ON THE IMPLEMENTATION OF THE EU COMMON STRATEGY TO RUSSIA

29 May 2000-02 June 2000

AIRAPETYAN, Ashot, Centre for Interethnic Co-operation

ALEXANDROV, Yurii, New House

ALTSHULER, Rights of the Child, Russian Human Righs Research Centre

AONGUSA Mac, Ronan, Second Secretary, EC Delegation

ARBATOV, G.A., Founder, Institute for North America and Canada

AZAROV, Anatolli, Moscow School of Human Rights

BABITSKAYA, Yaroslavna

BADALOV, Ruben M., First Vice-President, Independent Coal Employees´ Union

BERGE, Adriaan van den, General Manager CIS, DOW Eastern Europe

BOSSEN, Gerd, Büroleiter, Konrad-Adenauer-Stiftung

COMMEAU, Irene, President, European Business Club

COSGROVE, Simon, European Initiative for Democracy and HR, EC Delegation

DOLGORUKOV, Andrei P., Dep. Head of Dept. for Economic Co-operation with Europe

DUBOIS, Gilbert, Acting Head of Delegation, EC Delegation

FONTANA, Andrea Matteo, Second Secretary, EC Delegation

GEFTER, Mikhail, Human Rights Institute

GUSSAROV, Dep. Minister of Foreign Affairs

KOFLER, Silvia, Head of Press and Information Service, EC Delegation

HORTA, Maria Fernanda, Economic Attaché, Embassy of Portugal

KHAMADA, Irina M., Vice-Chairman, State Duma

KOBIAKOV, Oleg, Interperter, Former First Secretary, Russian Mission to the EU

KRAMER, Martijn P., Arthur Andersen Int. B.V.

KRASHENNINIKOV, Pavel V., Chairman Legislation Cttee, State Duma

LEROY, Karine, Programme Officer TACIS, EC Delegation

LISPSKII, Igor, Army & Society Association

LUKIN, Vladimir, Vice-Chairman, State Duma

MANILOV, Valeriy, Colonel-General, First Dep. Chief of General Staff, Russian Armed Forces

MATULAY, Dusán, Counsellor, Head of Political Section, Embassy of the Slovak Republic

MATVEEVSKI, Iouri A., Professor, Institute of European Law, MGIMO

MEZENTSEV, Dimitri F., President, Centre of Strategic Research

NAEGELE, Jochen R., First Counsellor Science and Technology, EC Mission

NATALE, Carlo, Head of Economics Dept., EC Delegation

NIEDZIELSKI, Jacek, First Secretary, Embassy of Poland

ORLOV, Alexandre V., Director, Dept. for Trade Policy, Ministry of Trade

OSOKINA, Irina E., Depubuty Minister of Science and Technology

PISKOPPEL, Roald F., Deputy Minister of Trade

PLATE, Professor, Secretary-General to the Presidium, Russian Academy of Sciences

PONOMAREV, Lev, Hotline For Human Rights

REYMONDET, J.P., Head of TACIS Dept., EC Delegation

ROEPKE, Alexander, Head of Administration, EC Delegation

SCHULZE, Peter W., Büroleiter, Friedrich-Ebert-Stiftung

SPENCE, Timothy, Political Section, EC Delegation

SZALONTAY, Mihály, First Secretary, Embassy of Hungary

SMIRNOV, E.A., Director General, Dept. of International Science and Technology Cooperation

TEMIROV, Umar E., Head of Staff Cttee on Nationalities, State Duma

TKACHEV, Alexander N., Chairman of the Cttee for Nationalities, State Duma

TUREL, Peter, Director, World Travel

WILEY, Thomas, Second Secretary, EC Delegation

Introductory statement by Mr. DUBOIS. The EC Mission is too small, about 70 fonctionnaires, locally hired EU-citizens and Russian personnel (up to 50%). There is a lot of shutteling between the Mission and Brussels. Language problems are predominant.

Mr. Dubois stresses the need of showing firmness in discussions with Russian partners.

Evaluation of the EU-Russia Summit 0f 29 May 2000. Commission Chairman Prodi´s speech did not make a very strong impression, contrary to Mr. Patten´s. The Summit was only marginally covered by the Russian press. Preparations to President Clinton´s forthcoming visit (3-4 June) seem attract more attention.

The EC Mission is small in comparison to National Embassies: Great Britain employs 400 staff, the USA 1000, Germany 300, France 200. There is no ambition to either replace or lead Member States´ Embassies, nevertheless, the Mission has a co-ordinating role in i.a. organising regular meetings between Ambassadors´, their No. 2s, and attachés. "If we pretend to be the best, we loose". Some Member States´ Embassies with old-style diplomats are hesitant as to co-operation with the Mission. Small Member States like Luxembourg and Portugal sometimes heavily rely on the Delegation as to e.g. information and press analysis.

Good relations are maintained with representations of the USA, OECD, OSCE etc. EU Activities are in convergence with UNDP, ILO etc. policies. Support is being given to Federal Ministries and reform-oriented regions.

The Moscow Delegation is comparable to the EU´s Mission to the UN in Geneva, and much smaller than the EU Mission in Washington, despite the fact that the Moscow Mission is engaged in far more activities than the EU´s missions in Japan and the USA.

TACIS constitutes an important part of the Delegation´s work, food aid included. ECHO has 2 fonctionnaires in Moscow. The Management Trainee Programme is TACIS´ largest programme (12.5 million Euro). All Member States participate, or intend to do so. It is not equalled by any of the Member States´ single programmes. Through this programme, Russian citizens are sent as trainees to EU-Enterprises.

The ESSN Volunteer Prorgramme is operational again. TACIS is in an interim-phase now. 1999 Commitments are being implemented right now. The Helsinki Decision (Dec. 1999) to freeze TACIS support and to focus on projects encouraging the rule of law, democracy and civil society will only be felt next year. For now, no new programmes are being prepared. Thus, the actual budget for projects to start in 2000 was reduced about tenfold.

Mr. Alexander ROEPKE points out that the monthly budget of the Mission is about 1.25 million Euro, including BISTRO (quick project support without interference of Brussels up to 10.000 Euro per project) and Democracy (up to 50.000 Euro). Huge problems exist as to the authorisation of budget releases for 1999. For months, commitments could not be fulfilled due to procedural problems in Brussels which have to do with fears for deep investigations. For Democracy, the situation is even worse. It is a shame on the Delegation. Apparently, the Commission has a lack of specialist servants, who are willing and able to take budgetary decisions in the TACIS field. Compare this with USAID or the Soros Foundation, spending USD 200 million annually with a staff of 60! The Dutch Embassy has a lump sum at its disposal. Dutch collegues spend the money as they want, provided they set priorities.

The Delegation is very much in favour of decentralisation of decision-making, to the level where the trained specialists are – in Moscow. The EC´s budget is extremely detailed, with hardly any shifting possible. Even a request for a GSM needs to be sent to Brussels.

Mr. Carlo NATALE provides some information on current EU-Russia trade disputes. The Mission as such is only involved in an advisory role, as specialists from Brussels are flown in when necessary. The Economic Section´s main role is to observe the Russian economy, and to provide information to Brussels.

The PCA is quite a structured edifice. However, parts of it remain to be frozen, independent of the Chechen Conflict. Some Subcommittees have been unable to meet. Honestly, the Common Strategy hardly added anything to the PCA. In reality, there has been no change whatsoever. "Everything was already being done before". The Common Strategy contains no grand new ideas. Its adoption in June ´99 was highly over shadowed by the Chechen Conflict that started three months after. As an instrument to better co-ordinate Member States´ policies, it could indeed be successful in due time. Yet, the document is only valid for 5 years and the only budget involved remains TACIS. It also sets out useful lines to be developed later. The Russian Strategy, for its turn, could help in forging Russia´s own policy toward the EU.

The Common Strategy is hardly being referred to in the Russian and foreign press. Russian focus is still on the USA. To Russia, the EU is not of the same importance.

Mrs. Silvia KOFLER, Head of Press and Information, points out that the TACIS Information budget is about 1.2 million Euro p.a. An important part, about 500.000 Euro, is spent on the monthly Interfaks-published magazine "Evropa", which contains Russian information about the EU destined to a wide audience. Another activity consists of sending Russian journalists to Strasbourg. Cultural activities are subsidised too from the TACIS Information budget.

Communication with Brussels turns out to be complicated nowadays. DG X (Information) was abolished, spreading responsible officials over other DGs. It takes a lot of time to receive permission for projects above 10.000 Euro. Small projects in the range of about 5000 Euro have the disadvantage of an unreasonable balance between the amount of bureaucracy and the size of the project. Russian neglect of Europe could be related to incredible decision-making procedures in Brussels.

Acting Head of Delegation Mr. Gilbert DUBOIS refers to President Putin as a strong man. However, he is already in power for 9 months, and not much strength was seen, apart from Chechnya. Still, no final economic policy plans were produced. Foreign visits were paid first to Turkmenistan and Uzbekistan, hardly any examples for decent democracies. Putin´s next visit will be to Minsk. Russia seems to be playing a game of balance. Mr. Dubois agrees that Putin sends out a strong message of putting order in your own house.

"Nowadays, a certain Umdenken takes place in the Russian politcal scene. Up to now, Russia only thought in bilateral terms. Under Bundeskanzler Kohl, the EU was considered all right, because ´the Germans did it´. Now something similar takes place between Mr. Putin and Mr. Blair. Personal relations and contacts remain important to Russia. Nevertheless, Russia is fully aware of the EU".

"However, the weak Euro causes some scepsis and as a political reality, Europe is put in doubt as well from time to time. Russia´s intention to break up the current unipolar order would rather being strived after via the Member States in stead of via the EU. Nevertheless, no political choice is made against the EU. A stronger EU will certainly encourage Russia to play the European card more often against the Americans".

"NATO Enlargement is an emotional issue to the Russians. However, they hardly show any reluctance toward EU or even WEU Enlargement, despite the fact that the latter comprises far-reaching obligations of mutual support. Apparently, it doesn´t hurt for the Americans are not involved. The EU is not considered a super power, and this should be exploited by Europe playing a non-threathening role in the Baltic/Kaliningrad area".

"The Chechen War is a war that has to be fought. Only the way in which it is being fought can be questioned. Europe can do nothing. We need to take note of the fact that no soldiers from Moscow or St. Petersburg are being sent to the frontlines. A partisan war could continue for years, leaving no constructive role for the EU whatsoever. North Chechnya, above River Terek, is being turned into a Russian Protectorate with loyal Chechen authorities already. As to the religious factor in Chechnya, this is not the problem at all. The Mufti is no fundamentalist. ´94-´96 Chechnya was divided by war-monging clans that were able to turn everybody, including e.g. the Dagestani, against them. The kidnappings deprived them of any remaining sympathy".

"We should take into account the possibility of preventive air strikes by Russia in Georgia. This will have geopolitical consequences. After Israel and Egypt, Georgia is the third net receiver of US aid. The USA are strongly engaged in the Transcaucasus Republics, contrary to the EU, i.a. in the pipeline business. The EU depends on Siberian gas, rather than Caucasian oil. Our interests in that respect are smaller, and besides, aren´t the Americans our friends?".

"In the Balkans, nobody likes to rely on Europe anymore. Former Bremen Mayor Koschnig (SPD) is about the only one not to blame. The Americans solved the case, the Europeans provided some decoration".

"As a rule, on a world-wide scale, the EU demands for regional co-operation, except for the CIS-area! Are we afraid of a re-arising Soviet Union? We should realise that when Russians discuss integration, they mean domination. Russia can´t perceive an organisation like GUAAM as an addition, but as a competitor only".

Mr. BOSSEN agrees that Mr. Putin´s new decrees imposing seven federal districts is about an urgently needed reform in Russian federalism. "Thus, the power basis of regional potentates can be demolished. Indeed, many governors are not reliable. Regional consitutions are far from compatible with the Federal law".

After an outline of Mr. Oostlander´s intentions, Mr. GUSSAROV elaborates on possible points of convergence in both sides´ foreign policies, while referring to statements made during the EU-Russia Summit, 29 May 2000.

For years, we used to live in a divided Europe, where the major issue consisted of East-West confrontation. Now we should head for an undivided, secure Europe. First, We should assure that this united Europe is a democratic social and economic space under the rule of law, where equal criteria are maintained to all parts of the continent. Second, no new dividing lines should be accepted in order to avoid the errors of history. Third, we should look for areas where we can work together, where we can build up potentials, where we can reach for common assessments and solutions. For example, in ecology, terrorism, security, and all those areas where we can not sufficiently solve problems alone.

In the Balkans, we should co-operate. Russia agreed on many points within the Stability Pact. There is a common European interest in stability. More generally, we should always agree on the rules and methods to be used. A real, active and equal co-operation requires overcoming actual differences between us. It is of great importance to create this strategic partnership between the EU and Russia. Russia indeed acknowledges the EU as a very important entity in world politics. Russia strives after a joint vision about Europe´s future, for it sees itself as part of European civilization.

As to Mr. Oostlander´s reference to a visity by the Yugoslav Defence Minister to Moscow, Mr. GUSSAROV pointed out that Moscow also invited Mr. Draskovic. We have a common interest in Serbia as a state to be respected, where the rule of law is being restored. Indeed the Balkan as a whole, including Serbia, whole should be an area of democracy, security, civil society, based on the rule of law. Serbian citizens should look for that goal themselves. We may or may not like Mr. Milosevic, but he was elected by the people. Of course he made many blunders. But despite foreign interference, Milosevic is still in power. Air, sports, banks and oil boycotts proved to be failures. Sanctions are counter- productive.

Mr. GUSSAROV refers to Croatia and Iran as succesful examples of reform without foreign interference. Further, as to Irak, the West should ask itself: what is the legal basis of the daily bombings. Is it morally correct?

As stated in the New Foreign Policy Concept, Russia wants an intensive political dialogue with the EU about a wide range of issues. We should continously each other´s viewpoints, in order to see where we can go beyond dialogue. It is important that the West understands correctly the present stage the Russian Federation is going through. A cautiously optimistic and encouraging approach from Europe would be applauded. Indeed, Russia is ahead to a democratic civil society, based on a market economy. We all want to live in a civil, prosperous world. A great and unified Europe should include Russia. In this respect, yesterday´s Summit was utterly constructive.

As to the Chechen question, Russia never expected that much violence to be necessary. Mr. Gussarov expresses his disappointment that even the very much respected NATO Analysis Centre did not visualize at all the magnitude of the problem. Mr. GUSSAROV does not accept a certain comparison between Algeria and Chechnya. Of course, Chechnya is part of the Russian Federation.

Concluding, Mr. GUSSAROV thinks it too ambitious to reach for convergence in EU and Russian foreign policies. There are some areas, arms control, common viewpoints in some parts of the world, which are suitable, but let´s not forget our divergences: Eastward expansion of ESDI, a very sensible issue to Russia. What will be the rules and mandates within ESDP? Nevertheless, on-rivalry EU-approaches to the Caucasus, the Northern Dimension, and even the Mediterranean could be helpful for creating positive openings.

Finally, it is important to maintain a strong parliamentary dimension in EU-Russia relations.

Russia is a Eurasian country, which should not predominantly pay attention to its relations with the USA, India, China and Japan. Historically, its relations with Europe are of paramount importance. Europe should also set its priorities, and one should realise that Europe is not an easy partner! The USA and Russia are equals in terms of nuclear power. By the way, Mr. Arbotov is not very optimistic about the forthcoming USA-Russia Summit, 3-6 June 2000. Especially the USA´s National Missile Defence plans meet with bitterness in Russia. The rooms for manoeuvring in the arms field are tremendously narrow.

While the mood in Russia used to be very much in favour of the West in ´91-´92, now there are huge suspicions. Hardly any Russian politician dares to say that he is in favour of good relations with the USA and NATO.

The recent 8 years have shown more suffering in Russia than 40 years of Cold War Arms Race. Production decreased by 50%, standards of life deteriorated gravely, a class of extremely rich people emerged. The feeling in the streets is that if this wasn´t imposed on us, it was at least recommended by Western advisors. The situation has changed, and not for the good.

However, grave errors were made on the Russian side. A clique around President Jeltsin has ruined the country, though not that worse as in Ukraine, Belarus and Kazakhstan. The ´93 putch and the Chechen wars were his ideas. The ´91-´92 euphoria turned into disappointment, while Russia´s empire-thinking only resulted in difficulties with former CIS-countries. Many economic (trade disputes), demographic (25 million Russians living abroad) and social issues (remigrees´ pensions) remain unsolved.

The end of the Cold War caught the West with their pants off. Nobody had ever thought about it. Then we missed the opportunity to create something completely new. We now only had a temporary way out. Now we should continue thinking about global security, give muscles and powers to the UN. Ten years ago it would have been more promising, but we still can do something. We should build out of the current OECD (good principles, no mechanism), NATO (no principles, good mechanism), and WEU a new, viable security system which will be acceptable and understood by everybody. Europe must not be comfortable with US territorial defence, because it maintains a relation of dependence.

It is important to develop all kinds of relations with Europe, which until now have been very passive, except for arms control issues. In that particular area, it needs to be taken into account that in the process of continuing disarmament, British and French nuclear systems should come into the picture.

One should realise that a multipolar world is not per se safer than the current unipolar world! It is time for Russia to develop a long-term foreign policy.

As to the recent signature of a great powers´ agreement to abolish all nuclear weapons in the long term, this is all right as a final goal, but first we need to re-shape the system of international relations. The Cold War in this respect was a very bad thing, but it led to discipline. Now we face the question of globalization, which we should discuss together.

The forthcoming US-Russia summit faces the problem of a President Clinton who has become the hostage of conservative Republicans, on the one hand, and a President Putin who does not feel himself completely secure as country leader.

The Chechen Conflict is typical for this time of a new generation of young politicians not remembering the war. They consider it a police operation. Mr. ARBATOV personally is not happy with the Government´s policy. The EU could indeed play a future role in the Caucasus, but one should keep in mind that this region is something completely different from the Balkans.

CIS-Integration in the sphere of trade, custions, currency, economic co-operation should be approached in a different way. No pressure should be exerted. If Member States do not want to participate, then they don´t have to. Relations should be built up for people, not for leaders – with pump and circumstance. Whatever CIS structure, Mr. ARBATOV does not really care.

As to Mr. Putin´s prospects, Mr. ARBATOV has some doubts. Mr. Putin hardly understands economics. Quite honestly, his achievements until now are disappointing. He brought a lot of experts from St.-Petersburg, as was being done by previous leaders from their respective cities. Putin´ll have to learn and hopefully, he´ll be a quick learner. His appointments of generals as Presidential Representatives over federal Districts is not exactly a sound solution.

While representing his so-called "independent" miners´ trade union, Mr. Badalov does not hide his complete loyalty to the new President and his government. Rosugleprof has 495.000 members in structure on the federal, oblast, okrug and rayon level; 90% of all Russian miners are members.

The Union closely monitors the economic situation in Russia, which affects all members. Membership also dropped in recent years. "Some changes need to be made in order to positively contribute to the current situation". During the last 6 years, the number of operational mines dropped by 50%. Of course, social tensions exist in miners´ cities, where no jobs are available to unemployed miners. Presently, many unprofitable mines continue to be closed. Next years, 5 will close, "but others are profitable and conditions will not deteriorate".

When questioned about Rosugleprof´s history of strikes, reference is only made to ´89-´90, when members undertook rail-strikes (blocking rail roads) and hunger strikes in front of the White House. There were some short-term successes, but long-term goals have not been met.

Rosugleprof members actively participate in politics. Two of them were elected as Members of Duma. They actively support President Putin in order to solve current miners´ problems. The new Government recognizes the importance of the coal sector. Thanks to past strikes, better consideration is being given to miner.

When asked about privatisations, Mr. BADALOV considers the form of ownership not so relevant. Miners are interested in efficient owners, the question of state or private ownership is of less importance. He mentions some World Bank projects aimed at re-orientations in the coal sector, e.g. re-locating former coal employees to other regions and sectors. There is a Federal government programme to create new non-coal-related jobs in the Rostov-na-Donu region. Mr. BADALOV points out that miners are well-qualified people who are suited for many other jobs.

There is hope for the future: Russia is a northern country. Energy is of paramount importance. Gazprom starts to understand the importance of the coal sector. New investments are foreseen in the future. The World Bank provides funds to the coal sector. Despite the fact that most mines still work with the same obsolete equipment dating from the 40s-50s, perspectives for the future remain. The Russian government is now preparing an Energy Strategy which aims at increasing annual production from 240 million tons of coal this year to 480 tons in ten years time. Rosugleprof participates in this Strategy, and it actively supports the Government.

Social problems are of an acute nature. Wage delays between 4 and 11 months are commonplace. As a result, safety standards are endangered. Deficiencies in accident legislations grow. In case good laws exist, they are generally not implemented. In some cases, wage delays are related to economic crimes, which causes great anger among miners.

As to international contacts, Rosugleprof is an active member of the International Union of Emplyees of Mines and Industry, located in Brussels. Not many differences are seen between the goals and strategies of Russian and EU-Member States´ trade unions in e.g. Belgium, France and Germany. Rosugleprof is engaged in two TACIS-Democracy projects. More co-operation would be highly valued.

Finally, Mr. BADALOV expresses his deep respect for EU Institutions.

Referring to The Duma, a book by former Duma President Mr. Vladimir Rybkin, Mr. SCHULZE stresses the important and mediating role of the Federal Parliament in the "reconciliation process" between the people and its politicians. Member of Duma Mr. Vladimir Zhirninovski obviously was a KGB agent (elected by the grace of President Yeltsin) who was given the task of giving the Duma a bad reputation. At the end of the day, the Duma has always been an underestimated and undervalued organ.

The Ebert-Stiftung is the only one of its kind maintaining a trade unions´ policy. Seminars are being organised, e.g. in the chemical, car manufacturing and steel sectors, which have relatively well-organised trade unions. These sectors generally underwent comprehensive reforms at an early stage. Wages have been paid since 1999, except for parts of the official sector.

Wages and pensions in Moscow have been paid always. Delays only exist on the countryside. One should realise that the big Russian cities, apprx. 40% of the population, never knew of great poverty. Their development was steady-forward. Cities like St-Petersburg, Tver, Moscow, the Central-Wolga region and the South Urals never seriously faced a crisis. Great problems exist in Siberian areas without natural resources, border areas in the Upper North, the Far East (except for Omsk), the Buryat Republic and the areas bordering Kazakhstan.

Separatism as always been rare, except for Chechnya. Russia´s federalism is of an asymmetrical nature, which left space for the development of 3 categories of regions. First, there are the strong, rich and self-confident regions. They generally supported the Fatherland-All Russia List (Luzhkov-Primakov) in the ´99 Duma elections. Second, the average and silent regions and thirdly, the poor regions which are kept alive by federal subsidies. The last category strongly supported Putin in the ´00 Presidential elections.

Russia is a country of opportunism without borders. There are no normative parties, except for maybe the Communist KPRF. Fundamental policy changes are made without the blinkering of an eye, and opposition against the President is often considered not done. Politics in Russia is about staying in power. There is a positive aspect, because it has led to political stability and the absence of a civil war. The new bourgeoisie clearly knows what can be done and what cannot. Keeping Russia one is a common aim. The atmosphere could be compared to West-Germany in the 50s, "keine Experimente" (Adenauer). Nobody wants to rock the boat. Russia is therefore predictable. In that sense, Russia continues to show a maximum of willingness to economically co-oeprate with the EU, while keeping a cold and critical political dialogue.

The August ´98 Rouble crisis had a healthy effect on the Russian economy. Russia was forced to substitute imports by home-made products. It helped to re-establish and reinforce a new middle class in Russia. This new middle class voted for Putin and his Edins´tvo Party.

The Stiftung drafted some future scenarios for Russia, highlighting the coming into existence of very motivated regional elites achieving formidable economic successes. Mr. SCHULZE refers to Die Zukunft Rußlands, a book by H.J. Spanger, published by Kampus.

It is the Stiftung´s role to i.a. fight against the negative image of Russia in the West, especially after the Chechen wars. Nevertheless, during the last 5 years, Chechnya has proven to be fully unable to create a statehood. Close links were forged between freedom fighting desperados and highly criminal subjects. Chechens are hated all over the Caucasus. Primitive reflexes from the Russian side were quite unavoidable. Putin should have labelled it a European problem, which needs a solution indeed in the form of a Euro-Russian Stability Pact. Russia cherishes no fears from the side of the EU, which would pose a possible advantage to EU involvement in the region.

Russia´s youth is not oriented at the state at all. Actually, youngsters expect nothing from the state. Their orientation is quite conservative, destined at education, a substantive job and a family.

As to the reform of the Russian federal administration, the current American model with locally elected governors presupposes a living political awareness and a flourishing civil society. This is not the case at all in Russia´s regions. It is now money and good relations fully determining the outcome of elections. Current gouvernors are weak, economically uneducated non-democrats. Regions should be a power against an over-dominant executive. As to the absence of civil society, Mr. SCHULZE states "Wenn es nichts zu verteilen gibt, organisiert man sich nicht". Nevertheless, Green groups succesfully attacked plans to build a fast-train track from St-Petersburg to Moscow.

Finally, Mr. SCHULZE expresses his anger about the ineffectiveness of TACIS.

Mr. PISKOPPEL does not intend to talk about politics. Instead, he intends to address only problems in the field of economics and competition. He is a member of the Co-operation Cttee and substitute for Foreign Affairs Minister Ivanov in the Co-operation Council. Russia is a part of Europe. The simplest way to get things done is for the EU to accept that Russia is in Europe.

As a politician, he regrets any interference of politics into economic developments, implicitly referring to Chechnya. As a matter of fact, Chechnya is a concern to every Russian citizen. Also, Mr. PISKOPPEL takes it very personally. He stresses that the problem is much more complex than it appears from the media. Its roots lie in Czarist times.

As to the question whether the current restrictions which were put upon the implementation of the PCA should be regarded as mainly symbolical, Mr. PISKOPPEL notes his concerns. A note will be prepared, for the devil is in the details. It is important to accept a mutual spirit of good neighbourness, a common will to solve problems, without blowing them out of proportions.

Speaking about details, Mr. PISKOPPEL mentions the problem of importing Finnish eggs. He blames the EU veterinary services creating a lot of problems that did not exist before Finnish accession to the EU. "Instead, Russian veterinary organs are completely independent and highly qualified. They effectively dealt with dioxine and chicken meat from Belgium; however, the price for mass-scale destruction of products was not paid from that side. As to Spanish poultry industry, allegedly, more than 75% do not respect any hygiene or control measures".

Metal scrap is another problem of yet another dimension. "A special steel agreement was signed some years ago. Now the time of phasing-out has come and it is time to proceed to normal free trade rules. However, negotiations have become tougher all the time, despite the fact that Russia´s share in the EU-steel market is only 5.2%. Russia is motivated to solve such issues, and it calls on Mr. Oostlander to push the European Commission to take a more reasonable attitude. When somebody tries to dictate us, it is time to sit around the table".

The EU is indeed Russia´s most important trade partner (40%). Russia observes with concern an increase in trade problems, especially with regard to future EU-expansion. Poland is Russia´s biggest individual trade partner in Europe. Soon Poland will be a border state, creating problems with e.g. energy transit. Gazprom is a major investor in Poland.

Foreign Direct Investment is not as big as Russia would hope for. What should be done now, is to handle the infrastructure system. 300.000 km of roads are in need of repair. It is in Europe´s interest to dispose of good transit roads to China, Kazakhstan, and the other Central Asian Republics. Unfortunately Russia does not have the needed billions of US Dollars. We need to look for a solution, to which all parties will contribute. The story for domestic shipping is similar. Facilities date from Czarist times. Mr. PISKOPPEL welcomes any initiative in the sphere of infrastructure, as well as nuclear power.

As regards nuclear issues, reference is made to Nuclear Energy Minister Adamov. Quite active attention should be paid from all sides to Russia´s aging nuclear reactors and their utilisation. Russia has good technologies, some of which are even ahead of the EU and the USA. There is no intention whatsoever to leave this market. It is indeed true that people tend to forget about the risks. Besides, it is in Russia´s interest as well to prevent proliferation toward rogue states.

Finally, Mr. PISKOPPEL asks whether Mr. Oostlander believes that the trend of globalisation will finally lead to the dissolution of CIS, EU, NAFTA etc. The answer is, economically, yes. Nowadays, Russia faces huge economic barriers, even within the territory of the Federation itself.

The meeting is concluded by a statement of willingness from the Russian side to settle down the table and to resolve all outstanding economic issues with the EU.

One speaker complains about the lack of speed and efficiency of European bureaucratic structures. A grant was won, but still the money cannot be used. NGOs very much rely on support from the European Commission, but TACIS money fails to materialise. This is confrimed by Mr. Simon COSGROVE, democracy and human rights specialist of the EC Delegation (EIDHR).

"Russia should be compared with post-World War II Germany, for which the Marshall Plan was co-designed. A Marshall Plan for Russia would cost much less than the actions against Yugoslavia".

Another speaker addresses the contradictions between EU goals to establish a civil society in Russia, while not allocating the money directly to civil society. Usually state structures are involved as intermediaries. "Russia is now undergoing major reforms. Evidently, NGOs are of growing importance. However, the new Duma and the new President do not consult civil society at all and do not take into account its considerations".

"Recent legal changes tend to threaten civil liberties. For example, a recently adopted labour code is strident with international treaties and Council of Europe conventions, which were signed by Russia. Acquiring legal expertise is of major importance to Russian civil servants, as well as citizens".

"Though many Russians consider themselves democrats, the only party that stands for human rights is the Communist Party".

Mr. Igor LIPSKII represents an organisation aiming at the integration of former military into society. "The Army and Society Association wants a share in building a democratic society. Good contacts are maintained with EU Member States and even NATO. People are being trained, making use of new knowledge. Unfortunately, the Russian state tends to ignore or even discredit this NGO activity. It is rather difficult to organise programmes and public actions".

"EU financing should be improved in order that we know what we can count on". Despite the good co-operation, support is not sufficient.

A fourth speaker discerns three kinds of NGOs in Russia. "First, those closely collaborating with the Russian state, with possible state subsidies. Second, human righs organisations which are in reality affiliated with criminal structures. Third, the most numerous group, consists of organisations trying to contribute to civil society without any means. This last group seeks for support from abroad, which is actually hampered by discriminatory tax laws".

"Unfortunately, the benevolent sector is very underdeveloped in Russia. In the West, it had time to develop for decades, not so in Russia. It is not at all understood why the European Commission freezes support due to the Chechen crisis (N.B. Support to civil society was not frozen, quite the contrary! – JB). It is also incomprehensible why EU NGO policies do not directly address NGOs. In stead, the Russian State is always a third actor".

"In case the money does not arrive in time, some 56 NGOs will be in great financial difficulties soon". Finally, the fall of the Euro against the Dollar is a concern to beneficiaries of EU support.

Mr. Boris ALTSHULER is representing Rights of the Child, a constituent member of Helsinki Watch, the Committee of Soldiers´ Mothers, the Moscow Helsinki Committee etc. Quite extensive co-operation exists with UN and OSCE Committees for Children. In a press statement related to the forthcoming Clinton-Putin Summit, an appeal is made to both Presidents to sign an International Charter for Transparancy. "Public awareness and political control should be increased in order to remedy the terrible situation with regard to children´s rights. For instance, a new draft law on public control in prisons is underway now. The government is opposed, violating UN Conventions demanding for a juvenile system. In Russian prisons, children are treated like adults".

During the Kosovo Crisis, Rights of the Child appealed to the Russian government to intervene, because children were suffering. "Probably the Ministry of Foreign Affairs is now punishing us for that". Mr. ALTSHULER pleads for state funding to NGOs, "like in Austria, Denmark and The Netherlands".

Mr. Michail GEFTER, Human Rights Institute, outlines the difficulties under which Russian NGOs work. The EU currently is an empty chair. However, the EU –despite its bureaucracy- is taken rather seriously. It is important that the EU develop a consistent strategy.

Mr. GEFTER has two proposals. First, to let the EC Mission decide over projects in stead of Brussels. Second, as to grants, to introduce an advisory board of independent experts to judge on projects by their merits.

Similar projects need to be combined in order to simplify organisational arrangements. Finally, it is also important to have finance sources from within Russia.

Lastly, Mr. Anatolii AZAROV, Moscow School of Human Rights, raises the point of increasing awareness on human rights in Russia. "Certainly, a Common Strategy would be beneficial to Russia and its society. Of course, the environment, agriculture etc. are of paramount importance. Yet, civil society should receive a bigger share. For them, 20-30.000 Euro is a lot more than for the State".

"The legal basis for civil society in Russia should be improved. Some laws could be useful, but they don´t work. More pressure should be exerted, like the World Bank does in the economic sphere".

Mr. MATVEEVSKII is a professor in European Law, teaching i.a. to future Russian diplomats. His position is more or less unique. The USSR used to ignore European Integration. The Institute helps to introduce the rule of law in Russian society in several areas, building upon European experience. Other institutes were set up in i.a. Yakutsk, Vladivostok and Khabarovsk.

The professor does not like Mr. Putin´s expression of "the dictatorship of the law". It should of course be "the rule of law" As to his expectations with regard to the new president, Prof. MATVEEVSKII states that "everybody sees in him, what he hopes to see". To some degree he is optimistic. From visits to the new Duma, he has the feeling that things are being done in the right direction.

Introducing the rule of law depends on the will of a political elite, but mostly on a change in mentality within the population. This will cost many years, even decades. For both leaders and the people the main task is now to overcome the old legal nihilism. Simply said, if a law is adopted, you must adhere to it. "It must be shown that it is better to adhere to the law than to avoid it!". Frequently changing laws do not contribute to that process. Besides, there is a huge amount of contradictions and lacunae in Russian legislation. The judicial situation in the new Russia still suffers from weaknesses. It will take a lot of time.

Russia is not a candidate for EU-accession. Its entry would indeed destroy the EU! Russia should develop as close relations as possible with the EU, at least in all those fields where the EU has competencies. Participation in a European Economic Space, in a kind of free trade area, would certainly be an option. "Adopting the EU acquis is important, but of course it doesn´t need to be done in the same kind of shock therapy manner as it is by the CEECs". A few days ago, MGIMO organised a conference showing that hardly anything had been done as to the approximation to EU-legislation. The awareness that actually some approximation is necessary proved to be very constructive to civil servants present at the conference.

Speaking about the functioning of the Partnership and Co-operation Agreement (PCA), Prof. MATVEEVSKII mentions a continuing lack of understanding among Russians about the EU. People don´t realise the EU not being abstract, but a very practical thing. Mr. MATVEEVSKII is personally involved in the 6^th subcommittee under the PCA, which deals with law approximation. By the way, "the original Russian desire was to create one subcommittee for about every ministry, up to 15 in total. Of course, to the EU-side this was considered an exaggeration".

As to CIS-integration, many of its members have great consolidation difficulties. "CIS-Integration should be based on free will. Up to now, efforts are limited to solemn declarations, without any follow-up. Indeed, there are about 1000 agreements between CIS-Member States, maybe 10 out them really work". As one leader put it, "Close integration OK, but we won´t permit loosing even one drop of sovereignty".

Problems in the framework of Schengen Enlargement are already being observed today. For instance, the Czech Republic recently implemented visa obligations to Russian citizens. Which will, by the way, harm their tourism sector. Kaliningrad will be a problem, but special legal and judicial arrangements can of course be invented and implemented. In Russia there´s hardly any discussion about the future of Kaliningrad as an enclave within the EU.

As a final remark, Prof. MATVEEVSKII asks for more technical assistance in order to guarantee continuation of masters´ and post-graduate courses for Russian students interested in European law.

Mrs. Irene COMMEAU just returned from Volgograd, where she witnessed an experimental tax policy which may now be extended all over the Federation. It basically comes down to a flat tax of about 13%.

Mrs. Commeau has absolutely no clue as to how to judge the current government.

She confirms Mr. Schulze´s complaints about the management of the TACIS Programme, which she calls "simply pumping around European money". In a ´99-report, the European Business Club drafted a plan on how TACIS actually should work. "The EC Delegation people stay too much within their compound".

Based in Mr. Putin´s former election head quarters, the Centre for Strategic Research (CSR), in its 5-month existence, has proven to be an influential think-tank to the new Presidential administration. "CSR deals with policy research in practically all fields. CSR elaborates on the perception of the philosphical consequences of Russia as it is in its new context of international relations. Meetings are organised with top experts, Foreign Ministry officials, diplomates and representative of leading institutions. These people define Russia´s priorities in its relations with the outside world. Clearly, relations with Western and Eastern Europe are a high priority. Russia also recognises the growing importance of supranational institutions, like the European Commission".

Russia´s reaction to the "cold shower" it got in Dec.´99-Jan. ´00 is quite simple. "It is highly regretted that such measures were resorted to". Mr. MEZENTSEV remarks regretfully that Russia´s time and money consuming efforts were not met by Western understanding. "Doesn´t international terrorism threat us all?. However, in NATO Head Quarters it is increasingly realised that the Southern border of Russia is the very border that stops Islamic fundamentalism". Mr. MEZENTSEV assumes that Russia has conducted loyal, sincere policies since 10 years. Russia deserves more support and comprehension.

"March 26, 2000, citizens not only voted for Mr. Putin, but they also voted for stability and predictability in the foreign and international policies of the Russian Federation. It was a vote for self-respect, for a good standing of the homeland. As 19-th Century Chancellor Gorshakov put it during the Crimea War, Russia is gathering for power".

As to the direction of Mr. Putin´s economic policy, the CSR forwarded a draft economic programme to Prime Minister Kasyanov. "It does not contain any specific, concrete projects. No descriptions or feasibility studies are given for e.g. ´new macaroni plants´. Hopes for economic improvements are expressed, e.g. by pushing for the melioration of Russia´s investment climate. Further, priority areas need to be defined. In the discussions about this programme, not only financial and banking people need to be involved, but also representatives from the humanitarian, social and non-economical sphere".

"Russia´s lack of confidence is very costly, and it resulted in huge losses. The Bank crisis of August ´98 was a crisis of confidence as well. In this context, Mr. MEZENTSEV tells about his experiences during a recent Conference with many Members of Duma and other prominent personalities present. Discussions went on for more than 5 hours, and positions were very close. The Orthodox Church was represented by the Metropolite, the Greek-Catholic Church by the bishop. Rabbi Kohen and the Mufti of Bashkortistan were present as well. There was an atmosphere of confidence which coincided very well with economic proposals to be made later. The Russian economy should be developed on the basis of a standard, not double standards".

As to ecology, Mr. MEZENTSEV admits the mistakes of history. Russia still underestimates the environment. "That is probably huge psychological syndrome, which I can´t grasp". People tend to think that they are not concerned, as if ecological problems only exist in densely populated areas. "Ecology as an issue will catch up, and it will become a priority now" (which is hardly in line with the recent merging of the State Committee for Ecology and the Ministry of Natural Resources; JB). Enterprises now need dozens of permissions and bribes in order to fulfill ecological requirements. In future, they should deal with only one guichet.

"Recently, Minister of Economy German Gref was critisized for the forthcoming tax relief for the richest people as a result of the introduction of a flat tax rate of 13%. As a matter of fact, real tax revenues only comprise 12% nowadays. It is preferable to pay 13% legally, in stead of only 12% far below the real rate. Tax evasion would be greatly reduced. This approach is a very realistic one, which aims at contributing to the resolution of Russia´s economic problems. It is interesting to note that the people behind the draft economic plans are also the people behind the draft plans on reforms in social life".

President Putin´s proposal to create seven Federal districts did not materialise at the CSR. "However, we support it".

As to the Northern Dimension and its environmental problems, Mr. MEZENTSEV refers to two key-points. "First, the environment is a whole and indivisible. Turbulences in the atmosphere reach all over the continent. Second, public opinion is not so flexible. It will take time before the electorate accepts the necessity of adequate environmental policies".

Former Justice Minister KRASHENINIKOV (SPS, Union of Right-Wing Forces) i.a. deals with judicial questions, Chechnya, as well as with Third Pillar co-operation. He points out that, despite great efforts since the end of the 1980s to introduce new legislation, many USSR and RSFSR laws are still in force. The number of collisions between old and new legislation is huge and growing. Nevertheless, many contradictory laws were adapted or removed in recent years, especially since President Yeltsin´s rule by decree (1993-1995), which constituted many new legal norms.

As for now, the Mr. KRASHENINIKOV estimates that progress in the production of laws has diminished in the State Duma. Well, a wider framework of legislation was already adopted: a civil code, general provisions for a tax code, a new criminal procedures code. However, a civil administration procedure code was not adopted yet, which should get priority. In order to provisionally complete legal reform in crucial areas. This week´s plenary meeting will address the tax code (which was discussed with Mr. MEZENTSEV and Mrs. COMMEAU earlier today; JB). Generally, in the judicial sphere, lots of laws still have to be finalised.

"President Putin just recently introduced some laws aimed at a great reform of the State. Yesterday, a first reading about local leaders´ and governments´ responsibilities took place in the Federation Council". Debates are heated. Mr. KRASHENINIKOV considers these laws a step in the right direction. "Federal authorities do not intend to undermine local leaders, but federal authorities should be brought closer to the regions".

"The 7 Presidential Representatives won´t have competencies in the sphere of the Governors, but they will exercise executive powers in the presidential domain. They are no threat to democracy. There have been numerous cases of local leaders trespassing the line of the acceptable and there were no means to stop them. Now all law enforcement agencies that are federal by nature will be co-ordinated in a more effective way. Supervision on the obeying of all federal laws will constitute an extra guard to Russian democracy".

As to possible co-operation in the combat against international crime, Mr. KRASHENINIKOV replies that, evidently, crime knows no borders. "Now we fight international criminals and militants in Chechnya, where mercenaries from Arab countries are fighting in regular shifts, as they were in Afghanistan. I try to be objective, I am not taking any extreme position, but it is my conviction that we should pay more attention to the mercenaries´ problem. Specifically the Taleban regime sends reinforcements to the world´s hot spots, including the Balkans. Chechnya is a training ground for terrorism. It would be helpful if Russia and the EU co-operated fruitfully to address this problem".

"Chechnya remains a very difficult and complex issue. However, the northern part of the region is rather stable now. In the south, a limited number of bandits keeps fighting. The majority of Chechens are just victims. The Russian government is developing anti-terrorist methods in order to deal with the militants. For the civilian population, Russia will do its utmost for rehabilitation and compensation. Until now, they continue to leave Chechnya massively. Mr. KRASHENINIKOV knows Chechens who live in Moscow. They just want stability, security and the possibility to build their lives".

"We should not regard all soldiers as criminals. Of course, there are some, but in every similar situation there are. Crimes should be investigated. It would be preferable to arrest the bandits and to put them on trial. Regretfully, European media tend to concentrate on crimes, while overlooking positive signs". Mr. KRASHENINIKOV hopes that Mr. Oostlander´s report will be of a positive nature.

As to a possible EU-contribution to stabilise the Caucasus area, Mr. KRASHENINIKOV firstly stresses the need to give sound judgements. It is important to realise that the Chechens don´t have a single leader. "None of the potential ones can boast on an approval rate higher than 20%, combined with a disapproval rate of less than 50%. We probably should rather not focus on political leaders, but on the clergy, elders or clans, who are more responsive. Paradoxically, many Chechens prefer to rely on Russians in stead of on their fellows. Chechen authorities in pacified areas asked Russians and Danes to distribute their aid, for they could not agree among themselves".

"North and South Chechnya require a different approach. In the North, above River Terek, there could be more advancement, with the re-establishment of a more or less peaceful life. During the night, however, unrest and acts of terrorism remain to occur. The mountains are an absolute no-go-area, especially along the Georgian border".

Any particular EU-assistance and co-operation in the field of law-enforcing would be welcome. Mr. KRASHENINIKOV points out that last week a Law on amnesty was adopted, allowing people who are non-violent to be released earlier. As to a question about alternative punishments, Mr. KRASHENINIKOV replies that special legislation for juvenile criminals is underway.

In reply to the question whether Russian legislation tends to follow or not the Anglo-Saxon model of "everything which is not prohibited, is allowed", the answer is that now the borders between different law systems are blurred. "Of course, the Russian legal system is based on Roman, continental law". One should note that the Dutch and Russian civil codes are among the world´s most progressive! Good co-operation in law-making exists with Dutch colleagues in Leiden.

"Continuous changes in legislation have different effects for different branches. For instance, raising the retirement age does not receive a lot of understanding. It is important to create good living conditions, like in Europe. On the other hand, abolition of the death penalty is not acceptable to the Russian public".

Mrs. I.M. Khakamada (SPS, St-Petersburg) is a member of the Budgets Committee, as well as Chairman of the temporary Investments Committee of the State Duma. She was very recently elected Vice-Chairman of the Duma.

To her, the question of how to how to improve Russia´s investment climate is of great importance. First, Russia needs to quickly join WTO. The recent EU-Russia Summit was another step leading toward that first-priority goal. However, some parts of the economy which are in an initial developing stage need to be protected, especially those sectors registering growth (clothes, food, confection). In these areas Russia experiences difficulties entering European markets. Nevertheless, Russian exporting enterprises increasingly gain experience in adapting to European standards, qualities, certificates and other documents.

The Foreign Ministry is promoting the export of Russian products and capital. Currently, import and export duties and tax levies are the subject of plenary discussions about the draft tax code. This code aims at cutting out all loopholes for evading taxes, among others by introducting a low, flat income tax. No significant amendments are foreseen. An important aspect of the law involved comes down to exempt imports meant to boost production from VAT.

New provisions should be introduced in laws on investments, on order to extend beneficial conditions for large-scale investments to small investments. Another problem that needs to be addressed immensely is the need to further a corporate and business culture. Russian enterprises are still of a rather closed nature, though they generally adapted to market conditions. The degree of distrust is high. Foreign investors fear that Russian contractors won´t be able to fulfil conditions. Mrs. KHAKAMADA finally proposes a European economic programme to encourage private investments.

Mrs. KHAKAMADA would personally appreciate if European institutions would contribute to a kind of permanent rating index of Russian enterprises and institutes. Such an indicator of trust could be helpful in encourage a better business mentality in Russia. It is important for such an initiative not to originate from the State.

During the first reading of the law on mutual investment funds, proposals were accepted to exempt dividends from taxes. Unfortunately, this does not apply to foreign investors, who´ll be due to pay 30% (in the USA foreign investors are treated preferentially). A tax deposits law introducing a limit of 35% was also approved. Taxes on securities are limited now to 30% annually in stead of a tax on a project basis, which used to be current practice until now. Thus, a maximal liberalisation of the securities market will be achieved, as well as a maximalisation of personal revenues.

Next to the new flat income tax rate of 13%, a regressive system (!) on social levies will be introduced, ranging from 35% for salaries up to 50.000 Ruble, 20% up to 100.000 Ruble, 10% up to 300.000 Ruble and 6% up to 600.000 Ruble. Yet, rather high capital taxes will be maintained.

Mrs. KHAKAMADA deems these measures a very important step forward. CEOs will have fewer difficulties. Nevertheless, she remains concerned about Russian export markets, foods, textiles, as well as the steel industry. The EU´s frequent application of antidumping procedures hurts. Mrs. KHAKAMADA suggests the EU to talk about this with Minister Gref.

Next to occupying the chair of the Duma Nationalities Committee, Mr. TKACHEV is Chairman of the Committee on Human Rights in Chechnya as well. He immediately addresses the Chechen Question, since Europeans apparently are very concerned in this respect. "The situation is still a complex one. Nevertheless, government policies still enjoy wide support among the establishment and the public. President Putin takes the right decisions. After the First Chechen Conflict, the region turned out to be a criminal zone with extensive trade in narcotics. An old-fashioned brand of banditism became the norm of daily life. Worse, these practices proliferated to other subjects of the Russian Federation, up to Stavropol and Rostov-na-Donu".

Speaking about human rights violations, "most of them were reported under Mr. Dudaev and Mr. Maskhadov, who incited massive mirgration processes from Chechnya. In this respect, we should not forget that initially 30% of the population consisted of Russians. According to continuing opinion polls, about 70-80% of the total population is in support of the Government´s actions in Chechnya. Of course, the 50.000 Russian troops caused some collateral damage in Chechnya, we admit that. However, from many personal visits to the region, we know that a majority of the population wants the Russian Army to stay. The Nationalities Committee is permanently being briefed about the restoration of a peaceful life in Chechnya. The Chechens are our people, their interests are our interests. Chechnya is a part of Russian territory, and we will bring the situation back to normality. Contrary to the First Chechen Conflict, over-whelming support exists to this policy".

As to the reforms of the Federal Administration, the Duma yesterday approved 3 laws. "First the Federation Council should no longer constitute of regional governors, but in stead of elected representatives from the regions. The current mixture of legislative (on the federal level) and executive powers (on the local level) is illogical. Local politicians possess too many powers. Unfortunately, about 20% of regional legislation now contradicts federal laws. Heads of local executive organs elevated themselves to presidential proportions. Nobody can remove them. Their position is similar to the Pope´s! Some of them even created their own free trade zones. President Yeltsin allowed all this to happen. Governors could grasp as much sovereignty as they wanted, and so they did. This economic and political diversity created an atmosphere which turned out to be inhibitive to any further institutional, social and economic reform, which i.a. resulted in the Chechen conflict".

Will the Duma democratically control the Presidential Representatives? "They are approved by decree, and such a mechanism is not foreseen by the constitution or federal law. However, the Representatives´ powers are derived from Presidential powers. They control local branches of Federal agencies, like MVD (Services of the Interior Ministry) and the Prokuratura. At least, they will have to inform the President about regions abiding by federal law".

"Rather unfortunately, up to now, federal appointments in the regions are only possible with the approval of local leaders. Direct Presidential control is needed to remedy that situation. Nevertheless, Presidential Representatives shall not interfere with internal government questions. It is their task to submit dossiers to the President. A competent Court should deal with Presidential requests to dissolve local legislators. Mr. TKACHEV stresses that this is a temporary construction to deal, which hopefully won´t last too long. It is not approriate now to suggest that Representatives will have extensive power, and to demonise them in advance. The Duma and the public are in favour, yet, the Federal Council no doubt will use all legal and illegal means to fight the President´s decisions with all its forces".

"Evidently, Russia does not exactly have straight record in the field of nationalities. Russia still suffers from Stalin´s crimes. The Duma is working on legislation to rehabilitate deported people. It is essential that they preserve their rights upon returning to their historical territories. An effort is made to financially compensate them through a special law. Both indigenous minorities, as well as minorities with a foreign home land enjoy cultural and national autonomy respectively. They have a special status in the sphere of media, studies, politics etc, regardless of the fact whether they are concentrated in one area, or dispersed all over federal territory. We probably are quite close to the solution of all problems. In the end of the day, it is our task to make arrangements protecting the State against separatism".

After the formal opening of the meeting with the Deputy Minister for Labour, Mr. REYMONDET, Head of TACIS Unit with the EC Delegation, explains the current sensitive phase in which TACIS is. He is accompanied by Mr. WILEY, Mrs. LEROY and Mr. FONTANA, EC fonctionnaires. This year´s TACIS budget should amount 98 million Euro, but the Helsinki European Council Decision to focus on democracy and civil society has reduced that budget to approximately 10 million Euro. These sanctions are not symbolical, its effects are very obvious. If the Helsinki decision would be withdrawn before September 2000, still everything could be done as planned.

Democracy and civil society projects face difficulties now, for they need the approval and signature of the Russian national co-ordinator. In case of projects supporting the independent Union of Journalists, or certain trade unions, Russian hesitations come to the fore rather gravely. Direct contacts with beneficiaries remain good, but without the goodwill of e.g. the Ministry of Economics, procedures increasingly face difficulties.

Backlogs mainly exist in the nuclear sector, a huge and complex area. Apart from being a European priority, there is also a very strong demand from the Russian side, so that´s not the problem.

After Mr. Oostlander´s outlining of i.a. the typical post-Cold War features of the EU´s Petersberg tasks, leaving traditional territorial defence tasks to NATO, General MANILOV replies by stating that he won´t say anything negative at all about NATO. Some days he had even publicly advocated closer co-operation between Russia and NATO. General MANILOV agrees that we should not fall back into old reflexes.

The from the beginning, the General had been most supportive of the idea of a European Security and Defence Identity, which he views indeed as a very positive development. Besides, "It is absolutely certain that it is unnecessary to make a footnote to every Trans-Atlantic issue". NATO should deal indeed with collective defence. Nevertheless, the economic security of the EU needs to be defended as well, for security nowadays has not only has military aspects, but socio-economic aspects as well. "I see enormous advantages in a ESDI over NATO. ESDI is built on a sound economic foundation with great economic leverage. Indeed, all major political decisions are taken through the stomach, aren´t they? Napoléon already said: "You can win a soldier´s heart by feeding him well".

As to Mr. Oostlander bringing up the Bosnian failure of sending Blue Helmets into war regions, General MANILOV replies that it is imperative to closely work together in a more effective way in international security matters. "We should avoid the mistakes of the past, if we work together. Three sensitive steps need to be discerned. First, in order to use our potentials, we should jointly analyse and evaluate hot-spots. This requires a comprehensive approach in contingency planning. Second, we should strive after a framework outlining how to deal with those hot-spots. Third, we need a mechanism in order to proceed to the stage of implementation. If we adopt this methodology, we can achieve real Russia-EU co-operation in security and defence matters".

The EU and Russia have different viewpoints as to the Balkans and Chechnya. However, in the latter case, some experience exists in pooling military knowledge about anti-guerilla combat, which could be extended to the prevention of causing violence to civil populations. General MANILOV fully agrees. "Before the Kosovo Crisis, the issue of co-operation in these fields with NATO was good and promising, there was a considerable degree of interaction, of exchanges of information on a regular basis. This proved to be useful for both sides, and it wasn´t limited to purely military tactics. Unfortunately, our different approaches to Kosovo built a wall between us. Now we should tear down this wall".

"So, the so much needed co-operation between NATO and Russia suffered a lot. We felt that our opinion was not considered, our analyses were dismissed. We had no say, no role, and we couldn´t tolerate that. We were offended, because, before, we were engaged in a purely de-militarised information exchange. We reported many times to NATO´s Political Committee, recommending to take our advises into consideration. We informed NATO about the real purposes of the KLA, about the ethnic cleansing they were planning. We not only shared our hard intelligence with NATO, but also our prognoses. They turned out to be true!

"We also warned our NATO-partners in a friendly way, that the air strikes would be counter-productive. "Milosevic is still in power, the Yugoslav Army is not defeated, the threat of a Greater Albania still exists. That, roughly, was exactly our blue-print analysis. We argued that there was still room for political leverage; not all means were used". Referring to the Rambouillet Conference (Febr. 1999), General MANILOV states that within the Contact Group, a draft resolution was agreed upon. "However, the military annexes rendered useless all that was achieved". Current economic sanctions don´t work, because there is no monolithic wall against Serbia. EU Member States are divided as well.

As to Mr. Oostlander´s explanation that the difference between Bosnia and Kosovo constituted non-ethnically focused governments vs. ethnically-focused governments, General MANILOV stresses that one should stop demonizing President Milosevic. "That is the basis for his popularity and hero-isation. Probably his position would be quite different if we made less noise. Empty casseroles sound louder. We should not bang on open doors, but undertake effective action".

What was the significance of a recent visit of the Serbian Minister of Defence, a war-criminal, to Moscow? General MANILOV: "I´ll be frank. I personally see no meaning behind it. We needed some talks and explanations about military-technical co-operation. We assumed UN-obligations in this respect. It was not exactly a visit, the trip was attributed a political meaning. Probably it wasn´t all done in a delicate manner, and probably it would be sufficient if Russia send some military to Yugoslavia. But it happened as it happened, and it´s history now. We have learnt our lesson".

General MANILOV wants to mention a counter-example. Mr. Ilias AKHMADOV, self-proclaimed "minister of foreign affairs" of Chechnya, was received in Washington (and by MEPs in Strasbourg). If there had been a continuous uninterrupted dialogue, such errors could have been avoided and they would not have occurred.

General MANILOV does not see any military feasible solution to the Chechen Conflict, where religious extremists, separatists and bandits abused the difficult economic system. "A great thinker said: you can take power by bayonets, but you can´t sit on bayonets. Certainly, the only solution is a political one". MANILOV is taking part in the political settlement of Chechnya and the Caucasus, including the counter-terrorist measures. Political actions and measures are being taken in order to restaurant normal State power, and to substitute for the vacuum left behind by the bandits. Vast social programmes are being implemented, which is necessary, for unemployment amounts to 80% in Chechnya. Practically not a single industrial enterprise is working.

Paradoxically, Chechnya was a place of wealth. All oil and refining capacities were used by the bandits. They had divided pipelines into hundreds of parts, tapping oil for their own purposes. Some 1000 illegal refineries were running 24 hours per day. Not many people know that they were serviced by slave labour. Slaves used to live in holes in the ground. From an ecological point of view, an enormous waste took place: massive amounts of oil were spilled into the surface. Chechnya´s ground is litterally soaked with oil. The whole country was vandalized and not a single school was functioning under Mr. Maschadov.

To ensure basic living conditions elementary supplies are being delivered now in order to make life liveable in the region. "We succeeded in restoring 200 enterprises employing Chechens. 30 Hospitals were re-opened. This year, 6000 boys and girls will finish high school; 70% of them want to pursue in higher studies. They will be given preferential treatments to Russian universities. All that is part of a political solution aimed at creating safe conditions".

"South of River Terek, especially in the mountains, a regularly supplied army of 26.000 bandits remains to be active. About 5.000 of them are foreign mercenaries with combat experience in all the hot-spots of the world. Their experience and heroism is formidable. That bandit army is to be eradicated. However, 80% of Chechen inhabitants were never actively touched by military actions".

General MANILOV is in favour of a constructive role for the EU in the region. This could be more than humanitarian aid. The 15 could play a major role in contributing to programmes for the socio-economic re-birth of the region, ranging from commercial, ecological, educational to aid projects. As to a possible Stability Pact for the region, "we have to think about this thoroughly. Before we take it on board, we must work out a plan including small spots in the whole region. Take Georgia, which has problems with South-Ossetia, Adyaristan, Abkhazia, as well as Azerbaidzhan with Nagorno Karabach. Returning to the beginning of our meeting: we must jointly assess the three pillars for co-operation in order to jointly arrive at common actions. But before we start dancing, we should write down our common principles".

Some remarks by Mr. NIEDZIELSKI (Poland), Mr. MATULAY (Slovakia), Mr. SZALONTAY (Hungary) and the First Secretary of the Czech Embassy to the Russian Federation.

About 80% of all money in Russia is earned in Moscow (St-Petersburg: 5%). There is hardly any social security outside Moscow. Russia´s major cities constitute islands of democracy, freedom of speech etc. Elsewhere, there is darkness. Russia´s State budget amounts to 20 billion US Dollars, which is equivalent to the budget of New York City.

Cyprus is the biggest investing country in Russia, which is related to rather obscure Russian off-shore activities in Cyprus.

Russia seems to have lost interest in the Czech Republic, as well as in other CEECs. This probably has to do with NATO-Enlargement. There have been Russian offers of unacceptable non-attack treaties with the Visegrad-4. Russian State visits are not paid, despite plenty of invitations and active visiting policies of the Visegrad-4. Relations with Czech are quite cold, i.a. due to the introduction of visa obligations to Russian citizens. Trade volumes are at a never-seen low.

After an initial question by Mr. Oostlander about the current functioning of PCA and Common Strategy, Mr. LUKIN (Yabloko Faction), Co-Chairman of the EU/Russia Parliamentary Co-operation Committee, replies that he recently tried to set up a Conference about current and future functioning of TACIS in Moscow. However, he got the feeling that "Paris and Brussels" tried to prevent this conference. As to the functioning of the PCA, Mr. LUKIN esteems its interparliamentary dimension of utmost importance, "and probably its most actively used aspect". Nevertheless, "on the executive side, the PCA has been less effective. Many important problems in the sphere of trade and customs dominate the agenda. The principle of freedom of trade is sacred. It is very effective in a situation where Russia has nothing to trade. This situation needs to be dealt with". Important achievements have been made in great international projects, e.g. in the field of joint cargo planes, in which Russia, Ukraine, France and Germany operate together.

"Russia is not pre-occupied by EU-enlargement, but it is worried about the consequences. No new border, a new division line, an iron or bamboo curtain should be created between Russia and Europe". Mr. LUKIN just returned from Estonia, where he attended a conference about this problem. "Estonia is preparing for EU-membership, but still a very important border issue between Russia and Estonia remains to be unresolved. There is a Russian-orthodox minority living in Narva, at the Estonian side of the Russian border, which will soon be closed to people who want to visit their peers in Ivangorod. These people need free access to and from Russia".

"After the accession of Finland to the EU, a sharp decrease in trade took place (as well as a diversion from trade with Russia to trade with other EU-Member States). The same could happen in Estonia, Poland and the Czech Republic, where visa were introduced for Russian citizens recently. This was due to pressure from the side of EU-offices, despite the fact that President Havel found it too early. Karlovary Region is very much dependent on Russian tourism, and the region will get in danger as a result of Czech measures. Compare this with the messages of Radio Liberty, now in Prague, which used to promise freedom of exchanges after the collapse of communism.. This may be a kind of a transition period, but one should realise that a transition period is a period between two transition periods. The Estonian and the Czech cases se are of immediate concern to us".

Russia is interested in a Europe speaking with one voice. Mr. LUKIN understands the choice to be made between élargissement and profondissement. Russia is interested in speaking about security co-operation. "We sympathize with the idea that Europeans and Russians discuss co-operation in situations of minor crises". As to a possible convergence in Russia/EU Balkan politics, Mr. LUKIN stresses that it was he, who recently invited Yugoslav opposition leaders to Moscow. "However, the problems with Milosevic are similar to those with Saddam Hussein. When air strikes are launched against them, their popularity increases. Stalin´s gained popularity when Germany invaded Russia. We should learn from the past, by not inviting the Yugoslav Defence Minister and self-appointed Chechen Foreign Minister Mr. Ilias Akhmadov respectively. That is all I want to say on Serbia".

"Europe should not commit the mistake of considering the USA more European than Russia. Our mentalities are more similar. Besides, Russian and EU interests are of more direct nature, and the USA can indeed prosper even without a foreign policy".

As to a possible joint visit to Chechnya, Mr. LUKIN is not against, but also not convinced about the likeliness of this visit taking place. Holidays are postponed until 7 July 2000 due to the new administrative reform proposals by President Putin.

Financial problems exist, but procedural problems are worse. They come down to the fact that in Brussels everything has to be approved by people who are not always well informed. Every project decision exceeding 10.000 Euro has to be sent to Brussels by diplomatic pouch. Since DG X (Information) was abolished, a dispersion of fonctionnaires over other DGs took place in a rather intransparent way. Implementation rules of new financial procedures, and the tightening controls of SCR, the general directorate for the material implementation of projects, causes many headaches.

There are some vacancy problems. Now Mrs. KOFLER is the only EU-national within the Press and Information department. Six are Russians, which is a bit out of balance.

Mrs. KOFLER regrets that TACIS excludes the possibility of cultural projects. Only Member States Embassies´ involvement may remedy that situation.

Rather bad experiences exist as to co-operation with Dutch institutes, EIPA Maastricht and the Asscher Institute in Leiden, which is good, but horrendously expensive.

Answers to questions by journalists from Reuters and Interfaks.

Deputy Minister Mrs. OSOKINA and her Director-General Mr. SMIRNOV complementarily explain the composition of the new Ministry of Industry, Science and Techonology (MIST). Formerly, a separate Science and Technology ministry existed next to the Ministry of Industry. The main advantage of creating a new MIST is that the process of developing a certain scientific idea to an industrial project remains now within the scope of only one ministry. The "S&T Block" within MIST will be organising many more links with industry now. The Russian Academy of Science, where basic research is being done, is under the auspicien of MIST as well.

As to S&T co-operation with the EU, Minister Osokina is mostly interested in the EU signing the Scientific Co-operation Agreement, which was postponed due to EU criticism on the Chechen Conflict. "This is even more a pity, since such remarkable results were already achieved in EU/Russian S&T co-operation. Thus, the EU Council and the EP should proceed to signing the agreement as soon as possible. Our main problem is the formalisation of our S&T co-operation relation. We need an umbrella structure".

Mr. Jochen NAEGELE, S&T Counsellor to the EC Delegation and Mr. SMIRNOV engage in a heated discussion whether the so-called sanctions really affect S&T co-operation on the operational level. Mr. Smirnov replies by saying "yes, and no". Russia needs solid perspectives. Mr. NAEGELE hopes that the current break will soon be overcome. He also puts up the question whether Russia will pay its GNP-related share in its contribution to the EU´s 6^th Framework Programme. "Russia´s financial co-oepration is essential". Mr. SMIRNOV decides that this is a case for politicians".

Mrs. OSOKINA is ready to pay for Russia´s contribution according to the lines set out by the EU. The amounts concerned are already in the S&T budget. She stresses Russia´s positive attitude in this respect. It should be mentioned that there is "a very successful" bilateral co-operation with The Netherlands in the area of nuclear power and ecology.

As far as the "S&T Department´s main tendencies" are concerned, they materialise in "(1) industry-oriented research, (2) intellectual property rights, and (3) the process of commercialisation. Lots of projects involved wait for implementation, but we don´t know how to proceed. This is a very interesting problem which needs to be discussed separately. Hopes are high with the new Government and the new Minister, and we´re collaborating well at all levels".

The Ministry published an S&T Strategy for the Russian Federation. MIST will be responsible for the implementation of this Strategy. "Our links will be more close to industry, and they will be easier established. We will be able to create a chain between the conception of an idea and its final production".

Just recently, a concept on Governmental S&T International Co-operation was adopted as well. "6 Ministers put their signatures under it. It takes for granted the current transformation to a market economy, though be it slowly and painfully. The Ministry´s role is not to control or dictate, but to make rules, to create conditions and infrastructure. Still, many research institutes and centres are government-owned. There´s no private science yet in Russia. That is an error to be repaired"

"In order to move to a market-economy, we need to create the infrastructure, as well as an academies of science and industrial research centres which need to remain acquainted to the market. Of course, it is most difficult to find the money needed. Next to EBRD-support, new finance mechanisms should be developed. Examples can be found in Finland and Israel, where so-called Fund of Funds were created. With the help of the Federal government, an S&T Centre with a likewise function will be located in St-Petersburg, to create infrastructure and commercial funds in different regions. Governors are already enthusiastic about it, and they show a very good and eager attitude as to the participation in regional branches of the Fund. There is close co-operation with the Ministry of Justice to create a legal framework. I.a., a special group of lawyers was created in order to amend all relevant laws. Smooth procedures as to the registration of foreign capital and a transparent framework venture system are provided for as well due to close collaboration with the Central Bank. The Ministry established a specialised database of about 300 projects to be commercialised. All of them can be found on our website".

As to the question whether the USA act far more efficiently world-wide than the EU, Minister OSOKINA replies that she considers it far more profitable if Russia and the EU join forces. "Then, we could deal together with the USA. We consider ourselves Europeans. Our mentalities are closer, as are our modi operandi, but of course, each side has its merits. We should learn and accept them. If we find the balance, this is good for Russia". Mr. NAEGELE confirms that in the space area, Russia is heavily directed toward the USA. However, "if perspectives on EU co-operation were more stable, Russia would prefer Europe".

Prof. PLATE is secretary-general to the Presidium of the Russian Academy of Science. Despite some problems, which could have been resolved years ago, he views co-operation and relations with the EU as "very good, fruitful and productive. The general approach of enlarging and intensifying current co-operation is completely in line with that of Russia´s intellectual community". Prof. PLATE is as a Member of the Board of MIST, but he only speaks for the Academy of Science. "I will always support any ideas of more intensive Russian scientific involvement in Europe".

Nuclear power stations are not within the Academy´s scope, nevertheless an Academy-related special Academic Institute for the Security of Nuclear Power Stations was created just after the Chernobil incident. It delivers independent experts for industrialists within Russia and abroad, and it is an example of Russia´s first-class scientists being employed as experts in the field. We also have a good national programme for monitoring the environment, which is co-ordinated by an interdisciplinary Ecological Council of academic people. If they erect barriers, they are difficult to overcome. But of course, they have no money".

"Our Ministry for Emergencies supervises a superb network system for seismology, whose modelling powers are far ahead of the West´s. Joining forces with the West could be of great advantage to e.g. the Mediterranean EU Member States. We also avail of many good oceanologists, who could be involved in an International Group of Experts on a lease basis. Russian scientists´ possibilities and capacities are not exploited to the full, but they can be".

"In the aviation sector, competition with the EU and the USA are very strong, almost bloody. I think that the Academy has 2 areas where the results obtained are showing unusual properties of new materials, especially super light metals. In this area, we are on the top. The same yields for super conductive materials. In the material science, we are absolutely ready to share our knowledge with other colleagues working in the same sphere. My message is that there are certainly areas where the level of research is not comparable to the EU´s, but in some areas, Russia is ahead. Good co-operation exists with The Netherlands and Germany. The Academy is now engaged in major collaboration with TNO and Bayer. This is no charity, and all research is published in a normal way".

"The Academy has a long history with the INTAS programme for fundamental research, which, recently, has undergone some cuts. This programme used to be very attractive to Russia, but it is less so now, for two reasons. First, competition has become too strong. We spend too much time now filling in all requests. The result is zero. Second, sometimes so many projects receive the mark "excellent", that we need to randomly choose from a range of very many good proposals. As to financial responsibility, things are going too far. Every penny needs to be accounted for". Mr. NAEGELE explains that in INTAS, the Western partner in a project gets 20%, the Russian partner 80%. "However, the success rate is very low. Western companies are no longer interested to join in. Responsibility lays with the Western co-ordinator, which leads to further hesitations. Furthermore, strict financial rules need to be slightly reconsidered".

According to Mr. NAEGELE, S&T Counsellor to the EC Delegation, the meeting with Mrs. OSOKINA came to the point. New movements were considered toward better future co-operation. Nevetheless, MIST is not to be considered a new S&T Ministry. President Putin has a strong background in promoting industry. "Let´s hope it´s not just talking. New concepts were released earlier, but nothing was ever heard of it again". As to the postponement of the Eu signature under the EU/Russia Scientific Co-operation Agreement, it was Russia who delayed its signature for two years. Unfortunately, at that time, Chechnya interfered". Administrative procedures are the EU´s weak spot, and the Russians know it. That´s why they put so much stress on the EU signature".

How should EU/Russia S&T co-operation be secured for the future? The PCA builds a good foundation. "We should use TACIS means plus a more flexible INTAS programme. Some of its disadvantages are also experienced by the EU as well. We should open up the Commission to adaptations. Industry-related S&T programmes need to be re-furbished. Probably the current profit ratio EU/Russia of 20/80 should be changed into 50/50 or even 60/40".

"At this moment, we are running 3 pilot projects as to industry-related S&T co-operation with involvement of both the EU and Russia, as well as science institutes. However, they are in danger now, since the Russians do not pay for their participation. In Russia, it is almost only Gazprom who pays". The French S&T Counsellor foresees no place for EU-Russia industrial research in the next 3 years. The Commission´s Copernicus programme has no funds anymore, except for some infrastructure, and INTAS is only aimed at basic research and some soft aspects".

"We should ask the question whether Europe, in the long term, will be ready to accept Russia as a fully associated partner in the 6^th Framework Programme".

"The TACIS nuclear power programme only amounts to 17 million Euro, and is severely under-staffed. It comprises not just the safe running of nuclear power stations, but everything, including waste storage, nuclear research etc. Mr. NAEGELE advocates an increase of the total TACIS limit from about 100 million to 150 million Euro, in order to deal with nuclear issues especially. About 60 projects are available now, and 20 of them are perfectly fine. Mr. NAEGELE is in favour of Western Contractors employing Russian subcontractors".