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Security Watch: October 2, 2000


2 October 2000, Volume 1, Number 11

KREMLIN POLICY

PUTIN SAYS ARMY MUST REFLECT COUNTRY'S ECONOMIC ABILITIES. Russian President Vladimir Putin told the Russian Security Council on 27 September that the Russian army must be reduced in size in order to correspond to the country's economic possibilities. In addition, he insisted that the strategic rocket forces must be incorporated into the air force as proposed by General Staff chief Anatoly Kvashnin. And he said that he would not support increasing allocations for defense in the 2001 budget. Meanwhile, Security Council Secretary Sergei Ivanov said that the government should "thoroughly scrutinize" the 35 percent of that budget now allocated for defense, security, and law enforcement, ORT television reported on 27 September.

PUTIN FURTHER LIMITS ACCESS TO GOVERNMENT INFORMATION. RIA-Novosti reported on 27 September that President Vladimir Putin has added to the list of officials who have the right to classify information in their areas of responsibility. Among those gaining that right and thus potentially having the ability to limit public access to information in their areas are Industry, Science and Technology Minister Aleksandr Dundukov, Agriculture Minister Aleksei Gordeyev, Trade and Development Minister German Gref, Energy Minister Aleksandr Gavrin, Russian Land Registration Agency head Sergei Sai, and Conventional Weapons Agency head Aleksandr Nozdrachev.


FOREIGN POLICY

WEST SEEN MISREADING MILOSEVIC DEFEAT. Gazeta.ru suggested on 27 September that Western governments are deceiving themselves about what is taking place in Yugoslavia. While President Slobodan Milosevic has lost the presidential race, his ruling Socialist Party-United Left coalition has done quite well in the parliamentary elections. Such a development could put Milosevic in line to become the next Yugoslav prime minister. Because the Yugoslav Constitution formally gives the prime minister enormous powers relative to the president, such a development could allow Milosevic to continue to dominate the situation -- even though when he was president, Milosevic reduced the prime minister to the status of his puppet, the Russian Internet site said.

MOSCOW STEPPING UP DRIVE TO END SANCTIONS AGAINST IRAQ. The Russian Foreign Ministry on 20 September rejected Western suggestions that a Russian flight to Baghdad violated the sanctions regime. The ministry defended what it called the humanitarian Russian flights on 19 and 21 September, one of which was chartered by Gazprom board member Arnholt Bekker, which seeks to cooperate with Iraqi oil enterprises. On the latter day, "Nezavisimaya gazeta" pointed out that the Russian government and Russian companies are united in seeking to lift the sanctions regime, which reduce Russian profits from high oil prices and thus work against Russian national interests.

RUSSIA, ARMENIA BUILD BRIDGES. Armenian President Robert Kocharian signed a "declaration on strategic partnership" with his Russian counterpart Vladimir Putin on 25 September. Moreover, the two agreed to expand transportation links between the two countries by setting up a railroad ferry from Krasnodar through the Georgian port of Poti to Armenia. The declaration also anticipates a visa-free regime between the two countries, the first such accord since Moscow announced its plans to withdraw from the CIS visa-free area agreement (see "RFE/RL Security Watch," no. 7, 4 September 2000). Commenting upon this accord, polit.ru on 25 September said that this "strategic partnership, in combination with pragmatism, implies a different approach to the different partners."

GERMANY'S SCHROEDER TO HELP RUSSIA IN EXCHANGE FOR OIL. German Chancellor Gerhard Schroeder made a three-hour visit to Moscow on 25 September to seek Russian help in supplying Germany with more oil, "Izvestiya" reported the following day. In return for Russian help in this area, Schroeder promised President Vladimir Putin that Germany would help integrate Russia with Western institutions like the European Union and NATO.


MASS MEDIA AND COMMUNICATIONS

KREMLIN MOVES TO CONTROL REGIONAL TV. President Vladimir Putin has signed a decree directing that Moscow rather than local governors will appoint the chief administrators of the territorial network of the second national TV channel, RIA-Novosti reported on 28 September. In releasing the decree, Putin said that this measure will help during the upcoming regional elections, adding that he has asked his envoys in the seven super-districts to "help the population to obtain objective information about candidates." The Moscow newspaper "Novaya gazeta" concluded the same day that this measure means that the presidential administration rather than the electorate will choose governors.

PUTIN'S IMAGE-MAKER ISSUES INFORMATION POLICY MANIFESTO. Gleb Pavlovsky, Vladimir Putin's chief aide on media questions, has published a manifesto on the media on his new website, strana.ru (see "RFE/RL Security Watch," no. 10, 25 September 2000). In it, he says that press freedom, often viewed as a major achievement of Russian reform, has become a tool for the degradation and destruction of society. He blames oligarchs like Vladimir Gusinsky and Boris Berezovsky for this situation, saying that recent moves against them have limited the danger they represent but have not precluded the possible "takeover of their holdings" by foreigners with their own political agendas. And finally, Pavlovsky says that the Russian government plans to rebuild the information environment there from the top down. He suggests that Moscow will split and downsize information conglomerates, feature state takeovers of media outlets, grant television and radio channels to the Russian Orthodox Church and other recognized confessions, and restore the right of communist and nationalist forces to "normal information activity."

ACTIVE MEASURES AGAINST MASS MEDIA. The Russian Presidential Administration has created the special rapid reaction group to carry out so-called "active measures" against the press most critical of Vladimir Putin, "Segodnya" reported on 21 September. "Active measures," of course, is KGB slang for various techniques of compromising political opponents. The new group is headed by political scientist Simon Kordonsky, with compromising materials on media operatives to be supplied by the country's intelligence services.


CORRUPTION AND MONEY LAUNDERING

A PRIVATIZED RUSSIAN NUCLEAR INDUSTRY? Atomic Energy Minister Yevgeny Adamov, reputed to be a close ally of oligarch Boris Berezovsky, has launched a program to partially privatize Russia's nuclear industry, "Rossiya" reported on 25 September. Also involved are his business partners Roman Abramovich and Aleksandr Mamut. The three have sought to gain control of Konversbank, the only Russian bank which works with nuclear enterprises. They have dispatched managers from the MDM Bank, which is already controlled by Mamut and Abramovich, and the three have begun to lobby the new chairman of Konversbank, Andrei Melchenko, who also serves as MDM Bank president.

KUDRIN SEEKS MORE CONTROL OVER RUSSIAN OFF-SHORE COMPANIES. Russian Vice Prime Minister Aleksei Kudrin told the IMF in Prague on 25 September that his government seeks to expand its regulatory control over Russian off-shore companies. Kudrin said that he and his colleagues are pressing the Duma to ratify the international money-laundering convention to help speed this process. And Kudrin said that the Russian government will also seek to become more transparent to international auditors. One step that will be necessary is the passage of a Russian law defining corruption; as of now, no such legislation exists.

ZYUGANOV COMPLAINS TO PUTIN ON CAPITAL FLIGHT. Communist party leader Gennady Zyuganov said on 25 September that he had turned over to the Russian president information his party has gathered about rising corruption in the defense, nuclear, and forestry industries, kprf.ru reported. He said that according to the information in his possession, the rate of capital flight has grown from $500 million a month under Prime Minister Yevgeny Primakov to $2.3 billion a month now. In other comments, Zyuganov indicated that he and his allies reject the economic program of the current government but hoped to continue to meet on a regular basis with Putin.

SWISS PROSECUTORS TO CONTINUE INVESTIGATION. A Geneva court on 25 September removed the block on the assets of the Mercata trading company even though investigations into its activities are continuing. At the same time, the court directed the procuracy to return documents confiscated from company Director Viktor Stolpovskikh. Meanwhile, the former chief of the Russian presidential property office, Pavel Borodin, whose case was also suspended by the Geneva Court told "Tribune de Geneve" on the same day that the Swiss prosecutors simply "have prejudices against rich Russians and would like to make money on them." But one investigator, Daniel Devaud, announced that he would issue a new warrant for the seizure of Mercata assets.

STOLPOVSKIKH PORTRAYS HIMSELF AS 'PATRIOT.' In a lengthy interview to "Zavtra," no. 38, Mercata Trading Company head Victor Stolpovskikh said he is being investigated by the Swiss because he is "a Russian patriot." He said that his enterprise had resuscitated the Kremlin as "the symbol of Russia but not for the use of Boris Yeltsin." He further asserted that Swiss prosecutor Daniel Debaud was irritated by his role, together with painter Ilya Glazunov, and Property Office chief Pavel Borodin. He said that the $60 million that the Swiss have described as bribes were simply legal royalties to his subcontractors. And he charged that the entire case against him had been started by Carla del Ponte who has "publicly embraced Vladimir Gusinsky."

CRIME EXPANDING INTO FINANCIAL SECTOR. The Interior Ministry's investigative committee has concluded that organized crime has increased its activity in the credit and financial spheres, RBK business news agency reported on 29 September. According to the ministry, such crime typically takes the form of stealing funds via the signing of fraudulent loan contracts and taking assets from accounts by means of falsified documents. The committee's deputy chairman, Mikhail Zotov, told "Izvestiya" on 29 September that his agency has been investigating the theft of Gazprom funds by criminals who broke into the computer files of a Gazprom bank and transferred some 62 million rubles ($2.2 million) to their accounts.


LAW ENFORCEMENT

TAX POLICE WOULD LIKE TO BE STATE'S FINANCIAL GUARD. The chief of the Main Operative Directorate of the Federal Service of the Tax Police (FSNP), Kuzma Shalenkov, the chief of the main operational directorate of the Federal Tax Police (FSNP), told "Vremya novosti" on 22 September that he wants to raise the status of his group and convert it into a "financial police" for the entire country. His proposal calls for giving the FSNP jurisdiction over some 50 kinds of economic crimes. At present, the FSNPO has many of the same powers as the FSB. During one recent investigation, the FSNP probed the legality of currency transactions in Spain by a group of 298 Muscovites.

COUNTING THE DRUG THREAT FROM THE SOUTH. According to the e-monthly of the Russian Special Anti-Terror Force (its publication is available at http://www.alphagroup.ru/specnaz/). Most of the drugs enter Russia from Afghanistan via Tajikistan and now represent an annual market of $7 billion. The e-monthly denounced Dushanbe for failing to take the necessary actions and it questions whether the Russian troops stationed there are capable of countering this threat.


SECRET SERVICES

MORE CIVILIZED EAVESDROPPING. The Russian Supreme Court declared unconstitutional a directive of the Communications Ministry that allowed the FSB to eavesdrop on the customers of telecommunication companies without informing them or applying for authorization from the procuracy (see "RFE/RL Security Watch," no. 6, 28 August 2000). The court has decided that the operator company must be informed about those of its customers who are under secret surveillance. Both the Communications Ministry and the FSB opposed even this cosmetic change, arguing that the operators may then sell this information to criminals. For ordinary citizens, however, the court's action changes very little: Even if a Russian suspects that he is being eavesdropped by the FSB, he cannot prove it because the operator company is bound by confidentiality regulations with the FSB from telling him.

A RUSSIAN-AMERICAN SWAP? The Russian procuracy's public information service issued a press release on 27 September saying that prosecutors have now turned over the case of accused American spy Edmund Pope to the courts. Up to now, Moscow has ignored U.S. demands for his release on bail (see "RFE/RL Security Watch," no. 10, 25 September 2000). And an unnamed FSB officer told RIA-Novosti on 27 September that the Russian government was not planning to swap him for convicted Russian spy Aldrich Ames, as some rumors had said. "The damage Ames caused to the U.S. is incomparable with what Pope did to Russia," the officer said. But he did not exclude that after Pope is convicted, he might be exchanged for George Trofimoff, a retired U.S. officer who spied for the USSR and the Russian Federation.

CHUBAIS AS THE ETERNAL SCAPEGOAT. Security Council secretary Sergei Ivanov and Presidential Administration chief Aleksandr Voloshin, "Argumenty I fakty" reported on 26 September, believe that the latest confrontation with Media-MOST and the public embarrassment of Information Minister Mikhail Lesin, is part of a provocation designed by Gazprom-Media chief Alfred Kokh and his old patron, Anatoly Chubais. The two of them, the weekly said, have tried to convince Russian President Vladimir Putin that the entire affair has been directed against him and Prime Minister Mikhail Kasyanov.

'KURSK' SPECULATION CONTINUES. Igor Mikhailtsev, the chief designer of the Russian bathysphere "Mir" told "Obshchaya gazeta" on 28 September that he is convinced the "Kursk" was rammed by an unmanned robotic device weighing 8,000 tons. He said the robot had a self-destruct mechanism which operated after the crash. Meanwhile, however, Pyotor Mesnyakin, the chief designer of navy weaponry at the medium machine building ministry, told "Zavtra," no. 39, that he is convinced that a torpedo explosion is the only credible explanation for what happened. Mesnyakin, who took part in the design of the torpedoes onboard the "Kursk," dismissed other suggestions as violations of common sense.

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