From Volume 6, Issue 35 of EIR Online, Published August 28, 2007
Russia and the CIS News Digest

Glazyev: Global Bubble, Inflated Since 1971, Is Finished

Aug. 23 (EIRNS)—Russian economist Sergei Glazyev, member of the State Duma and head of the National Institute for Development, gave a press conference in Moscow today to lay out the dimensions of the current global financial crisis. According to reports from the Rosbalt and Novy Region agencies, he identified as the foremost symptoms of "the self-destruction phase of the dollar and yen financial bubbles," the same two developments in international finance, which Lyndon LaRouche has named the "bookends" of the current crisis. Those are the mortgage crisis in the United States, and the devastation of international investment institutions by their involvement in the yen carry trade.

"The situation in world markets can be called a permanent economic crisis, so nobody should be surprised by the ongoing devaluation of the dollar, or the absence of industrial growth in Japan," said Glazyev.

More fundamentally, Glazyev explained, this is the end-phase of a nearly 40-year process. "Starting in 1971," he said, "the U.S. Federal Reserve System and the Bank of Japan have been pumping their currencies into the world economy.... The National Bank of Japan has printed as much money as Japan itself, and neighboring countries, could swallow." Glazyev's mention of 1971 is a reference to the end of the post-World War II Bretton Woods system, when George Shultz, as President Richard Nixon's director of Management and the Budget, oversaw the end of fixed exchange rates. Since then, said Glazyev, "the U.S. Fed has been issuing as much as $2 billion per day, and, in August 2007, the figure has been ten times that.... But, every financial pyramid comes to an end, sooner or later."

Glazyev warned that Russian financial officials were insufficiently attuned to the oncoming crisis, saying that "they are taking no measures" to deal with it. Even in the short term, he said, Russia has lost $30 billion through the dollar's fall, while the investment of a good portion (45%) of the country's $120 billion so-called Stabilization Fund in dollars threatens to bring much greater losses. As short-term measures, Glazyev called for holding more of Russia's Central Bank reserves in gold, and denominating Russian oil exports in rubles. The ruble, he added, "could be turned into a reserve currency for the CIS countries, Europe, and China." The possible use of the ruble in this way was also mentioned by President Vladimir Putin during the June 2007 St. Petersburg International Economic Forum.

Glazyev, who has been courted by various political blocs for their slates in the December 2007 State Duma elections, said he will decide within the next two weeks, whether or not to run. The founder and former head of the Rodina (Homeland) Party, Glazyev said earlier this year that he would not primarily play politics, but would try to provide ideas and leadership for Russia through the Academy of Sciences, of which he is an associate member. Glazyev said today that he is in a dialogue with several parties.

Russia Urges Czechs To Wait on U.S. Radar

Aug. 22 (EIRNS)—Russian Chief of the General Staff Gen. Yuri Baluyevsky, during an Aug. 21 visit to Prague, urged leaders of the Czech Republic not to rush into making a decision on accepting placement of a U.S. anti-missile radar station. It would be a "big mistake," he said, to make that decision before the American Presidential election next year. Itar-Tass reported that, indeed, the Czech parliament will not adopt a resolution on the deployment of the radar, integrated in the U.S. ABM system, at least before the end of this year.

"I and my Russian colleagues simply ask that process continue through to October-November of 2008, and I think you can all guess why," Baluyevsky said. "I do not exclude that a new administration in the United States will re-evaluate the current administration's decisions on missile defence." Following talks with the Russian general, Czech First Deputy Defense Minister Martin Bartak said: "We have not yet said the final word on this, and we will not until we have explored all avenues."

Russian officials will hold talks with representatives of Azerbaijan in early September, regarding Putin's offer to the U.S. to jointly develop the Gabala, Azerbaijan radar facility, currently rented by Russia, as a screen oriented towards Iran and other points south. There will be a second Russian-American "experts' meeting" on the proposal, in Moscow later in the month.

Possible New Russian Nuclear Deals in Jordan, Yemen

Aug. 21 (EIRNS)—Jordan's Ambassador to Russia, Abd-al-ilah al-Kurdi, told a news conference in Moscow Aug. 19 that Jordan is expecting Russia's help in developing its nuclear energy program. "Jordan intends to build a nuclear power plant," he said, noting that Jordan has uranium deposits on an industrial scale, and should develop its own nuclear program. "Russia, naturally, has vast experience in this field, and it could contribute to the implementation of these projects, at the state level, or through private companies." He also invited Russian companies to participate in developing other energy facilities and port infrastructure, in geologic exploration, and in the construction of a canal linking the Red Sea with the Dead Sea, Interfax reports.

On Aug. 20, Russian officials expressed interest in a contract to build a nuclear power plant in Yemen, whose Electricity and Energy Minister, Mustafa Bahran, said the country has decided to develop nuclear power, SABA news agency reported. Last October, Yemeni President Ali Abdullah Saleh said his country was negotiating with U.S. and Canadian firms to construct a nuclear power plant, but Russia has now stepped up its overseas projects in the industry.

Russia Upgrades Space Cooperation with Europe, Ukraine

Aug. 22 (EIRNS)—In discussions on Aug. 21 at the MAKS-2007 air show in Zhukovsky, near Moscow, Russian Space Agency head Anatoli Perminov and European Space Agency (ESA) head Jean-Jacques Dordain agreed to form a working group to continue studying development of a joint next-generation manned spacecraft, Novosti reported. The Russians must either replace or substantially upgrade the time-honored Soyuz, and Western Europe has never developed an independent capability to send astronauts into space. According to the Washington office of ESA, the September meeting of the working group will continue the ongoing study of the interest and expertise of each space agency, and discuss options for designs.

ESA has been working to build a new launch pad for Russian Soyuz ST rockets, at its equatorial Kourou launch site in French Guyana, and a contract has been signed between French satellite launch firm, Arianespace, and the Russian Space Agency for the first launch of four European satellites on Russian rockets. As Russia has only northern latitude launch facilities, the equatorial site allows for hundreds additional pounds of payload to be launched into Earth orbit on the same rocket power.

RosBusinessConsulting reported Aug. 21 that Yuri Alexeyev, head of Ukraine's National Space Agency, would also meet with Perminov at the air show, to discuss the current state of cooperation. Ukraine was an integral part of the Soviet space program, which Russia is trying to reconstitute. Russia and Ukraine both contribute hardware to the Boeing-managed Sea Launch project.

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