Security Watch: September 24, 2001

PUTIN WANTS UNDERSTANDING OVER CHECHNYA AS PRICE FOR HELP OPPOSING TALIBAN... In separate interviews presented on 21 September by the German newspaper "Bild," the weekly "Fokus," and the national television channel ARD, Vladimir Putin repeated his position that Moscow is already fighting terrorism in Chechnya and will not take part in a second front elsewhere. "We will see what we can do to help [the West on its front], if they will help us on ours," Putin said.

...BUT GETS READY TO HELP. President Putin met in Sochi with Defense Minister Sergei Ivanov, Security Council Secretary Vladimir Rushailo, SVR director Sergei Lebedev, GRU chief Valentin Korabelnikov, FSB Director Nikolai Patrushev, Federal Border Service head Konstantin Totskiy, and other security officials to discuss how to cooperate with the U.S. in the fight against terrorism, gazeta.ru reported on 23 September. Putin interrupted these sessions for telephone calls with U.S. President George W. Bush. Defense Minister Ivanov said after the meeting that Moscow views the Northern Alliance as the only legitimate government of Afghanistan, and its victory over the Taliban will allow it to return to Kabul.

PUTIN REPEATEDLY CONFERS WITH CENTRAL ASIAN LEADERS... From Sochi, where he is on a working vacation, President Vladimir Putin on 17 and 22 September telephoned the leaders of the five Central Asian countries that are members of the Commonwealth of Independent States to discuss cooperation in the fight against terrorism, Russian and Western agencies reported. Meanwhile, Russian Security Council Secretary Vladimir Rushailo the same day departed for Central Asia to continue these discussions, ITAR-TASS reported. The chief of the CIS Anti-Terrorist Center, Boris Mylnikov, and senior military strategist Leonid Ivashov said during an Internet press conference on strana, ru 22 September that they were strongly against the direct participation of CIS countries in U.S.-led anti-terrorist actions.

DUGIN SAYS U.S. FACES DILEMMA IN RESPONDING TO TERRORIST ATTACKS. Aleksandr Dugin, the controversial leader of the Eurasia movement, said that the United States now faces a genuine dilemma in deciding how to respond to the 11 September terrorist attacks, smi.ru reported on 14 September. If it does not take decisive action, the U.S. will lose its position as the world superpower and the leader of the globalization process. But if it acts too strongly, it may alienate many of its allies and intensify the opposition of its foes. Dugin's arguments were echoed by an article in "Nezavisimaya gazeta" which suggested that the West will find it "psychologically more difficult" to fight Islamic fundamentalism than it found combating communism during the Cold War.

...AS RUSSIAN, IRANIAN MILITARY, AND SECURITY CHIEFS MEET WITH MASSOUD'S SUCCESSOR. The chief of the Russian General Staff, Anatolii Kvashnin, the deputy chief of the FSB, Viktor Komogorov, and the deputy chief of the FSB Anti-Terrorist Center, Valery Verchagin, met in Dushanbe, Tajikistan with the military commander of the anti-Taliban Northern Coalition, Mokhammad Fakhim-khan, Russian media reported on 23 September. Both agreed on cooperation in case of U.S. anti-terrorist operations in Afghanistan. The head of the secret services of Iran and Central Asian states were also present at the meeting, BBC reported on 23 September.

YAVLINSKY CALLS FOR RUSSIA TO TAKE ACTIVE ROLE IN ANTI-TERROR COALITION. Yabloko leader Grigorii Yavlinsky on 18 September called for Moscow to take "a leading and aggressive" role in the anti-terrorist campaign alongside the U.S. and Europe, RTR television reported. Indeed, Yavlinsky said, Russia should not wait for an American decision on what to do but help prepare joint actions because such participation is in Russia's national interest. Another advocate of expanded cooperation on this point is Sergei Karaganov, the head of the Foreign and Defense Policy Council. During an interview on Ekho Mosk radio on 17 September, Karaganov said, "Russia has no choice but to cooperate" with Washington lest it be left out in the cold. At the same time, Karaganov continued, because "our support could cost us more than anybody else, we must demand certain concessions from the West," including on NATO expansion and refinancing Russian debt.

ZHIRINOVSKY WORRIES NATO WILL GET BEACHHEAD IN CENTRAL ASIA. Duma Deputy Speaker and Liberal Democratic Party of Russia leader Vladimir Zhirinovsky said on 18 September that Russia should "extend its hand to the Taliban" not only because the U.S. is getting ready to unleash a campaign against terrorists in Afghanistan, but also because NATO is going to use this occasion "to occupy Central Asia" to the detriment of Russia's interests there, RIA-Novosti reported. Zhirinovsky's statement is striking because he usually calls for campaigns against peoples to the south of Russia rather than for cooperation with them.

PRIMAKOV CALLS FOR BAN ON INTERNATIONAL TERRORISM... In an interview published in "Moskovskii komsomolets" on 17 September, former Prime Minister Yevgenii Primakov said, "Even the most powerful military alliances, the redoubling of the military budget, or the most efficient NMD will prove helpless against terrorism." Instead, he said, terrorism "must be extinguished at its source -- regional conflicts." He called for the adoption of special international laws to deal with this problem.

DELYAGIN AND HIS CIRCLE SAY MOSCOW WOULD BENEFIT FROM NEUTRALITY. Kiril Tremasov, a stock exchange analyst at the Moscow Business World Bank, argues that "Russia will profit a great deal politically" if it neither supports nor opposes any future U.S. and NATO military actions against terrorists, utro.ru reported on 17 September. Moscow should continue its anti-terrorist rhetoric, Tremasov said, but it must avoid any commitments to take part in any actions by an international coalition. Tremasov, who is a close associate of Globalization Institute Director Mikhail Delyagin, said that the present situation in the world might allow Russia to quickly regain superpower status, especially if American actions exacerbate the existing split between northern and southern countries. He added that Russia must avoid gloating over what is happening in the United States and ensure that it is not dragged into a conflict with Islam that would undermine Russia's own national interests, strana.ru reported on 20 September. Delyagin called the Taliban a threat to Russia not as an ideological magnet or terrorist organization, but rather as a trafficker in drugs intended for the Russian market.

'IZVESTIYA' CRITICIZES FOREIGN MINISTRY FOR ITS REACTION TO TERRORIST INCIDENTS. An article in "Izvestiya" on 17 September sharply criticized the Russian Foreign Ministry for its reaction to the terrorist attacks in the United States on 11 September. Instead of showing compassion, the paper said, Foreign Minister Igor Ivanov and his deputies acted as if nothing had changed in the world and stood aloof from the situation. That approach, "Izvestiya" added, was out of step with President Putin who compared the actions of the terrorists to those of the Nazis. If the Foreign Ministry expects to achieve more understanding from the West, the paper concluded, it would have to show more sympathy to the situation the West finds itself in.

'KOMMERSANT' BELIEVES CRISIS MAY SPLIT CIS. An article in "Kommersant-Daily" on 18 September suggested that an American retaliatory strike against terrorist camps in Afghanistan could lead to the disintegration of the Commonwealth of Independent States (CIS). The paper said that Central Asian countries are most concerned with the threat of Islamic extremists, while Moscow is most worried about the possible deployment of U.S. troops in these countries.

MILITARY NEWSPAER SEES U.S. ILL-PREPARED FOR TERRORISM FIGHT. An article in "Krasnaya zvezda" on 18 September said, "the United States is not ready to fight international terrorism." On the one hand, the military paper said, Washington does not want to limit its future freedom of action by forming broad alliances on the question. And on the other, American officials have drawn the wrong conclusions from the recent terrorist attacks and do not recognize the nature of the problem they face.

'ROSSISKAY GAZETA' RECALLS THAT NAZIS PLANNED SUICIDE ATTACKS ON SKYSCRAPERS. "Rossiiskaya gazeta" on 19 September noted that the terrorists who attacked the World Trade Center on 11 September were guilty of intellectual plagiarism because in fact the idea of using suicide pilots to attack such buildings was first developed by Nazi propaganda chief Josef Goebbels. He planned to attack the Empire State Building and even began putting together a group of agents to carry out such an attack.

PAVLOVSKII WARNS THAT TERRORISTS CAN USE MEDIA AS A WEAPON. Kremlin media adviser Gleb Pavlovskii said on 18 September that terrorists can deploy new information technologies as their "most dangerous" weapons, and that he is creating a Center of Defense Technology to meet this threat, Russian news agencies reported. Pavlovskii said this threat proves that critics of the Russian Information Security Doctrine are wrong. At the same time, he said that the world is now at the edge of a global crisis and that "for the first time in 50 years," both the Russian people and the Russian government are ready to meet it. He also argues that Russia must take a number of specific moves in foreign and domestic policy in order to avoid being dragged into war or suffer in other ways, strana.ru reported on 20 September. He told a meeting of the Civil Debate club that such measures should include a ban on protests by the Communist Party and the Liberal Democratic Party of Russia (LDPR) slated for October. Such demonstrations, he said, could have a very negative impact on Russia's image abroad. He also called for a more general ban on extremist groups.

DUMA CALLS FOR STRUGGLE AGAINST TERRORISM. After a brief debate on 19 September, the Duma unanimously passed a resolution condemning terrorism and recognizing the right of the U.S. to take retaliatory measures, Russian and Western agencies reported. Deputies specified that the U.S. response must be "strictly proportional," and they urged President Putin to push the creation of an international anti-terrorism center. The adoption of a resolution on global terrorism provoked a heated exchange between those like Union of Rightist Forces (SPS) leader Boris Nemtsov, who believe Moscow should cooperate with the U.S. in the fight against terrorism, and those like Liberal Democratic Party of Russia (LDPR) leader Vladimir Zhirinovsky, who want Moscow to align itself with Afghanistan and the Muslim world. Many deputies, including from the pro-Kremlin Unity faction, said that Russia should not take part in any action planned and led by another country.

RUSSIAN INTELLIGENCE SAYS ITS DATA SUGGEST BIN LADEN BEHIND U.S. ATTACKS. Sources in the Russian intelligence services told Interfax on 19 September that Moscow has some evidence that Osama bin Laden was behind the attacks in New York and Washington. The same day, Russian border guards told the news service that they believe that bin Laden is still in southern Afghanistan near Kandahar. Meanwhile, Leonid Shebarshin, the former head of Russian Foreign Intelligence Service (SVR), said in an interview published in "Argumenty i fakty" on 19 September that a previously unknown terrorist group may have been behind the attacks. Shebarshin also said that the success of the terrorists represents a major intelligence failure not only by the U.S. special services, but by Russia's as well.

BANK CHIEF SAYS AMERICAN RESPONSE MAY HURT ECONOMY. Russian Central Bank chief Viktor Gerashchenko said on 20 September that a massive American attack on Afghanistan could have a negative impact on the world economy, Interfax reported. Yevgenii Yasin, a leading Moscow economist, told the agency that further terrorist acts could slow the U.S. economy and thus reduce demand for Russian exports. But Deputy Prime Minister Aleksei Kudrin said on RTR on 19 September that the Russian economy is relatively protected from any major shock from these sources.

ORTHODOX CHURCH SAYS U.S. HAS MORAL RIGHT TO RETALIATE. Metropolitan Kirill, the head of the Foreign Relations Department of the Moscow Patriarchate, said on 18 September that the Russian Orthodox Church believes that the United States has both moral and religious grounds to retaliate against those who attacked American cities, Russian news agencies reported.

RUSSIAN SUBMARINE TESTS STRATEGIC MISSILE. For the first time since Moscow agreed not to test-fire missiles in the wake of the terrorist attacks on the United States, a Russian nuclear submarine launched a ballistic missile from the Okhotsk Sea in the Far East to the Barents Sea in the Arctic, Russian naval spokesman Igor Dygailo told RIA-Novosti. Dygailo said that the test demonstrated the "combat-readiness and reliability" of Russia's sea-based strategic nuclear forces.

SUKHOI AIRCRAFT NOW A STATE HOLDING. Deputy Prime Minister Ilya Klebanov announced that the government has approved the transformation of the Sukhoi Aircraft Company into a state holding company in which the government retains 100 percent of shares, "Vedomosti" reported on 18 September. The firm's main task, the paper said, will be the design and construction of a fifth-generation Russian jet fighter and the management of contracts currently worth over $10 billion. Klebanov said that the change will help the government maintain control of the company's revenues.

MOSCOW PLANS TO DEVELOP MAKHACHKALA PORT FOR CENTRAL ASIAN OIL AND GAS. On 18 September, First Deputy Transportation Minister Vyacheslav Ruksha told an international conference in Moscow on Caspian oil and gas that his agency plans to develop the port of Makhachkala in Daghestan in order to ensure better transportation for oil from Kazakhstan and Turkmenistan to the West, RIA-Novosti reported. At present, he said, Russia's port capacity is inadequate to the task.

RUSSIAN OIL EXPORTS UP 20 PERCENT IN 2001. Russia exported 20 percent more crude oil in the first six months of 2001 than during the same period in 2000, Prime-TASS reported on 18 September. Eighty-six percent of the 91.93 million tons were exported to non-CIS countries. Germany, Poland, and Italy are three biggest importers of the Russian oil.

GM BEARISH ON AUTO MARKET IN RUSSIA? General Motors Corp. has liquidated its joint venture for the production of automobiles in the Republic of Tatarstan, Interfax-AFI reported on 18 September. The agency quoted GM representative David Herman as telling "The Wall Street Journal" that the decision is based on the "realities of the Russian market." According to the agency, the joint venture, after being created in 1995, stopped production of the Che Blazer in 1999.

PREMIER PUSHES FOR GAZPROM ROLE IN LITHUANIA. Prime Minister Kasyanov on 20 September discussed Gazprom's plans to purchase a 25 percent share of the Lithuanian gas company Lietuvos Dujos and another 25 percent in that company via its Lithuanian affiliates with visiting Lithuanian Prime Minister Algirdas Brazauskas, RIA-Novosti reported. Vilnius was reluctant to agree to this form of Russian investment, but Kasyanov apparently believes that he will succeed in securing Brazauskas's approval for the deal. At the same time, Kasyanov sought to promote the extension of a transit corridor from Kaliningrad to the Lithuanian border at Klaipeda, which Russian and Asian firms would like and from which Lithuania would profit from transit fees.

IS THE INTERIOR MINISTRY BECOMING A COMMERCIAL ENTITY? In an article published in "Moskovskii komsomolets" on 18 September, journalist Aleksandr Khinstein said that the Interior Ministry is being transformed from a law-enforcement agency into a giant commercial entity where ministry officials profit from the sale of almost anything, from promotions to favorable outcomes of criminal investigations. This pervasive system of corruption was set up by General Aleksandr Orlov, formerly the personal aide of former Interior Minister Vladimir Rushailo, the journalist argues. Orlov, who recently decided to live abroad, is nicknamed "the oligarch in epaulets" and is said to have close ties with magnate Boris Berezovskii and the Alfa Group.

GREF SAYS CAPITAL FLIGHT IN 2001 WILL TOTAL $20-25 BILLION. Economic Development and Trade Minister German Gref on 20 September said on ORT television that capital flight out of Russia will total $20-25 billion in 2001. To get it back, he said, Moscow would have to create a more attractive investment climate. But "Izvestiya" suggested the same day that the deteriorating international environment may either prompt more Russians to keep their money at home or, alternatively, to send even more abroad to safe havens. Meanwhile, ITAR-TASS on 19 September reported that the Russian population currently holds $18-20 billion in U.S. currency, down from $30 billion immediately after the August 1998 crisis.

GOVERNMENT APPROVES FOREIGN BANK ACCOUNTS FOR RUSSIANS. The Russian Central Bank has released new regulations allowing Russian citizens to transfer their funds to accounts in foreign banks, "Kommersant-Daily" reported on 20 September. The new rules do not impose any restrictions on these accounts except to say that Russians may place their funds only in countries that are members of the Organization for Economic Cooperation and Development.

A CAPITAL AMNESTY IN THE NEAR FUTURE? Duma Budget Committee head Aleksandr Zhukov (Russian Regions) believes that there must be an amnesty on past capital acquisitions before the Law on Combating Illegal Income goes into force in February 2002, "Obshchaya gazeta" reported on 20 September. Zhukov said the state should legalize all undeclared capital up to that point and then take a tough line against future illegal gains. Zhukov's comments were echoed by Russian Central Bank head Gerashchenko, who also announced the same day that he will not remain in that position for a second term, Interfax reported.

DUMA ADOPTS LAND CODE... Despite protests both outside and within the chamber by Communists and Agrarians, the Duma on 20 August approved on third and final reading the new Land Code by a vote of 260 to 130, Russian agencies reported. The measure, which still must be approved by the Federation Council and signed into law by President Putin, allows for the buying and selling of a small fraction of the country's land area. Excluded from purchase and sale are arable lands, areas near large rivers, water reservoirs, forests, and land near borders. The Agrarian deputies repeated their threat to stage protests and to seek a national referendum on the code.

...AND BACKS PUTIN ON CHECHNYA... By a vote of 345 to eight, the Duma on 20 September called on President Putin to combat terrorism in order "to protect Russian citizens" and to "cut off external support for terrorist groups in Chechnya," Russian and Western agencies reported. Meanwhile, officials of the Federal Security Service (FSB) are working with other Russian security agencies to identify and block the domestic and international channels of financing of the pro-independence Chechen forces, Interfax reported on 20 September.

...BUT REFUSES TO CALL FOR EMERGENCY STATUS IN CHECHNYA. Also on 20 September, the Duma failed to pass a measure introduced by the SPS to call on President Putin to introduce a state of emergency in Chechnya; something the SPS insists is required to legalize the Russian troop activities there. Sixty-eight deputies voted for the measure, as opposed to the 226 needed for passage. Some 175 voted against. The deputies did, however, adopt with 231 votes an appeal to Putin demanding "immediate and tough measures" to uproot organized crime. They also passed a resolution calling on the president to focus on what the parliamentarians called "negative trends" in the work of the Unified Energy Systems company and its chairman, Anatolii Chubais. In addition, the deputies passed on first reading a measure that will increase punishments for those violating Russian laws governing securities transactions, Interfax-AFI reported.

PREMIER SAYS IMPROVED ECONOMIC PERFORMANCE MAY ALLOW BUDGET REVISIONS. Mikhail Kasyanov said on 20 September that Russia's better-than-expected economic performance -- a 5.5 percent GDP growth rate in 2001 rather than the 4 percent that was projected earlier -- and the resulting budget revenues may permit some revision in the 2002 budget. But he said that the cabinet will not undertake any such revision until the end of the year in order to avoid unleashing inflation, RIA-Novosti reported. The prime minister also said that the 2002 draft budget anticipates the creation of a reserve fund to level the expenditures of the regions and avoid any risk to the federal budget of imbalances in regional equivalents. Meanwhile, presidential economics adviser Andrei Illarionov told Interfax the same day that he believes there will be a sufficient growth in budget revenue to pay for increased expenditures on defense.

PUTIN APPOINTS AGRICULTURAL LEADERS TO NEW STATE COUNCIL. President Putin signed a decree on 18 September naming new members to the presidium of the State Council, Russian agencies reported. Appointed were Tambov Oblast Governor Oleg Betin, Leningrad Oblast Governor Valerii Serdyukov, Chelyabinsk Oblast Governor Petr Sumin, Magadan Oblast Governor Valentin Tsvetkov, Altai Krai head Aleksandr Surikov, Mordovia President Nikolai Merkushin, and North Ossetian President Dzasokhov. State Council presidium members serve six-month terms. According to the State Council apparatus, the first session of the new presidium will be held in October and will be made up of members from the largest grain-producing regions in Russia. Council members will, among other issues, look at the situation in the country's grain market and problems of exporting grain, Interfax reported.