From Volume 7, Issue 13 of EIR Online, Published Mar. 25, 2008
Russia and the CIS News Digest

Russian Finance Academy Issues Crisis Warning

March 20 (EIRNS)—The Finance Academy of the Russian government yesterday issued a report titled, "Risks of a Financial Crisis in Russia: Factors, Scenarios, and Policies to Counteract Them." Unlike recent claims by Finance Minister Alexei Kudrin and others that Russia would remain an island of calm in the storm, the Finance Academy's lead author, director of the Financial Markets Institute Yakov Mirkin, said that Russia is immediately threatened by "financial infection" from abroad. The reason is the high level (70%) of non-resident participants in Russia's debt markets, and the influx of speculative capital during 2006-07.

Foreign borrowings by Russian banks and companies now stand at a level equivalent to 80% of the credit issued within the country. According to a report on the RBC news wire, Mirkin's team concludes that "the risk of a speculative attack is also increasing, because Russia's developing financial market is depending on foreign portfolio investments and financing from non-residents."

In a separate statement, also on March 19, Accounting Chamber chairman Sergei Stepashin warned about the $430 billion debt of Russian banks and corporations to foreign lenders. Speaking before a plenary session of the State Duma, Stepashin called on Kudrin to invest resources from the National Prosperity Fund, Russia's sovereign wealth fund, directly into the Russian economy, as an alternative to allowing the foreign borrowing to race ahead.

Another high-level session on the world economic crisis was held March 18, as the first meeting of the Institute for Contemporary Development, a new think tank set up by President-elect Dmitri Medvedev. On March 17, President Vladimir Putin discussed the crisis with the government, directing the cabinet to monitor and seek remedies for the too-rapid appreciation of the ruble.

Russian Expert Links Tibet Events to Financial Crisis

March 20 (EIRNS)—Igor Panarin, a professor at the Russian Foreign Ministry's Diplomatic Academy, told the popular daily Argumenty i fakty of March 18 that the current unrest in Tibet is part of a larger effort by foreign interests to destabilize various countries. He situated these events within the current world financial crisis.

"We have to pay attention to the simultaneous actions in a number of countries," said Panarin. "Essentially, it is an integrated ideological-informational operation, which I would link directly with the financial crisis that is now developing in the world." He suggested that outside forces might hope that a destabilization of China would reduce capital flight from the United States to China.

Panarin wrote, "Among the rebels there is certainly a group of individuals, acting according to the scenario of the so-called 'Orange Revolution,' the scenario of the conflicts that took place in Kiev [Ukraine, 2004] and Tbilisi [Georgia, 2003]. Evidently the same people developed these scenarios, with each 'plan' being written to order for the specific local situation."

Putin and Medvedev Receive Gates-Rice Delegation

March 17 (EIRNS)—The U.S. Secretaries of Defense and State, Robert Gates and Condoleezza Rice, in Moscow for "2+2" talks tomorrow with their Russian counterparts, met today with President Vladimir Putin and President-elect Dmitri Medvedev. Both made a point of expressing some optimism, while other officials continued to emphasize the Russian leadership's dissatisfaction over the Bush Administration's failure, to date, to give an adequate response to the strategic cooperation proposals Putin presented last Summer at his Kennebunkport meeting with President George W. Bush.

In comments before the talks, Putin mentioned his most recent phone call with Bush, and the receipt of a letter from him—"a serious document, which we have carefully analyzed." Said Putin, "If we really manage to agree on [the letter's] main provisions, we shall be able to say that our dialogue is progressing successfully." But, Putin added, "There are still plenty of problems that need to be discussed."

Front and center among the latter are U.S. plans to deploy ballistic missile defense systems (BMD) in the Czech Republic and Poland, which Russia has called a threat to its strategic nuclear deterrent. Russian media followed the New York Times in reporting remarks by Gates, to the effect that the United States would offer to keep the BMD facilities non-operational, until there were "proof" of an Iranian capability to hit European targets with missiles. Gates called this part of "a very forward-leaning set of proposals" that he and Rice were bringing to Moscow, but he added a barb: "At some point the Russians are going to have to decide whether they want to be true partners, which we are offering, or whether this is just all a sham game on their part to stall the whole deal.

The daily Vedomosti reported comments by a Russian foreign ministry official, who said that Moscow still awaits written confirmation of offers made orally by Gates and Rice in Moscow last October. These included stationing of Russian personnel at the East European facilities, and construction of the radars in the Czech Republic in such a way, that they could not face Russia. In a March 7 interview, just after a trip to Washington during which he met with Gates, former Prime Minister Yevgeni Primakov said that National Security Advisor Stephen Hadley had told him Gates's October 2007 offer had been "misunderstood," and that it had referred only to occasional visits by Russian officers, not their permanent stationing as part of a joint staff.

After the 2+2 talks, both sides indicated no resolution of the critical issues, but a willingness to keep talking, based on the latest proposals, which Russian Foreign Minister Sergei Lavrov termed "interesting."

Russia Prepares Afghanistan Initiative for NATO Summit

March 20 (ERINS)—Russian officials have said they will present an Afghanistan-related initiative at the NATO summit in Bucharest April 2-4, when President Vladimir Putin leads the first-ever Russian delegation to such a summit. Dmitri Rogozin, Russia's ambassador to NATO, said in a March 11 Interfax interview, that Russia "will back non-military NATO programs in Afghanistan concerning humanitarian goods, direct assistance to Afghanistan and the restoration of its infrastructure," adding that, "We are interested that problems with Talibs be resolved at a distance from Russian borders."

On March 15, NATO spokesman James Appathurai announced that NATO has been negotiating land- and air-transit agreements with Russia for the resupply of NATO forces in Afghanistan, and that the agreements might be signed in Bucharest. The same day, RFE/RL Newsline reports, the Polish newspaper Gazeta Wyborcza commented that the Russian offer might be part of "a broader deal, under which NATO would not admit Ukraine and Georgia to a Membership Action Plan (MAP)." Germany, among other NATO members, has cautioned against rushing to accept MAPs for Ukraine, though Ukrainian officials have said they intend to plead their case for an MAP, when President George Bush makes a state visit to Kiev on the eve of the summit.

In the Asia Times of March 14, retired Indian diplomat M.K. Bhadrakumar analyzed the Russian offer on Afghanistan as "throwing a wrench in NATO's works"—and not only due to the possible quid pro quo of delaying the Ukrainian and Georgian MAPs. Citing Foreign Minister Lavrov's recent remark that Russian provision of transit routes to Afghanistan would be linked with "an agreement on all aspects of the Afghan problem, between NATO and the Collective Security Treaty Organization (CSTO)," Bhadrakumar wrote that Russia could try to force NATO operations in Central Asia to come under the aegis of the CSTO—Russia, Belarus, Armenia, Kazakstan, Kyrgyzstan, Tajikistan, Uzbekistan—and even the Shanghai Cooperation Organization (SCO), which includes China. At the United Nations on March 12, Russian Ambassador Vitali Churkin said that the CSTO and SCO provide the best capabilities for combatting drug-trafficking operations run out of Afghanistan.

Russian Foreign Ministry Sees Britain on Cold War Path

March 19 (EIRNS)—Britain should rethink its "Cold War" stereotype of Russia if it wants to normalize bilateral relations, the Russian Foreign Ministry said on March 18. The strain in British-Russian relations has been visible in the diplomatic fallout following the murder of Russian security service defector Alexander Litvinenko in November 2006 in London, and more recently by the closure of British Council offices in Russia. "There has been no decisive moving away from the stereotypes of the Cold War era in the political policies of the British elite," the statement said, adding that "if this problem is not resolved, it will be hard to count on the normalization of Russian-British relations."

Russian President Vladimir Putin and British Prime Minister Gordon Brown have not had a single conversation since Putin called to congratulate Brown on taking office on June 27 last year. "British authorities have become more critical in their comments on Russia," the ministry said. "The main emphasis of these comments is being put on the issue of the 'worsening situation' of human rights and democratic freedoms in Russia." The ministry statement is especially relevant for the Caucasus theater of tensions, which is exploited and fueled by London.

BP Officials Arrested in Moscow

March 21 (EIRNS)—Russian police raided the office of the BP joint venture TNK-BP in Moscow on March 19, and on March 20 made two arrests of BP officials, who will face charges of corruption and of espionage, according to Russian and British media reports. The two men have done university studies at Wellington College and Oxford in the U.K., on a grant by the British Council (which is itself under investigation in Russia for legal violations, espionage, and subversion).

One of the two arrested men, Alexander Zaslavsky, is president of the British Alumni Club, an organization of Russians who have studied at British universities. The Club is closely linked to the British Embassy in Moscow. Also of interest is that Ilya Zaslavsky, the brother of Alexander, is a member of an anti-Putin group that works via Facebook. Interfax reported that although the men have Russian names, both are U.S. citizens.

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