From Volume 4, Issue Number 28 of EIR Online, Published July 12, 2005
Russia and the CIS News Digest

Putin, Chirac, and Schroeder Meet in Kaliningrad

The leaders of Russia, France, and Germany met July 3 in the Baltic Sea city of Kaliningrad (formerly Koenigsberg), on the 750th anniversary of its founding. After the talks, German Chancellor Gerhard Schroeder told the press that he, French President Jacques Chirac, and Russian President Vladimir Putin had agreed that security for their energy supply is crucial, and would be placed on the agenda of the July 6 Group of 8 summit. Included aspects: controlling oil price speculation and achieving long-term agreements between oil-producing and oil-consuming nations.

Of course, the agenda of the G-8 summit was abruptly altered by the July 7 bombings in London.

Russia Prepared To Build More Nuclear Plants in Iran

On the heels of Mahmoud Ahmadinejad's "hardliner" victory in Iran, the head of Russia's Atomic Energy Agency, Alexander Rumyantsev, gave a statement to the Itar-Tass news agency on June 28: "When Iran announces new tenders to construct nuclear reactors, we'll take part in them," Rumyantsev said, adding, "Tehran intends to build another six nuclear reactors." Russia is currently working on a 1,000-megawatt plant in the city of Bushehr, a plant whose construction has been dragging on since 1979.

Chile and Russia To Cooperate on Nuclear Power

An agreement to cooperate on non-military nuclear power development was signed during a late-June meeting of the Russian-Chilean inter-governmental commission on Trade and Economic Cooperation in Moscow, attended by Chilean Mining and Energy Minister Alfonso Dulanto, and Alexander Rumyantsev of Russia's Federal Atomic Energy Agency. Chile does not currently have a nuclear plant, but Rumyantsev told reporters that it is considering the possibility of building one and is interested in working with Russian experts on such a project. Earlier this year, President Ricardo Lagos said that Chile will have to consider the use of nuclear energy, among other sources, to resolve its serious energy crisis.

State Dept./NED Announce Budget for 'Democracy' in Russia

Izvestia of July 7 featured the just-announced 2006 budget of $85 million, committed by the U.S. State Department, through USAID, to fund the National Endowment for Democracy to promote "democracy" and "economic reforms" in Russia, including $5 million "for supporting development programs of political parties." Izvestia noted, "The fact that parties in Russia are legally forbidden to accept funding from foreign sources doesn't deter the authors of the documents. The money will be allocated not directly, but according to a well-tested technology through the National Endowment for Democracy. It is well known how this money is spent, from the examples of the former Soviet countries where the 'colored' revolutions have occurred."

Izvestia cited a footnote to this part of the budget, which instructs the State Department and USAID to "persistently and openly" promote their programs in Russia and Azerbaijan, in particular. The paper then quotes Lilia Shevtsova, a person transformed by the Carnegie Institute's Moscow Center into a Western-style media talking head, on how "the experience of the Serbian, Georgian, and Ukrainian 'revolutions' shows," that Western money can circumvent restrictions on outside interference in politics, for example, by recruiting youth to "favorable attitudes to the West."

Harsh Words Fly Between Moscow, and Poland and Baltics

The July 3 Kaliningrad commemoration occasioned heightened tension between Russia and Poland, as well as the Baltic countries. Moscow invited neither Polish President Alexander Kwasniewski nor Lithuanian President Adamkus to attend, although Poland and Lithuania border the Kaliningrad enclave. Officials in both Warsaw and Vilnius criticized the Russian decision.

On July 6, the Russian Foreign Ministry denounced a call by Kwasniewski for the European Union, of which Poland and the Baltic States are now members, to intervene in an ongoing dispute between Russia and Estonia over finalization of their border treaty. Russia backed out of the treaty in June, after the Estonian Parliament amended it with a statement citing laws that refer to Estonia's former "occupation" by the Soviet Union. "Moscow is perplexed at the pronouncements of the Polish President," said the Foreign Ministry, and "has no use for middlemen, including those from Warsaw, in relations with its neighbors."

As for Russia-Lithuania relations, Adamkus on June 29 charged that Russian requests for Lithuania to freeze assets in Lithuania of Yukos Oil (which is under continuing tax and criminal investigation) constituted interference in Lithuania's internal affairs.

More Russian Officials Demand Oil Surplus Be Spent on Infrastructure

Recent cabinet meetings of the Russian government have featured sharp debates over whether or not to invest the country's oil earnings in infrastructure upgrades and other domestic economic projects. So far, the Stabilization Fund, composed of oil export taxation and other revenues over and above the amounts that go into regular Central Bank Reserves, has been earmarked by the Finance Ministry for spending on nothing other than debt reduction. At the June 16 government session, Finance Minister Alexei Kudrin projected an 80% increase in Russia's primary budget surplus, to the equivalent of $17.5 billion. Central Bank gold and foreign currency reserves hit a record level of $151.8 billion at the beginning of July.

Kudrin and other monetarists adhere to the argument that spending significant portions of the Stabilization Fund inside Russia must be avoided in order to prevent inflation. But recent spectacular failures of the country's aging physical infrastructure have made even some cabinet members, including Prime Minister Mikhail Fradkov, raise the question of some different allocation of the money. Martin Shakkum, a member of the pro-regime United Russia bloc in the State Duma, addressed the matter even more pointedly than any government member, saying in a recent speech: "We want the government to stop acting like accountants, and promote economic development and prosperity."

The recent infrastructure incidents include the Moscow power blackout in June and a mid-June train derailing in Tver Region, resulting in a 300-ton fuel spill into a Volga River tributary, potentially affecting Moscow's water supply.

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