Putin Sends Forces to Southern Border After Bombing

Russian President Vladimir Putin told a June 19 cabinet meeting that he was asking for the immediate deployment of two new brigades of troops to the country's North Caucasus borders, Russian television reported after the latest terrorist bombing in the region. Earlier that day, a car bombing in northern Chechnya had killed 15 people. During his trip the previous week to the Caspian Sea region and Dagestan, a North Caucasus republic to the east of Chechnya, Putin had announced plans to fortify the border more strongly.

Putin Sends Forces to Southern Border After Bombing

President Vladimir Putin received Prime Minister R.T. Erdogan of Turkey on July 18 in Sochi, southern Russia, for talks ranging from economic cooperation, to the still-debated status of northern Cyprus. Russian media reported that the two leaders agreed to reopen the possibility of Russian contracts to supply Turkey with military helicopters; a previous tender was won by the U.S. company Bell Helicopter, but that deal fell through due to U.S. export curbs. Vedomosti newspaper reported that a bid by Russia's Alfa Bank to take over Turkcell, a major IT company, was also on the agenda.

In the energy aspects of the talks, the Russian side has pledged its readiness to step up investment in the Turkish oil and natural-gas industry. "We are ready not only to increase delivery of oil and gas to Turkey," Putin said, "but also to build large-scale underground gas-storage facilities, and to invest in gas distribution networks that are undergoing privatization." (Putin's Kremlin staff has been in the thick of operations to consolidate greater state control over Russia's own natural gas giant, Gasprom, which has considerable investment capability.) On the eve of the talks, Russian commentaries focussed on the prospects for Russia and Turkey to supply natural gas through the Blue Stream pipeline on the Black Sea floor, to "third countries"—meaning, almost certainly, Israel, but also, according to Putin, "Southern Europe." They also discussed the re-export of Russian electricity via Turkey to Iraq.

Russian Regional Economic Zones To Promote Technology

On July 13, the Russian Parliament finalized approval of a new Law on Special Economic Zones, authorizing tax relief for areas set aside for special types of economic activity. Unlike the free economic zones that abounded in the 1990s, which became instruments for looting Russia, and havens for organized crime, the new concept, proposed by the Ministry of Economic Development and Trade, and supported by many regional governors, promotes productive industrial development. By Sept. 15, the ministry will conduct a competition for special economic zone status. Most of the projects submitted for inclusion in new zones originate from the Volga Federal District—25 of them to be situated in Nizhny Novgorod alone.

The government of Tatarstan hopes to revive the Yelabuga Automotive Plant (YelAZ) project, started in the late 1980s and not finished, though the relevant infrastructure was prepared. Similarly, Karelia is promoting a special economic zone in Kostomuksha, close to Finnish border, which has been on the drawing boards for seven years and is based on existing natural resources and industrial potential, but until now lacked the necessary federal legislation. Other projects have been proposed by the governments of Leningrad Region, Astrakhan Region, Kaliningrad Region, Dagestan, and Primorsky Territory.

Yakunin Plans Rail Modernization in Russia

Speaking July 15, Vladimir Yakunin, newly-appointed President of the state-run Russian Railroads Corporation, characterized the situation in Russian rail transport as unsatisfactory. He emphasized that the technical obsolescence of the corporation's physical assets "is close to the critical level." Russian rail transport risks becoming uncompetitive, due to its inefficiencies. Yakunin is introducing a number of improvements, he said, by changing the company's domestic and foreign economic strategies. Long-term contracts will be part of the picture, as well be the development of logistics centers in some regions, where the railroad company will take charge of integrating transport services.