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Security Watch: July 20, 2001


20 July 2001, Volume 2, Number 27
TRENDS
DUMA STAFF CHIEF WANTS DEPUTIES TO DECLARE ASSETS. Nikolai Troshkin, the Duma's chief of staff, said on Russian radio on 11 July that he and his aides have drafted a bill that will require deputies to declare their assets. He also said that the Duma's operating budget now is 1.5 billion rubles ($500 million) annually.

PUTIN AGAINST CAPITAL PUNISHMENT -- EXCEPT FOR CHECHENS... Putin told a group of international lawyers that he is against the restoration of the death penalty and that while he is president, Russia will maintain a moratorium against its use, gazeta.ru reported on 9 July. But he added that "the Chechens should not rejoice as they are not going to be taken alive."

...MAY CHALLENGE U.S. ON DEATH PENALTY... Pavel Laptev, Russia's envoy to the European Court of Human Rights, said on 12 July that Moscow may refrain from cooperation with Washington on terrorism if the U.S. retains the death penalty, ITAR-TASS reported on 12 July. Laptev noted that Putin has made it clear that Russia is determined to do away with this form of punishment. But that undercuts Russia's ability to cooperate with the U.S. on terrorism because Moscow would not be willing to extradite terrorists to the U.S. if they might be executed, he argued.

...BUT CONSIDERS COMMISSION ON PARDON 'TOO HUMANE.' The leader of the People's Deputy faction, Gennadii Raikov, said Putin had asked him to evaluate the work of the presidential pardon commission, Interfax reported on 13 July. Putin said he doubts that all of the 2,600 convicts that had been pardoned last year deserved to be. Raikov, for his part, said he was surprised at the large number of pardons.

RUSSIAN SCHOLAR DESCRIBES RUSSIA'S CHEKIST REGIME. Speaking to an international political science meeting in Berlin devoted to Russia's current political regime, Russian scholar Aleksei Musakov said that Putin's path to power was paved by the elite of the country's intelligence services acting under the direction of Yevgenii Primakov, the BBC reported on 11 July. Putin, Musakov said, is by nature a meritocrat in political life and "an authoritarian liberal" in economic affairs. In foreign affairs, Musakov added, Putin is a pragmatist who is prepared to cooperate with both the West and rogue states and, as a former intelligence officer, is adept at camouflaging his actions. Musakov is known to have close ties with the Russian intelligence services.

POLITICAL ECONOMY
GEOLOGISTS FIND NEW OIL FIELD IN SIBERIA. Andrei Shtorkh, vice president of Slavneft, said the company's geologists had discovered a large oil field in Evenkiya, "TV-Tsentr" reported on 11 July. The prospective reserves of the new find exceeds 350 million tons, but he said that the field's location means that it will be economically viable only if the firm receives state subsidies.

CIS COUNTRIES MOVE TOWARD SINGLE FINANCIAL SPACE. The International Exchange Association of the member countries of the Commonwealth of Independent States (CIS) and the Moscow Interbank Currency Exchange on 12 July signed an agreement calling for the creation of "a single financial space" within the CIS, RIA-Novosti reported. The agreement sets rules for clearing mechanisms among the countries and also for common legal arrangements on currency matters.

FORBES, FORTUNE LIST RUSSIAN COMPANIES. The U.S.-based "Fortune" magazine listed only Gazprom among its top 500 corporations in the world, but "Forbes" magazine included four Russian companies -- Gazprom, Surgutneftegaz, YUKOS, and LUKoil -- with the Russian gas monopoly having risen from the 22nd largest company in 2000 to 138th place on this year's list.

FIVE RUSSIAN BANKS AMONG WORLD'S 1,000 LARGEST. "Kommersant-Daily" reported on 9 July that five Russian banks are among the world's largest. They include Vnestorgbank, which is in 222nd place; Sberbank in 301st place; Gazprombank in 415th; Sovinbank in 708th; and MDM in 814th.

MOSCOW ALLOTS $200 MILLION FOR FOREIGN INVESTMENT GUARANTEES. The Russian government has created a special fund of $200 million to provide foreign investors in the timber and coal industries with guarantees against noncommercial risks, Prime-TASS reported on 9 July. Moscow has taken this step because corrupt officials siphoned off earlier foreign investments in these sectors.

DOMESTIC POLICY
UNITY-FATHERLAND FORM UNION, BACK PUTIN... Fatherland leader Yurii Luzhkov and Unity party head Sergei Shoigu on 12 July announced the integration of their two political groups into a new bloc, the All-Russia Union, Russian and Western agencies reported. Luzhkov said that both groups will preserve their identity -- he added that Fatherland will become a party in the fall -- but will cooperate in the Duma and during elections. They adopted a resolution in support of Putin, and they agreed to merge the symbols of the two parties, a bear and a map of Russia, into a single symbol: a bear standing above a map of Russia.

...AND CHOOSE A CHEKIST TO LEAD THEM. The joint meeting of the two parties elected retired FSB Colonel Aleksandr Bespalov as chairman of the joint executive committee. A veteran of the state security organs from St. Petersburg, Bespalov played a major role in Putin's presidential election campaign and is one of the members of the core of Putin's so-called "St. Petersburg Chekists."

THE DUMA VOTES ON NUMEROUS MEASURES... On 12 July, the Duma adopted on third and final reading the law governing shareholder rights in companies, Russian agencies reported. It approved on second reading a bill simplifying the licensing and registration of new companies. Thus, the law imposed obligatory licensing on most industrial production and commercial services, except those that have separate legislation like the banking, insurance, and broadcasting sectors. It also approved a measure establishing the rights that businesses have during probes and investigations, including the right to deny access to the premises of the business and a provision for compensation of losses caused by any inspection. The deputies approved the 2001 budget for the Pension Fund, but they decided not to invite the heads of regions and republics for the 14 July discussion of the Land Code, Interfax reported. Deputies failed to vote for a proposal by Duma deputy speaker and Liberal Democratic Party of Russia leader Vladimir Zhirinovsky that would ban advertising in foreign languages, but they did approve an appeal calling on Putin and his Belarusian counterpart Alyaksandr Lukashenka to begin consultations on admitting what the deputies call the union of Moldova and Transdniester into the Russian-Belarus Union, ITAR-TASS reported.

...AND STILL MORE MEASURES. Before going on summer break, the Duma also approved several crucial bills and amendments, including codification of licensing, equities market, and audit activities and modification of tax on the natural resources, Russian agencies reported on 13 July. The amendment to the natural resources legislation abolished a whole variety of old taxes and installed a universal tax that will be calculated into a percentage of the market value of recovered resources. The exception is for taxes on oil and gas, which will be calculated based on average world prices. Finally, the Duma adopted a law regulating auditing in Russia and amendments to the law of equities market setting up responsibility for releasing topical and worthy information.

KREMLIN WANTS TO ABOLISH POWER-SHARING ACCORDS, WON'T SIGN NEW ONES. Pravda.ru reported on 11 June that the Kremlin not only plans to abolish the existing power-sharing accords between Moscow and federation subjects, but will not sign any new ones. It noted that Saratov Governor Dmitrii Ayatskov -- who the site noted has often anticipated the Kremlin's moves -- has said that the regions must be enlarged and their governors appointed.

LIST OF CLOSED CITIES PUBLISHED. "Rossiiskaya gazeta" on 12 July published a list of some 90 cities and locales that are closed to foreigners and other outsiders for security reasons (see "RFE/RL Newsline," 11 July 2001). Among them are the nuclear centers at Zheleznogorsk in Siberia and Snezhinsk in the Urals, the chemical center at Shikhany in the Volga region, and Arctic naval bases at Polyarny, Severomorsk, and Vidayevo. Many of these places were well funded during the Soviet period but now face economic hardships.

FOREIGN POLICY
MOSCOW REACTS HARSHLY TO U.S. MOVES ON MISSILE DEFENSE. Presidential aide and former Defense Minister Igor Sergeev told RIA-Novosti on 12 July that Washington "undoubtedly has taken the decision to withdraw from the 1972 ABM Treaty" and those consultations with Russia and others are intended as a smokescreen for this decision. "We will view the first cubic meter of concrete poured under the launching pad in Alaska for interceptor missiles as representing the formal withdrawal of the United States" from the earlier agreement, and Russia will respond promptly and effectively, Sergeev added.

RUSSIA TO LAUNCH FRENCH SPY SATELLITES. "Le Monde" reported on 9 July that the recent Russian-French accord to allow Moscow to launch rockets from the French space center at Kourou, Guyana, calls for Russia to carry two French spy satellites of the Helios-2 class into orbit. The paper said that this agreement highlights the new level of trust between Russian and European space agencies because the information obtained will be shared.

BRZEZINSKI, PRIMAKOV DEBATE IN MOSCOW PAPER. Former U.S. national security adviser Zbigniew Brzezinski and former Russian Prime Minister Yevgenii Primakov have presented their views on relations among Russia, the United States, and China over the next 20 years in a joint interview published in "Moskovskii komsomolets" on 10 July. Brzezinski said that Russia would have to turn to the West to protect itself from China, while Primakov insisted that a wise migration policy in the Russian Far East and a multidimensional foreign policy could work to Moscow's benefit. Primakov also insisted that Russia will remain a major power, adding that the concept of superpower is already a historical term.

PUTIN PRAISES MOLDOVAN PRESIDENT FOR STANCE ON TRANSDNIESTER ISSUE. Putin welcomed the unexpected visit of Moldovan President Vladimir Voronin to Moscow on 11 July, saying that he fully supports his guest's position on talks with the Transdniester Republic, ORT television reported. He said that Voronin's approach will make possible the constructive development of ties between Moscow and Chisinau in all areas.

U.S. GLOBALISM SAID TO BE THE LATEST VARIANT OF BOLSHEVISM. According to an article in "Rossiiskaya gazeta" on 10 July, American globalism is the latest reincarnation of Bolshevism, an ideology that seeks to assert that there is or should be a single center of power in the world. The article also said that the extradition of former Yugoslav President Slobodan Milosevic to the international tribunal in The Hague represents a victory for globalism, but also threatens Russian leaders, including Putin and former President Boris Yeltsin, with the possibility of them being tried for their "crimes" in Chechnya. Consequently, Moscow must oppose globalism before it is too late, the paper concluded.

LAW ENFORCEMENT
PRESIDENT ACQUIRES POWER TO APPOINT FEDERATION SUBJECT POLICE HEADS. The Duma approved a measure giving the president the power to hire and fire the chiefs of regional Interior Ministry bodies, Interfax reported on 12 July. The bill is a revised version of one rejected by regional leaders in the Federation Council, and, unlike the version it replaced, gives the heads of federation subjects a voice, but not a decisive one, on candidates proposed by the federal interior minister for such positions.

GRYZLOV WANTS TO INVOLVE CITIZENRY IN PUBLIC SECURITY. Speaking at a conference of law-enforcement officers on 10 July, Interior Minister Boris Gryzlov said that citizens must become involved in public security and law enforcement, ORT television reported. Gryzlov also said that even though he hopes to improve efficiency in law enforcement, he does not anticipate any reduction in the size of the staff at his ministry, Interfax reported the same day.

SECRET SERVICES
SUPREME COURT BACKS FSB ON ANONYMOUS DENUNCIATIONS. The Russian Supreme Court has rejected an appeal by a group of civil rights activists against the use of anonymous denunciations by the Federal Security Service (FSB), Ekho Moskvy radio reported on 12 July. The court said that the FSB's use of such denunciations is appropriate and does not violate the constitution. But Lev Ponomarev, who heads the group "For Human Rights," said the decision "may allow the FSB to fabricate cases," and that his organization will now appeal the Russian court's decision to the European Court for Human Rights.

PASKO DOUBTS HE'LL RECEIVE FAIR TRIAL. Grigorii Pasko, a journalist who is again facing trial in Vladivostok on charges of state treason for publishing documents about ecological damage caused by the Russian fleet, said in an interview published in "Kommersant-Daily" on 12 July that he does not believe he will get justice. For that reason, he said, he has already filed a suit with the European Court in Strasbourg. Meanwhile, a Krasnoyarsk court rejected a request by Valentin Danilov, a scientist charged with selling secrets to China, to release him from detention because of his health, Interfax reported the same day.

U.S. STUDENT'S LAWYER SEEKS HIS TRANSFER TO BETTER PRISON. A lawyer for imprisoned American exchange student John Tobin said on 11 July that he is seeking to have his client transferred to a minimum security penal colony, AP reported. Tobin is in a general security camp but he may be transferred to a less strict regime camp or even released once the first half of his sentence is completed on 2 August, the lawyer said.

PUTIN REWARDS LOYAL FSB HEAD. Putin has promoted his friend, Federal Security Service (FSB) Director Nikolai Patrushev, to the rank of full general, ostensibly "in connection with his 50th birthday," Interfax reported on 11 July. On the same day, Prime Minister Mikhail Kasyanov presented Patrushev with a special certificate in honor of his work for the state, the news service said.

LAW ENFORCEMENT
PUTIN INSTALLS INTELLIGENCE OFFICERS IN INTERIOR MINISTRY. Putin on 10 July appointed three new deputy interior ministers, all of whom have the rank of lieutenant-general, RIA-Novosti reported. Aleksandr Chekalin will head the public security section, Mikhail Ignatiev will head the logistics service, and Nikolai Bobrovskii will head the criminal police. Bobrovskii was a colleague of the Russian president in the foreign intelligence service and like Putin has a good knowledge of German. Putin also named Federal Security Service (FSB) General Boris Miroshkin to head a new directorate that will be responsible for electronic intelligence gathering and combating high-tech crime.

MASS MEDIA
GAZPROM-MEDIA PLANS TO SELL MORE SHARES IN EKHO MOSKVY ONCE PRICES GO UP. Aelita Yefimova, the head of the press service of Gazprom-Media, said that her company plans to sell additional shares it holds in Ekho Moskvy to foreign investors once the price of those shares goes up and it can make a profit, "Izvestiya" reported on 12 July. Such sales would be in addition to the 9.5 percent the company has offered to Union of Rightist Forces (SPS) leader Boris Nemtsov.

RULES SET FOR GOVERNMENT INTERNET USE. The Communications Ministry has prepared rules governing the nature and amount of information that state agencies can put on the Internet, Interfax reported on 12 July. According to Communications Minister Leonid Reiman, these rules were prepared on the order of the Russian president. Reiman added that "unfortunately" not all government agencies are taking full and correct advantage of this channel. Meanwhile, Yabloko leader Grigorii Yavlinsky said in Moscow the same day that the Internet should be used to help ensure honest elections with information about ballots placed on the web to prevent fraud, Interfax reported.

MILITARY
DUMA SAID READY TO RATIFY RUSSIAN-U.S. WEAPONS-GRADE PLUTONIUM ACCORD. The Duma International Relations Committee said on 11 July that the full Duma is prepared to ratify a Russian-U.S. accord signed in 2000 on the utilization of weapons-grade plutonium, ITAR-TASS reported. The agreement calls for each country to reduce the concentration of plutonium in existing stockpiles so that it can be used for fuel at nuclear power plants. In addition, the accord calls for the U.S. to provide Russia with at least $200 million and possibly more toward the construction of a processing center for the plutonium.

RUSSIA MAY SELL MORE HELICOPTERS TO IRAN. Iran, which has already purchased 17 Mi-171SH helicopters and is scheduled to take delivery of 20 more before the end of 2001, may purchase still more of the Russian craft in 2002, ITAR-TASS reported on 9 July. The agency also reported that the Urals Machine-Building Plant is offering for sale on the world market a so-called "killer motorcycle," capable of carrying heavy weapons and even attacking tanks. Meanwhile, "Tribuna" reported on 5 July that Russia leads the U.S. in tanks but is behind in almost all other military categories, including the number of men fit for active duty.

MALAYSIA INTERESTED IN BUYING HIGH-TECH RUSSIAN WEAPONS. Following a meeting between Russian Foreign Minister Igor Ivanov and his Malaysian counterpart Syed Hamid Albar in Moscow, Interfax reported that Malaysia is very interested in purchasing Russian Su-30 fighters, T-90 tanks, and gain licenses to manufacture the Igla air-defense missile.

KALININGRAD WILL BE SUPPLIED EVEN IF LITHUANIA IS IN NATO. Andrei Nikolaev, the chairman of the Duma Defense Committee, told military attaches from foreign embassies in Moscow that Russia will find a way to supply its fleet and army units stationed in Kaliningrad even if Lithuania joins both the European Union and NATO, RIA-Novosti reported on 9 July.

CRIME AND PUNISHMENT
KOZAK SAYS 15 CORRUPT JUDGES FIRED THIS YEAR. Dmitrii Kozak, the deputy chief of the presidential administration, said that 15 judges charged with corruption have been fired over the last 12 months, ORT television reported on 9 July. Kozak was quoted as saying that the judicial reforms approved by the Duma on 28 June will lead to longer sentences for those who misuse their judicial offices.

MOSCOW VIGILANTES SEEK TO DRIVE OUT PEOPLE FROM THE CAUCASUS. Viktor Gosudarev, the deputy chief of the Moscow Interior Ministry's main criminal investigation directorate, said that young people have formed vigilante groups to drive out of Moscow markets vendors that are from the Caucasus, according to an article in "Rossiiskaya gazeta" on 10 July. But Gosudarev said that the vigilantes fall under the category of "extremist groups" and that the FSB "will take care of them." Meanwhile, Interior Minister Gryzlov said that his agency will devote more attention to combating the growth in crime among the young, Interfax reported the same day.

END NOTE
THE DUMA'S BUSY LAST DAYS

By Victor Yasmann

As they moved toward adjournment of the spring session, the Duma on 12-13 July adopted a record number of crucial bills and amendments that could make a significant contribution to the economic development of Russia. Some of the bills were approved on a third and final reading and will move on to the Federation Council and the Kremlin, while many were backed only on the first or second reading and are likely to be the subject of more political struggle in the months ahead.

Among the first category are the bill on combating money laundering and another on the licensing of business activities. Among the second is the still-controversial Land Code.

The anti-money laundering legislation was dubbed by the Russian media as something "for export," that is, to impress the international community without doing very much to address the problem. The law imposes obligatory controls on business and financial transactions exceeding 600,000 rubles ($21,000) but it contains so many loopholes -- including keeping tax evasion out of its categories and not forcing banks and casinos to report suspicious activities -- that it is unlikely to make much of a difference. Nonetheless, it is important because it is likely to save Moscow from international sanctions for failing to try to end money laundering.

The licensing law is intended to debureaucratize the Russian economy by reducing the number of the activities requiring registration with the state and simplifying these procedures. Indeed, the adopted law decreases the number of state licensing activities from 3,000 to 100. And the law defines the division of prerogatives in licensing between the federal and local authorities.

The Land Code, which passed on second reading despite very strong opposition from the Communists and Agrarians, will have to face more debate before possible passage in the fall. But as it was approved on second reading, the bill contains two important changes from the original version: It gives foreigners the same right to own land as Russian citizens will have, and it creates border zones in which all foreign ownership is banned.

The Communist Party had sought those concessions but promised protests against the code as a whole despite getting part of what it wanted. Despite all of the controversy, "Vedomosti" on 16 July put the entire issue in perspective: Even if the Land Code is passed in its current form, it will affect less than 2 percent of the land area of Russia.

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