From Volume 4, Issue Number 31 of EIR Online, Published Aug. 2, 2005
Russia and the CIS News Digest

Presidential Rep Pulikovsky: Russia Looks East

In a statement issued by his press service on July 15, and reported by, Russian Presidential Representative to the Far East Federal District Konstantin Pulikovsky said that improved relations with China were essential for Russia's place in the world. Pulikovsky contrasted the rapprochement with China to the friction Russia is experiencing with the European Union: "Russia is not very welcome in the European Union; everything possible is being done to lower our participation in and influence on European affairs. That is why it is very important that there is a country—the People's Republic of China—in the east, in Asia, which is our friend." He said that the "wild East" border trade of the 1990s, when resources and machinery poured out of Russia, is now giving way to more civilized business practices, whereby Chinese businesses take part in auctions, for example, for timber concessions in Russia's Far East. Soon they will be bidding at auction for the rights to develop natural resources, as the Russian Natural Resources Ministry changes its regulations on subsoil resource development.

President Vladimir Putin, speaking to a meeting of NGOs on July 20, said that the new pipeline from East Siberian oilfields to the Pacific will be a project of national economic significance, comparable with the Baikal-Amur Mainline railroad in scope, but contributing more to the economy than the BAM currently does. (Putin also warned against ecological impact studies being used to block the project or make it prohibitively expensive.)

Russia Seeks Admission to East Asia Summit

Russia has applied to join the East Asia Summit (EAS), which will be held for the first time in Malaysia in mid-December 2005, according to a senior official of the Association of Southeast Asian Nations (ASEAN). Deputy Foreign Minister of Laos Bounkeut Sangsomsak, chairing a July 24 ASEAN meeting, said that his country—as ASEAN's current chair—had received the Russian application. The meeting agreed to take the request under consideration, Bangkok's The Nation reported July 25. The EAS will include ASEAN, together with China, Japan and South Korea—the ASEAN+3. Australia, New Zealand, India, and Mongolia have expressed interest in joining the meetings.

Rumsfeld in Kyrgyzstan, Russians To Beef Up Base

With U.S. Secretary of Defense Donald Rumsfeld set to arrive in Kyrgyzstan July 26, the country's Foreign Minister Roza Otunbayeva said that "the main reason" for the visit was the U.S. desire to keep its military base at Manas airport, where 1,000 military personnel are stationed. After the visit, Kyrgyzstan's defense minister, Ismail Isakov, said the base could stay "as long as the situation in Afghanistan requires."

Earlier in July, Kyrgyzstan joined other members of the Shanghai Cooperation Organization (SCO) in demanding a timetable for the withdrawal of non-member countries' military units from SCO member states. A comment from U.S. Chairman of the Joint Chiefs of Staff Gen. Richard Myers, that "two very large countries [China and Russia] were trying to bully some smaller countries" with the SCO resolution, drew a sharp rebuff from the Russian Foreign Ministry on July 15. "We were bewildered by the comments," the Russian agency said, adding that SCO decisions "are consensus-based and reflect the collective opinion of all the member countries."

On July 13, Russian Air Force Commander Gen. Vladimir Mikhailov stated that Russia hopes to double the forces at its own base in Kyrgyzstan, located at the Kant airfield.

Central Asian Leaders: Extremism and Drugs Pose Threat

Remarks by Kyrgyzstan's President Kurmanbek Bakiyev, warning of a dangerous alliance of Afghanistan-based drug traffickers and religious agitators, were highlighted in a July 19 article by Fred Weir in the Christian Science Monitor. The report also noted Uzbekistan President Islam Karimov's statement at the recent SCO summit, that an international "radical religious conspiracy," fuelled by drug money, "aims to destroy stability in order to dominate the region." It is highly unusual for the Central Asia heads of state to openly identify the Afghanistan drug problem as a major threat to their stability. The flow of drugs from Afghanistan through Central Asia to Russia and the West has accelerated since the U.S. occupation of Afghanistan in early 2002.

Putin: Russia Must Resist Military and Political Pressure

Addressing a group of military and security officers who received promotions, Russian President Vladimir Putin on July 27 emphasized that the armed forces must be prepared "to counter any attempts to apply military-political pressure on Russia." He pointed to the recent escalation of assassinations in Dagestan in the Russian North Caucasus, as being of a piece with terrorist bombings in London, Turkey, and Egypt (and also mentioned Iraq and Israel in this context). Citing the illegal narcotics trade as a threat to Russia in its own right, but also a source of funding for terrorism, Putin called for the creation of anti-narcotics "security belts" around the borders of Russia and of other CIS countries.

Gen.-Lt. Yevgeni Lazebin made his first appearance as commander of Russia's Federal Forces in the North Caucasus, at this ceremony.

Putin: Block Foreign Funding of Politics in Russia

During discussions at the July 20 meeting on the activity of NGOs in Russia, which officially was a session of the Council to Promote the Development of Civil Society and Human Rights, President Putin spoke out sharply against foreign funding of any NGOs engaged in political activity: "I categorically oppose financing from abroad of political activity in the Russian Federation. I categorically oppose it. No self-respecting nation allows this. And we shall not allow it." Without giving details, Putin said that Deputy Premier Alexander Zhukov had provided him "specifics" of cases in which "money was allocated from abroad for specific political activity in Russia—very specific, and with a rather sharp content. And ... he who pays the piper calls the tune. Let's solve our domestic political problems in Russia ourselves; we are not some primitive society."

Putin's remarks came after more than a decade of heavy foreign NGO funding of politics in Russia, under the guise of "promoting democracy," and of regime-change in neighboring former Soviet republics like Georgia and Ukraine. This summer, Russian media and politicians are paying a lot of attention to a "commissar training camp" being held in Tver Region by the patriotic youth group "Nashi" ("Ours," or "Us"), one of the declared goals of which is to prevent a Ukraine-style foreign-funded "orange" revolution in Russia. Nashi, which burst into prominence in May with a 60,000-strong Red Square demo in honor of World War II veterans, enjoys financial support from the Kremlin, and the 3,000 commissars-in-training have been visited by a parade of Kremlin officials. Putin himself met July 27 with a select 56 of its members.

On July 23, Russian Orthodox Church official Vsevolod Chaplin addressed the youth at Nashi's camp with an appeal to oppose such a revolution. "Russia has already lived through a colored revolution—a red one. Russia will not survive another revolution," Chaplin said, according to Interfax. "If our country falls apart," he added, "it will not become a group of little Switzerlands, but one big Yugoslavia, pulled apart by bloody chaos, which no foreign peacekeepers could deal with."

Russian Companies Launch IPOs in London

Russian companies raised $2.4 billion in the first six months of 2005 by going public—in London. The funds raised through these IPOs on the London Stock Exchange in half a year, compare with $1.6 billion raised by Russian companies in all markets over the previous decade. The largest IPOs were those of the giant steel company Yevrazholding, the telecom company Sistema, and Pyaterochka, a grocery retail operation. The Financial Times, reporting this development, quoted EBRD President Jean Lemierre on how "there could be an element of capital flight" in these IPOs, being done in a foreign money-center market, rather than in Russia. In some cases, the listing company's owners have pocketed the proceeds of their stock sale as cash, rather than reinvesting them; "Pyaterochka does not need money," one of its board members noted.

A follow-up FT article, writing that the Russian IPOs have been "the biggest source of primary equity issuance for the LSE this year," included a spoof dispatch dated May 2006, which featured an imaginary LSE official for Russian listings, "Lionel Loot," explaining why the LSE was adopting Russian as a second official language. The non-spoof article indicated why the "Loot" moniker would be apt, forecasting that then next Russian companies to go public in London will include Novolipetsk Metal Works (another steel giant) and Rusal, which produces 70% of Russia's aluminum.

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