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Security Watch: April 16, 2002

16 April 2002, Volume 3, Number 13
RUSSIA FERRIES NEW TROOPS FROM ABKHAZIA... Russia on 14 April completed the withdrawal of troops it helicoptered into Abkhazia's Kodori on 12 April, Russian and international media reported (see "RFE/RL Newsline," 12 April 2002). During his traditional Monday morning radio address, Georgian President Eduard Shevardnadze credited the removal of the approximately 80 Russian troops to a telephone conversation he had with Russian President Vladimir Putin on 13 April, ITAR-TASS reported. Shevardnadze said Putin's decision to remove the troops helped prevent "a complication of the situation," according to the news agency. Russia's deployment of troops to the unrecognized republic one day after Georgia completed the withdrawal of its military forces from the Kodori Gorge incited strong reactions from Georgia's parliament and public, reported on 13 April.

...AS RUSSIAN LEADERS CONDUCT DAMAGE CONTROL. A Russian State Duma delegation led by Deputy Chairman Lyubov Sliska landed in Tbilisi on 15 April to discuss the situation with Georgian parliamentary leaders and with Shevardnadze over the course of a two-day visit, ITAR-TASS reported. Before departing from Moscow, Sliska told journalists that the delegation planned to discuss parliamentary relations between the two countries as well the status of Russia's peacekeeping contingent in Georgia and issues related to the deployment of U.S. military advisers to the region. On 14 April, RIA-Novosti reported First Deputy Foreign Minister Valerii Loshchinin as saying that Russia honors Georgia's sovereignty and respects its leadership, and that Russia provides benefits to the country by selling oil and gas at discount prices.

RUSSIA HAILS RETURN OF VENEZUELA'S CHAVEZ... Moscow has welcomed the restoration of Hugo Chavez as president of Venezuela, and hopes that "it will help to achieve lasting civil peace in the country and promote the development of democracy and the implementation of the legitimate rights of the Venezuelan people," Foreign Ministry spokesman Aleksandr Yakovenko told ITAR-TASS on 15 April. Chavez returned to the presidency on 14 April after a failed military coup. Meanwhile, commented on 14 April that Russian oil companies took the surge of world oil prices that resulted from the instability in Venezuela as a "pleasant surprise."

...AND JOINS RANKS WITH THE U.S., EU, AND UN ON THE MIDDLE EAST... In Madrid on 9 April, Russian Foreign Minister Igor Ivanov, U.S. Secretary of State Colin Powell, UN Secretary-General Kofi Annan, and EU foreign policy chief Javier Solana signed a common declaration calling on Israel to withdraw all of its troops from the Palestinian Authority immediately, and especially from the headquarters of Yasser Arafat in Ramallah, ITAR-TASS reported on 10 April. The "document of four" also demands that Israel and the Palestinian Authority agree to an immediate cease-fire and refrain from acts of terror, and asks Israel to provide "complete and full access for international humanitarian organizations to the Palestinian population." commented on 10 April that the signing of the declaration is unique in that all four power centers in the world are united in their positions on the matter, leaving Israeli Prime Minister Ariel Sharon practically without allies.

...AS FOREIGN MINISTRY BLASTS ISRAEL FOR STORMING ORTHODOX CHURCH PROPERTY. The Russian Foreign Ministry on 12 April protested the storming of a hostel in Bethlehem owned by the Russian Orthodox Church and used by members of the church on pilgrimages to Bethlehem, ITAR-TASS reported (see "RFE/RL Newsline," 4 and 8 April 2002). The ministry said the incident can only be regarded as Israel's ignoring of "Russia's interests and concerns," and that "the reseizure of the building contradicts the spirit of Russian-Israeli relations," the agency reported. On 2 April, Israeli forces stormed the hostel in Bethlehem owned by the Russian Orthodox Church as they tried to dislodge a group of Palestinians from the nearby Church of the Nativity.

CZECH PRIME MINISTER IN MOSCOW TO DISCUSS NATO, EU EXPANSION. Milos Zeman arrived in Moscow on 14 April for a three-day visit during which he will meet with Russian President Putin and negotiate with Prime Minister Mikhail Kasyanov, Federation Council Chairman Sergei Mironov, and Duma Speaker Gennadii Seleznev, Russian and Western news agencies reported. Zeman is expected to attempt to soothe Russian concerns about possible NATO expansion, and to stress the benefits that EU membership for the Czech Republic and other former Soviet-bloc countries would hold for the Russian economy. The leaders are also expected to discuss ways to increase bilateral trade between Russia and the Czech Republic, as well as how to settle Moscow's debt to Prague. According to Prime-TASS on 14 April, the Czechs hope to arrange Russian deliveries of spare parts for the Czech army's Soviet-made military hardware as payment for some of Russia's $3.6 billion debt.

SECURITY COUNCIL HEAD CALLS FOR JOINT CENTRAL ASIAN EFFORT AGAINST TERROR. Russian Security Council Secretary Vladimir Rushailo on 11 April called on the security chiefs of Tajikistan, Kyrgyzstan, Kazakhstan, Belarus, and Armenia to join forces in combating terrorism, Russian and international news agencies reported. "Russia favors the broadest cooperation on this issue with all countries, including the United States," ITAR-TASS quoted Rushailo as saying. "Central Asia plays a paramount role in this respect," Rushailo said, adding that "the success of our economic cooperation will also depend on how effective our cooperative action will be in the fight against international terrorism."

ALEKSII II HINTS THAT POPE CAN VISIT RUSSIA WITHOUT HIS CONSENT. Russian Orthodox Church head Patriarch Aleksii II said in a recent interview with the Italian magazine "30Giorni" that as the head of the Vatican state, which maintains diplomatic relations with Russia, Pope John Paul II has the right to visit Moscow, ITAR-TASS reported on 14 April. However, Aleksii II continued, "There is an ancient tradition that a church head should coordinate his visit with the local church." In the magazine, Aleksii II also stressed his personal opposition to a visit by the pope, especially in the wake of a recent Holy See decision to elevate the status of Catholic dioceses in Russia (see "RFE/RL Newsline," 4 March 2002). Finally, he mentioned that his position regarding the Vatican "is also shared by the Foreign Ministry, parliament, and average citizens," the news agency reported, citing "30Giorni."

MOSCOW OFFICIAL SAYS RUSSIA HAS UP TO 25 PERCENT OF THE WORLD'S HYDROCARBONS. Speaking at Duma Natural Resources Committee hearings on 11 April on the development and rational use of the Russian continental shelf's oil and gas reserves, Deputy Natural Resources Minister Ivan Glumov said that the national Russian continental shelf contains 15.5 billion tons of oil and 84.5 trillion cubic meters of gas, or 20-25 percent of the world's oil and gas reserves, RIA-Novosti reported on 11 April. For comparison Russia currently produces 320 million tons of oil and 580 million cubic meters of gas a year, Glumov said. Russia's continental shelf comprises an area of 6.2 million square kilometers, or 21 percent of the world's ocean-shelf area, he added. Glumov also said that if Russia achieves international recognition of its claims in the Arctic Ocean, it could add up to 4.6 billion tons of hydrocarbons to its reserves.

...AS NEW AGENCY CREATED TO SUPERVISE CONTINENTAL SHELF EXPLORATION. Speaking at a press conference in Moscow after parliamentary hearings, Glumov said on 11 April that the government has decided to create a new body, the Main National Nautical Administration, which will be responsible for the exploration and recovery of the oil and gas from the Russian continental shelf, Prime-TASS and Severinform reported. Glumov added that the new agency also would be in charge of attracting foreign investment, which could bring in up to $10 billion to the Russian state coffers in the very near future. Finally, he said that he hopes that by the middle of the year the UN will address the Russian request on the extension of its continental-shelf zone in the Arctic Ocean (see "RFE/RL Newsline" 7 September 2001).

MOSCOW REFUSES TO BUDGE ON OIL-EXPORT POLICY... Speaking at the Eurasian Economic Forum in Almaty on 9 April, Russian Deputy Prime Minister Viktor Khristenko said that Moscow will not increase or cut its oil exports as a result of Iraq's decision to suspend its oil output, RBK reported. "Baghdad's decision is economically negligent and therefore, will not impact our level of exports," Khristenko remarked.

...CONDEMNS BAGHDAD DECISION TO SUSPEND OIL EXPORTS... A spokesman for the Russian Foreign Ministry said on 8 April that Baghdad's decision to halt oil exports for 30 days is "a mistake" and an indication that Iraq "adheres to a policy of self-isolation," ITAR-TASS reported. Iraq is allowed to export 2 million barrels a day within the framework of the UN "oil-for-food" program. That amount constitutes only 5 percent of the total world output. Only one-third of Iraqi oil is likely to reach the U.S. market, and therefore Saddam Hussein's decision "only dooms his people to more suffering," the Russian spokesman said. This step also shows that "instead of allowing UN experts to enter Iraq, Saddam Hussein is continuing to set himself against the entire international community," he added.

...AND REBUKES WTO ON ENERGY PRICES. Russia has refused a request from the World Trade Organization (WTO) to harmonize its domestic and export energy prices, Russian and international news agencies reported on 8 April. "Russia isn't satisfied with the differential energy price situation and is trying to resolve it by reforming natural monopolies. We do not want to make any international obligations on this issue," said Deputy Economy Minister Maksim Medvedkov, Russia's top trade negotiator. Russia now sells electricity at around $.013 per megawatt-hour on the domestic market, while it exports electricity to Europe at an average price of $20 per megawatt-hour. Likewise, Russia sells natural gas domestically for $21 for 1,000 cubic meters, but exports it for between $90 and $105 for 1,000 cubic meters. Medvedkov said Russia will maintain all energy-sector subsidies not prohibited by the WTO, which Russia is negotiating to join.

EES LAUNCHES TRANSCONTINENTAL FIBER-OPTIC PROJECT. Unified Energy Systems (EES) has signed a contract with the Cyprus company FTA Enterprises Ltd., which plans to develop over the next five years a transcontinental fiber-optic telecommunications network comprising Europe and Asia and known as the Trans-Russian Optical Network (TRON), "Vedomosti" reported on 9 April. According to the $1 billion contract, FTA Enterprises, whose ownership has not been disclosed to the public, will lay down telecommunication lines alongside the EES electrical grid. The first phase of the project, known as the "Baltic ring," will connect St. Petersburg, Stockholm, Ventspils, and Riga. In the next stages the project will link Russia and Europe to Japan, South Korea, and China.

KASYANOV ANNOUNCES NEW STAGE OF PRIVATIZATION FOR BANKING SECTOR... Prime Minister Mikhail Kasyanov signed a directive on 10 April launching an ambitious program for the further privatization of the country's banking sector by selling state-owned shares in that sector, "Kommersant-Daily" reported on 11 April. According to this program, the Finance and Economic Development and Trade ministries will prepare plans over the next three months for selling off state-held shares in investment, insurance, and financial institutions. All in all, the state would sell its stakes in over 600 banks, according to Kasyanov.

...PLANS TO MAKE MORE MONEY FROM TOURISM. Speaking at a meeting of his cabinet on 11 April, Prime Minister Kasyanov called for increased efforts to promote domestic and foreign tourism in Russia, ITAR-TASS reported. Kasyanov argued that promoting tourism requires less capital investment than other economic sectors, but has the potential to attract billions of dollars in revenue. According to the premier, some 8 million foreigners visited Russia last year. Kasyanov said that Russia lags far behind other countries in tourism because of poor advertising, an underdeveloped recreation infrastructure, and expensive and time-consuming requirements for entry visas -- a holdover from the Soviet era. The premier announced that his government has prepared a concept for promoting tourism that can make Russia one of the top five destinations in Europe.

VIKTOR KHRISTENKO TO HEAD EES SUCCESSOR. The board of directors of Unified Energy Systems (EES) approved the candidateship of Deputy Prime Minister Viktor Khristenko as the CEO of the new distributing operator "Central Dispatching Administration of EES," which is an offshoot of EES, Prime-TASS reported on 8 April The new company was formed as part of the process of deregulation of EES, and its board members will also include Property Relations Minister Farit Gasizullin, Economic Trade and Development Minister German Gref, Atomic Energy Minister Aleksandr Rumyantsev, and EES head Anatolii Chubais.

SCHROEDER SLASHES RUSSIA'S GDR DEBT. Speaking to journalists during a joint press conference with German Chancellor Gerhard Schroeder in Weimar, Germany, on 10 April, Russian President Putin announced that the two leaders had solved the problem of the Soviet debt to the German Democratic Republic (see "RFE/RL Newsline," 10 April 2002), RIA-Novosti reported. According to the agreement, Russian debt of 6.5 billion "transit rubles" will be slashed to 500 million euros ($440 million), which Russia will pay over the next three years in cash installments. Schroeder added that he met Putin's request because last year Russia began to repay its debts to the Paris Club of creditor nations ahead of schedule.

RUSSIA EXTENDS MILITARY COOPERATION WITH BRAZIL... In Moscow on 9 April, Defense Minister Sergei Ivanov signed with his Brazilian counterpart Geraldo Magela da Cruz a bilateral accord on military-technical cooperation between the two countries, ITAR-TASS reported on 10 April. According to the accord, both countries will intensify mutual cooperation in developing advanced and high-tech weapon systems. Meanwhile, Defense Ministry sources told RIA-Novosti on 11 November that they hope for more specific results from the Brazilian minister's visit; in particular, regarding Russian participation in the tender for Brazil's purchase of 24 modern fighter aircraft for an expected $700 million. Russia's bid to sell Su-35 fighters is competing against bids from U.S. and French aerospace companies, according to the news agency.

...AND VOLUME OF RUSSIAN-INDIAN MILITARY CONTRACTS. Defense Minister Ivanov said after meeting on 11 April with his Indian counterpart George Fernandes, who is in Russia on a four-day visit, that military-technical cooperation between the two countries has grown out of the "salesman-buyer" stage and is ready for the joint production of weapons systems, Russian news agencies reported. Ivanov said that military ties between Moscow and New Delhi are anchored by a treaty and mutual understanding of common strategic threats, including terrorism. Meanwhile, defense industry experts note that in the near future the total volume of Russian-Indian military trade could reach $10 billion, the BBC reported on 10 April.

GENERAL STAFF PROPOSES TO LIMIT STUDENTS' DEFERMENTS. Speaking to the Duma Defense Committee on 8 April, deputy chief of the Russian General Staff Colonel General Vladislav Putilin said that this year the military will manage to induct only 11.7 percent of registered draftees, RIA-Novosti reported on 8 April. The rest of the young men have various kinds of deferments, most of them linked with higher education. In this connection Putilin proposed to leave in force deferments from the military service for students, except for higher education institutions with a state-contracted specialization.

FSB SAYS IT HAS UNCOVERED CIA OPERATION IN MOSCOW. The Federal Security Service (FSB) announced that it has "disrupted a big CIA operation to recruit a Russian citizen working f or the Defense Ministry and through him to steal Russian military secrets," Russian and Western news agencies reported from Moscow on 10 April. According to the FSB, among those involved in the operation were Ungu Kensinger, a former third secretary of the U.S. Embassy in Moscow, who no longer resides in Russia, and alleged CIA officer David Robertson, who the FSB said led the operation from abroad. This is the first spy scandal between the two countries since last year, when following the arrest of FBI agent Robert Hannsen for spying for Moscow, the U.S. ordered 50 Russians working for diplomatic missions in the United States to leave the country. Moscow retaliated by expelling an equal number of American diplomats from Russia. A spokesman for the FSB, however, told Interfax on 14 April that his agency will publish details about the CIA's "failure" as both agencies have a gentleman's agreement on how to behave in such matters.

FSB FINDS THAT RUSSIANS ARE LOOSE-LIPPED ON 'STATE SECRETS.' Sergei Burlakov, the spokesman for Khabarovsk Krai's branch of the FSB, has said that after conducting an investigation into how well classified documents are being protected, the local agency's officers discovered "appalling violations of the Law on State Secrets" among regional organizations and companies, reported on 12 April. Burlakov said classified documents have been discovered in absolutely inappropriate places including a local meat-processing factory and scrap heap. Burlakov added that after the KGB was broken up, so-called "first departments," which were responsible for surveillance over personnel and existed in nearly every Soviet organization, were closed, and as a result nobody cares about the defense of state secrets today. He also announced that the local FSB branch has decided that all local organizations found to possess classified information will be obliged to obtain a special license from the local FSB branch. Afterward, violators of the license will be fined or even closed down.

TWO KILLED IN NOVGOROD BANK ROBBERY. Two cash collectors were killed and more than 8 million rubles ($250,000) were stolen in a robbery at the Central Bank's Cash Collection Department in Novgorod, RIA-Novosti reported on 8 April. One of the bank's official cars was also stolen. The dead men were identified as Viktor Nilov and Valerii Gubetskoi. The two died of multiple gunshot wounds, most likely from a Kalashnikov assault rifle, according to police. Police departments in the Novgorod, Leningrad, Pskov, Vologda, and Tver oblasts have launched a massive manhunt to find the perpetrators.

AUDIT CHAMBER UNCOVERS MISUSE OF FOREIGN LOANS IN ST. PETERSBURG... The Audit Chamber has made public its probe of misappropriation of foreign loans given to the government of St. Petersburg to prepare for celebrations of its 300th anniversary, reported on 9 April. According to the investigation, city authorities misused some of a $46 million loan released by the International Bank for Reconstruction and Development. In particular, $11.5 million was used for "disproportionately high payments to foreign consulting services," and $2.3 million was spent on "project realization support personnel."

...AS PROSECUTOR OPENS INVESTIGATION OF $200 MILLION EMBEZZLEMENT. Based on documents provided by the State Audit Chamber, the Prosecutor-General's Office has launched a criminal investigation into a $200 million loan provided by the British government for the reconstruction of the historical center of the city, reported on 9 April. The money was allegedly redirected by the company Rapid Highways (VSM). Because the credit was provided under federal guarantees, and because VSM is nearly insolvent, the federal government has already lost $64.3 million including $27.5 in overdue payments, a spokesman for the Prosecutor-General's Office was quoted as saying by RIA-Novosti the same day.

PUTIN DENOUNCES TREATIES WITH RUSSIAN FEDERATION CONSTITUENTS. President Putin signed accords on 8 April renouncing the treaties on the division of power between the federal center and St. Petersburg, Orenburg, and Nizhnii Novgorod oblasts, reported. According to Putin's legal aide Sergei Samoilov, the abolished treaties were signed between 1994-98 and delegated "too much power to the regions." Samoilov said that three years ago a special commission to revise the division of power was created under the chairmanship of deputy head of the presidential staff Dmitrii Kozak, and that since that time the commission scrapped 24 of the 42 treaties concluded between Moscow and the provinces. Samoilov added that those treaties that still remain in force "will not survive much longer."

PUTIN WANTS MORE ECONOMIC IDEAS, AMBITIONS FROM GOVERNMENT. Meeting with members of Mikhail Kasyanov's cabinet on 8 April, President Putin said that he is not happy with the government drafts of economic development from 2002 to 2005 and that the proposed economic scenarios are not satisfactory, reported. Putin noted that pessimistic scenarios forecast economic growth of between 3.2-4 percent, while optimistic scenarios operate with figures from 3.7 to 4.6 percent. In both cases, however, the growth indicators do not overcome Russia's lag behind developed countries. "We need goals that are more bold and ambitious," Putin concluded.

PRESIDENTIAL AIDE OUTLINES MASS-MEDIA REFORM... Aleksei Volin, the deputy chief of the presidential staff, told Ekho Moskvy radio on 12 April that technological advancements will eventually make state ownership of mass-media outlets inefficient and unnecessary, reported. Volin said that, if in the near future viewers have 300 digital television channels at their disposal, it will be meaningless to control only one of those channels and that the state should instead employ 10 producers to develop programs and TV shows, thus ensuring itself a role in television media. This system would allow the state to announce tenders of companies and to provide various informational programs.

...AND CALLS FOR NEW MASS-MEDIA LAW. In the same Ekho Moskvy interview, Volin said that before the restructuring of relations between the state and mass media can occur, a new law on mass media should be adopted. The current Law on Mass Media, implemented in 1990, is "hopelessly obsolete," he said. On 12 April, quoted Media Minister Lesin as saying that the present law does not distinguish between publishers, editors, and proprietors of the mass media.

EURASIAN PARTY OF RUSSIA HOPES FOR DUMA. Speaking at the meeting of the Political Council of the Eurasian Party of Russia on 6 April, its leader, Abdul-Vakhed Niyazov, said that the goal of his association is to meet the 5 percent hurdle for representation in the Duma, RosBalt reported on 9 April. Niyazov and his followers believe that they can garner at least 3 million votes and are open for an alliance with all political groups accept the Union of Rightist Forces and Yabloko, RosBalt reported. The Eurasians have also pledged their full support to President Putin. Among the guests of honor at the Eurasian Party meeting were Russia-Belarus Union State Secretary Pavel Borodin, representatives of the presidential administration, as well as the members of the Iraqi and Palestinian diplomatic missions in Russia. Niyazov's Eurasian Party of Russia is an Islamic double of the political movement Eurasia led by Aleksandr Dugin.