From Volume 6, Issue 36 of EIR Online, Published Sept. 4, 2007
Russia and the CIS News Digest

Glazyev's Website Posts New Bretton Woods Call

Aug. 30 (EIRNS)—The updated Call by the Ad Hoc Committee for a New Bretton Woods, issued by Schiller Institute founder Helga Zepp-LaRouche on Aug. 12, appeared in Russian yesterday on the website of economist and parliamentarian Sergei Glazyev. One of the most widely read political sites in Russia, titled the appeal "Authoritative economists call for creation of a new world financial system," and listed it prominently.

Glazyev, who is an associate member of the Russian Academy of Sciences and an elected deputy in the State Duma, gave a press conference Aug. 23 on the systemic nature of the current world financial crisis. He called for Russia to move in coordination with other Eurasian countries to protect their economies, and reiterated his own proposal to use the Russian ruble as a reserve currency and to denominate Russian exports in rubles—ideas that President Putin seconded at the St. Petersburg World Economic Forum in June.

The Ad Hoc Committee for a New Bretton Woods outline of a Rooseveltian new financial architecture, is being widely quoted and reposted on other Russian sites, picking it up from the source. The Russian translation of the Call has also appeared on the Anti-Globalist Resistance site (, and a new analytical site called Strategium, based in Ukraine.

Wall Street Livid About New Bretton Woods

Aug. 30 (EIRNS)—Today's Wall Street Journal published a diatribe against the potential for a New Bretton Woods agreement among Russia, China, India, and other nations. The author, Judy Shelton, is a regular contributor to the Journal, and sits on the Board of the National Endowment for Democracy. Shelton railed against Russian President Vladimir Putin's call in St. Petersburg in June for a "new international financial architecture," and Putin's efforts to make the ruble into a reserve currency. In particular, she whined that Putin "is determined to establish a world-class oil exchange on Russian territory and shift energy business away from existing global financial centers."

Rather than seeing this as a move for war avoidance through international cooperation, with U.S. participation, Shelton warned that "Russia's next move is to challenge U.S. supremacy in world financial markets.... Russia's leader strikes a chord with other emerging-market economies—Brazil, China, India.... It's a daring gambit and it constitutes no less than a demand for new international monetary arrangements on the scale of the post-World War II Bretton Woods agreement."

If Russia begins demanding payment for its oil in rubles, wrote Sheldon, and China continues "flexing its monetary muscle by hinting it might dump a portion of its considerable dollar reserves, ... you have the makings of a devastating dollar rout." Reflecting the current British campaign to divide Russia and the U.S. into warring camps, Shelton concluded: "The next Bretton Woods should be launched as an earnest initiative from the nation that gave birth to democratic capitalism, not as an act of aggression from a pumped-up Russian pretender."

Brits Play Up Russian Vulnerabilities to Financial Crisis

Aug. 31 (EIRNS)—At a point when President Vladimir Putin has called for a new financial architecture, and his government has at least somewhat curtailed the furious activity of Russian firms on British markets, in particular, Ambrose Evans-Pritchard writes in today's London Daily Telegraph about imminent dangers to Russia from the financial crisis abroad. "Fears that Russia's banking system could be vulnerable to a sudden downturn have led to a surge in capital outflows over the past two weeks," Evans-Pritchard emphasizes, "triggering the sharpest fall in the country's reserves since the oil boom began."

While some British speculators and others who are unfriendly to the prospect of a Russian economic recovery may wish to play up the impact of the global crisis on Russia, there is no doubt that the effects are real. According to the Telegraph article, the Russian Central Bank spent $4 billion to support the ruble on Aug. 21 alone, and "has intervened aggressively in recent days to stave off a possible credit crunch, injecting a record $10.6 billion into the banking system on Tuesday." Evans-Pritchard quotes Central Bank official Gennadi Melikyan on dangers to Russian banks that have borrowed a combined $110 billion overseas to invest in Russian ruble-denominated markets.

In his Aug. 23 press conference on the global financial crisis, economist Sergei Glazyev warned that Russian officials are underestimating the impact it will have on Russia.

The Telegraph cites Fitch and other foreign rating agencies, on the "liquidity risk" facing Russian banks that have relied on foreign borrowing, but would have "increased re-financing risks should foreign appetite dry up." Richard Hainsworth of Moscow's RusRating acknowledged that the exit of funds from Russia in August was caused by hedge funds liquidating Russian assets to meet U.S. subprime losses.

The Moscow Times and Vedomosti reported on a lending moratorium until October by one Moscow bank, Moskommertsbank (majority owned by Kazakstan's Kazkommertsbank), which is heavily into mortgage lending. While mortgages account for just 1% of gross domestic product in Russia, they make up 5% in Kazakstan.

MIT Prof: Proposed U.S. BMD System Is Threat to Russia

Aug. 28 (EIRNS)—Dr. Ted Postol, science professor at MIT and former Pentagon advisor, explained to a standing-room-only crowd in a House Armed Services Committee hearing room today, why the Administration's proposal to place a radar in the Czech Republic and missile interceptors in Poland is a strategic threat to Russia. Since the proposal was made early this year, and as recently as last week, top civilian and some military officials have insisted that Russia's ICBM force is not threatened by the proposed ballistic missile defense system.

While Postol is skeptical about the efficacy of the kinetic kill interceptor system, he pointed out that this is just the "leading edge" of a series of more sophisticated systems the Administration is proposing to deploy, citing Presidential National Security Directive 23, issued Dec. 6, 2002. It is those "improved" and "expanded missile defenses" that the Russians see as a threat. The trajectory of western-Russia-based ICBMs runs above the Polish interceptor site, if their target were Washington, D.C., and could be targetted by the Ballistic Missile Defense system.

Postol also detailed the advantage of adding the Russian Gabala radar in Azerbaijan, which President Putin has proposed for joint U.S.-Russian use. With the additional use of Aegis ship-based interceptors and facilities that could be placed in Turkey, which could not intercept Russian missiles, there is no reason for the Polish-Czech deployment, he said.

Russian Space Agency Announces New Plans for Moon Mission

Aug. 31 (EIRNS)—Russian Space Agency head Gen. Anatoli Perminov announced new plans for the Russian space program today, adding bold new missions to what has been a stagnant policy. According to, it includes the first post-1960s official intention to send cosmonauts to the Moon, which should be possible by 2025. Perminov referred to the creation of "a new manned spaceship," which could be the reusable Clipper, and would replace the vintage 1950s Soyuz. These are two programs that were promoted by former Energia Corp. head Nikolai Sevastyanov, who was fired from that post, for proposing such far-reaching programs not endorsed by the government.

AFP reports that Perminov also said that an "inhabited station" could be built on the Moon, between 2027 and 2032. On NASA's current schedule, the first Americans since the Apollo program to land on the Moon will arrive between 2018-2020, although each year of budget cuts pushes that schedule further into the future.

Perminov said Russia will develop rocket launch sites on its own territory, but will necessarily continue to use the Baikonur launch site, which it leases from Kazakstan. Russia will also continue to pursue the launch of space "tourists," five of whom have paid more than $20 million each for a trip to the space station.

China and Russia Sign Trade Agreement

Aug. 25 (EIRNS)—China and Russia signed a trade deal on Aug. 23, establishing a joint chamber of commerce for machinery and electronic products. Such a mechanism was agreed to earlier this year by Presidents Vladimir Putin and Hu Jintao. Russia, whose trade to China has been predominantly in the field of energy and raw materials, wants China to buy more of its manufacturing products. Chinese Commerce Minister Bo Xilai said that China was interested in doing so. "China expects to import more machinery and electronic products from Russia, but we will choose what is proper," Bo said. The two sides also signed agreements dealing with trade in lumber and farm products.

In related developments, new border crossings along China's northeastern Heilongjiang Province, bordering Russia, are for import and inspection of Chinese rice. China has also established an economic and trade cooperation zone in the Russian city of Ussuriysk. The Ussuriysk Economic and Trade Cooperation Zone, approved by Russian and Chinese commercial authorities, covers 2.28 million square meters. More than 60 large and medium-sized domestic and overseas companies, specializing in a large variety of manufacturing and processing industries, including shoes, apparel, timber, household appliances, automobiles and components, are expected to set up offices and plants in the zone.

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