September 27, 2001

This Date's Issues:   5462 • 5463 • 5464

Johnson's Russia List
#5463
27 September 2001
davidjohnson@erols.com

[Note from David Johnson:
1. The Times (UK): Roger Boyes, Putin impatient for Nato welcome.
2. AFP: Russia, other CIS countries face sharp economic slowdown: IMF.
3. Reuters: U.S. urges Chechen rebels to cut terrorism ties.
4. AFP: Chechen leader unfazed by US statement on links to bin Laden.
5. Luba Schwartzman: ORT Review.
6. Moscow Times: Kim Iskyan, Banking on Reform.
7. CDI Weekly Defense Monitor: Tomas Valasek, The Choices Before Former Soviet Republics.
8. RFE/RL: Francesca Mereu, What Happens When Putin's Deadline To Chechen Separatists Expires?
9. strana.ru: Mark Urnov: "Russia is now behaving absolutely sensibly." (re foreign policy)
10. Jamestown Foundation Monitor: ECONOMIC REFORM MOMENTUM IN RUSSIA
REMAINS STRONG and PROPOSED CORPORATE GOVERNANCE CODE SEEN AS IMPORTANT STEP FORWARD.
11. Financial Times (UK): Nancy Dunne, US-Russia move urged over chemical weapons.
12. Interfax: Putin's rating in Russia remains high.
13. BBC Monitoring: Putin surprised by Germany's softer line on Chechnya.]

********

#1
The Times (UK)
September 27, 2001
Putin impatient for Nato welcome
FROM ROGER BOYES IN BERLIN

PRESIDENT PUTIN urged the West yesterday to begin negotiations with Russia
on admitting the country to Nato.
Meeting editors of German newspapers here, he showed some impatience that
the alliance was not moving faster to open up to Moscow.

“Everything depends, of course, on what is being offered,” said Mr Putin,
who is on a three-day state visit to Germany. “There is no reason any more
for the West to hold up such talks.”

Mr Putin told the German Parliament on Tuesday that security structures had
to be overhauled, that the Cold War was over and that instead of superpower
competition there should be a strategic triangle linking the US, the
European Union and Russia.

Earlier Gerhard Schröder, the German Chancellor, had given Mr Putin some
cautious encouragement on entering Nato. The West has kept open the vague
prospect of Russian membership, but the offer was always a little
half-hearted because the nature of the alliance would have to be completely
rethought. Russian generals, too, were critical of the idea.

The terrorist attacks on the United States seems to have changed Russian,
or at least Mr Putin’s, thinking about the alliance. It had been expected
that he would use his German trip to set out the price of Russian
co-operation with the US-led war against terrorism. Mr Putin, it was
surmised, might demand a slowdown of Nato’s attempts to recruit the Baltic
republics to the alliance. Instead, the Russian leader is arguing for the
alliance to be thrown wide open and perhaps defined by the issue of
terrorism, the new global enemy.

Diplomatic analysts in Berlin believe that Mr Putin may be more concerned
with boosting Russian channels of communication with Nato than with
membership.

********

#2
Russia, other CIS countries face sharp economic slowdown: IMF

WASHINGTON, Sept 26 (AFP) -
The economies of Russia and the other 11 members of the Commonwealth of
Independent States are contracting sharply but continue to recover from the
1998 Russian crisis, the IMF said in its World Economic Outlook report
published Wednesday.

In Russia, the region's biggest economy, gross domestic productgrowth this
year is expected to halve to 4.0 percent, from 8.3 percent in 2000, and to
hold steady at 4.0 percent in 2002.

The combined economic growth of the 12-state CIS is projected to shrink to
4.4 percent this year from 7.9 percent in 2000, and to contract further to
4.0 percent in 2002.

But the CIS countries, which had lagged in introducing structural reforms
when growth was strongest, had to press ahead with change, the report
insisted.

The IMF explained that most of the 2001 regional slowdown was due to a
partial reversal of the factors that had boosted growth earlier, including
lower energy prices, real exchange rate appreciation and weaker-than-expected
activity in Western Europe.

Russia, despite some weakening in oil prices from their late 2000 peaks and
continued high capital outflows, was expected to maintain a strong surplus in
its current account and overall balance of payments, the IMF said.

"The authorities face the difficult task of creating appropriately tight
domestic liquidity conditions to restrain inflation while avoiding an overly
rapid real appreciation of the ruble that could threaten economic growth," it
said.

Despite Russia's unexpectedly strong fiscal surpluses, "inflation is running
ahead of projections, suggesting that monetary policy may need to be
tightened."

The IMF hailed Russia's "encouraging" 10-year reform program plan. Its
recently implemented tax reform was "a major step forward" but the government
had to monitor closely the revenue implications, especially if oil prices
declined further, the IMF warned.

For the overall CIS, the key to sustainable growth remained the structural
reform process -- notably in institution building and governance, business
restructuring and transforming the role of the state.

But indicators produced by the European Bank for Reconstruction and
Development "suggest that little progress was made between 1998 and 2000
despite relatively favorable macroeconomic conditions", the IMF said.

The 12-state CIS comprises Russia, Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyz Republic, Moldova, Tajikistan, Turkmenistan, Ukraine and
Uzbekistan.

********

#3
U.S. urges Chechen rebels to cut terrorism ties
By Randall Mikkelsen

WASHINGTON, Sept 26 (Reuters) - The United States on Wednesday welcomed
Russia's offer for talks with Chechen separatists and urged them to cut ties
with terrorist groups, handing a diplomatic victory to Russian President
Vladimir Putin.

But President George W. Bush coupled the welcome with a call for Putin to
respect human rights in Russia's Chechnya province, long a source of
U.S.-Russian frictions.

The U.S. welcome of Putin's peace initiative -- which the Russian leader
reinforced with a 72-hour deadline for acceptance -- followed Putin's offer
of limited support for the U.S.-led effort to combat terrorism in the wake of
the Sept. 11 attacks on New York and Washington.

The White House denied there was any deal linking the two actions.

"The Chechen leadership, like all responsible political leaders around the
world, must immediately and unconditionally cut all contact with
international terrorist groups such as Osama bin Laden and the al Qaeda
organization," White House spokesman Ari Fleischer told Reuters.

Bush later told reporters, "I would hope that the Russian president, while
dealing with the al Qaeda organization, also respects minority rights within
his country."

Bush has accused bin Laden, a wealthy Saudi-born militant, and his al Qaeda
network of masterminding the Sept. 11 attacks on New York and Washington that
left nearly 7,000 dead or missing and presumed dead. Bin Laden denies
responsibility.

The White House said on Wednesday the United States has known for years that
al Qaeda had connections in Chechnya.

"To the extent that there are terrorists in Chechnya, Arab terrorists
associated with the al Qaeda organization, I believe they ought to be brought
to justice," Bush said. "We do believe there's some al Qaeda folks in
Chechnya."

The United States has long criticized Russia for using excessive force
against the Chechen rebels, and in last year's presidential campaign Bush
said he would cut off aid to Russia until it withdrew from Chechnya.

NO DEAL, WHITE HOUSE SAYS

Putin on Monday coupled the offer for talks on Chechnya with his offer of
limited support for the U.S.-led effort to combat global terrorism, which
Fleischer said included permission for humanitarian flights over Russian
territory, intelligence information and help in potential search and rescue
operations.

But Fleischer denied there was any "deal" exchanging U.S. support on Chechnya
for Russia's cooperation on terrorism. "No such conclusion should be
reached," Fleischer told reporters.

Putin's offer opens the door to a political settlement, Fleischer said. "The
United States has always said that only a political process can resolve the
conflict in Chechnya, and we welcome the steps by the Russians to engage the
Chechen leadership," he said.

He also welcomed as an "encouraging sign" Chechen rebel leader Aslan
Maskhadov's naming of an envoy for the talks, although there is doubt in the
region over whether Maskhadov has control over hard-line rebels in Chechnya.

The U.S. statement on Chechnya "demonstrates growing understanding in the
United States, although still with reservations, that the normalization of
the situation in Chechnya is closely intertwined with the struggle against
international terrorism," a Kremlin spokesman said.

Interfax news agency quoted spokesman Sergei Yastrzhembsky as saying the U.S.
statement also confirms the links between bin Laden and the "irreconcilable"
Chechen rebel leaders.

Western officials have said the crisis set off by the Sept. 11 attacks has
led to a reshaping of relations with Russia. German Chancellor Gerhard
Schroeder, after meeting Putin on Tuesday, hinted the West would take a
softer line toward Russia over Chechnya.

Fleischer denied the United States had violated any principles in wooing
states including Russia to join an anti-terror coalition.

"American policy will still be based on what's right for America, in
accordance with enduring principles of human rights (and) cooperation with
nations around the world in accordance with those principles," he said.

********

#4
Chechen leader unfazed by US statement on links to bin Laden

MOSCOW, Sept 26 (AFP) -
The pro-independence leader of Russia's mainly Muslim republic of Chechnya
reacted coolly Wednesday to a US statement calling on him to break off all
contact with the Saudi-born extremist Osama bin Laden, clearly implying
that there were no contacts to break off.

A spokesman for Aslan Maskhadov, the main rebel leader in the breakaway
republic, said that the appeal made earlier in the day by White House
spokesman Ari Fleischer posed "no problem."

"As regards the call from the White House, I can assure you that the
(Chechen) leaders see no problem whatsoever," said spokesman Mairbek
Vachagaev. He refused to say anything else.

Speaking earlier in Washington, Fleischer called on Chechnya's
pro-independence leaders to "immediately and unconditionally" break off all
contacts with bin Laden and his Al Qaeda network, which Washington blames
for the September 11 terror attacks in the United States.

Fleischer denied that the appeal was part of a softer line on Russia's
bloody campaign in the province as part of a deal to secure Moscow's
support for a global war on terror in the wake of the attacks.

"No such conclusion should be reached," said the spokesman, who added that
US President George W. Bush believed that "the only solution in Chechnya is
a political solution."

The Kremlin's advisor on the Chechen conflict, Sergey Yastrzhembsky,
welcomed the US declaration.

He said it was a "demonstration of a better understanding in the US that
the normalisation of the situation in Chechnya is directly linked to the
struggle against international terrorism."

Yastrzhembsky said it also confirmed what Moscow had said many times
before: "That's to say, that there are direct links between international
terrorist groups -- in particular the bin Laden organisation -- and Chechen
fighters."

********

#5
ORT Review
www.ortv.ru
Compiled by Luba Schwartzman (luba7@bu.edu)
Research fellow at the Institute for the Study of Conflict, Ideology and
Policy at Boston University

HEADLINES,
Wednesday, September 26, 2001
- Russian President Vladimir Putin continues his official visit to
Germany. The president spent most of the day meeting with the most
influential members of Germany's business and social circles. Before
leaving Berlin, Putin met with the executives of Germany's leading media
companies. The Russian president then flew to Dusseldorf, the capital the
Nordrhein-Westfalia county, and, from there, took a helicopter to Essen,
one of Germany's main industrial and financial centers.
- In the morning, President Putin and Italian Prime Minister Silvio
Berlusconi took advantage of being in Berlin at the same time to have a
working breakfast at the Steinberg Hotel, where Putin was staying.
Berlusconi complimented the Russian president's speech, and Putin spoke
very favorably about the meeting and about Italy's position concerning the
struggle against terrorism.
- The Chechen government and the heads of all of the republic's regions
gathered today to work out the mechanisms for the voluntary disarmament of
the Chechen fighters suggested by Russian President Vladimir Putin. The
most important thing is to avoid provocations at the collection points.
- A resident of the Nozhai-Yurt region of Chechnya has turned in his
machine gun to security services. He will now be freed from criminal
responsibility.
- Chechen field commanders who voluntarily give up military actions and
turn themselves in can receive protection. Deputy Presidential
Plenipotentiary to the Southern Federal District Nikolai Britvin declared:
"We will guarantee the safety of these people -- safety both, from
retributions of overzealous extremists, and from lynch-law trials by the
peaceful residents of the republic."
- Iraqi President Saddam Hussein met today with Akhmad Kadyrov, the head
of the Chechen administration, who brought with him to Baghdad a message
from President Putin.
- Two of the three prisoners who had escaped from Moscow's Butyrskaya jail
have been detained in a forest in the Serpukhovsky region, located in the
Moscow oblast. At least 270 people -- members of practically every
special service -- actively participated in the operation. The prisoners
were armed with two knives and an ax, and fought tooth and nail. Special
service officers had been instructed to take the prisoners alive. Right
now the criminals are being interrogated. Authorities suspect that the
escape took at least a month to plan.
- A powerful tornado ripped through Sochi. One man died, several were
injured. Tons of salt water that were caught up by the tornado as it
formed over the Black Sea poured down onto houses, roofs were torn down,
trees felled, and several larger building damaged.
- The Norwegian Gigant-4 barge has arrived at the site of the sinking of
the Kursk nuclear submarine.
- Russian Defense Minister Sergei Ivanov is in Brussels, at a meeting of
the Russian-NATO Permanent Joint Council. The main topic of discussion
will be the means of fighting international terrorism. As Ivanov
declared, Russia will be able to work in search and rescue as well as
humanitarian operations. These actions, however, will be limited to the
territories of the Central Asian Nations and Afghani regions under the
control of the Northern Alliance.
- Russian Emergencies Minister Sergei Shoigu chaired a meeting of the
government commission for the restoration of Lensk. The time allowed by
the president for restoration of the flood-damaged city runs out on
October 1st, when the state commission will meet in Lensk to sum up
results.
- Two people died when a car blew up near the Talgin police station in the
North-Western suburb of Makhachkala. Special service officers, policemen
and Makhachkala prosecutors are currently working on an on-site
investigation.
- Four of the participants of the September 11 terrorist acts may have
fought in Chechnya.
- Ministers of the Organization of Petroleum Exporting Countries (OPEC)
will need to decide whether to cut oil output. Ministers are meeting on a
bi-lateral basis until the official opening of the conference. The United
States is insisting that cartel members increase oil production.
- Snipers in Vladivostok have began another operation to destroy old
unused ammunition and explosives.
- The Russian State Duma will hold another meeting today. Deputies will
review the problem of international terrorism, as well as a number of
economic laws.

******

#6
Moscow Times
September 27, 2001
Banking on Reform
By Kim Iskyan

Thursday's meeting of the Cabinet will feature discussion of banking sector
reform, which has been the bete noire of the Putin administration's
otherwise very successful economic reform program. The focus of discussion
is a compromise strategy document developed by the Russian Union of
Industrialists and Entrepreneurs (which wrote the so-called Mamut plan),
Duma deputies, the Central Bank and others. Government approval of the
program would mark its first step toward passage by the Duma.

Although there are some signs of positive evolution, the Russian banking
sector is presently stagnant with very little change having taken place
since the financial crisis of August 1998. There has been minimal progress
on banking sector restructuring and, indeed, the sector remains so small
that it plays an extremely limited role in the economy as a whole.

The poor state of the banking sector means that banks are not converting
savings into loans, which is the fundamental, and crucial, role of banks in
fueling economic growth. The ratio of domestic lending to GDP -- a key
indicator of whether banks are effectively doing their job -- is a fraction
of the levels of other emerging markets, at 12 percent. This compares with
Poland at 24 percent, and the Czech Republic at 57 percent.

This means that the vast majority of Russian companies in need of funds for
investment cannot get them from the banking sector. Amazingly, a mere 3
percent of total domestic investment funds come from the banking sector,
with the vast majority of the balance coming out of companies' retained
earnings. Thus, large commodities exporters that have plenty of cash flow
to reinvest are okay. However, Russia's small- and medium-sized
enterprises, which should be an important engine of economic growth for
years to come, are starved for investment funds, due in part to the
underdevelopment of the country's banking sector.

The Putin government, to its credit, has made a solid attempt at bringing
about the passage of banking sector reform. The Duma has passed roughly
three-quarters of the banking sector-related measures called for in Putin's
reform program. In theory, this legislation should pave the way for higher
levels of disclosure, increased responsibility on the part of bank owners
for their institutions, and expanded supervisory powers for the Central
Bank. Additionally, the measures that comprise the banking sector
development strategy to be discussed Thursday would result in an
improvement in the investment environment for foreign banks, increased
transparency in the sector overall and improved creditor protection. For
the most part, the legislation is both sound and well conceived. Although
key issues, such as the role of state-controlled banks in the sector, are
not addressed.

The real problem is that the banking sector legislation that the Duma is
expected to pass in the coming weeks or months will not have a major impact
for the simple reason that implementation is weak. This is the bugbear of
any reform program as it is, by definition, hard to change the status quo.
However, this caveat is particularly relevant for the Russian banking
sector, in view of the fact that over the past three years the Central Bank
has largely ignored a major part of its core mandate: banking sector
regulation. The lack of any real consensus for reform and the tangled web
of incestuous relationships between the government and the banking sector
mean that there is little reason to believe that fresh legislation passed
by the Duma will be properly implemented anytime soon.

Furthermore, effective implementation is not feasible in the present legal
and regulatory environment. A wide range of enabling measures -- in the
areas of judicial reform, corporate transparency, the bankruptcy code,
property rights and others -- have to be passed and implemented for banking
reform measures to really take effect.

Besides putting future economic growth at risk, a failure to fundamentally
address the state of the banking sector increases the chances that the
present stagnation in the sector will eventually turn into a crisis.
Although there are few immediate catalysts for collapse, the foundations of
the sector, while improving on some fronts, are still, in many ways, as
weak as they were prior to the August 1998 crisis.

There are, nonetheless, some bright spots in Russia's banking sector. The
passage of reformist regulations is certainly not bad, although it is
dependent on the Central Bank becoming more proactive in its role as
banking sector regulator. There have been some signs of healthy
consolidation of the sector. And a few banks have lengthened their
strategic planning time horizons considerably from six months -- as tends
to be the case now -- to up to three years. Also, the credit risk analysis
skills of participants in the sector have improved significantly over the
past few years.

However, in spite of the positive noises emanating from the Russian
goverment, it seems real change in the sector will unfortunately be all too
limited for the time being.

Kim Iskyan is an analyst at Renaissance Capital. He contributed this
comment to The Moscow Times.

********

#7
CDI Weekly Defense Monitor
Center for Defense Information
1779 Massachusetts Ave., NW * Washington, DC 20036
(202)332-0600 * Fax (202)462-4559 * www.cdi.org
Volume 5, Issue #36 September 25, 2001

The Choices Before Former Soviet Republics
Tomas Valasek, Senior Analyst, tvalasek@cdi.org

President George W. Bush's categorical "you are either with us or against us
approach" forces Afghanistan's neighbors to scramble for a right mix of
policies combining assistance for the United States with long-term regional
aspirations.

RUSSIA

Russia expressed strong moral support for U.S. campaign against terrorism.
Following the attacks on New York and Washington, Russian President Vladimir
Putin immediately sent a message to President George W. Bush, saying that
"the entire international community should unite in the struggle against
terrorism." Moscow claims to be facing the same terrorist threats in
Chechnya. Individuals close to Osama bin Laden and his al Qaeda network have
indeed been reported to operate there, even though the vast majority of the
population in this breakaway republic is fighting for independence from
Russia rather than religious goals. To bolster Putin's campaign against
Chechnya, often criticized in the West, Russian intelligence services already
sought to link Chechnya to terrorist attacks in the United States. The
Russian security service, FSB, announced that it discovered flight manuals in
a hideout allegedly used by Chechen fighters.

But Russia's support was not unequivocal. Putin's declared foreign policy of
rapprochement with the West has always been qualified with pursuit of
Russia's regional agenda, often incompatible with the views of NATO and the
European Union countries. Hence, Russia's initial statements of support were
modified by considerations unrelated to the anti-terrorist campaign, such as
the desire to add legitimacy to its Chechnya campaign and to strengthen its
influence in Central Asia.

Moscow wants to maintain, and perhaps expand, its influence in the South
Caucasus and Central Asian republics of the former Soviet Union. It quickly
sought to maneuver itself in the position of a mediator between Washington
and the independent republics of Uzbekistan and Tajikistan, bordering on
Afghanistan, whose bases the United States would like to use for military
operations against Osama bin Laden and Afghanistan. Moscow sought to preempt
NATO or U.S. presence in the Commonwealth of Independent States (CIS), the
organization of former Soviet republics, by declaring, in the words of the
country's Defense Minister Sergei Ivanov, that "Central Asia is within the
zone of competence of the CIS Collective Security Treaty -- [there are] no
grounds, even hypothetical, for a possible NATO deployment in Central Asian
States."

However, Moscow modified its stance after Washington apparently approached
Central Asian countries directly. Russian Foreign Minister Igor Ivanov said
on Wednesday that "each country will decide for itself to what degree it will
be cooperating with the U.S.A." Moscow's compromise avoided a potentially
humiliating defeat -- Uzbekistan and other Central Asian countries were
apparently willing to grant the United States forces the use of their land
and air space anyway (see below for Uzbekistan's position).

As for Russia's own participation in the campaign, Moscow has extended
intelligence cooperation while holding back on use of force. Russia and the
United States remain divided over the questions of NATO enlargement, the
alliance's roles, and what Russia calls "U.S. unilateralist policies" --
political and military operations outside the framework of the United
Nations. Despite shared interest in fighting terrorism, Moscow is unwilling
to take part in a U.S.-led coalition, especially one operating on or near the
territory of the former Soviet Union. "The United States has armed forces
powerful enough to handle the task by themselves," said Gen. Anatoly Kvashin,
chief of Russia's General Staff. The Kremlin limited its participation to
intelligence sharing and search and rescue efforts, if necessary.

At the same time, Moscow wants a say in developments in Afghanistan,
particularly if U.S. actions result in the toppling of the Taliban regime and
installment of a new government. Russia has an interest in making sure that
the successor government is friendly to Moscow and helps stabilize regions to
Russia's south. Putin needed a formula to keep a distance from U.S.
operations, while becoming more closely engaged in military and political
movements in Afghanistan. He found one in siding with the Northern Alliance,
a grouping of Afghan military forces opposing the Taliban. Putin declared on
Monday that Russia would support the alliance "through arms and technological
supplies." In effect, Moscow has only confirmed what has already been its
clandestine policy for some time but there is no doubt Russia is serious --
it will support anti-Taliban forces in order to give itself a decisive say in
the composition of the government after Taliban.

UZBEKISTAN

Moscow's warnings to its former satellites to seek guidance from Russian on
participation in the U.S. campaign seem to have fallen on deaf ears in
Uzbekistan. Uzbek President Islam Karimov offered to "combine efforts to
fight terrorism" and, in a pointed reference to Russia, said that his country
is "not obliged to coordinate foreign policy with anyone." U.S. media are
reporting that the Pentagon is indeed moving forces to Uzbekistan. The
country's exact participation in the anti-terrorist campaign is unclear.
Uzbekistan denied having agreed to let the United States use its bases on the
Afghan border, but local observers report that several planes with U.S.
military personnel already landed in Tashkent. Uzbekistan has a number of
incentives to cooperate with the West in its anti-terrorism campaign.

Uzbekistan has its own problem with terrorism. The Islamic Movement of
Uzbekistan, operates partly out of Afghanistan and has suspected links with
Osama bin Laden. In the past, IMU staged attacks on Uzbek territory and
attempted to assassinate Karimov. In a possible attempt to rally Uzbek
support, Bush pointedly listed the IMU as a threat in his speech on Sept. 20.
The analogy is partly misleading - IMU has very different goals from those of
bin Laden and al Qaeda; most regional observers agree that the IMU emerged
primarily as a response to the Uzbek government's nepotism, corruption, and
its crackdown on some Islamic institutions. Cooperation with the United
States on fight against terrorism would allow Karimov to bolster his campaign
against the IMU and other Islamic groups such as the Islamic Party of
Liberation (Hizb ut Tahrir).

Participation in a U.S. led anti-terrorist campaign would also enable
Uzbekistan to strengthen its ties with the West and further distance itself
from Moscow. Karimov's foreign policy has shifted several times between
Moscow and the West but overall, Uzbekistan has moved closer to Europe and
the United States than Russia in recent years. The country dropped out of the
CIS Collective Security Treaty and joined a rival regional grouping, the
pro-Western GUUAM (Georgia, Uzbekistan, Ukraine, Azerbaijan and Moldova)
alliance in 1999. Uzbekistan seeks alliances wherever it can secure financial
help and military assistance in its fight against domestic militant groups.
Washington is likely to extend all forms of support to Uzbekistan in exchange
for the use of its bases; hence the planned military campaign is likely to
shift Uzbekistan's foreign policy even closer to the West.

TAJIKISTAN

Tajikistan is the poorest of all former Soviet Republics. It depends almost
entirely on the Russian military (6,000-10,000 troops) and border guards
(15,000-20,000 troops) to guarantee its stability against fighter incursions
and refugee waves from neighboring Afghanistan. Unlike Uzbekistan, Tajikistan
is also bound to Russia by the CIS Collective Security Treaty. It has the
little leverage vis-?-vis Russia and is likely to take its instructions on
participation in the U.S. anti-terrorist campaign from Moscow. Even though
Foreign Minister Talbak Nazarov said that Tajikistan was ready to cooperate
with the United States, Prime Minister Okil Okilov added that the government
will "obligatorily consult with Moscow first."

Perhaps in response to Russia's warnings against NATO operations in Central
Asia, Tajikistan further distanced itself from Washington on Sept. 16. The
Tajik Foreign Ministry issued a statement saying that reports of planned U.S.
military strikes staged from Tajikistan are "totally without foundation."
Somewhat surprisingly, U.S. media reported on Sept. 19 that U.S. forces are
moving to Tajikistan after all. These reports were further denied by the
Tajik authorities, who said on Sept. 21 that they have "no information on any
negotiations held between our countries [Tajikistan and the United States]."

If Tajikistan indeed relented on U.S. bases in its territory, the information
would likely never be made public, in part because the cooperation could
jeopardize the stability of the country's government. The current
administration contains a strong radical Islamic faction, a vestige of
1992-1997 civil war in which the United Tajik Opposition fought the
ex-communist authorities of Tajikistan.

*******

#8
Russia: What Happens When Putin's Deadline To Chechen Separatists Expires?
By Francesca Mereu

In a televised speech this week, Russian President Vladimir Putin spelled out
a five-point strategy in which Moscow will support U.S. military operations
in Afghanistan by assisting the Afghan opposition forces with arms and
technological supplies. Putin also linked the fight against terrorism to the
rebellion Russia is facing in breakaway Chechnya and gave the separatists
there 72 hours to begin disarmament talks. The question is, what will Moscow
do if the separatists don't hand in their weapons?

Moscow, 26 September 2001 (RFE/RL) -- Russian President Vladimir Putin has
outlined Russia's plan to help the United States battle terrorism.

The U.S. is considering a military assault against Afghanistan, the country
believed to be harboring Osama bin Laden, the terrorist suspected to have
masterminded the 11 September attacks in New York and Washington.

In a speech to the Russian people this week (24 September), Putin said Moscow
will send arms and military equipment in support of the Northern Alliance --
the anti-Taliban opposition in Afghanistan -- and offer its airspace to any
humanitarian aid flights that might result from possible military action
against Afghanistan. He also promised to share intelligence information on
the actions and movements of international terrorists.

In his speech, Putin -- referring to Russia's conflict in its breakaway
republic of Chechnya -- said his country has been leading its own fight
against international terrorism and has on many occasions asked the
international community for help. He emphasized that the Chechen conflict
should not be considered "outside the background of efforts against
international terrorism."

Putin urged the Chechen rebels to end their alleged contacts with
international terrorists. He gave them a 72-hour deadline to contact Russian
authorities and begin to discuss the process of disarmament.

Victor Kazantsev, the president's envoy to the North Caucasus, was appointed
to lead the negotiations from the Russian side. Chechen separatist leader
Aslan Maskhadov said in a statement yesterday that he will send Akhmed
Zakaev, the deputy prime minister of the separatist government, to any such
talks.

Maskhadov pointed out that the Chechen separatists are not linked to
terrorism and that the conflict is rooted in Chechnya's long desire for
independence.

Gennady Selesnyov, the president of Russia's State Duma or lower house of
parliament, welcomed Putin's ultimatum to the rebels:

"This will give one more chance to those people who turned to the side of
[terrorists] bands accidentally or due to their religious principles, or to
those who were forced under the menace of machine guns to take part in some
armed detachments."

The Republic of Ingushetia borders Chechnya in the east. It has a population
of 350,000 and currently hosts some 170,000 refugees. Ingushetia's President
Ruslan Aushev is not happy with the Kremlin's ultimatum. He says he does not
believe Chechen fighters are ready to give up their weapons and is worried
that more refugees may flood into Ingushetia:

"I doubt that [the Chechen fighters] will give up their weapons. But after
the ultimatum, the federal forces will increase their presence in Chechnya
and there will be a retort [from the Chechen fighters' side]. This situation
will have repercussions on the [Chechen] civilians. Not only the [refugees
who live in Ingushetia] won't go back home, but I think that other refugees
may come [to Ingushetia] from many Chechen villages."

Ingush officials say the tiny territory lacks the necessary structures to
host the deluge of refugees. Aushev said a new wave of refugees would be a
significant social danger and a further strain on the republic's economy.

Sergei Ushenkov is deputy chairman of the State Duma's Defense Committee. He
welcomes Putin's call to support the international efforts to fight
terrorism, but he said there are many things that remain unclear concerning
his ultimatum to the Chechen rebels. Ushenkov says it is impossible to settle
in 72 hours a situation that required so many years of war.

"In a two-year anti-terrorism operation, [authorities] were unable to reach
any [positive] results, and [now] it is impossible to believe that in 72
hours [the Chechen] fighters will give up their weapons. It can be explained
in two different ways: [one], the information that Putin is given is not
reliable. [Two,] the president of the Russian Federation wishes to use the
international anti-terrorism wave to appear as a strong, tough opponent of
terrorism."

Ushenkov believes this is not the right way to fight terrorism. He says it is
not clear what Putin will do if the Chechen rebels don't give up their
weapons.

"This kind of ultimatum is unlikely to be successful against terrorism.
Moreover, it is not clear whether the president is going to declare the state
of emergency or not if the ultimatum isn't fulfilled."

This is also the question many of Russia's newspapers are asking today. The
daily "Novye Izvestia" considers the president's ultimatum strange: "It [the
ultimatum] dictates conditions, but it does not say what kind of sanctions
[there will be] if conditions aren't fulfilled. What are authorities going to
do after the 72 hours? If they don't do anything, they will look a bit silly.
But we can wait for the worst: They may start doing something and now the
West is too busy with its own troubles."

Ushenkov says the authorities must take some form of action if the ultimatum
isn't fulfilled, but whatever action is taken, it must be according to the
law or Russia, he says, "will lose face once again."

Ushenkov says that if Russia uses illegal methods in its fight against the
separatists, it will tarnish its "already weak democratic image." Ushenkov
says the state must always act according to the law: "The state differs from
bandits because it acts according to the law. Even a fight against bandits
should be carried out according to the law."

Ushenkov hopes the Russian authorities will not repeat the mistake they made
in September 1999 when they ordered a new invasion of Chechnya. Now,
according to Ushenkov, a reinforcement of Russian troops in Chechnya will
only be further stimulus for the rebels to fight harder.

Andrei Piontkovski, the director of the Center for Strategic Studies, told
RFE/RL's Russian Service that he was surprised to hear Russia give advice to
the West on how to behave in any eventual war in Afghanistan.

"They all say the right things," Piontkovski says. "You shouldn't kill
civilians, otherwise you are going to have many refugees and then people will
hate America and you'll have more terrorists and so on."

Piontkovski says the Russian authorities apparently believe they can do what
they want in Chechnya now, since the West, they believe, cannot criticize
them anymore.

"When they [generals and politicians] go to a [TV] studio to answer different
questions with triumphant glints in their eyes, they say: 'Now, at the end,
we'll have carte blanche in Chechnya. Nobody will have the heart to criticize
us.' What kind of carte blanche [are they talking about]? We turned Grozny
into Dresden. We lost thousands of soldiers. We killed thousands of
civilians. We are warning the Americans about the mistakes we made. And,
unfortunately, the same idea was present in the second part of President
[Putin's] speech."

So far, some 48 hours into Putin's ultimatum to the separatists, no visible
results can be seen. In fact, reports indicate that fighting is continuing in
the breakaway republic.

********

#9
strana.ru
September 26, 2001
Mark Urnov: "Russia is now behaving absolutely sensibly"
In the following interview, the Board Chairman of the Political Technologies
Center comments on Vladimir Putin's latest foreign policy steps.
By Victor Sokolov

In the following interview, the Board Chairman of the Political Technologies
Center comments on Vladimir Putin's latest foreign policy steps.

Q: Putin has enchanted everyone by his speech in Berlin. Does it look as if
Germany will become the pipeline to bring Russia's ideas to the West?

A: During the past decade the West behaved abominably in respect to Russia,
abominably, in the style of Bzrezinsky's absolutely paranoid recommendations.
The West simply tried to take advantage of the fact that Russia had become
weaker. It tried to gain some petty, often silly, partially strategic
advantages. America simply played the role of backyard bully who took
advantage of the fact that his rival's arm was broken in order to say he was
the boss that he would lay down the rules.

That was indecent and senseless behavior that, judging by everything simply
accompanies periods of relaxation, peace and tranquility. Such is modern
civilization. As soon as everyone slackens, the elite become stupid.
Lightning struck today and everyone could feel the one common danger. And on
this background, the behavior of the western partners has become more decent.

A short time ago, the American ambassador still said that they had no
intentions of changing their views on Chechnya. But today they are coming out
with more flexible and meaningful phrases. Germany proposes taking a
differentiated approach to Chechnya. In other words, what we are talking
about here is dumping the policy of double standards and stopping attempts to
take advantage of someone else's trouble.

Everyone could feel that this was not someone else's trouble, but a common
trouble. In any case, everyone is beginning to realize this - everyone except
Brzezinsky who has today come out with another of his paranoid articles.

Q: One gets the impression that the West has failed after all. It has failed
after all, and now we are going to speak and make up for what was lost?

A: In any case, that attitude of "we can do anything" has run into an awful,
a terrible reply.

Russia now is behaving absolutely wisely. Yes, we are going to participate in
the anti-terrorist action, but this participation will be minimal. Our
special purpose troops will be participating rescue operations. Air corridors
will be opened, while the Northern Alliance will openly be given significant
military support. All this is absolutely fair and just. But what concerns
allied relationships with the USA - that will be possible only after double
standards are given up.

Q: Do you think the Americans have started giving them up?

A: It looks like that. According to the reaction of the American ambassador
about a week ago when he said one thing, and today is speaking more decent
and plausible words, it looks as if certain shifts are starting to occur.
Thank God.

Q: Now it seems as if the zone of responsibility of NATO and the USA, from
the point of view of flying range, stretches out to the Far East, to Central
Asia…

A: That is not a zone.

Q: Nonetheless, isn't that already some kind of humanitarian basis for
further creating a new system of European and world security, for accepting
Russia into NATO? Putin hinted at that in his speech in Berlin yesterday. And
that is not the first time he has hinted at that.

A: And why not? The problem here lies strictly in mentality. After all, just
a few years ago when the Cold War was folding up, NATO was really worried
because the concept under which it was created was disappearing. What would
it have to do after that? Finally, they found something to do in the form of
brazen deployments and air strikes in Europe and Iraq with all the ensuring
consequences. And if today under the terrorist threat the mentality of the
western elite changes, a great deal can be done.

Q: The carcass of that anti-terrorist coalition is gradually beginning to
shape out, but will not all that disappear after the tactical strikes of
retribution?

A: Anything can happen. So far, no one guarantees anything. I want to stress
once again that during the past decade, the behavior of the western elite was
irresponsible, childish and indecent. Perhaps this was due to the influence
of people like Albright and her like who foist upon the superpower East
European mentality that the main enemy is Russia. That Russia must be
strangled. This obsessive, mad idea is not so dangerous when it is localized
somewhere in Poland or the Czech Republic, but when the bearer of such a
petty mentality stands at the helm of a superpower, it begins to harm the
entire world. But if this mentality undergoes some kind of restoration, if it
is finally cured, the western elite will start thinking in truly global
categories of the modern world, then we shall be able to do everything, then
it will be possible to restructure the UN that today has become absolute
inadequate.

Q: Then it will be possible to build NATO in a way that it becomes part of
that system?

A: Perhaps NATO can be rebuilt. It may become possible to build a global
system of security. And subsequent steps may become possible but only
condition of changing approaches. The fact that Putin now has gone to Germany
is an absolutely correct move.

Q: Does he and Schroeder want to give an example of how two European
countries can cooperate?

A: It is not simply an example. In reality, these are two countries that are
extremely interested in developing normal relations - Germany because of its
great economic potential. Today Germany can become precisely that country,
due to its potential, might and approach that will orient itself towards
changing the climate that was being formed over the past decade.

Q: First in Europe and then in America?

A: Of course.

*******

#10
Jamestown Foundation Monitor
September 26, 2001

ECONOMIC REFORM MOMENTUM IN RUSSIA REMAINS STRONG. The wave of sweeping
economic reform legislation that Russia has seen this year is likely to
create unprecedented favorable conditions for sustained economic growth. The
country now has a unique chance to catch up with its more successful Eastern
European peers in the process of postcommunist economic transition. While
much remains to be done and questions remain about the implementation of
reform legislation the Duma has adopted, there is compelling evidence that
President Vladimir Putin and his team will be able to accomplish more than
any of their recent predecessors to transform Russia into a "normal country"
with a dynamic economy. There is a consensus in Moscow that the amount of
reform legislation the Duma is likely to pass in the next several months
will be even greater than that in its spring session. Given the government's
de facto majority in the Duma, the upcoming session of the parliament is
likely to be quite fruitful, provided that the newfound cooperative
relationship between the legislature and the executive remains intact.

The State Duma's autumn session opened on September 19. Of the 2,000 bills
awaiting discussion in the Duma, approximately 700 are scheduled to be
reviewed by the end of this year. Of these, 125 have been given high
priority. Among them are the land and labor codes, packages of bills on
pensions, banking, tax and judicial reforms, and the 2002 budget. Some bills
are expected to have hundreds of amendments because many controversial laws
and regulations were passed hurriedly in the final weeks of the spring
session.

Reforms concerning the structure of the federation appear to be on hold this
year, following the successful reassertion of the center's judicial and
fiscal authority over the regions in 2000. Efforts to further reform and
develop fiscal federalism and to legally define the status of local
authorities are planned for next year. However, at least one important piece
of the puzzle has been quietly changed in 2001: Legislation was adopted that
removed the requirement that heads of regional police departments be
appointed and dismissed with the agreement of regional governors. The
necessary amendments were approved by the Duma on July 12 and signed by
Putin on August 4. As a result, the ability of governors to use coercive
powers when resolving business disputes in their regions has been
significantly reduced, given that the heads of regional police are now
formally independent from the governors (Renaissance Capital, September 20).

PROPOSED CORPORATE GOVERNANCE CODE SEEN AS IMPORTANT STEP FORWARD. On
September 18, Russia's Federal Securities Commission (FSC) released the
latest draft of its Corporate Governance Code, a much-awaited document
likely to be instrumental in improving the country's investment climate. The
new code is to be based on a set of international best practices. Although
this document is not designed to be legally binding, there will be strong
incentives for publicly traded companies to follow its provisions. The
seventy-page, ten-chapter draft code describes in detail principles of
corporate conduct, sets rules for shareholders' general meetings and defines
the functions of a company board and executive bodies, as well as the
procedures for their election or appointment. It also covers corporate
information disclosure, payment of dividends and settlement of corporate
conflicts. In the future, the code will be modified as new standards of best
practice are introduced.

The FSC suggests that the code should be applicable to joint stock companies
with more than 1,000 shareholders, that is, essentially all publicly traded
corporations. Smaller companies that cannot afford to implement all of the
best practices will be encouraged to follow as many of the code's provisions
as possible. The FSC is planning to monitor violations of the code and to
publicize them. In addition, each publicly held corporation will be expected
to publish on a regular basis (for example, in annual reports) a list of the
code's requirements that it has not met, with explanations of the reasons
for not complying with those rules. The FSC is thus confident that there
will be strong incentives for publicly traded companies to follow the
guidelines of the code.

Legislation that currently regulates corporate governance includes the Law
on Joint Stock Companies and the Law on Securities Markets. During the
autumn session of the Duma, the FSC will continue to push for the adoption
of amendments to the Criminal Code that would allow criminal charges to be
brought for violation of information disclosure rules affecting shareholder
value (Renaissance Capital, September 19). According to FSC head Igor
Kostikov, the main focus of the commission at present is to make sure that
companies provide complete and reliable information about themselves to the
public. The Corporate Governance Code was drafted with the help of the
international law firm Coudert Brothers. The code will be up for public
discussion for the next two months and is to be submitted for the
government's approval by the end of November (United Financial Group,
September 19).

********

#11
Financial Times (UK)
27 September 2001
US-Russia move urged over chemical weapons
By Nancy Dunne in Washington

An often-troubled joint effort by the US and Russia to control materials for
weapons of mass destruction and provide jobs for the scientists who created
them is now drawing new support in the wake of the September 11 terrorist
attacks.

With the practical need for a united front against terrorism made brutally
clear, there are quiet calls for renewed attention to a series of bilateral
non-proliferation programmes among security experts.

A spokesman for Senator Richard Lugar, former chairman of the Senate foreign
relations committee, said there were hopes for additional funding for the
effort, which next year is expected to disburse about $750m. A long-awaited
$35m US contribution to a $200m plant to destroy chemical weapons is now
slated for passage.

In an effort to keep hazardous materials out of unfriendly hands, the US -
and its allies - have spent hundreds of millions of dollars to help Russia
and its former republics destroy old missiles, secure fissile materials and
employ Russian scientists. But enthusiasm for some of the programmes had been
waning and parts of the programme had been threatened by budget cuts.

The Bush administration had been prepared to delay an expensive scheme
planned by the Clinton administration to destroy excess plutonium and to cut
a programme designed to assist Russian scientists in two former secret Soviet
"nuclear cities" find new jobs or start new companies.

The Russian-American Nuclear Security Administration Council, a non-
proliferation think-tank, last week wrote to President George W. Bush and
Vladimir Putin, Russia's president, urging them to overcome bureaucratic
barriers to co-operation.

They called for intensified efforts on a number of fronts, including control
of nuclear materials, disposal of materials from dismantled warheads,
exchanges of intelligence on smuggling and interdiction efforts, and
downsizing of Russia's nuclear weapons complexes.

Between 1992 and 2000, the US allocated almost $5bn for non-proliferation and
security programmes with former Soviet republics. Currently, the Defense
Department spends about $400m a year to help Russia and other former Soviet
republics secure and reduce the nuclear arsenal left by the Soviet Union.

The Energy Department is spending about $300m a year to control the
disposition of plutonium, uranium and other dangerous materials and for
"brain drain" programmes to employ and retrain Russian scientists, who might
otherwise feel compelled to offer their services to terrorist states. (The
Russian government stopped a group leaving for North Korea in 1996).

The State Department spends about $50m a year on programmes to provide
employment for former Soviet scientists. The US and other countries have
found work for about 45,000 former weapons scientists out of a target group
of 100,000.

"This was never designed to be the universal solution [for the unemployed
scientists]," said Rose Gottemoeller, a former Clinton administration
official now with Carnegy Endowment for International Peace, a Washington
think-tank. "It was to provide a pressure release valve during a prolonged
transition."

An Energy Department official said new money could be made available from the
$40bn disaster relief package - swiftly backed by Congress after the attacks.

At the very least, the current funding for the bilateral non-proliferation
programmes, run by the Energy and Defense Departments, are probably now
"untouchable", said Victor Alesso, president of the US Industry Coalition,
which works with the Energy Department.

The coalition - a group of more than 100 US companies - is creating new
businesses with the scientists who once built nuclear, chemical and
biological weapons. So far, eight products are in production and 20 are close
to production.

Many of these products have potentially important anti-terrorism
applications. For example, one company will produce a three dimensional
camera to help safeguard stored nuclear materials. Another has produced a
hand-held detector for biological pathogens to determine whether a biological
attack is under way.

Another is soon to produce a high-speed needle-less vaccine injector, which
can give 600 vaccinations an hour, usable in a biological attack. This
programme, funded at about $25m a year, has strong backing in Congress, but
Mr Alesso said he could easily and efficiently spend $50m just to meet
current demand.

As for the "nuclear cities initiative", it was drastically cut from $27.5m
this year to a proposed $6m in 2002 in the Bush budget. Congress is certain
to provide more than that in the final appropriations bill.

********

#12
Putin's rating in Russia remains high
Interfax

Moscow, 26 September: Russian President Vladimir Putin maintains a high
rating of population support, with 73 per cent of Russians approving his
policy. In August, this figure was 74 per cent.

Interfax obtained these figures from the All-Russian Public Opinion Survey
Centre (VTsIOM), which conducted representative public opinion polls of 1,600
Russians in late August and on 24 September.

Prime Minister Mikhail Kasyanov's work is approved by 50 per cent of
respondents, against 46 per cent a month ago, and 40 per cent of those polled
view the government's work positively (39 per cent in August).

Putin's rating of trust also remains high. When asked to name 5 or 6
politicians they trust most of all, 42 per cent of respondents mentioned the
president (44 per cent in August).

Following Putin in this list are Communist leader Gennadiy Zyuganov (16 per
cent now and 17 per cent in August), Emergency Situations Minister Sergey
Shoygu (15 per cent and 14 per cent respectively), Prime Minister Mikhail
Kasyanov (11 per cent and 9 per cent), Kemerovo region Governor Aman Tuleyev
(7 per cent and 10 per cent), ex-Prime Minister and currently State Duma
deputy Yevgeniy Primakov (7 per cent and 5 per cent), Deputy Prime Minister
Valentina Matviyenko (6 per cent and 7 per cent), leader of Liberal
Democratic Party Vladimir Zhirinovskiy (6 per cent and 8 per cent), leader of
the Union of Right Forces (SPS) Boris Nemtsov (5 per cent and 3 per cent),
and Moscow Mayor Yuriy Luzhkov (4 per cent and 7 per cent).

On the other hand, 22 per cent of respondents hold the view that no Russian
politician deserves their trust, while 18 per cent of those polled thought so
in August.

*******

#13
BBC Monitoring
Putin surprised by Germany's softer line on Chechnya
Source: Deutschlandfunk radio, Cologne, in German 1100 gmt 26 Sep 01

Russian President Vladimir Putin has said German Chancellor Gerhard
Schroeder's change of position on the Russian role in the Chechnya conflict
came as a complete surprise to him. He said the issue had not been discussed
in talks between the two leaders. The following is the text of a report by
German Deutschlandfunk radio on 26 September:

[Presenter] Russian President Vladimir Putin met editors in chief of the
German media this morning. One of the issues discussed was the Chechnya
conflict, which will be dealt with in a more differentiated manner, as
Chancellor Gerhard Schroeder stated - that is under the headline fight
against terrorism.

A very serious, pensive and vigorous Putin presented a real surprise at the
beginning of the breakfast with the German editors in chief. Asked about the
chancellor's statement yesterday that the Chechnya conflict must be viewed in
a more differentiated manner, Putin said:

[Putin in Russian with superimposed German translation] The more I get to
know the chancellor, the more surprised I am. I did not ask him to modify his
position in the way he did.

[Presenter] This had come as a complete surprise to him. The issue was not
discussed during his meeting with Schroeder, Putin said. Yet it was quite
obvious that this was a great political success for him, that he will be able
to present this booty at home as it were, proving that his dubious actions in
Chechnya might now be seen in a new light in the West. The fact that Putin
spoke for 20 minutes about this topic shows to what extent this trauma still
dominates his work. He said there is evidence that the unlawful rulers in
Chechnya, a he described them, were supported by Bin Ladin. In general
Islamic fundamentalism is trying to spread worldwide, he added. Putin
compared this with the doctrine of the communist world revolution.

He said: The terrorists should not and must not think that we are scared.
They must be afraid of us. Wherever terrorist organizations appear,
coordinated action against them is required - with violence if necessary and
with political instruments if possible, and by trying to eliminate the
prosperity gap in the world, as well as by cutting off the financial flow. He
expects to be involved in all consultations, but spoke out against an
invasion of Afghanistan by Russian soldiers. This would be the same thing as
if the United States returned to Vietnam.

Putin assessed the fact that he has started to cooperate with all the Central
Asian partners as a big Russian achievement. This is not nothing, he stated.

[Putin] Pakistan is cooperating with the United States. As a result, the
sanctions were lifted, and the United States is also distributing other
sweets.

[Presenter] President Bush is right that the worldwide network of terrorist
fundamentalism must be smashed. When and wherever there is a power vacuum,
the terrorists are trying to gain a foothold, Putin pointed out.

Referring to Russia's relations with NATO, Putin was very reserved. He
continues to have reservations against the alliance's eastward expansion. But
Russia is ready to discuss Russia's possible membership. He repeated last
year's reply: why not? Yet those who claim that NATO is only a political
alliance are trying to cheat. Putin said literally: Was it a political troop
that dropped bombs over Yugoslavia?

Putin continues to believe that the United States is playing the key role in
the present antiterror coalition, This also means security for all Europeans.
In any event, Russia wants to be a normal European country.

*******

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