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Russia Backsliding on Democratic Reforms, Rice Says (Update4)

By Janine Zacharia

April 19 (Bloomberg) -- Secretary of State Condoleezza Rice accused Russian leaders of backsliding on democratic reforms as she arrived in Moscow today.

``The trends have not been positive on the democracy side,'' Rice told reporters en route to Moscow. She cited ``the centralization of state power at the expense of countervailing institutions'' such as the parliament and an independent judiciary and press. ``It's clearly very worrying,'' she said.

Rice's arrival was disrupted by a bomb threat at the Renaissance Hotel in downtown Moscow where she was to stay, a senior U.S. official said. She spent about two hours at the residence of the U.S. ambassador several miles away, then left to have dinner with Russian Defense Minister Sergei Ivanov.

Rice visits Russia at a moment of tension between the Bush administration and Russia over U.S. support for revolutions in former Soviet republics and criticism of Russian moves to tighten economic and political controls.

James Collins, U.S. ambassador to Russia from 1997-2001, said Russian officials told him during a recent visit to Moscow that they're confused about U.S. motives. ``There are a lot of actions or events'' that they don't understand, he said.

Smoothing the Way

Part of Rice's mission on her first visit to Moscow as secretary of state is to smooth relations ahead of President George W. Bush's visit in May, analysts said.

``She's not going to do anything on this trip that could make Bush's visit difficult,'' said Celeste Wallander, director of the Russia program at the Center for Strategic and International Studies in Washington. ``This Russia trip is not really about her making her mark. This trip is about her preparing for the president to have a good trip in May.''

When asked by reporters about her comments on Russian centralization of power, Rice said, ``I'd like not to think of them as criticisms. We understand that a democratic path isn't easy.''

``This is not a matter to lecture Russia or to criticize,'' she said.

Russia is watching U.S.-blessed revolutions in Ukraine, Georgia and Kyrgystan ``as a zero-sum game against it by the U.S,'' said Ariel Cohen, a Russia specialist at the Heritage foundation in Washington. ``We need to calm things down.''

NATO Meeting

After talks with Russian officials today and tomorrow, Rice heads to Vilnius, Lithuania for a meeting of NATO foreign ministers, which will focus on trans-Atlantic cooperation, Iraq, prospects for further NATO expansion, and Russia's relationship with the alliance.

Rice might be reluctant to press Russian President Vladimir Putin on his crackdown on independent media, his handling of the separatist republic of Chechnya and his control of industries including oil, analysts said.

Foreign investors were rattled after the dismantling of OAO Yukos Oil Co., once the second-biggest Russian oil exporter, amid a government tax probe. Putin, whose government seized and sold Yukos's biggest production unit and jailed Chief Executive Mikhail Khodorkovsky, said last week at a trade fair that he wouldn't take back other assets sold in the 1990s.

`U.S. Missed Boat'

The Russian government also moved against another private company, the British-Russian oil venture TNK-BP, filing a $1 billion back tax claim. Robert Dudley, chief executive of TNK-BP, a unit of BP Plc, confirmed the filing April 11 during the Russian Economic Forum in London, a gathering that had been intended to boost investor confidence in the Russian economy.

If Rice raised the Yukos affair now, it would only demonstrate the lack of leverage Washington has over Moscow to stick to free-market and democratic policies, Wallander said.

``Unfortunately, all it does is expose that the United States missed the boat'' on Moscow-based Yukos, she said, adding that if the U.S. really had wanted to take a hard line it would have needed to do so in October 2003 when Khodorkovsky was arrested.

It is ``not the right moment,'' for a rift, she said.

Collins said Russian officials would stress their desire to see deeper U.S.-Russian dialogue on energy issues and continue to press for Russian entry into the World Trade Organization. Collins is senior international adviser in the Washington office of the law firm Akin Gump Strauss Hauer & Feld.

Bush and Putin pledged to work together toward Russian WTO membership when the two met in Bratislava in February.

Discussions on Energy

Collins said U.S. Secretary of Energy Samuel Bodman was planning to meet his Russian counterpart ``in the near to immediate future'' and that the Russians are interested in clearing the way for two-way discussions with Carlos Gutierrez, Bush's commerce secretary.

``The Russians are obviously interested in the development of their energy resources,'' Rice told reporters. ``I do think there has been some inconsistency about how foreign investment will or will not play in some of those efforts.''

Collins said the Russians will also update Rice on a review they have been conducting of the ways they have been working to secure weapons of mass destruction, he said.

A specialist on the Soviet Union, Rice, 50, will likely seek ways the two nations can better combat terrorism and safeguard Russia's stockpiles of chemical, biological and nuclear weapons.

Agreement in Bratislava

Bush, 58, and Putin, 52, agreed in Bratislava to conclude cooperative security enhancements at Russia's nuclear warhead and material storage facilities by no later than the year 2008.

The U.S. and Russia remain at odds over whether U.S. inspectors will have access to Russian sites and who should pay insurance for nuclear-related accidents. ``We've had some concerns about the ability to go to some places,'' Rice said.

``What I think they're going to do is to focus on non- proliferation and terrorism,'' Cohen said. ``They're going to look at points of disagreement in the former Soviet areas. And democracy and Yukos will be probably second-tier issues because they were discussed before. And I think we can describe the situation on these issues as agreeing to disagree.''

Bush is scheduled to travel to Latvia, the Netherlands, Russia and Georgia May 6 through 10 to participate in ceremonies marking the 60th anniversary of the end of World War II.

While the Russians will be seeking areas of cooperation with the U.S., Rice could hear complaints regarding Bush's decision to visit Latvia before traveling to Moscow for next month's celebrations.

``The one thing she will face certainly when she gets there will be the decision to go to Riga on the way to Moscow. I heard a lot of complaints,'' Collins said. ``They're upset about it. It's seen as American insensitivity to Russian feeling.''

The Baltic states Latvia, Lithuania, and Estonia joined NATO last year over Russian opposition. Bush's visit to Riga and the holding of the NATO foreign ministers' meeting in Vilnius are meant to mark the one-year anniversary.

Rice is scheduled to fly to Lithuania tomorrow.

To contact the reporter on this story: Janine Zacharia in Washington at jzacharia@bloomberg.net

Last Updated: April 19, 2005 14:23 EDT

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