|Russia and the CIS News Digest
Professor Menshikov Writes on Dollar Crisis
In his Feb. 4 column for Slovo, a Russian-language paper published in Europe, Prof. Stanislav Menshikov discussed "The Nature of The Dollar CrisisConclusions For Russia," drawing on his recent participation in EIR's Berlin seminar with Lyndon LaRouche. An English translation of the article was sent to Johnson's Russia List by Menshikov himself, and was posted there.
Analyzing the danger of runaway dollar-dumping by central banks, investors, and speculators, Menshikov called it a real and immediate problem, about which "Washington is just disoriented and has no idea what to do." By contrast, he wrote, "The ones in the know are those who think that the cause of the currency crisis is the existing world financial system itself, and no amount of patchwork solutions is going to fix it. For example, a popular American political figure, Lyndon LaRouche, has been calling for many years to replace the old system, headed by International Monetary Fund, and accompanied by the common European currency and floating exchange rates, with a New Bretton Woods system, which might be created as an agreement between the leading world nations. This topic was central to the mid-January scientific seminar of the in Berlin, attended by experts from 30 countries, including the author of these lines."
The Russian economist wrote that the dollar crisis stems not only from the USA's living beyond its means today, but may be traced to the end of the fixed-rate system in August 1971. Saying that "the danger of a dollar catastrophe is growing," Menshikov cited LaRouche again: "Lyndon LaRouche thinks that the dollar crash is inevitable and that sooner or later Washington will have to default on its official and private credit obligations. This, of course, would result in a worldwide economic crisis, which would be beneficial to no oneincluding the USA itself, which would lose its central role in world finance, with the dollar transformed into useless paper.... But the dollar crash may come, despite the will of the USA. Imagine a scenario, where China decides to transfer a large part of its dollar revenue into euros, yens, and pounds. Then the dollar would fall so much, that a chain reaction of dollar dumping and a de facto American debt default would be imminent."
Discussing the implications of such a turn of events for Russia, Menshikov ridiculed "undereducated liberals, still waiting for the godsend of foreign investments." What Russia should do, he concluded, is invest its surplus not by accumulating paper, but in real productive capital.
Primakov Slams Russian Economics Minister Gref
Former Russian Prime Minister Yevgeni Primakov blasted the economic policies of the current Russian government as leading to disaster. Responding to a report by Economics Minister German Gref at the Jan. 28 session of the Federation Council (Parliament's upper house), Primakov charged Gref with "repeating the crimes and mistakes of the 1990s." Primakov is now chairman of the Russian Chamber of Commerce and Industry.
Gref's program reform of the social sector, Primakov said, is based on "the ideological assumption that there is an unbroken continuity with the 1990s, rather than making the necessary break with the past." The reform, which monetizes entitlements and subsidies for vital services, "amounts to a new type of shock therapy for millions of socially vulnerable citizens," he added. "It seems to me that we need to speak principally about a new phase that will correct the mistakesthe very big mistakesof the 1990s. The biggest mistake of the 1990s was when we prevented free competition, and this was accompanied by the growth of oligarchical structures." Real change, according to Primakov, would mean action to direct investment into the real economy, rather than real estate and commodity transfers, as is now the case.
Russian Historian: Yalta Was Historic Opportunity
The Yalta Conference agreements in February 1945 "could have become a new chance for the world," but the chance was lost because President Franklin Roosevelt died, Russian Professor of History Valentin Falin said in a Feb. 3 interview with RIA Novosti. Falin was Soviet Ambassador to Germany in the 1970s, subsequently became a top Soviet information official, and is a long-time student of World War II. In this interview, he emphasized FDR's commitment to work with Stalin and the Soviet Union, as being closer than his commitment to British Prime Minister Winston Churchill. Falin's said his conclusions were based on the memoirs of U.S. Secretary of State Edward Stettinius, Jr., an influential industrialist, who was at the Yalta summit.
Falin pointed to the never-mentioned "major detail" of the talks, namely that FDR promised Stalin a loan of $4.5 billion for post-war reconstruction. FDR may have been told that Stalin was a "communist dogmatic," Falin said, but "he knew that Stalin offered the Americans a vast number of concessions and exceptionally good investment conditions, and was pondering the idea of creating a market economy in the Soviet Union. The dream did not become reality only because Roosevelt was succeeded by Truman, a man who ordered Eisenhower on the way from the Potsdam Conference to draft a plan of a nuclear war against the Soviet Union, called 'Totality.'"
Falin called FDR "a sober and far-sighted politician, who thought that America's economic might, even in the absence of strike forces, would ensure his country the leading role in the world." At the same time, he realized that the Soviet military had saved the U.S. from catastrophe in 1942, when it held on in Stalingrad. In early 1945, U.S. troops were embattled in the Ardennes, but the Red Army attacked (again, as it had for over two years!) ahead of schedule, saving the Allies on the Western Front. FDR also rejected Churchill's idea to conquer Germany and use Germans to hold the Russians back at the Oder River.
Eisenhower Granddaughter Calls for Engagement With Russia, China
Warning that cooperation has stalled, President Dwight Eisenhower's granddaughter called Feb. 4 for renewed engagement with Russia and China. Taking her new book, Partners in Space, as a starting-point for her talk to a U.S.-Russia Business Council luncheon, Susan Eisenhower said that the successful cooperation between Russia and the U.S. National Aeronautics and Space Administration (NASA) over the last 10 years, should be the paradigm for U.S. foreign policy. Since President Clinton left office, she said, cooperation has been "subject to a considerable tightening on the U.S. side in the national security area." There has been "no meaningful cooperation since 2000" in space, between the United States and Russia, she said, as a result of the new visa policy, the constraints of the Iran Nonproliferation Act, and additions to the list of space hardware now prohibited under export controls.
Eisenhower had just visited Russia, where space officials told her that Russia has decided that it is easier to cooperate with the Europeans than with the United Statesa decision which led to a new Russian-European space cooperation agreement.
China, India Involved in Russian Oil Development
Russian Finance Minister Alexei Kudrin said Feb. 2 that a group of Chinese banks had loaned $6 billion to the Russian state-owned oil company Rosneft, to help finance the latter's $9.4 billion purchase of former Yukos Oil property Yuganskneftegaz in December. The Chinese loan, arranged via the state oil company CNPC, would be repaid in a five-year contract to supply China with 50 million tons of oil. Though the Chinese financing was reported in the official newspaper Peoples Daily, a Chinese Foreign Minister spokesman on Feb. 3 denied it had taken place, just as Chinese officials had refused to confirm Russian Energy Minister Victor Khristenko's December statement that CNPC would ultimately own a 20% stake in Yuganskneftegaz.
Putin: Syria Missile Sales May Be Discussed
Russian President Vladimir Putin said that missile sales to Syria were still under discussion, despite U.S. and Israeli opposition, al-Jazeera reported Jan. 29. Speaking to the Jerusalem Post, Putin said that Russia would never upset the Middle East's regional balance, and that sale of anti-aircraft missiles could be allowed for "defensive purposes." "While we're talking about supplies of weapons to countries in the region, such a supply should be understood in the light of supporting defensive capacities, as in Syria," he said. He continued, "We understand our responsibilities. We have not taken a single step to violate that balance [of forces in the region] and we will follow that pattern in the future. Second of all, we won't bring to the region weapons that can be used by terrorists or that can be transferred to terrorists without controls."
Israeli Prime Minister Ariel Sharon spoke by phone with Putin several days earlier, when it was understood that he urged the Russian leader not to conclude any deal during Assad's visit. Putin said the missile sale was still under discussion "with all participants [in] ... the Middle East settlement, including frankly and openly with our Israeli partners."
Georgian Prime Minister Dies
Prime Minister Zurab Zhvania of Georgia, died Feb. 3 at age 41, of carbon monoxide poisoning attributed to a faulty space heater. He was found dead along with an associate, Raul Yusifov, in the latter's apartment, according to Georgian Interior Minister Nano Merabishvili. The small heaters are in wide use in Georgia, where the privatized electricity sector and other utilities function poorly.
Nonetheless, media and some members of Parliament speculated that there may have been foul play. Shvania was a close adviser to President Michael Saakashvili, and had rivals in the government. At the same time, independent observers considered Zhvania, a biologist who had worked with former President Eduard Shevardnadze and had headed the Georgian Parliament, to be a steadying influence on the young Saakashvili, who came to power in the Western-financed "Rose Revolution" of December 2003. Saakashvili has taken over the premier's duties. Many believe that Speaker of the Parliament Nino Burjanadze may be named Prime Minister.