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Security Watch: July 24, 2001

24 July 2001, Volume 2, Number 28
RUSSIA SEEKS IMMIGRANTS TO SOLVE DEMOGRAPHIC CRISIS... Aleksandr Blokhin, the minister for federation affairs, nationality and migration policy, told the cabinet on 19 July that Russia must attract at least 1 million immigrants a year if current birth and death rates inside Russia continue at their present level, RIA-Novosti reported. In response, Prime Minister Mikhail Kasyanov said the government must develop a comprehensive policy under which legal immigrants will feel welcome and protected and illegal ones will be dealt with as they deserve to be, RIA-Novosti reported. He added that a special immigration inspection system will be established to deal with the problems of immigration.

...BUT HAS FEWER COMPATRIOTS ABROAD. Russia's domestic demographic crisis has attracted considerable attention, an article in "Nezavisimaya gazeta" notes, but less attention has been paid to the fact that the number of ethnic Russians living in the former Soviet republics and Baltic countries has declined precipitously as well. In 1989, the paper said, there were 24.8 million ethnic Russians in these places, but in 1999, only 18.9 million remained. As a result, the proportion of Russians in all these countries has declined both absolutely and relatively. One interesting dimension pointed out by the article is that the percentage decline among ethnic Russians in the Baltic countries has been significantly lower than in many of the CIS states.

PUTIN SAYS PARDONS COMMISSION 'TOO HUMANE.' People's Deputy Duma faction leader Gennadii Raikov said that Putin has asked him to evaluate the work of the Presidential Pardons Commission, Interfax reported on 13 July. Raikov said that Putin told him that he "doubts that all the 2,600 convicts pardoned by the commission deserved to be released and believes it is worth looking at how the commission is making its decision." And a spokesman for the presidential administration stated to "Vremya novostei" on 21 July that by pardoning thousands of prisoners the Pardons Commission "has mixed amnesty and pardon and, therefore, the meaning and purpose of [its] existence was lost."

ZHIRINOVSKY, RAIKOV COME OUT FOR LUKASHENKA. Duma Deputy Speaker and Liberal Democratic Party of Russia head Vladimir Zhirinovsky on 13 July expressed his support for the re-election of Belarusian leader Alyaksandr Lukashenka, ITAR-TASS reported. Zhirinovsky said that he has information suggesting that the West has allocated $500 million to oust Lukashenka. The same day, People's Deputy Duma faction head Raikov also expressed his support for Lukashenka's re-election. Meanwhile, Konstantin Zatulin, who serves as the director of Moscow's CIS Institute, told on 19 July that current media campaigns about attacks on journalists and the disappearance of opposition figures are being directed from "a single center," the United States. He said that Washington is hoping to overthrow Ukrainian President Leonid Kuchma because the Americans have lost interest in him, and Belarus leader Alyaksandr Lukashenka "for reasons of principle."

PROKHANOV SAYS COMMUNISTS HAVE LOST THEIR WAY, PUTIN SUNK IN 'YELTSINISM.' Aleksandr Prokhanov, the editor of the radical anti-Western weekly "Zavtra," believes that the Communist Party under Gennadii Zyuganov has lost its sense of purpose and cannot offer anything but the ideology of social disobedience, "Nezavisimaya gazeta" reported on 18 July. As for Putin, Prokhanov said that he has some sympathy for the Russian president but that Putin now remains sunk in "the marshes of Yeltsinism" and thus has "the sad eyes of a dog that has failed to retrieve a duck."

...BUT RUSSIANS, CHINESE DIFFER ON ITS IMPLICATIONS CONCERNING NMD... Chinese Foreign Ministry spokesman Zhu Bangzao said in Moscow on 16 July that the treaty is critical given U.S. plans to create a national missile defense system that he said would "threaten international security," Russian agencies reported. But Russia's Deputy Foreign Minister Aleksandr Losyukov said that the treaty does not include any reference to that issue or others on which the two countries have specific views, because it is designed to be relevant for two decades. Losyukov also specified that the accord does not cross the line into being an alliance.

KURGINYAN BACKS PUTIN BECAUSE PRESIDENT'S FAILURE WOULD BE VICTORY FOR CHECHENS. Political analyst Sergei Kurginyan wrote in "Rossiya" on 18 July that even though Putin's standing is falling and even though he has not achieved everything Kurginyan had hoped for, the political analyst still supports Putin because the president's failure would be a victory for Chechen field commander Shamil Basaev. At the same time, however, Kurginyan said Putin's regime has run out of steam and may soon beat a hasty, panic-driven retreat.

PUTIN EXPLAINS WHY HE WON'T BURY LENIN NOW. In his interview for "Corriere della Sera" on 16 July, Putin said that it is "premature" to talk about burying the body of Soviet state founder Vladimir Lenin. "When I see that the overwhelming majority of the population wants this, it could become a topic for discussion. At present, I do not see this, so it is not on the agenda." Putin defended his approach in Chechnya by comparing it with the situation in the Balkans. He said that his government is not trying to throttle the independent mass media but rather to create the "economic conditions" necessary for the functioning of such media. He also said that the creation of a liberal economy is the best way to defeat corruption.

...AND JIANG EXPLAINS RATIONALE FOR TREATY. In an interview published in "Rossiiskaya gazeta" on 16 July, Chinese leader Jiang said that he initiated the treaty to give "a solid legal base" to his "feeling of friendship" with Russia. He also went out of his way to say that even though Beijing and Washington have just passed through a period of difficulties in their relationship, he is confident that they will cooperate in the future because the two countries have "important common interests." Concerning Taiwan, which Putin stressed Russia will never recognize as independent of China, Jiang indicated that while he would prefer peaceful means to bring about reunification, he "cannot exclude the use of force" not only against Taiwan but also against any power that tries to split China by proclaiming the independence of that island.

PUTIN TELLS KISSINGER MOSCOW SEEKS INTEGRATION INTO WORLD COMMUNITY. Putin told visiting former U.S. Secretary of State Henry Kissinger on 13 July that Russia's priority is to integrate itself into the world community, RIA-Novosti reported. Kissinger responded that Russia will have to fundamentally modify its approach to international affairs if it is to achieve that goal. Kissinger also met with other senior Russian officials, including former Russian Ambassador to the U.S. Vladimir Lukin.

PUTIN, JIANG SIGN FRIENDSHIP TREATY... President Vladimir Putin and visiting Chinese leader Jiang Zemin on 16 July signed a friendship and cooperation treaty that proclaims their respective countries "always friends, never enemies," Russian and Western news agencies reported. The document, the first such accord between the two countries since the collapse of the Soviet Union, includes commitments to avoid the use of force in solving disputes and to cooperate in space exploration. It also specifies that the accord is not directed at any third country. The Soviet-style document is valid until 2021, and commentators in both capitals called it "historic and unique," but others, including Duma Deputy Speaker and Liberal Democratic Party of Russia leader Vladimir Zhirinovsky, expressed skepticism about its impact.

RUSSIA, CHINA SIGN ENERGY COOPERATION ACCORDS. Prime Minister Kasyanov on 17 July signed a major energy accord with visiting Chinese leader Jiang, Russian agencies reported. Over the next two years, Russia will build a 1,700-kilometer pipeline that will ultimately supply China with 30 million tons of oil annually beginning in 2010. In addition to Kasyanov, the signatories on the Russian side included YUKOS Chairman Mikhail Khodorkovskii and Transneft head Semen Vainshtok. The two sides also agreed that China will purchase at least 10 of Russia's Tu-204 passenger aircraft, RIA-Novosti reported the same day.

GAZPROM PLANS PAN-ASIAN PIPELINE NETWORK. Sergei Zhvachkin, the president of Gazprom's Vostokpromgazprom, said in an interview published in "Russkii Fokus" on 16 July that his corporation plans to build up a unified gas pipeline system covering eastern Russia, Mongolia, China, and Japan. He said that this network will have enormous geopolitical significance and allow Gazprom to "compete" with the major international gas firms like Shell, BP, and ExxonMobil.

RUSSIA HOPES FOR MORE CHINESE STUDENTS WHO CAN PAY THEIR OWN WAY. Sergei Markov, the director of Moscow's Institute of Political Research, said on 17 July it would be very profitable for Russia if China were to send tens of thousands of students to Russian higher educational institutions, RIA-Novosti reported. Students who pay cash for their studies abroad would find that Russian universities are far less expensive but just as good as Western ones, Markov said. Moreover, such exchanges would ensure that the next generation of the Chinese elite will speak Russian rather than English as its first foreign language, Markov said.

MOSCOW IMPOSES ECONOMIC SANCTIONS AGAINST HUNGARY. The Russian government has imposed special duties on some Hungarian food products in retaliation for Budapest's imposition of restrictions on Russian chemical and wood exports, "Kommersant-Daily" reported on 19 July.

COLUMBIA INVITES RUSSIAN OIL COMPANIES TO DEVELOP ITS RESERVES. Colombian state oil company Ecopetrol President Alberto Calderon Zuleta said in Moscow on 19 July that he has invited Gazprom, YUKOS, and LUKoil to participate in the exploration and processing of oil in Columbia, RIA-Novosti reported. He said he is particularly interested in having the Russian firms develop seven offshore fields. Ecopetrol is the third-largest oil producer in Latin America.

RUSSIA PLANS TO EXPAND GOLD OUTPUT, SEEKS FLEXIBILITY IN DIAMOND SALES. Goskhran head Valerii Rudakov said that Russian gold output is expected to rise 10 percent this year over last to a total of 150 metric tons, Finmarket reported on 17 July. He also said that Moscow will begin to auction large diamonds (those over 10.8 carats), and plans to seek greater flexibility in its dealings with DeBeers.

ONLY 20 PERCENT OF RUSSIAN AIRCRAFT CAN BE MADE TO MEET INTERNATIONAL STANDARDS. First Deputy Transportation Minister Aleksandr Neradko said on 16 July that only 20 percent of Russia's 6,400 passenger aircraft are sufficiently modern to be able to be upgraded to meet new noise and pollution standards set by the International Civil Aviation Organization beginning next year, Prime-TASS reported on 17 July. The remainder are either too old or would be too expensive to bring into compliance, he said.

MOSCOW, HANOI EXPAND JOINT OIL VENTURE, DISCUSS FREE-TRADE ZONE. Deputy Prime Minister Viktor Khristenko said on 18 June after talks with his Vietnamese counterpart Nguyen Manh Kam that the Russian-Vietnamese joint venture Vietsovpetro will expand production of oil to 13 million tons in 2002, ITAR-TASS reported. The two sides agreed to build a jointly owned petrochemical plant. They also discussed the creation of a kind of free-trade zone between the two countries to assist the growth of trade between them.

PUTIN TELLS COMMISSION TO CLARIFY CENTER-PERIPHERY RELATIONS. Putin on 18 July told the presidential commission on the delimitation of functions and powers between Moscow and the regions that up until now, no one in either place knew precisely who was responsible for what and that the commission must overcome this problem, ORT reported. Putin said that in order to do so, the commission must study the legal basis for power sharing, as well as come up with a means of resolving conflicts between Moscow and the regions. In approaching this problem, Putin said, the commission members should remember that "the federation is not a fixed structure but rather a continuously evolving one," and that what may have been useful in the past may be "harmful and superfluous today."

STROEV CATEGORICALLY AGAINST POWER-SHARING TREATIES. Yegor Stroev said on 17 July that he is "categorically" opposed to any renewal of power-sharing agreements between Moscow and the regions, ITAR-TASS reported. He said that such accords allow many regions to underpay taxes to the federal budget and thereby contribute both to growing income disparities among the regions and centrifugal forces in the country.

DUMA SUPPORTS CONTROVERSIAL LAND CODE ON SECOND READING... The Duma on 14 July adopted on second reading by a vote of 253 to 152 a draft Land Code, Russian agencies reported. The bill is strongly opposed by the Communists and Agrarians in the chamber and by more than 35 regional legislatures, and attracted a variety of parliamentary efforts at delay and demonstrations outside the Duma. As supported in its second reading, the bill contains two important changes from the draft approved on first reading: it allows for foreigners to buy and sell land on the same basis as Russian citizens, and it establishes special zones along the borders of Russia where foreigners may not own land at all. Economic Development and Trade Minister German Gref and other government officials, who had actively pushed the measure despite criticism of their actions by opponents, said they were pleased with the result, Interfax reported the same day.

...AND ENDS SPRING SESSION WITH A BURST OF ACTIVITY. In the final two days of its spring session, 13-14 July, the Duma gave its approval to a variety of measures. It passed on first reading three bills on pension reform, simplified taxes on natural resources, approved a bill on the registration of juridical persons, approved a bill enumerating those functions subject to state licensing, reduced the share of hard-currency profits that firms must convert to rubles from 75 percent to 50 percent, and it adopted legislation on auditing procedures that both sets the rules for such audits and provides protection to those being investigated. The Duma will reconvene for its fall session on 17 September.

EXISTING POLITICAL ORGANIZATIONS MUST REREGISTER WITHIN TWO YEARS. There are 59 political parties, 35 political organizations, and 104 political movements in Russia now, and all must reregister with the government as political parties within two years, Deputy Justice Minister Yevgenii Sidorenko said on 19 July, according to ITAR-TASS. (Political movements and political organizations will not be allowed to participate in elections after that time.) Sidorenko said that he does not expect that more than 10 political parties will remain as a result. He noted that if elections are held before 14 July 2003, the old rules will remain in force and all groups will be allowed to take part.

SERGEEV SAYS U.S. SEEKING MILITARY DOMINANCE. Marshal Igor Sergeev, a former defense minister and Putin's assistant for strategic stability issues, said on 19 July that the United States is seeking military predominance in the world and that if Washington puts weapons in space, "that will mean they are directing them against Russia," Russian and Western news agencies reported. Sergeev said that "in that case, we will not wage war against the United States but will take adequate retaliatory measures." He said this could be done without increasing the defense budget or delaying military reform. Sergeev also said that he does not rule out creating a new collective security system in Europe as an alternative to NATO, Interfax reported the same day.

PUTIN MAKES PERSONNEL CHANGES AT DEFENSE MINISTRY. Defense Minister Sergei Ivanov announced on 13 July that Putin has accepted the retirement of Colonel General Leonid Ivashov, who was the head of the Defense Ministry's Directorate for International Military Cooperation, RIA-Novosti reported. Ivanov said that he will be assigned another post. Ivashov's replacement is Lieutenant General Anatolii Mazurekevich. Putin also named General Nikolai Yefremov to head the Moscow Military District and Lieutenant General Nikolai Pankov to be the chief of the Main Personnel Directorate of the armed forces.

SUKHOI FIGHTER FLIGHTS SUSPENDED AFTER CRASH. The Russian Air Force grounded all of its advanced Su-33 fighters after one of them crashed on 17 July and claimed the life of Timur Apakidze, the deputy chief of naval aviation, reported the following day. General Apakidze was a decorated hero with the reputation of being one of the country's most experienced pilots. Consequently, the website suggested, it is very unlikely that the crash was the result of pilot error.

DUMA APPROVES LAW ON MONEY LAUNDERING... The Duma on 13 July approved on third and final reading a bill setting the rules for combating money laundering and bringing Moscow into closer accord with international standards, Interfax reported. The bill, which still must be passed by the Federation Council and signed by Putin, gives the government the right to scrutinize all business activities in excess of 600,000 rubles ($20,000). But many of the amendments that have been adopted reduce the effectiveness of the legislation: The bill does not provide for any actions in the customs or offshore areas, it does not require banks and casinos to report suspicious activities, and it exempts all deals that will have taken place once the bill becomes law.

...BUT DEPUTY SAYS MONEY-LAUNDERING LAW MAY MAKE SITUATION WORSE. In an interview published in "Rossiiskaya gazeta" on 17 July, Nikolai Kovalev, the former Federal Security Service (FSB) head and current chairman of the parliamentary commission on the struggle with corruption, said that the anti-money-laundering law adopted by the Duma on 13 July on third reading might not reduce the extent of that problem, and may even have the opposite effect. That is because it creates new legal categories that people may then violate. He called for the establishment of a special institution to try to prevent violations rather than punish those who violate the law.

CORRUPTION FOUND IN KALININGRAD. Audit Chamber head Sergei Stepashin said that his agency has uncovered massive corruption in the Kaliningrad free-trade zone, reported on 14 July. In fact, Stepashin said, the zone's eight years of existence have shown that it was "free" only for corruption and greed.

MOSCOW HAS ITS OWN 'BLACKLIST' OF WESTERN BANKS INVOLVED IN MONEY LAUNDERING. Aleksandr Lebedev, the president of Moscow's National Reserve Bank and the head of the National Investment Council, has given the Unity party and the government a list of Western banks he says are "helping" promote capital flight from Russia, "Vremya novostei" reported on 13 July. He said that at present Western banks are holding approximately $90 billion in Russian money. A former Russian foreign intelligence officer, Lebedev said he is not in a position to publish this "blacklist" but hopes that the government will make it public.

FORMER FAPSI HEAD CLEARED OF CORRUPTION CHARGES. A Moscow court has cleared the former head of the federal communications agency FAPSI, Major General Valeriy Monastyretskiy, of corruption charges, "Vremya novostei" reported on 20 July. Monastyretskiy was accused of massive embezzlement and misuse of office during his service at FAPSI in 1994-95, but the court found insufficient evidence of embezzlement and said that the statute of limitations meant that he could not be convicted of misuse of office.

FSB ARRESTS RUSSIAN FOLLOWER OF JAPANESE CULT. A spokesman for the FSB office in Primorskii Krai said his agency has arrested an activist of the Japanese extremist religious sect Aum Senrike, and "Izvestiya" reported on 16 July. The FSB officer said that Aleksei Yurchuk, the man just arrested, and three other members of the group were planning to stage terrorist acts on Japanese territory in order to secure the release of the sect's leader, Seko Asahara.

DIPLOMATIC SECURITY OFFICIAL DIES MYSTERIOUSLY. Moscow police found Vladimir Vasiliev, the deputy chief of the Foreign Ministry department responsible for coded diplomatic communications, dead in his apartment, RIA-Novosti reported on 18 July. The MIG news agency said that he had succumbed to numerous knife wounds, but an Interior Ministry spokesman said this report was nonsense and that Vasiliev appeared to have died as a result of a self-inflicted knife wound while drunk.

BELARUS SENTENCES GERMAN ARRESTED BY RUSSIA FOR SPYING FOR U.S. A Belarusian military court convicted a German citizen on charges of spying for the U.S., Russian and Western news services reported on 21 July. Christopher Letz, who worked at the U.S. Marshal Center in Germany, has been sentenced to seven years in prison. He was arrested originally by the Russians. "Kommersant-Daily" reported the same day that Lukashenka appears to be trying to use this case to put pressure on the West to stop what he calls its intervention in the Belarusian elections.

EURONEWS TO BEGIN LIVE BROADCASTING TO RUSSIA. Putin announced at his Kremlin press conference that the government's State Television and Radio Broadcasting Company (VGTRK) will feed programming from EuroNews, a major European media company, beginning in September, reported on 18 July. Putin suggested that the broadcasts will represent "a step forward in Russia's efforts to integrate itself into Europe and the international information space."

TV REPORTERS ROUTINELY BRIBED TO SLANT STORIES. According to "Kommersant-Daily," No. 27, business firms and others can get almost any story they want on Russian television by resorting to a bribe of $1,500-2,000. In the past, the weekly said, RTR had the reputation of being the most corrupt station in this regard, but now TV-6 and TV-Center have that reputation. Meanwhile, journalists in Rostov-na-Donu have issued an appeal to their colleagues across the country to live up to the highest journalistic standards so that reporters will not all be considered corrupt, "Nezavisimaya gazeta" reported on 18 July.