Russian diary \ N37

1. NEWS FROM RUSSIA
RUSSIAN CINEMA ON THE UPRISE

2. DIPLOMACY
FOCUS OF THE PRESS: NATO'S BLIND ALLEY IN MACEDONIA

3. ECONOMY
THE GOVERNMENT SENDS THE 2002 DRAFT BUDGET TO THE PARLIAMENT

4. COMMENTARY OF THE DAY
NATO OPERATION IN THE BALKANS IMITATION OF ACTIVITY

6. DOCUMENTS
Russian President Vladimir Putin's Meeting with President Boris Trajkovski of Macedonia Press Opportunity, Kyiv, August 24, 2001

RUSSIAN CINEMA ON THE UPRISE

     Marina SHAKINA, RIA Novosti analyst

     In late August, Russia marked the Day of Cinema, established back in 1979 -- the time when cinematography was protected and favoured by the Soviet state but also fully controlled by it, both financially and ideologically.

     After decades of rigid censorship and lack of artistic freedom, Russian cinematographers welcomed 1991 as the year of liberation that brought long-desired market economy and free competition. Paradoxically however, the majority of motion pictures created in the atmosphere of spiritual freedom of the early nineties were made in annoyingly bad taste. It wasn't long before the country felt a surge of nostalgia for Soviet cinematography with its great filmmakers like Sergei Eizenshtein, Sergei Bondarchuk and Andrei Tarkovsky.

     The lament for freedom that was typical of cinematographers before 1992 gave way to complaints about money shortage and predominance of Western produce. The decade that followed the disintegration of the USSR and the beginning of market reforms turned out a hard time for ex-Soviet film industry, which suddenly found itself hanging in the balance.

     Three world-famous film giants, Mosfilm, Moscow's Gorky Studio and St. Petersburg's Lenfilm, remained state property and were practically altogether unused, managing to keep going by selling the right to screen the old Soviet movies they made before 1992, leasing their productive capacities to small private companies, letting out their premises to tradesmen, etc.

     After 1992, the Soviet film-producing and film-hiring system lay in ruins. Private film production, which could have saved the situation, never made it to the masses because of high risks and lack of investment. The only way out was to resort to state support, state order and state-owned film-hiring, which was exactly what Russian cinematographers did after a short while.

     After 1992, the country was literally flooded by foreign-made films, American in the first place. On the whole, the early nineties were marked by a keen interest in foreign cinematography, which is quite understandable considering the seven decades spent behind the Iron Curtain. Up to this day, the overwhelming majority of hired movies are foreign-made.

     But that does not mean Russia has made no movies of its own since 1992. For Russia's world-renowned director Nikita Mikhalkov, the nineties were the peak of his film-making career, which gave birth to two highly successful movies, the Oscar-winning Burnt by the Sun /recently screened all across the country and Europe/ and his latest creation, The Barber of Siberia. Apart from those, there was the Oscar-winning Prisoner of the Caucasus by Sergei Bodrov Sr. and a few decent joint projects like the Russian-French East-West.

     Those were high-quality, well-financed products intended for export and international festival nominations, sponsored by all kinds of sources but mainly from abroad. Very often, such movies were made by Russian filmmakers who reside in the West.

     As time went by, Russia witnessed the gradual and almost imperceptible birth of a film industry that focused on, so to say, "folk" movies "for Russian consumers only," such as the Lenfilm-produced Peculiarities of National Hunt, Peculiarities of National Fishing and Peculiarities of National Politics, an unexpectedly popular and commercially successful comic trilogy. The first success encouraged an entire generation of very talented young filmmakers, who came up with low-budget but hugely successful movies like the hottest hit of the previous season, Brother-2, by young film director Alexander Balabanov.

     Tired of Western movies, the audience felt a longing for good old homemade films, which visibly reflected itself in the charts of the country's most popular TV programs, where Russian-made series were rapidly replacing the US and Latin-American "soap" that was immensely popular with Russian TV viewers just a while ago. But so far, nothing has ever compared in popularity with old Soviet movies.

     It's been some years now that the Russian film industry and the state launched an all-out effort to revive Russian cinematography and restore its international prestige, which included the introduction of several professional nationwide film festivals and cinematographic awards. The best-known film event, Nike, is held annually to sum up the results of Russia's previous cinematographic year. The Soviet-era Moscow International Film Festival has also been revived and is gradually taking the shape of a genuinely grand show.

     Last April, President Putin signed two decrees that envisage sale of shares of existing state-owned film studios and creation of a state-owned film-hiring enterprise, both of which are meant to effect a radical change in the Russian film industry.

     Presidential decrees will undoubtedly streamline the development of Russian cinematography. Indeed, the country's potentially profitable film market is gradually growing and must be allowed to earn money -- all the more so since homemade cinematographic products have a general run.

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FOCUS OF THE PRESS: NATO'S BLIND ALLEY IN MACEDONIA

     Moscow, RIA Novosti, August 23

     A special contingent of NATO forces is currently being deployed in Macedonia, whose task is to disarm Albanian extremists. This is a subject that is widely discussed in today's Russian press.

     The newspaper Trud recalls that the road to the deployment of NATO units in Macedonia was opened by the agreement to end the political crisis and settle security issues that was signed on August 13 by representatives of the main political parties of Macedonia in the health resort of Ohrid.

     "Despite the fact that the Ohrid agreement confirms the sovereignty and unitary nature of the Macedonian state and stresses that there is no territorial solution for ethnic problems, it again evidences the effectiveness of the tactics chosen by the Albanian extremists, who have well learned the lessons of Kosovo," writes the Trud analyst. The main lesson of Kosovo for the Macedonian Albanians is that violence committed by an extremist-minded minority is an efficient instrument for attaining political goals and a good starting point for negotiations with the West." The Albanian extremists have managed to achieve substantial political concessions which provide for the introduction of a number of changes into the country's constitution. These innovations include further de-centralization of the control system, granting to the Albanian language of the official status in areas where Albanians account for no less than 20% of the population, and also an increase of the number of representatives of the Albanian population in state bodies, particularly in local police structures, explains Trud.

     The author of the article believes that "implementation of the Ohrid agreement is not very likely against the background of the on-going clashes between government forces and the gunmen. It is not at all surprising that NATO has not taken upon itself the function of controlling its fulfilment, having confined itself to the task of collecting arms from the Albanian extremists. The latter will directly benefit from the deployment of NATO units because the Macedonian army and police will be compelled to stop actions against the gunmen which will give the extremists the chance to gain a foothold on the territories already under their control." There is no sense in the gunmen's "voluntary" laying down of light arms, although it presupposes a number of arms-collecting measures carried out for show, which is in the interests of the Albanian extremists, resumes the paper.

     It is not quite clear what is to be considered as the conclusion of the Essential Harvest operation, NATO's mission to collect and destroy Albanian arms, notes the article in Vremya Novostei. The number of arsenals of the so-called Albanian National Liberation Army (NLA) is estimated in different ways by the conflicting sides. NATO representatives are more inclined to believe the many-fold under-rated NLA data on the 2,500 units of arms than the information provided by the Macedonian Interior Ministry, states the author of the article.

     "Even if the Albanian rebels really hand over a substantial part of their arsenals, which is doubted, goes on Vremya Novostei, nothing will prevent them from re-arming as soon as the peacekeepers go back to the places of their permanent deployment. Particularly since the Kosovo experience has shown that it is impossible to reliably seal the arms supply channels of the Albanian gunmen.

     The paper Vremya MN also doubts that the Essential Harvest will be a constructive operation. The sub-heading of the article reads: "NATO's New Intervention in the Balkans Guarantees No Peace, but is Fraught with War." The analyst writes: "The experienced former commanders of the contingents in Bosnia and Kosovo reproach NATO of being naive, saying that the gunmen have long hidden away their best weapons, and will hand over only such they do not need themselves." If, for example, the Albanians hand over at least one mortar, that will only serve to confirm NATO's data that they possess mortars. And if they do not hand over any, then the gunmen could at least be accused of being insincere. One cannot take that very mortar away from them, since the disarmament is voluntary, says the author of the article.

     Besides, goes on Vremya MN, formally, it is only the National Liberation Army that is demilitarizing. "But in Macedonia there are also gunmen who are fighting under other emblems. Since July 5 when a ceasefire agreement was concluded in Macedonia with NATO's mediation, the gunmen have managed to expand the zone under their control in the North-West. This has been confirmed not only by the Macedonian authorities, but also by NATO representatives." Vremya MN concludes that the conflict may further aggravate: although NATO declares that it is impossible for it to be drawn into the Macedonian confrontation, there are no guarantees for that. The alliance defines the nature of its presence in the region by itself, and a direct involvement into the conflict cannot be excluded, since NATO has the right to use force if it is attacked." The Albanian extremists have timed another action to the beginning of NATO's operation: they have blown up a 14th-century Orthodox church in the Macedonian village of Lesok. "Hitherto the gunmen of the region have never encroached on religious shrines, but now they have decided to follow the example of the Afghan Taleban who are destroying Buddhist temples in Afghanistan," says the newspaper Kommersant. That act of vandalism committed by the Albanians is meant to bring a religious factor into the Macedonian conflict," concludes the paper of the business circles.

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THE GOVERNMENT SENDS THE 2002 DRAFT BUDGET TO THE PARLIAMENT

     RIA Novosti - Moscow Diary

     According to the Russian legislation, the government is to forward the 2002 draft budget to the State Duma (lower parliamentary house) in late August. The government approved the draft at its August 21 session.

     The main feature of the draft is the government's firm resolve to continue living "within one's means," which means minimum state expenses, maximum repayment of foreign debts, control of every budgetary rouble and its disposal. The 2002 draft budget is a very cautious document elaborated with a large margin of safety.

     The first thing analysts usually note is the estimated price of Russia's main export commodity, oil. Today Russian oil is sold on the world market at around 25 dollars per barrel, but the budget is based on the assumption that it may go down to 18.5 dollars. The Finance Ministry estimated the 2002 revenues on the basis of this figure, which was the mean world oil price in the past ten years.

     "Budgetary expenses will be funded in full and we do not envisage a reduction of expenses even if world oil prices plummet," said Finance Minister Aleksei Kudrin, a deputy chairman of the government. He added that the cabinet has an action plan to be enacted in case of an unfavourable oil price situation.

     The budget will be fulfilled even if this happens, Kudrin said, although this will entail problems with the repayment of foreign debts (the country is to pay 14 billion dollars next year). In this case the government will have to mobilise the returns of the privatisation of state property and seek assistance on the world loan market.

     On the other hand, Russia will need to loan no more than 1 billion dollars - or 2 billion at the most, and the government is prepared to try its luck with Eurobonds. Moreover, the cabinet members are convinced that Russia should go out on the world loan market anyway, simply to see how Russia is regarded in the world now and if its financial obligations are trusted.

     Of course, not everybody will like the estimated oil price underlying the 2002 budget. Quite a few Duma deputies will surely accuse the ministers of deliberately underestimating the volume of oil profits and hence "limiting" the budget in order to subsequently use as much additional revenues as possible on the repayment of foreign debts. For this is where the additional profits will go. And the Left opposition has always advocated a rise in social spending.

     Indeed, as in the case of the 2001 budget, the repayment of foreign debts will be the largest expense item of the 2002 budget (about 20% of expenses). The president and the government give priority attention to the servicing and repayment of foreign debts, which amounts to 141 billion dollars. This year the government did not seek a single loan and hopes to honour this new tradition in 2002.

     Other major expense items include national defences, regional transfers and social policy. The government promised to raise the wages and salaries of the public sector staff by 80% and to increase pensions and allowances.

     Allocations on state assistance to the industries and agriculture will go down, while spending on education, the judicial power and environmental protection will be somewhat increased. But, as minister Kudrin said after the government session, allocations to agriculture may be reasonably increased by 4-5 billion roubles (1.5 billion dollars) during budgetary debates in the Duma.

     The estimated economic growth is modest - 3.5-4%. For the first time in the past 15 years, analysts say, the 2002 draft stipulates a general budgetary surplus of 1.3%. Annual inflation will amount to no more than 10-13%, promises the Finance Ministry, with the average exchange rate of the dollar kept at 31.5 roubles (today one dollar equals 29.37 roubles). And the people's real incomes are to grow by 5%.

     The specialists' opinion of the 2002 budget drafted by the Finance Ministry is rather calm and even favourable. The only hitch is that many of them think inflation will be higher than planned. This year's estimated inflation of 12-14% reached the limit already in the first six months of 2001 and may reach 18-22% by the end of the year, analysts say.

     President Putin said in his March address to the Federal Assembly that it would be reasonable to divide the budget into two parts. The basic part would reflect the obligations of the state to the people and it would be hardly possible to change it. And an additional, reserve, budget would be made up of expected super-profits, in the division of which the deputies will take an active part.

     Pro-presidential factions have the majority in the State Duma now, which means that the 2002 draft budget has a good chance of sailing through the parliament. Closing the government's session, Premier Mikhail Kasyanov called on the ministers to uphold the draft in the Duma and not to engage in narrow departmental lobbying.

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NATO OPERATION IN THE BALKANS IMITATION OF ACTIVITY

     By Pavel KANDEL, head of the Ethnopolitical Conflicts Section of the Institute of Europe of the Russian Academy of Sciences, RIA Novosti

     The operation Essential Harvest, launched by NATO in Macedonia to collect armaments from Albanian rebels, is nothing but an attempt to calm the world public opinion with an imitation of activity and an exaggerated display of NATO's determination to disarm the rebels. In fact, this widely publicized operation is formal and the alliance does not plan to take really rigid, effective measures. This follows, for example, from the statement by the commander of the NATO force in Macedonia, General Gunnar Lange, according to which during a month the 3,000-strong NATO force plans to collect a mere 3,300 pieces of armaments from the rebels of the so-called National Liberation Army (NLA), in other words, one piece per NATO soldier.

     No wonder that Macedonian Prime Minister Ljubco Georgievski described such a "harvest" as funny and humiliating for his country. He said NLA is armed with about 60,000 pieces of various kinds of weapons. Naturally, the rebels will surrender outdated armaments, while modern weapons will be partly hidden and partly taken across the border to Kosovo from where they can be quickly sent back to the rebels, if necessary.

     Most likely, the deployment of the NATO force in Macedonia will bring only a short-term calm to the country. First, the NATO force does not plan to make its stay in Macedonia too long and intends to leave it as soon as the operation Essential Harvest is completed. Second, the force command has already announced that its mission is only to collect armaments and not to conduct combat operations, and that if hostilities between government troops and NLA resume, it will pull out the force from Macedonia. This means that the Albanian rebels can easily make the NATO force leave. To this end, they need only to stage yet another provocation and, thus violating the peace accord, resume combat actions.

     This will hardly happen in the near future, because the tired and exhausted rebels need a break and re-formation. But a month or two later, they will be ready for a new war which can be provoked by the forthcoming presidential and parliamentary elections in Kosovo, scheduled for this autumn. As soon as the Kosovo Albanians declare their independence or make a step towards it, NLA rebels in Macedonia will begin a new stage in their armed struggle against government troops.

     The aforesaid prompts the conclusion that the deployment of the peace-keeping force has not introduced any essential changes in the situation in Macedonia and the correlation of the warring forces, and that there are no grounds to expect any positive changes. These changes could come if NATO really wanted them. However, all the signs are that the leadership of the North Atlantic Alliance is not ready to take resolute actions, and it is not difficult to understand why.

     The NATO command from the very beginning supported Albanian separatism and extremism in the hope to achieve its geopolitical goals in the Balkans with its help and to make the whole of the peninsula into a NATO bridgehead. The fatality of this strategy, which has led to the destruction of Yugoslavia by NATO bombings and to the wide outburst of Albanian extremism in the Yugoslav province of Kosovo and in Macedonia, which now threatens to make its way into other Balkan countries as well, is evident. Yet, NATO will not admit it, because such an admission would hit hard the reputation of many European leaders responsible for NATO's decisions.

     There is one more reason why the alliance refrains from active involvement in the Macedonian conflict. NATO has never participated in ground combat operations. It prefers fighting from a distance, using aviation and missiles, against an enemy that will not retaliate. The use of force against the Albanian rebels who, no doubt, would put up resistance, would inevitably inflict losses on the NATO force, which is unacceptable to NATO.

     NATO has independently assumed the role of an international policeman in the Balkans, promoting only its own interests. The alliance has obviously failed to cope with this role, which is confirmed by its current farcical operation in the Balkans.

     The Balkan crisis cannot be resolved by declarations or imitation of actions, as Russian President Vladimir Putin said in an interview given after his recent meeting in Kiev with Macedonian President Boris Trajkovski.

     "People who seek to solve political problems with weapons must realize that they will face not imitation of force but real actions," Putin emphasized. He declared Russia's full support for the Macedonian president's efforts to combat terrorism.

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