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Security Watch: September 25, 2003


25 September 2003, Volume 4, Number 38
FOREIGN POLICY
PUTIN OUTLINES RELATIONS WITH WASHINGTON... Putin told U.S. journalists assembled for a 20 September press conference that Moscow and Washington are "allied" in the antiterrorism and nonproliferation efforts, along with encouraging strategic stability, ITAR-TASS and strana.ru reported. Russia and the United States are "partners" in other areas, he added. Putin said his good personal relationship with Bush contributes to enhanced bilateral cooperation. Putin said that while he and Bush might disagree over some steps, the U.S. president is a good partner and a decent person. He noted that he and Bush are each facing re-election efforts in 2004, adding that they should seize the current window of opportunity to work together.

...SAYS TROOP DEPLOYMENT TO IRAQ NOT ON THE TABLE... At the same press conference, Putin said Russia is not currently considering a troop deployment to Iraq, according to izvestiya.ru and polit.ru. Moscow supports sending troops only within the framework of the United Nations, he said, adding that Russian soldiers are already participating in 10 UN peacekeeping missions around the globe.

...REASSERTS PLANS FOR NUCLEAR TRANSFERS TO IRAN... Putin told journalists on 20 September that Russia does not intend to scrap planned transfers of nuclear technology to Iran, as the United States and Israel have long urged, gazeta.ru reported on 21 September. Putin said those who accuse Russia of contributing to an Iranian nuclear-weapons capability should stop talking and present evidence to that effect. He noted that unconfirmed Russian intelligence suggests that many Western firms also cooperate with Iran in the nuclear field. Putin also voiced support for Tehran's adoption of the International Atomic Energy Agency's Additional Protocol on inspections. "If Tehran has no plans for the creation of atomic weapons, it has no reason not to sign [the] protocol confirming this obligation," he said.

...SAYS ARAFAT SHOULD NOT BE DENIED ROLE IN PALESTINE... Putin said on 20 September that Palestinian President Yasser Arafat lost "a moment and historical chance" in the path to peace in the Middle East, but added that that does not mean the international community should deny Arafat's role in Palestine and the Arab world, gazeta.ru reported. He said the situation in the wake of Palestinian Prime Minister Mahmoud Abbas's resignation is complicated. Putin said the Palestinian side must do its utmost to stop terrorist attacks, while Israel should avoid provoking negative reactions.

...URGES RECONCILIATION BETWEEN RUSSIAN ORTHODOX CHURCH AND VATICAN. Putin on 20 September encouraged improved relations between the Russian Orthodox Church and the Vatican, gazeta.ru and polit.ru reported. "It would be correct if [those] two sister churches rose above their controversies and found a common language," he said. Such a development would provide an additional step toward Russia's integration into the world community, he added. Putin said he cannot invite the Roman Catholic pontiff for a full-scale visit to Russia in light of the Russian Orthodox Church's opposition.

MOSCOW SAYS MIDEAST PEACEKEEPERS UNDER UN MANDATE WOULD BE 'USEFUL.' Deputy Foreign Minister Yurii Fedotov said on 17 September that Russia might participate in international peacekeeping forces in the Middle East if "a relevant decision is made by the UN Security Council," Russian media reported. Fedotov said it would be "useful" to bring "international forces or international observers" into the Israeli-Palestinian conflict zone in order to pressure the parties to the conflict to fulfill their obligations under the so-called road-map peace plan. In an oblique criticism of the United States' veto on 17 September of a draft UN resolution demanding that Israel halt threats to expel Palestinian Authority President Yasser Arafat, Fedotov added that the Security Council's "inability" to adopt the resolution confirmed the need to step up international efforts to resolve the crisis (see "RFE/RL Newsline," 17 September 2003).

U.S., RUSSIA DISCUSS PROLIFERATION AND IRAN... U.S. Undersecretary of State for Arms Control and International Security John Bolton held talks in Moscow with Deputy Foreign Minister Sergei Kislyak on 17 September, Russian and international media reported. Bolton told Interfax following the meeting that he and Kislyak discussed arms control and arms proliferation, and the issue of Russia's nuclear cooperation with Iran. Asked about Washington's decision this week to impose sanctions on KBP Tula (see "RFE/RL Newsline," 17 September 2003), a state-owned Russian company that the United States accuses of selling laser-guided artillery sells to Iran, Bolton said such sanctions are required by U.S. law and will be imposed on other Russian companies if they are determined to be doing similar business with Iran. "This issue is the subject of our constant attention," Interfax quoted Bolton as saying.

...WHILE MOSCOW SAYS RUSSIA WILL NOT BOW TO U.S. PRESSURE. Deputy Foreign Minister Kislyak was resolute in an interview conducted prior to his meeting with U.S. Undersecretary of State Bolton and published in "Vremya novostei" on 17 September. Asked whether the United States is exerting pressure on Russia about its "contacts" with Iran and North Korea, Kislyak responded: "I think our American colleagues understand very well that it is pointless to put pressure on us. We have our points of view. To the extent that they coincide with those of the Americans, we are ready to work and we are working together to prevent the proliferation of nuclear weapons." Kislyak also said it is "extremely disappointing" that the so-called Jackson-Vanik amendment -- a trade-restriction measure passed by the U.S. Congress in 1974 to punish the Soviet Union for limiting Jewish emigration -- remains in effect against Russia. Earlier this month, U.S. Representative Curt Weldon (Republican, Pennsylvania) called on U.S. President George W. Bush to lift the restrictions before he meets with President Vladimir Putin at Camp David in late September (see "RFE/RL Newsline," 3 September 2003).

U.S. IMPOSES SANCTIONS ON RUSSIAN FIRM. The United States on 16 September accused Russia of supplying "lethal military equipment" to "state sponsors of terrorism" and imposed sanctions on KBP Tula, which produces antiaircraft and antitank systems, for allegedly selling laser-guided Krasnopol-M artillery shells to Iran, "The Moscow Times" reported on 17 September. The sanctions, which will last one year, prevent the state-owned firm from doing business with the U.S. government or buying U.S. military equipment. KBP Tula spokesman Valerii Vazbrannii denied the firm has any contacts with Iran, telling Ekho Moskvy radio on 16 September that Washington has made similar accusations against the firm on four separate occasions over the last three years. In 1999, Washington imposed sanctions on KBP Tula for allegedly selling Kornet antitank missiles to Syria, "The Moscow Times" reported. Andrei Morozov, the firm's deputy chief engineer, told Radio Mayak on 16 September that the real reason for the sanctions is that "the Americans are just scared of our developments, which are far more advanced than their own when it comes to technical features."

OFFICIAL SAYS ONLY UN SECURITY COUNCIL CAN BLOCK RUSSIA'S NUCLEAR COOPERATION WITH IRAN... Russia will only cease its work at Iran's Bushehr nuclear-power plant if the UN Security Council adopts a resolution imposing the appropriate sanctions on Tehran, Russian media reported on 19 September, citing an unidentified Atomic Energy Ministry official. The official was commenting on earlier media reports that Russia might cancel the project if the United States produces evidence that Iran is trying to develop nuclear weapons. The official said that any such evidence must be submitted to the International Atomic Energy Agency (IAEA) and, after the IAEA evaluates it, submitted for discussion to the Security Council. RIA-Novosti reported on 19 September that U.S. Ambassador to Russia Alexander Vershbow called on Russia to suspend the project until Iran signs the Additional Protocol to the Nuclear Non-Proliferation Treaty. The ministry source also said the first block at Bushehr is 80 percent completed and work is proceeding according to schedule. RC

...AS MINISTER SAYS DISPUTE OVER RETURN OF SPENT FUEL WILL TAKE TIME TO RESOLVE. Atomic Energy Minister Aleksandr Rumyantsev told journalists on 19 September that it could take "a long time" to resolve a dispute with Tehran over the return to Russia of spent nuclear fuel from Bushehr. Tehran has insisted that Moscow pay for the return of the fuel. Rumyantsev met in Moscow on 19 September with U.S. Energy Secretary Spencer Abraham

AGREEMENT SIGNED ON RUSSIAN AIR BASE IN KYRGYZSTAN... Kyrgyz Defense Minister Colonel General Esen Topoev and Russian Defense Minister Sergei Ivanov on 22 September signed an agreement in Moscow authorizing the opening of a Russian air base in the Kyrgyz town of Kant, kabar.kg and akipress.org reported. The signing took place in the presence of both countries' presidents, and the agreement is the result of months of negotiations, particularly over funding issues. According to kabar.kg, the final agreement specifies that the Russian side will be responsible for funding the base, but it will not have to pay rent or other fees. About 15 Russian Su-25 and Su-27 fighter jets will be stationed at Kant, along with 300 Russian service personnel. Those aircraft have an operational range of about 2,000 kilometers and will be used to provide air support to the 201st Motorized Infantry Division, which is deployed in Tajikistan. Ivanov said the base's runways are to be lengthened to accommodate military-transport planes.

...AS PUTIN STRESSES IMPORTANCE OF CENTRAL ASIA. President Vladimir Putin commented at the air-base signing ceremony that the opening of the Kant base is the first step in augmenting the Russian presence in the Central Asian region in the interest of maintaining regional stability. "Central Asia is a very important region for us," ORT quoted Putin as saying. Asked to comment on the fact that now both Russia and the U.S.-led antiterrorism coalition in Afghanistan will have bases in Kyrgyzstan, Kyrgyz President Askar Akaev said both bases are aimed against the same threat -- international terrorism.

POLITICAL ECONOMY
PUTIN STUMPS FOR INCREASED ENERGY EXPORTS TO UNITED STATES. President Vladimir Putin told senior U.S. officials on 21 September that U.S.-Russian cooperation in the energy sector is important to bilateral economic and political interests as well as global stability and security, RTR and ORT reported. Putin was welcoming U.S. Commerce Secretary Don Evans and U.S. Energy Secretary Spencer Abraham, who together with Russia's Economic Development and Trade Minister German Gref and Energy Minister Igor Yusufov co-chair the Russia-U.S. Energy Forum. The U.S.-Russia Commercial Energy Summit was opened in St. Petersburg on 22 September. Putin said Russian exports currently account for 4 percent of U.S. energy imports, up from 1.36 percent in 2002, but added that the figure is small in light of those countries' huge potential. Putin urged an increase in Russian energy supplies to the United States, and said the topic will be discussed at his Camp David summit with U.S. President George W. Bush on 26-27 September. Putin also said Russian and U.S. experts are discussing diversification of bilateral cooperation in the sector to include coal, gas, and nuclear power. Secretary Evans predicted major U.S. investments into Russia's energy sector in the near future, particularly in developing oil and gas reserves off Sakhalin and exporting Russian liquefied gas to the United States.

YUKOS CASE HAS NO IMPACT ON PRIVATIZATION RESULTS, PUTIN SAYS. Putin told journalists at his 20 September press conference that the ongoing investigation of oil major Yukos does not represent a revision of the results of privatization, ITAR-TASS, ORT, and RTR reported. "But if there were improprieties [during privatization] and the Prosecutor-General's Office is responding to this, I cannot obstruct it," Putin said. He insisted the Yukos scandal is of a criminal, and not a political, nature. One of the investigations concerns the possible involvement of a Yukos manager in a slaying, Putin added. He also warned prosecutors and Yukos executives against politicizing current events. "Neither Yukos CEO Mikhail Khodorkovskii nor Platon Lebedev [the arrested head of Yukos's financial arm, Menatep] is a political figure, and, therefore talk of a political background to the case is groundless," Putin said. He stressed the rule of law in Russia, including for those with "billions in fortunes."

PRIME MINISTER IN CHINA TO TALK TRADE, PIPELINES... Mikhail Kasyanov arrived in Beijing on 23 September for a session of the Shanghai Cooperation Organization, international media reported. Kasyanov will also hold bilateral talks with the Chinese leadership, including discussions of the trade imbalance between the two countries and trade conflicts that have emerged recently, strana.ru reported on 22 September. China has called upon Moscow to lift all barriers to the importation into Russia of Chinese labor. Moreover, Russia believes that China has been quietly obstructing Russia's admission to the World Trade Organization (WTO). Kasyanov is also expected to discuss a proposed oil pipeline from Angarsk to the Chinese city of Datsin, RBK reported on 22 September. Beijing suspects that the Russian government is leaning toward a rival project to build the pipeline to the Russian port of Nakhodka in order to transport the oil to Japan, the website commented (see "RFE/RL Newsline," 21 August 2003).

...AS YUKOS HEAD URGES GOVERNMENT TO HURRY WITH NEW PIPELINE PROJECTS. Meanwhile, speaking at the U.S.-Russia Energy Forum in St. Petersburg on 22 September, Yukos CEO Mikhail Khodorkovskii said that Russia urgently needs two new strategic pipelines: one from Angarsk to Datsin and another from Western Siberia to Murmansk, biztime.ru and polit.ru reported. Khodorkovskii also said the Angarsk-Datsin line should have a spur to Nakhodka to enable Russia to export to both China and Japan. The Murmansk line would be used to boost exports to the United States. Khodorkovskii said Russia is losing $7 billion a year because of the absence of these pipelines and that Moscow should hurry to build them while energy prices remain high. He said that if the global price of oil falls below $18 a barrel, then the new pipelines will not be profitable.

MILITARY
STRATEGIC BOMBER CRASHES... A Tu-160 strategic bomber crashed in Saratov Oblast on 18 September, killing all four crewmembers, Russian and international media reported. The cause of the crash has not been determined, but investigators have recovered two of the plane's three flight-data recorders, strana.ru reported on 19 September. No weapons were aboard the bomber at the time. ITAR-TASS reported that Air Force Chief of Staff Colonel General Vladimir Mikhailov has arrived at the crash site to oversee the investigation. An Air Force spokesman confirmed that the crew unsuccessfully attempted to eject from the plane immediately prior to the crash, strana.ru reported. According to "Nezavisimaya gazeta" on 19 September, one of the plane's four engines caught fire, causing the accident. The crash was the first for the Tu-160 since the supersonic jet entered service 17 years ago, and all 14 remaining Tu-160s have been grounded pending results of the investigation, Russian media reported on 19 September.

...IN WHAT MEDIA CALLS A 'SYMBOLIC TRAGEDY.' The 110-ton Tu-160 long-range bomber -- classified by NATO as Blackjack -- is one of the prides of the Russian military, "Nezavisimaya gazeta" commented on 19 September. The Saratov crash is a "symbolic tragedy" on a par with the August 2000 sinking of the "Kursk" nuclear submarine during a training exercise, the paper wrote. The plane that crashed was 12 years old, according to the daily, but had an expected service life of at least another decade. It cost more than $300 million and is capable of carrying 12 cruise missiles with nuclear warheads. The daily reported that over the last decade, the Air Force has only received 30 percent of the funding it requires for maintenance, and that pilots now spend fewer than 20 hours a year flying, as opposed to 150-200 hours in the Soviet era. Defense Minister Sergei Ivanov last month flew to the Russian Far East aboard an identical Tu-160 to observe a military exercise, boasting to reporters that the plane would soon resume flying missions above the Far East and the Pacific Ocean (see "RFE/RL Newsline," 25 August 2003).

SECRET SERVICES
OFFICIALS DISCUSS NEW WAYS OF COMBATING MONEY LAUNDERING... Security Council Deputy Secretary Vyacheslav Soltaganov said on 16 September that capital flight from Russia last year amounted to $12 billion, about half the $24.8 billion estimated to have left Russia in 1999, Prime-TASS reported. He said that Russia's shadow economy accounts for 20 percent-25 percent of its GDP. Soltaganov, who made his comments during a conference in Moscow on ways to counter money laundering, said that Russia's banking, customs, and fiscal legislation needs to be revised to make it more effective in the fight against money laundering, ITAR-TASS reported. Deputy Central Bank chief Viktor Melnikov said that new money-laundering methods appear "faster than the legislative process can keep pace," and called for more effective banking regulations. Deputy Aleksandr Gurov (Unity-Unified Russia), chairman of the State Duma's Security Committee, said his committee is preparing legislation that would, among other things, allow the law-enforcement authorities to request information on any bank customer, not just those facing criminal prosecution.

...WHILE ANTI-MONEY-LAUNDERING TSAR REVIEWS RESULTS TO DATE. Viktor Zubkov, chairman of Russia's Financial Monitoring Committee, told the same conference that since Russia adopted an anti-money-laundering law in 2001, Russian law-enforcement has launched more than 200 criminal cases involving the laundering of criminal proceeds through the country's banks, ITAR-TASS reported. Still, 170 banks have not supplied the committee with any information on suspect operations by clients as the law requires, Zubkov said, adding that a majority of banks "deliberately distort information and details about customers." He said his committee is currently compiling a list of banks allegedly involved in financing extremist activity. Zubkov also said a presidential commission on money laundering is being set up that will include officials from various ministries, law enforcement agencies, and the Central Bank. On 15 September, Zubkov said that a delegation from the Council of Europe's Select Committee of Experts on the Evaluation of Anti-Money-Laundering Measures recently visited Moscow and praised Russia's progress in battling money laundering and the financing of terrorism, Prime-TASS reported.

INTERIOR MINISTER TARGETS PYRAMID SCHEMERS. Boris Gryzlov has complained to top ministry officials that some regional police forces have failed to pay sufficient attention to instances of stealing government funds earmarked for social programs for children, the handicapped, and pensioners, Interfax reported on 17 September. Gryzlov also said that "police do not fully use their capabilities for exposing, finding, and punishing members of criminal groups specializing in financial pyramid schemes," and ordered that a working group be set up to tackle the problem. According to the Interior Ministry, more than 500,000 people have fallen victim to financial pyramids in Russia over the past nine years, losing an estimated at 9.5 billion rubles ($300 million at current exchange rates) and $240 million in U.S. currency. During the same period, 324 criminal cases involving pyramid schemes were launched, 52 of which are currently on hold because the suspected perpetrators remain at large. The trial of Sergei Mavrodi, mastermind of the infamous MMM pyramid scheme, began in Moscow on 15 September (see "RFE/RL Newsline," 16 September 2003).

CRIME AND PUNISHMENT
PUTIN'S CHIEF OF STAFF SAYS NO PRIVATIZATION REVERSAL, BUT 'OBVIOUS VIOLATIONS' ARE FAIR GAME. Presidential administration head Aleksandr Voloshin said on 16 September that the results of Russia's privatization process will not be revised, but that there are "specific cases that are being investigated," Interfax reported. "There will not be a revision of the results of privatization," Voloshin said during a press conference in Baku. "However...this is not a simple issue for us, either from the political or the legal point of view. The process of privatization does not go anywhere easily. Legislation during the period of privatization was not complete and suffered from defects and, if sought, a defect could be found in any privatization deal." In instances of "obvious violations," Voloshin said, the law enforcement organs cannot be told that they must "close the Criminal Code and go home." Interfax quoted Voloshin as saying, that Russia must "quietly exit the initial period of capital accumulation without shaking the foundations of its economy. The law will triumph, and the results of privatization will not have to be reviewed."

PROSECUTORS OFFICIALLY REQUEST EXTRADITION OF FORMER NTV OWNER. The Prosecutor-General's Office has transmitted an official extradition request to the Greek Justice Ministry for former Russian mass-media tycoon and oligarch Vladimir Gusinskii, Russian media reported on 22 September. Gusinskii was arrested in Athens on 21 August under a Russian warrant and has been released on bail pending an extradition hearing (see "RFE/RL Newsline," 25 August 2003). Russia accuses Gusinskii of fraud in connection with a loan of nearly $300 million. Gusinskii denies the accusations and maintains that they are politically motivated. Aleksandr Berezin, one of Gusinskii's lawyers, told journalists that the latest extradition request contains no charges against Gusinskii that were not in the request that was rejected by a Spanish court in 2001, lenta.ru reported on 22 September. He said that the lack of new evidence means that new request will be rejected under the legal principal against double jeopardy.

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