Russia and the CIS News Digest
Shanghai Cooperation Organization Summit Held in Tashkent
Russian President Vladimir Putin attended a summit meeting of the Shanghai Cooperation Organization (SCO) on June 17, the first of three summits he took part in in Central Asia. The leaders of the SCO member countries (China, Russia, Kazakstan, Kyrgyzstan, Tajikistan, Uzbekistan) met in Tashkent, the Uzbek capital, where the organization is headquartered. One of the top orders of business was the official opening of the SCO's regional anti-terrorism office.
According to remarks made by Putin at the summit, the talks also focussed on the illegal drug trade, including its role as a source of financing for terrorism. Afghanistan's President Hamid Karzai took part in the meeting, as did Mongolia's Foreign Minister Luvsangiin Erdenechuluun. Mongolia has official observer status in the SCO, and has formally asked to join.
Putin said that economic cooperation was also high on the agenda. Chinese President Hu Jintao announced that China will extend $900 million in trade credits to finance the development of trade among the SCO member nations. "We should fully take advantage of the high complementary economy among members and the rich natural resources and start cooperation in various forms," said Hu. At a press conference after the summit, Putin hailed the Chinese move as "a serious step" in economic cooperation. Putin noted that the countries have "many joint infrastructural interests," for which multilateral efforts are appropriate.
Kyrgyz President Askar Akayev called for better cooperation in energy and transportation, and Uzbek President Islam Karimov proposed a Central Asia Common Market. Putin flew on to Astana, Kazakstan, where, on June 18, he attended summits of the Eurasian Economic Community (EurAsEC, which has the same members as the SCO, minus China and Uzbekistan and plus Belarus) and the Collective Security Treaty Organization same membership as EurAsEC, plus Armenia).
Russia Receives Chinese Three-Point Cooperation Proposal
Meeting with President Putin on June 17 in Tashkent, where both attended the SCO summit, Chinese President Hu Jintao offered a three-point proposal for implementation of the China-Russian Friendship Treaty on Good-Neighborly Cooperation through major economic cooperation. The areas of cooperation would be trade, local cooperation, and joint investment projects.
Putin said Russia and China have rapidly growing cooperation in trade, military technology, and culture, and said he agreed with Hu's three-point proposal. Russia will give "full consideration" of China's interest when making decisions on any projects related to China, he said. Bilateral trade grew by more than 37% year-on-year. The two Presidents also discussed Korea, Southwest Asia, and the G-8 meeting.
Putin To Visit Brazil in November
A November date has been set for President Vladimir Putin's visit to Brazil, Russian Ambassador to Brazil Vasili Gromov reported June 14. When the two Presidents spoke last March after Putin's re-election, President Lula da Silva's spokesman, Andre Singer, reported that Putin had accepted Lula's invitation, as the two Presidents agreed "on the necessity of advancing the dialogue between the two countries, to make bilateral commerce more vigorous and dynamic, and tighten scientific-technological cooperation."
Russian Markets on Rollercoaster
Trading was suspended June 17 on the Moscow Interbank Exchange, after stock shares in Yukos Oil soared by 23%. This was triggered by President Putin's remarking, in Tashkent, that the Russian state has an interest in such a big company as Yukos not going into bankruptcy. Yukos stock had been leading the Russian stock market in a downward plunge, ever since the company's warning several weeks ago, that it was just months from bankruptcy and would not be able to pay the $3.5 billion in back taxes, assessed by the government. Then, at the beginning of the week of June 14, Yukos announced that it did have a payment plan (involving installments, and possibly the sale of some stock to the government, i.e., partial renationalization), which prompted a further plunge because the governmentwith Putin out of the countrydid not respond enthusiastically. On June 15, the Russian Trading System (RTS) index briefly hit a two-year low.
The trial of former Yukos CEO Mikhail Khodorkovsky and two other Yukos owners and execs was supposed to begin during the same week, but was postponed till June 23, due to the illness of an attorney.
On June 10, the International Energy Agency issued a warning that the bankruptcy of Yukos could affect world oil supplies, insofar as approximately one-fifth of this year's planned increase in Russian crude output is supposed to come from Yukos facilities. The approaching trial has occasioned other, fairly hysterical commentaries in the international financial press, such as the London Financial Times June 15 headline, "Turmoil at Yukos drains confidence in Russia."
The specter of "renationalizations" hangs in the Russian air, even as the government presses ahead with Western-modelled reforms in the social services sector (cash pay-outs instead of free services for elderly and invalids, partial privatization of pensions and health care, introduction of a mortgage market, etc.). Members of the United Russia majority in the State Duma are pushing legislation that would permit renationalization of privatized companies that did not meet certain standards of performance.
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