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Russia Report: June 20, 2007

Glimpsing The Future Through Rose-Colored Glasses

By Victor Yasmann

Back to the future: Putin and Ivanov hope to restore Soviet-era dominance in key technology sectors

June 20, 2007 (RFE/RL) -- The St. Petersburg International Economic Forum was launched in 1997 in an attempt to lure foreign investment. It was a largely lackluster affair, however, until 2006, when the Kremlin decided to raise its status to serve as a kind of Russian spin-off of the Davos World Economic Forum. The goal was to convert Russia's mounting market attractions into much-needed political capital the Kremlin could use to reverse its deteriorating image in the West.

This year, responsibility for the June forum was handed to Economic Development and Trade Minister German Gref. Gref did his job well, bringing in hundreds of global CEOs, bankers, and trade officials including World Trade Organization head Pascal Lamy, EU Trade Commissioner Peter Mandelson, and Davos founder Klaus Schwab.

Russian President Vladimir Putin, fresh from the G8 summit in Heiligendamm, Germany, was an active participant in this year's economic forum. But the spotlight, to some degree, was focused on someone else -- Sergei Ivanov, a first deputy prime minister and a potential Putin successor in March 2008.

Sparkling Debut

Ivanov's introduction to the world's business elite was professional, effective, and efficient -- surpassing even that of his likely presidential rival, Dmitry Medvedev, at Davos in January. Presenting Ivanov, Gref said Russia was entering a "new political cycle." Ivanov took up his cue from there, delivering a forward-looking address laying out Russia's developmental course through the year 2020. Ivanov tried to sound both liberal and presidential, beginning his speech with a promise that Russia 15 years hence will be a democratic state "based on the rule of law and respecting the rights of the individual."

Ivanov also made a discreet swipe against U.S. President George W. Bush, who in a June 6 speech in Prague said "[Russian] reforms that were once promised to empower citizens have been derailed, with troubling implications for democratic development." In evident response, Ivanov said "there are many roads to the same goal," and that Russia's road would not necessarily be the same as that of Western democracies.

Ivanov went on to say that Russia would be among the world's five leading economies by 2020. Living standards, he went on, would come closer to those of highly developed countries, with a GNP of $30,000 per capita, as opposed to less than $12,000 in 2005. Moreover, he said, the country would pursue dominance in five critical industries -- nuclear energy, civil and military aviation, space, specialized shipbuilding, and nanotechnology. (Speaking after the forum, Ivanov said nanotechnology will contribute as much to the Russian economy as the nuclear and space industries combined did during the Soviet era.)

The first deputy prime minister acknowledged formidable challenges in meeting those goals, among them corruption, poor infrastructure, and drunkenness. But with time and careful management, Ivanov projected, Russia will be responsible for at least 10 percent of the world production in its hi-tech sectors, and will become a major force in aircraft manufacturing.

Ivanov acknowledged that in order for this scenario to materialize, the government would need to create major state holdings. But he strenuously denied this would translate into renationalization of key economic sectors. The state, he said, would buy out assets from private businesses "at market price and without confiscation."

Potential For Change

The mood among audience members was cautiously optimistic. James Wolfenson, the former World Bank president and top Citigroup executive, said Russia's growth rate would bring it closer to Asian Pacific countries than to Europe. He also cited human capital as one of Russia's greatest strengths, noting that the country's higher-learning institutions graduate over 1.2 million students a year.

John Lipsky, first deputy managing director at the International Monetary Fund, gave gentle praise as well, describing Russia's resources and well-educated population as "enviable." "With the right economic policies in place," he said, "the economic outlook will be exceptional."

Yegor Gaidar, the former Russian prime minister and a frequent critic of the Kremlin's current economic policy, himself predicted sustained growth in the Russian economic in the midterm. He told forum participants that Russia's economy will remain stable until 2010. He added, however, that the main challenge of the Russian economy -- its dependence on the world energy market -- remains unchanged. Some 84 percent of the Russian budget, he said, comes from the energy sector. Also, in distinct contrast to Ivanov, Gaidar spoke against the consolidation of state assets into superholdings, saying the state continues to own too much property. Gaidar said Russia's mounting demographic woes would present a further obstacle to the country's economic reforms.

With signed contracts reaching a record total of $13.5 billion, many Russian and foreign analysts view this year's forum as a success. Foreign investment for the first five months of 2007 reached $60 billion, a figure comparable with investment rates in China and higher than at any other point in Russia's post-Soviet history. (It's rumored that at least some of this investment is the funds of Russian oligarchs returning their capital home, fearful that rising tensions with the West will put their finances under unwelcome scrutiny abroad.)

Superstate In The Making?

In addition to being an economic success for Russia, the forum was also a political success for Ivanov, who in the eyes of the Russian elite now holds a clear lead over Medvedev. This conclusion was confirmed by a number of Russian pollsters and pundits, including Vitaly Tretyakov, editor in chief of the pro-Kremlin "Moskovskiye Novosti," who wrote that he personally could now go on vacation and put his political musings aside. Ivanov, he predicted, would be Russia's next president, Medvedev his prime minister, and a still-powerful Putin secretary of an upgraded Russian Security Council.

Not everyone in Russia, however, is pleased by the prospect of another KGB veteran serving as their next president. Combined with Ivanov's vision of a muscular hi-tech destiny, some may see Russia's future in the terms first described by fiction writer Maksim Kalashnikov in his 2003 book, "Forward To USSR-2", which envisions an unrealized plan for Soviet reform attributed to then-KGB head Yury Andropov.

"In 1980, the United States had a nightmare in which it saw the transformation of the USSR, a country with a clumsy socialist economy, into a smart, aggressive, and strong-willed 'Red Star' supercorporation," Kalashnikov wrote.

Is Sergei Ivanov the man who will finally make this vision a reality?

Nemtsov Urges Opposition To Back Single Candidate

Boris Nemtsov speaking with RFE/RL in Prague today

PRAGUE, June 11, 2007 (RFE/RL) -- Boris Nemtsov is a member of the Political Council of the Union of Rightist Forces and a co-chairman of the Committee-2008 opposition umbrella group. Nemtsov, who served as first deputy prime minister in 1997-98, spoke with RFE/RL correspondent Brian Whitmore about the upcoming parliamentary and presidential elections in Russia and his view of what strategy the opposition should adopt.

RFE/RL: If public-opinion polls are reliable, a major percentage of the population supports President Vladimir Putin. What developments are necessary for the democratic opposition to achieve any kind of success?

Boris Nemtsov: Putin has 75-80 percent popular support. Under these conditions, the opposition's only chance is if it advances a common presidential candidate. I am a strong advocate for this strategy. They must not choose separate candidates independently, even on the level of the Other Russia.

A boycott won't be noticed; it won't help to ensure the legitimacy of the elected government; and it will only weaken the opposition. So it's not a good strategy to boycott any kinds of elections, whether parliamentary or presidential.

As you can see, they've got [former Prime Minister Mikhail] Kasyanov, [Yabloko St. Petersburg head] Sergei Gulyayev, [former Central Bank head Viktor] Gerashchenko, and also [Yabloko leader Grigory] Yavlinsky. Maybe the Union of Rightist Forces will promote someone else. The result would be an absolute travesty of common sense, on citizens and on our supporters.

So my suggestion is essentially that all potential presidential candidates sign a memorandum that at the final stage of the preelection campaigns, one candidate will emerge. This will be the most popular candidate, and the others will be obligated to support him by pooling all the resources available to them, for instance, organizations, structures, and so forth. If this happens, in the case of the fragmentation of the bureaucratic elite -- and it is obviously fragmented, some are for [First Deputy Prime Minister Sergei] Ivanov, others are for [First Deputy Prime Minister Dmitry] Medvedev -- then there is really a chance for the opposition to reach the second stage of the electoral process.

That is the situation as I see it. Putin is popular, but his appointed successors aren't. If Putin were in the running, nobody else would have a chance. But since only his chosen successors are running, the opposition has a window of opportunity. But the opportunity is finite. If there's more than one candidate, then just forget it -- nobody's got a chance. It's a shame, political infantilism, and it means that the opposition is good for nothing.

RFE/RL: How do you determine which candidate is the most popular? Do you have primaries, like in the U.S. system?

Nemtsov: We can't have primaries because Putin will arrange it so that there are none, that's obvious. The only thing we can do is conduct a survey, since he can't outlaw those. For example, a survey of 50,000 people, or just residents of large cities: Moscow, St. Petersburg, Yekaterinburg, Novosibirsk, Nizhniy Novgorod. The survey must be conducted by an independent agency that everyone trusts. Also, the census must be jointly financed. Each candidate must give the same amount of money to the organization conducting the survey, so that no one can say that the agency is working for the benefit of its biggest benefactor. Primaries, I think, are virtually impossible. Primaries are speeches in front of large auditoriums. What auditoriums have we got? We have doors nailed shut, broken-down chandeliers, psychopaths walking around. So unfortunately we can only dismiss the idea of a primary, and it becomes essential for us to pick the most popular and thus the last remaining candidate.

RFE/RL: Certain people in the Russian opposition say the electoral system is so corrupt and under the control of the Kremlin that it is impossible to win elections and that it would be more useful to not participate in them and instead to apply one's efforts to civil society, as in Belarus. Do you agree?

Nemtsov: We can learn from Belarus's sad experience. When in 2000 they boycotted elections, what good came out of it? Did [Belarusian President Alyaksandr] Lukashenka become better? Unfortunately, a boycott is ineffective because elections will happen anyway. There will be several candidates -- [Liberal Democratic Party of Russia leader Vladimir ] Zhirinovsky, [Communist Party leader Gennady] Zyuganov, and so forth. In the eyes of the people, they will be typical elections regardless.

A boycott can only be organized when one candidate remains. But they will definitely make sure that there are several candidates, so a boycott is a dumb idea. It can be supported emotionally and there could even be legitimate political reasons for it, for example repressive electoral legislation. A candidate could be removed; signatures could be unregistered; election results could be rigged. But a boycott won't be noticed; it won't help to ensure the legitimacy of the elected government; and it will only weaken the opposition. So it's not a good strategy to boycott any kinds of elections, whether parliamentary or presidential. I think it would be total foolishness to boycott parliamentary elections and participate in presidential ones. If you're boycotting, you may as well boycott everything. If you're participating, participate in everything. Otherwise you appear wishy-washy. For example, if the Other Russia doesn't participate in parliamentary elections, they can't participate, but boycotting them would be foolish. It's much more sensible to publicly support a specific political campaign.

People with a Chekist history cannot believe in freedom. They hate criticism; they don't consider the triumph of justice a main priority. So for me, the dilemma of whether [Putin] should be supported then or later never existed. I never supported him.

RFE/RL: In a recent interview with RFE/RL, Garry Kasparov said that one of the best opportunities for the opposition would be to work with certain sections of the elite. Do you agree?

Nemtsov: It looks like I'm a more dogged person. I think that under no circumstances should one collaborate with Ivanov. He led our army to total ruin, limitless corruption, and banditism. He is an advocate for a kind of corporate, Chekist capitalism. So why should we collaborate? I don't view him as a potential colleague.

Also, I think that there is a clan, a fraternity that people don't leave so easily, even if they are alienated. Another place is always found for them. For example, [Aleksandr] Veshnyakov. He was fired from the [Central] Election Commission, but he didn't run to a different party. He's waiting for Putin to appoint him somewhere else. I think that even if one of these candidates loses, he'll be put somewhere else. Do you really think he'll be abandoned? He won't go and collaborate with anyone else, that's clear as day. It's a kind of mythical picture.


In any case, from Putin's point of view, the ideal alternative is to put two endorsed successors into the elections. Let them both run. Look, what's important for Putin? He wants a loyal president and a weak one. He already picked two of these -- Ivanov and Medvedev. They satisfy both these criteria. They'll both run and advance to the second stage.

A whole campaign is planned -- [Central Election Commission Chairman Vladimir] Churov is appointed, whose only guiding principle is that Putin is always right. These two candidates will advance to the second stage, both loyal and weak, and these will compete. But in any case, everything depends on Putin. He won't be a lame duck; he'll continue to exert influence; his will be the decisive voice; he'll remain president until the very end. Whoever supports them is in his debt, which is good for him. And whoever loses will also be found a place. Maybe he'll be appointed prime minister. Why would there be a schism within this Chekist, St. Petersburg fraternity? There won't be any schism.

RFE/RL: So it's impossible to collaborate with Ivanov, but what about Medvedev?

Nemtsov: Medvedev differs from this whole gang in that he never served in the KGB or FSB [Federal Security Service]. I think that this is, of course, his surprising and fantastic advantage over the others. The question with Medvedev is different: Is he capable of governing such a huge country? Is he prepared to govern the country? Not to move along PR projects, in which publicity trumps actual business, but is he actually skilled enough? Does he have enough charisma, force of will, energy, even experience to do this, or not? This is a very big question. Of course, when forced to choose between these two people, many liberal-minded individuals prefer Medvedev, that's true. But is he fit to be president? Therein lies the question.

RFE/RL: One of the problems of Russian politics is the absence of a reliable system of democratic presidential succession. During presidential transitions, everyone panics. The elite fights it out and chooses a candidate and elections merely become coronations. Why is this the case, and what must be done to establish a legitimate system of succession?

Nemtsov: In Russian history, there was one instance of elections without dynastic succession. That was the presidential election of 1991. These were honest elections. They ended well. But then everything returned to its usual state of affairs, and I think that it is important to consider the long history of autocracy.

Dynastic succession is in the nation's blood. The Romanov dynasty lasted for 300 years. Then there were bequeathed successions among the communists, that is, Lenin, Stalin, Khrushchev, and the rest. This is all genetically saturated, next to [one's] mother's milk. To just knock it out of people's heads, that there should be honest elections, that someone has to win the popular vote, it's a difficult task.

Putin put an end to this tradition entirely. When people started to get accustomed to democracy, when there were gubernatorial elections and bequeathed succession was practically nonexistent -- mayoral elections and elections of federal-level deputies also didn't have bequeathed succession. Russia was basically headed in the right direction in the 1990s. It was a difficult journey, a painful one, but it was correct. Putin put an end to it and autocracy was restored. Some call it white autocracy, others Chekist autocracy, but it's autocracy.

On the one hand, there was a historical precedent. On the other hand, he interrupted healthy development in the right direction. This was his huge mistake, and many people can't forgive him for it. You see, democracy is a new phenomenon for Russia. That sounds absurd, but it's true. To engrain something new, there needs to be will. Putin had no will whatsoever when it came to this issue. He thought, for 100 years there was a dynasty, so now there'll be a Chekist dynasty. That's all there is to it.

But in order for there to be democracy in Russia, the chief himself has to believe in it. Does Putin believe in it? Of course not. [Former President Boris] Yeltsin did, and for a time that was how it was. But even Yeltsin, a democrat, finally appointed a successor. Even Yeltsin. So what can we expect from Putin? He's not Yeltsin.

RFE/RL: Your party supported Putin in 1999. It wasn't clear then that this is how things would turn out. What happened?

Nemtsov: You know, there are really two Putins. There is an early Putin who lowered taxes, gave people land, supported America on September 11[, 2001], first expressed his sympathies to President [George W.] Bush, and everything was somehow very touching.

And then there is the later Putin. He took office on October 25, 2003, when he imprisoned [jailed oil tycoon Mikhail] Khodorkovsky. This is a man who treats everyone as an enemy. This is a man who completely destroyed the opposition, and so forth. The earlier Putin was steeped in paradox. He continued progressive reforms in the economic sphere, but politically he started pulling strings. First slowly, then faster and faster.

But it was clear to me from the very beginning that he should not be supported because of his background. People with a Chekist history cannot believe in freedom. They hate criticism; they don't consider the triumph of justice a main priority. They're used to living by notions. So for me, the dilemma of whether he should be supported then or later never existed. I never supported him.

Political Crisis 'Inevitable'
Former world chess champion and Russian opposition leader Garry Kasparov spoke with RFE/RL on June 5. more
Former Prime Minister Predicts Political Crisis
Former Prime Minister Mikhail Kasyanov told RFE/RL in July 2006 that it is essential that Russians stand up and refuse to be silenced. more

Tehran Says It Has Kremlin Assurance It Won't Share Radar With U.S.

Qabala radar station

June 18, 2007 (RFE/RL) -- The Iranian Foreign Ministry says it has received assurances that Moscow willl not let the United States share a Russian radar facility in Azerbaijan as part of a missile shield against Iran -- despite an offer by President Vladimir Putin to U.S. President George W. Bush to do exactly that.

The ministry says Russia has no intention of allowing the Americans to use the radar base. Was Putin bluffing when he made the offer to the United States?

Surprise Announcement

Iranian Foreign Ministry spokesman Mohammad Ali Hosseini's comments came as a surprise to journalists attending the June 17 news conference in Tehran.

It raises the possibility that the Russian offer was bogus and that Putin was merely maneuvering to occupy the high ground in the dispute over the antimissile system.

Hosseini said that Russian officials have privately assured Iran that the Kremlin will not let the United States use a radar base at Qabala (Gabala), Azerbaijan, as part of an antimissile system which the Americans are planning to place in Central Europe.

This assertion -- if true -- runs directly counter to an offer made publicly by Putin to Bush at the G8 summit in Germany earlier this month.

Putin said that instead of developing an entirely new radar station in the Czech Republic, the United States could use the powerful Russian facility at Qabala.

The radar is meant to be part of a U.S. antimissile shield designed to intercept Iranian or North Korean missiles fired at Europe or the United States. However, Moscow has strongly objected to the Czech base, saying it would be able also to track Russian missiles.

The Putin offer of a joint base would enable the United States to watch Iran, while Russian personnel at the site could ensure that they did not also monitor Russian missile activity.

Is Putin's Offer Serious...

But senior Iran analyst Peter Lehr says he doesn't believe Putin's offer was serious. Lehr, of the Iranian Studies Department of St. Andrews University in Scotland, points out the complication of having non-NATO personnel responsible for the security of NATO countries.

"Imagine this station is in Azerbaijan, with Azerbaijani and Russian crew operating there, together with Americans," he said. "Well, that's an organizational nightmare."

American officials have already downplayed the offer on security grounds and indicated that Washington will proceed with plans to build the Czech facility.

U.S. Defense Secretary Robert Gates, speaking at a NATO news conference in Brussels after meeting Russian Defense Minister Anatoly Serdyukov, made that clear.

"I was very explicit in the meeting that we saw the Azeri radar as an additional capability, and that we intend to proceed with the radar, the X-band radar, in the Czech Republic," he said.

...Or A Hoax?

Russia is not confirming the Iranian version of events. But it raises the possibility that the Russian offer was bogus and that Putin was merely maneuvering to occupy the high ground in the dispute over the antimissile system.

Anticipating a U.S. rejection of his offer, Putin could say that Russia had gone out of its way to offer a solution but that Washington had not been willing to accept it.

Vafa Quluzade, a former national security adviser in Azerbaijan, told RFE/RL's Azerbaijani Service on June 7 that he felt Russia was perpetrating a hoax.

"Putin proposed it to the United States knowing that the United States is not interested in establishing [those] kinds of radar systems in Azerbaijan," he said.

Iran does not currently have a missile capable of reaching the United States. Some experts believe it's longest range missile, the Shahab-3, can travel about 1,300 kilometers and could reach some parts of Eastern and Southern Europe as well as southern Russia.

Moscow 'Unhappy' With Outcome Of CFE Conference

By Jean-Christophe Peuch

Anatoly Antonov, head of the Russian delegation at the meeting

VIENNA, June 15, 2007 (RFE/RL) -- An extraordinary conference of the 30 state parties to the 1990 Conventional Forces in Europe (CFE) Treaty ended today in Vienna with participants failing to agree on a final joint statement.

The four-day emergency meeting was requested by Russia, which cited "exceptional circumstances" stemming from NATO enlargement and what it described as the alliance's "foot-dragging" on ratification of an adapted version of the treaty that was signed in 1999.

Addressing reporters at the close of the closed-door Vienna meeting, Russian delegates said they were "unhappy" with its outcome.

"We were hoping our partners would hold more constructive views," said Russia's chief negotiator Anatoly Antonov.

"It was clear that the position of Russia and the West would clash even before the Vienna forum began," Russia's "Kommersant" daily commented on June 14, two days into the conference that followed unsuccessful consultations within the framework of the Russia-NATO Joint Permanent Council earlier this year.

Freeze Threat

The emergency talks took place a few weeks after Russian President Vladimir Putin threatened that Russia would freeze its commitments under the landmark Cold War-era disarmament treaty unless NATO countries hasten the ratification of its adapted version.

In his state-of-the-nation address to the Federal Assembly on April 26, Putin complained that Russia is one of the very few countries -- with Kazakhstan, Belarus, and Ukraine -- that have formally approved the 1999 Adapted CFE Treaty to date. He accused NATO members of dragging their feet with its ratification with a view to gaining "unilateral" strategic advantages over Moscow.

He added that unless the alliance "begins effectively contributing to the arms reduction process in Europe," Russia would no longer feel any obligations with regard to the CFE Treaty.

The United States and other NATO countries have said that they will not ratify the 1999 Adapted CFE Treaty until Moscow withdraws all its troops, military equipment, and ammunition stockpiles from Georgia and Moldova's Russian-speaking separatist region of Trandsniester.

Under commitments made in 1999 in Istanbul, Russia agreed to vacate its military facilities from those two countries within specific deadlines that were renegotiated after it missed them.

Daniel Fried, the U.S. assistant secretary of state for Eurasian and European affairs who led the U.S. delegation at the start of the Vienna talks, acknowledged Moscow's "considerable progress" in pulling its troops from Georgia. But he deplored the continued presence of Russian military forces in Transdniester.

Another problem is posed by Russia's refusal to let international observers inspect the Abkhaz-based military facility it officially vacated in 2001.

Moscow claims it has met all its obligations toward Georgia and Moldova under the CFE Treaty and that all pending issues should be discussed within the framework of bilateral talks. In particular, it says troops stationed in Transdniester are peacekeeping forces that are not covered by the CFE Treaty regime.

Proposed Bases

Another bone of contention are U.S. plans to set up military bases in Bulgaria and Romania -- two former Soviet allies that joined NATO in 2004.

Moscow believes the bases may serve for the additional permanent stationing of "substantial combat forces" in Central Europe, something it says is banned under the 1997 NATO-Russia Founding Act. The United States has said that those facilities will be joint training grounds where there will be only few, or no permanently stationed U.S. forces at all.

Russian military hardware leaving Moldova (TASS)

Finally -- and more importantly -- Russia complains of what it says are the "humiliating and discriminatory" dispositions of the adapted CFE Treaty that allegedly forbid it to freely move troops and military equipment on its territory.

At stake are the so-called flanking arrangements that were agreed upon in 1999 to prevent countries from concentrating all their treaty-limited equipment in one single area.

Addressing reporters the day before the Vienna conference opened, Russian delegation head Antonov said Moscow's objective was to have the adapted CFE Treaty ratified by all its signatories so that new negotiations on the flank limitations could start as soon as possible.

In other words, he said Moscow was seeking "an adaptation of the adapted CFE Treaty."

Russian Proposals

In the course of the conference, Antonov and his team circulated a package of six proposals that should have served as a basis for a final joint statement.

The proposals include the abolition of the flank arrangements for Russia; the entering into force of the adapted CFE treaty no later than July 1, 2008; and the lowering of treaty limits for NATO "to compensate for the military potential acquired by the alliance as a result of its two waves of enlargement."

Russia is also demanding that the CFE regime be extended to NATO members Estonia, Latvia, and Lithuania -- which were still under Soviet occupation in 1990.

Finally, it is suggesting that state parties agree on a definition of what constitutes "substantial combat forces" and on the conditions under which new countries could join the CFE Treaty.

In Antonov's words, this plan reflects the geopolitical changes that have taken place in Europe since the disappearance of the Warsaw Pact and should be seen as "a kind of roadmap that is necessary to revive the practicability of the CFE Treaty."

Fried and other U.S. diplomats in turn say many Russian concerns -- including those related to the possible deployment of allied forces in the Baltic region -- could be resolved once the adapted CFE Treaty comes into force. That means when Moscow fully meets the Istanbul commitments. They also say Washington recently proposed that an international peacekeeping force that would include Russian troops be deployed in Trandsniester.

NATO Concerns

But they also make it clear that NATO allies will not compromise on issues that could endanger the CFE Treaty, which they describe as "a cornerstone of European security" that helped decommission some 60,000 tanks, armored vehicles, artillery, combat aircraft, and attack helicopters since it came into force 15 years ago. They also say alliance members are committed to preserving the existing flank agreements.

The ball is now in Putin's court.

Antonov said his delegation would report on the outcome of the conference to the Russian president, "who will in turn make the appropriate decisions."

At the same time, he said he did not see the failure of the conference as "the end of the story" and insisted that Moscow is ready to continue dialogue with NATO.

Speaking to reporters before leaving Vienna, Fried on June 12 said nothing in the Russians' approach precluded the possibility of "working together."

Yet, he added: "That doesn't mean it will happen."

"Kommersant" believes the proposals made by Russia amount to an "ultimatum." "Either the West accepts them, or Moscow will first stop implementing the CFE Treaty and then will withdraw from it," the daily wrote on June 14.

Russian delegates at the Vienna talks have said in case Russia would declare a moratorium it would not proceed to any military buildup that would contravene the CFE Treaty, but would simply stop communicating any information to NATO and suspend its participation to the inspection process.

There is one problem, however.

As Fried reminded this week, the CFE Treaty contains no provision for suspension.

And according to a recent NATO fact sheet, any decision to unilaterally declare a moratorium "would constitute a direct violation of the treaty."

BP-TNK, Gazprom, And The Kovytka Gas Field

By Roman Kupchinsky

A gas-production facility run by a TNK-BP subsidiary in Russia (file photo)

June 13, 2007 (RFE/RL) -- There are fears that, after almost four years of negotiations, the British-Russian joint company TNK-BP will be forced to cede control of the Kovytka gas field to Russia's state-controlled energy giant Gazprom.

Russia has said that TNK-BP is not producing enough gas from the field and is therefore not complying with production obligations. "How long should we tolerate it if participants of that consortium do nothing to meet the license obligations?" Putin asked on June 5.

The Russian president didn't mention that TNK-BP has repeatedly said that the reason it can not meet license obligations is that Gazprom has blocked a plan to build a gas pipeline to China.

Immense Potential

Gazprom officials have insisted that they are not interested in Kovytka, although the giant gas field surely must be an interesting prospect. The Kovytka gas field in Russia's Irkutsk Oblast contains proven reserves of nearly 2 trillion cubic meters of gas -- enough to supply the world's needs for one year.

In August 2003, in a $6.7 billion deal, British Petroleum joined forces with several companies -- the Renova Group, the Alfa Group, Access Industries, and Interros -- to create TNK-BP. The shares were split 50-50 between BP and their Russian partners.

The deal was heralded as a new era for Russian business. But, at the time, a few eyebrows were raised at BP's inclusion of Alfa Group.

Alfa Group had been investigated by the Russian Audit Chamber for numerous violations after it had purchased in 1997 a 40-percent stake in the privatization of the then state owned oil company TNK. Alfa Group bought TNK using a closed shareholding company it had created, Novy Holding.

Among the violations listed by the Audit Chamber at the time was that the State Property Committee failed to verify the legality of the source of funds used by Novy Holding to purchase its stake in TNK.

In December 1999, then U.S. Secretary of State Madeleine Albright refused to allow the U.S. Export-Import Bank to guarantee up to $500 million in loans to TNK needed to buy vital equipment. Albright pointed to the fact that some Western oil companies, including BP, had complained that they had been cheated by TNK.

Concerns Over TNK

In 2000, however, U.S. State Department spokesman James Foley announced that TNK was now addressing U.S. concerns and that Albright's delays "had a tonic effect on this particular situation. Moreover, in recent appearances, President-elect Putin has made clear public statements recognizing the importance of protecting investor and creditor rights."

But in the background there were signs that there were rocky times ahead for BP-TNK. BP owned the majority share in a company called Rusia Petroleum, which in turn owned the license to develop Kovytka.
In the background there were signs that there were rocky times ahead for BP-TNK.

BP was intent upon developing Kovytka and selling the gas to China. But many analysts say the plan collides with Gazprom's own plans to supply China and other Pacific Rim countries with gas. When TNK-BP applied for permission to build a pipeline to transport Kovytka gas to China, Gazprom blocked the project.

In February 2003, the Russian daily "Vedomosti" reported that Natural Resources Minister Vitaly Artyukhov had ordered proceedings to cancel a license for developing Kovykta on the grounds that the field has not been developed as promised.

That immediately raised suspicions that Gazprom was maneuvering to have BP thrown out of Kovytka.

Something For Nothing

"The Moscow Times" at the time quoted Rusia board member Sergei Aleksashenko as saying, "Gazprom doesn't have any money. But it wants to get Rusia Petroleum for nothing. It wants to use its administrative resources. One way of doing this is by orchestrating the Natural Resources Ministry check."

A Gazprom spokesman dismissed the charge as "rubbish."

But Western and Russian observers became apprehensive, fearing it signified a shift in the rules of the game.

It became evident by 2005 that TNK-BP was not the only target for Russian administrators. Shell's Sakhalin II project came under attack and, in fall 2006, the company lost control of the development to Gazprom. Last year, the development of the huge Shtokman gas field was declared off-limits to foreigners.

Russian Soldiers Sentenced For Killing Chechen Civilians

June 14, 2007 (RFE/RL) -- A military court in southern Russia has sentenced four soldiers for killing six civilians in Chechnya, RFE/RL's North Caucasus Service reported.

The case, which failed to secure convictions in two earlier civilian jury trials, is seen as a test of Moscow's willingness to acknowledge atrocities by federal troops.

The court in Rostov-na-Donu handed down sentences ranging between nine and 14 years.

The stiffest sentence went to Eduard Ulman, who was commanding the unit in January 2002, when the soldiers opened fire on a civilian vehicle and killed the survivors, including a pregnant woman.

Nikolai Gulko, a judge with the North Caucasus District Military Court, said Ulman was sentenced to serve a 14-year term at a high-security correctional facility.

Guilty, But Absent

Today's ruling is complicated by the fact that Ulman and two of the other three defendants were tried in absentia. The three men failed to turn up for a hearing in April and have not been seen since.

Major Aleksei Perelevsky, the only defendant to appear in court, received a nine-year sentence. The others received sentences of 11 and 12 years.

Prosecutors had requested terms ranging from 18 to 23 years.

Nikolai Titov, a state prosecutor, said he was satisfied with the ruling.

"The North Caucasus District Military Court issued a guilty verdict today, and I don't think it's a big tragedy that the sentence pronounced was shorter than what the state prosecutors had asked for," Titov said in televised comments to journalists.

"It is the right of the court to give its assessment to each act committed by the accused and sentence them within the terms determined by the article of the law under which they were convicted," he added.

Juries in the two previous trials acquitted the four soldiers, who said they were following orders from their superiors in the army's Main Intelligence Directorate, or GRU.

Ruling Welcomed

Human-rights defenders in Moscow said today's court decision sends an important message to the Russian military that summary justice is not excusable.

Murad Musayev, a lawyer for the families of the slain civilians, said justice would not be served until the three absent soldiers are located and forced to carry out their sentences.

"We're pleased with the guilty verdict, but of course we wish it could be carried out immediately," Musayev said. "But we hope that law-enforcement agencies are pursuing those convicted and will find them soon."

Lawyers for the defendants say they don't know the location of the three missing soldiers, who have been placed on a federal wanted list.

Prosecutors and relatives of the victims say they believe Ulman and the other two soldiers have gone into hiding in order to avoid punishment.

Rights activists say Russian federal forces and allied Chechen militias are responsible for mass atrocities directed at Chechnya's civilian population during Moscow's two wars in the North Caucasus republic.

(with material from agency reports)