In this issue:

EU-Russia Summit Postponed

Putin To Visit Ukraine, the EU, India and Germany

Russian Oil Surplus To Be Paid to International Banks

Russia Looks at Dwindling Raw Materials Reserves

Tense Situations in Several North Caucasus Locations

Russian, Belarusian Officials Condemn U.S. Election Practices

From Volume 3, Issue Number 46 of EIR Online, Published Nov. 16, 2004
Russia and the CIS News Digest

EU-Russia Summit Postponed

At Moscow's request, the leadership of the European Union on Nov. 9 announced postponement of the EU-Russia summit, scheduled for Nov. 11 in The Hague. A new date of Nov. 25 was announced later. The official reason—that the new European Commission has not yet been formed—was highlighted by the Kremlin, which posted an exchange on President Putin's website between the President and Foreign Minister Sergei Lavrov. The exchange noted how regrettable it was that the new commission is not yet operational, because that precludes discussion of "matters of substance." Izvestia on Nov. 10 called this a mere pretext, used "to cover over, temporarily, current frictions."

What the Russian side wants, Izvestia continued, is declaration of a "new strategic partnership" with the EU, including "road maps for the development of four common spaces: ... the economy, foreign security, internal security, and science/education/culture." But, Russia has refused to sign on to drafts of the foreign policy "road map," which touch on its activity in former Soviet republics, including a pledge to close Russian military bases in Georgia. Disagreements also remain over visa-free transit to Kalinigrad from the rest of Russia. An EU source cited by EUPolitix news agency (reported in RFE/RL Newsline) said that "there were some areas, to be frank, where we would have liked to see the Russians be more forthcoming."

The Russian web site Strana.ru, however, charged that relations with Europe were being held up by the "serious internal crisis" of the EU itself, including "attempts by new EU members, from Eastern Europe and the Baltic, to put themselves in charge of EU policy towards Russia"—attempts, the Strana.ru commentator said, towards which the current chair of the EU, the Netherlands, is far too obliging.

Putin To Visit Ukraine, the EU, India and Germany

On Nov. 11 the Kremlin announced a hastily arranged two-day visit by President Vladimir Putin to Ukraine, starting the next day. He travelled as the guest of outgoing President Leonid Kuchma, mainly in the Crimea. Putin already made a three-day visit to Ukraine on the eve of the first round of the Presidential elections there, held Oct. 31. He is de facto campaigning for Victor Yanukovich, who faces opposition figure Victor Yushchenko in the Nov. 21 run-off, though Ukrainian sources see Russia as attempting to prepare for either outcome.

News of the trip came one day after Ukrainian election officials announced that Yushchenko narrowly surpassed Yanukovich in the first round; each had something over 39% of the vote. Since the first round, Natalia Vitrenko's Progressive Socialist Party of Ukraine (1.5%) has endorsed Yanukovich, while the Socialist Party led by Alexander Moroz (5.5%) is more or less openly supporting Yushchenko. The Communist Party (5+ %) has made no endorsement.

Following the Ukrainian election, Putin is scheduled to attend the Russia-EU summit in The Hague, now set for Nov. 25. During the first 10 days of December, Putin will make a state visit to India, and later in the month the Russian President is due to visit Germany.

Russian Oil Surplus To Be Paid to International Banks

The Russian Ministry of Finance has terminated debate over how to spend the country's multi-billion-dollar "stabilization fund," which came into existence due to tax revenues from Russian oil exports at the current high world prices, Izvestia reported Nov. 10. The Ministry's plan, submitted to the government, directs the fund surplus exclusively into foreign-debt reduction. The report said that Kudrin wants to prioritize the Paris Club debt (Soviet-era debt to foreign private banks, chiefly in Western Europe). Russia's Paris Club debt is $46 billion, of which $18 billion (40%), might still be written off; then Kudrin would spend $10 billion from the stabilization fund to pay down the remaining amount, and sell another $18 billion worth of new Eurobonds, to roll the rest over.

Russia Looks at Dwindling Raw Materials Reserves

The Nov. 11 cabinet session of the Russian government discussed a national program for resource exploration in 2005-2010 and the subsequent decade. Minister of Natural Resources Yuri Trutnev reported that without decisive action, Russia's exploitable gold reserves will run out by 2010, and oil will run out in just a decade, by 2015. Recent increases in oil production have been achieved by using new technologies to squeeze oil out of West Siberian and other fields, already explored and developed by the Soviet Union. But since 1991, a Strana.ru report of the meeting noted, Russia's "geological science, previously one of the best in the world, has been in a state of decline." Prospecting, exploration, and confirmation of reserves practically came to a halt.

Russia is currently below the breakeven point, where new reserves are confirmed at a rate equivalent to the rate at which already confirmed resources are extracted. It was noted at the meeting, that the rule of thumb for staying at breakeven, is that new reserves have to be confirmed at a rate 50% higher than current extraction, because not all confirmed fields pan out. "At first glance," commented Strana.ru's Sergei Pletnev, "there would appear to be time to remedy the situation, but that is an illusion. This sector has a high level of inertia, which means that investment [in exploration] takes several decades to pay off." The plan adopted by the cabinet provides 16.5 billion rubles (less than $570 million) per year for raw materials exploration. Agriculture Minister Alexei Gordeyev pointed out that this sum is less than 20 percent of the amount of taxes, evaded by Yukos Oil company in a single year. While adopting the program, the cabinet instructed Trutnev's ministry to develop a "more aggressive" plan to restore Russia's resource base of proven raw materials reserves.

Tense Situations in Several North Caucasus Locations

Presidential Representative for the Southern District Dmitri Kozak—President Putin's close aide, who was assigned this post after the Beslan massacre in September—spent the wee hours of Nov. 11 trying to calm crowds of protesters against Mustafa Batdyyev, president of the republic of Karachayevo-Cherkessia in Russia's North Caucasus. On Nov. 8, Internal Affairs police forces in the area were put on high alert after several thousand people, grouped around relatives of seven men found dead at Batdyyev's son-in-law's dacha, invaded and ransacked Batdyyev's offices. The incident occurred after the discovery of the bodies of seven people, missing since early October, concealed in a well on the property of the son-in-law, Ali Kaitov, who is chairman of the board of Caucasus Cement. On Nov. 11, Batdyyev joined Kozak in dispersing the protesters, by promising to resign if it turned out he had acted improperly. Moskovsky Komsomolets newspaper of Nov. 12 headlined, "Kozak doused the flame, but he hasn't put out the bonfire." Izvestia claimed to have uncovered a "sensational" story behind the story: that Ali Kaitov's enemies were representatives of Kaitov's uncle, electricity company owner Magomed Kaitov, and that the latter's interests are tied to one major Moscow businessman and a large Russian bank.

In North Ossetia, President Dzasokhov has also spent late-night negotiating sessions, trying to calm relatives of the schoolchildren, killed in the terrorist hostage-taking attack on a school in the town of Beslan, in September. Their protests against him flared in early November after publication in Komsomolskaya Pravda of allegations that the true number of hostage-takers at Beslan was higher than acknowledged, and that 13 of them had escaped.

In Chechnya, First Deputy Premier Ramzan Kadyrov, 27-year-old son of the assassinated President of Chechnya, is making waves with an offer/threat to send a force into Pankisi Gorge, Georgia, to suppress Chechen insurgents operating there. Georgian security officials have said, "No, thanks!" but Kadyrov repeated on Nov. 4 that, "we stand ready to carry out a special operation in Pankisi."

Beginning Nov. 4, NATO Secretary General Jaap de Hoop Schaffer toured the three Transcaucasus nations, the northeast corner of Southwest Asia—Georgia, Armenia, and Azerbaijan—before heading for Washington for consultations with Bush Administration officials.

Russian, Belarusian Officials Condemn U.S. Election Practices

Alexander Veshnyakov, chairman of Russia's Central Election Commission, who visited the United States as an election observer, announced at a Nov. 6 press conference upon his return, that he thought Democrat John Kerry had a legal basis to challenge the outcome of the Presidential election. Veshnyakov cited the failure to count some votes, including absentee ballots, Itar-TASS reported. He also said that Russian electronic voting machines, which provide a physical record of each vote cast, are superior to the ones used in the United States, and that some U.S. election officials want to visit Russia to learn from the Russian system.

Russian members of an OSCE observer delegation noted at a Nov. 4 press conference that spot checks had found electronic shuffling of votes in the United States—awarding to one candidate, votes cast for another; and they complained that Russian Embassy observers were barred from the polls in Connecticut, West Virginia, and Pennsylvania.

More strident was Alexander Lukashenka, President of Belarus, and target of the recent "Belarus Democracy Act," passed by the U.S. Congress and signed into law by President Bush. Lukashenka said on Nov. 4, "If we had staged an election the way they did in the United States, we would have been crushed a long time ago." On the same day, the Belarus Foreign Ministry condemned the United States for failing to measure up to international election standards. "We are not surprised," the Foreign Ministry said, "by many reports on the disappearance of a large number of mailed-in ballots, the malfunctions in the electronic voting system, the intimidation of voters, the absence of voters on voter registration lists, and the impossibility to freely obtain information from precinct and district boards of elections on the procedures and places of voting."

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