CDI Russia Weekly-#112

28 July 2000

Edited by David Johnson

Center for Defense Information

1779 Massachusetts Ave. NW

Washington DC 20036

phone: 202-332-0600; fax:202-462-4559

djohnson@cdi.org

The CDI Russia Weekly is an e-mail newsletter that carries news and

analysis on all aspects of today's Russia, including political,

economic, social, military, and foreign policy issues. With funding

from the Carnegie Corporation of New York, CDI Russia Weekly is a

project of the Washington-based Center for Defense Information (CDI),

a nonprofit research and education organization.

  CDI Russia Weekly web page (with archive): http://www.cdi.org/russia/

  Visit CDI's web site: http://www.cdi.org

Contents:

  1. AFP: Charges dropped against independent media mogul Gusinsky.

  2. RFE/RL: Andrew Tully, Gore Adviser Says Russian Corruption Hard To Fight.

  3. Itar-Tass: US Congress Republicans, RUSSIA'S Unity to Keep Dialogue.

  4. Moscow Times: Peter Ekman, Public Show To Star Putin, 18 Tycoons.

  5. Jamestown Foundation Monitor: RUSSIA REPORTS SKY-HIGH ECONOMIC GROWTH...BUT FOR HOW LONG?

  6. Dawn (Pakistan): Sergei Blagov, G7's blunt reply to Moscow: Total debt writeoff is out of question.

  7. The Globe and Mail (Canada): There's a better way. Almost

unnoticed, the United States and Russia have embarked on an

unprecedented kind of joint espionage, says Nobel laureate

John Polanyi. The result may make missile defence obsolete.

  8. AFP: US negotiator warns Russia must get help to transform plutonium.

  9. Moscow Times: Yevgeny Maslin, Vladimir Orlov and Ivan

Safranchuk, Reforming Nukes.

  10. Vremya MN: Russia's Role as Mediator with Iraq Viewed.

  11. Stratfor.com: Turkmenistan: The New Hermit Kingdom.

  12. AVN: RUSSIAN NAVY TO GIVE PRIORITY TO NUCLEAR COMPONENT IN NEXT 10 YEARS.

  13. RIA: Russian Chief Rabbi Hails Stability, Good Ties With US Jews.   

******

#1

Charges dropped against independent media mogul Gusinsky

MOSCOW, July 27 (AFP) -

Independent media mogul and ardent Kremlin critic Vladimir Gusinsky won a

sudden reprieve Thursday after prosecutors dropped fraud charges against him

after conceding they had no case.

The unexpected news came on the eve of a powwow between Russia's top business

tycoons and President Vladimir Putin, whom they accuse of launching an unfair

blitz against their companies.

Gusinsky has also blamed Putin for his arrest and brief imprisonment, a case

that has focused international concern on a crackdown of press freedoms in

Russia.

Gusinsky is reportedly not on Putin's guest list for Friday's Kremlin

round-table, and he flew to see his family in Spain upon hearing news that he

was no longer under investigation on Wednesday evening.

Analysts said the decision would permit Putin to deflect criticism

surrounding the Gusinsky controversy while allowing him to renew hostilities

should the tycoon provoke his ire again.

"The inquiry is closed, the house arrest and confiscation of property orders

are lifted," said Dmitry Ostalsky, spokesman for Gusinsky's Media-MOST empire.

The case had collapsed due to lack of evidence, he said.

Gusinsky was informed of the sudden development by Valery Nikolayev, the

senior investigator handling his case.

Gusinsky spent four days in Moscow's notorious Butyrka jail before securing

bail following his June 13 arrest over a 10-million-dollar fraud case

involving the privatization of a Saint Petersburg television station.

The tycoon, whose television and print outlets have been sharply critical of

Putin's administration, refused to cooperate with the investigation, branding

the case against him as politically-motivated.

Gusinsky's NTV has been the only national television station to question the

nine-month ground offensive in Chechnya while his Sevodnya daily has probed

graft inside the FSB domestic intelligence agency, once headed by Putin.

Curiously NTV, which had spearheaded a noisy public protest campaign against

Gusinsky's arrest and the charges leveled against him, played down the news.

Its factual midday newscast devoted only 40 seconds to the development, which

came 11 minutes into a broadcast dominated by the murder of an independent

radio station chief and the ongoing war in Chechnya.

The Kommersant business daily, owned by Gusinsky rival Boris Berezovsky, said

the Media-MOST chief had agreed to water down attacks on Putin and his young

administration.

Kommersant said Gusinsky had been in tough negotiations all week with its

main shareholder Gazprom-Media which wanted to increase its holding in NTV in

exchange for writing off Media-MOST debt.

Citing sources in the presidential administration the paper said Gusinsky had

rejected the moves but agreed to soften NTV's stance "vis a vis the state and

President Putin in particular."

Gusinsky's detention marked the start of a spectacular witch-hunt targeting

the business elite that built fortunes and political power during the

country's controversial crash privatization program.

"This is good news, because Gusinsky's arrest was the biggest political

mistake of recent times," said Vyacheslav Nikonov, head of the Fond Politika

think-tank here.

"But it is difficult to believe that the Kremlin has forgiven Gusinsky. It's

possible that Gusinsky made certain promises in exchange."

"The Kremlin has hidden its club in the drawer, but it hasn't thrown it in

the dustbin," cautioned Boris Makarenko, deputy director of Moscow's Centre

for Political Technologies.

******

#2

Economy: Gore Adviser Says Russian Corruption Hard To Fight

By Andrew F. Tully

The man who may be the next White House national security adviser says the

West can help Russian President Vladimir Putin fight corruption in his

country. But he says the job ultimately must be done by the Moscow government

itself. Washington correspondent Andrew F. Tully reports.

Washington, 26 July 2000 (RFE/RL) - The national security adviser to U.S.

Vice President Al Gore says the American government is doing everything it

can to help Moscow fight corruption in Russia.

But the adviser, Leon Fuerth, emphasized that the U.S. and other Western

countries can only help. The prime responsibility for fighting corruption, he

said, lies with Russian President Vladimir Putin.

Fuerth likely would become the White House national security advisor if Gore

is elected president in November. He made his comments Tuesday at the Woodrow

Wilson International Center for Scholars, a Washington think-tank.

Gore's adviser said the U.S. administration of the current president, Bill

Clinton, has done as much as it can to help the Russian government fight

corruption by strengthening law enforcement cooperation between the two

countries, helping the Duma draw up new legislation for Russia's civil,

criminal, and bankruptcy laws, and by supporting programs in Russia that

promote the rule of law.

But Fuerth conceded that corruption as rampant as that in Russia cannot be

eradicated overnight because it is not a new phenomenon.

"Deeply engrained corruption predates the Russian Federation.

Institutionalized corruption virtually defined the Soviet state. It was not

an invention of the new Russia, and the cure for it will require years of

struggle."

Fuerth was asked what further the U.S. can do to fight corruption. The

questioner dismissed what he called "petty" corruption, like the bribery of

low-level government officials. Instead, he wanted to know how Russia could

be helped fighting the organized-crime gangs that quickly came into being

after the collapse of the Soviet Union.

Fuerth responded by cautioning against minimize the importance of petty

bribery.

"Every time you have somebody in a position to say, "No," and if you have a

system that requires that you pass scores of people on your way possibly to

"yes," you are in effect institutionalizing and motivating corruption that

may be petty at any given point, but in the aggregate becomes a huge drag on

the desire and the ability of people to develop the Russian economy on a

privatized basis."

As for organized crime, Fuerth said the West must encourage Russia to join in

the worldwide fight against corruption and narcotics trafficking. He said

this problem is -- in his words -- "bigger than any one of us and requires

all of us." He said that with the collapse of the Soviet Union, international

organized crime is both importing and exporting contraband -- including drugs

-- into and out of Russia.

"That requires a worldwide effort with Russian participation. One of the

things that we would like as a practical matter is for the Russians to

approve the Mutual Legal Assistance Treaty, which is pending before their

Duma. Because without that treaty, we don't have in place the basic machinery

to facilitate the kinds of interstate cooperation that you require in order

to deal with this form of corruption."

Fuerth said he and Gore are concerned about Putin's record since he took over

the presidency from Boris Yeltsin on Jan. 1. He said Putin's ideas of a

strong Russia are "contradictory and sometimes ominous." He said the war in

Chechnya could become a "second Afghanistan." He decried Putin's restrictions

on the news media.

The adviser to Gore said Moscow has much to do to improve economic relations

with the West in general and the U.S. in particular. This includes reforming

the Russian judiciary, updating tax laws, passing the Mutual Legal Assistance

Treaty, adopting Western accounting practices, and reforming its banking

system.

But overall, Fuerth endorsed Putin's economic plan.

"His program is a program of vigorous economic reform along lines that we

ourselves would have advocated -- and in fact did advocate it from the

beginning of our close association with the Russian government. His program

-- if it is carried out -- offers the single greatest hope for the rebirth of

the Russian economy under conditions that are compatible with political

freedom."

A questioner alluded to this statement when he noted that Zbigniew Brzezinski

addressed the same forum last week. The questioner recalled that Brzezinski

-- the national security adviser to U.S. President Jimmy Carter in the 1970s

-- accused Fuerth of mistakenly believing that free markets lead to greater

democracy.

Fuerth said he does not believe that one automatically leads to the other.

"But I believe that the weight of practical experience does indicate that if

you try to pursue market reform while at the same time sustaining a

repressive system, something has to give. Either the market reform goes bad

or the repressive system blows up."

Still, Fuerth said he remains deeply troubled about the war in Chechnya. He

said the Clinton administration has pressed Putin's government to seek a

diplomatic solution to Chechens' desire for independence. And he said the

only way the current Russian government can hope to maintain legitimacy is to

seriously investigate accusations that its forces have committed atrocities

against civilians in the breakaway republic.

*******

#3

US Congress Republicans, RUSSIA'S Unity to Keep Dialogue. .

WASHINGTON, July 28 (Itar-Tass) - U.S. Republican congressmen and members of

the Russian State Duma's Unity faction have agreed to establish a permanent

direct dialogue.

A delegation of the Unity faction in the parliament's lower house has come to

the U.S. to attend a national congress of the Republican Party which will

work in Philadelphia.

Faction leader Boris Gryzlov told Itar-Tass on Thursday that the dialogue

"can become a reliable conduit in relations between the two countries".

On the American side, a backing to the idea was stated by Christopher Cox,

leader of the House of Representatives' working group on Russia. He said the

Republican Party and Unity had close ideological and economic programmes.

Cox said Unity's economic proposals were similar to what the U.S. Congress is

trying to do this day.

*******

#4

Moscow Times

July 28, 2000

TWO KOPEKS' WORTH: Public Show To Star Putin, 18 Tycoons

By Peter Ekman

Friday's meeting in the Kremlin between President Vladimir Putin and 18

businessmen should not be expected to depart from the script of a play titled

"Surrender of the Oligarchs," but it will be a play produced for public

consumption, not necessarily a reflection of reality.

With 18 businessmen present, nothing in the meeting will be secret. Anything

that Putin can say, he's already said in public: All businessmen will be

treated equally, any court cases will be conducted strictly according to the

law, and privatization sales will not be reviewed en masse.

Any businessman who disagrees will in effect be saying, "This is fine for all

the other oligarchs, but you have to treat me better." The only other option

is to agree with Putin, to submit to a public show of surrender.

Perhaps the question of an amnesty for privatization and tax crimes will

arise f if one of the oligarchs has the courage to raise it. Putin's answer

would almost inevitably be negative. An amnesty would give away his

ammunition against the oligarchs. It would be unpopular with voters and

signal the resumption of business as usual.

But after the public show, questions will remain. Will the government really

treat all businessmen equally, or is the show just a cover for installing

new, more Putin-friendly, oligarchs? Will the court system really be

independent and protect the rights of the accused? Answers to these questions

may become apparent fairly quickly.

Next Wednesday, the Supreme Court Presidium will hear the Federal Security

Service's request to reopen an espionage investigation against

environmentalist Alexander Nikitin. This is a test of the independence of the

judicial system. Nikitin's case has been reinvestigated several times, with

several indictments filed and thrown out. The Supreme Court has heard the

case twice: once to order an earlier reinvestigation, once to confirm

Nikitin's acquittal.

If the court allows the St. Petersburg FSB, the descendant of Putin's former

employer, to reopen the case, oligarchs f and every citizen f will know that

justice and fair enforcement of the law are not the purposes of the courts.

What's happened to Nikitin could happen to anybody.

On Sept. 18, the results of the Onako Oil Co. privatization sale will be

announced. If the auction is conducted fairly, it would seem that businessmen

will be treated equally in the future. The mechanics of running an auction

are not difficult, and the government can conduct a fair auction if it

wishes.

But stories are already circulating that the fix is on. According to these

hypotheses, one favored oligarch f in many instances named as Roman

Abramovich f would be allowed to purchase Onako's shares at just above the

starting auction price, with any serious competitors knocked out of the

auction by problems with the tax police, and with the shares paid for f

indirectly f by a loan from the government. I have no way of knowing whether

these stories are true, but if on Sept. 18 Abramovich has made a bargain

purchase of Onako, Putin's credibility will suffer.

Today's meeting is just for show, but the Supreme Court and the government

will soon tell us whether we can believe Putin's promises. Let's hope they

tell us that all people and all businessmen will be treated equally under the

law.

Peter Ekman is a financial educator based in Moscow.

*******

#5

Jamestown Foundation Monitor

RUSSIA REPORTS SKY-HIGH ECONOMIC GROWTH... On June 30 Goskomstat reported

that Russia's GDP grew by a stunning 8.4 percent during the first quarter

of 2000. (Sotsial'no Ekonomicheskoye Polozhenie Rossii, June 2000). This is

the highest rate of quarterly growth Russia has reported since the collapse

of the Soviet Union, and suggests that the economy continues to recover

briskly from the effects of the August 1998 financial collapse. It is

generally recognized, however, that Russia's strong growth is due to

external factors--such as the weak ruble and high prices for Russian

exports--which will not last forever.

Although quite high by international standards, Russia's 8.4 percent first

quarter growth represents a continuation of a trend which took hold in the

third quarter of last year. GDP was reported to have grown 6.7 percent

then, and by 7.3 percent in the fourth quarter. The sectoral components of

Russia's first-quarter GDP growth were quite similar to the fourth-quarter

pattern: In both quarters, value added produced by industry grew by 11

percent, while value added in the construction and transport sectors grew

9-10 percent. While the growth in value added contributed by agriculture

fell from 6 percent in the fourth quarter of 1999 to 1 percent in the first

quarter of this year, this was more than offset by faster growth in value

added produced by domestic and foreign trade, which rose from 7 percent to

12 percent. These figures indicate that Russia's economic expansion is now

more balanced than it was in 1999, when strong growth in industry was

offset by sharp declines in trade and other services.

Demand-side data showed that all the end uses of GDP grew sharply during

the first quarter of 2000. Consumption was reported up 8 percent, with

strong (9 percent) growth in personal consumption moderated by only a

slight (1 percent) increase in government consumption. Fixed investment was

up 6 percent, though a sharp decline in inventories slowed the growth of

overall investment spending. Meanwhile Russia's trade balance more than

doubled, rising from US$6.0 billion in the first quarter of 1999 to US$13.7

billion in the first quarter of this year. These figures suggest that

Russia's growth was fueled by personal consumption and net exports, while

investment spending and public consumption grew more slowly.

...BUT FOR HOW LONG? While these figures look impressive, it is generally

agreed that Russia's rapid growth results largely from high export prices,

statistical base effects, and the weak exchange rate that followed the

August 1998 financial crisis. (The exchange rate fell from US$1=6.2 rubles

as of mid-1998 to US$1=28.4 rubles during the first quarter of 2000.)

Domestic producers have benefited from the weak ruble that has priced

imports out of many Russian markets. Imports in the first quarter were only

US$9.7 billion, compared to US$18.3 billion in the first quarter of 1998.

The weak ruble has also made exports much more profitable: The US$23.4

billion in exports reported in the first quarter of 2000 were more than 50

percent above the level registered in the first quarter of 1999. Exports

were also helped by higher world prices for key Russian commodities.

Whereas a ton of oil sold for only US$61 during the first quarter of 1999,

it averaged US$170 during the first quarter of 2000.

While oil and other commodity prices may remain high for some time, further

dramatic improvements in Russia's terms of trade are unlikely. Meanwhile,

the ruble is now strengthening: as of July 21 it was trading at US$1=27.7

rubles. The competitiveness enjoyed by Russian domestic producers and

exporters is also being eroded by inflation, which for producer prices is

currently running at 45-50 percent annual rates. Given the depths of the

ruble's long slide after August 1998, the advantages afforded to Russian

companies by the weak exchange rate are unlikely to vanish in the near

future. Still, like the high price for oil and other Russian exports, the

weak ruble is a serendipitous, rather than sustainable, source of economic

growth.

Russia's rapid first-quarter growth also results from the fact that it is

calculated relative to a low base. Since GDP dropped by some 3 percent in

the first quarter of 1999, some of the first quarter growth this year

reflects this favorable point of comparison. Since, according to

Goskomstat, Russia's economic recovery began in the second quarter of last

year, base effects will start to reduce reported GDP growth in the second

quarter of this year and beyond. The Russian government seems to be aware

of this: The Finance Ministry, for example, has estimated that GDP growth

slowed to around 5 percent in the second quarter of this year.

******

#6

Dawn (Pakistan)

July 27, 2000

G7's blunt reply to Moscow: Total debt writeoff is out of question

By Sergei Blagov

MOSCOW: Russia had hoped to use the Okinawa summit to negotiate a write-off

of multi-billion in Soviet-era loans it owes to Western governments.

However, economists say Russia was given a clear signal by its G-8 partners

that it is not appropriate for a world power to beg for debt relief, and that

a total write-off was out of the question.

The G8 leaders gathered in Okinawa, Japan, at the weekend to discuss common

political and social concerns and the state of the world economy.

The leading industrialised nations were expected to reject Russian pleas for

a write-off of 42 billion US dollars on the grounds that Russia, a former

superpower, has long way to go to become eligible for debt reduction - along

with the world's poorest states.

On the eve of the summit, German Chancellor, Gerhard Schroder, told

journalists that Russia is neither a developing country nor an emerging

economy, but a world power, thus Russia does not need debt write-off.

Paris Club countries have said they do not favour a debt write-off, instead

offering Russia more time to repay the debts.

Germany, Russia's largest creditor, and the lead state for the western debt

talks with Moscow, showed its readiness to consider a long-term debt

rescheduling deal.

Germany offered debt rescheduling - Russian debt from 1998, 1999 and 2000 is

to be restructured in the amount of around eight billion Deutsche marks.

Russia owes Germany some 16 billion of the 42 billion dollars in Paris Club

debt.

Russia took the initiative during the Okinawa summit, said Dmitry Rogozin,

head of foreign relations of committee of Russia's State Duma, lower house of

parliament. The debt restructuring deal with Germany - though limited - is

very important for Russia's reform process.

Putting aside debt write-off issue - and thus avoiding outright refusal -

Russian President Vladimir Putin made a strong showing at his first

appearance at the Okinawa summit of the Group of Eight.

Putin told the Russian media on Monday that the debt issue was discussed "in

the most general way." While visiting Russia's far eastern town of

Petropavlovsk on Monday, Putin told journalists he was satisfied with the

results of the Okinawa summit.

Nonetheless, the Kremlin had serious hopes to secure a debt write-off. Prime

Minister, Mikhail Kasyanov, warned on July 20 that if Russia is forced to

pay, it would slow down the country's development of the fully-fledged market

economy.

Russia will have to spend 30 to 40 per cent of budget revenues on servicing

its debt unless it wins relief, he said.

Furthermore, Russia now faces political conditions in debt negotiations. On

July 19 the US House of Representatives voted to prohibit the United States

from participating in multinational rescheduling agreements until Russia

shuts down an electronic intelligence facility in Cuba.

Kasyanov, who had served as Russia's chief foreign debt negotiator in his

previous capacity as deputy finance minister, had said earlier that Moscow

would try to persuade the Paris Club to agree to similar debt restructuring

terms as those accepted by the London Club in February 2000. xxx

The London Club agreed to cut 32 billion US dollars of Soviet-era debt by

about 36.5 per cent and to extend repayments over 30 years. They also agreed

to swap the defaulted post-August 1998 payments of 2.8 billion US dollars

into 10-year bonds.

Russia's total debt is about 150 billion US dollars owed to Western

governments and banks, to the World Bank and the International Monetary Fund.

About two thirds of that debt was incurred by the Soviet Union, and Moscow

has vowed to repay it.

However, even Russian experts argue that it sounds strange for probably the

richest country on earth in terms of natural wealth to get a debt

forgiveness, while many poorest countries in the world are yet to get debt

relief - notably given Russia's extraordinary - and growing - foreign trade

surplus.

The Russian economy has begun to pick up in recent months, after a

decade-long decline.

Russia's financial health has improved significantly since the 1998 economic

crisis, thanks largely to high world market prices for its main energy and

commodity exports and the 1998 ruble devaluation.

The nation's gold and hard-currency reserves rose to 22.3 billion US dollars

by mid-July, almost doubling last year level, according to the Central Bank.

Rising prices for its gas and oil exports had boosted Russia's revenues.

Russia inherited billions of US dollars of debt owed both by and to the

former Soviet Union, when it collapsed in 1991.

Russia insists it is owed 113 billion US dollars by other nations, mainly its

former allies during the Cold War, and much of the debt is in transferable

rubles - Soviet block quasi-currency.

But this calculation is based upon the exchange rate of 0.6 rubles per

dollar, the official rate in 1991, which many debtors refuse to accept.

Russia does not need debt write-off, argues Andrei Vavilov, director of the

Institute of Financial Research, Moscow-based think-tank. "The country just

needs good debt management,' he adds. -Dawn/InterPress Service.

******

#7

The Globe and Mail (Canada)

July 25, 2000

There's a better way

Almost unnoticed, the United States and Russia have embarked

on an unprecedented kind of joint espionage, says Nobel laureate

John Polanyi. The result may make missile defence obsolete.

John C. Polanyi, a Nobel Prize winner in chemistry at the University of

Toronto, is a member of a committee of the American Academy of Arts and

Sciences studying JDEC. These views are his own.

The people who dreamed up the U.S. National Missile Defence (NMD) proposal

got one thing right: A world with thousands of nuclear weapons mounted on

missiles ready for firing is unsafe.

Yet we know the world is a safer place than it was. We know, too, that it was

not missile defences that made it so, but the spread of openness and

responsible government around the world. Fewer governments than before are

sealed off from their people, and fewer nations from one another.

The best hope for a secure world lies in fostering this trend. But the NMD

proposal runs counter to it by trying to fence in one nation. This

wrong-headed solution is not improved by the fact that the fence will be an

imperfect one.

Canada's Department of Foreign Affairs has tried to distance the country from

the American idea. Given our ties to the U.S. defence establishment, that has

proved difficult. The debate in Ottawa appears to be at a standstill, while

the missile defence proposal rolls on. What is to be done?

The recent, and relatively unheralded, U.S.-Russian summit suggests a

direction to go in. On June 4, in Moscow, Bill Clinton and Vladimir Putin

signed an agreement committing them, for the first time, to a permanent

military collaboration. They pledged themselves to establish a jointly

staffed monitoring agency for missile launches. This shared early warning

system bears the nondescript initials JDEC ("jaydec" in Pentagonese), for

Joint Data Exchange Centre.

Since missile warnings would be crucial to missile interception, this

proposal will have definite implications for U.S. missile defences. Surely

Mr. Putin has embraced it to deflect attention from the NMD. Canada should

help see that this happens.

JDEC, despite its quiet birth, is revolutionary. It is a joint centre for

espionage, to be located in Moscow. Not any old espionage, but spying on the

most fearsome weapons in history. For Russia and the United States to engage

in this activity jointly is to give the strongest imaginable signal that the

Cold War is over.

Provided, of course, JDEC works. The signals coming from the radars and

satellites of both parties must be available for analysis to the other, so

that each can assess their truthfulness and dependability. False data are

dangerous.

This is so obvious that neither party would consent to engage in such an

exchange without a high degree of transparency. Neither will end up with many

secrets in regard to its missiles, but neither has many now, and they don't

need them for deterrence. We have an unprecedented opportunity to prevent

accidents arising from malfunctioning on either side, and from the current

disrepair of Russia's warning systems.

Such collaboration would be a far-fetched dream but for the fact that the

dreamers are the Russian and U.S. presidents, who have committed themselves

to establishing this joint missile warning centre within a year.

The two parties can be expected to notify one another, in advance and in

detail, of rocket launches, since they will jointly be observing them. In

this way, they can build confidence in the dependability of their data

exchange. Advance notification is not a new concept but takes on a new

urgency in the context of JDEC. Negotiations to make it mandatory are under

way.

Where does this leave other nations? Altered and involved, if they are

sensible. Many have expertise in surveillance that could be made available to

JDEC. Canada's experience is through NORAD and through decades of research

into the principal tools: radar and satellites. Mr. Putin, having invited

third parties to contribute to JDEC, has opened the door to such

collaboration. The staff in Moscow, therefore, should include experts from

Europe and Canada.

The cost, which could be in the hundreds of millions of dollars, is to be

shared equally between Russia and the United States. This cost, which is

about 1 per cent of that of the thinnest U.S. missile defence system, is

sufficiently small that other nations could contribute significantly in cash

and in kind to see that the initiative does not die.

How does this affect NMD? Greatly, but without eliminating it from

consideration.

If "rogue" nations do exist, immune to massive deterrence, their preparations

for a surprise attack will be detected by JDEC since their weapons must be

tested. These nations will then be the subject of intense diplomatic and

economic pressures, of the sort that are already succeeding in taming today's

rogues, North Korea and Iran.

If, even in the setting of a new regime of international restraint, they were

to persist in testing, the question would be asked whether they have the

right to threaten their neighbours with annihilation. If not, precision

munitions could be employed to destroy their missile sites (with due warning).

If the world is unready to take the civilized step of denying small nations

the right to make dire threats, on the plausible grounds that large nations

still reserve that right, then there is a form of missile defence that should

be contemplated. This is the "boost phase" missile defence proposed by Mr.

Putin, as an alternative to NMD. In such a system, the defensive missiles

would be placed at points adjacent to a rogue state, so they could intercept

its offensive missiles promptly, as they were launched. The proposal was that

they be operated not by a single nation but jointly, as with the joint

warning system.

Boost-phase interception has the advantage that the missile being targeted is

easier to spot -- multi-stage and blazing -- so rocket scientists will be

happy. Strategically, it means that the missiles hidden in the oceans or the

hinterland of large nations -- the basis of nuclear deterrence -- are immune,

so the major powers should be satisfied.

After all, there is nothing intrinsically wrong with defence. Only with

defence that is unilateral and provocative, as is the case with the U.S.

National Missile Defence system.

******

#8

US negotiator warns Russia must get help to transform plutonium

PARIS, July 27 (AFP) -

Europe and Japan must provide Russia with financial and technical aid to

recycle its stocks of military plutonium or international security will face

grave risks, said a senior US official here Thursday.

"If Russia's program does not receive sufficient support, the clock on

nuclear disarmement will be set back," Michael Guhin, a US representative in

the nuclear disarmament talks, told a Paris press conference.

"Large amounts of weapon-grade plutonium would likely be retained

indefinitely, providing a ready source to rebuild cold-war arsenals or to

tempt the hand of terrorists or states."

The United States and Russia have agreed to destroy 34 million tonnes of

military plutonium each, a 20-year operation which will cost Russia two

billion dollars and the United States three billion dollars, said Guhin.

"And if Russia's program fails, the US program will not go forward," warned

Guhin.

Russia plans to transform the plutonium into a fuel, called MOX, which can be

used in specially adapted nuclear power stations. Once the plutonium has been

used as fuel it can no longer be used for military purposes.

"This programme won't succed without major contribution from Europe. The

programme needs Europe and Japan, (...) technically and financially. We want

to spread the burden as wide as we can. (...) but the big contributors will

be G7," he continued.

"Can we expect Russia to cover its own cost? The answer is no. They will make

sizeable contributions. Can private fundings make the difference? Again the

answer is no. MOX fuel is not competitive in today's uranium market.

We will have to make a multilateral agreement," Guhin said.

"Who benefits from the programme? Every country that cares about arms

control," he added.

Commenting on support for the disarmament programme at the recent Group of

Eight (G8) summit in Nago, Japan, Guhin said the next G8 summit in Genoa, in

July 2001, will be crucial to the programme.

"This a first step," he said, "By next year, the Genoa summit, we will have

developped an international financing plan for the Russian programme. That

negociation will be far more intense than the one we have been going through."

The United States plans to eliminate its military plutonium stocks partly by

transforming it into MOX fuel and burying the rest in underground sites.

*******

#9

Moscow Times

July 27, 2000

Reforming Nukes

By Yevgeny Maslin, Vladimir Orlov and Ivan Safranchuk

Colonel General Yevgeny Maslin, retired, is senior adviser to the PIR-Center

for Policy Studies, a nonprofit nongovernmental organization that studies

arms control and nuclear nonproliferation issues. Vladimir Orlov is director

of the PIR-Center. Ivan Safranchuk is a PIR-Center research associate and

director of the "Nuclear Weapons and Their Future" project. They contributed

this comment to The Moscow Times.

Debate on ways to reform the strategic nuclear forces has recently

intensified, and is widely discussed in Russian and foreign media.

Unfortunately, often the commentaries are of a scandalous character. The form

of debate concerning strategic nuclear forces reform is absolutely

unacceptable. One can only agree with President Vladimir Putin's statement:

Such complicated issues of military policy cannot be solved under pressure

from the media and public opinion.

Analysis of foreign media coverage, and also active contacts with Western,

above all U.S., experts on disarmament issues, prove that the scandalous

character of the debate about strategic nuclear forces reform is weakening

Russia's positions in bilateral dialogue with the United States concerning

the ABM Treaty and within the START III framework.

At the same time, reform for the strategic nuclear forces is urgent, and one

can only welcome that it has been raised in so timely a fashion.

Russia inherited its nuclear status. The nuclear arsenal was built up in the

Soviet Union to accomplish specific combat missions f to suit a particular

world order, which was characterized by the confrontation (including nuclear

rivalry) between the two global superpowers. The new model of international

relations is different. The world has changed, Russia's position in it has

changed, too, and moreover, Russia's perception of its own security and of

relations with the rest of the globe has significantly transformed. As a

result the question emerges: How useful is this Russian nuclear legacy in

these new conditions?

There may be different answers, but any response should be based only on

comprehensive analysis of the current role of nuclear weapons, on trends in

the development of the nuclear world, and on the characteristics and

peculiarities of existing and potential security threats.

It is useful to bear in mind one more factor: Russia's ability to transform

its nuclear arsenal, to develop new-generation nuclear weapons and to provide

for serial production of such new arms is limited for objective economic

reasons. Hence, the state's requirements of its nuclear policy are ever-more

demanding, since that policy has to take into account existing financial and

military-technical constraints.

The term "nuclear policy" itself, which is widely used by Russian and foreign

experts, is not mentioned in any official government documents. The only

exception was "The Basic Provisions of the RF Military Doctrine" (1993),

which spoke about "Russia's policy in the area of nuclear weapons." However ,

that document did not define the term. The 1997 and the 2000 Concepts of

National Security and the 2000 Military Doctrine do not contain the term

either. In March 1999, President Boris Yeltsin approved "The Basic Guidelines

for the Russian Policy in the Area of Nuclear Deterrence." This document was

not published and the meaning of the term "policy in the area of nuclear

deterrence" was also never clarified.

In 2000, Russia has adopted three documents f the National Security Concept,

the Military Doctrine and the Foreign Policy Concept f that are directly

connected with Russian nuclear policy. These documents should serve as a

basis for any reforms of the strategic nuclear forces and should determine

the country's positions concerning nuclear disarmament and nonproliferation

issues. Any military reform plans should follow the approved concepts.

Russian foreign policy efforts will succeed only if the policy is consistent,

coherent and realistic.

The federal law on START II ratification says that the president "shall

approve the Federal Program of Development of the Strategic Nuclear Forces of

the Russian Federation and present it to [parliament] no later than two

months after entry into force" of the law. The law on START II ratification

entered into force on May 6, 2000. According to our sources, no such document

is yet to be approved or submitted to the legislature.

Well-grounded proposals on strategic nuclear forces reform will take into

account specific characteristics of nuclear munitions f chiefly, the

necessary strict requirements to ensure safety and security of a nuclear

arsenal during the whole of its service life.

For the foreseeable future, nuclear weapons will remain the key element for

providing national security and maintaining international stability.

Obviously, reform of the strategic nuclear forces can be carried out only in

accordance with Russian nuclear policy.

The Security Council, as a body that "works out proposals to ensure Russian

national security" (according to the National Security Concept), should

summarize the proposals of the defense minister and the General Staff and

submit them to the president, since the latter "determines guidelines of

military policy" (according to the federal law "On Defense," Article 4,

paragraph 1) and directs "construction, training and use of the state's

military organization and activities" (the Military Doctrine, paragraph 18,

approved on April 21, 2000).

******

#10

Russia's Role as Mediator with Iraq Viewed 

Vremya MN

July 25, 2000

[translation for personal use only]

Article by Aleksandr Umnov, chief expert of the Institute for Study

of Israel and the Near East: "Tarik Aziz Awakens Nostalgia For Old Times

in Moscow; Our Country Will Be Able to Achieve In Near East What Neither

USA Nor Iran Could Do"

   Vice-Premier of Iraq Tarik Aziz arrives in

Moscow today for a 3-day visit.   He will hold negotiations with

President Vladimir Putin and Prime Minister Mikhail Kasyanov, and will

meet with head of the MFA [Ministry of Foreign Affairs] of Russia, Igor

Ivanov.   Aside from that, the program of his stay provides for talks

with the heads of the leading Duma factions and with Security Council

Secretary Sergey Ivanov.

    The visit by Tarik Aziz cannot help but awaken nostalgic

recollections about our country's former positions in the Near East.  

Many still remember what influence the Soviet Union had in this

strategically important oil-bearing region of the world.   Today, the

situation is principally different.   The socialist superpower to oppose

the United States no longer exists, and the new Russia, which has arisen

on its ruins, is being actively edged out of the Near East.   Clear

evidence of this fact is Washington's monopolization of the Arab-Israeli

regulation, in which Moscow formerly played one of the leading roles.

    On this background, the visit of Tarik Aziz may appear to be a

conjunctive event, which does not reflect any major tendencies in the

region.   After all, since the attempted takeover of Kuwait, Baghdad (in

accordance with the UN decisions, substantiated primarily by American

military force) can neither freely sell oil on the world market, nor

implement any effective control over the north and south of its own

country.   The desire of the Iraqi leaders to weaken the limitations

imposed upon them in one way or another--or at least to once again

attract attention to their problems--is entirely explicable.   In turn,

the desire of Moscow (acting in the role of the traditional friend of the

Arabs against Western dictate) to get the support of Baghdad on the

Chechen question is also understandable.   But, in my opinion, behind all

these notions we also cannot help but see the main principle interest of

the new Russia in the Near East--an interest which radically differs from

the Soviet interest.

    Beginning in the mid-50's, the main strategic tasks of the USSR in

the region consisted of facilitating the "socialist orientation" of the

Arab countries and weakening the positions of Turkey, which had joined

NATO.   At that time, the confrontation with Israel, which prompted the

Arabs to enter into alliance with Moscow, and the armed struggle of the

Turkish Kurds against Ankara, fit neatly into Soviet foreign policy.  

Therefore, USSR declarations about wanting stability in the Near East

could not help but evoke entirely justified doubts.

    But today, unlike the past, our country really is vitally interested

in pacification of the region.   The situation here will directly

determine the state of affairs in the adjoining and also rather unstable

Caucasus.   Edging Russia out of Arab-Israeli regulation cannot help but

wound its pride.   However, if the Americans really do manage to achieve

a resolution of the age-old conflict in the Near East, this,

strengthening the prestige of the USA, would be to our country's benefit.

    Iraq is potentially one of the religions and ethnic "time bombs" of

the region.   As we know, the majority of Iraqis profess one direction of

Islam, while the ruling elite professes another.   Moreover, one-third of

all the residents are Kurds, of whom there are many not only in

neighboring Turkey, but also in adjoining Iran.   Not only is Baghdad

interested in seeing to it that this "bomb" does not explode, and that

the government of Iraq is preserved (which is entirely natural), but so

are such seemingly polar forces as Teheran and Washington.   It is no

accident that Iran, which in fact achieved victory in its many-year war

with Iraq, refrained from destroying it altogether.   The USA acted in

the same manner during "Desert Storm," which followed Baghdad's incursion

into Kuwait.   Moscow is no less interested in the Iraqi question than

are Washington and Teheran.   We cannot rule out the possibility that,

relying on old ties and new connections, Russia may do here what neither

Iran nor the USA are capable of achieving for one reason or another.

    * * *

    According to data of the Ministry of Trade of Iraq, after

introduction of international sanctions in August of 1990, the country's

losses comprised $140 billion.   Since the start of implementation of the

UN "Oil for Food" program in 1996, Iraq has exported $29 billion worth of

oil.   The UN has deducted $9 billion from this sum to pay compensation

for victims of the war in the Persian Gulf.   In 1996, Russia purchased

663 million tonnes of Iraqi oil, spending around $2 billion.

******

#11

Stratfor.com

Turkmenistan: The New Hermit Kingdom

27 July 2000

Summary

The leader of a key former Soviet republic, Turkmenistan, has isolated his

country from the international community more than the deserts of Central

Asia. In addition to his adoption of the title “Turkmenbashi” ­ “Father of

All Turkmen” ­ President Saparmurat Niyazov has recently instituted a

series of new laws on banking and education that will dramatically increase

the seclusion of this state, important for its vast supplies of natural

gas. Iran as a result, will gain in political and economic power in the

region.

Analysis

Turkmenistan has always been Central Asia’s odd man out. This year,

President Saparmurat Niyazov’s cult of personality has only served to

deepen Turkmenistan’s isolation. It began on Dec. 28, 1999 when Niyazov

proclaimed himself president for life. Niyazov’s cult of personality has

become even more encompassing ­ and stifling ­ by making both of his

long-dead parents national heroes. Completing the isolation, on June 21

Turkmenistan began registering and monitoring all foreigners.

On the economic front as well, the president has moved to isolate his

country of five million people. Turkmen citizens were barred from holding

foreign bank accounts on June 21, and the last Internet provider was forced

to close on June 30. On July 20 Niyazov announced a new policy: All

potential university students would be screened ­ back three generations ­

to filter out all but “the most worthy” applicants. Students previously

approved to study in the United States have been barred from departing.

All told, these measures efficiently prevent most legitimate cross-border

contact, discourage investment and torpedo economic development.

Consequently, the West will not have much to do with such an introverted

regime. Already, two Western firms interested in Turkmenistan’s four

trillion cubic meter natural gas deposits, General Electric and Bechtel,

have withdrawn their participation from the U.S-backed Transcaspian

pipeline project; now only Royal Dutch Shell remains.

The question now becomes who else wants a take of the Turkmenbashi’s

Turkmenistan? One possibility is the old imperial master: Russia. Russia

and Turkmenistan recently renewed a deal in which Turkmenistan will supply

Russia with gas. But in the long term, Moscow is more interested in

developing its own Arctic gas deposits than paying high prices for

unpredictable supplies of Turkmen gas. Turkmenistan is cool on close

relations as well. It is the only Central Asian state not participating in

the Russia-led security structures in the region. Ashgabat has even refused

to join the rest of the regional powers in opposing the Taliban. 

Kazakstan would like to use Turkmenistan as a transit state for oil and gas

exports to either the Persian Gulf or Turkey. But both deals depend first

upon the support of Tehran. Iran is Turkmenistan’s natural associate, if

not partner, for a number of reasons. Nearly all of Turkmenistan’s

population lies along its border with Iran. Even under sanctions, Iran can

provide Turkmenistan with what few consumer goods the Turkmenbashi deems

appropriate.

More importantly, Iran is the natural choice for export routes for Turkmen

petroleum. Already one small pipeline, Korpedje-Kurt-Kui, brings Turkmen

natural gas to Iranian markets. Larger potential projects include

liquefying Turkmen gas for re-export via the Persian Gulf and a large

pipeline to supply Turkey directly via Iran.

The price for this cooperation is clear ­ and seems one the Turkmenbashi is

willing to pay. Turkmenistan is to side with Iran on Caspian issues. After

all, the Caspian Sea holds one of the world’s largest concentrations of

petroleum deposits, yet a decade after the Soviet breakup, the legal status

of the Caspian Sea is still unresolved.

On July 25, Turkmenistan’s foreign minister, Boris Shikjmuradov, stated

that Turkmenistan would never negotiate the status of the Caspian unless

Iran takes part. Previously, Russia had attempted to band the former Soviet

states together to defeat Iran’s claims to a greater share of the sea.

Also, since Turkmenistan is still on speaking terms with the Taliban,

Ashgabat has the potential to be a valuable contact for Tehran on Afghan

issues.

Turkmenistan has efficiently severed its contacts to the outside world.

What few links remain go to Russia and Iran, and only Iran seems to have

any interest in or capability to establish more. It is Iran, therefore,

that will have the most influence over this remote ­ but valuable ­ corner

of Central Asia. 

******

 

#12

RUSSIAN NAVY TO GIVE PRIORITY TO NUCLEAR COMPONENT IN NEXT 10 YEARS

Text of report in English by Russian AVN Military News Agency web site

Moscow, 27th July: The plans of the Russian navy development for the next 10

years prioritize on the naval nuclear forces, navy commander Vladimir

Kuroyedov said on Thursday [27th July].

According to him, "the role of the naval nuclear forces will increase in any

variants of the staff structure of the strategic nuclear forces. Not only

because the START-2 treaty has been ratified but given that the naval nuclear

forces have a full advantage and are an ideal means for the country's

leadership in the realization of the strategic nuclear containment policy."

The commander said that the building of nuclear strategic submarines of the

Yuriy Dolgorukiy type, as well as those of the Severodvinsk and Amur, will

continue. The navy command will also take into consideration the conventional

purpose forces that are component to the navy, he said.

Kuroyedov also stressed that the country's new leadership has started taking

serious measures for strengthening the Russian naval status. He also reminded

that in the end of the 1980s/early 1990s the Russian navy was the strongest

in the world, comprising over 1,000 submarines, ships and vessels. The fleet

had a deployed system of coastal basing, developed infrastructure and an

up-to-date system of combat management.

Other Russian fleets - those of the sea, river and fishing - were also

powerful, Kuroyedov stressed. A lot has been lost since then, but the country

still has a chance to restore its naval power. This was said in President

Vladimir Putin's March 2000 decree "Concerning Russia's naval policy", and

the "Basics of the RF [Russian Federation] policy in the field of naval

activity for the period until 2010", also approved by the president.

******

#13

Russian Chief Rabbi Hails Stability, Good Ties With US Jews 

Moscow RIA

   New York, 25th July:   The American Jewish

community is sure of Russia's stability "and is striving for cooperation

with us", Russian chief rabbi Berl Lazar told RIA in an exclusive

interview during his short visit to the USA.

    Lazar met representatives of almost all the leading American Jewish

organizations during his trip.

    Lazar said that while once the American Jewish community had grounds

for doubt, now it sees clearly that the Russian Jewish community has wide

support - from President Vladimir Putin, the government, regional leaders

and city authorities.   He said this defines American Jews' highly

optimistic evaluation of what will happen in the future in Russia.

    "Today Russian Jews are not sitting on their suitcases", Lazar said. 

 "They are not preparing to leave tomorrow or the day after".   They are

staying and plan to take an active part in efforts to revive the Jewish

community in Russia.   I believe that this revival will succeed.   And

the American Jewish community is saying it is ready to help in these

efforts, in particular in starting businesses and setting up Jewish

schools," he said.

    Lazar said 21 Jewish schools would open in cities across Russia this

September alone.   Pupils will follow an ordinary school programme, but

also study Hebrew and Jewish history and traditions.   Parents are

expressing ever more interest in sending their children to these schools,

and not at all because they want to leave Russia, he said.

    Lazar said that the situation has changed fundamentally since Soviet

times.   "Then people were afraid to admit they were Jews.   There is

nothing like that now.   Now we are not talking about antisemitism, but

about ways to revive the community.   People feel there is stability", he

said.

    Talking about the difficulties between various groups within Russia's

Jewish community, Lazar said he was sure "this problem will be resolved

soon".

    On the issue of some Jewish organizations trying to artificially

inflate the problem of returning Jewish property confiscated by the

Soviet authorities, Lazar said it is not really clear to him why it was

necessary to start such a campaign and what its instigators hoped to

achieve.   "The basis of our approach to this issue is truth", he said.  

"The Russian government has nothing against returning the property.  

They have handed over four buildings in the last two months alone," he

said.   "The process is under way and will continue.   Everything takes

time," he said.

*******