In this issue:

Russian/British Sources Expose U.S. Contingency Plan For ICBMs Against Iraq

Russian Analysts See Dollar and U.S. Market Crash as Strategic Event

Dollar's Fall Raises Russia's Debt Payments

Russian Intelligence Comments on EIR's Analysis of September 11

Putin Demands New Economic Security Concept

Putin Sends a General to The Economics Ministry

Putin Moves To Cut Regions' Control Over Raw Materials

Primakov: Demographic Situation in Russia 'Catastrophic'

Primakov Warns U.S. Strike on Iraq Would Promote Clash of Civilizations

Russians Ask: Does Worldcom Bankruptcy Doom Iraq?

From the Vol.1,No.21 issue of Electronic Intelligence Weekly
Russia and Central Asia News Digest

Russian/British Sources Expose U.S. Contingency Plan For ICBMs Against Iraq

On July 18, the Russian Web site Gazeta.ru drew attention to the possibility that the United States will use intercontinental ballistic missiles, armed with non-nuclear warheads, to attack Iraq. The analysis was based on comments by Pentagon official Stephen Younger. The Gazeta.ru item was picked up and circulated by BBC Monitoring, which referred to the scheme as "the Pentagon's plan to use intercontinental ballistic missiles [ICBM] against Iraq," i.e., as something already generally recognized to be an option.

Gazeta.ru referred to a July 18 statement by Younger, head of the Defense Department's Threat Reduction Agency, "to the effect that his unit is working on the issue of using ICBMs with non-nuclear warheads, in a possible armed conflict."

Younger evidently did not mention Iraq, but Gazeta.ru's coverage treated it this way: "The Pentagon has declassified yet another detail of the military operation that is being prepared against Iraq. If the United States is unable to reach agreement with [Iraqi President Saddam] Hussein's neighbors on the use of their territory for advance deployment of its troops, the main strike against Iraq will be delivered by ICBMs." The Russian agency commented that this option becomes especially relevant, after Turkey's refusal to provide bases for attacks on Iraq.

The use of submarine-launched ICBMs, continued Gazeta.ru, would make it possible to destroy even hardened Iraqi military targets. But that is not all. Such a deployment of ICBMs would be a cheap and efficient way to slash nuclear weapons delivery systems, as mandated under the Treaty on the Reduction of Strategic Nuclear Potentials, signed by Presidents Bush and Putin!

Gazeta.ru concluded that, "The use of ICBMs in the operation could trigger an entirely unpredictable reaction not only from Russia, but also from China. And it is not only the fact that ICBM launches against Iraq might be misinterpreted by the Russian missile-attack early-warning system. The fact is that, as a result of using strategic weapons, the Pentagon will gain unique experience of the combat use of its own ICBM guidance systems—experience which none of the other members of the nuclear club has." Finally, the commentary speculated on the chances of Washington's persuading the Kremlin to approve, or even take part, "in such an unusual process for the reduction of nuclear potentials."

Russian Analysts See Dollar and U.S. Market Crash as Strategic Event

The presence of $40 billion or more in cash dollars inside Russia and the fact that Russian currency reserves are held chiefly in dollars, make the plunge of the U.S. dollar a burning issue in Russia. The week of July 22, currency exchange points in Moscow began to be swamped by people who were either trying to exchange their dollars for euros (some exchange points reportedly ran out), or at least demanding reliable information on what to do. Finance Minister Aleksei Kudrin and other officials urged calm. Russian stock markets dropped sharply for the first time in recent months, the giant Gazprom falling by 11% on July 24.

Most striking is that the strategic dimensions and systemic nature of the crisis are now being openly discussed in Russian media. The July 19 interview of Lyndon LaRouche in Vek (EIW No. 20) set a standard of reference. The same day, Prof. Stanislav Menshikov, in his weekly column for the English-language Moscow Tribune, took up the question of the U.S. "bubble" economy. Menshikov wrote that Alan Greenspan's explanations about an epidemic of greed were an understatement, since "the long boom of the 1990s has brought about an asset price inflation that has gone wildly astray for the first time since the 1920s." The major banks, said Menshikov, "have also been involved in crediting the bubble and helping it grow beyond reasonable proportions."

A third article such article appeared in the July 22 issue of the weekly Ekspert, by the well-known analysts Oleg Grigoryev and Mikhail Khazin. They were the authors of a summer 2000 article titled "Will the United States Manage To Bring On the Apocalypse?" (see EIR, Aug. 18, 2000), which argued that the so-called New Economy was a hoax, the collapse of which would make the United States into the epicenter of a coming crisis. Now Khazin and Grigoryev have returned to the pages of Ekspert with a sequel, on which EIW will report in detail next week.

Dollar's Fall Raises Russia's Debt Payments

Andrei Illarionov, an economic adviser to Russian President Vladimir Putin, said on July 7, that every rise of the euro against the dollar by one cent, increases Russia's foreign debt by $100 million. Russia has debts that are denominated in dollars, but owed to European countries. They must be serviced in euros. The Russian economy is heavily dollarized.

On July 17, Strana.ru reported Finance Minister Kudrin's appeal to Russians not to take "drastic action," meaning not to cash in dollars on a panic basis.

In a commentary dated July 18 and titled "The Economy Is Sick," Nezavisimaya Gazeta wrote that dollar's fall can wreak havoc with Russia's budget planning. Next year's budget already prioritizes payments of $17 billion on the foreign debt, in the peak year of 2003. But, observed Nezavisimaya, "Another problem for the budget has been the unexpected strengthening of the euro against the dollar, which will increase the amount Russia must pay out to service its foreign debt. Finance Minister Alexei Kudrin has already announced that if the euro/dollar exchange rate remains as it is, Russia will have to pay an extra $300-400 million. Then again, some Finance Ministry officials say the difference could reach $2 billion by the end of the year."

Russian Intelligence Comments on EIR's Analysis of September 11

The military- and intelligence-connected Russian weekly newspaper Zavtra in its July 16 issue published excerpts from the German-language EIR report on the background of the attempted internal U.S. coup of Sept. 11, together with comments from "Namakon"—the pen-name of a group of top-level former Soviet intelligence officers. While concurring with EIR's conclusion, that the events of Sept. 11 could not have taken place without high-level involvement of some faction within the U.S. military, Namakon stresses that the decision by President Bush in the evening of Sept. 11, to go with the bin Laden cover story at the urging of Tony Blair and others, "meant a de facto capitulation of the U.S. Presidency to the real organizers of the attack, and the adoption of their policy of confrontation with the Islamic world, according to Huntington's formula for a 'Clash of Civilizations.'"

Namakon also commented on the EIR analysis, that the attempted orchestration of conditions for an escalating nuclear alert between the U.S. and Russia was a crucial part of the Sept. 11 coup plot, and drew a direct line to the August 2000 sinking of the Russian nuclear submarine Kursk, which has been the subject of a major coverup. Namakon writes, "the [EIR] hypothesis leads us to ask, whether the Kursk catastrophe might not also have been an included facet of the operations of the U.S. putsch group, since an attack of such a dimension would necessarily lead to a big reaction from the Russian military and population, creating an atmosphere favorable to provoking a nuclear escalation." In fact, such an escalation of the Kursk incident, which top-level Russian military officials have repeatedly linked in some way to the presence of NATO submarines in the area, was prevented at the time by a direct "hot line" consultation between Putin and then-U.S. President Clinton, followed within 48 hours by a highly unusual visit by CIA chief Tenet to Moscow. The parallel to the Bush-Putin contact on Sept. 11 was pointed out by EIR on a number of occasions.

Putin Demands New Economic Security Concept

What the widely read Russian daily Argumenty i Fakty (AiF) termed "intriguing, even mysterious events" have taken place in the Russian establishment, around economic policy. On July 8, President Putin held a meeting of the Security Council, to which Minister of Economic Development and Trade German Gref delivered a report Putin had demanded on "threats to Russia's economic security." Putin ordered the Security Council to update its "national economic security concept," which was originally composed by economist Sergei Glazyev, during his 1996 time at the Security Council under Gen. Aleksandr Lebed. On July 11, Gref reported to the government on the same topic, behind closed doors.

AiF interviewed Glazyev, who is campaigning for the governorship of Krasnoyarsk left vacant by Lebed's death. He said that nothing proposed so far addresses the biggest threats to Russia—"the destruction of its scientific, technical, and intellectual resources, especially in research and education, where the average age of the key personnel is approaching retirement age." Moreover, "Due to our barbaric methods of extracting natural resources, we will soon run out of reserves of oil, natural gas, and other resources which are explored and ready for development. There is also the threat of foreigners taking over key sectors of the economy. As a result, we could lose some unique technology and our capacity to compete in the global marketplace. And there is the threat of domestically produced goods being overwhelmed by imports."

Putin Sends a General to The Economics Ministry

On July 11, it was reported that President Putin has assigned Gen. Col. Vladislav Putilin to the Ministry of Economic Development and Trade, under German Gref. Putilin, 56, is a military organization specialist with a background in engineering and the strategic rocket corps, who has headed the Organization-Mobilization Directorate (GOMU) of the Armed Forces General Staff since 1997. GOMU was an important institution during Marshal Ogarkov's war planning in the 1970s-1980s.

The Russian media went into a whirl of speculation about the appointment, the initiative for which was variously attributed to Defense Minister Sergei Ivanov and to Gref himself, though Deputy Minister of Economic Development and Trade Medvedkov said it had come as a complete surprise.

The Moscow Times noted that GOMU is formally in charge of "top-secret plans to keep the country permanently prepared for war," including rapid conversion from civilian to military industrial production. Strana.ru quoted Defense Ministry spokesman Nikolai Deryabin on this: "This program has received little attention over the past 10 years. But the President has decided that in planning the economy's development, serious consideration should be given to the country's security, the improvement of factories capable of quickly switching to the production of military equipment."

Putin Moves To Cut Regions' Control Over Raw Materials

According to the Russian economics weekly Ekspert, legal expert Dmitri Kozak, deputy chief of the Presidential Administration, is preparing legislation to shift control over most of Russia's natural resources—including oil, natural gas, gold, diamonds and ferrous and non-ferrous ores—to the Federal government, declaring them Federal property. The new law would come in the form of amendments to the Tax Code and to an existing law on raw materials. Regions would be left with control over gravel, sand and ground water. Taxes and other fees paid in connection with raw materials extracton would be paid to the Federal budget.

Putin has shown growing impatience with regional leaders, regarding economic problems. On July 7, he visited Ulyanovsk, scene of protests against electric power cut-offs. He blasted the provincial leaders for carrying out their own form of "shock therapy," which allowed a rate of increase on utilities rates, between seven and 11 times higher than in the rest of the country.

Primakov: Demographic Situation in Russia 'Catastrophic'

Interviewed in Rossiyskaya Gazeta of July 9, Russia's former Prime Minister Yevgeni Primakov said that the country is losing nearly 1 million people each year. In the Far East and Siberia, the situation is almost a "demographic vacuum," he said—and a vacuum does not stay for long. Primakov recommended controlled and measured immigration, in order to prevent a "migration tsunami" (tidal wave) from sweeping over Russia. Primakov said that he envisaged the immigration of citizens not only from members of the Commonwealth of Independent States, but also from China and Korea.

Primakov Warns U.S. Strike on Iraq Would Promote Clash of Civilizations

In his July 9 interview with Rossiyskaya Gazeta, Russia's former Foreign Minister and Prime Minister, Yevgeni Primakov, who is now chairman of the Russian Chamber of Commerce and Industry, said that the division of the world into Christians and Muslims poses a great threat. He said that Russia had its own reasons for supporting the U.S.-led operation in Afghanistan, particularly the situation in breakaway Chechnya, but now the question is what comes next. Primakov said that U.S. policy was complicating matters, by turning the fight against terrorism into something useful for the United States, rather than the whole world.

Primakov cited two criteria by which to judge U.S. intentions: whether or not U.S. forces and bases are pulled out of Central Asia after the war in Afghanistan ends, and the potential U.S. attack on Iraq. Such an attack would backfire against the United States, Primakov warned, because it would create splits among Muslims, as well as reinforce the idea of dividing the world by a "civilizational-religious principle."

Russians Ask: Does Worldcom Bankruptcy Doom Iraq?

Russian commentators have picked up on the ever more explicit linkage between the threatened U.S. attack on Iraq, and the U.S.-centered financial crisis. In a commentary in Izvestia of July 23, Anatoli Maksimov wrote, "The bankruptcy of WorldCom and the threat of a collapse of the U.S. stock market are making the U.S. military operation in Iraq inevitable. It seems that the George W. Bush Administration posses no other methods to save the national economy and the U.S. currency." Maksimov reported that he had interviewed numerous Washington thinktankers, who concur that the political decision for an attack has already been taken.

The newspaper Vedomosti titled its editorial, "WorldCom and Iraq," but gave a more convoluted analysis, involving the world price of oil.

In his July 19 Moscow Tribune column, Prof. Stanislav Menshikov wrote that the Bush Administration has done "precious little" to address the problem of America's "overinflated financial superstructure," and that "the feeling in some Washington offices is that a foreign adventure in Iraq might help put the problem away."

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