Russia and Central Asia News Digest
Leading Russian Banker: Follow Italian Parliament's Example
Victor Gerashchenko, formerly chairman of the Central Bank of Russia, has welcomed the Italian Parliament's resolution No. 6-00030 the Sept. 25 decision that recognizes "a crisis of the whole financial system" and the need for "a new financial architecture capable of supporting the real economy" as a "very favorable" policy statement, which the Russian State Duma ought to take up as well.
Gerashchenko, who still heads the National Banking Council attached to the Central Bank, was addressing a conference on "The State of the Global Financial System and Tactics for Corporate Development," held Oct. 9-10 at the Financial Academy of the Government of the Russian Federation.
Speaking immediately before Gerashchenko was Lyndon LaRouche's associate Dr. Jonathan Tennenbaum, who also provided conference participants with a written Russian translation of the Italian resolution. Citing Tennenbaum's presentation, Gerashchenko said that it was now obvious that a major financial crisis was under way. The senior Russian banking expert then drew attention to the text of the Italian resolution, saying that it was "a very favorable development" and that "our Parliament should take this up." Gerashchenko moved from that point in his speech, directly to the idea that a high rate of investment is not sufficient to achieve economic growth; there must also be a tool to mobilize capital.
Gerashchenko also welcomed the electoral victory of "anti-globalists" in "the great country of Brazil." He said that globalization has certain "objective" aspects, but these do not eliminate the need for effective policies: ways to increase the purchasing power of the population, and "interesting projects" to move the economy ahead. In postwar Europe, for example, there was the Marshall Plan. Russia today should be refurbishing the rail network across Siberia, and building modern highways and other infrastructure. Some people argue that there is not enough money for such projects, Gerashchenko said, but speakers at this conference have just reported on the vaporization of $19 trillion in the current stock market collapse.
Gen. Ivashov Warns of Ill-Prepared U.S. Military Adventures in Iraq
At a Moscow press conference on Oct. 11, Gen. Col. Leonid Ivashov, former head of the international affairs section of the Russian Ministry of Defense and now vice-president of the Academy of Geopolitical Problems, said the morale of the Iraqi armed forces and population should not be underestimated by the Americans. As reported by RIA Novosti, Ivashov pointed out that though the U.S. and the United Kingdom are technologically superior to the armed forces of Iraq, the examples of their wars in the Balkans and in Afghanistan have documented that their highly sophisticated smart weapons are not that accurate, after all. Furthermore, neither the Americans nor the British has sufficient amounts of weaponry and ammunition to sustain a longer war, nor the financial resources required for that.
Moreover, Ivashov added, in spite of Congressional approval of a war-authorizing resolution, "American society is not ready yet to realize possible numerous deaths," in an Iraq war, and is, therefore, not as bellicose as officials in Washington are.
Condi Rice Agrees with Bertrand Russell: U.S. Should Have Launched Preemptive Attack on U.S.S.R. in 1948
Showing her kinship with H.G. Wells disciple Madeleine Albright whose father Josef Korbel was Rice's own mentor U.S. National Security Adviser Condoleezza Rice has concurred with the idea that the U.S. (and presumably Britain) should have attacked the Soviet Union shortly after World War II ended.
In a Time magazine article titled "Fighting Across the Aisle," datelined Sept. 30 and posted on the Time website, Karen Tumulty reported:
"The Bush team was also busy making its case [for an attack on Iraq] in private, because it is only behind closed doors that lawmakers and Bush aides feel it is safe to debate the implications of waging war against a country that has not first attacked the U.S. or its interests. As Rice briefed a group of House members last week, a Democrat challenged her argument for a preemptive strike. By that reasoning, he said, we should have invaded the Soviet Union in 1948 to keep them from getting nuclear weapons. 'In light of 50 years of bondage of Eastern Europe,' Rice replied, 'that was probably a reasonable thing to do.'"
On Oct. 4, RIA Novosti reported a statement by Boris Malakhov, the Russian Foreign Ministry's deputy official spokesman, who said that Moscow "had paid attention to a scandalous article" spread by some Russian media, with reference to Time magazine. Malakhov said that the Russian Foreign Ministry "did not make any hasty conclusions, but in the spirit of the new Russian-American relations of cooperation, requested Washington's explanations." The Bush Administration denied that Rice had said anything like what was reported, Malakhov stated.
Russian Machine-Building Association Established
Ivan Silayev, former Prime Minister of the Russian Federation, has been elected chairman of Russia's Machinebuilding Association, Moscow Vedomosti reported on Sept. 26. The new organization was co-founded by 11 machinebuilding corporations, including United Machinebuilding Plants (OMZ), headed by Kakha Bendukidze, Alexei Mordashov's Severstal, Alexandr Nesis's IST and Boris Kuzyk's New Programs and Concepts (NPK), Energomash Corporation, Tekhnokompex, Kaskol Group, Sterlitamak-MTE 7 (Bashkiria), Novoye Sodruzhestvo (Rostov) and others.
NPK's Boris Kuzyk told Vedomosti that the new association will complement the activity of Alexander Volsky's Union of Industrialists and Entrepreneurs (RSPP). "While RSPP is focussed on the conditions of business activity, such as tax policy, terms of WTO membership, etc., our Association will be concentrated on industrial policy, which does not exist today, although a lot of conceptions have been discussed," said Kuzyk. Severstalmash's general director Alexei Yevgeniyev added that the Association will advocate tax breaks for companies undertaking technological modernization, and promote the export of manufactured industrial goods. OMZ's PR Director Andrey Onufriyev expressed the view that in the framework of the Association, companies will be better able to finance scientific research and establish integrated standards of quality in machinebuilding.
The Machinebuilding Association's charter members include a number of companies involved in mining, but also transportation. Kaskol Group is IST's partner in mining gold, silver and rare metals in the Far East, while NPK's assets include a number of shipping companies.
Russian Government Discusses Promotion of Exports
Prime Minister Kasyanov and the cabinet of the Russian government held a wide-ranging debate on measures to promote exports from the manufacturing sector of industry, at its Sept. 27 cabinet meeting. They took up the question of promoting exports that decrease Russia's heavy reliance on fuel products exports (which provided 60% of the economic surplus in the first eight months of 2002,) reported Izvestia in a Sept. 27 article headlined "The Government Changes Economic Orientation."
A report was given by Maxim Medvedkov, Deputy Minister of Economic Development and Trade, who proposed to "mobilize political measures, assistance and voluntary promotion of exports." Following a lively discussion of the rules for repatriation of export revenues, Medvedkov noted that a federal program of export incentives, adopted in 1996, earmarked 27 billion rubles for such incentives, but these have never been allocated in the budgets. He demanded urgent establishment of "a functioning system of insuring export loans under government." Given how tight next year's budget will be, he proposed to concentrate on support for non-fuel export-oriented industries.
Medvedkov also proposed funding a state-run insurance agency for export deals. When PM Kasyanov inquired where the money would come from for such an enterprise, Medvedkov proposed restoration of the budget line for export incentives and establishment of a government export-import bank on the base of Roseximbank, which has nominally existed since 1996. Such a bank would coordinate the federal and regional export-promoting programs, issue guarantees for foreign loans on behalf of the Government, issue loans to foreign governments and companies, etc.
In addition, an insurance agency would be established on the base of the existing company, Roseximgarant. This "governmental agency for insuring political and commercial risks" is supposed to accumulate 85 million rubles from the budget for insuring risks, and 50 million for creating the initial capital. Finance Minister Alexei Kudrin added that in this case, Roseximbank should be nationalized. Medvedkov's boss, Minister of Economic Development and Trade German Gref, proposed to convey part of the stock of Roseximbank to Vneshtorgbank (the Foreign Trade Bank), and later make it completely state-owned.
Izvestia emphasized that the policy of promoting exports, approved by the government, is supposed to stimulate industrial production (especially of equipment and software) and reduce the share of fuel products in exports. If this task is not accomplished, Kasyanov said, Russia will face an economic and financial crisis of new dimensions. "The government also promises to behave more actively in protecting the interests of domestic producers outside Russia, in order to avoid anti-dumping procedures."
Explosions, Assassination in Dagestan
While Chechen guerrillas engaged Russian forces in the neighboring republic of Ingushetia, in late September, there were also new incidents in another Russian North Caucasus republic Dagestan. The invasion of Dagestan in 1999 by Chechen field commanders was part of the escalation into the ongoing Second Chechnya War.
On Sept. 27, according to Kommersant, unidentified persons assassinated Col. Akhberdilav Akilov, head of the Antiterrorist Directorate of Dagestan's Internal Affairs Ministry, in broad daylight near the center of Makhachkala, capital of Dagestan. The gunmen jumped out of a white Zhiguli car, which drove up to Akilov's Volga car at a major intersection. They killed Akilov, his brother, and his driver. Dagestani police blamed the paramilitary group of Rapani Khalilov, while coverage in Moscow Kommersant played up eyewitnesses' statements that the gunmen moved like security professionals.
Two days earlier, a warehouse blew up at Dagvzryvprom, a factory producing industrial explosives, on the outskirts of Makhachkala. On Sept. 28, another explosion destroyed a stretch of a gas pipeline connecting Mozdok and Qazimagomed.
Political Tension High in Ukraine, as U.S. Puts Pressure on Radars Issue
Ukrainian President Leonid Kuchma agreed Oct. 2 under U.S. pressure, delivered by Assistant U.S. Secretary of State Beth Jones during a visit to Kiev, to allow U.S. investigators to come investigate alleged sales of the Kolchuga radar system by Ukraine to Iraq. State Department spokesman Philip Reeker said the U.S. welcomed "Ukraine's offer to make available all information on sales or transfers of the Kolchuga system and grant experts access to all Kolchuga sites and the manufacturing plant, as a sign of transparency."
Ukrainian Prosecutor-General Svyatoslav Piskun, however, demanded the U.S. hand over the audio recordings, originating with defector Mykola Melnychenko, on which the accusations are based. "We are ready to invite any expert to check [the Kolchuga allegations]," said Piskun, "but do not treat us like fools give us the original [tapes]. They are offering us only edited versions." Piskun said he doubted Melnychenko's assertion that he secretly taped Kuchma, using a tape recorder placed under a sofa. An anonymous "leading government official" of Ukraine told RFE/RL's Ukrainian Service that Russia, not Ukraine, should be blamed for selling Iraq the Kolchuga radar systems to Iraq.
The furor around the Kolchugas intersects an intensifying political showdown in Ukraine. On Sept. 26, the parliamentary caucuses of the Communist Party, the Socialist Party, the Yuliya Tymoshenko Bloc, and Our Ukraine appealed to the United Nations, the OSCE, the Council of Europe, and the governments of the United States and Canada not to impose economic sanctions on Ukraine for the Kolchuga sales (the U.S. has already suspended $54 million in direct aid to the Ukrainian government and is reviewing all Ukraine programs), but "to draw a clear dividing line between the people of Ukraine and criminal actions by [Ukrainian] officials."
Also on Sept. 26, parliamentarians of those same four caucuses announced a boycott of voting in the Supreme Rada, unless the current political situation is put on the agenda. On Sept. 28, Kuchma went on national television to accuse the opposition of seeking a violent change of power. "It is one thing to express one's dissatisfaction," he said, "but another thing to [try to] force a violent change of the power and social system.... I refuse categorically to resign ... because I was elected by the people as the head of state and I feel fully responsible for all that happens in the country."
On Oct. 2, Our Ukraine leader Viktor Yushchenko said he was ready to take "radical" steps, unless the regime began a dialogue on overcoming the political crisis: "If our initiatives continue to be deflected, we will do everything possible including the organization of and participation in actions of a radical character to make the Ukrainian authorities sit down at a negotiating table or hold early elections in the country." Yuliya Tymoshenko, Oleksandr Moroz (SP), and Petro Symonenko (CP) called Oct. 1 for a nationwide protest on Oct. 12 to demand Kuchma's ouster and said they would set up "people's tribunals" to judge the President. The three, plus Yushchenko, also wrote to Russian President Putin to ask him to meet them during his visit to Ukraine the weekend of Oct. 11-13.
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