In this issue:

July Valyutny Spekulyant Features Analysis From LaRouche's EIR

China and Russia Agree on Fossil Fuels Survey

Russia, U.K. Sign a Gas Pipeline Deal

Khodorkovsky's Menatep/Yukos Empire Targetted

From Volume 2, Issue Number 27 of Electronic Intelligence Weekly, Published July 8, 2003
Russia and Central Asia News Digest

July Valyutny Spekulyant Features Analysis From LaRouche's EIR

Issue No. 7 of the Russian online and print monthly Valyutny Spekulyant (Currency Dealer) is now out, containing a heavy dose of reality for the Russian economists and business executives who read it. The issue includes three articles from Executive Intelligence Review.

A major feature is Lothar Komp's "The Meltdown of the Dollar: It's Systemic, Stupid!" (EIR, May 23, 2003), under the Russian title "The Dollar's Collapse Was Produced by the System." The Russian translation, with graphics, takes up four pages of the magazine.

John Hoefle's ironical commentary on "Wall Street Reform" ("Meet the new crooks: they're the same as the old crooks...."), from the May 16 EIR, appears as a one-page article in Valyutny Spekulyant.

Lastly, VS ran a half-page box, based on Richard Freeman's article, "Freddie Mac Now Threatens the Global Bubble...", from the June 20 EIR. This updates the Fannie & Freddie story, which VS covered in its April issue by carrying Freeman's earlier reports on the pending U.S. real estate and derivatives debacles.

China and Russia Agree on Fossil Fuels Survey

China and Russia have agreed to make a joint survey of the oil and natural gas resources in their border areas, the first such cooperation in this field between China and Russia, the government of China's Heilongjiang Province announced on June 28. According to Xinhua, the project is a phase of the oil supply deal signed by Moscow and Beijing in May, to supply 30 million tons of Russian crude to China. The geological survey will be done in three trans-border basins: the Muhe-Ushumun, the Sunwu-Zeysko Bureinskaya, and the Sanjiang-Amur. The work will be done by scientists from both sides. According to the Far East Institute of the Russian Academy of Sciences, a preliminary geological survey had detected an oil and gas field with a maximum reserve of 80 million tons.

Russia, U.K. Sign a Gas Pipeline Deal

During President Vladimir Putin's state visit to Britain the week of June 23, energy deals were at the top of the agenda on economic cooperation. British Petroleum and the Tyumen Oil Company (TNK) finalized their merger. In addition, after an energy conference addressed by Putin on June 26, Energy Ministers Yusufov and Stephen Timms signed an agreement on a $5.7-billion pipeline project, to deliver Russian natural gas to Britain via the Baltic Sea and Northern Europe.

Another cooperation agreement, signed by the Russian and British Foreign Ministers, provides for the U.K. to provide $48 million in funding to dismantle decommissioned Russian nuclear submarines and store spent nuclear fuel.

Khodorkovsky's Menatep/Yukos Empire Targetted

Platon Lebedev, chairman of the board of Menatep International Financial Group, was arrested July 2 and charged with the illegal acquisition of the former Russian state mining group Apatit in 1994, and with murky transfers of $5 billion from Yukos Oil and other firms of the Mikhail Khodorkovsky empire, over the past years. Furthermore, Alexander Pichugin, one of Khodorkovsky's security chiefs at Yukos, has been charged with responsibility for two assassinations in November 2002. Khodorkovsky himself is under investigation in connection with his 1995-96 purchase of Yukos. He has also been summoned to appear July 4 for questioning by the Prosecutor General in the Lebedev case.

Given Khodorkovsky's aggressive lobbying for a Russian special relationship with the United States, based on providing oil to replace fuel from the Mideast in the event of endless war, and the fact that he is especially close to British oligarchs—Lord David Owen heads up the international office of Yukos in London—some analysts rushed to interpret these events as a long-overdue crackdown by Russian state authorities against the power of Russia's "oligarchs" in general—the raw materials magnates who seized much of the country's wealth during the 1990s so-called reforms.

There are at least three elements of the context of these events, however, which point to a more complex political story.

1) The scandal around Yukos is taking place just before its planned merger with Roman Abramovich's Sibneft, which will make Yukos the fourth largest oil company in the world. For this deal, Yukos was going to borrow $1 billion. The timing also coincides with discussions with China about construction of the Siberia to Daqin oil pipeline, with financing from Yukos as well as the state. These projects—which have their opponents among other raw-materials clans—could be affected by the scandal, which has already knocked Yukos' capitalization down by about 4%, as it led the Russian stock index into a slide.

2) Khodorkovsky has made enemies by leading a "Mr. Clean" campaign for transparency in big-business practices in Russia. This may be self-serving hokum, but it has been openly welcomed by President Vladimir Putin, who met on June 10 with Khodorkovsky's ally in this matter, aluminum magnate Oleg Deripaska.

In a lengthy June 20 press conference, Putin said that Russia no longer had "oligarchs," but rather "major businesses," whose activity was essential for the country. Nezavisimaya Gazeta of July 4 noted that "it is no secret, that Internal Affairs and FSB archives have accumulated enough unfinished cases over the past decade, that skeletons could be resuscitated out of the closet of any one of today's financial kingpins."

3) Yukos is a funder of the Yabloko Party, which joined with the Communist Party in last month's embarrassingly strong no-confidence vote against the Kasyanov government. It is widely discussed that Khodorkovsky is running a political gambit through Yabloko in this year's elections, aiming to create a bloc of his own the Duma—a plan that somebody may have decided to shoot down.

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