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Security Watch: August 30, 2001

30 August 2001, Volume 2, Number 33
STARODUBTSEV INITIATES MONUMENT FOR PUTSCH LEADERS. The present governor of Tula Oblast and one of the former leaders of the anti-democratic Putsch in August 1991, Vasilli Starodubtsev, said that he has directed that a monument to the State Committee for Emergency Situations (GKChP) -- established by would-be coup leaders in 1991 -- be set up in Tula, reported on 24 August. He also said he is forming a special committee that "will reassess the activities of the GKChP." And he added that Russia is recovering from the "illness" of the last decade thanks to the work of President Vladimir Putin and especially his independent foreign policy.

GOVERNMENT ASKS SPS TO 'CURTAIL' COUP COMMEMORATION TO ALLOW CABINET TO WORK. The Russian government on 22 August asked the leaders of the Union of Rightist Forces (SPS) to "curtail" a march near the Russian White House lest such a commemoration impair the workings of the cabinet, Interfax reported. Nonetheless, several thousand Muscovites took part in a rally and then in a concert organized to mark the 10th anniversary of the defeat of the abortive August 1991 coup, RIA-Novosti reported. Also on 22 August, about 200 former defenders of the White House marked State Flag Day, Interfax reported.

PUTIN SPENT VACATION VISITING MONASTERIES... On 20 August, President Putin began his vacation by visiting the Solovetskii Islands, the site of a medieval Russian monastery and also one of the earliest and most notorious Soviet penal colonies, Russian and Western agencies reported. Joining him on this pilgrimage was Russian Orthodox Patriarch Aleksii II. During the next two days he also visited the Iversk, Sato-Yuriev, and Valaam monasteries. The pro-government web site noted on 22 August that Putin made his pilgrimage before the adoption of a crucial state decision in September.

...AS HIS FAMILY TAKES A SEPARATE VACATION. Meanwhile, in contrast to the his predecessor, Boris Yeltsin, whose family usually spent summer vacation with him, Putin's wife Ludmila and their two daughters vacationed at the presidential dacha in Sochi. According to "Argumenty i Fakty" on 24 August, this pattern of family vacation has no special significance, except of a different climate preference by Putin and his wife.

MAU PRESENTS 'LIBERAL NATIONALISM' AS NATIONAL IDEOLOGY. Vladimir Mau, the head of the Economic Reform Center within the Russian government, who was asked by President Putin to develop a new national ideology, has decided that Russia should choose "liberal nationalism," reported on 23 August. Mau said that liberal nationalism combines a minimum of state intrusion into the economy but the predominance of the state over the political sphere and human rights. He said that this has been the policy pursued by the Kremlin over the last few months and that even though it carries with it the risk that relations with the West may deteriorate, "we should proceed with this policy in any case."

RUSSIA, UKRAINE AGREE ON ENERGY UNION?... Prime Minister Kasyanov and his Ukrainian counterpart Anatoliy Kinakh agreed on 20 August following a meeting in Moscow that the two countries will move immediately to initiate the parallel operation of their electric grids, RTR television reported. Kasyanov noted that this synchronization of the power systems will allow Russia to export electricity to the West. President Putin issued a statement on the occasion, saying that this accord will "significantly strengthen" the position of the two countries on the international energy market. Meanwhile, Kasyanov noted that Moscow and Kyiv are finalizing an agreement on Ukrainian debts for Russian gas. Kinakh, for his part, said that Kyiv has agreed to offer its national oil and gas company to Russia as a deposit for its future payments on Russian gas supplies, ITAR-TASS reported on 20 August.

...AND MOLDOVA WILL JOIN THEM. Now that Ukraine is being integrated into the Russian electrical power system, Moldova will follow, "Vremya novostei" reported on 22 August. The paper said that Chisinau will gain from this arrangement because of transit fees for the export of power and also because of the enhanced role it will give the Moldovan government over the breakaway Transdniester region. To secure its place in these arrangements, Moldova will hand over to Russia 76 percent of the shares in its largest electrical power station, Moldovan officials said.

ENERGY MINISTRY TO REGULATE EXPORTS OF HYDROCARBONS. Energy Minister Igor Yusupov said that his agency is to be put in charge of regulating the export of all hydrocarbons, including those by privatized oil companies, "Vedomosti" reported on 22 August. Under current arrangements, such exports are controlled by Deputy Prime Minister Viktor Khristenko as well as by the boards of Gazprom and United Energy Systems. The new arrangement suggests, "Kommersant-Daily" reported the same day, that Yusupov enjoys President Putin's backing and will thus appoint his own people to the boards of the two monopolies.

RUSSIAN ALUMINUM MOVES INTO DOMESTIC AUTO INDUSTRY. The Russian Aluminum (RusAL) industrial financial group is making major acquisitions within the domestic automobile industry, Prime-TASS reported on 20 August. It recently purchased the Kurgan bus factory as well as similar factories in Pavlovsk and Likin, and it is already the owner of the GAZ automobile factory. The news service said that RusAL is planning to Target AvtoVAZ for a takeover in the future.

SINGLE AGENCY FOR WATER RESOURCES URGED. An article in "Nezavisimaya gazeta" on 22 August argues that the Russian government must set up a single agency to regulate domestic water use in order to exploit the country's water supplies in dealing with foreign countries, and to ensure that the interests of other countries in those supplies does not become a threat to Russian national security.

PUTIN TAKES PART IN UKRAINIAN INDEPENDENCE ANNIVERSARY? President Putin on 23 August flew to Kyiv to take part in celebrations marking the 10th anniversary of Ukrainian independence, Russian and Western agencies reported. He praised Ukraine's progress over the last decade and said much of it reflects Ukrainian-Russian ties. And he said that he hoped for expanded ties and more frequent summits in the future. He was accompanied by Defense Minister Sergei Ivanov and Russian Security Council Secretary Vladimir Rushailo, leading some commentators in Ukraine to conclude that he hopes to secure Ukrainian President Leonid Kuchma's agreement to the renewed production of strategic missiles at the rocket factory in Dnepropetrivsk that Kuchma led in Soviet times, the BBC reported.

PAVLOVSKII PROMOTES RUSSIAN-UKRAINIAN TIES ON THE INTERNET. Gleb Pavlovskii, who serves as President Putin's media adviser, has launched a new website,, to promote Russian-Ukrainian relations, reported on 23 August. On its opening page, Pavlovskii states that his main goal is to inform Russians about developments in Ukraine, where he said, "Putin is even more popular than in Russia." He added that Putin wants both countries to be part of a "united Europe" but not become "copies of the West." He said his site will also seek to overcome obstacles to this among many Ukrainians: the notion of some in the Ukrainian elite that Russia remains a threat and that Ukraine can join Europe without Russia.

MOSCOW OPPOSES PHYSICAL DEMARCATION OF BORDER WITH UKRAINE. A Russian Foreign Ministry spokesman said on 17 August that Moscow believes that there need not be any physical demarcation of the border between Russia and Ukraine now that the two sides have agreed on the border on maps, RIA-Novosti reported on 17 August. The spokesman said that Moscow believes that the border should help "unite rather than divide" the two countries, and that in any case nothing should be done until there is a formal bilateral treaty on the shared border.

JAPAN PROTESTS RUSSIAN SALE OF FISHING RIGHTS NEAR DISPUTED ISLANDS. Japanese Prime Minister Junichiro Koizumi has sent a protest note to President Putin concerning Moscow's sale of fishing quotas in the waters around the disputed Kurile Islands, Russian and Western agencies reported on 20 August. Koizumi said in his message that Putin should recognize the seriousness of this issue for the overall development of bilateral ties. But a Russian Foreign Ministry spokesman told Interfax the same day that Russia has no intention of changing its approach because it is based exclusively on "commercial" considerations.

BAGHDAD APOLOGIZES FOR ANTI-RUSSIAN ARTICLE BY SADDAM'S SON. The Iraqi embassy in Moscow handed over to the Russian Foreign Ministry a formal apology for the publication of an article in Baghdad's "Babel" newspaper, which is controlled by Saddam Hussein's son, Udday, questioning the prospects for Iraqi-Russian relations, ITAR-TASS reported on 19 August. The Iraqi note said that the article does not represent the views of the Iraqi government.

SVERDLOVSK, CHELYABINSK POWER-SHARING TREATIES TO BE CANCELLED? Petr Latyshev, the presidential envoy to the Urals Federal District, has said that power-sharing treaties between Moscow and two oblasts in his district, Sverdlovsk and Chelyabinsk, must be cancelled, "Vek," No. 32, reported. Latyshev said that both treaties fail to correspond to the Russian Constitution. But Chelyabinsk Governor Petr Sumin said that he will defend the treaty between Moscow and his oblast "to the very end," "Vek" reported. Latyshev also said that 47 additional agreements between political units within his district and Moscow should be cancelled as well.

CHELYABINSK GOVERNOR POINTS TO NUCLEAR WASTE THREAT. Chelyabinsk Governor Sumin has sent a letter to Prime Minister Mikhail Kasyanov complaining that buried nuclear waste in his area will pose a severe health risk in the future if emergency measures are not adopted, AP reported on 17 August. Deputy Governor Gennadii Podtesov told AP by telephone that water in contaminated lakes is only 30 centimeters below the top of dams and that if nothing is done, the radioactive waste will flow into rivers and ultimately into the Arctic Ocean, "creating an international outcry."

PATRIARCH SEEKS RETURN OF CONFISCATED PROPERTY. Russian Orthodox Patriarch Aleksii II said he believes that the Russian state should return most of the property the Soviet authorities seized from the church in the past, RIA-Novosti reported on 22 August. He said that he would be especially pleased if monasteries received their land back, because then the monks could set an example on how to work the land. But an article in "Rossiya" the same day noted that such a return of land could involve the church hierarchy in criminal activities in much the same way as the special privileges the church earlier received in trading in liquor and tobacco.

RUSSIA APPEARS TO BE LEAVING CUBAN SITE. Defense Minister Ivanov and Vice Prime Minister Ilya Klebanov have refused to confirm that Moscow is closing its electronic espionage site near Lourdes in Cuba, but "Novye Izvestiya" reported on 23 August that the withdrawal of Russian equipment and personnel has already begun. The declining intelligence significance of the center, its high cost, and its impact on Russian-American relations played a role in the decision to phase the center out. But the last straw, the paper said, was the refusal of Cuban leader Fidel Castro to cancel rental charges on the site as partial payment on Cuban debts to Moscow. Castro reportedly said "we owed money to the USSR, not to Russia." The paper said that President Putin may announce the closure of the electronic intelligence site when he visits the U.S. in November 2001 as part of his media blitz there.

'VYMPEL' SPECIAL FORCES UNIT MARKS 20TH ANNIVERSARY... Veterans of the elite special forces unit "Vympel" appeared on ORT and RTR television on 18 August as part of a celebration of the 20th anniversary of the hitherto super secret group. Vladimir Kozlov, the head of the Federal Security Service's Department for the Protection of Constitutional Order, noted during the broadcasts that the group was created by the Soviet KGB in 1981 to destroy vital Western government infrastructure in the event of a third world war. "Vympel" officers have taken part in secret combat operations in Nicaragua, Cuba, Mozambique, Angola, Vietnam, and Laos, the broadcasts reported. More recently, Kozlov added, "Vympel" officers have served in Chechnya.

...AS DOES MVD SPEZNAZ 'KOBALT.' Interior Minister Boris Gryzlov has unclassified and made public the special assignment MVD force "Kobalt" that was created in August 1980, reported on 23 August. Talking to journalists, the first commander of the 1,000-man-strong detachment, Beksulltan Dzioev, said that his squad got its combat experience during the Afghan war, where its units was present in all 23 provinces of Afghanistan. Now "Kobalt" is mainly used in Chechnya.

RUSSIA TRAILS ONLY U.S. IN FOREIGN ARMS SALES. Citing a report by the U.S. Congressional Research Service (CRS), Interfax reported on 20 August that Russia exported $7.7 billion worth of arms in 2000, trailing only the U.S., which exported $18.6 billion during the same period. According to the CRS report, foreign arms sales totaled $36.9 billion in 2000, up 8 percent from 1999.

RUSSIAN NAVY SEEN DECLINING TO 100 SHIPS BY 2010. Lack of funding for new construction and fuel shortages are hampering Russia's ability to maintain its navy and as a result, Moscow may have only 100 ships of all classes by 2010, according to an article in "Nezavisimoe voennoe obozrenie," No. 30. Ever more ships are falling into disrepair, and the navy has been forced to raid its reserves in order to send the fleet to the Indian Ocean earlier in 2001. According to the article, one of the main reasons for these problems is that the navy is not funded as a separate budgetary item apart from the rest of the military.

A NEW PLAN TO FIGHT ORGANIZED CRIME. Aleksandr Ovchinnikov, the newly appointed head of the Interior Ministry's Main Directorate for Combating Organized Crime, said in an article published by "Izvestiya" on 20 August that his agency will soon be transformed into the Criminal Militia Service. That will allow the Interior Ministry to "split organized crime from within" rather than simply respond to particular actions. Ovchinnikov also said he is opposed to any anticorruption efforts within his agency lest it force many experienced officers off the payroll, which he said would be particularly troubling given the shortages of militia officers.

RUSSIAN COURT TO HEAR FIRST MONEY-LAUNDERING CASE. The Interior Ministry has completed its investigation into two multimillion-dollar transactions by Moscow's Expobank involving money laundering and has handed them over to the courts, "Vedomosti" reported on 17 August. The paper noted that this is the first time that cases involving money laundering will be heard in a Russian court in accordance with international regulations.

SWISS COURT BLOCK BOOKS ABOUT MENATEP AND MONEY LAUNDERING. A Swiss court agreed with lawyers for Moscow's MENATEP Bank that a book by a French writer and a Luxembourg banker fails to prove that the bank was involved in money laundering of international loan funds provided to Moscow, "Kommersant-Daily" reported on 22 August. The court refused to block the sale of the book in Switzerland. Consequently, while MENATEP may be happy with the court's finding, the paper said, the verdict will only stimulate interest in the book.

NEARLY ONE-THIRD OF BANKRUPTCIES SAID FRAUDULENT. Tatiana Trefilov, the head of the federal office that supervises bankruptcy proceedings, said that approximately 30 percent of all cases of business bankruptcy are fraudulent, "Trud-7" reported on 19 August. Typically, she said, fraud is most often the result of the action of creditors who are interested not in recovering their investment but changing the ownership of a particular enterprise. She said that during the last year, her agency had identified 232 managers as having engaged in such fraud and suspended the licenses of 97 companies. She said that presently her Financial Service Recovery agency is reviewing 27,000 bankruptcy cases.

MINISTRY OF JUSTICE CLOSE LIMONOV'S PARTY. The Ministry of Justice asked the Moscow Oblast Court to "evaluate" the ban of the "National-Bolshevik Party" headed by eccentric writer Eduard Limonov, ITAR-TASS reported on 20 August. The special squad of FSB arrested Limonov last April during an alleged attempt by him to buy a large cache of automatic weapons and explosives. However, Limonov who now is in custody in the FSB prison Lefortovo, said through his lawyer that his own arrest as well as the persecution of his followers is an FSB vendetta for the publication of sharply critical articles about President Putin and Oleg Deripaska, an oligarch who is close to him.

GOVERNMENT TV REQUIRES REGIONAL TV CENTERS TO USE ITS LOGO. Viktoriya Arutyunova, the deputy director of state television channel RTR, announced that as of next month, the channel will require regional television centers that are part of the state television system to use its logo on the air, reported on 22 August.

ORT ANNOUNCES NEW PRO-KREMLIN PROGRAM. The Russian television network ORT plans to launch a special analytical program on 1 September, "Kommersant-Daily" reported on 23 August. The program, to be called "Curfew," will be hosted by a number of well-known journalists loyal to the Kremlin, including Mikhail Leontiev, Mikhail Sokolov, Aleksandr Nevzorov, and Vitalii Tretyakov. Meanwhile, Tretyakov, who earlier served as editor in chief of "Nezavisimaya gazeta," said in an interview published in "Vremya Novostei" the same day that he has launched a new publishing group that will issue at least nine new independent papers, following the rubrics of the paper he used to head. He stressed that the news operations of these publications will be completely under his control.