From Volume 8, Issue 18 of EIR Online, Published May 5, 2009
Russia and the CIS News Digest

LaRouche, Zepp-LaRouche Warnings Publicized in Russia

May 3 (EIRNS)—The Russian news agency Itar-Tass today published a dispatch on Helga Zepp-LaRouche's press conference in Copenhagen April 29, filed by correspondent Nikolai Morozov. The short version, highlighted on the Itar-Tass website, was the following (translated from Russian by EIR):

"The world economic crisis is 'neither a recession nor a depression, but the collapse of an unbelievably inflated speculative financial system,' stated Helga Zepp-LaRouche, President of the German Schiller Institute. She called for the formation of 'a new international financial architecture.' The current economic crisis, she said, resulted from the operation of a casino-economy, which led to unlimited globalization and predatory capitalism."

The high authority of American economist Lyndon LaRouche, in the current world economic breakdown, continues to be recognized in many different media in Russia and Ukraine. Coverage, monitored by EIR in late April and the first days of May (see EIR May 1, 2009):

* A round table titled "Bankruptcy of the World Financial System," held April 13 at the Glavred political club in Kiev, Ukraine, was addressed by LaRouche representatives Rachel Douglas and Sky Shields. They played a Russian-dubbed version of the opening 20 minutes of LaRouche's March 21 webcast, in which he discussed economist James Galbraith's observations on the flawed premises used by today's economists and officials. Then, Douglas and Shields presented the briefing LaRouche had given in his April 11 webcast, outlining the clash between the "LaRouche/FDR" tendency in Democratic Party circles, and the economic behaviorists around President Obama. The full transcript of this round table was published on April 24 by Glavred and in the blog of one of its activists, Yuri Romanenko. Since then, it has been reproduced on at least 15 websites and blogs in Ukraine, Russia, and Kazakstan, becoming a topic of discussion in the associated Internet forums.

* LaRouche's short, April 20 warning about the threat of the depression exploding into hyperinflation went out in Russian and has been further publicized on the websites of the Communist Party of the Russian Federation and the Russian Anti-Globalist Resistance.

* A popular posting on RuTube, the Russian video-clip site, is a briefing recorded by Ukrainian economist and Progressive Socialist Party of Ukraine leader Natalia Vitrenko, at a Eurasia News club meeting in October 2008. Half of her 20-minute talk was devoted to explicating Lyndon LaRouche's Triple Curve function, as having forecast the crisis, and relating how Vitrenko's "Memorandum to Mankind" initiative in the mid-1990s grew into the LaRouche-led movement for a New Bretton Woods, premised on relaunching real economic growth.

* On May 3, the new site InoForum, which publishes translations from the foreign press, showcased Rachel Douglas's article from the April 10 issue of EIR, titled "Summers Is Hated in Russia for What He Did in the 1990s."

Crisis in Russian Steel Sector

April 30 (EIRNS)—Russian steel producers are reporting more contraction of production, although the year-on-year figures are not so drastic as they were for the last months of 2008. On April 29, the giant steelmaker Severstal reported a 21% drop in crude steel output, year-on-year, in the first three months of 2009, to 3.8 million metric tons. Rolled steel production was down 18%, cast iron down 20%, and coal 32%. Severstal produces over 16% of Russian steel, with factories in Russia, the United States, Italy, France, Britain, and Ukraine, and has already laid off 9,500 workers.

Magnitogorsk Iron and Steel Works (MMK), which makes 20% of all steel products sold on Russia's domestic market, had to report a 43% fall in output earlier this month, and yesterday reported a 17% fall in profits in 2008. Mechel steel lost 30% of production.

The Zlatoust specialty steel plant in Yekaterinburg has halted production until June, according to news agency reports. In March, 16 workers staged a hunger strike at the plant to protest wage cuts.

Unemployment at Ten-Year High in Russia

April 30 (EIRNS)—Some 7.5 million Russians, 10% of the workforce, are now unemployed, the Economic Development Ministry announced April 27, with another 1.2 million on unpaid leave. Another 500,000 people are not getting paid: Wage arrears are at 8.755 billion rubles ($262 million), RFE/RL reported on the eve of the international Labor Day, May 1. At one plant producing Kalashnikovs, workers are getting food packages instead of wages; and at the Magnitogorsk Iron and Steel plant in Yekaterinburg, which employs 25,000 people, workers are being given plots of ground near the plant to grow potatoes.

The Ministry projected that fully one-third of all Russian companies, especially those in the auto and metallurgy sectors, plan further layoffs. Living standards overall are severely undermined: Due to the weak ruble and inflation, workers' buying power has been slashed by 40%.

Yakunin: Invest in Railways To Save Economy

April 30 (EIRNS)—Russian Railways president Vladimir Yakunin told a conference in Moscow today that investment in infrastructure projects is the most efficient way to support the economy and development of production in Russia, Voice of Russia reported today. He called on the government to support the state-owned railroad company's investment program, because this is not only an industrial, but also a macroeconomic question.

Earlier in April, Yakunin announced that Russian Railways will be forced to lay off 53,700 workers in 2009, because the huge company expects losses of some 50 billion rubles ($1.48 billion). Russian Railways employed about 1.3 million people as of the beginning of this year, but by early April, the company's workforce was down to 1.2 million, Moscow Times reported. Management announced that 450,000 people were working shorter hours, and 247,000 had to take unpaid vacations.

Losses were 26.8 billion rubles in the first quarter alone, Moscow Times reported April 10, and somewhat lower losses are expected this quarter. Cargo volume is falling sharply, down by 27% in the first three months from a year ago. Because the rate of cargo collapse slowed down over the three months, a Bloomberg reporter asked Yakunin on April 8 if this indicated some kind of recovery. The Russian Railways CEO dismissed that notion: "The crisis is only beginning to bite, and we should wait for more reliable figures."

Senior vice president Fyodor Andreyev says that the railroads have been hit hardest by the situation in the metals and construction sectors. Yakunin also said on April 8 that Russian Railways is cutting purchases of new track by 30%. This will hit Mechel steel, which had planned to spend $500 million to build a new mill to produce 400,000 tons of rails over 20 years, beginning in 2012.

Yakunin told the Moscow conference that Russia, as the transport bridge between Europe and the Asia-Pacific region, is constantly developing its rail network in Siberia and the Far East, Voice of Russia reported. It is important not to cut the number of new projects now because of the crisis, he said, adding that infrastructure development is the most efficient tool to prevent the decline of GDP and production. New projects include cargo lines to the ports of Vysotsk and Primorsk in northwest Russia, and improving the capacity of the ports of Vanino and Sovetskaya Gavan in the Far East. Russian Railways will also continue to modernize infrastructure for getting cargo to Rajin in North Korea, which connects the Transiberian Railway with the Trans-Korean Road.

Building these projects will save and create hundreds of thousands of jobs and contribute to further economic and social development of Russia's regions, Yakunin said.

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