Russia and Central Asia News Digest
Former Russian Central Bank Chief: 'De-Dollar Has Started'
The 12th International Financial Congress, held in St. Petersburg at the beginning of June, was the occasion for intense discussion about the implications for Russia of the plunging U.S. dollar. (According to the Federal Reserve, 12% of all cash dollars in circulation, are in Russia.) Current Russian Central Bank chairman Sergei Ignatyev puzzled journalists by declaring that "de-dollarization has started"possibly referring to Russia's increasing the share of euros and gold in its gold and foreign currency reserves. According to Izvestia, however, Ignatyev was unavailable for further comment. Instead, Izvestia correspondent Natalya Orlova interviewed his predecessor, Victor Gerashchenko, who attended the Congress as an independent observer.
Gerashchenko, who at the end of last year welcomed the Italian Parliament's resolution in favor of a New Bretton Woods system, made a number of pointed remarks, exposing the irresponsibility of Ignatyev's denial of the possibility of a panic stampede out of the dollar in Russia. Gerashchenko said that expert calculations already indicate that the dollar-ruble exchange rate should be 15 or 16 rubles to the dollar, instead of the official rate of over 30. About continued Central Bank support for the dollar in Russia, he remarked, "The opinion that the ruble exchange rate should be kept high for the benefit of eight or ten companies, engaged in export of resources and not even paying what they are supposed to pay, is wrong.
In the same issue with this interview, Izvestia editorialized that the Central Bank should be more open about its policy: "[T]he country's top financial authorities should address the people and explain their view, which is the basis of their policy. Do they prefer the Russian currency to remain cheap, for the sake of the oil exporters? Or, on the contrary, are they not going to prevent an increase of the ruble, which increases domestic demand?... It would be only useful for business and the population if Mr. Ignatyev sincerely confessed: Yes, we don't want the ruble/USD exchange rate in 2003 to fall beyond 30 rubles. Or, if he explained what we are going to do with our currency reservesto promptly pay the foreign debt, or to extend credit to developing countries, or just to keep this money for worse times."
Glazyev Forms New Committee on National Resources
At a June 10 press conference, Member of the State Duma Sergei Glazyev announced that he has agreed to head the new Committee for the Defense of Russian Citizens' Rights to National Natural Resources. Other members of the committee are Academicians Dmitri Lvov and Zhores Alfyorov, the Nobel laureate in physics and a member of the Communist Party group in the Duma. Glazyev said that by Sept. 1, the committee will prepare legislative initiatives "on the expropriation and redistribution of super-profits from the exploitation of Russia's natural resources." This "natural rent," he said, could be allocated, either through special public funds, or though the Federal budget, "for the good of the country's development and of each individual citizen."
The matter of national ownership of natural resources was the subject of an exchange between Academician Lvov and Lyndon LaRouche, at the hearings Glazyev convened on June 29, 2001, on how to defend national economies under conditions of global economic collapse. (See EIR, July 20, 2001, and LaRouche's follow-up article, "On the Subject of Primitive Accumulation," in the Aug. 17, 2001 issue.)
At the same press conference, Glazyev said that studies done at the Russian Academy of Sciences show the possibility of achieving 20-30% annual growth in areas of advanced technology, in order to "create real, powerful engines of economic growth." This will require a development budget, and development banks, he said.
Glazyev's Political Moves Draw Attention in Russia
Economist Sergei Glazyev's leadership of an effective opposition movement in this year's Russian Parliamentary elections, and even his possible Presidential candidacy next year, are the subject of current coverage in major English- and Russian-language media in Russia. As EIW reported two weeks ago, Glazyev held a conference of diverse opposition forces on May 19.
Moscow News of June 11-17 analyzed Glazyev's bid to expand the base of the People's Patriotic Union (PPU), under the headline "Red Banner Changing Hands?" The article tried to play up friction between non-Communist Glazyev, who was elected to the Duma on the Communist Party (CPRF) slate and co-chairs the CPRF-led PPU, and CPRF leader Gennadi Zyuganov. But its main point was that many voters "see in the young, but fairly experienced and well-educated political figure, a proper new leader, capable at last of rejuvenating the CPRF and leading the left forces to victory in the upcoming [Dec. 7] Parliamentary elections."
Similarly, a Moscow Times article of June 9 stressed that the CPRF "old guard is wary of embracing a rising star who could eclipse them." Nonetheless, they may be unable to do without him, since Glazyev "has shown that he can reach beyond the party's traditional electorate and tap into a new group of voters"as happened in the Krasnoyarsk gubernatorial election in 2002, where Glazyev got 21.4% of the vote, as against a previous CPRF showing there of 15%.
The Moscow Times quoted thinktankers on Glazyev's "promising political future," a point underscored by Izvestia commentator Andrei Kolesnikov in his June 9 column. Anticipating a generational change in several parties, Kolesnikov wrote, "There is almost no doubt that the 2004 Presidential elections are a good opportunity for Sergei Glazyev, who is very politically active already today, and has even reportedly received guarantees that he will be second on the CPRF slate, with 20 of his people included in the top part of the slate." There will be a CPRF leadership meeting at the end of this month.
Israeli Foreign Minister Tries To Lean on Russia
Foreign Minister Silvan Shalom of Israel was in Moscow June 9-10 for talks with his counterpart, Igor Ivanov, about the Mideast "Road Map" for peace, crafted by the "Quartet"the U.S., Russia, the EU, and the UN. At every opportunityremarks as he arrived at the airport, his June 9 press conference with Ivanov, and an interview with Nezavisimaya Gazeta printed June 11Shalom put up front the demand for action to restrain Iran's nuclear program. Shalom railed against Iran as being run by "a radical extremist regime," striving to "create a nuclear industry for military purposes." He said Iran is a threat to Israel, the region, Europe, and Russia.
Ivanov called his discussion of Iran with Shalom "very frank and constructive," a diplomatic indication of disagreement. Kommersant-daily reported that Shalom sought to meet President Vladimir Putin on this matter, but Putin declined to schedule a meeting with him.
On June 9, Putin spoke by phone with President George Bush, about the Road Map. He also phoned Israeli Prime Minister Sharon and Palestinian Prime Minister Abbas, as well as Yasser Arafat on June 10.
Russia Denounces Needling by United States.
There is a furor in both the Russian and the Western press, about whether or not Russia is shifting away from its commitment to peaceful nuclear cooperation with Iran. Sources in the entourage of British Prime Minister Tony Blair fanned these rumors on June 4, claiming that at the Evian G-8 summit, President Putin had pledged to halt nuclear-fuel deliveries, pending Iran's signing a new, special accord with the International Atomic Energy Agency. Russian Foreign Ministry spokesman A. Yakovenko and Deputy Foreign Minister Georgi Mamedov strenuously denied that this was Russia's posture, in statements made June 5 and 6. Some analysts suggested that Blair had been "confused," mistaking Putin's reference to the bilateral Russian-Iranian agreement on reprocessing spent fuel from the Bushehr reactoran arrangement still under negotiationfor the U.S.- and British-demanded new IAEA one.
Mamedov said to Vremya Novostei, "The position of the United States in relation to Iran generally ... differs from ours. The Americans are in favor of isolating Iran. But we are in favor of cooperation with it, of course, within the framework of international agreements." Mamedov particularly objected to Congressional testimony by the State Department's John Bolton, who, on June 4, talked about potential actions against countries allegedly seeking to become nuclear, adding that countries supplying them with nuclear materials would also face "adverse consequences." Mamedov said, "It is completely incomprehensible why, after serious agreements in St. Petersburg and Evian, such unfounded remarks were necessary. We consider it not very responsible on his part, to make such statementswithout proof and without asking us about it."
An IAEA delegation was in Iran beginning June 7. On June 16, the IAEA board of governors is scheduled to review the question of Iran's compliance with the nuclear Non-Proliferation Treaty.
Russia's Lukoil Pushes To Resume Work in Iraq
Leonid Fedun, vice president of the Russian oil company Lukoil, said June 2 that Lukoil was "in consultation with the occupying power" (that is, the U.S. and secondarily, the U.K.) about getting back into action in Iraq. A week later, June 9, Foreign Minister Igor Ivanov told a meeting of corporate managers in Moscow that Russia was "conducting an active dialogue with all parties to the process, and hopes for the participation of Russian companies in the postwar reconstruction of Iraq." Ivanov said that some Russian contracts might be frozen, but that measures were being taken for them not to be annulled.
In the meantime, Kommersant-daily reported that a team of Russian oilmen arrived in Baghdad June 4, on the first such visit since the war began. And Vedomosti of June 9 said that Lukoil has "resumed the development of the west Qurna oil field"for which it has a contract that had not yet been implemented, before the waralthough the report gave no details.
Russia Protests U.S. Pressure Tactics on Weapons Destruction
On June 5, Russian Foreign Ministry spokesman Aleksandr Yakovenko said that Moscow objected to Washington's setting "additional unjustified conditions" on U.S. assistance to Russian weapons-destruction projects. He said the list of conditions was "getting longer rather than shorter," as exemplified by the U.S. intention to withhold $100 million in assistance to a chemical-weapons disposal facility in Shchuchye, until either Russia or a third country contributes an additional $50 million. Such decisions, Yakovenko said, "create additional difficulties for the Russian side. At issue are not only plans to build the Shchuchye facility but also our cooperation with other G8 countries to which we have offered separate projects." He added, "We have more than once expressed concern with the uneven development of Russian-U.S. cooperation in chemical weapons disposal, pointing to the fact that linking [this issue] with politics is counterproductive."
Wave of Assassinations in Russia Involves Putin's Defense-Sector Projects
May and June have seen even more gangland-style assassinations than usual, in the violent world of Russian business. The victims ranged from a Yukos oil manager in Irkutsk, to a St. Petersburg Sea Port official, as well as St. Petersburg organized-crime kingpin Konstantin Yakovlev (aka "Kostya Mogila""Kostya the Grave" [as in "tomb"]), who was killed in Moscow.
But a pair of assassinations on June 6 took Russian wetworks to a new level, when two top defense-industry officials were killed. Igor Klimov, acting general director of the defense-industry consortium Almaz-Antey, was shot to death near his apartment in Moscow, while Sergei Shchitko was gunned down in his car in a Moscow suburb. Shchitko was commercial director of the electronics firm RATEP, an Almaz-Antey subsidiary. While there are many "versions," as Russian analytical theories are called, about these killings, one thing is clear: Almaz-Antey was an important defense-sector project, shepherded into being by President Putin personally, with Putin's long-time associate Vladimir Ivanov as its chairman of the board. Gazeta and other Russian sources identify Klimov as Ivanov's man, as well as having been, like Putin, a veteran of the KGB's foreign section. Klimov was to have been confirmed as general director at a board meeting later this month. Almaz-Antey was approved by Presidential decree in 2001 and established the next year, to consolidate 46 smaller companies involved in producing air defense missiles.
Some Russian observers described the latest events as giving the impression that the Federal executive power cannot control the country. Analysts unfriendly to Putin, like military journalist Pavel Felgengauer and thinktanker Maxim Pyadushkin, call the killings a defeat for him. Quoted June 10 in a Financial Times article titled, "Deaths challenge Putin's reforms," Pyadushkin said, "This is a big blow to Putin's image, and a clear sign that in Russia there are some circles that do not worry about him and are not afraid of his new elite." Felgengauer told AP that Almaz-Antey was supposed to be a pilot project for reorganizing the defense industries into large government-held companies.
George Soros Leaves Russiathe Worse for Wear
Megaspeculator George Soros gave a press conference in Moscow June 9, at the conclusion of his tour of 10 nations in the Balkans, the Caucasus, and Central Asia"what the geopoliticians describe as the arc of instability," he noted. In Russia, Soros said, "The main purpose of my visit to Moscow is to celebrate the 15th anniversary of the [Soros] Foundation by terminating it in its present form. I want to emphasize that this does not mean the ending of all our activities, but reorganization of those activities in a different form."
Soros, whose speculative bidding for Russian assets (he bought part-ownership of the Russian telecommunications system), and bribes to Russian scientists, played no small part in the disruption of life in the country during the 1990s, cynically declared that what he had been spending money on"introducing the Internet, reforming education, providing books to libraries and so on"are "activities that should really be supported by the state." According to Soros, "It is no longer appropriate for me ... to continue to subsidize the Russian state. The economy is now recovering and the state is restored. That is why I think that it is right for us to conclude our activities in their present form."
Soros announced that he had launched about 20 new foundations, however, to seek support from sources other than himself, and to carry on his work. Particularly targetted is education, which the Soros-launched New Russia Foundation will attempt to dominate.
He said that he has become "preoccupied with problems of globalization" and, since Sept. 11, "with the role that the United States plays in the world." Therefore, he intends to carry on his "struggle for a global open society," primarily in the United States.
Central Asian Nations Confer on Afghanistan
The 13th session of the Economic Cooperation Organization (ECO), which is made up of the Central Asian republics, plus Iran, Pakistan, and Turkey, opened on June 9 in Bishkek, Kyrgyzstan. Iranian Deputy Foreign Minister for Economic Affairs Hossein Adeli told IRNA that experts would discuss the agenda of the organization, and the foreign ministers would discuss plans for the coming year. He said they would be signing a document for collective cooperation on various reconstruction projects in Afghanistan.
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