In this issue:

Putin Questions U.S. 'Democracy Injections' Agenda

Russian TV Shows G-8 Summit As Clown Show

Pentagon Campaigns For Ukraine-NATO Connection

Academician Lvov Promotes Cooperation With China

Default Fears Hit Russian Banking System

Protests in Russia Against Slashing of Benefits

Historian Recalls 'Operation Bagration' on WWII Eastern Front

President Putin Visits Mexico

From Volume 3, Issue Number 24 of Electronic Intelligence Weekly, Published June 15, 2004
Russia and the CIS News Digest

Putin Questions U.S. 'Democracy Injections' Agenda

Reporting from the G-8 Summit on June 9, Russian state television said the Russian delegation had voiced strong doubts about U.S. proposals for "injecting democratization" into North Africa and the Mideast in order to promote "civil society," which, in turn, would allegedly prevent terrorism. At the close of the summit the next day, President Vladimir Putin warned that it would be unacceptable to interfere in countries' internal affairs, under the pretext of the "democratization" called for in the U.S. scheme. According to Putin, terrorism is rooted in, first of all, "poverty, destitution, and inequality," and additionally, in funding that gets into the hands of terror-promoting groups.

Concerning the (U.S.) push for NATO to take a role in Iraq, Putin ironized that maybe it would be a good idea, because "it would give them something to do, which might make the situation easier for us." But, he said, the United Nations should be the institution to anchor a stabilization process in Iraq. After his bilateral meeting with President George Bush on June 8, Putin called the new UN Security Council resolution on Iraq "a big step forward." But he remained cool towards U.S. behavior overall, "defending" Bush against criticism from "the Democrats": Putin said, "Bush's political opponents have no right to criticize his policy in Iraq, since they conducted the same policy towards Yugoslavia."

Russian TV Shows G-8 Summit As Clown Show

A June 9 report by the Vesti program on Russian state TV, from the Sea Island, Georgia (USA) G-8 summit, dramatized the goofiness of the event's staging by host George W. Bush. The Russian correspondent told how the press corps had been ordered by the Americans to shed their ties and dress casually. Then Vesti showed footage of Bush whizzing up to his villa in a red, white, and blue four-wheeler, getting set to receive other heads of state as they arrived in the same style: "First came Gerhardt Schroeder like a race-car driver [German four-wheeler shown cutting a sharp turn, with the Chancellor at the wheel]; then the Japanese, with Koizumi, however, riding in the back seat; Vladimir Putin led an entire Russian convoy of carts, with himself behind the wheel of the lead vehicle; but, most shocking was President Jacques Chirac of France, who arrived on foot [group of French diplomats shown, striding along in the heat] and wearing a suit and tie, leaving others to speculate if this were a matter of protocol, the eternal French sense of style, or a statement. Bush kept needling the French President, 'Jacques, aren't you hot?'"

From there, the Russian report went on to note that, when it came to American demands for statements on the "Mideast," Chirac was not alone in his disagreement, but was joined by Germany and Russia on various points.

Earlier, Russian TV footage showed Bush making a fool of himself as he met the small number of "Mideast" leaders who accepted his invitation—"using his own special greeting for kings, 'Hey, Your Majesty, how's it goin'?'"

Pentagon Campaigns For Ukraine-NATO Connection

The U.S. Department of Defense has been trying to drum up interest in Ukraine, in a bid to join NATO, according to a Ukrainian military officer stationed in the United States. The Ukrainian government, however, has been unresponsive to such probes, while Ukrainian officials perceive the State Department and other U.S. government agencies as realizing the folly of such a move. There may be some interest on the part of Ukrainian military circles, the source said, since many within the Ukrainian military are unhappy with the country's "buffer" role between Russia and the West.

Academician Lvov Promotes Cooperation With China

At a June 1 press conference, after a meeting of the social sciences department of the Russian Academy of Sciences, held in the Russian Far Eastern city of Khabarovsk, Academician Dmitri Lvov said that Russia must shape its policy, "by taking into account the obvious successes the Chinese economy has been displaying of late.... China's leading place in Russia's economic policy in the Asia-Pacific region [and Russia's] long-standing partnership with [China] will enable Russia to receive considerable economic advantages." The same orientation was also expressed in the resolutions adopted by the session in Khabarovsk on June 1. Academician Lvov is academic secretary of the economics department of the Academy.

Default Fears Hit Russian Banking System

Two medium-sized Russian banks have recently defaulted on bonds and were shut down by the government, spreading concerns for a repeat of the 1998 crisis, when Russia defaulted on government bonds. Like Brazil, Turkey, and other so-called "emerging markets," the Russian banking system is now suffering from repatriations of foreign hot money. Furthermore, the Russian government has started to impose tighter money-laundering legislation.

The first victim, Sodbiznesbank, was shut down under the new money-laundering laws, and, as a consequence, defaulted on ruble-denominated bonds on May 25. When rumors spread that CreditTrust, another medium-sized Russian bank, was linked to Sodbiznesbank, investors withdrew money from CreditTrust and sent it into liquidation as well. In early June, CreditTrust therefore failed to meet its bond obligations.

Many more, and probably bigger, default cases are expected to erupt soon in the Russian banking sector. Russian banks are closing down credit lines to other Russian banks, meaning that liquidity in the interbanking market has disappeared. Usually, interbank interest rates in Russia are about 2% to 3%. But on June 8, this rate quadrupled, from 3% late on the previous Friday to 12%, while at some point in the day it even shot up to 20%. The Russian media is speculating about a blacklist of other troubled banks, which might be targetted by the government in the coming weeks.

Protests in Russia Against Slashing of Benefits

There were demonstrations throughout Russia on June 10, ranging from 1,500 people in Moscow to larger crowds in some provincial cities, against the legislation now making its way through the State Duma, which will change the country's system of social benefits. Millions of pensioners, veterans, and disabled stand to lose their free access to public transportation, rent subsidies, etc., in exchange for cash payments. The fear is that the small increases in their pensions and stipends will be dwarfed, as the government also moves to raise utilities prices towards so-called "world levels," as long demanded by foreign financial organizations.

The Moscow Times of June 11 wrote that "pensioners and the disabled ... fear that the proposed 800 to 3,500 ruble monthly supplement to pensions and allowances will not cover the value of privileges they now receive.... They are worried that the cash allowances will not keep pace with hikes in charges for electricity and gas supplies, as Russia seeks to meet its commitments to the European Union on energy prices, agreed to last month as part of the negotiations for its accession to the World Trade Organization. The average monthly pension is now 1,760 rubles ($60)—less than the official poverty line of about $75 per month."

Organized by the generally ineffective Federation of Independent Unions, today's rallies were small, compared with protests over wage arrears some years ago. But, wage protests have also resumed recently, in the mining areas of central Siberia. A woman hunger striker died there on June 9.

Historian Recalls 'Operation Bagration' on WWII Eastern Front

The truly decisive battle for the liberation of Europe began 60 years ago this month, wrote American history Prof. Mike Davis in the London Guardian of June 11, but he was referring to Belarus (then Soviet Byelorussia), not Normandy. It was named Operation Bagration by the Soviets, after the great military hero of the War of 1812 against Napoleon Bonaparte. The World War II battle began when a Soviet guerrilla army, including many Jewish refugees and escapees from concentration camps, began a surprise attack to the west of the German Army Group Center on the Eastern Front, cutting its links to Poland and East Prussia.

Then, on June 22, 1944, the third anniversary of the Nazi invasion of the Soviet Union, Marshal Georgi Zhukov sent 1.6 million Soviet soldiers in a 500-mile-long front against the strongest concentration the Wehrmacht had in all Europe. This was what the late historian, Prof. John Erickson, called a "great military earthquake." By the end of the summer, Operation Bagration had driven the Wehrmacht back into Poland, and engaged the elite Panzer (tank) and other forces of the Wehrmacht—so that the British and American troops in Normandy did not have to face them.

The Wehrmacht had some 53 divisions facing the Normandy invasion, but over 180 divisions, of much greater operational strength, on the Eastern Front! But the Soviets adopted and perfected the same Wehrmacht tactics of Barbarossa, and defeated the German armies.

The Soviet summer offensive was several times larger than Operation Overlord, Davis wrote. It followed the great Soviet battles of Stalingrad (August 1942-February 1943) and Kursk, (July 1943)—the greatest tank battle in history. By the end of Operation Bagration, the road to Berlin was already open.

German losses were far greater in the East: Some 70% of German soldiers were killed on the Eastern Front, not the Western. Some 40 Soviet soldiers died for every one American solider, Davis wrote. At least 27 million Soviet soldiers and citizens were killed. (John Erickson put the toll, including of Stalin's relocation of Soviet industry, up to 40 million.) These Soviet soldiers are not being celebrated in the "D-Day" commemorations, Davis wrote, and that is wrong. Misconceptions about the Red Army must be clarified. It saw itself—for good reason—as "the greatest liberation army in history." It was universal: "Three of the generals who led the troops in Bagration were a Jew (Chernyakovsky), an Armenian (Bagramyan), and a Pole (Rokossovskii)."

After U.S. President George W. Bush decided to use D-Day to commemorate his war crimes in Iraq and Afghanistan, Prof. Davis wrote, he decided to commemorate his own uncle, a Normandy veteran, and "his comrade Ivan."

President Putin Visits Mexico

See Ibero-America Digest for coverage of the Russian President's history-making state visit to Mexico.

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