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Security Watch: August 19, 2003

19 August 2003, Volume 4, Number 33
U.S., RUSSIAN, BRITISH AGENTS BREAK MISSILE-SMUGGLING PLOT... FBI agents, working in tandem with the Federal Security Service (FSB) and Britain's MI5, on 12 August arrested a British citizen who stands accused of smuggling a Russian-made Igla shoulder-launched antiaircraft missile into the United States, Russian and Western media reported. Agents arrested Hekmat Lakhani, a British citizen of Indian origin who has reportedly worked as an arms dealer in the past, in Newark, New Jersey, and two other people were arrested in connection with the case in New York City the same day. According to, the FSB detected Lakhani's activity in St. Petersburg several months ago when he was reportedly shopping on the black market for Igla missiles. Such weapons have been used to shoot down several Russian helicopters in Chechnya in recent months, and one was fired at an Israeli passenger airliner in Kenya in 2002

...AS PUTIN, BUSH PRAISE JOINT INTELLIGENCE OPERATION... U.S. President George W. Bush and President Vladimir Putin spoke by telephone on 16 August and discussed the recent joint U.S.-Russian-British intelligence operation that thwarted a plot to smuggle a shoulder-launched antiaircraft missile into the United States, Russian and international media reported. The presidents lauded the cooperation and noted that closer interaction in combating international terrorism is now bringing concrete results. They also discussed bilateral issues in preparation for Putin's visit to the United States at the end of September.

...AND SO DO FSB GENERALS... Lieutenant General Sergei Fomenko, deputy head of the FSB counterterrorism department, said on 13 August that the FSB is grateful to the U.S. and British intelligence agencies for their cooperation in successfully breaking open a plot to smuggle a shoulder-launched Igla antiaircraft missile into the United States (see "RFE/RL Newsline," 13 August 2003), Russian media reported. Speaking at a joint U.S.-Russian press conference in Newark, New Jersey, Fomenko said that the significance of the joint operation goes far beyond mere cooperation between intelligence services, and reaches the political level. In Moscow, former FSB Director and current Duma Security Committee Chairman Nikolai Kovalev (Fatherland-All Russia) told ORT on 13 August that joint U.S-Russian antiterrorism activity has evolved from individual operations into permanent, standing cooperation. He said that for a long time both countries misjudged the common enemy -- international terrorism -- but that this changed following the 11 September 2001 terrorist attacks in the United States.

...AS EXPERTS EMPHASIZE THAT ANTIAIRCRAFT MISSILE IS A SERIOUS THREAT. The 10-kilogram, shoulder-launched Igla missile is produced in Kolomna and can hit targets at altitudes of up to 3 kilometers, Russian and Western media reported on 13 August. Russian, U.S., and Israeli security experts consider it a highly effective weapon against both military and civilian aircraft. Until the 1990s, it was strictly classified, but since then it has been exported to about 30 countries. In the last 18 months, there have been at least three attempts using the missile to shoot down commercial airliners, reported on 13 August. The BBC on 13 August cited unidentified FBI sources as saying that terrorists planned to smuggle up to 50 Iglas into the United States. Although Russian security officials maintain that they keep strict track of the country's Igla missiles, last month 10 were stolen from a naval-supply depot in Leningrad Oblast (see "RFE/RL Newsline," 16 July 2003). Russian security agents recovered those missiles on 1 August (see "RFE/RL Newsline," 1 August 2003).

MEDIA EXPRESSES SKEPTICISM ABOUT OPERATION'S MOTIVES... "Kommersant-Daily," "Nezavisimaya gazeta," and -- all controlled by self-exiled tycoon Boris Berezovskii -- published on 14 and 15 August skeptical commentaries saying that the joint operation to intercept the smuggled antiaircraft missile was little more than a public-relations exercise for the intelligence services involved. TV-Tsentr -- which is run by the Moscow municipal authorities -- on 16 August expressed bewilderment that the entire story was given to the press. The channel speculated that the Russian security services are seeking the publicity in order to convince the West that they are preventing the proliferation of weapons from Russia's arsenals and, at the same time, they want to stimulate sales of Russian air-defense systems. The U.S. and British governments are interested in touting the achievements of their intelligence services for their own domestic political reasons, TV-Tsentr commented.

...FORCING FSB TO DEFEND ITSELF. Reacting to skeptical media reports, the public relations office of the FSB on 14 August released a statement saying that the operation against the missile smugglers was executed "in strict accordance with Russian, U.S., and British legislation," RIA-Novosti reported. Federation Council International Relations Committee Chairman Mikhail Margelov said that he found some of the media reports "astonishing." "The media are trying to find some dirty trick or propaganda elements in any intelligence/counterintelligence operations that are made public," Margelov told RIA-Novosti on 14 August.

RISK OF TERRORISM GREATER IN U.S., BRITAIN THAN IN RUSSIA. Russia faces less risk of terrorism than the United States, Israel, or Great Britain, according a study of the risks of conducting business in various countries released by the British World Market Research Centre, reported on 18 August. The study takes into account such factors as the motivations of potential terrorists, the presence of terrorist groups in the country, the scale and number of past terrorist incidents, and the effectiveness of both local terrorists and local security forces. According to the study, the most dangerous of the 138 countries studied was one that has no Islamic extremists at all -- Colombia. Israel was second, followed by Pakistan, the United States, and the Philippines. Great Britain ranked 10th and Russia was 14th.

DEFENSE MINISTER SAYS MOZDOK COMMANDERS WILL BE PUNISHED. Sergei Ivanov on 12 August told journalists that Lieutenant Colonel Artur Arakelyan, the commander of the Mozdok military hospital that was struck by a car bomb on 1 August (see "RFE/RL Newsline," 4 and 11 August 2003), and the commander of the Mozdok garrison should be held responsible for that assault, and RTR reported. Doctors who worked at the hospital have reportedly appealed to Ivanov to dismiss Arakelyan, who has been detained since the bombing. Ivanov said that Arakelyan, as commander, bears personal responsibility for those in his charge and for the reportedly lax security at the facility. Ivanov said that carelessness, sloppiness, and stupidity will no longer be tolerated in the military, and unit commanders will be held responsible for ensuring security. Chief Military Prosecutor Aleksandr Savenkov confirmed that seven people have been arrested in connection with the bombing (see "RFE/RL Newsline," 11 August 2003) and said that their names will be revealed soon.

FSB GIVES SUMMARY OF SITUATION IN CHECHNYA. In an interview with on 12 August, FSB Major General Yurii Rozhin, head of the FSB's Chechnya Territorial Directorate, said that the military and political situation will remain tense at least until the Russian presidential election next spring, as Chechen fighters are expected to intensify their efforts against the government in the run-up to that poll. Rozhin added that the increase in suicide attacks in recent months might be because the Chechen fighters do not have sufficient manpower for raids and other military operations. Rozhin said that the results of a recent amnesty of Chechen fighters have been disappointing and far fewer fighters than expected have laid down their arms. He said his agents have information that officials within the law-enforcement organs of the pro-Moscow Chechen administration maintain contacts with Chechen fighters and provide them with documents and information. Rozhin added that the level of activity of the fighters depends on the funding they receive from Islamic extremists abroad. Since the war in Iraq, he added, tensions have emerged between the Chechens and their sponsors as some funds have been redirected to forces opposing the U.S.-led coalition in Iraq

RUSSIA READY TO MAKE SECURITY GUARANTEES IN NORTH KOREA TALKS. Closed-door negotiations began in Moscow on 13 August between Russian, North Korean, and South Korean diplomats to prepare for six-way talks on Pyongyang's nuclear program that are set to begin in Beijing at the end of the month, RTR and reported. First Deputy Foreign Minister Valerii Loshchinin and Deputy Foreign Minister Aleksandr Losyukov are representing Russia in the negotiations. Losyukov told journalists on 13 August that Russia and China might give Pyongyang additional security guarantees in exchange for agreeing to renounce its nuclear-weapons program, if the assurances proposed by the United States are not deemed sufficient. Losyukov added that he believes North Korea will insist on additional guarantees and that "this demand is logical." He also said that Russia does not want to sit in judgment regarding this conflict, but is interested only in eliminating the danger of war in the region, which Moscow sees as a threat to its national security

MILITARY HOLDING MAJOR EXERCISE IN THE FAR EAST. The Defense Ministry has announced that the Russian military on 18 August began "strategic" military exercises in Primorskii Krai, near the Bering and Okhotsk seas, the Sea of Japan, and the Tatar Strait that separates Sakhalin Island from the Russian mainland, Russian media reported. The exercises are being led by the commander of the Russian Navy, Fleet Admiral Vladimir Kuroedov, and include 105 ships and 80,000 troops and civilian specialists. Presidential envoy to the Far East Federal District Konstantin Pulikovskii said that just one quarter of the exercises -- which will last until 28 August -- is devoted to military tasks. The rest of the program includes practice responding to emergency situations caused by terrorist acts or natural or manmade catastrophes.

U.S. FIGHTERS TAKE TO THE SKIES OVER MOSCOW. The Moscow International Air Show (MAKS) opened at the Zhukovskii airfield near Moscow on 19 August, Russian and Western media reported. The government hopes to turn the annual event into one of the world's largest air shows, comparable to France's Paris Air Show and Britian's Farnborough International Air Show, and MAKS-2003 is the largest in the event's six-year history with 800 companies from 38 companies participating. More than 200 civilian and military aircraft will be on display, including U.S.-made F-15 and F-16 jet fighters. These planes will be making demonstration flights over Moscow for the first time in history. Show visitors will also be able to see a U.S. B-52 strategic bomber, widely held as one of the most potent symbols of the Cold War, ORT reported on 18 August.

TWO MILITARY OFFICERS KILLED WHEN CARELESS SMOKER ATTEMPTS TO SIPHON GASOLINE. Two officers were killed and three other servicemen injured when a military truck loaded with some 800 artillery shells exploded at a military base in Primorskii Krai, RTR and other Russian media reported. The blast in the village of Babstvo, Jewish Autonomous Oblast, was reportedly sparked when a private at the base lit a cigarette while attempting to siphon gasoline from the truck. The private was arrested and the Military Prosecutor's Office has opened a criminal case against him.

FSB RESTRUCTURING COMPLETED. President Vladimir Putin on 12 August signed a decree establishing a new structure for the Federal Security Service (FSB), which should complete the reorganization of the security services that he began in March (see "RFE/RL Newsline," 12 and 13 March 2003), Russian media reported. In March, Putin abolished the Federal Agency of Government Information and Communications (FAPSI) and the Federal Border Guard Service, subordinating their functions to the FSB. Under the 12 August decree, the new FSB will comprise the departments of Counterintelligence, Protection of the Constitutional Order, Analysis and Strategic Planning, Military Counterintelligence, and the Border Guard Service. Reflecting Soviet traditions, the agency will form a 19-member collegium that will be its top administrative body. The FSB director will have three first deputies and nine deputies (see "RFE/RL Newsline," 28 July 2003)

YUKOS CEO WORRIES THAT SECURITY FORCES COULD REVERSE DEMOCRATIC DEVELOPMENT... Yukos head Mikhail Khodorkovskii told German ARD television on 11 August that there is a group of people within President Vladimir Putin's inner circle that is hindering Russia's democratic development. Commenting on recent actions by prosecutors and security agencies against the oil giant, Khodorkovskii said this is "a pivotal moment for Russia." Either the security forces will gain the upper hand and Russia will develop along the lines of some Latin American countries during the 20th century, or Russian civil society will prove that it can defend itself, showing that a return to totalitarianism would be impossible, Khodorkovskii said.

...AND PLANS TO BOOST SUPPORT FOR LIBERAL PARTIES... Yukos's Khodorkovskii intends to increase his financial support for Russia's liberal parties -- primarily Yabloko and the Union of Rightist Forces (SPS), the "Financial Times" reported on 11 August. The daily reported that Khodorkovskii plans to strengthen these parties' regional networks in order to increase their influence outside the major cities. He also plans to increase significantly Yukos's contributions to government social programs. By doing so, the oligarch hopes successfully to challenge the pro-Kremlin parties, which are building their election campaigns on popular anti-oligarch sentiment. Khodorkovskii believes that financing social programs might help him reach a compromise with the Kremlin, the "Financial Times" wrote.

...AS POPULAR ENTERTAINER ATTACKS HIM ON STATE TELEVISION. In an interview with RTR television on 9 August, popular comedian Mikhail Zadornov -- who is known for his close Kremlin ties and his acidic anti-Western rhetoric -- said that he and his fans are outraged by the behavior of Yukos's Khodorkovskii and other oligarchs during the recent confrontation with law-enforcement agencies. Zadornov noted that Khodorkovskii and the others have complained that the investigations are costing them hundreds of millions of dollars. "To whom are they complaining? To the millions of Russians who do not have enough food to eat?" Zadornov asked.

ANTIMONOPOLY MINISTRY APPROVES YUKOS-SIBNEFT MERGER... The Antimonopoly Ministry on 14 August approved the merger of Russian oil majors Yukos and Sibneft, which would be the largest merger in Russian corporate history and create the world's fourth-largest oil producer, Russian and international media reported. There was speculation that the merger, which was announced in April (see "RFE/RL Newsline," 23 April 2003), would fall through as a result of the recent investigations into Yukos. Under the deal, Yukos could get 100 percent of Sibneft, paying $3 billion for an initial 20 percent stake while Sibneft shareholders could exchange the remaining shares for shares in the new company, YukosSibneft Oil Co. The new company would have a daily oil output of approximately 2.06 million barrels and total reserves of some 19.4 billion barrels of oil equivalent, according to AP.

...WITH SOME CONDITIONS. The ministry said in a 14 August press release announcing its decision that the merger must be completed by the end of the year and that it has established "rules of conduct" for the merger to proceed, Interfax reported. First, YukosSibneft Oil must not hinder independent oil traders' access to markets in which the new company is dominant; second, the new company must guarantee current and future suppliers unfettered access to its oil refineries; and third, that other companies will be allowed to participate in funding new pipeline projects under the condition that they contribute funds proportional to the amount of oil they intend to pump through those pipelines. The latter requirement, according to an unidentified Antimonopoly Ministry spokesman, relates to a strategic oil pipeline from Siberia to the countries of Asian Pacific regions that Yukos CEO Khodorkovskii has been lobbying. Yukos spokesman Aleksandr Shchadrin expressed his satisfaction with the ministry's decision, and said it will have a positive effect on the company's situation, RTR and reported.

FINANCE MINISTER WARNS AGAINST TURNING YUKOS AFFAIR INTO RUSSIA'S ENRON. Deputy Prime Minster and Finance Minister Aleksei Kudrin told NTV on 14 August that the authorities will find a just solution to the legal assault on Yukos and that the public can expect a proper "court decision." He added that any violations of the law that are uncovered during the investigations should be made public. However, Kudrin also questioned the wisdom of scrutinizing the company's operations to such an extent that it affects the country's economy. Comparing the Yukos affair to the Enron scandal in the United States, he noted that as Enron was investigated the U.S. financial markets suffered. He asked rhetorically, "Should one so scrutinize Enron's abuses to get such [economic] results?"

PUTIN TELLS BUSINESS TO GET READY FOR WTO MEMBERSHIP. Speaking to a Kremlin gathering of leading industrialists on 13 August, President Vladimir Putin said that joining the World Trade Organization (WTO) is "a crucial element of the country's economic policy," and other Russian media reported. He said that the efficiency of domestic industry depends on its readiness to compete in the global environment. As a member of the WTO, Russia would be able to participate in elaborating global trade regulations which, in turn, would have an impact on the national economy, Putin argued. However, WTO membership will not be a panacea for Russia, and it will not solve crucial economic problems such as the lack of investment. These problems must be addressed by boosting the economic-growth rate, Putin said. He also urged business to help create an attractive image of Russia abroad. He said that to do so, Russia should change the structure of the economy, create a civilized business environment, and develop democracy. At the same meeting, Economic Development and Trade Minister German Gref said that it is realistic to expect that Russia will join the WTO in 2005-06.

PUTIN CALLS FOR DECISION ON COMMON RUSSIAN-BELARUSIAN CURRENCY. Speaking at a cabinet meeting on 11 August, President Vladimir Putin said it is time to make a final decision on the proposed single Russian-Belarusian currency, which is scheduled to be introduced on 1 January 2005, Russian media reported. "We have come to the point at which we must decide to go one way or the other," Putin said. Moscow and Minsk have proposed different models for creating the single currency on the basis of the Russian ruble. Belarusian President Alyaksandr Lukashenka has called for financial parity and is demanding that the joint currency be issued both in Russia and in Belarus. Russian economists, meanwhile, insist that the Russian Central Bank should have sole responsibility for managing the currency. Putin has repeatedly backed that position in the past. Also on 11 August, First Deputy Finance Minister Aleksei Ulukaev predicted that the joint working group on the issue will eventually adopt a draft based on Moscow's position, RTR and ORT reported. The working group will also establish a litigation procedure for use in the event that Lukashenka rejects the group's draft and decides to withdraw from the single-currency accord.

POLICE ALLEGE TRAVEL AGENCY HELPED SUSPECTS ESCAPE ABROAD. Filipp Zolotnitskii, a spokesman for the Interior Ministry's Moscow Economic Crime Directorate, said on 13 August that police are investigating a Moscow travel agency that reportedly helped some 300 suspected criminals -- including some on the federal most-wanted list -- to flee the country, reported on 13 August. Zolotnitskii said that Alyans-Turs employees inserted the pictures of criminal suspects into passports that had been lost, stolen, or illegally obtained and helped them to get the necessary visas to travel abroad. He added that among those whom the firm allegedly helped to flee abroad were some residents of Chechnya. He said the company's owner, Nina Fedotyuk, had made at least $800,000 on the deals. Fedotyuk and two company employees have been detained in connection with the case. A list of the suspects that Alyans-Turs is accused of helping has been forwarded to Interpol, lenta reported.

AUTHORITIES CRACK RING THAT ALLEGEDLY FORGED STATE HONORS. The FSB has alleged that the Association of Heroes of the Soviet Union and Russia has been illegally producing forged documents that seemingly bestow some of Russia's highest state awards, Russian media reported on 15 August. The association allegedly sold the documents for large sums of money. The association, which reportedly has no real heroes of Russia or the Soviet Union among its members, also illegally obtained the Golden Star of Heroes from laureates who are deceased. The Hero Order is one of Russia's most prestigious state awards, and it is in extremely high demand on the black market since it confers lucrative benefits including tax breaks, discount lending rates, and opportunities to purchase prestigious real estate. An FSB spokesman said that some 30 people have been detained in connection with the case, including association head Aleksei Kuznetsov, who has allegedly posed as an FSB lieutenant colonel. A search of the association's office reportedly uncovered numerous false documents and a personal firearm with a forged inscription purporting to be on behalf of the FSB. Investigators alleged that the association tried to embed its own people within the law-enforcement organs, the Justice Ministry, and other government agencies, including the offices of the presidential envoys to the seven federal districts in order to lobby the association's interests.

FORMER KREMLIN INSIDER SAYS CORRUPTION CONTINUES TO GROW... Georgii Satarov, a former adviser to President Boris Yeltsin who is now president of the INDEM research foundation, told TV-Tsentr on 13 August that corruption in government and society continues to grow and exceeds the levels found during the Yeltsin years. He said that there is now an unofficial price list for government positions. An appointment as a deputy minister costs $500,000, while one as deputy prime minister costs several times that figure, Satarov said. Although senior officials do not necessarily know about the corruption of their subordinates, President Vladimir Putin certainly knows the extent of the corruption problem because competing groups within the administration bring him compromising materials about one another, Satarov said. Putin, however, understands that the problem cannot be solved all at once or by means of brute force, he added.

...AND WARNS AGAINST POLITICIZING EFFORTS TO COMBAT IT. In an interview with "Rossiiskaya gazeta" on 16 August, INDEM head Satarov, who last year published a comprehensive study of corruption in Russia (see "RFE/RL Newsline," 10 October 2002), said that the politicization of the fight against corruption as a consequence of the upcoming December Duma elections and the March 2004 presidential election could have serious consequences for Russia. History has many precedents in which the struggle against corruption was used as a pretext to replace a weak, fragile democracy with a dictatorship. Satarov cited the examples of Adolf Hitler, who campaigned against corruption in Weimar Germany, and of Spanish dictator Francisco Franco, who used corruption in republican Spain as an excuse to impose authoritarian rule. The fight against corruption has its political limits, Satarov said.

COURT DISMISSES CHARGES AGAINST EXHIBITION VANDALS. A Moscow district court on 11 August threw out a criminal case filed against two Russian Orthodox believers who, with several other accomplices, vandalized an anti-clerical exhibition organized by the Andrei Sakharov Museum in Moscow in January (see "RFE/RL Newsline," 21 January 2003). Prosecutors had charged the men with hooliganism, but the court ruled that their actions were not illegal because their "religious sensibilities" had been offended by the exhibition. Sakharov Museum Director Yurii Samodurov said that one purpose of the exhibition was to draw attention to the commercial use of Russian Orthodox imagery and the church's state privileges in selling tobacco and alcohol. The court's ruling means that ideological and religious protest in Russia may now take the form of "pogroms," commented on 11 August.

PRESIDENT CHECKS UP ON NATIONAL SPORTS PROGRAM. President Putin met in the Kremlin with Deputy Prime Minister and Finance Minister Aleksei Kudrin and State Sports Committee Chairman Vyacheslav Fetisov on 12 August to discuss revitalizing the country's sports program, ITAR-TASS and other Russian media reported. Kudrin told Putin that the government's draft 2004 budget includes a 37 percent increase in state funding for athletics and that each region of the federation is expected to create 10 new public sports facilities. Fetisov said that his committee is planning to reinstate the Soviet-era mass Olympiad for schoolchildren and that it expects up to 5 million children to participate in the first such event next year.