In this issue:

New Generation of Nuclear Subs Enhances Russian Military Preparedness

Russian Minister Warns of Nuclear Danger in Korea; Economic Alternative Needed

Russia Presses for New United Nations Resolution on Iraq

Russian President Visits Malaysia

Malaysia To Send Cosmonaut on Russian Space Station Mission

Moscow Ready To Invest in Iran's Transport Sector

Russian Parliamentary Leader in China

Lautenbach's 'Productive Credit Creation' Featured in Russian Monthly

Moonie Times on Russia: Oligarchs Represent 'Democracy'

Chevron-Texaco Seeks Chunk of Yukos

From Volume 2, Issue Number 32 of Electronic Intelligence Weekly, Published Aug. 12, 2003
Russia and Central Asia News Digest

New Generation of Nuclear Subs Enhances Russian Military Preparedness

Alongside President Vladimir Putin's remarks on improved nuclear weapons, during a July 31 visit to the Federal Nuclear Research Center at Sarov (see EIW Russia Digest, Aug. 4), came the announcement by Defense Minister Sergei Ivanov of progress in the development of a new, more efficient generation of nuclear submarines, of which the first units are to be delivered to the Navy by 2006.

In other military developments, shortly after the recent Russian-French naval exercise in the eastern Baltic Sea, Russian ground forces carried out an exercise rehearsing the safe supply of larger army groups with fuel under conditions of war, through the oil pipeline grid in western Russia and in Belarus. In this context, the exercises included the protection of these pipelines under conditions of war—including the pipelines from which Europe is also supplied with crude oil. The pipeline exercise was a top item in a review session at the Russian General Staff, about which Putin was briefed as well.

On Aug. 7, Adm. Vladimir Kuroyedov, commander-in-chief of the Russian Navy, began a tour of inspection and consultation with naval commanders in the Far East, in the context of the following week's start of the largest naval exercise of the Russian Navy in the Pacific region since 1991. The exercise, for which rehearsals of special purpose forces began on Kamchatka in early August, involves naval combat vessels, submarines, naval airforce, marines, and coastal forces in the entire Far East of Russia and in the Pacific Ocean. The script for the exercise includes the "protection of economic interests of the country in the Far Eastern region."

Larger rehearsals for this strategic exercise were held in mid-May, by Russian naval units on their way for joint exercises with the Indian Navy: there, Russian strategic Tu-95MC bombers hit waterborne targets in the Indian Ocean with two cruises missiles, conducting operations along a scenario of a "regional conflict developing into a real war [sic]." The air strikes—in what certainly is a signal on the global strategic level—rehearsed nuclear strikes against targets in the U.S. and U.K., especially the search for liquidation of the U.S. Navy's aircraft carrier shock groups.

"During the exercises, Russian troops will work on a complex of training missions aimed at disabling of U.S. satellites in orbit. This is important to break the stable functioning of the NAVSTAR global positioning system, the Keyhole optical-electronic satellites, and LaCrosse radar reconnaissance satellites," the daily Pravda wrote in a first review of these exercises, adding that this implies that "under conditions of war, these actions could blind the Pentagon and interfere with its use of high-precision weapons against Russia's armed forces."

Russian Minister Warns of Nuclear Danger in Korea; Economic Alternative Needed

In an op-ed published in the Aug. 6 Frankfurter Allgemeine daily, Deputy Russian Foreign Minister Alexander Losyukov writes that whereas "North Korea certainly is no threat to the security of the United States, one single medium-range nuclear missile detonation would create havoc in the region. Therefore, Russia is committed to contribute to a diplomatic solution to the North Korean problem, in whatever format is acceptable to Pyongyang. The main objective of Russian diplomacy is to establish a nuclear-free zone on the entire Korean peninsula." See Asia Digest for more.

Russia Presses for New United Nations Resolution on Iraq

U.S. Assistant Secretary of State William Burns was in Moscow Aug. 7, to try to persuade the Russians to help bear the costs and trauma of "reconstructing" Iraq. In a joint press conference following his talks with Russian Deputy Foreign Minister Yuri Fedotov, Burns said that Russia and Russian companies "have a real interest" in the reconstruction of Iraq.

The Putin government, however, is pushing for a new UN resolution on Iraq, as Foreign Minister Igor Ivanov had made clear when he supported French Defense Minister Michele Alliot-Marie's Aug. 4 statement that France was willing to take part in reconstruction—if a new UN resolution were passed. Thus, Fedotov reported in his press conference with Burns, that they had "exchanged very concrete proposals" on a new resolution. Burns avoided the question in his comments, and emphasized that the idea was to build on Resolution 1483. Both agreed that the United States and Russia had agreed to continue discussions.

Russian President Visits Malaysia

President Vladimir Putin of Russia arrived in Malaysia Aug. 4 for the first-ever state visit of a Russian head of state. Putin came to the country for 48 hours, carrying out a schedule that had been postponed after terrorist attacks in Moscow during July. Local Malaysian press noted that Putin was the third head of state or government opposed to the war in Iraq, to visit Malaysia since the war began; he was preceded by French President Jacques Chirac and German Chancellor Gerhard Schroeder. A Malaysian official said the war would be high on the agenda.

A main event of Putin's short trip was the signing of a $900 million purchase by Malaysia of 18 Sukhoi jets. Putin also addressed the Malaysia-Russia Business Council.

Putin said during his visit that Russia is considering joining the Organization of the Islamic Conference (OIC), an organization of 57 predominantly Muslim nations. Putin pointed out that Russia has more than 20 million Muslims, more than some OIC members such as Malaysia.

On Aug. 5, Council of Russian Muftis Chairman Ravil Gainutdin endorsed Putin's proposal. "That move would be especially important, now that fighting international terrorism is in full swing," Itar-TASS quoted Gainutdin. A spokesman for the Russian Orthodox Church said, "it would be quite logical for Russia to seek membership in European as well as Oriental organizations, including the Islamic Conference."

Russian affiliation with the OIC would be of special interest, in connection with the OIC's role as a venue for promotion of the Malaysia-initiated gold dinar currency for international trade.

Malaysia To Send Cosmonaut on Russian Space Station Mission

During President Putin's visit to Malaysia, the two countries agreed that Russia will train Malaysia's first space traveler, who will launch in a Soyuz capsule and visit the International Space Station for about a week. Every six months, the Russians send a Soyuz to the station. Each trip returns a two-man space station crew to Earth and delivers a new one. The guest cosmonaut will be on the station for the week it takes for the hand-over of the station from one six-month station crew to the new one.

Malaysian Defense Minister Najib Razak told the press on Aug. 5 that this program is "a breakthrough," since it is "the first time that we are venturing into outer space." Russian space agency head Yuri Koptev, accompanying Putin, said the Malaysian cosmonaut would start training in September or early October. The mission will likely be in the second half of 2005.

Moscow Ready To Invest in Iran's Transport Sector

Russian Transport Minister Sergei Frank said Aug. 6, that Moscow is ready to invest in Iranian ports on the Caspian Sea and in the construction of docks and warehouses, Ettalaat reported the next day. Frank said in talks with Iran's Ambassador Gholam-Reza Shafeie, that one of Russia's main policies is to activate the north-south corridor, adding that investment in projects for construction of ports in Makhachkala, Oliya, and Astrakhan has been promising, IRNA reported from Moscow.

Shafeie also called for conclusion of long-term cooperation agreement between Iran and Russia in order to balance mutual trade and invest in projects for construction of ports, terminals, and warehouses at the ports.

The two sides said expansion of mutual transactions involving the Caspian Sea would raise mutual understanding. They called for promotion of cooperation in railway and port construction, as well as in loading and offloading goods.

Meanwhile, Russia's Transportation Ministry announced that the working group of Iran-Russia joint commission convened on Aug. 6 in Tehran to examine mutual cooperation on the north-south corridor. It added that Russia's First Deputy Minister of Transportation and head of a State Marine Transportation Company, Vyacheslav Roksha, presided over the meeting. According to the report, the two parties exchanged views on various issues, including the construction of container terminals in Iranian and Russian ports, and investment in Caspian Sea shipping industry.

It added that synchronizing customs duties and taxation of Iranian and Russian shipping lines at the Caspian ports were also discussed at the meeting.

The north-south corridor agreement connecting India to Europe via Iran and Russia has already been inked by Iran, India, and Russia, as well as Kazakstan and Belarus, while Oman and Tajikistan have expressed interest in signing it.

Russian Parliamentary Leader in China

Sergei Mironov, speaker of the Upper House of the Russian Parliament, arrived in China Aug. 4. In an interview with Xinhua, Mironov called for expanding Russian-Chinese strategic cooperation. Mironov was invited by Wu Bangguo, chairman of the Standing Committee of the National People's Congress (NPC) of China. He called for direct contacts and collaboration between special committees of the two parliaments. Mironov said that Russia and China share common views on many international issues. "When the two powers take the same stand in the international affairs, that is a powerful force," he said. He also emphasized the past three years of "stable economic development" in Russia, while the political situation "has been stable also."

Speaking on Aug. 5 in Beijing, Mironov said that the North Korean nuclear issue "can get out of the current stalemate." While Russia wants the Korean peninsula to be nuclear-free, North Korea also has the right to ask for a guarantee of security when giving up its nuclear plan.

On Russia-China relations, Mironov said that Russia attaches great importance to its relationship with China, and that the Russia-China relationship is the most important bilateral relationship in international political arena. On Russia-China economic and trade relations, Mironov proposed further cooperation in the fields of nuclear energy, military and space technologies, and timber processing. He also supported growing region-to-region and city-to-city cooperation between the two countries.

Lautenbach's 'Productive Credit Creation' Featured in Russian Monthly

The August issue of the Russian economics and business magazine Valyutny Spekulyant ("Currency Dealer") carries a four-page abridged translation of Hartmut Cramer's presentation to the March 2003 Bad Schwalbach conference of the Schiller Institute, on Wilhelm Lautenbach's concept of productive credit creation. The title of the Russian article, appearing over Lautenbach's portrait, is "He Could Have Stopped Hitler." On the English-language section of its website, Valyutny Spekulyant promotes the article as follows: "Wilhelm Lautenbach's concept of productive credit creation / Hartmut Cramer. The Russian version of an article originally published in EIR magazine. The disastrous economic crisis and enormous unemployment in 1930s Germany resembled the situation in the U.S.A. But U.S. President Franklin Delano Roosevelt found a way out, while Germany was taken over by the Nazis. This historical tragedy is especially irksome because Germany had a group of economists, members of the Friedrich List Society, who knew how to overcome the crisis in the same way as Roosevelt did. The most brilliant representative of this group was Wilhelm Lautenbach, who proposed a productive credit concept for Germany. Unfortunately, he did not succeed in his plan."

Valyutny Spekulyant is read by many Russian businessmen and economists. The Russian article is also posted at http://www.larouchepub.com/russian/pdf/a332cramer.pdf.

Moonie Times on Russia: Oligarchs Represent 'Democracy'

Russia prosecutors' crackdown on Yukos Oil prompted the Washington Times to decry President Vladimir Putin's "totalitarian aims," in an Aug. 3 article by Simon Bell, titled "Tilt to Totalitarianism." Bell quoted Boris Berezovsky: "Putin is creating the necessary conditions for an authoritarian government. He seized the mass media for the Kremlin. Now he wants privatization reversed and the Russian economy in his hands."

The Moonie-owned paper spoke approvingly of those whom it candidly calls the "oligarchs," equating their unbridled rule with "democracy." "Nationalism" is the enemy, and is equated with anti-Semitism. Says Berezovsky, "even educated people welcome the blow against Khodorkovsky, for two reasons: They see us as robbers and, alas, they like it that the Kremlin is doing away with Jewish capital [Mr. Berezovsky, Mr. Abramovich, Mr. Khodorkovsky, and several of the other oligarchs are ethnic Jews]. The Kremlin kindles this flame of nationalism."

Berezovsky is frank: "I was never ashamed to formulate the power of capital and say that capital is the most important element of politics. By capital, I don't just mean money, but brains and culture. You can't keep capital out of politics except by brute force. Rockefeller was vice president in America.... In order to preserve democracy in 1996, we had to prove to them that Yeltsin was stronger. When the oligarchs demonstrated their power, the undecided 20 percent of the population who were afraid of the communists saw that maybe power lay with Yeltsin. That is what [the oligarchs] must do now."

Chevron-Texaco Seeks Chunk of Yukos

An article in the Aug. 3 Sunday Times of London reported that the oil giant Chevron-Texaco is negotiating to purchase 25% of Yukos Oil, the Russian company which is the subject of a law-enforcement crackdown. Chevron-Texaco has reportedly made a $4 billion offer. The report coincided with rumors, denied by Yukos, that the company's planned merger with another Russian oil company, Sibneft, was on the rocks.

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