From Volume 5, Issue Number 18 of EIR Online, Published May 2, 2006
Russia and the CIS News Digest

Russian, German Leaders Meet in Siberia

President Vladimir Putin of Russia and German Chancellor Angela Merkel had a two-day summit meeting in the central Siberian city of Tomsk, April 26-27. Bilateral energy cooperation was emphasized, as well as the overall role of Russia's Gazprom company in supplying Western Europe with natural gas. An expert from Russia's Institute for the World Economy and International Relations noted that Russia is also particularly interested in involving Germany in Russia's nuclear projects.

Prior to meeting with Merkel, Putin told a Tomsk audience that the West was resorting to "unfair competition on the world [energy] market," and obstructing Russia's desire to expand into European energy markets through Gazprom. He warned that Russia would look to the Asia-Pacific region for new markets, should problems with Europe not be resolved.

Merkel was accompanied by ten cabinet members, including the Ministers of Foreign Affairs, Economics, Finance, Health, Transport, Science, and Culture. Among the 20 industry leaders in the delegation were leading German energy producers like E.on, BASF-Wingas, and Siemens, as well as the aerospace producer EADS and German Railways. Their Russian opposite numbers attended the talks.

Among the numerous agreements signed during the summit, three accords in the economic-financial sphere are worth special mention:

1) Cooperation in the exploration of, and establishment of production at, the Yuzhno-Russkoye natural-gas field, between Russia's Gazprom and Germany's BASF-Wintershall firms. The gas field is said to be one of the world's largest; its location is in the Yamal-Nenets region of Siberia. The production capacity is to be 25 trillion cubic meters per year; the gas will be pumped into the new North European Gas Pipeline from 2010 on. This deal not only is the first in which a Western company has been granted access to a strategic resource field of Russia; but it also goes with an asset swap, which makes BASF's Wintershall subsidiary a substantial shareholder in the venture, and makes Gazprom a substantial shareholder in BASF's Wingas subsidiary, which operates gas pipeline grids in Germany, and through partnerships in other Western European states.

2) Cooperation between German Railways and Russian Railways, through a joint venture for the promotion of cargo transit between Asia and Europe, via the Trans-Siberian Railroad.

3) Cooperation in development projects (public and private) financing inside Russia, notably in Siberia, between Russia's Mezhekonombank, Roseksimbank, National Development Bank, and Germany's KFW (Kreditanstalt fuer Wiederaufbau) Bank. Deutsche Bank signed an agreement on cooperation with the National Development Bank, as well.

Russia Rejects U.S. Pressure Over Iran

In response to U.S. Undersecretary of State Nicholas Burns' demands that Russia cease weapons deliveries to Iran, Deputy Secretary of the Russian Security Council Nikolai Spassky stated on April 22: "Currently, nothing is preventing the fulfillment of our obligations—in the area of military and technical cooperation with Iran." He added: "As far as the future is concerned, military and technical cooperation with any country may be limited only after the UN Security Council imposes the relevant sanctions."

Speaking to the Los Angeles Times, Spassky said: "At this stage we consider it unproductive to discuss the issue of sanctions." He went on to discuss the IAEA report: "When we get the report, we'll review what's written in it. Moreover, we will be reviewing concrete issues, concrete items—Not abstractly: 'Do we like Iran or not?', but 'What's it doing with centrifuges?' The primary issue, the source of this whole story, is the issue of Iran's failure to fulfill its obligations, the issue of doubts on the part of the IAEA about its past nuclear program." He concluded: "As soon as this dossier is closed, the mechanisms of Iran's normal IAEA membership can immediately be fully restored, as can the normal, full-fledged development of its peaceful nuclear program."

During the Russian-German summit in Tomsk, the countries' foreign ministers released a joint declaration on April 27, which stated: "Special attention was paid to agreeing on positions on Iran's nuclear file with the emphasis on there being no alternative to continuing efforts for a politico-diplomatic settlement of the Iranian nuclear problem, in order to accomplish the main task of ensuring the nuclear non-proliferation regime. In this context, the Russian President's initiative for creating international centers for nuclear cycle services under IAEA control was affirmed as important for strengthening the non-proliferation regime."

Blair Backs Off Challenge to Gazprom

British Prime Minister Tony Blair said April 25 that his government will not challenge an attempt by Gazprom, the Russian gas company, to buy a controlling interest in the British gas distributor Centrica. There had been calls for a challenge on the grounds that Gazprom was a state monopoly and through the sale would exert a strong influence over British gas supplies. Britain already imports Russian liquefied natural gas.

Speaking in Tomsk April 27, after his talks with German Chancellor Merkel, President Putin again lashed out—as Gazprom's leadership had done the previous week—against attempts by the UK to block Gazprom's penetration of European markets, as with the Russian company's bid to take over the British gas distributor Centrica. When foreign companies operate in Russia, Putin pointed out, we're supposed to welcome it as globalization, but when Russian companies try to operate abroad it's dubbed Russian expansionism.

Ivanov Visits Beijing

Russian Defense Minister Sergei Ivanov made a working visit to China April 24-27, to take part in a Shanghai Cooperation Organization defense ministers' meeting. A Defense Ministry press statement said before the meeting, that the ministers would "discuss international and regional security and plan measures that the Defense Ministries should take to oppose international terrorism and other new challenges and threats." Ivanov himself, as the meeting opened, spoke about the SCO as having "entered new frontiers not only on a regional level, but also on the global scale."

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