RUSSIA AND CENTRAL ASIA NEWS DIGEST
Russia, Iraq To Sign $40-Billion Infrastructure Deal
Iraq's Ambassador to Moscow, Abbas Khalaf, announced that Iraq and Russia will sign a $40-billion, five-year economic-cooperation agreement, possibly before the end of this month, the Washington Post revealed in its lead article Aug. 17. The agreement focusses on cooperation in big infrastructure projects: oil, electrical energy, chemical products, irrigation, railroad construction, and transportation. Most of Iraq's infrastructure was originally built with Soviet or Russian help, and Baghdad wants the Russians to help rebuild, or upgrade it.
The deal was confirmed by Oleg Buklemeshev, a deputy to Russian Prime Minister Mikhail Kasyanov. Buklemeshev told the Post that "All of the ministries have agreed to the document," and the signing ceremony could take place "very soon." He also stressed that nothing in the agreement violates UN resolutions regarding Iraq. The U.S., he said, "should be okay provided they have the correct information." This latest Russian move is expected to further complicate efforts by the Bush Administration to rally support for a war against Iraq.
The announcement comes at the same time that Russia is pursuing upgraded relations with the other two countries labelled by President Bush as part of the "axis of evil." As the Post notes, "Despite President Vladimir Putin's friendship with Bush and support for the war on terrorism," Moscow last month released a plan to build five new nuclear-power plants in Iran, and extended an invitation to North Korean leader Kim Jong-il this week, to visit Moscow.
Russian Defense Minister Proposes Defense Group of Caspian Sea States
Russian Defense Minister Igor Ivanov proposed the formation of a defense group of Caspian Sea littoral states, in the context of Russian-Kazakh maneuvers, according to the Tehran Times of Aug. 11. He said, "We are familiar with the threats in the region and that is why a common operation with our neighbors in the Caspian is necessary."
Besides Russia and Kazakhstan, the Caspian littoral states include Iran, Turkmenistan, and Azerbaijan. Iran was an observer at the maneuvers.
China, Central Asian States To Discuss Great Rail Project
According to Kabar Kyrgyz, a Chinese delegation was expected in Bishkek last week, for discussions on construction of the great rail project to connect Uzbekistan to Kyrgystan to China, according to the Prime Minister of Kyrgyzstan, Nikolai Tanayev. Tanayev was meeting with a delegation from the International department of the Central Communist Party Committee of China when he made the announcement.
He noted that if the railroad is built, "The economy of Kyrgyzstan will sharply improve."
The planned railroad, which promises to be an astonishing project, will go from Kashi in Xinjiang, western China, over the mountains into Kyrgystan and then to the Fergana Valley, will run close to large mineral deposits in Kyrgystan, and will facilitate their development, Tanayev said.
North Korean Leader To Visit Russia
North Korean leader Kim Jong-il will visit Russia soon; he visited there in August last year. Yonhap News of Seoul, South Korea, reports that he is going in order to advance work on the link-up of North Korea to the Trans-Siberian Railroad. Thirty North Korean students will study at Russia's Siberian National Railway College in Novosibirsk starting next month, the Korea Trade-Investment Promotion Agency (KOTRA) said, citing a report from its office in Vladivostok.
According to the Aug. 8 issue of the Russian newspaper Izvestia, Russian President Vladimir Putin will arrive in Vladivostok Aug. 24 to meet with the leadership of Primorsk Kray and Far East Federal Okrug, and visit the base of the Pacific Fleet. Here, too, he will reportedly hold very unofficial talks with North Korea's leader Kim Jong-il, for the second time since Putin's official visit to the North Korean capital of Pyongyang in 2000.
The meeting of Putin and Kim is reportedly being prepared by Gen. Konstantin Pulikovsky, the President's Representative in the Far Eastern Federal Okrug, who is known for his personal sympathies towards Kim Jong-il. On Aug. 7, Pulikovsky visited Putin in the Kremlin, officially to discuss the region's fishing industry.
In April, Pulikovsky was a guest in Pyongyang, visiting the celebrations of the Day of the Sun (the birthday of Kim Jong-il's late father, Kim il Sung). At that time, he said that Kim Jhong-il would like to visit Vladivostok, Khabarovsk, and Komsomolsk-on-Amur.
Russia's Foreign Ministry would not confirm or deny any plans for a Putin meeting with Kim, although Foreign Minister Ivanov recently travelled in the two Koreas, discussing joint infrastructure programs.
Russian Firm To Invest in German Aircraft Industry
Oleg Deripaska, head of Siberian Aluminum (the main component of the Russian Aluminum conglomerate), has declared his intention to invest in the aircraft-building business of Fairchild Dornier, a German company which is today in bankruptcy procedure. According to Kommersant of Aug. 5, the Russian oligarch is going to finance the construction of FD 728 jets, traditionally regarded as rivals of Russian TU 334s and the joint SU-Boeing project.
On the eve of bankruptcy, FD lost such partners as Boeing and Canada's Bombardier. FD's vice president Thomas Brandt told Kommersant's correspondent that several engineers from Siberian Aluminum are already working at FD's plant in Oberpfaffenhofen. The cooperation will also be very beneficial to the Russian company, as it enables Deripaska to engage the idled facilities of its Samara-based Aviakor Co., which is supposed to produce parts for the German aircraft.
It is obvious that serial production of FD aircrafts will start before the TU-334 and the SU-Boeing plane. Reached by Kommersant's authors, officials at the Russian Industry Ministry could not comment, confessing that they don't possess any information. After a while, contact in the Ministry agreed that penetration of foreign markets by Russian companies was certainly a positive event, but asked, why not invest in domestic business?
Russian Aluminum Executive Deripaska Attacks German Gref
Oleg Deripaska, head of the giant company Russian Aluminum, became the latest of Russia's raw materials "oligarchs" to attack the Kasyanov government. Vedomosti of Aug. 6 reported an open letter by Deripaska, harshly criticizing Minister of Economics German Gref for, among other things, being obsessed with Russia's accelerated entry into the World Trade Organization.
Deripaska's letter outlined his own "economic strategy for Russia," which is not limited to raw materials development. Besides general points about reducing the cost of capital and making credit and monetary policy more predictable, Deripaska calls for a public-private-sector approach to economic growth, including "development and implementation of a strategy and specific programs for the physical infrastructure of the economy," "expansion of tax and budget policy instruments to provide incentives for demand and for investment in fixed capital," "development and implementation of a regional policy strategy, in order to equalize the social and economic development levels of various regions of Russia, with comprehensive involvement of natural resources of Siberia and Far East," "a comprehensive solution of the problem of poverty, with emphasis on the employment of educated pauperized persons."
Economist Mikhail Khazin commented to Vedomosti that Deripaska's activation as an economic strategist showed "healthy pragmatism," because "it is clear that in the autumn, the government will be purged, and the loudest critics of Gref's policy will probably have the best access to influence the new cadre policy."
Russia-Georgia Relations Deteriorate Further
According to numerous sources, including ORT, Moskovskie Novosti, Kommersant Daily, and others, the relations between Russia and Georgia are deteriorating significantly.
On Aug. 8, the Georgian side was forced to agree to extradite a group of Chechen mercenaries to Russia, after Russian special services provided videotaped evidence of the involvement of Georgian military and customs officials in deployment of terrorists across the Georgian border into Russia. This evidence involves also Azerbaijan, as the mercenaries were hired in Baku through a company functioning as a travel agency. On the videotape, a terrorist was featured describing in detail, how he was protected by Georgian officials in Pankisi Gorge.
During the past two weeks, accusations have flown back and forth between Moscow and Tbilisi, after Chechen guerrillas retreated from heavy fighting with Russian forces in Chechnya, back into Pankisi Gorge. Georgia protested against Russian military aircraft overflights of Pankisi Gorge, and initially refused to extradite two groups of Chechens captured on the Georgian side. Oleg Mironov, speaker of the Russian Federation Council (upper house of Parliament), inflamed the situation by proposing that Russia emulate Ariel Sharon's military operations on the West Bank, and go into Georgia in force to wipe out the guerrillas' bases there.
The deterioration of the Russian-Georgian relations is taking place on the eve of the signing of a comprehensive Friendship and Cooperation Treaty between the two countries, but also in the midst of political instability in Georgia. In recent local elections, no clear leading force emerged, and at the same time, there is more and more open discussion about the succession to President Eduard Shevardnadze.
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