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Security Watch: May 21, 2002


21 May 2002, Volume 3, Number 18
U.S.-RUSSIA SUMMIT
BUSH SAYS THAT STRATEGIC-ARMS REDUCTION TREATY READY TO BE SIGNED... U.S. President George W. Bush told reporters on 13 May that the United States and Russia have agreed to a strategic-arms treaty, which will be signed during the summit in Moscow and St. Petersburg later this month, cnn.com reported the same day. He said the treaty would limit each side to from 1,700 to 2,200 warheads and that it would represent a "new era" in relations between the two countries. "The new era will be a period of enhanced security, economic security, and improved relations," Bush said.

...PUTIN HAILS STRATEGIC-ARMS ACCORD... President Vladimir Putin welcomed on 13 May the pending U.S.-Russia strategic-arms treaty, which is expected to be signed at a summit in Moscow and St. Petersburg later this month, Russian and Western news agencies reported on 14 May. Putin said that "without the interested, active position of the American administration and the attention of President [George W.] Bush, it would have been difficult to reach such agreements," ORT television reported on 13 May. The willingness of the United States to sign a treaty, rather than a less formal agreement, was seen as a victory for Putin. ITAR-TASS on 14 May quoted an unnamed member of the Russian negotiating team as saying that both the Foreign and Defense ministries approved the draft treaty. "The Washington Post" reported the same day that the key provision reducing each country's strategic nuclear arsenal to between 1,700 and 2,200 warheads will have to be implemented by 2012.

...AS IGOR IVANOV NOT SURE ABOUT FORM OF BILATERAL ACCORD... Appearing on Vladimir Posner's "Times" talk show, Foreign Minister Igor Ivanov said that the two countries have yet to agree on whether the pending U.S.-Russian accord will take the form of a treaty or an agreement. "If it is a treaty, it would require a two-thirds vote of the legislature for ratification. If it is an agreement, only a simply majority [will be needed]. Taking into account the importance of the problem, we prefer a treaty," Ivanov said.

...AND DEFENSE MINISTER STILL CONFUSED ABOUT DETAILS... Meanwhile, Defense Minister Sergei Ivanov said that the understanding reached regarding the treaty does not mean that Russia has dropped its objection concerning the issue of "reverse potential" -- the ultimate fate of the nuclear warheads to be removed from strategic missiles, smi.ru reported on 14 May. Russia has insisted that the warheads be destroyed, while the United States has suggested storing at least some of them. The website cnn.com cited an unnamed U.S. official as saying that under the terms of the treaty, some decommissioned warheads would be stored and others would be destroyed. "We have now identified a formula which allows us to do what we want to do and them to do what they want to do," the official said. "We don't have to destroy them." Interfax, citing an unnamed source involved in the negotiations, reported on 14 May that the United States intends to destroy approximately 1,600 warheads and to store about 2,400.

...AS RUSSIAN MILITARY CAUTIOUS OF NEW TREATY... Speaking to an Internet and radio press conference on 18 May, First Deputy Chief of the General Staff Colonel General Yurii Baluevskii said that the forthcoming U.S.-Russian treaty slashing both countries' nuclear arsenals does not mean the complete destruction of nuclear weapons, strana.ru reported. Baluevskii said that about 130,000 nuclear warheads have been produced globally since 1949 and, at present," neither Russia nor the United States have enough capacity to destroy [those] nuclear warheads." Nonetheless, Baluevskii said that the basic conditions for signing the treaty are in place. However, he insisted that Russia still disagrees with U.S. proposals to store some decommissioned warheads. He argued that third countries might use this practice as a precedent when decommissioning their own warheads.

...AS ROGOZIN AND PAVLOVSKII SAY RUSSIA HAS NO ALTERNATIVE TO TREATY. Speaking at the same press conference, the chairman of the Duma Foreign Affairs Committee, Dmitrii Rogozin, said that Russia was "eager for an agreement with the United States" because the accord will have the form of a binding document. Moreover, Russian lawmakers will press the government to incorporate a well-defined system of verification and control into the new arms treaty. "We have learned from [former U.S. President] Ronald Reagan, who used to say, 'Doveryai, no proveryai [trust, but verify].'" Meanwhile, another participant in the press conference, the influential political consultant Gleb Pavlovskii, said that the agreement with the United States is in Russia's national interests. "The period of peaceful breathing space for Russia is coming to end," Pavlovskii said. "The country is awaiting some tough clashes ahead and, in this situation, being weak and disarmed, we cannot allow ourselves animosity with everyone."

RUSSIA AND NATO EXPANSION
FOREIGN MINISTERS INITIAL NEW RUSSIA-NATO COUNCIL AGREEMENT... The foreign ministers of Russia and the 19 NATO member states approved in Reykjavik, Iceland, on 14 May an agreement on the creation of a new Russia-NATO Council that will reflect the formal partnership between the two sides, Western and Russian news agencies reported the same day. Speaking after the signing, Foreign Minister Igor Ivanov and NATO Secretary-General Lord George Robertson said that the new council should be granted full legal status at the Russia-NATO summit in Rome on 28 May. The new council will function on the basis of consensus within a limited range of issues including the fight against terrorism; the nonproliferation of nuclear, chemical, and biological weapons; missile defense; peacekeeping; and managing regional crises, polit.ru and strana.ru reported. The agreement does not give Russia any voice in matters beyond this fixed range of topics, nor does it give NATO any say in matters concerning Russia's national security.

...AS FOREIGN, DEFENSE MINISTERS LAUD THE AGREEMENT... In his comments on the agreement, Foreign Minister Igor Ivanov said that it would be wrong to try to figure out who will benefit most from the accord, "as it is beneficial to all sides," strana.ru reported on 15 May. Ivanov also noted "the new council heralds a new step in the development in accord with the realities of the post-Cold War era," but added that Russia has not withdrawn its objection to NATO's expansion plans. Meanwhile, Defense Minister Sergei Ivanov said that the new agreement is a recognition of reality and will serve to enhance Russian national security, polit.ru and gazeta.ru reported on 14 May.

...AS PUNDIT IS POSITIVE ABOUT NATO, BUT SKEPTICAL ON CIS COLLECTIVE SECURITY... The head of the influential Council for Foreign and Defense Policy (SVOP), Sergei Karaganov, told "Gazeta" on 16 May that he hopes Russia's cooperation with NATO will forge a new alliance that will help his country face its security threats and avoid conflict with NATO, even if Russia cannot prevent the expansion of the alliance. However, Karaganov does not believe in the future of the CIS Collective Security Treaty (DKB), of which Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan are signatories. The upgrading of the DKB this week to a military-political alliance (see "RFE/RL "Newsline," 14 May 2002) cannot evolve into a CIS "Warsaw Pact" or serve as a counterbalance to NATO, Karaganov said. "I am skeptical about the DKB. It has not worked before, and I do not understand why it should work now," he concluded.

...AND PAVLOVSKII BLASTS FOREIGN MINISTER'S PERFORMANCE. Meanwhile, political consultant Pavlovskii sharply criticized Ivanov's performance as foreign minister, smi.ru reported on 13 May. Referring to a 12 May joint appearance of Ivanov and U.S. Secretary of State Colin Powell on Russian television (see "RFE/RL Newsline," 13 May 2002), Pavlovskii said Powell presented Russian foreign policy to the audience more effectively than their own foreign minister did. Pavlovskii was also harshly critical of Ivanov's passivity in preparing for the upcoming Bush-Putin summit and of his position on the Middle East. Pavlovskii argued that Russia should more decisively support Israel in the conflict with the Palestinians. "The only thing that Ivanov has managed to do is to irritate [U.S. Undersecretary of State for Arms Control and International Security] John Bolton, but is this enough to justify a person holding the title of minister?" Pavlovskii asked.

INTERNATIONAL ANTITERRORISM CAMPAIGN
COOPERATION IN FIGHT AGAINST INTERNATIONAL CRIME GETS BOOST. The first session of a joint U.S.-Russian working group on transnational crime began in Moscow on 13 May, Russian and Western news agencies reported. According to ITAR-TASS, the two-day session will focus on improving coordination of investigations into leaders and members of international criminal groups. The American delegation is headed by Michael Welch, deputy head of the FBI's organized-crime department, and includes FBI specialists on automobile theft and computer crime, strana.ru reported the same day. The meeting is expected to result in a formal protocol on cooperation, and the next session of the working group is scheduled to take place in the United States in 2003.

DAGHESTAN OFFICIALS CALL FOR DEATH PENALTY FOR TERRORISTS. The State Council and the National Assembly of Daghestan met in a special session on 13 May to discuss the 9 May explosion in the Caspian seaport city of Kaspiisk, Russian and Western news agencies reported the same day. Lawmakers issued an appeal to President Putin to reinstate the death penalty for those responsible for the explosion, which killed 42 and wounded more than 130. "Criminals staging terrorist acts similar to the one in Kaspiisk have no right to mercy," State Council Chairman Magomedali Magomedov said, according to AP. Officials also criticized law enforcement agencies, saying that their lack of vigilance contributed to the explosion. Mukhu Aliev, the head of Daghestan's parliament, alleged that some police officials collaborate with terrorists, ITAR-TASS reported on 13 May. "If we call terrorists 'scum,' how should we call those who help them? Even harsher penalties must be imposed on those people," Aliyev said, according to the news agency.

FOREIGN POLICY
CIS PRESIDENTS FAIL TO ENDORSE 'CIS WARSAW PACT' INITIATIVE. President Putin and the heads of the five other members of the CIS Collective-Security Treaty (DKB) -- Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan -- rejected on 14 May a proposal by member defense and foreign ministers to upgrade the DKB to the status of a regional military organization, Russian and Western news agencies reported. "Kommersant-Daily" on 14 May referred to the proposal, which would have created a single interstate military control organ within the Russian General Staff, as a "CIS Warsaw Pact." Despite the failure to adopt the proposal, Putin emphasized that members of the security pact "are cooperating not against someone, but against threats we are all facing," according to AP.

MOSCOW HOSTS EURASIAN ECONOMIC COMMUNITY SUMMIT. The presidents of Russia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan, the five member states of the Eurasian Economic Community (EES) formalized a year ago on the basis of the CIS Customs Union, met in Moscow on 13 May, Russian media reported. Also present was Moldovan President Vladimir Voronin, whose country was granted observer status in the EES, which it has applied to join. Ukraine also applied for, and will be granted, observer status in the EES, "Vremya-MN" reported. Kazakh President Nursultan Nazarbaev, who was confirmed for a further term as EES chairman, singled out as the community's most pressing problems coordinating their respective trade policies once all five states have become members of the World Trade Organization and agreeing to suspend antidumping sanctions in trade between EES member states. It is not clear how many of the 10 documents that EES Secretary-General Grigorii Rapota told Interfax on 8 May were included in the agenda for discussion were actually signed.

RUSSIA REDUCES BALKAN PEACEKEEPING FORCE. Russia has begun withdrawing troops from Kosova, sending home the first train of soldiers and military equipment, ITAR-TASS reported on 14 May, citing a source within the General Staff. The reduction is being carried out within the framework of a General Staff decision to reduce Russian peacekeeping contingent in the Balkans, including Bosnia and Kosova. According to this decision, Russia will withdraw 1,200 soldiers and 400 units of military hardware from Kosova, leaving just 600 service personnel in the region. During April and the first week of May, Russia withdrew 300 troops and 100 units of military equipment from Bosnia, the news agency reported. The source in the General Staff stressed that the withdrawals are due to the improved security situation in both regions and conform to recent U.S.-Russian agreements.

MILITARY
RUSSIA AND CHINA DISCUSS MILITARY AND TECHNICAL COOPERATION. Defense Minister Sergei Ivanov said after talks on 16 May with Chinese Defense Minister Chi Haotian, who arrived in Moscow for a meeting of the Shanghai Cooperation Organization (see "RFE/RL Newsline 15 May), that contacts between the two defense agencies are "a crucial part of bilateral relations," RIA-Novosti reported. Ivanov added that the two discussed issues of mutual interest and agreed that Ivanov would visit China for a session of the joint military technical commission that he co-chairs.

NEW ANTI-CRUISE-MISSILE WEAPON ON THE DRAWING BOARD. Russia is developing a new-generation, anti-cruise missile weapon, ITAR-TASS reported on 14 May, citing the journal "Voennyi parad." According to the news agency, the new weapon is a portable missile system called the Igla-S, which features a new guidance system that will significantly improve its accuracy. Chief Weapons Designer Nikolai Gushchin was cited by the news agency as saying that the Igla-S will pave the way for a new generation of ground-to-air weapons for use against airplanes and helicopters, as well as against cruise missiles.

RUSSIA TO LAUNCH MORE THAN 30 NEW SATELLITES THIS YEAR. Russia intends to launch more than 30 satellites from its launch sites at Baikonur and Plesetsk by the end of the year, ITAR-TASS reported on 16 May, citing a spokesman for the Russian Space Defense Forces. The source said that more than 10 military satellites will be launched and that the Rosaviakosmos group is scheduled to put more than 20 commercial satellites into orbit. He also said that a new reentry vehicle will be tested in July and that the Babakin Space Research Institute will launch an experimental spacecraft in October or November.

POLITICAL ECONOMY
KASYANOV LIFTS OIL-EXPORT QUOTAS. Russian Prime Minister Mikhail Kasyanov said after a 17 May meeting with representatives of leading oil companies that his government will not extend beyond 1 June the self-imposed oil-export quotas introduced at the beginning of the year at the request of the Organization of the Petroleum Exporting Countries, Russian news agencies reported. Kasyanov noted that the government and the oil giants believe "the oil market is approaching stabilization, and it is time to lift the restrictions." Among those who met with Kasyanov were Yukos head Mikhail Khodorkovskii, Surgutneftegaz President Vladimir Bogdanov, LUKoil Vice President Anatolii Kozyrev, Tyumen Oil Company (TNK) President Semen Kukes, Sibneft President Yevgenii Shvindler, and Rosneft President Sergei Borganchikov. As the global economy recovers, Kasyanov has decided to act in the best interests of the Russian state budget, siding with the United States and Europe on the issue of export quotas, "Rossiiskaya gazeta" commented on 18 May.

RUSSIAN ENERGY GIANTS MAKE LIST OF 500 LARGEST GLOBAL COMPANIES. Four Russian energy companies have been included in a list compiled by the "Financial Times" of the 500 largest global corporations, "Vremya novostei" reported on 13 May. Yukos, with a total capitalization of $18.7 billion, was the highest-ranking Russian company in 227th place. Gazprom ranked 250th, while Surgutneftegaz came in 344th and LUKoil came in 362nd. The newspaper noted that the appearance of the Russian companies on the prestigious list can be attributed to the relative reduction in capitalization of leading transnationals because of the downturn in the global economy and the relatively rapid growth of the Russian energy companies. Meanwhile, the magazine "Kommersant-Dengi" will publish its lists of the world's largest companies, Europe's largest companies and Eastern Europe's largest companies on 15 May, "Kommersant-Daily" reported on 13 May.

PRIME MINISTER EXPLAINS HIS ECONOMIC STRATEGY... Speaking at a State Duma hearing on the government's economic course, Prime Minister Kasyanov said on 15 May that his government is now emphasizing a model of economic development based more on domestic resources rather than on conjectures about external factors, Russian news agencies reported the same day. He added that he sees increases in labor productivity, average income, investment, and consumer demand as the main potential contributors to economic growth. Kasyanov said that he realizes that the economic achievements of his government to date are not sufficiently durable and current growth is not sustainable. However, he said that he does not support proposals to accelerate economic-growth rates. "[We need] not economic breakthroughs, but rather systematic and consistent work," he said.

...DISCUSSES CHUBAIS'S SALARY. At the same hearing, Kasyanov also addressed the inquiries of angry parliamentarians about the salaries of the chiefs of Russia's natural monopolies, especially that of Unified Energy Systems Chairman Anatolii Chubais, who earns $350,000 per year, polit.ru reported on 15 May. Kasyanov noted that the government, as the major shareholder in many of Russia's largest corporations, must be concerned about how they determine salary levels, the website reported. He noted that salaries in the energy sector are not the highest overall, but said that if the Duma asked him to look into the matter, he would.

AMERICANS IN NO HURRY TO INVEST IN RUSSIA. Members of a delegation of major U.S. investors from the Russell 20-20 Association visiting Russia this week said that they were favorably impressed with the progress of economic reforms, but are still not ready to invest their funds in the Russian economy, "Kommersant-Daily" and "Vedomosti" reported on 15 May. The group -- which together manages $8 trillion in assets -- stressed that Russia is still crippled by poor corporate management, a weak banking system, and an underdeveloped fund market.

LUZHKOV CONTINUES WAR AGAINST U.S. POULTRY. Moscow Mayor Yurii Luzhkov announced that he has ordered the municipal food department not to buy chicken drumsticks imported from the United States for the capital's stores, ntvru.com reported on 18 May. Luzhkov said he believes that "biological additives in U.S. poultry are dangerous and may cause a negative impact at the genetic level for generations to come." Meanwhile, Agriculture Minister Aleksei Gordeev said that U.S. poultry importers are unhappy that imports have not yet reach the levels they were at before a ban on the meat was instituted earlier this year (see "RFE/RL Newsline," 8 and 13 March 2002, and 9, 11, and 15 April 2002), RIA-Novosti reported on 18 May. Gordeev added that the Russian government had nothing to do with this fact and that one reason for it might be "insufficient advertising." Gordeev noted, however, that the government plans to introduce import quotas on all categories of meat beginning in 2003.

CRIME AND PUNISHMENT
GAS GIANT TO KEEP EMBATTLED AUDITOR. Gazprom announced on 13 May that it would retain PricewaterhouseCoopers (PwC) as the auditor of its 2002 results, despite the opposition of minority shareholders, Dow Jones reported the same day. The company said that PwC had won the tender over KPMG and that the decision will be submitted to the board of directors for approval. According to Dow Jones, the decision is a blow to a campaign against PwC spearheaded by fund manager Hermitage Capital Management, which has filed suit in a Moscow court alleging that PwC filed "false and misleading audits" in the late 1990s and 2000 (see "RFE/RL Newsline," 16 and 17 April 2002).

RUSSIA TO INCREASE FOREIGN-DEBT PAYMENTS IN 2003. Russia will pay off about $17 billion in foreign debt in 2003, Deputy Finance Minister Sergei Kolotulkhin told Prime-TASS on 13 May. Kolotulkhin said that the decision was motivated by expectations that interest rates in the United States will go up by the end of this year, leading to "growing expenditures on servicing foreign debt." Prime-TASS also reported that Russia intends to spend $14.2 billion on foreign-debt repayment this year.

CRIME PROBLEM CONTINUES TO WORSEN. More than 38 million Russians suffered as a result of crimes last year, according to presidential Ombudsman for Human Rights Oleg Mironov, ITAR-TASS reported on 13 May. Mironov said that more than 150,000 people were killed or seriously injured as a result of criminal activity and that the problem continues to get worse with each passing year. Mironov said that he believes that Russian citizens are "not protected against terrorist acts and crimes," despite the fact that "the Interior Ministry is now larger than the Defense Ministry."

PROSECUTOR-GENERAL CALLS ON LEGISLATORS TO TAKE ON ECONOMIC CRIME. Presenting his annual report to parliament about the state of law and order (see "RFE/RL Newsline," 2 May 2002), Prosecutor-General Vladimir Ustinov told the Federation Council on 15 May that legislators should make amendments to the laws on bankruptcy and insolvency because of the increase in crimes in this area, Russian news agencies reported. Over the last four years, the number of false bankruptcies has more than tripled, as this practice has become the "cheapest way to redistribute state property," side-stepping the law on privatization. Ustinov said that the amended law should contain a provision involving state prosecutors in bankruptcy proceedings. The prosecutor-general also called on lawmakers to adopt tough legislation against state corruption. He mentioned that the appropriate legislative package, including a stiff anticorruption law, had failed to make it through the legislature for the last 10 years.

PROSECUTOR'S OFFICE SAYS IT WILL SEEK TO FREEZE GUSINSKY'S PROPERTY ABROAD. Deputy Prosecutor-General Vasilii Kolmogorov said that his office might reactivate the case against mass-media magnate Vladimir Gusinsky on 1 June when the new Criminal Procedure Code comes into force, Interfax and polit.ru reported on 18 May. Kolmogorov said that the new code gives courts the right to issue verdicts concerning the freezing of Gusinsky's foreign real estate, bank accounts, and other assets. Kolmogorov added that the Prosecutor-General's Office had sent to its foreign counterparts requests to freeze Gusinsky's assets in the past, but they were turned down as not being legally binding. Kolmogorov also said that his office is preparing a new indictment against Gusinsky.

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