’ and Peasants’ Inspection
failed to determine the average level of prices on salt, sacks and
other items at the time the deals were made. It refused to evaluate
the damage done to the treasury. As for the representative of
Vneshtorg who had been the object of Rakityansky’s extortion (the
latter wanted 5% interest from the volume of deliveries), at
confrontation he confirmed the words of the commissary: “He mentioned
the 5% in a joking tone nine months ago when it was fashionable to
talk about commission in a private setting – just like it is
fashionable to talk about bribes now.”
Still GPU was going to transfer the case to the military tribunal.
Rakityanky’s standard of living apparently did not correspond to his
salary. This was quite sufficient for the verdict of guilty. However,
there was one little thing. A military man could not be tried without
the agreement of his command. It was suppliers like Rakityansky that
he was subordinated to. His report with the request to cease the
court persecution against him received a positive resolution.
For the same reason other commissaries remained unattainable for the
retributive sword of the party. GPU reported in the Central
Committee: “In a number of cases it is the absence of experienced and
reliable managers that is the reason for the grave condition of the
units. This is ascertained through informative materials,
investigations held by the Workers’ and Peasants’ Inspection and by
the command. At times in the units of the 3rd division of the
Detached Cavalry Brigade business managers were replaced 4-6 times a
year. Often the military-economic department does not recall the
managers who are on trial.”
Photo: RGAKFD/ROSINFORM
The model Red Army was always half a bowl ahead of the real one.
As for the commissaries, they continued to expand the sphere of their
activity. At the end of 1923 the army bakeries were transferred to
cost accounting. Right away there began mass thefts of flour. To
conceal the misappropriation they baked bread with various
admixtures. When it was buckwheat or weeds it was half the trouble.
Often they added sand. The money allocated for the remodeling of
barracks and for the purchase of firewood was stolen as actively.
Beginning with the middle of 1924 practically everywhere the Red Army
men received over-seasoned or bad fish instead of meat.
When the troops went to summer camps it turned out that there was an
array of problems there as well. “The camp conditions are
dissatisfactory,” read the report for July, 1924. “The tents are old,
they leak, there is impermissible overcrowding (up to 15 men in each
tent). Since many Red Army men lack bedding they have to sleep right
on the ground. The supply and the boiling of water is established
poorly.”
The next month the report on the state of the army read: “It is the
culpable attitude of the administrative bodies towards the cause of
the army supply that is the reason for the dissatisfactory supply of
the units. The Turkestan Front and the Western District stand out in
this respect. On the order of the head of the Turkfront’s
military-economic department they accepted the meat, which was bad
and had been scrapped earlier. The head of the supply of Turkfront
agreed to the delivery of vegetables on the conditions, which were
unprofitable for the treasury. This happened because the staff had
received the bribe of 1000 rubles from the suppliers. The front’s
supply bodies received 70,000 poods of oats that were no good and
that had been recognized as dissatisfactory. In the Western Front
there have been cases of negligence towards grain. Thousands of poods
of grain had rotted and were still delivered to units. In Vyazemskiy
grocery store 4,000 poods of rye are infected with vermin. Bad hay
was delivered to the Leningrad district. In many military units the
food prepared is tasteless, often dangerous for health, frequently
prepared in non-sanitary conditions.”
Photo: RGAKFD/ROSINFORM
“The Party Staff Tries to Avoid Appointments to Administrative
Offices”
The way out from the exclusive circle of intendancy’s stealing looked
attractive. The military department decided to transfer the
contractual work to the regiment level. In this way the commanders
who faced their soldiers every day would be in charge of the money
allocated for the supply. This new de-centralized system was called
independent procurement.
“In the course of transfer to the new system of supply,” the report
for December, 1924 read, “the units had to face the old question of
staffing the administrative apparatus. The issue has become most
topical under the present circumstances. As was mentioned in the
previous materials, the practical skills of the old staff of the
administrative apparatus (these were bureaucrats who often had
deliberate criminal attitude towards the work) do not correspond to
the demands of the new system. The party staff attracted into the
administrative apparatus is even less prepared for this kind of work
and tries to avoid responsible positions in the administrative block.
All of the above-said is confirmed by the practice of independent
procurement. Thus the 2d territorial division of the Western Military
District has signed an agreement for the supply of vegetables, which
will be more expensive than vegetables at the market because of the
distance of deliverance. In the 10th Cavalry Division of the Moscow
Military District the lard bought from a private dealer turned out to
be bad. Every week the North Caucasus Military District receives
information on the poor quality of meat. For example, there was a
case in the 13th division when the prepared food contained intestines
with excrement. At first the 27th division of the Western Military
District signed an agreement with the Smolensk meat packing plant.
Photo: RGAKFD/ROSINFORM
The plant supplied good quality meat. However, under the pressure
exerted by the district suppliers the division was compelled to break
this agreement and sign another one with the front commission of
assistance to war invalids. At prices higher than the market ones
this commission supplied lean stringy meat with bruises, which the
Red Army men refused to eat. There are many examples of the kind.”
Such examples continued to multiply in the new year (1925) because
the number of administrative workers who had real money on hand
increased by dozens of times. In some cases Red Army commanders
became accomplices of the commissaries. Then the reserves of whole
regiments were stolen.
In general though the calculation of the army command turned out to
be correct. Having grasped the point of the matter the majority of
regiment commanders brought the independent procurement to the
necessary level (as it was said back then). In the summer of 1925 for
the first time since the introduction of the Soviet power the report
on the condition of the army read: “The de-centralization of the
supply of the Red Army has by and large brought positive results. The
quality of provision has significantly improved, the deficiencies of
supply have been almost overcome.”
It was only big military suppliers that were dissatisfied. They kept
twisting commanders’ arms trying to make them sign agreements with
the organizations in the jurisdiction of the intendancies. At the
same time as a rule the agreements were not observed and the number
of those eager to have anything to do with the central supply bodies
kept decreasing.
Photo: RGAKFD/ROSINFORM
The experiment with the practice of independent procurement could be
a success and could become the norm. Had it not been for the skill of
the high-ranking suppliers and for the inflation. By the beginning of
1926 the prices on food and uniform, which the commanders could now
order independently, increased. As for the financing, it remained on
the previous level – apparently not without the effort on the part of
the chief commissaries. Commanders of regiments and their
administrative workers began transferring money from one item of
expenditure to another, they were confused and became the objects of
investigation. They were not tried but the desire to work on
agreements and supplies was completely gone.
With time the practice of centralized supply was restored. However,
stealing did not disappear. It continued throughout the thirties and
during the time of the Great Patriotic War. As the former head of the
food supply service of the Soviet Army shared, “during the time of
the war we had cases of thefts and cases when food was not entered
into books however nobody was tried by the tribunal at the front”.
There were problems with the quality of food as well. However, the
command found a reliable way of solving them. For example, in 1942 a
private letter of the Special Department of the North-Western Front
read: “The Special Department of the 144th detached brigade arrested
Red Army man Volkov P.A.
Photo: RGAKFD/ROSINFORM
Even temporary deliverance from the wrong-size boots resulted in an
uncontrollable flush of vis vitae with the Red Army men.
In a conversation with soldiers he ran down the quality of food and
spoke of shortcomings in the organization of nutrition in the unit.
Despite the fact that this was the only instance of Volkov leading
such conversations and that he was characterized positively by the
command, the Special Department charged him with counter-revolution
propaganda, the prosecutor confirmed this absurd accusation and the
military tribunal sentenced Volkov to death.”
Volkov was lucky and his sentence was canceled. However, most likely
from that point on none of those serving with him plucked up the
courage to discuss commissaries.
by Evgeny Zhirnov
–Boundary_(ID_FKPZP/vZ5lJMaGOok5XwAg)–

MEETING OF WESTERN DIOCESAN CLERGY OF LOS ANGELES AREA
BURBANK, CALIFORNIA, December 17 (Noyan Tapan). Upon the invitation
and under the presidency of His Eminence Archbishop Hovnan Derderian,
Primate of the Western Diocese of the Armenian Church of North America,
on Wednesday, December 12, the clergy of the Los Angeles area had their
last meeting of the year, also attended by his Eminence Archbishop
Vatche Hovsepian, His Eminence Archbishop Dirayr Mardigian, Primate
of Bulgaria and Rumania, and His Eminence Archbishop Arsen Berberyan.
The meeting began with the Morning Service, after which the Primate
greeted and addressed the clergy.
According to the Press Office of the Diocese, the Primate referred to
his schedule of 2005, his Pastoral visits, the dates and locations
where he will celebrate Divine Liturgy, as well as conferences and
other events. The schedule will be completed in the near future.
The Primate also mentioned the Pontifical visit of His Holiness Karekin
II, Catholicos of All Armenians, which is to take place on June 1-20,
2005, stating that for the past several months a committee has already
been planning the details of the Pontiffâ~@~Ys visit.
The Primate’s address focused on the construction of the Mother
Cathedral, and the fact that new donations are pledged constantly. The
Construction Committee is dedicated to this vital mission, and the
legal paperwork is almost completed. His Eminence made a plea to the
clergy to increase their efforts in securing Godfathers and donors
for the Cathedral.
On June 4th the Catholicos of All Armenians will officiate over the
Ground-breaking ceremony of the Mother Cathedral. To provide first
hand information regarding the progress of the Mother Cathedral
project, the Primate has sent an official invitation to Los Angeles
based organizations, Armenian media and press, clergy, parish council
chairmen and Diocesan standing committee representatives to be present
at a reception to be held at the Diocese on January 12.
His Eminence also reminded the attendees that on Christmas Day,
January 6, 2005 the traditional reception will take place at the
Diocese. The reception is open to all faithful. Following the
traditional House Blessing ceremony with the participation of
the clergy, the Primate will officiate the blessing of Khachkars
commisioned on the occasion of the 90th anniversary of the Armenian
Genocide. Youth representing each parish of the Diocese will take
part in this special ceremony. Following, Archbishop Derderian will
visit each parish and consecrate their Khachkar, which will then be
situated in an appropriate place in the church.
The publication of books and booklets is an important part of the
Primate’s mission. The last booklet published is entitled “Key
Elements of the Christian Faith”, with a publication volume of 5000
copies. Dr. and Mrs. Bedros and Garine Taghlyan from St. John Garabed
Armenian Church in Hollywood became the sponsors of this publication,
in the memory of their beloved father, Hagop Taghlyan.
The Diocese of Gougark, Armenia, is the Sister Diocese of the Western
Diocese. The Western Diocese has adopted around ten Sister Parishes
in Armenia, Artsakh and Georgia, which it supports every year.
In the upcoming year five churches of the Diocese will adopt parishes
in Artsakh. The ACYO will adopt the ACYO of the Artsakh Diocese,
to financially assist their projects. It is the Diocese’s goal to
have 30 Sister Parishes by the end of next year. The faithful can
also participate in this mission by making their own donations.
The Primate also announced that the Western Diocese will support
the St. Nersess Hospital in Yerevan, which functions under the
auspices of the Mother See. For the implementation of this project
the Primate is currently meeting with doctors who have shown the
interest to participate in this beneficial project.
Another item on the agenda was a reminder of two pilgrimages to Armenia
and Jerusalem in the upcoming year. Archpriest Fr. Moushegh Tashjian,
Pastor of St. Mary Armenian Church in Costa Mesa, is in charge of
the pilgrimage to Jerusalem.
To spread the Word of God and at the same time make the faithful aware
of the activities of the Diocese, parishes and auxiliary bodies,
a television program will soon begin under the leadership of Very
Rev. Fr. Dajad Dz. V. Yardemian.
After a dialogue with the Clergy around certain issues, the Primate
invited Archbishop Dirayr Mardigian who informed the participants
of the spiritual life and mission of the Dioceses of Rumania and
Bulgaria. He congratulated wholeheartedly the various projects of
the Primate and expressed his appreciation that under the guidance
of the Primate, the Western Diocese is able to financially assist
the Mother See, her Sister Parishes, the Motherland and Artsakh.
The Primate expressed his gratitude to the clergy who serve the
Armenian Church and their parishes with devotion. He wished them all
a successful year, filled with new accomplishments.
The meeting closed with the Lord’s Prayer.
–Boundary_(ID_0rutSnpINdJjAqZxDu6q1g)–

For immediate release
An Amaras Art Alliance program
December 17, 2004
Hovanness Badalian Music Fund Banquet – an event to remember
Hovanness Badalian Music Fund
P.O.Box 733,
Watertown, MA 02471
Phone: 617-331-0426
Email: [email protected]
Contact person:
Tatoul Badalian, Program Director
617- 331-0426 [email protected]
An enthusiastic Artur Anushavanyan, folk singer from Yerevan, and
poet Zepure Arman were among the young people who performed at the
First Annual Banquet of the Hovanness Badalian Music Fund held in
Watertown, Massachusetts. The December 4, 2004 event brought together
close to 250 supporters of the Fund, young and young at heart,
in a festive atmosphere. Armine Mirzabegian MD, speaking on behalf
of the organizing committee, welcomed everyone and invited composer
and conductor Konstantin Petrosian of Providence, RI, to speak about
the goals and mission of the Fund. Following Maestro Petrosianâ~@~Ys
remarks a short biography of Badalian, narrated by the singer himself,
was presented on video courtesy of Argisti Chaparian and his father
Vartan. His Excellency Dr Arman Kirakossian, Armeniaâ~@~Ys ambassador
to the US, who together with his wife and young son was among invited
guests, spoke about the importance of such an undertaking and urged
everyone to continue their support of the Fund. He emphasized that by
helping the children in their music education the Fund will also help
strengthen our cultural identity. Hovanness Badalianâ~@~Ys brother
Garnik, who lives in Watertown, on behalf of his family throughout
the world, thanked the guests, the organizing committee and specially
the young performers for their involvement in the project.
The cultural program, hosted by Narini Badalian, Garnikâ~@~Ys grand
daughter, ignited with Ani Arakelian reciting a poem in Armenian
followed by the performance of soprano Noune Karapetian who was
accompanied by Nune Hakobyan, piano and Eddy Gregorian, dhol. Poet
Zepure Arman read her work specially written for this event and
prefaced it by saying: Badalian was a man who carried his sense of
identity with such absoluteness that his identity molded him rather
than the contrary. Gegham Margarian performed his own work on the
keyboard followed by Artur Anushavanyan who delighted the audience
with his folk songs.
The final speaker of the evening was Ara Sarkissian, a young composer
and graduate of Boston Conservatory of Music, who spoke of his recent
journey in Armenia and stressed the critical shortage of quality
instruments which children need in order to continue their music
education in the Republic. Turning his attention to the New England
community, Mr Sarkissian, praised members of Bostonâ~@~Ys Arev Armenian
Folk Ensemble who have dedicated a great deal of energy in learning
and performing Armenian folk songs. In particular he mentioned Martin
Haroutunian, founder and director of the group, who has been a teacher
and a mentor for many young people interested in learning traditional
Armenian music. He concluded his remarks by inviting Maestro Petrosian
to present the first ever Hovanness Badalian Appreciation Award Plaque
to the members of Arev. Martin Haroutunian accepted the plaque on
behalf of the group and invited its members whose current roster
includes Ani Zargarian, vocalist; Tamar Melkonian, vocalist; John
Kozelian, oud; Vazken Kroshian, M.D., guitar; Marcos Shahbazyan,
dhol; David Gevorkian, duduk and Martin Haroutunian, duduk to the
stage for a grand finale performance of the evening.
HBMF provides merit-based scholarships to children enrolled in Armenian
music education programs, worldwide. The Fund also provides assistance
to individuals and organizations that create material and training
programs for children. Beloved singer Hovanness Badalian played a
significant role in educating Armenian children and young adults. He
spread the spirit of the Armenian culture around the world through
his songs, helping bond the Diaspora and Armenia. His dream was
… to hear the Armenian song resonate from every home wherever an
Armenian lives. The Fund was established in early 2004 to celebrate
the singerâ~@~Ys life and legacy.
To learn more about the Fund please call 617 331-0426 or write to HBMF, P O
Box 733, Watertown, MA 02471 (email: [email protected])
——————————————————————————
Note to the editor:
First Annual Banquet of Hovanness Badalian Music Fund brought
together many talented young people among them poet Zepur Arman
who made the following remarks and read her poem written specially
for this event. You may wish to publish this as well. Thank You.
Tatoul Badalian
I am overwhelmed with honor that I have a chance to speak of such a
great man to you today. Hovanness Badalian was a man who carried his
sense of identity with such absoluteness that his identity molded
him rather than the contrary. Thus his great art beseeched him and
his country listened. To have such an infectious passion can only
inspire us.
His voice led me to these images.
Adagio from the east beckons
Pulled toward the sky surrounding me
I hang on to each branch offered
my eyes drift north to the palisades of a colossal past
rich as the land we’re grounded on,
sound rumbles throughout the fields
legends live within our tears
the sable obsidian is dripping within my thoughts
with a voice of hundreds before me…..
I anchor my lineage on an abstraction… intangible to the touch
yet an impetuous pulse finds every branch.
Holding on
I am never alone,
I am never forgotten
–Boundary_(ID_qfQmfXgJTomHnNMSjr0Mcw)–

EU, Turkey reach landmark deal to start entry talks
By Shadaba Islam
DAWN
18 December 2004 Saturday 05 Ziqa’ad 1425
BRUSSELS, Dec 17: The European Union and Turkey reached a historic agreement
on Friday on starting talks on admitting the large Muslim nation to the bloc
after overcoming last minute haggling over Ankara’s relationship with EU member
Cyprus.
The entry talks, expected to be long and difficult, will begin on October 3,
2005. The decision is a victory for Ankara’s long battle to confirm its
European credentials by joining the EU. But Europe’ embrace of the Muslim nation —
albeit a secular one — remains a grudging, reluctant affair.
The EU is imposing a range of new conditions that Ankara must meet over the
next 10 to 15 years before it is deemed ready to join the Union. And in what
many view as an inauspicious start, celebrations at the end of two-day summit
were marred by a difficult, eleventh-hour battle over last-minute EU demands
that Turkey give fast-track recognition to Cyprus via the signing of a customs’
union deal.
Turkish Prime Minister Recep Tayyip Erdogan rejected this and instead forced
a compromise under which he made a public verbal declaration announcing his
readiness to recognize (Greek) Cyprus through the custums union before October 3
next year. EU leaders, in exchange, welcomed this.
The squabbles at the Brussels summit once again reflected many European
states’ continuing ambivalence about opening the doors of their current exclusive
Christian club to a large Muslim nation. But the fact that EU leaders overcame
such misgivings is a sign of a new maturity in a Union which wants to become a
global power and build bridges with its Islamic neighbours.
The start of negotiations is also a boost to the 15 million Muslims who live
in Europe and have felt increasingly marginalized since the rise of
anti-Islamic sentiments after the Sept 11 attacks on the US landmarks.
However, the summit squabbles also reflect the EU’s complex decision-making
machinery where one member state — in this case tiny Cyprus – can make
nationally driven demands.
Although it had never previously been a condition for starting talks with
Turkey, Cyprus, which only joined the EU last May, swiftly objected to the fact
that Turkey refuses to grant it diplomatic recognition.
Turkey, until now, has only recognized the self-styled state of Turkish
northern Cyprus. This led to hours of shuttle diplomacy at the summit with Turkey
supporters Germany and Britain being called in to mediate.
Mr Erdogan dug in his heels due to fears that voters at home and the
ever-sensitive Turkish parliament would rebel if he was seen to be caving in on the
spot to last-minute EU demands.
Turkey has been knocking at Europe’s door since 1963 and sees moves to EU
membership as a confirmation of its European identity. The goal has spurred
unprecedented reforms under Erdogan which have won wide admiration in the EU.
For Europe, taking in Turkey makes sense for a host of economic and
geo-political reasons. Chancellor Schroeder has pointed often to the huge market
provided by Turkey’s booming economy and population of 70 million as well as the
security advantage of making Turkey a democratic, secular beacon for the Islamic
world.
Dutch Prime Minister Jan Peter Balkenende – who holds the rotating EU
presidency – said the goal of negotiations beginning next year was full accession of
Turkey but cautioned: “We’re going to negotiate to see if membership is
possible. There’s no guarantee it is possible.”
Should negotiations fail, he said, Turkey must remain firmly anchored in EU
structures. This, however, is not the same thing as the offer second class
membership – dubbed a “privileged partnership” – which was rejected by EU leaders.
Turkey’s trials with the EU are not over, however. Ankara faces a huge task
in meeting the bloc’s standards and while sweeping reforms by Erdogan may have
started getting Turkey into shape for EU membership, Brussels is asking for
much more.
The lengthy EU agenda for Turkey includes major improvements in political and
economic structures. EU leaders say Turkey must make additional effort to
upgrade standards for human rights, minority protection and rule of law.
More challenging for Erodgan are Europe’s calls for what many in Turkey will
see as a social revolution. Women’s rights, religious freedom and difficult
historic questions from Turkey’s past, including the fate of Armenians during
the World War I, still need to be addressed.

Azer Tag, Azerbaijan
Dec 18 2004
SATE COMMISSION ON WAR PRISONERS, HOSTAGES AND UNACCOUNTED FOR HOLDS
FIRST MEETING IN ITS NEW COMPOSITION
[December 18, 2004, 21:42:56]
The new composition of the Sate Commission on War Prisoners, Hostages
and Unaccounted For approved by November 15 Presidential Executive
Order held its first meeting at the Ministry of National Security of
the Republic of Azerbaijan on December 18.
The Commission members decided to make public the documents reflecting
the facts of ethnic purge, genocide, vandalism and violation of the
rights of prisoners and hostages, resulted from the Armenian aggression
to include them in the report to be discussed at the meetings of the
United Nations General Assembly and Human Rights Committee.
Besides, there were proposals concerning organization of search for
hostages and unaccounted for, as well as provision of embassies and
other diplomatic representations of Azerbaijan abroad with relevant
materials and maps.
The Commission also approved the plan to design and publish photo album
called “Armenian Terror” and organize a young painters competition
on this theme, as well as a general plan of actions for 2005.