President’s Report

November 25, 2003

Dear Friends of CCI,

CCI is in the process of designing and implementing one of its boldest initiatives ever - a positive approach to reducing the entrenched corruption that plagues Russia's developing economy.

Our corruption reduction program, Next Steps: Transition to Transparency has been gathering momentum for the past year, but the timing and the right combination of events haven't surfaced until now. I believe such a moment has come. Our 2004 strategy will break barriers that even a year ago were considered impossible.

Russia is going through a nightmare as 2003 comes to an end. Just when the country was attaining a modicum of order and stability, the Yukos/Khordorkovsky affair has plunged Russia into suspicion in the west and turmoil at home. I've carried out a small survey of our PEP alumni across several time zones, and about 95 percent support Putin. How all of this will play out is unknown - so many destabilizing possibilities are floating in the wings.

My personal angst is that Russia doesn't deserve this, President Putin doesn't deserve it, and Khordorkovsky didn't need it. He could have kept his illegally gained, unearned fortune to do with as he pleased, had he not decided to attempt an end-run around to weaken, if not replace, the president. This started long before his airplane arrest in Siberia and has deep roots that are not being covered by most U.S. journalists. Why? Because it's more titillating to bash an ex-KGB president and stir up visceral juices by assuming that Russia will return to an authoritarian state. The facts about this case are available and crystal clear. If you haven't studied them in depth and want more reference points, let me know.

The Yukos/Khordorkovsky situation throws so many wild cards up in the air, it is difficult to predict what will happen; nonetheless, I want to put forward my predictions:

1. This episode, like many others in the past, will subside after the media has had its field day.
2. Putin will hold firm to the reins of the country despite the criticism and conjecture about his ill intentions.
3. Russian entrepreneurs and citizens will continue to support Putin because they understand the critical necessity for order and stability in Russia and know it will increase under Putin's direction.
4. Russia's economic and democratic structures will shift around but will remain standing, and the direction of the country will slowly but steadily move toward rule of law and democratic institutions.
5. Putin will use this situation as justification for systematically forcing lawful corruption reduction throughout the country, from top to bottom.
6. Three years from now, we will look back and see that this unfortunate set of circumstances brought about shifts in Russian mentality that were totally unpredictable, just as the changes did that followed the 1998 financial crisis.

Predictions aside, I'd like to inform you about CCI's strategy to break through our PEP alumni's greatest impediment - the illegal, obstructive role of public officials that hovers over Russia's small and medium-sized businesses across the country.

Our 2004 Next Steps program activities are now posted on our website. If you have time to peruse it, you will see why I believe what we are attempting with the Next Steps program matches perfectly with this historic time in Russia.

Warm wishes to you during this holiday season,

Sharon Tennison
President