From Volume 7, Issue 30 of EIR Online, Published July 22, 2008
Russia and the CIS News Digest

Russians Discuss LaRouche, New Financial Architecture

July 19 (EIRNS)—In line with President Dmitri Medvedev's calls for changing the "architecture of international economic relations," heated debates are under way in Russia over what a new system should look like. There is much attention to the notion of elevating the ruble to regional reserve-currency status, to the possible denomination of the energy trade in rubles, and related measures. At the same time, the name of American economist Lyndon LaRouche and the idea of a New Bretton Woods, which has been closely associated with LaRouche for the past decade, are coming up in the public discussion, thus pointing toward a more profound type of change. The forthcoming release of a Russian translation of LaRouche's article "Free Trade vs. National Interest: The Economics Debate About Russia" (EIR, July 4, 2008), beginning next week, will draw even more attention to LaRouche's comprehensive solutions.

The G-8 summit in Japan failed to address the critical agenda items of food, energy, and "the onrushing economic crisis," wrote the leading Russian economics weekly Expert July 14, because major decisions cannot be taken on these matters without the participation of China, India, and Brazil (i.e., with Russia, the so-called BRIC grouping). Prominent TV journalist Mikhail Leontiev, who has previously compared international finance to a pyramid scheme, said in a July 14 commentary for that the only one of the G8 leaders who even came close to giving an adequate evaluation of the world financial crisis was Medvedev.

What Medvedev was talking about," said Leontiev, "was a new configuration of world finance. Really, he was raising a New Bretton Woods. And, indeed, this was the basic thing that ought to have been discussed at that forum. The scale, depth, and danger of the future crisis are such that no other questions on the agenda compare with it. But, what we heard from Medvedev's negotiating partners was pathetic babble.... The food markets are bloating up. But nobody trades oil or food directly; they trade futures, derivatives, promises, and speculative paper, which are totally divorced from any real backing. The system needs to be reconfigured. And what the summit could have done, is at least to begin to talk about forming a New Bretton Woods."

Academician Sergei Glazyev, in an interview with the Rosbalt agency on July 15, upped his estimate of how much money Finance Minister Alexei Kudrin has lost by investing Russian currency reserves in dollar instruments, from $30 billion to $50 billion. As in his Zavtra newspaper interview in May, Glazyev cited the 2001 hearings he held in the State Duma, at which LaRouche was the keynote witness. "Already in 2001, at Parliamentary hearings," Glazyev recalled, "we officially warned our monetary authorities that a serious devaluation of the dollar was inevitable."

Economist Andrei Kobyakov, writing July 12 on his website, welcomed Medvedev's "ruble as regional reserve currency" idea, which he traced back to Glazyev's proposals of the late 1990s. It won't work without a detailed plan for a payments system and close diplomatic cooperation with other Eurasian nations, Kobyakov said, but the idea could spark historical optimism and hope for a restoration of Russia's economic sovereignty.

And in the weekly Slovo dated July 11, Prof. Stanislav Menshikov brought in a crucial element, otherwise missing from these Russian discussions: a positive role for the United States. Under the subhead, "A New Roosevelt," Menshikov concluded an analysis of the latest crisis phenomena in the USA with this: "The well-known American economist Lyndon LaRouche forecasts the imminent bankruptcy of the banks, and calls for urgent measures to save them.... Of course, there are theoretically sound recipes for fighting the crisis, such as state investment programs to build schools, hospitals, and infrastructure, which the left wing of the Democratic Party would support. But the Bush Administration is not prepared for such radical steps, and neither is the opposition [Democratic] leadership in the Congress. The country needs a new Roosevelt, but one has not yet appeared on the horizon. There is also a need for coordinating anti-crisis actions among the world's leading nations, meaning not only the USA and Europe, but emphatically Russia, and especially China."

Russia-India-China Dialogue on New Financial Institutions

July 14 (EIRNS)—An interesting dialogue has started among the finance ministries of Russia, China, India, and Brazil, Russian Deputy Finance Minister Dmitri Pankin told the press in Moscow today in reporting on the results of the G8 conference, according to RosBusinessConsulting. Pankin referred to these nations' potential to join forces to reform the "old" financial institutions, RBC reported, and said it is even possible that these four ministries will come to a conclusion that new institutions must be created, as the old ones cannot respond to new challenges any longer.

Pankin emphasized that the global financial crisis is not over, and new problems will arise as the crisis deepens. However, he maintained the Cloud Cuckoo Land position that Russia's financial community knows how to handle the crisis; that Russia both knows which threats it faces, and had has found the methods to deal with these threats. Among these methods, apparently would be coordination between the Central Bank and the Federal Financial Markets Service to deal with the stock and financial markets. Pankin also said that Russia wants to "amend" the methods for determining shareholding at the World Bank, and that similar reforms are also being made at the IMF.

Russian Officer: U.S.-Russian Relations at a Low Ebb

July 13 (EIRNS)—A high-ranking Russian military officer, speaking to EIR today, indicated that no U.S.-Russian talks on missile defense had occurred since October. On the last occasion, there was still the "carrot" offered by the U.S. to allow Russian visitations on the sites, but nothing has come of even that promise. "Meanwhile, the U.S. goes and signs a deal with the Czechs and tries to ink a deal with Poland," he said. The officer also scored Secretary of State Condoleezza Rice's criticism of Russia on her visit to Georgia. "It is one thing for the U.S. to criticize Russian actions from the podium of the White House or the State Department. But it's significantly more of an affront when the Secretary of State goes to Georgia to make her comments," he said. He also noted that Georgia was spending an awful lot of money on military hardware, much more than the budget of Georgia would allow. "The U.S. is pouring a lot of cash into arming Georgia," he noted.

While Russia has not taken any dramatic measures to counter a U.S. missile deployment in Poland, which is still far from a done deal, and faces numerous hurdles before anything can actually be built, the officer noted that there is a lively discussion, especially among retired military officers, about the measures that might be taken were that to occur, such as, missile deployments or a re-positioning of air attack squadrons. More importantly, the whole debate is playing into a rather violent anti-American mood in the general population. "Some elements are even talking about giving active support to anti-American regimes throughout the world. This would really take us back to the Cold War days," he said.

Of course, this is occurring at a time when the Russian military is also in great disarray, thanks to the cost-cutting measures taken by the new Defense Minister Serdyukov, who has eliminated some of the top military leaders. Most important is, of course, the Chief of Staff, who for many years was General Baluyevsky. "The Chief has to have a detailed knowledge of all the areas of defense technology, missiles, air defense, ground forces, etc. There are not an awful lot of individuals with that kind of expertise to choose from," he said. The appointments that will be made, will, therefore, be critical.

In discussing the "British problem," he pointed to the fact that many of the Chechen insurgents who had been apprehended by the Russians were traveling on British passports.

Russia Renews Call for Security Belt Around Afghanistan

July 12—Russian Ambassador to the UN Vitali Churkin renewed the Russian call for setting up a "security belt" around Afghanistan to block the international opium trade. This proposal, to stop both the drugs themselves and the money used to finance both the drug trade and terror operations, was already put forward by Russia at the summit of the Shanghai Cooperation Organization (SCO) in Bishkek, capital of Kyrgyzstan, in August 2007. Afghanistan is surrounded by member nations of the SCO—including China—and SCO observers Pakistan and Iran. Churkin made this proposal to a meeting of the UN Security Council on Afghanistan on July 9, saying that these measures would deprive "drug barons and terrorists of their financial basis." Churkin called for utilizing the demonstrated capabilities of regional organizations, including the SCO and the Collective Security Treaty Organization (CSTO) of former members of the Soviet Union, in this battle against the drug trade.

An example of what can be done by international cooperation, Churkin said, is the "Channel" anti-drug operation, conducted by the CSTO in cooperation with China, Iran, the United States, and European countries. Some African countries have also joined. "Channel," in operation since 2003, seized more than 28 tons of drugs in 2007 alone, he said. Churkin said that Russia thinks it necessary "to develop practical cooperation between the CSTO and NATO in the sphere of anti-terrorist and anti-drug operations, which would help to increase results of efforts by the International Security Assistance Force operating in Afghanistan."

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