Mikhail Kasyanov's visit to Poland this week is the first by a Russian prime minister in seven years. The last one was made by former Prime Minister Viktor Chernomyrdin, and Kasyanov hopes to successfully complete some tricky negotiations.

Observers say, however, that the prime minister has not chosen the best moment for his trip. Poland will hold parliamentary elections in September, and this will lead to gemstone necklace a change of government. While this means that Kasyanov is negotiating in Poland with people who won't be in power much longer, his PR team saw no reason to delay the visit.

It could be winter by the time the Poles put a new Cabinet together. What's more, the hope is that Kasyanov will be able to turn the pre-electoral situation to his advantage and play on the contradictions between left-wing Polish President Alexander Kwasniewski and Prime Minister Jerzy Buzek.

Moscow can't afford to put the visit off until winter because it is looking for a decision as soon as possible on building a stretch of gas pipeline across Poland (linking Belarus and Slovakia) to transport Russian gas westwards.

An existing gas pipeline crosses Ukraine, but that country is unstable at the moment and has caused Russia problems in the past by siphoning off transiting Russian gas. Now, Russia says transit through Ukraine is simply not profitable.

Russia's gas giant Gazprom is not the only company in a hurry to press for a deal with the Poles. Its partners in an international consortium – Ruhrgas, Wintershall, Gaz de France and SNAM (Italy) – also want a rapid decision.

According to one high-placed Russian government official: "The Germans and Italians managed to get it across to the Polish authorities that their interests should be a priority, because Germany, Italy and Russia are Poland's three biggest trading partners, and in this situation, friendship with Ukraine has to take second place."

Russian government officials think everything is ready now for an agreement on the gas pipeline. All that remains is to put the final touch by signing it, and Buzek would have more to gain by seizing the chance.

But it is not certain that Warsaw shares Moscow's view. Given that Buzek and his right-wing party will be facing elections soon, he might prefer not to rice pearl make any controversial decisions. It's a difficult situation for him because not signing the agreement risks annoying Russia, and that is also a controversial decision.

But on the other hand, if Buzek were really so intent on annoying Russia, he would have declined to receive Kasyanov. Building a gas-transit route across Poland is important to Moscow because, if need be, it would enable Russia to halve the amount of gas it currently pumps across Ukraine. Obviously, the Ukrainians stand to lose out if the deal goes ahead and the Poles are full of sympathy for their Ukrainian brothers. All the more so as Warsaw has no particular fondness for the Russians and doesn't want Gazprom to expand further into Europe.

But Russian government officials say these are all emotional arguments and don't tie up with the figures. Poland gets 90 percent of its gas from Russia and 70 percent of its oil. Russian exports to Poland came to $4.6 billion last year, when trade turnover grew by 62 percent. Gazprom's investments in Poland total $1.2 billion.

But Kasyanov plans to do more during his visit than talk about the bypass pipeline and whether Russia or Ukraine is dearer to Poland's heart. Kasyanov will also bring up the problems that have arisen over completion of the first stage of the Yamal-West Europe pipeline.

The Poles haven't kept to gemstone necklace the investment timetable and thus have violated international agreements. What's more, they have also begun putting forward new conditions for exploitation of this pipeline – they want to levy a tax on transit through it. Modest estimates calculate that this tax should bring the Poles at least $500,000 a year.

Russian officials say the Poles are deliberately putting forward unrealistic demands to get themselves some room to bargain. But Kasyanov is in a decisive mood and looks unwilling to make any concessions regarding prior agreements. He's in a good position, too, for negotiations with the Poles because he has the support of most of Western Europe behind him.

Russian insurers and Moscow-based international insurance analysts are critical of a recent report by Moscow-based United Financial Group (UFG) suggesting that fiction is larger than fact in the share valuations, balance-sheets and premium revenue reports of the leading Russian insurance companies.

UFG is one of a handful of Russian investment banks and brokerages with an established reputation in the capital. Its 40-page report by Ilan Rubin is the first attempt to cultured pearl jewlery survey the domestic insurance industry.

By projecting premium data and sales margins of 10 major Russian insurers, applying a 20 percent discount and a conservative share price to sales ratio, Rubin estimated a value of $159 million for Moscow-based Rosno. Accordingly, he reports that the $30 million price paid by Allianz in 2000 to acquire a 45 percent stake in the company was "very low" – less than half the $72 million valuation estimated by UFG.

The report also suggests that Rosgosstrakh, the big state insurer that is in the process of privatization, was undervalued before a consortium of still undisclosed buyers led by the Troika Dialog bank of Moscow, which acquired a 49 percent stake for $40 million at the end of last year. UFG values the stake at $83 million. The government-ordered valuation of Rosgosstrakh was done in 2001 by the Moscow office of KPMG, which recommended a price of $78 million.

According to an advisor to an international insurance group, "it is no accident that most deals value insurance companies less than they do. The moment someone who knows what they are talking about looks at a Russian insurance company, the price goes down, or the deal gets called off."

Igor Ivanov, deputy general director of Reso-Garantiya, disagreed. He said the value of Russian insurance companies was underestimated. "By definition, companies on a growing market are underestimated as the market constantly grows. It is very profitable to buy companies in such a situation, and not very profitable to sell. Any investment into Russian insurance companies is very promising, as next year there will be a boom of insurance in Russia because of the law on third-party liability for car owners," he added.

The UFG report forecasts a jump in motorists' third-party liability premiums from $66 million this year to $600 million in 2003.

Tom Manson, a British insurance expert who has headed a European Union-funded TACIS program to advise the Russian insurance industry, said: "The author of the UFG report is underestimating both the impact of the growth of automobile [insurance] and its problems.

"[Automobile insurance] is by far the largest non-life sector in Eastern Europe, and I think it is today in Russia as well. At the same time, it is a dangerous class and has nearly bankrupted many companies in the region."

According to Manson, at present, income from automobile insurance in Russia (physical damage and liability) stands at approximately $700 million, based on market penetration of 5 percent to pearl jewelry 7 percent, with physical damage much more important than liability for the time being.

"The compulsory scheme should bring in the amount UFG predicts," Manson notes, "but it will also increase the market penetration for physical-damage cover. I believe that this cross-selling will happen, and could increase physical-damage penetration from 10 percent to 15 percent. Premiums are higher for physical damage, so I foresee the possibility that physical-damage-insurance income could be about $1 billion, while liability cover could reach $600 million to $800 million."

He warned that the introduction of liability cover would vastly increase the volume of claims in Russia and lead to an "unpredictable effect" in the already erratic Russian court system. This, said Manson, will lead Russian insurance companies into "new areas of long-tail liability, where they have no experience. "I see, therefore, [automobile] premiums increasing rapidly, but at the same time posing huge difficulties. Nobody would provide reinsurance at a low level, as everyone has seen what happened in Eastern Europe. Most Western-managed companies that I talk to are not interested in participating in the compulsory scheme."

Concerning the UFG valuation of Russian insurers, Manson said the problem of using just one discount rate is "that it assumes all companies are the same, and this is wrong. A company with a large automobile-insurance portfolio will be very different from a company without it. This simply reflects the fact that valuing insurance companies is very difficult indeed, anywhere, because so much of the value depends on how good the reserves are. I feel that UFG's valuation is too high. At present, Russia is mainly profitable, but, actually, for the valuation reasons, I am not certain that companies are really as profitable as they look, especially if their high expense ratios are taken into account."

According to the calculations made by UFG's Rubin, published balance-sheet data for Russian insurers identifies only about 63 percent of their assets. The remainder, Rubin claimed, "may not be invested in stable, low-risk assets that insurance companies require in order to ensure they can protect their customers from default." He said Russian insurers are either placing their funds in high-risk investments that could trigger defaults, or the missing money does not exist at all, because "large sums of premiums ‘paid' do not really exist, being no more than paper figures used in salary and captive schemes."

According to turquoise necklace Ivanov, it is wrong to say that up to one-third of balance-sheet assets are unaccounted for. "There are no financial instruments in this country that are more reliable than the rating of the country itself. That is why there are very few instruments in which insurance companies can invest their financial reserves. Most of the reserves are invested into hard-currency bank deposits in different banks. Fortunately, we have survived the financial crisis of 1998 and managed to preserve these reserves. Besides hard-currency deposits in banks, there is also investment into real estate, which is more secure. There are some investments in blue chips, but they are very small in size."

Yevgeny Reshetin of the Expert Rating Agency said: "There is a problem that a large part of balance-sheets is unaccounted for, but at the same time this is primarily an attempt on the part of insurance companies to comply with the regulations of the Department of Insurance Control."

Regarding company valuations, Reshetin said: "There is no common tendency. Some companies were probably underestimated; some were overestimated. Probably in the case of Allianz buying Rosno a very thorough valuation was done, so I don't think that the company was over- or underestimated. The only example of overestimation that comes to mind is the sale of St. Petersburg-based Rus company [owned by Vladislav Reznik, Duma deputy and former head of Rosgosstrakh]. There were claims that Reso was overestimated, but it's hard to pearl necklace say. Rosgosstrakh and Industrial Insurance Co. were sold at prices which are about the same as previous estimates.

"In the case of Ingosstrakh, it is hard to say whether the price was too low because [the seller Andrei] Andreyev claims he didn't get anything at all," Reshetin added. "The lawyers who looked into the case say that legally the deal was clean, but the final answer must be given by the authorities. If Ingosstrakh were offered for sale [to foreigners], it would get the maximum price of all the Russian companies."

TOGLIATTI – Until 1991, regional journalism in this country was nearly a carbon copy of the national version. In the Soviet Union, there were regional newspapers and broadcasting outlets, but the media bosses in Moscow decided what was worth publishing or being put on the air.

Shortly after, new newspapers and broadcasting outlets began to cultured pearl appear throughout the country. But, all these years later, the regional media remain financially weak – a situation that does not encourage their independence.

In Togliatti – an industrial center in the Samara region on the Volga river – the only independent newspaper, the Togliatti Review, is fighting a longstanding battle against intimidation at the hands of city authorities.

While "faithful" papers get municipal financial aid – and can afford to keep their selling prices lower – the Togliatti Review must be self-supporting. In spite of the higher price it has to charge, Togliatti's readers keep buying and subscribing to it, editor Valery Ivanov said recently at a conference at the Samara Press Institute.

The newspaper is published Mondays, Thursdays and Fridays and has a circulation ranging from 17,000 to 33,000.

Local authorities have attempted to shut it down on several occasions, with the last incident occurring early this month when legal proceedings were started against Ivanov concerning a series of stories that appeared in the paper.

"For three years, our paper has been publishing articles about dubious financial operations concerning the city budget," he said. "In [Togliatti], a city Duma deputy group and some other city authorities carry out their own business with budget money and, as a result, the budget suffers big losses."

• Execs implicated

One story covered by the paper concerned the Ada trading company. According to the report, three Duma deputies – Igor Borisov, Aleksei Lipatnikov and Pavel Aleshkin – who were also executives of the firm – used the city budget for financial operations that allegedly cost the city some $30 million. The Togliatti Review published several stories and offered what it said was proof of the politicians' direct involvement in the case. But, as of yet, no court action has been taken.

"At first, the deputies were so sure about their immunity that they didn't care too much about the paper's stories and provocative commentaries," said Ivanov.

This is an important year for Togliatti, with Duma and mayoral elections scheduled for early July. Ivanov said the three deputies have consequently become agitated by the news coverage. "For them, it could mean losing [the elections]. They would then lose their business and access to [budgetary] funds. There will be new political forces, and legal actions could be taken against them. So, now, they are using their positions to claim that the Togliatti Review has been publishing lies for more than three years."

The deputies did take the paper to pearl jewelry wholesale court over an article accusing them of not having paid 500 million rubles in taxes when clearing their own imported cars through customs. Ivanov said that after the paper was proved right, the politicians claimed a subordinate had been responsible without their knowledge.

"In this way, stating their innocence, the deputies were also trying to make it obvious that they were not involved in other allegations in the case, which were published in the paper," Ivanov said. The judge forbade the paper to cover the trial and so introduced censorship, he said. "In this way, the constitutional guarantee of freedom of speech was violated," Ivanov said.

Ivanov said his paper didn't recognize the judge's order and continued to report on the trial. So the judge started a legal action against Ivanov, meaning that Ivanov could be preventively arrested and held in jail at least 15 days. The paper's office also could be searched at any time.

Ivanov accuses Russian judges of having a "particular idea about freedom of speech. They believe that you can tell your opinion only if it does not endanger the honor of another person."

The action against the Togliatti Review did cause an uproar in parts of Samara's media, leading to a June 16 ruling by the regional prosecutor's office that said the court action against Ivanov was not only illegal, but was also without foundations.

• Hard knocks

In this instance, the Togliatti Review has taken a few knocks, but in other cases, regional newspapers have suffered more serious consequences, Ivanov said, adding that some journalists have paid the cost of trying to establish independent newspapers with their lives.

"Before the 1995 elections," he said, "some financial groups [in Togliatti] wishing to get into power tried to subjugate the media. The most important papers at the time were Ploshad Svoboda and Togliatti Segodnya. They [the financial groups] tried to turquoise necklace keep control over Ploshad Svoboda by buying some stakes from one of the paper's owners. But all of the paper's staff refused to serve the new owner. The paper's editor was beaten and left nearly dead," Ivanov said.

Less lucky was Togliatti Segodnya's editor, Andrei Ulyanov. He was shot to death for the same reason at the door of his apartment, Ivanov said.

(E-mail Media Watch at media@russiajournal.com)

Try to imagine the following set of circumstances, and see how absurd it sounds to you.

On Friday, Nov. 23, President Vladimir Putin casually reminds President George W. Bush that 15 of the 19 hijackers in the 9/11 attacks came from Saudi Arabia. "We should not forget about those who finance terrorism," he says, regarding Saudi Arabia.

"We should not forget about that."

Bush frowns, nods, whips out a notepad, scribbles something down on it backwards and upside down, of course, because he is dyslexic, and then heads off to Air Force One for a triple highball and a Steven Seagal movie.

The next morning he wakes up hung over, throws four Alka Seltzer tablets in a mug of Budweiser, and, sipping it slowly, clears his head. He remembers something from the previous day's conversation with Putin, something important, but he can't quite put his finger on it. Troubled, he rushes over to Ari Fleischer's room, and tries to wholesale pearl jewelry wake him up. The latter shakes him off and tries to stay asleep. Not until Bush rips the giant stuffed rabbit from his sleepy grasp does Fleischer lurch awake in protest.

"Jesus!" Fleischer says. "What is it?" Bush points at his notepad. "Here important is something!" he sputters.

"Read help me!"

Bush then relaxes and gives an aw-shucks smile, revealing his perfect dentistry. Flesicher has taught him to do this at the end of every statement, regardless of whether he makes sense or not.

Touched, Fleischer sighs, sits up, and reaches into his bed-table drawer for a mirror. He holds it up to the upside-down pad and, reading from the reflection, the two of them carefully sound out the words.

"Whee – shudd – knot – furgit," Fleischer reads, then pauses, squinting. "Um – hoo iz fienansing terrurizm."

Flesicher gasps. "Does he mean Saudi Arabia?" he asks Bush, grabbing a panicked fistful of Bush's pajama top.

Bush gives him a childlike nod.

"Holy s–t!" Fleischer shouts. "He's right! Get me Powell on the phone!" An emergency Cabinet meeting is convened. The heads of the government review the information and conclude: Yes, Saudi Arabia sponsors terrorism. The news is leaked to freshwater pearl necklace the press through the usual avenues. Within days, the information is a national media sensation, as all three networks and most of the dailies run hysterical features about Saudi involvement in terrorism.

The outcry is so extreme that Saudi official Adel Al-Jubeir is forced soon afterward to hold an extraordinary press conference in which he defends his country's record in the fight against terrorism.

All of this sounds like a joke, but actually it happened. Within a few days after the Bush-Putin summit, the entire American press corps mobilized around the idea of Saudi Arabia as a sponsor of terrorism – as though they had just figured out that most of the 9/11 hijackers were Saudis.

By the Monday after Putin's statement, a full-blown anti-Saudi feeding frenzy was being recorded for our benefit by the national media. Newsweek led off the festivities with a report, citing government sources, that Saudi Princess Haifa al-Faisal had indirectly funded two of the 9/11 hijackers by means of a charitable contribution of $2,000.

That same day, Nov. 25, a group of righteous-sounding American senators, led by Joe Biden and Charles Schumer, came out and publicly accused Saudi Arabia of not doing enough to stem terrorism.

This in turn led to more print media hand-wringing, including the unofficial signal that something has become a "big story" in the United States: a lengthy, unreadable analytical feature in the New York Times ("Saudis Called Slow To Help Stem Terror Finances," Nov. 28).

The features continued rolling on the dailies and on the wires every day that week, usually a signal that Someone Important has decided that the story is not going to die until something is done (in contrast, a one-off story about illegal chemical dumping by Dow is generally not followed up so that the issue may die its desired natural death).

The Saudis took the hint, leading to pearl earrings the extraordinary press conference by Al-Jubeir that did, in fact, take place this past Tuesday.

Selective timing is almost as important as the selective reporting of facts in the news business. Just as you can slant a feature on Ted Bundy by writing 4,000 words about his exemplary SAT scores and just 50 about his 37 murders, you can definitely make a point or two about your feelings about Saudi involvement in terrorism by waiting an entire year to make a fuss about that country's history of terrorist sponsorship.

Anyone who followed all of this and chose to read between the lines could see very clearly what was going on. Bush and Putin meet shortly after Russia signs onto a bogus U.N. resolution. Putin makes a crack about Saudi Arabia. The United States prepares to invade Iraq. Mention is made of an agreement between the two countries to divide up the Iraqi petro-spoils after the war. Saudi Arabia is subsequently dissed in the American media. Soon afterward, news leaks that plans are afoot to expand exports of oil from the Varandey outpost in Siberia to the United States. Similar news leaks out that a multi-billion-dollar export terminal in Murmansk, the only city capable of servicing our 250,000-ton oil tankers, is due to be built by 2007, again easing U.S. access to Russian oil.

An industry expert I contacted explained that all of this boils down to oil issues. There is widespread concern in the industry that the government of Saudi Arabia is teetering, and that the country may soon go from being a puppet state to an Iranian-style Islamic state. Should that happen, the United States will no longer be able to rely on Saudi oil, hence the urgent need to de-legitimize Saudi Arabia on the one hand and invade Iraq on the other. During the "transition period" of Middle Eastern instability, the United States will also need to rely partly on Russian oil, as the physical preparations on both sides make plain.

Why wasn't Saudi Arabia an issue last year? Last year, they were still dependable allies. Now we've lost confidence in the puppet government's ability to cultured pearl rule, and the news blitz last week suggests we've finally decided to give up on them. Tough luck for the Saudi royals and for Iraq in general; good news for Russia. If ever there was any doubt that Putin was playing the United States like a fiddle during this ridiculous war period, it has to be gone now: Even U.S. newspapers are taking their cues from him.