Russia and Central Asia News Digest
Russian TV Quizzes Bush On Dollar Collapse
Interviewing U.S. President George Bush on May 31, the Russian state television channel RTR started with this question: "In my country, for many people, America is associated first and foremost with the U.S. dollar.... What's going on? Is it going to stay as weak as it is now? And what's your forecast?"
Bush replied, "The policy of my administration is for there to be a strong U.S. dollar."
RTR: "Which is not at the moment." To this, Bush responded that policy and reality do not necessarily coincide: "Well, I understand that. And the marketplace is making decisions as to whether the dollar should be strong or not. Our policy is a strong dollar. And we believe that good fiscal and monetary policy will cause our economy to grow and that the marketplace will see a growing economy and therefore strengthen the dollar. But you're right, the market, at this point in time, has devalued the dollar, which is contrary to our policy."
Russian Budget Plan Assumes Falling Dollar
The Russian Cabinet began on June 1 to deliberate on next year's Federal budget. Finance Minister Aleksei Kudrin told the session that the government's first draft assumes that the U.S. dollar will not recover during 2004; it counts the dollar at $1.20 to the euro.
President Vladimir Putin, at a May 31 press conference during the St. Petersburg tricentennial celebration, confirmed receive Central Bank officials' remarks about holding a smaller portion of Russia's gold and currency reserves in dollars, than hitherto. Putin said that more of the currency holdings will be in euros. In the recent period of high oil prices, Russian gold and currency reserves have risen from $11 billion to the level of $61 billion, during the past three years.
Shanghai Group Summit Focussed on North-South Transport Corridor
Russian Minister of Transport Sergei Frank addressed the participants of the Shanghai Cooperation Organization summit on May 29. "The summit is focussed on the issues of transport of Asian commodities to Europe. The Minister's report was dedicated to the development of the North-South transport corridor, designed to provide continuous transit of container cargo from Asia to Europe. One of the largest European transport consortiums, Eurogate, has already joined the project, which is supposed to involve over $300 million in foreign investment," reported eatu.org.
Eurogate, a merger of Eurokai and Bremer Lagerhaus Gesellschaft (BLG), is going to purchase a 26% stake in the consortium of companies controlling transit through St. Petersburg Seaport, Ust Luga Port (Leningrad Region), and Olya Port (Astrakhan Region on the Caspian Sea), from its Russian ownerNational Container Company, co-established by First Quantum and Severstaltrans.
There were also Russia-Europe transport deals finalized around the St. Petersburg tricentennial summit. On May 23, Frank signed a long-term agreement with German investors concerning development of container terminals in the ports of Ust Luga (Leningrad Region), St. Petersburg, and Arkhangelsk. The container terminals are going to be opened by 2007. From the Russian side, the terminals will be owned by the recently established Rosmorport State Company.
Iran, Uzbekistan and Afghanistan Discuss Transport
Representatives of the three countries signed a draft agreement in Tehran on June 2, establishing a road link from Iran to central Asia via Afghanistan and Uzbekistan. Iranian Minister of Roads and Transport Ahmad Khorram, Uzbek Deputy Prime Minister Elyor Ganiev, and Afghan Minister of Public Works Abdul Ali declared their commitment to build the "Rahgozar" corridor.
This will link Iran to Uzbekistan via Herat, Badgis, Jouzghan and Balk, the Afghan minister explained. In addition, the Iranian announced that his country has decided to establish a rail link "from Torbat Heidarieh, in the eastern province of Khorassan, to Afghanistan's Sangan and Herat," IRNA reported. Khorram added, "This project will also link neighboring Afghanistan to the high seas as well as to Central and Northern Europe.
In this context, Uzbek President Karimov will visit Iran for three days, beginning June 17. He will meet with President Khatami as well as with Afghan President Karzai, who will be there at the same time. "Road transportation will top the agenda of talks between these officials," IRNA noted. Karimov reportedly will sign an agreement with his counterparts, for building a road from his country, which is landlocked, to the Persian Gulf.
Chinese President Wants Increased Trade with Kazakstan
Visiting Kazakstan June 3 en route home from his meetings with Russian and Central Asia leaders in Moscow and St. Petersburg, Chinese President Hu Jintao voiced his commitment to greatly increased trade between the two countries. There will be a focus on oil deliveries from Kazakstan to China, as well as other energy sector cooperation under a program running until 2008. Hu pledged to double bilateral trade to $5 billion per year, up from $2 billion in 2002. The Chinese President also invited Kazak industries to invest more in China, especially western China, whereas Chinese firms also planned to increase investments in Kazakstan, notably in the natural gas and crude oil sector, in coming years.
Besides the long-term prospects for enhanced bilateral economic cooperation, Hu Jintao and Kazakstan's President Nursultan Nazarbayev discussed their cooperation on the international political stage, through the Shanghai Cooperation Organization (SCO). Both leaders stressed that developing the SCO is a factor of global, as well as regional stability, because of Central Asia's geopolitical location.
According to Kazak wire services, Hu Jintao briefed Nazarbayev on China's plans for industrial and infrastructure development in its western regions, pointing to the importance of building a modern transport link between Asia and Europe, via China, Kyrgyzstan, and Kazakstan (the project for a southern Eurasian corridor route, as distinct from the Trans-Siberian corridor in the north).
Russia To Continue Peaceful Nuclear Technology Cooperation with Iran
Russian Foreign Ministry spokesman Alexander Yakovenko said on June 5 that it was "actively pushing" for Iran to sign an additional protocol with the International Atomic Energy Agency, which would grant the UN nuclear watchdog broader access to Iran's nuclear sites and information. However, Iran has no legal obligation to accept stricter controls, and its failure to do so won't hinder its contract with Russia for a light-water reactor in the southern port of Bushehr, Yakovenko said. "The protocol is an agreement that is signed on a voluntary basis," Yakovenko told reporters.
Iran's ambassador to Moscow, Gholamreza Shafei, told a news conference that Russia had given assurances that the Bushehr contract was not linked to signing the protocol.
The statements apparently contradict British Prime Minister Tony Blair, who said a day earlier that Russian President Vladimir Putin had pledged not to supply any nuclear fuel to Iran until the government in Tehran agrees to closer IAEA supervision of its nuclear program. Yakovenko said Thursday that Moscow would supply uranium fuel for the Russian-built reactor in Bushehr only after Iran signs an agreement to ship the spent nuclear fuel back to Russia, as has been under negotiation for many months. Russian Atomic Energy Minister Alexander Rumyantsev said earlier last week that Iran was ready to agree on this, calling the delay so far in formalizing the arrangement purely technical, and due to the need to coordinate with Russian government agencies. Rumyantsev also said that the Bushehr reactor is now set to begin operating in 2005, although Iranian officials have said they expect the reactor to come on line later this year.
During a press conference at the Evian summit of the Group of 8, President Putin himself made the additional point that Russia does not want to see alleged weapons non-proliferation concerns exploited for the purpose of undercutting Russian companies, involved in developing peaceful nuclear technologies in Iran.
Russia and Iran Invite U.S. To Help Build Nuclear Power Plants in Iran
In separate press statements on May 30, the Atomic Energy Minister of Russia and Iran's Foreign Minister invited the U.S. and other Western nations to participate in Iran's nuclear energy program. Noting that Russia is building only the first of a possible six nuclear reactors at Bushehr, Alexander Rumyantsev told Tass that there is "enough room for everyone." What better way for the U.S. to assure itself that Iran's nuclear program is for civilian purposes? "We have made this proposal to our American colleagues several times during discussion on the expert level, and they have been saying they need to think about it," said Rumyantsev.
In his Tehran press conference, Kamal Kharrazi said that by 2020, Iran plans to have 6,000 MW of nuclear generating capacity on line. "Russia has helped us a lot to build the Bushehr nuclear power plant to produce electricity," he said. "Western countries can also participate in tenders we are planning to offer for the construction of more nuclear plants." If Iran were afforded access to the latest nuclear technologies (which it is entitled to under the provisions of the Nuclear Nonproliferation Treaty, which it signed in 1970), Kharrazi stated, and sanctions were lifted, Iran would sign additional protocols to the Nonproliferation Treaty.
Also on May 30, IAEA director Mohamed ElBaradei told CNN that although Iran's uranium enrichment facility in the city of Natanz could conceivably be used to produce weapons-grade material, "building these facilities does not automatically means this is a weapons program, because they can have peaceful applications in a nuclear program dedicated to producing electricity." Although the Bush Administration has been lobbying the IAEA to declare that Iran has an advanced nuclear weapons program before they even meet to review their data, ElBaradei said the IAEA is continuing its inspections of Iran's nuclear facilities and will issue a report in the middle of June.
Russia Demands Investigation of Israeli Nuclear Weapons
The Russian representative, speaking at the meeting of the Nuclear Suppliers Group held in May in Pusan, South Korea, presented a report on the nuclear weapons in Israel's possession, and demanded that this matter be addressed. As reported in the Israeli newspaper Ha'aretz of June 2, this demand was made while the U.S. was demanding an end to nuclear cooperation between Russia and Iran. The Russian representative declared that Israel represents a greater threat to the Middle East than Iran.
The Nuclear Suppliers Group represents 40 industrialized countries, and was set up to monitor leakage of nuclear technology that could be used for developing weapons. Meanwhile, U.S. Undersecretary of State for Arms Control John Bolton will be travelling to Israel next week to discuss U.S. efforts to halt Iran's nuclear program.
Bush and Putin Reaffirm Space Cooperation
Despite tensions on issues ranging from the Iraq war and reconstruction to Russia's nuclear cooperation with Iran, Presidents Bush and Putin issued a joint statement on U.S.-Russian cooperation in space on June 1. The U.S. Administration is well aware that, with the U.S. Shuttle fleet currently grounded, the very survival of the crew aboard the International Space Station (ISS) is wholly dependent upon Russian transport and resupply capabilities.
Referencing the loss of the Space Shuttle Columbia, the statement says the two nations "have persevered despite tragedy and adversity." It continues, "We confirm our mutual aspiration to ensure the continued assembly and viability of the ISS ... relying on our unprecedented experience of bilateral and multilateral interaction in space." It states that the U.S. "is committed to safely returning the Space Shuttle to flight, and the Russian Federation is committed to maintain our joint American astronaut and Russian cosmonaut teams on board the ISS until the Space Shuttle returns to flight."
Glazyev Becomes Co-chairman of 'Russian Regions'
In line with his stated intention of creating a broad-based Russian patriotic electoral coalition, economist Sergei Glazyev on May 30 accepted election as co-chairman of the Russian Regions Party. Glazyev was elected to the Duma on the Communist Party slate (although not a member), and already co-chairs the People's Patriotic Union electoral umbrella. CPRF leader Gennadi Zyuganov has announced that Glazyev will be Number 2 on the CPRF slate in the next elections. At a May 19 conference of the People's Patriotic Union, Glazyev stressed that the PPU must broaden its base, in order to seriously aspire to power, instead of being an impotent, token opposition.
It was also rumored in early June that Glazyev will be drafted to run for Governor of Murmansk Province, a possibility he does not rule out.
'Oligarchical Coup' Already Happened, Says Glazyev
In comments posted on his web site, Russian economist Sergei Glazyev commented with irony on the current "hot story" in Moscow, namely that a creeping "oligarchical coup" is in progress. The story was launched at the end of May, with the dissemination of a study by a think tank called the National Strategic Council. At least one of its authors, according to Moscow sources, is a pawn of Boris Berezovskythe ambitious moneybags now cooling his heels in exile in London. The scenario suggested that financial magnates such as Mikhail Khodorkovsky, head of Yukos Oil, were planning to use President Putin's desire for a parliamentary majority-based government, to install one of their ownpossibly Khodorkovskyas Prime Minister.
Glazyev commented that an "oligarchical coup" already took place in 1993, when Boris Yeltsin abolished the Constitution and the Parliament in order to suit the demands of international financial institutions.
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