From Volume 6, Issue Number 1 of EIR Online, Published Jan. 2, 2007
Russia and the CIS News Digest

Putin Keeps Spotlight on Demographic Crisis

Addressing the Council of Legislators in Moscow Dec. 21, Russian President Vladimir Putin returned to a major theme of his May 2006 State of the Federation report: Russia's demographic crisis. Over the past 13 years, he said, deaths in Russia have exceeded births by a total of 11.2 million. In 1992, immigration offset most of the population decline, but as of 2005, immigration made up for only 12.7% of that year's loss.

"We must break out of these negative tendencies, and do so based on a systematic and well-designed policy," said Putin, introducing First Deputy Premier Dmitri Medvedev to give a report on the National Projects in areas such as health care. Putin repeated his commitment to increasing subsidies to families with children. He also talked about ways to address the unacceptably high death rate of Russian men, first of all, from cardiovascular diseases, and secondly, from "unnatural or external factors: road and transport accidents, alcohol poisoning, and crimes."

In 2007, Putin announced, 12 pilot projects in various regions will be launched, for attracting Russian ethnics to immigrate to Russia. At the same time, there will be attempts to regulate the influx of non-Russian laborers, who are needed in the economy, but whose presence was the focus of rising tensions during 2006.

Gazprom in Showdown with Belarus

A war of words escalated between the Russian natural gas giant Gazprom, and the government of Belarus, after their price talks broke down Dec. 26. The possibility of a cutoff of gas destined for Belarus, with retaliation in the form of Belarussian diversion of gas destined for the rest of Europe, loomed as the year came to a close without a new contract being signed. Although Gazprom chairman Alexei Miller pledged Dec. 27 to supply gas to Gazprom's other European customers, he also said Gazprom had notified Lithuania, Poland, and Germany of possible disruptions. Alexander Medvedev, another Gazprom executive, said Dec. 28 that, "if Belarus siphons off a part of the gas destined to our European clients, ... that gas will be missing from the system. I cannot, therefore, exclude any future forced rationing of our stocks and, therefore, shortages for our clients."

About 20% of Russian gas exports to Europe cross Belarus; the rest cross Ukraine. Russia supplies one-fourth of Europe's gas needs, with customers in 20 countries, the largest such consumer being Germany. Gazprom was reportedly negotiating with Ukraine to increase the transit across that country, though experts said the maximum boost would be 4-5%. EU officials said that warm weather has allowed an accumulation of gas in Gazprom storage facilities, as well as at other companies in Germany and Austria.

As of Dec. 29, a delegation led by the CEO of the Belarusian pipeline company, Beltranshaz, flew to Moscow to continue negotiations, and an Energy Ministry official in Minsk said the intention was still to sign a contract. But Gazprom spokesman Sergei Kupriyanov doubted progress would occur, until Belarusian First Deputy Premier Vladimir Semashko joined the talks. Belarusian Prime Minister Sergei Sidorsky warned of transit disruptions, saying on TV Dec. 28, "We will not be able to deliver gas to Europe without a contract." Sidorsky conferred by phone with Russian Prime Minister Mikhail Fradkov. Miller said Gazprom's final offer stands: $105 per thousand cubic meters, of which $75 in cash and $40 in shares in Beltranshaz, the Belarusian pipeline company. In 2006, the price was $47. Minsk wants to pay $30 less than the Gazprom offer, arguing that, because there is a "union" agreement between the two countries, it should not pay above the Russian domestic price in neighboring Smolensk Region. (Gazprom ultimately intends to raise domestic prices, too.)

Russians Link Litvinenko Investigation to Yukos Figure

The Prosecutor General's Office of the Russian Federation announced Dec. 28 the merger of its investigation of the Litvinenko polonium 210 poisoning case, and ongoing murder investigations of fugitive Yukos Oil exec Leonid Nevzlin. "Evidence received indicates a link between the criminal case of the murder of former FSB employee Alexander Litvinenko in Britain, as well as the attempt on the life of businessman Dmitri Kovtun, and the criminal case against a number of Yukos Oil executives for crimes against the life and health of citizens. A theory is being checked, according to which these crimes may have been commissioned by the same people, who are on international wanted lists for committing felonies, and one of these people is Yukos Oil co-chairman Leonid Nevzlin," said the statement.

Nevzlin lives in Israel. Weeks ago Israeli papers and Moskovsky Komsomolets reported that Litvinenko went there two weeks before the alleged Nov. 1 date of his poisoning in London. Some Israeli media wrote that Litvinenko was delivering secret, explosive information about the Yukos case, to its former major shareholders, now residing in Israel. RIA Novosti said that British and Israeli officials declined to comment on the Russian move.

Russian Monthly Quotes EIR on Milton Friedman

The death of monetarist economist Milton Friedman drew more than a little attention in Russia, where the murderous "shock therapy" reforms of 15 years ago were based on the ideas of Friedman and Friedrich von Hayek. Several media articles linked the passing of Friedman and of Gen. Pinochet in Chile, under headlines like, "Death of a Fascist," "Pinochet and Yeltsin," "A Love Affair With Pinochet." One of the most striking articles appears in the November-December issue of the monthly Valyutny Spekulyant (Currency Dealer), which uses, and gives credit to, EIR editor Nancy Spannaus's obit of Friedman in the Dec. 8 EIR. Introducing Friedman as the person "whose ideas guided the Russian 'young reformers' 15 years ago," the article highlights Friedman's behind-the-scenes role in the 1971 destruction of the Bretton Woods System, in favor of floating exchange rates, and gives the quotations from Friedman, provided by Spannaus, about the "success" of wage/price controls in Nazi Germany. The importance of the Mont Pelerin Society is also emphasized by Valyutny Spekulyant.

Besides the article, a Valyutny Spekulyant correspondent had an opportunity to confront two of the godfathers of the 1990s monetarist reforms in Russia, at an interview session, staged for a TV program on the 15th anniversary of the implementation of Friedmanite policies in Russia by the government of Yegor Gaidar in 1991-1992. TV host Matvei Gannapolsky scripted a debate with two critics and two supporters of Gaidar, but there was really only one critic, State Duma Deputy Svetlana Goryacheva. Participant Konstantin Borovoy, a prominent supporter of Gaidar in the early 1990s, said that those who opposed Gaidar's reforms were fools, or fascists, and that "fascism is the main threat to the remnants of democracy in Russia." When the Valyutny Spekulyant correspondent began to ask what Borovoy thought about Milton Friedman, as the mentor of Gaidar and all his band, Gannapolsky immediately stopped the interview, saying, "We are not discussing Friedman, this great economist." Nonetheless, the correspondent used his allotted one question to cite the words of Friedman himself in praise of the Nazi economy, from Nancy Spannaus's article. At that point, both Borovoy and Yuri Afanasyev, another major figure in the break-up of the perestroika-era Soviet Union, began to explain that the Nazi economy was "very efficient," and that the "efficient" Chilean economy was the most brilliant illustration, that Gaidar's teacher was right. This exchange was omitted, when the program was broadcast in late December.

The circulation of EIR's exposés of the "Chilean model," and its apostles like Domingo Cavallo of Argentina, were instrumental in preventing the reimposition of these insane and evil policies at the moment of the Russian default crisis in 1998.

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