From Volume 7, Issue 22 of EIR Online, Published May 27, 2008
Russia and the CIS News Digest

Strategic Triangle on Medvedev's Agenda in China

May 22 (EIRNS)—Russian President Dmitri Medvedev's trip to China "should focus attention on the yet insufficiently explored potential of the tripartite India-Russia-China relationship," former Indian Foreign Secretary Salman Haidar wrote in an article published in the Indian magazine The Statesman today. Haidar said that Medvedev's trip to Kazakstan and China closely affects India and its strategic interests. In addition, there are positive indications for the bilateral India-Russia relationship under the new Russian President, Haidar wrote.

Central Asia is a region where India has long indicated its interests, but has not sufficiently followed this up, in Haidar's view. "Now a resurgent Russia and a fast growing India are in a position to take fresh initiatives in Central Asia, in joint productive ventures including transport linkages that would make the region more accessible. It is a real prospect which can benefit all the parties involved. And the second leg of Medvedev's journey, to China, should focus attention on the yet insufficiently explored potential of the tripartite India-Russia-China relationship."

High-Technology Potential of Medvedev Visit to China

May 24 (EIRNS)—President Medvedev's May 23-24 visit to China was more than just an indication of Russia's Eurasian orientation; the visit had economic substance. On May 20, China's Deputy Foreign Minister Li Hui and Russian Ambassador to China Sergei Razov gave a press conference about the visit. Li called Medvedev "an old friend of the Chinese people.... President Medvedev is making China his first foreign visit only half a month after he took office."

The two country's relations could now move in the direction proposed by then-President Jiang Zemin, in his historic speech to Russian scientists in November 1998. Andrei Ostrofsky, deputy director of the Institute of Far East Studies of the Russian Academy of Science, told Xinhua in an interview that the Russian policy to shift and optimize its economic structure, would contribute to economic relations with China. "Russia is determined to transfer its economic drive force from natural resources to innovation, which will increase its exports of high-tech products to China and tap cooperation potential in joint research and development," Ostrofsky said. China could even help Russia as "a window or bridge" to the Pacific-Asian and Southeast Asian markets, as well as those of Central Asia, where most nations are members of the Shanghai Cooperation Organization, he said.

Razov announced that Medvedev would be accompanied by Russia's energy and industry ministers, as well as a large delegation of entrepreneurs, and the two sides are very likely to sign an agreement on nuclear energy (see Asia Digest). The new Russian Energy Minister, Sergei Shmatko, was formerly head of Russia's nuclear energy export agency. Last November, Atomstroyexport had signed deals to build two more nuclear reactors at the joint Russia-China Tianwan power station project. "The cooperation in the Tianwan nuclear plant has brought many fruitful results. So I think there is great potential for further cooperation," Razov said.

Gennady Chufrin, deputy director of the Institute for World Economy and International Relations of the Russian Academy of Science, told Xinhua in an interview published May 20 that there is "a common interest between Russia and China: the development of Russia's Far East, Siberian and the neighboring China's northeastern regions, which are all rich in economic potential." In addition to their other relations, Russia and China have also carried out substantial cooperation within the Shanghai Cooperation Organization (SCO).

Russia, Kazakstan Agree on Long-Term Economic Cooperation

May 22 (EIRNS)—Kazakstan has "proposed to Russia to prepare a long-term agreement on economic cooperation and integration between our countries," President Nursultan Nazarbayev told a press conference in Astana today, following his meeting with visiting Russian President Dmitri Medvedev, Kazinform reported. "This is an important document, since the level of our economic development will allow us to act in a strategically new way," Nazarbayev said. Medvedev responded that the agreement will likely include aspects of Russia's development until 2020, and the Kazakstan development plan until 2030, Novosti reported. He also emphasized the establishment of a Russian-Kazak company for peaceful nuclear energy cooperation, and the building of a nuclear power plant in Kazakstan with Russia's participation. "Our plans include a transition to deeper nuclear energy integration," Medvedev said at the press conference.

The Russian daily Kommersant on May 22 cited unnamed Kazak sources, who said Nazarbayev is committed to creating a Common Economic Space (CES) with Russia, constituting "a merger of the two economies." Astana Mayor Imangali Tasmagambetov told Kommersant that Kazakstan considers the idea of economic union with Russia to be crucial. "The President has always argued to Moscow that it'’s pointless to tear up our economic ties; on the contrary, we should integrate more intensively."

Kazakstan-Russia Rail Agreement

May 22—Kazak and Russian railway officials completed discussion of the long-term development of both nations' rail systems today in Moscow, Kazinform reported. The rail systems, which were integrated during the Soviet Union, are crucial links in the Eurasian Land-Bridge between China and the rest of East Asia, and Europe. Russian Transport Minister Igor Levitin and the head of the state-owned Russian Railways corporation, Vladimir Yakunin, met the head of Kazakstan's Temir Zholy National Company, Askar Mamin, to work out details of improving long-term transportation cooperation and cross-border rail connections.

The Russian side informed the Kazak delegation of the huge Russian Railways development program, which involves investment of some 1.5 trillion rubles ($63.3 billion) from the Russian government budget (combined with additional private investment). The focus of Russian-Kazak rail cooperation will be container transport, modernization of border-area stations, tariff arrangements in some rail sections, and joint international projects. The two nations also agreed to meet again at the 48th session of Railway Transport Council of the CIS, Baltic states, and Finland, which takes place May 29-30 in Cholpan-Ata, Kyrgyzstan.

Mongolian President: Remember Khalkyn Gol Victory

May 21 (EIRNS)—At his meeting with Russian President Medvedev in Moscow on May 16, Mongolian President Nambaryn Enkhbayar discussed Mongolia's cooperation with Russia in infrastructure and other economic development, and the upcoming 70th anniversary of the famous battle of Khalkyn Gol. Enkhbayar said he would take personal charge of the celebrations, and invited Medvedev to participate.

In July-August 1939, the Soviet Red Army and the Mongolian Army won a decisive victory over an elite Japanese force which was trying to push its way from occupied Manchuria into Mongolia. The Red Army, led by the future Marshal of the Soviet Union Georgi Zhukov, routed the Japanese, using a combined highly mobile tank and air "defensive offense." Japan never again challenged the Red Army during World War II.

Medvedev and Enkhbayar also discussed joint projects. The Kremlin said that "Russia would welcome intensified activities of Mongolia as an observer in the Shanghai Cooperation Organization and active use of the possibilities of the organization to promote business cooperation with Russia, China, Kazakstan, and other SCO members," Itar-Tass reported. The Mongolian rail system has to be modernized to allow exploitation of Mongolia's mineral wealth. "There will also be a detailed talk on the issue of joint initiatives in the mining industry in Mongolia." Russia is considering helping to construct a nuclear power plant in Mongolia.

Russians Call EU Energy Deregulation Strategy Insane

May 21 (EIRNS)—At an annual EU-Russian energy conference in Berlin yesterday, Gazprom's director for international relations, Stanislav Tsygankov, said proposals being drafted by the EU Commission to force the separation of energy production, transmission, and distribution, would sow "instability and unpredictability." "Which companies will be able to plan long-term investments under those conditions?" he asked at the conference, which was organized by Gazprom, the Russian Gas Society, and the German Council for Foreign Policy.

The EU plans have come under pressure from companies like E.ON Ruhrgas and Wintershall in Germany, Gaz de France, Eni of Italy—as well as Gazprom. These companies have forged long-term energy contracts with Gazprom to guarantee supply for new power plants, for example. In return, they have allowed Gazprom to enter the distribution sector in their countries. The companies claim that EU plans to "unbundle," or break up, these vertically integrated companies would dry up investments. That, they say, would only undermine energy security in Europe, where demand for natural gas is expected to grow 1.3% a year over the next two decades.

Jean Marie Dauger, vice president of Gaz de France, said the gas sector would require up to $4.24 trillion between 2006 and 2030, warning that such huge investments might not be forthcoming with the Commission proposals. "The gas industry is a capital-intensive industry," he said at the conference. "It would be a real strategic error for the European gas sector if the Commission succeeds with its proposals."

Burckhard Bergmann, former chairman of E.ON Ruhrgas, said Russia already supplies 37% of Germany's gas imports and 45% of the EU's imports. "Long-term contracts are the essential link between security of supply and security of demand," said Bergmann, who is deputy chairman of the influential East Committee, which promotes German companies in Russia and eastern Europe. While the energy giants in Europe want to protect their own assets and investments, Russia is worried that its investments in Germany, Italy, and other EU countries would be affected.

Also, non-EU energy companies, like Gazprom, would be affected by the EU Commission's plans, therefore, Gazprom is trying to win support among other large energy companies in the EU.

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