U.S., Russia Exchange High-Level Delegations

March 15 (EIRNS)—Beyond the March 6 talks between U.S. Secretary of State Hillary Clinton and Russian Foreign Minister Sergei Lavrov in Geneva, a meeting which Lyndon LaRouche termed "highly successful, for its purpose," political and economic delegations from the United States and Russia visited each other's capitals the following week. Former U.S. Senators Gary Hart (D-Colo.) and Chuck Hagel (R-Neb.) were received by President Dmitri Medvedev in Moscow, while Vice President Joe Biden met with a group of Russian business figures, headed by the president of the Russian Union of Industrialists and Entrepreneurs (RUIE), Alexander Shokhin.

Hart and Hagel are co-chairmen of the Commission on United States Policy toward Russia, formed last year. Medvedev told them, "Recently, our relations have been seriously degraded. The signals, which I have received from President Obama, sound positive to me."

The RUIE delegation to Washington was the first of its type in several years. With Shokhin were executives Zakhar Smushkin of Ilim Pulp and Paper, Victor Vekselberg of the Renova holding company, MDM Bank board member Oleg Vyugin, and Russian Railways CEO Vladimir Yakunin. Kommersant business daily of March 14 reported that they met with National Security Council officials and economic aides to President Obama. Biden expressed support for removal of the 1974 Jackson-Vanik restrictions on trade (which concerned Jewish emigration from the Soviet Union), while the RUIE and the U.S. Chamber of Commerce issued a joint statement on upgrading bilateral interaction on economic matters. At a press conference, Shokhin advocated re-establishing a standing commission on U.S.-Russian economic relations.

Kommersant highlighted public remarks by Shokhin, Yakunin, and former Clinton Administration National Security Council director for Russia Toby Gati on the importance of Russian-American dialogue during the global financial and economic crisis. The paper reported, "Yakunin told Kommersant that the Russian delegation had the impression that the formation of the U.S. Administration is not complete, and that it would be premature to count on hearing any final positions from it." He added that there is uncertainty in the United States, as elsewhere, about the ultimate depth of the crisis and how to emerge from it. "But," he said, "they understand the impossibility for any one economy to find a way out of the crisis by itself, and that it would be wrong to concentrate solely on disarmament issues in relations with Russia."

Gati said, according to Kommersant, "It would be very useful for a discussion of economic issues, as well, to develop between Russia and the USA, because so far the main discussions have been on Afghanistan and strategic armaments, but that falls short of being a basis for full-fledged relations."

Ivanov: Russia Is World's Biggest Heroin Consumer

March 11 (EIRNS)—Russia has become the biggest consumer of heroin in the world, Russian Federal Drug Control Service director Victor Ivanov told the press in Moscow on the eve of the Vienna UN Conference on the world drug trade, which he was to address. "In recent years, Russia has not just become massively hooked on Afghan opiates, it has also become the world's absolute leader in the opiate trade and the number one heroin consumer," Ivanov was quoted by the Daily Telegraph. "Drug trafficking has become a key negative factor for demography and a blow to our nation's gene pool ... [and] a challenge to Russia's civilization." Russia has up to 2.5 million drug addicts out of a population of some 140 million, most of the addicts between 18 and 39 years of age.

Ivanov said that the situation is a crisis of national security, and compared it to the mass opium addiction in China in the 19th Century, after British traders forced the drug on the country, the Independent reported today. He said that seizures of heroin in Russia have risen 70%—although, at best, only 20% of drugs trafficked across the long, porous border with Kazakstan are intercepted. The seizure rate is barely 10%, he said.

Ivanov demanded that the drug crop be destroyed by spraying poppy fields and offering farmers incentives to grow other crops. "Ninety percent of those who are addicted to drugs in Russia use Afghan drugs," Ivanov said. "It's a simple equation—if there are no poppies, there is no drug traffic. Thank goodness politicians in the West are beginning to admit the whole war on terror was ill-judged. We've heard Barack Obama and David Miliband come out and say that it was a mistake. The level of Afghan drugs production now is 44 times higher than it was in 2001."

Chatham House Figure Guns for Economic Warfare

March 15 (EIRNS)—James Sherr, who heads the Russia and Eurasia program at the Royal Institute of International Affairs (Chatham House), has issued his latest scenario for a showdown with Russia over energy policy. In his early-2008 "Russia & the West: A Re-assessment," Sherr had berated Western leaders for having underestimated the Russian leadership's assumption that it should have "equal say" with other nations on security issues, and called for exploiting Russian vulnerabilities in the energy sector, to cut Russia down to size.

Sherr's new article appeared in the February 2009 issue of The World Today, under the headline "Final Warning: Europe, Russia, Ukraine and Energy." He emphasized that Ukraine is not financially capable of implementing the terms agreed upon in settlement of its latest gas price dispute with Russia. Second, he argues that Gazprom went into its confrontation with Ukraine, demanding higher prices, from a position of weakness: Gazprom is stuck for revenue because of falling prices, and needs cash for basic operations. The manipulator Sherr wrote that "Russia and Ukraine are incapable of managing this relationship," so the European Union should start intervening. Sherr wants the EU to finance Ukraine's gas purchases, in exchange for establishment of a joint EU-Ukraine commission to essentially take over its dysfunctional energy system.

Gorbachov Joins British Financial Warfare

March 15 (EIRNS)—Erstwhile Soviet President Mikhail Gorbachov, whose career has long featured a special relationship with London, is playing a dubious role in relation to the sensitive issue of Russia's corporate foreign debt. While the Russian Finance Ministry and Central Bank paid down the sovereign state debt over recent years, their policy of supporting the ruble and suppressing inflation by means of high interest rates, pushed Russian corporations to borrow abroad, especially on the London market. This corporate foreign debt now totals over $500 billion, with an estimated $130 billion falling due this year.

The largest holders of this debt are reportedly the Royal Bank of Scotland, HSBC, and Deutsche Bank. The companies involved include flagships of Russian industry, from the state-owned Rosneft oil to Oleg Deripaska's Basic Element, the major owner of Russian Aluminum (Rusal) and Norilsk Nickel. Many of the loans are collateralized with shares in the companies. Last Fall, the Russian government allocated $50 billion, disbursed through the state-owned VEB Bank, to meet the most urgent foreign loan payments. Thus, Rusal received $4.5 billion—which went immediately to pay off a debt to the Royal Bank of Scotland.

Gorbachov's proposal includes two options: 1) hand the collateral to the London lenders, or 2) have the Russian state take over the obligations. In December 2008, Gorbachov, together with several right-wing figures of prominence during the 1990s looting of Russia by London and related international financial interests, launched an anti-crisis initiative, which they billed as "not political." On Jan. 23, the Gorbachov group issued a 19-point action plan on the financial crisis, starting with two points concerning the foreign debt. First, they proposed "a transfer to creditors, including foreign creditors, of ownership stakes in debtor companies [which] will ensure the flow of capital into the country...." In other words, Gorbachov's group is pushing for Russia's core energy and metals companies to be handed to international oligarchs like the Royal Bank of Scotland, as against Russia's home-grown "oligarchs" like Deripaska. As an alternative, the Gorbachov team suggested converting the loans to Russian sovereign debt, "through a system of auctions at which foreign creditors might replace corporate debts with Russian Federation Eurobonds."

Belarusian Parliament's Paper Calls for New Relations with U.S.

March 13 (EIRNS)—The Belarusian daily Narodnya Gazeta, an official publication of the parliament, today published a pair of articles calling for the early re-establishment of normal diplomatic relations with the United States. The two countries' ambassadors were recalled last year, after an escalation of sanctions from the Bush Administration, and Belarusian charges of interference in internal affairs. The first of the two articles was authored by Yuri Tsarik, an analyst from the staff of President Alexander Lukashenka, while a U.S. view was provided by EIR senior editor Jeffrey Steinberg.

Tsarik proposes that Belarus initiate a new agenda for its relations with the United States, explicitly counterposing its potential content to the interest in Belarus shown by George Soros's circles in recent months. He writes that the U.S.A. must be brought into Eurasian infrastructure construction, and that a solution to the world financial crisis is impossible without the United States. The article quickly drew attention in Belarus, and was the subject of an article issued by the Charter 97 opposition group, titled "Authorities Worried about George Soros's Interest in Belarus."

Steinberg, documenting how a neocon clique in the Bush Administration led to the breakdown of U.S.-Belarusian relations, locates their potential renewal in the context of Lyndon LaRouche's call for a four-power initiative by the United States, Russia, China, and India, for a radical change in economic policy worldwide.