IMF, World Bank Not Invited to St. Petersburg

According to unidentified senior U.S. administration officials who informed reporters about the schedule of the July 15-17 Group of 8 summit in St. Petersburg, Russia, the host country decided not to invite the IMF, the World Bank, and the World Trade Organization, all of which usually attend such meetings. Present at the summit are the heads of the United Nations, IAEA, the WHO, and UNESCO. According to the U.S. officials, the agencies invited indicate Russia's priorities for issues to be featured at the summit: energy, health, and education.

Basayev Killed by Russian Special Forces

The most wanted man in Russia, Shamil Basayev, who took responsibility for the Beslan school massacre in which scores of Russian schoolchildren were murdered by terrorists, was killed on June 10. Russian special forces killed Basayev in an overnight operation in the southern Russian province of Ingushetia bordering Chechnya. Russian Federal Security Service (FSB) chief Nikolai Patrushev reported to President Putin the same day, telling him that Basayev was among a group of 12 militants killed as they prepared to carry out an unspecified "terrorist act" in Ingushetia just prior to the G-8 summit.

Putin congratulated "all members of the special services who planned and executed this operation." "This is a just punishment of the bandits for our children in Beslan and Budyonnovsk, for all the terrorist attacks that they carried out in Moscow and other regions of Russia including Ingushetia and the republic of Chechnya," Interfax quoted Putin as saying.

The President of Chechnya, Alu Alkhanov, said the slaying of Basayev was a decisive turning point in the battle of Russian forces against the Chechen rebels. "I think today can be considered the logical conclusion of the heavy struggle that the special services, the Federal forces and law enforcement bodies have been waging against illegal armed groups" in Chechnya, Interfax quoted Alkhanov as saying.

Bush Will Offer Russia Cooperation in Civilian Nuclear Energy—with Strings

In a bilateral meeting ahead of the St. Petersburg G-8 summit, President Bush will offer Russian President Putin cooperation in civilian nuclear energy, according to the Washington Post July 6. Such cooperation has been strained for a decade, due to the U.S. insistence that Russia give up its participation in Iran's Bushehr nuclear reactor project.

Russia has been anxious to gain unfettered access to the U.S. market in enriched uranium to supply nuclear fuel to American electric utilities, to participate in advanced nuclear technology research and development, and to establish an international center for the production and sale of enriched uranium, and reprocessing of spent nuclear fuel.

Finally having given up on bullying Russia into cancelling its civilian nuclear cooperation with Iran, and hoping for Russian support for increasingly harsh policies toward Iran, the carrot of potentially lucrative cooperation is being offered. The tactic is similar to that regarding the U.S.-India nuclear deal: Offer India access to U.S. nuclear technology, in exchange for support for the U.S. policy on Iran.

This policy was made clear in a briefing by National Security Advisor Steve Hadley on July 10. In response to a question from EIR Washington bureau chief Bill Jones, Hadley said: "We have also made it very clear to Russia that if those negotiations are going to be successfully concluded, and if an agreement is going to pass muster with the Congress, we will have to continue to be knit up on Iran, it's such an important issue."

One carrot mentioned is to offer Russia permission to reprocess American-origin spent fuel from foreign reactors, which could, the Post estimates, bring Russia $20 billion in fees.

A diplomat involved in nuclear policy at the Russian Embassy in Washington insisted on July 10 that Russia will never support sanctions against Iran, no matter what the U.S. offers in return. Russia does not need the $20 billion the U.S. is dangling as a carrot. "This is not like the early 1990s," he said. Today Russia has sufficient money from its oil revenues to support its industry.

According to diplomatic sources, it would take up to a year to negotiate an agreement. Such an agreement is already encountering opposition in the Congress.

Ukrainian Parties Seek Coalition That Can Govern

Following the sudden political shift in the Ukrainian Supreme Rada (parliament), whereby the Party of Regions (POR), Socialist, and Communist Parties joined to form a parliamentary coalition, and elected Socialist leader Alexander Moroz as speaker, POR leader Viktor Yanukovych announced he was rethinking relations with Russia, in the sense of intending to improve them. "An independent Ukraine means an independent foreign policy," he stated at the All-Ukraine Deputies' forum in Kiev. "We must return to a calm, reasonable and self-assured tone in Ukrainian foreign policy, especially in our relations with Russia."

"Ukraine has never been so close to the edge of an economic abyss as it is today, and we are facing a national catastrophe," Yanukovych said, adding that his party was urgently developing an action plan to lead the country out of the current crisis.

On July 10, the POR was officially declared part of a new parliamentary coalition with the Socialists and the Communists, and Yanukovych's name was put forward as a candidate for Prime Minister. Chairman of the Supreme Rada Alexander Moroz, the Socialist Party leader, then attempted to preside over a session of the Rada, which was interrupted repeatedly by brawling in the aisles and the cacophony of sirens, which the Deputies from the Bloc of Yulia Tymoshenko were sounding in order to prevent the body from doing business.

The same evening Tymoshenko claimed to have spent two hours meeting Yushchenko, demanding that he dissolve the Rada and call new elections. Hence Yanukovych's request that Yushchenko clarify his position: "If we hear the head of state's position, we will understand what is happening. Either this is a pre-planned scenario and the President will not tolerate any political force but his own, or we will see that the current confrontation in parliament can still be overcome." Yanukovych reiterated his invitation to Yushchenko's Our Ukraine to join in a grand coalition.

During a four-hour recess on July 11, called by Moroz amid the din, Moroz and Yushchenko conferred. Yushchenko then said he does not want to call early elections, since that would not resolve the crisis, but that he would do so as a last resort.