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Security Watch: October 22, 2002


22 October 2002, Volume 3, Number 37
FOREIGN POLICY
U.S., RUSSIA SEEK TO 'PRESERVE THE UNITY OF THE UN SECURITY COUNCIL' ON IRAQ. Foreign Minister Igor Ivanov discussed the Iraq situation with U.S. Secretary of State Colin Powell by telephone on 17 October, Russian and Western news agencies reported. According to a statement released by the Foreign Ministry, "both sides expressed concrete suggestions on how to preserve the unity of the UN Security Council...on this important issue." Russia again repeated its opposition to any resolution authorizing the automatic use of force against Iraq. The ministry also reported that Ivanov has told UN Secretary-General Kofi Annan by telephone that any new resolution "must be directed at the soonest-possible resumption of the work of international weapons inspectors in Iraq."

U.S., RUSSIA DISCUSS NONPROLIFERATION AND NORTH KOREA... U.S. Undersecretary of State for Arms Control and International Security John Bolton arrived in Moscow on 21 October for talks with his Russian counterpart Georgii Mamedov on North Korea's nuclear-weapons program, Iraq, and bilateral strategic-security issues, ITAR-TASS and Interfax reported. Bolton will also will meet with Foreign Minister Ivanov and Security Council Secretary Vladimir Rushailo to discuss the implementation of the Strategic Offensive Reductions Treaty signed this summer and preparations for the upcoming meeting of U.S. President George W. Bush and President Vladimir Putin at the Asian-Pacific Economic Conference in Los Cabos, Mexico, on 24 October.

...AS KREMLIN DENIES HELPING PYONGYANG'S WEAPONS PROGRAM. Foreign Ministry spokesman Aleksandr Yakovenko said on 17 October that Russia is waiting for more details about North Korea's nuclear-weapons program, RIA-Novosti and other Russian news agencies reported. Yakovenko added that Russia categorically denies helping North Korea in any way. He said that Moscow ended all contacts with Pyongyang in this sphere when North Korea renounced the Nuclear Weapons Nonproliferation Treaty in 1993.

RUSSIA, JAPAN WORK TO NORMALIZE RELATIONS. Speaking to journalists after a Kremlin meeting on 14 October with visiting Japanese Foreign Minister Yoriko Kawaguchi, President Putin said both countries are prepared to sign "a very solid document" during a January 2003 visit to Moscow by Japanese Prime Minister Junichiro Koizumi, Russian news agencies reported. Foreign Minister Ivanov added that both sides are moving toward signing a peace treaty that would formally end World War II and mean the complete normalization of relations between the two countries. Deputy Prime Minister Viktor Khristenko said an accord has been reached concerning the expansion of energy and transportation cooperation, ORT reported on 14 October. In addition to several oil-extraction projects near Sakhalin Island, in which Japan has invested a total of nearly $1 billion, Japanese companies will help transport oil from the island to the mainland. The two countries also reached a preliminary agreement on Japanese investment in a Russian-sponsored project to connect the Trans-Siberian and Trans-Korean railroads.

RUSSIA, MOROCCO SEAL STRATEGIC PARTNERSHIP... President Putin and Moroccan King Mohammed VI met on 15 October in the Kremlin and signed a strategic-partnership declaration, Russian news agencies reported. According to the document, the two countries will cooperate to combat international terrorism, including working together to prevent the proliferation of weapons of mass destruction, and to promote peace in the Middle East.

...AS RUSSIA COURTS SAUDI INVESTMENT. Also in Moscow on 15 October, Energy Minister Igor Yusufov told a meeting of the newly formed Russian-Saudi Joint Commission on Trade and Economic and Technical Cooperation that Russia is interested in attracting more investment from Saudi Arabia and in opening Russian markets to Saudi goods, strana.ru reported. Yusufov also said that Russia would like to offer the Saudis Russian oil-extraction technology and defense products.

RUSSIA REOPENS CONSULATE IN MAZAR-I-SHARIF. The Russian Consulate in Mazar-i-Sharif officially opened in new premises on 14 October, which is six weeks later than originally planned, Interfax reported. The former consulate, which was closed for security reasons in May 1997, was destroyed during fighting for the city between Taliban and Northern Alliance forces. The consulate will have a total of some 40 personnel, who will rotate between Mazar-i-Sharif and a mission in the border town of Khairaton. Aleksandr Zedgenizov has been named consul-general.

SECRET SERVICES
DECLASSIFIED DOCUMENTS INDICATE STALIN PROPOSED ALLIANCE WITH HITLER AGAINST U.S., BRITAIN. Soviet dictator Josef Stalin secretly offered Adolf Hitler a separate peace in February 1942 and proposed that the Soviet Union and Nazi Germany join forces against the United States and the United Kingdom, "Komsomolskaya pravda" reported on 17 October, citing recently declassified Soviet intelligence documents published in a new book by veteran military-intelligence officer Vladimir Karpov. In a document dated 19 February 1942, which was one of the lowest points of the war for the Soviet Union, Stalin offered a complete truce on the Eastern Front. Furthermore, he offered to undertake a joint military offensive against the other Allies "to restructure the world" by the end of 1943 under the pretext of accusing "world Jewry of warmongering." In a second document, dated 27 February 1942, Vsevolod Merkulov, a chief of the Soviet security apparatus, reported on a meeting with a high-ranking Nazi figure, SS General Karl Wolf, in Mtsensk, in Belarusian territory that was occupied by German forces. Merkulov reported that Wolf elaborated German counterproposals under which Stalin should "solve the Jewish question" in the Soviet Union before Germany would agree to an alliance against the Allies. Wolf reportedly said that Berlin would be willing to make territorial concessions to the Soviet Union in Europe and to change the color of the swastika on the Nazi flag from black to red. Merkulov also reported that Berlin was insisting on "unacceptable" demands, including German control over Latin America, the Arab world, and North Africa and Japanese control over China. Despite these revelations, Karpov's book, "Generalissimo," comes across as a panegyric to Stalin, as the author refrains from criticism and ignores the victims of Stalin's repression, "Komsomolskaya pravda" commented.

INTELLIGENCE OFFICER FACES TRIAL FOR TELEVISION APPEARANCE. In a closed session of the Moscow Military District Court, Aleksei Ivanov, a senior lieutenant of Russian military intelligence (GRU), stands accused of abusing his status as a security officer, "Komsomolskaya pravda" reported on 16 October. The accusations stem from an appearance Ivanov made on an STS television show called "Harem," in which female audience members observe and evaluate the masculine qualities of male contestants. Ivanov participated in some "adventure" scenes shot in Africa. GRU officials now charge that Ivanov violated the organization's secrecy and illegally crossed several international borders, the daily reported. If convicted, Ivanov faces up to three years in prison.

MILITARY
RUSSIAN-THAILAND ARMS DEAL IMMINENT? Prime Minister Mikhail Kasyanov told reporters following a 17 October meeting with Thai Prime Minister Thaksin Shinawatra in Moscow that the two countries are in intense negotiations concerning the purchase of Russian military aircraft, ships, and tanks, Russian news agencies reported on 17 and 18 October. Kasyanov said that the chiefs of the three main branches of Thailand's armed forces accompanied Shinawatra on his visit and that they are discussing details of possible deals with their Russian counterparts. President Putin also met with Shinawatra in the Kremlin and asked for Thailand's support for Russia's quick accession to the World Trade Organization.

DEFENSE MINISTER AGAIN CALLS FOR BALTIC STATES TO JOIN CFE TREATY. Sergei Ivanov on 18 October reiterated Russia's position that the only real objection Moscow has to NATO membership for Lithuania, Latvia, and Estonia is that the three countries have not signed the Treaty on Conventional Armed Forces in Europe (CFE), RIA-Novosti reported on 18 October (see "RFE/RL Newsline," 6 February 2001, 9 and 29 July, and 19 September 2002).

POLITICAL ECONOMY
PUTIN WARNS OF ECONOMIC STAGNATION. In a written statement addressed to the second annual national congress of Business Russia, a national organization of medium-sized and large businesses, President Putin gave an unusually pessimistic assessment of the Russian economy, polit.ru and other Russian news agencies reported on 17 October. Putin wrote that the economy "is stuck in a condition of sustainable stagnation as its dynamic for growth is disappearing." The president said that all the economy's growth in recent years can be attributed to inflation and increasing revenues from energy exports, while the influx of "fresh investment" has steadily declined. He stressed that the large number of technological disasters in 2002 is a warning sign that Russia's production infrastructure is on the brink of collapse in 2003. Finally, Putin wrote that Russia remains an unattractive investment target because it has failed to minimize political and economic risks and to modernize the banking system.

RUSSIA COULD SEND 50 MILLION TONS OF OIL TO U.S. IN 2003. Speaking to journalists in Washington on 19 October, former Prime Minister and head of the Russian Chamber of Commerce and Industry Yevgenii Primakov said Russia is ready to supply 50 million tons (300 million barrels) of oil to the United States in 2003, RIA-Novosti reported. Primakov argued that the supplies could reduce U.S. dependence on OPEC-produced oil, but that in order to import that oil, the United States must help Russia create the necessary export infrastructure, including developing its deep-water ports.

TNK BEGINS TRIAL OIL DELIVERY TO UNITED STATES. Tyumen Oil Company (TNK) President Semen Kukes has announced that TNK sent 840,000 barrels of oil to the United States strategic reserve last month, gazeta.ru reported on 14 October. Kukes said the oil was shipped to Corpus Christi, Texas, from Novorossiisk aboard two tankers. He added that by the end of 2003, TNK -- together with Yukos and LUKoil -- hopes to supply about 400,000 barrels a day to the United States.

GOVERNMENT TORN ON EASING FOREIGN-EXCHANGE REQUIREMENTS. A controversy has erupted in the cabinet concerning a recent proposal by Deputy Prime Minister and Finance Minister Aleksei Kudrin to cut the mandatory foreign-currency exchange rate from 50 percent to 30 percent (see "RFE/RL Newsline," 11 October 2002), strana.ru and other Russian news agencies reported on 15 October. Prime Minister Kasyanov withdrew a draft law that Kudrin had submitted to the government for consideration, sending it back for reworking and stating that it will be considered at a cabinet session on 24 October if ministers have reached a consensus. According to strana.ru, the Economic Development and Trade Ministry is holding out for an even more sweeping reform, which would include a timetable for eliminating the mandatory foreign-currency exchange requirement entirely, as well as for eliminating most other restrictions on hard-currency transactions. The ministry reportedly seeks to allow Russian citizens freely to open accounts abroad and to eliminate the requirement that they receive Central Bank authorization to purchase more than $75,000 on hard-currency markets. President Putin has spoken out in favor of eliminating the restrictions in order to place Russian firms on an equal footing with foreign competitors.

BANKERS WANT TO 'SQUEEZE' RUSSIAN CAPITAL OUT OF WESTERN BANKS. Aleksandr Lebedev, president of National Reserve Bank and head of the National Investment Council (NIS), said the NIS intends to compile a list of Western banks involved in laundering capital illegally exported from Russia, pravda.ru reported on 18 October. Since Russia was removed from the Financial Action Task Force's "blacklist" of countries that do not sufficiently combat money laundering on 11 October (see "RFE/RL Newsline," 11 October 2002), Russian financial groups have been discussing measures for "squeezing" Russian capital out of Western banks and repatriating it. Lebedev, a former officer in the Russian foreign-intelligence service, said that a simple amnesty for such capital is not sufficient without resolving legal issues abroad and instituting real guarantees at home, as well as establishing domestic political and economic stimuli. He estimated that there are five to 10 banks in Switzerland, France, and Luxembourg from which Russia can "squeeze" up to $15 billion each if it develops an effective repatriation program.

SECURITIES COMMISSION SATISFIED WITH EQUITIES MARKETS. Speaking at a conference in St. Petersburg, Federal Securities Commission head Igor Kostikov reported that the capitalization of the country's stock market dropped by 30 percent, from $137 billion to $106 billion, between May-October, strana.ru and other Russian news agencies reported on 17 October. However, he added that he is not overly concerned. He said the commission's analysis of the stock market shows no worrying trends, and it is growing at a faster rate than the gross domestic product. Commission member Aleksandr Sharonov told journalists that a World Bank study has found that Russians are currently keeping about $75 billion outside of the banking system, polit.ru reported.

CRIME AND PUNISHMENT
FAR EAST GOVERNOR GUNNED DOWN IN MOSCOW... Magadan Oblast Governor Valentin Tsvetkov was shot dead by an unidentified gunman on a downtown Moscow street on the morning of 18 October, Russian and Western news agencies reported. According to ntvru.com, police are looking for a "Slavic man" aged 30-35. The murderer dropped his Makarov pistol and silencer at the scene of the crime and made his escape in a Zhiguli automobile, in which a second man was reportedly waiting. According to strana.ru, police later found the car abandoned not far away. Ntvru.com reported that the entire incident was caught on videotape by cameras on a nearby building housing offices associated with the Federation Council. Tsvetkov, 54, was accompanied by his wife, an aide, and a bodyguard when he was killed, but no one else was injured in the incident. According to Interfax, President Putin ordered Prosecutor-General Vladimir Ustinov and Interior Minister Boris Gryzlov to take personal control of the investigation. First Deputy Governor of Magadan Oblast Nikolai Dudov will serve as acting governor until new elections are held within three months, strana.ru reported.

...AND DUMA SPEAKER SAYS CRIME SITUATION CONTINUES TO WORSEN... Commenting on Tsvetkov's murder, Gennadii Seleznev said on 18 October that, although the legislature provides ever more funding for law enforcement each year, the results are increasingly disappointing, RosBalt reported. "The criminal world feels completely invulnerable in Russia, and I cannot remember a case in which the murder of a politician has been investigated and the killers sentenced in a court," Seleznev said. Although Tsvetkov is the first governor to be murdered in post-Soviet Russia, eight Duma deputies have been murdered, as have numerous other regional political figures.

...AS INTERIOR MINISTER PLEDGES TO CLEAN UP MAGADAN... Addressing a gathering of law-enforcement chiefs on 19 October, President Putin called the murder Tsvetkov a "crime against the state," polit.ru reported. Interior Minister Gryzlov told journalists that his agency will hunt down both those in Moscow who pulled the trigger and those who ordered the killing, RIA-Novosti reported on 21 October. He said that he will use this opportunity to "decriminalize" Magadan Oblast and drive out the local mafia.

...INVESTIGATORS LOOK FOR CONNECTION WITH GOLD-DEALER MURDER CASE... Police are investigating possible links between Tsvetkov's murder and that of Kemal Musoyan in Moscow just 12 hours later, Russian news agencies reported. Musoyan was reputedly a major player on Russia's illegal gold market and allegedly a "thief in law" known by the name of "Camel." He was gunned down on 18 October by killers who escaped the scene. According to media reports, Musoyan controlled illegal gold produced in the Far North, including Magadan Oblast. Experts estimate that up to 30 percent of Russia's gold production ends up being sold illegally.

...AS OLIGARCHS PREPARE TO BATTLE FOR CONTROL OF MAGADAN RESOURCES. Tsvetkov's murder, like the death of former Krasnoyarsk Krai Governor Aleksander Lebed in a helicopter crash on 28 April (see "RFE/RL Newsline," 29 April 2002), will stimulate a battle among oligarchic groups for control over the territory's valuable resources, strana.ru commented on 21 October. Magadan Oblast's economy is based on gold and silver mining, fisheries, and alcohol-production revenues. According to the website, Tsvetkov tried to control all these areas, often placing himself at odds with local criminal groups. Experts estimate the oblast controls deposits of about 2,000 tons of gold and 80,000 tons of silver. Moreover, the oblast's Okhotsk Sea shelf has estimated oil reserves of about 1.2 billion tons, making the region comparable to Sakhalin. Therefore, strana.ru predicted that Russia's financial-industrial groups will take the upcoming gubernatorial election in the oblast very seriously. New elections must be held within six months, but an exact date has not yet been set.

THIEVES HIT PAY DIRT IN DEPUTY'S OFFICE. Thieves stole cash and valuables worth about $80,000 from the Moscow office of Duma Deputy Andrei Vulf (SPS) on 18 October, ntvru.com and other Russian news agencies reported. The thieves reportedly stole $60,000 in cash, several theatrical costumes, a sewing machine, a notebook computer, and an unspecified number of fox furs. In addition, they took two draft laws that Vulf intended to introduce in the Duma later in the current session. According to Yelena Demchenko, an aide to Vulf, it appears as if the thieves "took the most valuable things" in the office. She added that she "got the impression the criminals were looking for something in the office." Earlier this summer, thieves stole Vulf's briefcase and documents from his car, ntvru.com reported.

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