From Volume 6, Issue 32 of EIR Online, Published Aug. 7, 2007
Russia and the CIS News Digest

Russian Deputy Premier: Dollar Crisis Is Global

July 31 (EIRNS)—Speaking July 21 to a meeting of the youth group Nashi, Russian First Deputy Premier Dmitri Medvedev said that the crisis of the U.S. dollar "may become general and global in nature." Medvedev added, according to Interfax, "A situation may arise where we, China, and some other Asian countries will talk about the emergence of a regional reserve currency. That may be the yuan, but it is in our interest that it be the ruble." At the St. Petersburg Economic Forum in June, President Vladimir Putin also suggested that the time has come for multiple world reserve currencies, including the ruble. He said Russia might denominate its exports in rubles.

Russian Government Charts Development

Aug. 3 (EIRNS)—At cabinet-level meetings this week, President Putin and other Russian leaders focussed on the country's economic development. The deliberations started with a July 30 government meeting on Russia's first-ever three-year budget plan, which Putin introduced as "for the first time, so specifically and in some depth, setting forth objectives for the development of the real sector of our economy."

In budget spending, Putin said, "We have started to pay more attention to the real sector of the economy. The budget line that has risen the most is support for the national economy: for innovation programs, infrastructure, the aircraft industry, shipbuilding, and electric power, including nuclear power. This budget line has increased by 44.4%, to the level of 718 billion rubles.... The fastest rising line is spending for the nuclear industry: from 14 billion this year, to 60 billion rubles." (Currently, 26 rubles = $1).

Putin took reports from First Deputy Premier Dmitri Medvedev on the National Programs (housing, agriculture, health, and science), and First Deputy Prime Minister Sergei Ivanov, on the following day's planned session of the Military-Industrial Commission. In addition to an agenda item on industrial applications of new materials, developed in the military sector, Ivanov mentioned rail development, saying that he would visit the opening ceremony of Russian Railways' new Center for Innovative Development, at Moscow's Riga Station, the next day.

On Aug. 1, the Kremlin publicized a follow-up talk between Putin and Ivanov, where the first deputy premier delivered more detailed reports on performance by industrial sectors: machine-building for transportation and power, construction, steel, chemicals, wood-processing, and electrical equipment, as well as shipbuilding and aircraft production. In most of these sectors, except for shipbuilding, Ivanov reported rises in real output during the first half of 2007, significantly outstripping overall growth of 7.8%. Most dramatic are a 91% jump in the production of construction cranes, 35% rise in dumptruck output, and 29% for bulldozers. He stressed that the nuclear plant construction effort is beginning to be a significant growth driver for other industries.

Russia Invests in the Far East

Aug. 3 (EIRNS)—The Russian government has budgeted 566 billion rubles ($22.3 billion) for the development of the Far East and Transbaikal regions from now until 2013. The initial tranches of this fund will be disbursed as part of the three-year budget for 2008-2010. The program includes $5.8 billion to modernize Vladivostok, Russia's most important Pacific port, before the Asia Pacific Economic Cooperation (APEC) summit which Russia wants to host there in 2012. The plan also provides for rebuilding 22 airports and 13 seaports, while building a modern ferry terminal for traffic to Sakhalin Island, 6,500 kilometers of roads, and expanded power and gas lines.

Russia's Far East has been losing population due to the collapse of work, energy, and infrastructure there since the demise of the Soviet Union. Putin has made the regeneration of the region a national priority. Prime Minister Mikhail Fradkov, who carries overall responsibility for the vast region, has put Deputy Prime Minister Sergei Naryshkin in charge of the funds.

Russian Rail To Grow in All Regions

Aug. 3 (EIRNS)—The state-run Russian Railways company is planning to lay 2.5 times more track up to 2030, than was laid in the entire 70-year Soviet period, the Railway Review reported yesterday. By 2010, some 14,000 km will be added to the Russian rail network. The perspective was approved by President Vladimir Putin in an April 10 government session.

At a St. Petersburg conference on the rail program for 2030, Presidential Envoy for the Northwest Federal District Ilya Klebanov called the railways essential for "the defense of the country's national sovereignty and security, and preservation of a single socio-economic space." Yakunin presented details of the rail segments in the 1,200-km Perm-Syktyvkar-Vendinga-Karpogory-Arkhangelsk corridor, known as the Belkomur Mainline. It will give an outlet to the Arctic Coast, from Siberia, the Urals, and the industrial cities in north-central European Russia.

Kiriyenko: Heading Nuclear Industry Changed My Thinking

July 28 (EIRNS)—Sergei Kiriyenko, head of the Russian Federal Atomic Energy Agency (Rosatom), gave an unusual interview to editor-in-chief Alexander Prokhanov of the influential nationalist weekly Zavtra, in which he told how running Rosatom at the point of its revitalization has changed his thinking about the market economy, and Russia's future. Zavtra published their dialogue July 18 under the headline "Russia: The Atomic Vector."

Kiriyenko, then in his 30s, was Prime Minister of Russia at the moment of the country's catastrophic state debt collapse in 1998. "I always had liberal economic views," he told Prokhanov. "But here, thinking about the [nuclear power] sector, I caught myself coming to conclusions that were different from what I had believed before.... Getting to know the nuclear power sector was a revelation. This strictest of the Soviet Union's planned systems, the closed atomic energy sector, incorporated competition throughout. And I stopped thinking that market and planned management are incompatible. You can have a balance. Everything depends on what your goal is."

EurAsEC Holds First Meeting on Nuclear Energy Cooperation

Aug. 3 (EIRNS)—The Eurasian Economic Cooperation Community (EurAsEC) council on cooperation in the nuclear energy sector today completed its first-ever meeting in Angarsk, where Russia, Kazakstan, and other Eurasian nations are in the process of turning the Angarsk chemical electrolysis plant into an international center for uranium enrichment. Members from Belarus, Kazakstan, Kyrgyzstan, Russia, and Tajikistan attended, Itar-Tass reported. The meeting set up a work plan for 2007-08 and discussed personnel training, before a visit to the Angarsk plant.

Eurasian Triangular Security Cooperation Advances

Aug. 2 (EIRNS)—Eurasian leaders are increasing security cooperation to unprecedented levels, as the unending wars in Afghanistan and Iraq threaten security from Southeast Asia to Europe. At the ASEAN (Association of Southeast Asian Nations) Regional Forum in Manila, Russian Minister of Foreign Affairs Sergei Lavrov today proposed direct cooperation between the nations of ASEAN and the Shanghai Cooperation Organization (SCO), Itar-Tass reported. Two days earlier, it was announced that the SCO will sign a protocol of cooperation with the Collective Security Treaty Organization (CSTO), which is the military branch of the Commonwealth of Independent States (CIS), the association of the former republics of the Soviet Union. The first focus of CSTO-SCO cooperation will be the ever-worsening military disaster in Afghanistan.

The foreign ministers of Russia, China, and India, who met in Manila yesterday, agreed to hold another trilateral meeting in October, in Harbin, China. This meeting will be on the "Strategic Triangle" mechanism of cooperation among the three Eurasian giants, which has developed since the end of the 1990s.

Putin Pushes Kennebunkport Follow-Up

Aug. 1 (EIRNS)—At the July 30 Russian government meeting, President Putin received a report from Foreign Minister Sergei Lavrov on the status of talks between American and Russian experts on anti-missile cooperation, agreed upon during his visit with President George Bush and his father at Kennebunkport, Maine at the beginning of July. According to the Kremlin website, Lavrov said that the July 30-31 discussions were to be the first of "two or three" such sessions, before the 2+2 meeting of the two countries' foreign and defense ministers, which he said would take place in early October.

Lavrov said that the missile defense question was also discussed last week at the Russia-NATO Council, "where there was substantial interest in our proposals and readiness to discuss them." At Kennebunkport, Putin had proposed to broaden the discussion, bringing in more participants through the Russia-NATO Council. Putin added, "These two processes need to be combined," rather than there being separate missile defense talks with the USA and with NATO. Lavrov replied, "That is anticipated. The contacts between our interagency [Defense and Foreign Ministries] delegations, agreed on at Kennebunkport, will be completed in the next two months. In parallel, we are informing the Europeans about our approach, with the aim of bringing this whole process together in a single agreement."

U.S. State Department spokesman Tom Casey, answering a question from EIR, said Aug. 1, that the July 30-31 talks had been "a good preliminary exchange on the issues." A former official, who worked this issue in both the Clinton and the George H.W. Bush administrations, indicated that there is interest from the U.S. side in finding common ground with Russia. He thought that even if the U.S. went forward with deploying the interceptor missiles in Poland, this would not necessarily be a "deal-breaker" if the two sides could find common ground on a global joint system.

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