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Security Watch: July 2, 2001


2 July 2001, Volume 2, Number 26
TRENDS
ANOTHER SOVIET SYMBOL TO BE RESTORED. The Moscow City government approved a plan for the renovation of the monument "Worker and Kolkhoz Woman," erected during the peak of Stalinism in 1937 but not restored since then, "Rossiskaya gazeta" reported on 28 June. The monument was not only a political but also a cultural symbol of socialist realism.

MONARCHISM AS A BRAKE ON GLOBALIZATION. "Vek," no. 26, argued that the revitalization of monarchist ideology in Europe should be welcomed as a powerful brake on the growth of American influence. Indeed, under certain conditions, the weekly said, European monarchism can help national politicians resist Washington. The weekly said that President Vladimir Putin's contacts with European monarchies reflects his understanding of that fact.

PARDON COMMISSION SET TO GO OUT OF BUSINESS. Anatolii Pristavkin, the chairman of the Presidential Pardons Commission, said on 27 June that his organization has suspended operations and is likely to be disbanded because many law-enforcement officials oppose the commission's work, and because Putin has granted so few pardons since becoming president, Interfax reported on 27 June. Meanwhile, Ludmila Alekseeva, the head of the Moscow Helsinki Group, told Western reporters that she has information that the Justice Ministry wants Putin to replace the public figures on the commission with more pliable state officials.

IS THE STATE BUREAUCRACY GROWING OR SHRINKING? Deputy Prime Minister and Finance Minister Aleksei Kudrin told the Duma on 27 June that the number of state apparatus employees declined by 13-15 percent last year to 333,000, ITAR-TASS reported. But deputy Yegor Ligachev (Communist) said that his information shows a different trend: He said the number of government employees grew by 10,000 in the last year alone and now amounts to more than 1.34 million people. Meanwhile, Duma deputies proposed creating an Agency for Federal State Service that would oversee personnel issues of federal employees, Interfax reported.

DUMA PUTS OFF CONSIDERATION OF ANTIMONEY-LAUNDERING MEASURE. The Duma on 27 June delayed taking up for second reading a bill that calls for combating money laundering, Russian and Western agencies reported. Finance Ministry officials have called for removing inconsistencies and correcting several articles in the criminal code before the second reading, which is likely to take place next week. Deputy Prime Minister and Finance Minister Kudrin warned the Duma that any further delay would only further compromise Russia's international reputation.

BEREZOVSKY IN WORDS AND ON FILM. American journalist Paul Klebnikov told "Versiya," No. 25, that the 10,000 copies of the Russian-language edition of his biography of businessman Boris Berezovsky sold out instantly. Klebnikov said he focused on Berezovsky because he believes the oligarch embodies his times. Meanwhile, filmmaker Petr Lungin told RIA-Novosti on the same day that he plans to do a film on Berezovsky that will allow viewers to look into the oligarch's "soul."

FOREIGN POLICY
PUTIN RESTATES THREAT TO REFIT RUSSIAN MISSILES WITH MIRV� Putin on 23 June reiterated his threat to refit Russian missiles with multiple, independently-targeted, reentry vehicles if the U.S. withdraws from the 1972 ABM Treaty, RIA-Novosti reported on 23 June. Speaking at a joint press conference with Austrian President Thomas Klestil, Putin said that "if, as we are told, the deployment of the national antimissile defense system is not aimed at Russia, such a response on the part of Russia should not be a reason for concern, including countries that may decide to develop their own NMD systems." Meanwhile, Russian Security Council aide Igor Sergeev said that Washington has not fully formulated its position and that long talks might be required to reach an accord, Interfax reported on 23 June.

...BUT MOSCOW UNLIKELY TO BE ABLE TO AFFORD THEM. Despite President Vladimir Putin's threats to reinstall MIRVs on Russian rockets, Moscow is unlikely to be able to afford the $2 billion it would take to reinstall such warheads on the 140 missiles capable of carrying them and the $3-4 billion a year it would cost to maintain them, an article in "Argumenty i fakty," No. 26, suggested. But the Kremlin continues to use its missiles to put pressure on the U.S. over missile defense. On 27 June, the Strategic Rocket Forces launched an SS-19 from the Baikonur space facility, and that rocket, which could be MIRVed, hit its target in Kamchatka.

MOSCOW TO FIGHT FOR LIFTING SANCTIONS ON IRAQ... Sergei Lavrov, Russia's permanent representative to the United Nations, said on 27 June that Russia will oppose the British draft resolution supported by the U.S. that seeks to introduce new "smart sanctions" against Baghdad, RIA-Novosti reported on 27 June. Instead, he said, Moscow will introduce its own resolution calling for a full lifting of sanctions in exchange for weapons inspections. In Moscow, Foreign Minister Igor Ivanov said on 27 June that the Russian leadership would do whatever is necessary to end the sanctions because of its economic interests, Russian agencies reported. Ivanov said that Russia has lost some $30 billion in income because of the sanctions.

�WHILE BUSINESSMEN, DEPUTY CALL FOR END TO SANCTIONS AGAINST IRAQ. Russian businesses, including oil companies, have called for an end to UN sanctions against Iraq, ITAR-TASS reported on 25 June. Meanwhile, Duma Deputy Speaker and Liberal Democratic Party of Russia leader Vladimir Zhirinovsky called on the Russian government to use its veto in the UN Security Council to prevent the extension of sanctions against Iraq, Interfax reported. He later flew to Baghdad on 1 July.

MOSCOW PLAYS ON KOREAN, JAPANESE DIFFERENCES. "Izvestiya" reported on 27 June that Russia has provided South Korea with the fishing quotas it had sought in the seas around the Kurile Islands. Seoul views this as a purely economic issue, the paper said, but Tokyo is angry because of its political interest in the islands. The Moscow paper suggested that Russia is successfully playing on this difference to push Seoul into talks about the construction of an Irkutsk-China-South Korea gas pipeline and of a railroad linking the two Koreas with Russia's Trans-Siberian railway.

PUTIN SEEKS CLOSER TIES WITH KYIV. In a message to Ukrainian President Leonid Kuchma on the fifth anniversary of the Ukrainian Constitution, President Putin said that he is "confident" that ties between the two countries will "consistently develop further," ITAR-TASS reported on 28 June. Putin said that Kuchma "has done a lot for building a stable and prosperous Ukraine which remains committed to democratic ideals and principles as proclaimed in the constitution."

MOSCOW LIFTS TRANSIT VISA REQUIREMENT FOR U.S. CITIZENS. Putin has approved a recommendation by the Foreign Ministry to lift the requirement that American citizens obtain a visa if they are transiting Russia to third countries, Russian agencies reported on 25 June. Moscow initially imposed the requirement in response to the U.S. imposition of a similar requirement on Russian citizens transiting the U.S. earlier this year, and the Russian government's latest move is a response to Washington's 15 June decision to lift the requirement.

RUSSIAN FOREIGN MINISTER URGES POLAND TO OPPOSE NATO EXPANSION. Foreign Minister Igor Ivanov on 22 June said that Poland "will play a positive part in the interests of European security and stability" if it opposes the further eastward expansion of NATO, ITAR-TASS reported. Ivanov was speaking after meeting with visiting Polish Foreign Minister Wladyslaw Bartoszewski.

PUTIN, AUSTRIAN LEADER SEEK COMMON ECONOMIC SPACE IN EUROPE. President Putin and visiting Austrian President Thomas Klestil said they are pleased by the level of bilateral relations and see them as helping to create a common economic space in Europe, one in which Russia will be a full participant, RIA-Novosti reported on 23 June.

SECRET SERVICES
U.S. DIPLOMATS ARE LEAVING MOSCOW. Forty-six staffers of the U.S. embassy in Russia should have left the country by 1 July, reported Interfax on 30 June with reference to "American diplomatic sources." Russia ordered the U.S. diplomats to go as a retaliatory step for the expulsion of the same number of Russians from the U.S. when the Russian-American "spy war" surged in April.

FSB RECONSIDERING POSSIBILITY OF SPY CHARGES AGAINST U.S. STUDENT. Pavel Bolshunov, a spokesman for the Federal Security Service (FSB) office in Voronezh, said that his agency is considering bringing charges of espionage against American exchange student John Tobin, who is currently in a Russian prison following his conviction on drug charges, Russian and Western news agencies reported on 26 June. The FSB spokesman said that a Russian biologist who was briefly imprisoned in the U.S. has told the FSB that Tobin presented himself then as an FBI agent and tried to recruit the biologist to spy for the United States. But Tobin's lawyer said that such claims are untrue and part of an FSB effort to prevent Moscow from releasing Tobin before the end of his sentence. Moreover, American officials pointed out that Tobin never worked for the FBI and never visited the prison where the Russian biologist was held.

SPY MANIA MAY HAVE A DOWNSIDE. The spy mania in Russian society today has allowed the security services to act in ways they have not been able to since before the demise of the USSR, "Vremya novostei" reported on 27 June. That is because they are easily able to convince the public that any charges they bring are true. But they may be losing one important supporter, namely the president. The paper cited Putin's recent observation that "both the Russian and U.S. secret services are performing badly. They are not doing anything interesting. They are only interfering. Their main activity is to inform the political authorities, but I believe that they are doing very little to neutralize real threats. The Western security services call this 'making waves.' This expression can be applied to our secret services as well."

POLITICAL ECONOMY
DUMA BACKS CUT IN PROFIT TAX TO 24 PERCENT. On 22 June, the Duma approved on second reading by a vote of 330 to five a bill cutting the tax on business profits from 35 to 24 percent, Interfax reported. The government had wanted the tax cut to only 25 percent, while the Duma committee that prepared the legislation for vote wanted the cut to be 23 percent. The deputies also adopted a provision that allows regional governments to reduce the profit tax by an additional 4 percent. Putin called the Duma's decision "encouraging" and said he will sign it into law, assuming the Federation Council passes it.

MOSCOW STEPS UP WORK ON TRANSPORT CORRIDORS... A special body set up by the Russian Highways Agency has decided to begin construction of the Russian section of a superhighway that will link Yekaterinburg to Europe, "Izvestiya" reported on 27 June. Meanwhile, Amur Governor Leonid Korotkov told Interfax the same day that Russia and China plan to construct a bridge over the Amur River. Both projects are part of Putin's plan to construct new north-south and east-west transport corridors for both economic and geopolitical reasons.

...AS GOVERNMENT READY TO SPEND $10 BILLION ON NATIONAL HIGHWAYS. The Russian government is prepared to allocate 3 trillion rubles ($10 billion) to finance a national program for improving and developing a network of roads, Transport Minister Sergei Frank told Interfax on 28 June. According to Frank, 45 percent of the total sum will be earmarked for the federal budget, with the remaining 55 percent to be provided by the regions.

ECONOMIST SAYS INFLATION PUSHING RUSSIA TOWARD CRISIS. Mikhail Delyagin, the director of the Moscow Institute of Globalization, said in an interview published in "Vremya novostei" on 26 June that rising inflation threatens to plunge the country into a new economic and hence political crisis. Delyagin, who predicted default in advance of the August 1998 crisis, said that the new crisis will be different: it will hit not the banking system and stock market but rather the communal and energy sector infrastructures. Delyagin called on Putin to take urgent measures, including curtailing monopolies, protecting property, equalizing incomes across the regions, and implementing security minimum incomes, in order to prevent such a crisis. But Delyagin suggested in conclusion that Putin lacks the time and resources to do everything needed before the crisis is likely to take place.

BANKS STRUGGLE FOR ROLE IN LUCRATIVE ATOMIC ENERGY SECTOR. Russia's Alfa and MDM banks are fighting for control of the approximately $3 billion in annual revenues handled by the Atomic Energy Ministry, "Vremya novostei" reported on 26 June. Most of this money is currently passing through the coffers of Konvers Bank, and MDM is seeking to take control of that institution. But Alfa Bank's owner, Mikhail Fridman, is using his ties to the Kremlin to seek to displace both MDM and Konvers from access to the ministry's revenues.

GENERAL MOTORS, AVTOVAZ TO PRODUCE CHEVRO-NIVA. U.S. auto giant General Motors and Russia's largest automaker AvtoVAZ have signed an agreement to jointly produce a new line of Chevro-Niva vehicles, Prime-TASS reported on 27 June. The project calls for the production of 75,000 cars annually in Russia by 2004 and is being supported by the European Bank for Reconstruction and Development.

RUSSIA, UKRAINE TO INTEGRATE ELECTRIC GRIDS. Unified Energy Systems head Anatolii Chubais, Russian Deputy Prime Minister Viktor Khristenko, and Ukrainian Deputy Prime Minister Oleh Dubina have agreed to integrate their two power systems following Kyiv's agreement to a Russian demand that Moscow be allowed to export its electricity via the Ukrainian grid, "Kommersant-Daily" reported on 28 June.

NEW REGULATIONS ON EXPORT OF PRECIOUS METALS AND STONES. President Putin signed a directive that facilitates procedures for the export and import of precious metals and stones. The basic provision of the directive allows both the producers and jewelers to transact their valuables through the borders independently from the state and with quotas and licenses, reported "Kommersant" on 28 June.

DOMESTIC POLICY
PUTIN PUSHES FOR NEW BUDGETARY FEDERALISM. President Putin told the State Council on 28 June that Russia must have "strict budgetary federalism" in which the fiscal and tax policies of the various levels are clearly delineated, RIA-Novosti reported. He said that Russians should stop dividing regions into those that are donors and those that are subsidized, and instead consider the income and expense needs of regions depending on location, industry, and other factors. As for the sharing of revenue, Putin said that the federal budget should receive all customs duties as well as tax revenues from VAT, gas, fuel, cars, and imports, that the federal government and the regions should divide receipts from taxes on alcoholic beverages, and that taxes on gambling should go entirely to the regions.

DUMA GIVES PRELIMINARY APPROVAL TO LAW ON JUDGES. By a vote of 289 to eight, with one abstention, the Duma on 28 June approved on first reading a bill that will make it easier to discipline or remove judges and set retirement ages for most of them, Russian and Western agencies reported. The measure remains controversial, with many members of the judicial establishment saying it will open the door to even greater official pressure on judges.

FEW COUNTRIES ARE LIKELY TO SEND NUCLEAR WASTE TO RUSSIA. Atomic Energy Minister Aleksandr Rumyantsev told the Federation Council on 28 June that no country has yet applied to send its spent nuclear fuel for permanent storage in Russia and that only 10 percent of such materials will ever be sent to Russia, Russian news agencies reported.

CRIME AND PUNISHMENT
RUSSIA REMAINS ON FATF BLACKLIST... The G-7's Financial Action Task Force (FATF) has not dropped Russia from its blacklist of countries that are actively involved in money laundering and whose legislation fails to address this problem, Russian and Western agencies reported on 22 June. Despite Russian efforts during the past year to improve its image in this area, FATF President Jose Roldan warned Russia -- along with the Philippines and Nauru -- that they must do more before 30 September 2000 or they will face sanctions from the group.

...AND AMONG MOST CORRUPT COUNTRIES. According to the annual Transparency International ratings of government corruption, Russia is 79th from the top, being slightly more corrupt that Kazakhstan and Uzbekistan and slightly less corrupt than Ukraine and Azerbaijan, Interfax reported. Meanwhile, "Izvestiya" reported on 28 June that the Russian bureaucracy remains so corrupt that some people are prepared to pay up to $2 million for positions in which they can make far more. And an article in "Novaya gazeta," No. 43, documents corruption among military contractors involved with the Chechen conflict.

FSB OFFICERS ASSUMING KEY ROLES AT GAZPROM. As part of a broader agency effort to prevent capital flight, the Federal Security Service (FSB) is placing its officers in key positions at Gazprom, APN reported on 25 June. Two officers are now members of that corporation's board, the news service said.

CHERNOMYRDIN DENIES HE'S A BILLIONAIRE. Viktor Chernomyrdin, one-time prime minister and head of Gazprom who now serves as Russia's ambassador to Ukraine, called the "Forbes" magazine report that he has a $1.1 billion fortune "absurd," Interfax reported on 25 June (see "RFE/RL Newsline," 25 June 2001). Chernomyrdin added that if the magazine can show him where the billions are, he will give the money to "Forbes" and another $100 million to Interfax.

AUDIT CHAMBER FINDS $2.2 BILLION WASTED IN 2000. Sergei Stepashin, the head of the Audit Chamber, told the Duma Budget Committee on 25 June that his agency has identified the misuse of some 63.2 billion rubles ($2.2 billion) in budgeted funds in 2000, Interfax reported. He said his agency has succeeded in returning to the budget 4.2 billion rubles and has launched some 20 criminal investigations.

POLITICAL STATISTICS
COSTS OF CONFLICTS IN CIS COUNTRIES ASSESSED. Russian estimates of deaths in conflicts on the territories of CIS countries since 1992 range from 100,000 to 600,000, with other damages being assessed at $15 billion, according to an article in "Nezavisimaya gazeta" on 28 June.

STATISTICS COMMITTEE DENIES INTENTIONALLY DISTORTING ECONOMIC NUMBERS. Sergei Kolesnikov, the deputy chairman of the State Statistics Committee, on 25 June denied charges that his agency has intentionally misled people by changing the basis year for calculating economic statistics from 1995 to 1999, Interfax reported. That change led the agency to increase its estimates of Russian economic growth, but Kolesnikov said that the new figures are more accurate and avoid using figures for the period before the August 1998 economic crisis.

MASS MEDIA
PUTIN SAYS INFORMATION TECHNOLOGIES REQUIRE NEW APPROACH� In a message to the Moscow International Information Congress, President Putin on 25 June said that the new technologies in the information sphere require new approaches and "particular responsibility on the part of all participants in the information space," Russian agencies reported. Meanwhile, First Deputy Prime Minister Valentina Matvienko told the meeting that the government would guarantee freedom of speech and the media in Russia, Interfax reported. Vladislav Shertsyuk, the first deputy secretary of the Russian Security Council, added that information security is a key element in Russian national security planning. Security in this sphere, he said, can be achieved "only when the security of the national information infrastructures of each country of the world and also the global information infrastructure as a whole is guaranteed," the news agency reported the same day.

�AS YASTRZHEMBSKII TALKS ABOUT IMPROVING RUSSIA'S IMAGE ABROAD� Presidential aide Sergei Yastrzhembskii told the information congress that Moscow is just as concerned about its image abroad as it is by reforms, Interfax reported on 25 June. He said that many foreign news outlets, "especially" those in the U.S., ignore "positive information about Russia" and thus allow negative stereotypes to continue to hold sway among their viewers, listeners, and readers. He called on the journalists present to be "objective and just" in their treatment of events in Russia.

�AND GAZPROM IMPOSES ITS WILL AT EKHO MOSKVY. Representatives of Gazprom have succeeded in blocking the re-election of Yurii Fedutinov to the directors' council of Ekho Moskvy, Interfax reported on 25 June. In an interview published in "Vremya novostei" on 25 June, the radio station's editor in chief, Aleksei Venediktov, said that he does not rule out the possibility that Gazprom plans to replace the management of the station with its own people. Venediktov told Interfax that Gazprom's earlier assurances that it did not plan to change the management of the station were empty, but Gazprom representatives said they made no such promises, the news service reported.

MILITARY
SECURITY AIDE WANTS TALKS WITH U.S. SOON ON REDUCING STRATEGIC WEAPONS. Former Defense Minister Igor Sergeev, who is an adviser to the president on questions of strategic stability, told Interfax on 28 June that Moscow wants to have talks with Washington in the near future to seek drastic cuts in strategic nuclear weapons. Such reductions are necessary to reduce the threat of proliferation, he said.

RUSSIA DEVELOPS NEW SURFACE-TO-AIR MISSILE� Antei and Almaz defense firms have developed and tested a new surface-to-air missile, the S-400 Triumph, strana.ru reported on 27 June. The new missile is said to employ stealth technology and its creators claim it can "easily destroy" U.S. cruise missiles. Despite the success of this joint effort, an article in "Nezavisimaya gazeta" on 28 June warned that the government's efforts to consolidate the defense industry into a small number of firms could compromise the country's defense capabilities.

END NOTE
A NEW THREAT TO NATIONAL SECURITY

By Paul Goble Moscow's representative at the special UN General Assembly session on AIDS says that disease now threatens the national security of his country, an acknowledgement of both the speed of the spread of HIV infections in Russia and the impact that illness is having both there and elsewhere.

In an interview given before his departure to New York, Deputy Health Minister Gennadii Onishchenko noted that HIV infections arrived in Russia "six years later than elsewhere" and that the number of HIV-infected people and AIDS cases is still much lower than in the West. But the rates of infection in Russia, Onishchenko said, are growing so rapidly that "it is becoming a threat to the national security of the country."

Russia is not the only country threatened in this way, Onishchenko said. There are more than 56 million people around the world now infected with the HIV virus, he said. That number is increasing every month by 440,000. And AIDS, the disease which HIV infections cause, has already claimed almost 22 million lives.

Onishchenko's comments call attention to a fundamental problem that countries face in dealing with this illness under conditions of globalization.

On the one hand, even though the United Nations meeting this week is taking place under the slogan "global actions for a global crisis," most countries still view the spread of this disease through a national prism. That is, they consider both the threat and their response to it first and foremost in terms of their own domestic situation.

As a result, it is likely to be extremely hard -- at least in the short run -- for the UN to assemble the $9 billion in annual commitments officials say is needed to fight this disease. That, in turn, means that the international community is unlikely to arrange for the transfer of resources from the wealthiest countries to the poorest ones in Africa and Asia who currently are now most affected by HIV.

But on the other hand, Onishchenko's remarks call attention to why at least some countries that have not yet been affected so immediately may decide that they have to take action now -- and on an international basis. Until the Soviet Union collapsed, Russia and its neighbors were among the least affected parts of the world in AIDS. But now that has changed dramatically, as this region has opened up to the rest of the world.

Russia's Kaliningrad region is one of the most seriously affected places in the world, Ukraine has a major problem, and ever greater numbers of people there are coming down with a disease for which there is as yet no vaccine and no cure. None of the countries in this region have the resources to deal with this disease on their own, despite some brave words by Onishchenko that Russia has some "interesting experience" in fighting the disease.

And as a result, Russia and some of its neighbors are likely to press for an international solution to a problem no country can solve on its own. By casting the issue of AIDS in terms of his country's national security, the Russian deputy health minister has clearly signaled Moscow's intention.

The outcome of the UN session this week is thus uncertain, depending as it does on whether countries define their national interests in the short term or over the longer run. But regardless of the immediate outcome of this meeting, its focus on a new kind of threat to the security of UN members may become a turning point not only in the fight against AIDS but in international cooperation more generally.

As international attention is focused on the AIDS crisis, more countries are likely to come forward with assistance. And because this is a threat to national security on which all countries can agree, it may help to create the conditions under which the countries of the world will view other threats to national security in common and thus approach them in a common way as well.

Consequently, what may appear to some as a narrow defense of national interests may prove in the end to be a defense of the interests of humanity in the broadest possible terms.

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