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Russia Report: April 28, 2006

28 April 2006, Volume 6, Number 8
The initial public offering of Russia's state-owned oil company Rosneft, expected this summer, is creating a storm in the investment community. One of the largest-ever IPOs, it stands to make $20 billion. But the offering has also sparked controversy. Some think of fast-growing Rosneft as a lucrative investment opportunity. Others see it as a company eager to profit off stolen property.

Either way, there is no denying that Rosneft is an overnight sensation. Two years ago, the state-owned oil company was producing fewer than 500,000 barrels per day. Now that number has spiked to 1.5 million.

And if Rosneft's president is good for his word, that output is set to double over the next decade to 3 million barrels a day as the company moves to develop oil fields in Sakhalin.

Speaking on April 24 at the Russian Economic Forum in London, Rosneft President Sergei Bogdanchikov claimed that the company could be the world's largest oil producer by 2015.


It's an enticing prospect that comes as world oil prices skyrocket to historic levels. But not everyone will be lining up to buy shares. In an opinion piece published in the "Financial Times" on April 26, the billionaire financier George Soros warned the IPO "raises serious ethical and energy security issues" at a time when Europe is seriously questioning its energy dependence on Russia.

The critique from Soros was followed by an even stronger gesture from a powerful London financial firm. F&C Asset Management has reportedly advised investors to avoid the Rosneft IPO as an unacceptably risky venture.

Many Rosneft detractors point to the fate of Russia's former oil superstar, Yukos. Rosneft's star has risen as Yukos has been systematically stripped of its assets following what many consider the politically motivated arrest and prosecution of its chief, Mikhail Khodorkovsky.

Yuganskneftegaz Takeover In particular, critics are uneasy about Rosneft's takeover of Yuganskneftegaz, Yukos's largest production unit, after Khodorkovsky was jailed for fraud and Yukos was hit with $28 million in tax claims.

Yuganskneftegaz is now Rosneft's biggest asset, and its purchase helps explain how the company has managed to triple its output since 2004. But the circumstances of the acquisition were opaque. Some investors are questioning whether it is ethically and legally palatable to vie for shares of what critics say is essentially stolen property.

Not everyone is troubled by such doubts, however. Powerful financial firms like Morgan Stanley and JP Morgan Chase are acting as advisers on the Rosneft IPO, and Rosneft recently hired its first full-time Western executive, an American investment adviser, to lead strategic investment projects and external financing.

During Bogdanchikov's appearance at the Russian Economic Forum, the talk was of a potential oil-production bonanza -- and not, as one paper described it, "the specter of Yukos."

Bogdanchikov has refused to state precisely the size of the IPO. But earlier announcements stated that 49 percent of the company shares would be up for offer.

Bogdanchikov has said foreign strategic buyers are welcome to a major stake as long as the state maintains control over Rosneft. India's state-owned oil and gas company ONGC and China's national energy firm CNPC have been named as potential buyers.

But as investors prepare for the planned flotation on the London Stock Exchange, there are fears a successful IPO will only serve to legitimize the Kremlin's apparent willingness to seize Russia's energy assets by any means possible.

A $20 billion payoff may be seen as a reward for Russian President Vladimir Putin and his advisers -- notably Igor Sechin, now the head of Rosneft's board of directors -- for their crackdown on Yukos and Kremlin critic Khodorkovsky.

It may not be enough to deter investors, but for policy analysts, it's a dire concern. As the Economist Intelligence Unit recently asked: "Having got away with it once, what is to stop Russia's authorities from doing something similar in the future?" (Roman Kupchinsky)

Russian President Vladimir Putin has said a new oil pipeline from Siberia to Russia's Pacific Coast must be routed away from Lake Baikal.

Speaking at a regional meeting in the Siberian city of Tomsk, Putin said on April 26 that the pipeline, which joins Siberia with Russia's Pacific Coast, must be routed away from Lake Baikal.

"If there is even the smallest, the tiniest chance of polluting Baikal, then we must think of future generations and we must do everything to make sure this danger is not just minimized, but eliminated," Putin said. "This means that the pipeline we're talking about must go above the northern border of Lake Baikal's watershed."

State television showed Putin pointing with a red pen at the projected route of the pipeline on a giant map, and saying it must be moved more than 40 kilometers further to the north. Lake Baikal is estimated to hold 20 percent of the world's surface fresh water.

Environmental Concerns

Environmentalists and experts have said the lake could be permanently damaged in the event of an oil spill. In the event of an accident, they say, up to 3,000 metric tons of oil could find its way into Lake Baikal within 20 minutes. The multi-billion-dollar pipeline was originally routed to pass less than 1 kilometer from the lake. Experts have also raised concerns about the danger of seismic activity in the area.

Roman Vazhenkov, the head of Greenpeace's Baikal program, told RFE/RL that the decision has been a long time in coming: "It is a pity that only after mass protests in the whole county, the authorities have finally listened to the voice of scientists, the voice of specialists, the voice of the society, [and] seriously got into the problem and have taken the correct decision, which we welcome."

Putin's statement came as a surprise to many, as previously the state environmental watchdog supported the original route.

Oil To Far East

Vazhenkov thinks Putin's announcement sends a strong message to the state-owned Transneft oil pipeline company: "I think that President [Putin's] announcement is an important signal for Transneft company, a signal telling them that they should approach this problem in a different way."

Transneft has previously insisted that the pipeline poses no danger to Lake Baikal. But, in an interview with RFE/RL, Sergei Grigoriyev, the vice president of Transneft, appeared to welcome the decision.

"On the whole we are happy with President [Putin's] decision because now we can smoothly start the construction. Now we will be able to work calmly without this political component, as I would call it," Grigoriyev said.

When complete, the pipeline should pump up to 80 million metric tons a year to Russia's Far East. The oil will then be sent to Japan and China.

German Chancellor Angela Merkel and Russian President Vladimir Putin met on April 26 in the central Siberian city of Tomsk for the second Russian-German summit since Merkel's election in November 2005. Bilateral ties and energy issues are expected to top the two-day summit's agenda, and it is expected Merkel will raise Europe's concerns about Russian gas supplies and try to secure Moscow's support on the Iran nuclear standoff.

On the first day of the summit, Merkel and Putin had a face-to-face meeting at Tomsk University.

The talks were rather informal, with the Russian president jokingly vowing to have his German visitor get a foretaste of the local cuisine. "I hope that today I will be able to treat you with real Siberian pelmeny [sort of Russian ravioli]," he said. "As you see, we have a full program."

Putin has maintained close personal ties with Gerhard Schroeder, Merkel's predecessor. But observers in both countries expect bilateral relations to be more business-like under the new German chancellor.

On April 27, both leaders will meet again, this time in the presence of delegations of businesspeople and ministers. The summit is expected to end with the signing of several bilateral documents.

Merkel is traveling with a 20-strong delegation that includes senior banking and business executives. Putin, who arrived earlier in Tomsk to meet with Siberian regional governors, is accompanied by no less than 19 ministers and government officials.

Energy Security A Main Issue

"In all likelihood, energy security will be among the main issues to be discussed," said Vladimir Yevseyev, an expert with the Russian Academy of Sciences' Institute of World Economy and International Relations (IMEMO).

"All the more so as Russia sees it as a priority now that it is heading the G-8 [Group of Eight most industrialized nations]," he continued. "In this regard, the ties that exist between Russia and Germany are quite close. Russia exports a significant volume of its energy resources to Germany and, of course, Germany would like its cooperation with Russia in this field to develop successfully."

Russia's Gazprom gas monopoly provides approximately one-quarter of Europe's natural-gas needs, and one-third of Germany's. In January, it briefly cut off supplies to Europe amid a bitter price dispute with Ukraine. Russian gas meant for Western and Central European markets runs through pipelines that stretch across Ukraine and Belarus.

More recently, Gazprom has expressed concern at EU plans to deregulate energy markets and threatened to favor Asia over Europe for long-term gas sales.

Yevseyev also says he expects Putin and Merkel to discuss Germany's possible participation in Russia's nuclear projects.

"Russia is interested in securing Germany's participation in a number of energy projects," he noted. "With this regard, the [upcoming talks] may not only touch on the underwater shipment of [Russian] energy resources through the Baltic Sea, they may also touch on Germany's possible participation in Russia's plans to develop [new] nuclear reactors. This would be in line with a proposal made recently by the administration of U.S. President George W. Bush. These new types of reactors would be safer from the viewpoint of proliferation, which is very important for Germany."

Iranian Nuclear Standoff

Merkel and Putin are also widely expected to discuss Iran's nuclear standoff with the West.

Germany is one of the three EU countries, with Britain and France, that have been negotiating with Iran on behalf of the 25-member bloc. They have been attempting to convince Iran to abandon its uranium-enrichment program.

Moscow, in turn, has offered to create a joint venture that would enrich Iran's uranium on Russian soil. Tehran has sent mixed messages about the Russian proposal, saying alternately it was interested, and then not interested.

Russia, which is one of Iran's main economic partners, is adamant that the nuclear dispute should be resolved through diplomacy. Moscow categorically opposes any possible military intervention against Tehran in the case of it refusing to abandon its controversial nuclear program.

Yevseyev believes the upcoming Putin-Merkel talks could help bring the German and Russian positions closer on the Iranian nuclear issue. But, he says, that does not mean Russia will be alone in altering its stance.

"In my opinion, we should talk here of a mutual rapprochement," he says. "For example, [both sides] could state that the use of force to solve [Iran's nuclear] problem is unacceptable. They could also state that sanctions [against Iran] could be a matter of discussion. Russia opposes sanctions for now, while many European countries say they are in favor. But maybe a compromise on this issue could be possible. In any case, that would help create additional leverage on the Iranian leadership. If before the Iranian leaders thought Russia would always defend them whatever steps they take, I think they now understand Russia will not always defend them if they do not take [its] opinion into account."

The UN Security Council has called on Iran to effectively end its uranium-enrichment program by April 28. After that, Tehran faces a tougher resolution that could envisage the imposition of international sanctions.

The Reuters news agency on April 24 quoted an unidentified German diplomat as saying Merkel would urge Putin to insist that Iran accepts Moscow's joint enrichment offer. In case of a refusal, the diplomat said the German chancellor would then press the Russian president to agree to sanctions against Tehran.

Yevseyev says he believes a rapprochement between the two countries on the Iran issue "is not only possible, but highly desirable."

Leading Russian businesspeople, politicians, and foreign investors have been meeting in London this week to toast their recent successes and to discuss the current and future business climate in Russia. This year's Russian Economic Forum, which wrapped up on April 25, has taken on new significance as the "barometer of the Russian economy."

Coming off a year in which an estimated $17 billion in foreign direct investment was pumped into Russia, the mood of Russian business representatives at the ninth annual Russian Economic Forum has been largely positive.

And with the country taking on the presidency of the Group of Eight industrialized nations, a number of initial public offerings on tap, and its rising status as an energy supplier, Russia is attracting global attention as well.

Image Makeover

With that in mind, changing the perception of Russian business abroad is one of the key objectives of the April 23-25 forum. That according to Simon Joseph, general director of Eventica, the Russian-British company that organized the event.

"The idea is to show different sides of Russia to Britain. Russian business, Russian culture, what's happening in Russian politics to a certain extent, although the focus is mostly on business, and also to give Russian people a chance to look into a mirror, so to speak," Joseph said. "To come to London and to get a feeling for how the rest of the world is looking at them, with the feedback they get from people here."

Much of the focus at this year's forum was on addressing the concerns of foreign investors, whose interest was piqued when key Russian business and government officials used last year's event to criticize the lack of transparency and constraints placed on Russian business.

This year's meeting attracted 2,000 attendees -- representing investment funds, accounting firms, oil and gas giants, and global media. They have been treated to discussions of property rights, Russia's judicial system, corruption, and the relationship between the state and business.

They also heard criticism of the state's predominant role in big business for the second year in a row.

Alfa Bank President Pyotr Aven, who was among the most vocal critics of Russia's economic reforms during last year's forum, yesterday decried the increase of state spending.

"In our country the state apparatus is growing at a gigantic, catastrophic speed," Aven said. "It poses a serious question about how effectively economic problems can be tackled in this situation."

Another, prominent speaker, Unified Energy Systems head Anatoly Chubais, told participants he considers the increasing role of the state to be a tactical mistake.

"I consider these actions to be a huge tactical -- and I stress it -- a tactical mistake," Chubais said. "I am sure that in five or three years it will be easily understood. Then the second wave of privatization will come."

Rosneft In The Spotlight

One of the most anticipated speeches of the three-day event came from Rosneft President Sergei Bogdanchikov, whose company is preparing for an initial public offering this summer that is expected to be one of the largest in history.

Bogdanchikov said yesterday that Rosneft, which benefited greatly from the downfall of Yukos by taking over its subsidiary, Yuganskneftegaz, is now the "absolute leader in reserve growth" worldwide and third in exploration. He predicted that by 2015 the company would double its current output and become the world leader in terms of capitalization.

Youth Movement

But while much of the attention was given to the future of major Russian firms, their smaller brethren were not forgotten. Instilling a mind-set of fresh thinking by attracting representatives from Russia's entrepreneurial ranks was one of the key objectives of the forum.

"Maybe a few years ago we would have loved to have had them and they would not have come," explained event organizer Joseph. "Now, they're calling us and pushing us and they're ready to come over. And that's very important, because that's the critical thing for the Russian economy. I think that these smaller companies will get stronger and that you will see a new business environment forming with people who are bringing fresh ideas that are completely untainted by the old system."

One young businessman who made the trip is 36-year-old Aleksandr Gordiyevskikh, from the Siberian city of Tomsk. His firm, Tommarket, reprocesses glass to produce panels that can give new life to the facades of office and industrial buildings.

"We have set ourselves a goal of changing the look of Russian cities, especially Siberian cities in connection with the fact that in our regions one would wish to have better architecture," Gordiyevskikh said. "We would like to see the maximum use of glass."

After finding an investment partner after attending last year's forum, Gordiyevskikh came this year looking to expand his business.

Another representative of Russia's younger business circles, 34-year-old Ruslan Sitdikov, came to London to promote Rus'n Rus Agro, a Nizhny Novgorod-based agricultural company.

"Well, I am in London first to learn about the trends of business development in Russia, to meet up with my colleagues from Russia, to find partners for the enlargement and strengthening of our company on the Russian market," he said.

Sitdikov, who is vice president of the company, hopes his first trip to the forum will result in new investment partners. As for how free Russia is today for doing business, he smiled, saying only that there is "enough freedom."

(RFE/RL's London-based correspondent Jan Jun and RFE/RL Russian Service's Mikhail Sokolov contributed to this report)

Several events occurred in April that again showed the increasingly important role that energy security is playing in the uneasy relationship between Russia and the West.

On April 18, a week prior to the opening of the ninth annual Russian Economic Forum in London, Gazprom CEO Aleksei Miller addressed a Moscow gathering of 25 EU ambassadors. After Miller's speech, Gazprom distributed a statement that not only underscored ongoing tensions between the European Union and Russia, but exacerbated them.

Relations With EU

"It is necessary to note," the statement read, "that attempts to limit Gazprom's activities in the European market and to politicize questions of gas supply, which in fact are of an entirely economic nature, will not lead to good results."

"It should not be forgotten that we are actively familiarizing ourselves with new markets, such as North America and China," the statement continued. "Gas producers in Central Asia are also paying attention to the Chinese market. This is not by chance: competition for energy resources is growing."

The statement appeared to be an attempt to play off potential U.S. buyers of Gazprom's liquefied natural gas (LNG) against European clients, while at the same time threatening to make cash-rich but energy-poor China Russia's exclusive and limitless market for gas and oil if the Europeans refuse to play according to Russian rules.

'We Have Other Alternatives'

Sergei Kupriyanov, a Gazprom spokesman, was explicit in his interpretation of the statement. He told the U.K.-based "Financial Times" on April 20: "We just want European countries to understand that we have other alternatives in terms of gas sales. We have a fast-growing Chinese market, and a market for liquefied natural gas in the U.S. If the European Union wants our gas, it has to consider our interests as well."

The concept outlined in the Gazprom statement is not a new one. According to "The Moscow Times," Gazprom's management presented a strategy paper to its state-dominated board of directors in March. On March 30, the newspaper described the paper as a plan to boost Gazprom's share of the European gas market to 30 percent from 25 percent "by buying into gas storage, gas marketing, and power firms."

Centrica Link

Media reports have also linked the Gazprom statement to the EU to rumors of attempts by the Russian gas monopoly to buy into the largest British utility company, Centrica. British countermeasures to prevent this by changing the laws on foreign ownership of strategically important British companies apparently angered the Kremlin and it responded with the warning statement.

The United Kingdom is not the only country Gazprom is setting its sights on. During a meeting in Sochi on August 29, 2005, Putin asked Italian Prime Minister Silvio Berlusconi to allow Gazprom to invest more heavily in his country, saying: "It is in our interest that our companies, including Gazprom, be allowed to invest extra money in Italy's energy sector, including in gas-distribution networks," RIA Novosti reported.

A Questionable Middleman

There was more controversy on April 21 when "The Wall Street Journal Europe" reported that the U.S. Department of Justice's organized-crime unit had begun an investigation into the activities of the Swiss- and Austrian-based gas-trading company RosUkrEnergo.

RosUkrEnergo was created in July 2004 during a meeting in Yalta between Putin and former Ukrainian President Leonid Kuchma. It took over the function of being the middleman for gas deliveries from Turkmenistan to Ukraine from Eural Trans Gas, a company formed in Hungary in December 2002.

When the new Ukrainian government of Yuliya Tymoshenko took power in early 2005, one of the first investigations begun by the Security Service of Ukraine (SBU) was the case of RosUkrEnergo. The investigation looked into the hidden beneficiaries of the company, who were protected by Austrian law from disclosure. RosUkrEnergo officials refused to name its beneficiaries, while Gazprom officials claimed that they had no information about them.

After the Tymoshenko government was fired by Ukrainian President Viktor Yushchenko in late summer 2005, the SBU investigation of RosUkrEnergo was reportedly dropped.

In January this year, RosUkrEnergo, allegedly at the insistence of the Russian government, was designated as the middleman for the new gas agreement between Ukraine's Naftohaz Ukrayina and Gazprom.

The company stood to make more than $2 billion from the deal and this further incensed Tymoshenko's followers, who insisted that Yushchenko renew the investigation and renegotiate the deal with Gazprom in such a way as to keep RosUkrEnergo out of the picture.

The Human Rights Connection

Soon after news of the U.S. investigation of RosUkrEnergo broke, Global Witness, a U.K.-based nongovernmental organization that works to expose the link between natural-resource exploitation and human-rights abuses, released a major report on the activities of Eural Trans Gas and RosUkrEnergo.

The report, titled "It's A Gas -- Funny Business In The Turkmen-Ukraine Gas Trade," claims that offshore companies hide the real beneficiaries of Eural Trans Gas and says there are inconsistencies in statements by Gazprom and Naftohaz Ukrayina officials about RosUkrEnergo and its role in the gas business. The report also claims that Turkmen President Saparmurat Niyazov has allegedly used a German bank to hide billions of dollars earned from the gas trade.

As tension increases between Western countries and Gazprom, the Russian gas monopoly's shares traded on Western exchanges in ADRs (American Depositary Receipts) continue to climb in price. Whatever happens, Western investors are likely to still be attracted to Gazprom and other Russian energy stocks as global oil prices soar over $70 a barrel. (Roman Kupchinsky)

Russian officialdom has now thrown itself into the fight against racist violence. Against a mounting backdrop of xenophobic killings and attacks, authorities have sought to beat back the hate. But the campaign has a political subtext that raises questions about its real goals. Moreover, the most widespread abuses that afflict ethnic and other minorities in Russia are continuing unabated.

This year has seen a rash of racially motivated incidents. On January 11, 20-year-old Aleksandr Koptsev stabbed eight people in a Moscow synagogue. On February 5, a man from Mali was stabbed to death in St. Petersburg, where in late 2005 a student from Cameroon and an antifascist activist suffered the same fate in separate attacks. On March 25, assailants beat and stabbed a 9-year-old mixed-race girl in St. Petersburg. On April 1, Zaur Tutov, a cultural official from Russia's North Caucasus region, was beaten in Moscow by a group of young men shouting nationalist slogans. And on April 7, Samba Lampsar Sall, a Senegalese student, was shot to death in St. Petersburg by an unknown attacker who left a shotgun emblazoned with a swastika at the scene of the crime.

The attacks garnered high-profile coverage in the Russia media.

And officials, who frequently downplay the dangers of racist violence, have taken action.

On March 22, a jury in St. Petersburg found seven defendants guilty only of "hooliganism" in the 2004 stabbing death of a 9-year-old Tajik girl, Khursheda Sultonova, acquitting an eighth defendant. But this time, prosecutors appealed what critics derided as a typical example of lax prosecution of hate crimes in Russia. In the Tutov case, federal prosecutors stepped in to request that hate-crime charges be filed despite the initial assessment by Moscow prosecutors that it was a run-of-the-mill incident. Members of the recently created consultative body, the Public Chamber, warned at an April 14 meeting that "the problem of racial intolerance in the country has recently acquired particular urgency," Channel One reported.

Mixed Messages

But some official actions in the fight against violent xenophobia have sent an oddly mixed message.

Some in the opposition have dismissed as a publicity stunt an "antifascist pact" signed by a number of political parties in February. Signatories had included Vladimir Zhirinovsky's Liberal Democratic Party (LDPR), which has effectively mixed xenophobic rhetoric in the public arena with pro-Kremlin votes in parliament for years. Opposition Yabloko First Deputy Chairman Sergei Ivanenko said that another signatory -- -- the pro-Kremlin Unified Russia party -- had not taken "any concrete steps aimed at combating fascism and xenophobia."

Meanwhile, seemingly sanctioned "antifascist" rhetoric -- particularly as trumpeted by the Kremlin-sponsored youth movement Nashi (Us) -- has tended to fixate on vocal foes of the Kremlin. That has deepened doubts about the campaign's sincerity. A May 2005 brochure published by Nashi charged that "bankrupt 'liberals and democrats' today support avowed Nazis," citing as examples the well-known liberal politician Irina Khakamada, head of the Our Choice party, and Yabloko. Nashi implied a similar linkage in a March 2006 brochure. Asked by "Novye izvestia" on April 17 why Nashi described her as a fascist, Khakamada responded, "That's the PR concept Nashi is working with. They're fascists themselves, but so that no one notices this, they accuse people with democratic views of this and label them. It's aimed at idiots."

Nashi itself has been linked to football hooligan organizations noted for their street-fighting proclivities and ties to avowedly xenophobic skinhead groups. reported on April 4 that Nashi organizer Aleksei Mitryushin was the leader of the Gallant Steeds fan club (affiliated with Moscow's CSKA soccer team), while fellow Nashists Roman Verbitsky and Vasily Stepanov headed the Gladiator fan club (affiliated with Moscow's Spartak football team). According to, all three were present at a meeting of Nashi "commissars," as the movement dubs its ringleaders, and Vladislav Surkov, a close Putin aide, in July 2005. At the same time, Mitryushin, Verbitsky, and Stepanov were on file with the Moscow militia unit charged with keeping track of football hooligans and skinheads, stated.

The Nashi-football ties may be more than incidental. Nashi opponents charged that the movement used its connections with the soccer thug underworld to mobilize two dozen bat-wielding heavies for an August 29, 2005, attack on anti-Kremlin youth activists, including members of the radical National Bolshevik Party (itself no stranger to fascist leanings, particularly in the 1990s). For their part, official representatives of Nashi denied any link to the attack.

Nevertheless, Nashi leader Vasilii Yakemenko told provincial youth in 2005 that he would have enlisted soccer thugs to "sort out" the political demonstrations that rocked Kyiv in late 2004, "Moskovsky komsomolets" reported on August 31, 2005. Yakemenko said, "I would have contacted my colleagues in the Spartak soccer fan movement and they would have assembled 5,000 of their supporters with those blue plastic seats that they bang in the stadiums...and they would have used the seats to chase the 100,000 who came out on the Maidan [central square in Kyiv] to the Dnepr [River]."

'A Democratic Antifascist Movement'

Yakemenko's reported comment reflects the Kremlin's allergic reaction to Ukraine's Orange Revolution, and skeptics charge that Nashi, which bills itself as a "democratic antifascist movement," and the official antifascist campaign in general are really intended as a prop for the Kremlin's political designs. Sova Center, which tracks xenophobic and extremist attacks and sentiments in Russia, wrote in an analytical note on April 4 that the official antifascist campaign's aim is "to distract Russian society from a mood of social protest and to discredit the political opposition in the lead-up to elections." Nikita Belykh, the head of the liberal party Union of Rightist Forces, told "Novye izvestia" on March 3: "The authorities today need fascists. They need them so that in 2007 and 2008 they can offer the country a simple choice: black or white, us or them, the 'right party' or the 'fascists.'"

Dangerous Divides

Political maneuvering aside, Russia is a richly multiethnic society with a potentially dangerous capacity for xenophobic conflicts. One divide runs between Christian ethnic Russians and the primarily Muslim peoples of the North Caucasus, where the Chechen conflict continues to simmer at a low boil. Another sizable, identifiable minority comprises migrants -- most of them from Central Asia and the Caucasus. A recent UN study released found that Russia in 2005 was home to the second-largest number of migrants in the world -- 12.1 million.

Racist violence is one of many perils that face migrant workers in Russia.

The killing of 9-year-old Sultonova in what many believe was a racist attack garnered considerable media attention despite the St. Petersburg court's "hooliganism" verdict. But as Davlat Khudonazarov, a filmmaker and former presidential candidate in Tajikistan, wrote in "Izvestia" on March 24, hundreds of Tajik migrant workers in Russia each year "die on construction sites, the roads, [or] fall victim to skinheads, crime, and the police."

Statistics vary on the numbers of deaths. Tajikistan's Interior Ministry stated that 246 Tajik citizens died in Russia in the first 11 months of 2005, reported on December 3, 2005, with 115 succumbing to illness, 99 killed in accidents, 36 murdered, and six cases unresolved. Khudonazarov put the number of Tajiks who die in Russia each year at 600-700. An April 5 report by Russia's TV-Tsentr claimed that "each year more than 2,000 migrant workers return to Tajikistan in coffins." Karomat Sharipov, head of the Tajik League, told TV-Tsentr: "On the way from Domodedovo Airport in Moscow in 2003, 125 Tajiks vanished. Look at the distance -- it's 22 kilometers. This is real. It happens every day."

The collapse of a Moscow market on February 23 vividly illustrated the prevalence of migrant labor in the lower echelons of the Russian economy. After the disaster, the Emergency Situations Ministry announced that the 66 dead included 45 Azerbaijanis, eight Georgians, six Tajiks, three Uzbeks, and three Russian citizens, the website reported on February 26. Earlier that month, 12 Tajiks died in two separate fires in Russia, RFE/RL's Tajik Service reported.

Migrants and minorities are vulnerable communities, and recent events indicate that this is especially true in Russia. Racism and xenophobia may be the most disturbing of the threats they face, but police corruption, spotty medical care, inadequately defended rights, and an aging infrastructure take a heavier toll.

Official efforts to raise awareness of hate crimes are a positive development, despite the subtext of political chicanery. If these efforts are genuine, perhaps they will extend to the less media-friendly -- but more pervasive -- ills that pose as great a danger to the Russian majority as they do to the migrants and minorities who are targeted by racists and xenophobes. (Daniel Kimmage)