In this issue:

Russian President in Diplomacy with Europe, Asia

Mont Pelerinites Attempt New Infiltration of Russia

Menshikov: Neo-Liberal Tricks Discernable in Latest Reforms

Russia Tells Its Civilians To Leave Iraq

Putin Calls For Space Demilitarization, While Russia Prepares

From Volume 3, Issue Number 16 of Electronic Intelligence Weekly, Published Apr. 20, 2004
Russia and the CIS News Digest

Russian President in Diplomacy with Europe, Asia

President Vladimir Putin of Russia made a one-day trip to Germany on April 16, to attend the 60th birthday celebration of Chancellor Gerhard Schroeder. It was an opportunity for the two leaders to meet also with French President Jacques Chirac—thus bringing together the group of leading countries which had fought to prevent the launching of the war in Iraq one year ago.

Prior to this trip, Putin during the week of April 12 had also conferred with President Islam Karimov of Uzbekistan, who visited Moscow. Putin committed Russia to support Uzbekistan in the face of terrorist attacks like the series of bombings in Tashkent two weeks earlier. And, Putin received senior Japanese figures who were in Moscow to attend the "Council of Wise Men," a Russian-Japanese series of consultations headed by Moscow Mayor Yuri Luzhkov and former Japanese Prime Minister Mori.

Mont Pelerinites Attempt New Infiltration of Russia

Some of the world's most radical neo-liberal apostles of bankers' dictatorship descended on Moscow for a two-day conference April 8-9, under the title, "A Liberal Program for the New Century: the Global View." Speakers included persons who were among those responsible for the first onslaught of murderous neo-liberal reforms in Russia after the break-up of the Soviet Union, in the early 1990s, as well as other international poster kids for free trade, deregulation, privatization, and globalization: Jose Pinera ("father of the Chilean pension reform"), ex-Finance Minister of New Zealand Ruth Richardson, former Estonian Prime Minister Mart Laar, Cato Institute founder Edward Crane and the notorious racist "Bell Curve" author Charles Murray of the American Enterprise Institute, among others. At a high point of the event, participants watched a videotaped address to the proceedings by the now-ancient ghoul, Milton Friedman.

Evidently thanks to the (bad) good offices of Andrei Illarionov, a Friedmanite radical who is still an adviser to the President, participants in the confab were received on April 9 by Putin, who thanked them for choosing Moscow as the venue for their discussion of the world economy and finance. Stating his pleasure that the conference coincided with the manifestation of "certain positive tendencies in our economy," Putin said he hoped the Russian Central Bank and government economic officials had listened to the ideas discussed at the meeting, since they would be needed "during the determination of strategic actions to solve various problems we have in Russia."

Menshikov: Neo-Liberal Tricks Discernable in Latest Reforms

In his April 2 column for the weekly newspaper Slovo, the distinguished Russian economist Stanislav Menshikov analyzed "The First Steps of the New Government: Neo-liberal Haste and Dense Capitalism." Menshikov wrote that—for all the aggressive, "get-down-to-business" profile of the new team Putin has put together under Prime Minister Mikhail Fradkov—the unhealthy neo-liberal axioms of the 1990s have not been changed, and "there are no signs that an industrial policy has been conceptualized and formulated." Putin has sternly demanded the halving of the poverty rate, wrote Menshikov, "but the leaders of the social sector avoid talking about the most important thing: a program to create new jobs, especially in chronically depressed sectors, and whole regions with a chronically high unemployment and poverty level ... into which category fall a near majority of the towns and villages in the country. Nationwide, this would mean several million new, well-paid jobs. Who will create these companies, and how, in the neo-liberal market economy, left to its own devices, remains a mystery."

Among other points, Menshikov zeroed in on the pitfalls of "the neo-liberals' dream of using taxes to defeat poverty." Indeed, the radical tax reform of reducing the "unified social tax" (paid by employers to fund the national pension program, health care and a host of other benefits) by 10 percentage points, has been topic number one at Putin's recent meetings with the new government. Allegedly, this move will inspire employers to put their payroll on the books, instead of paying it under the table. But how then to fund the programs that rely on the unified social tax? "It is well known, that [German] Gref's Ministry [of Economic Development and Trade] has already drafted a plan to raise the individual income tax from 13% to 17%, Menshikov noted." (It is already a regressive flat tax, Andrei Illarionov's brainchild.) "To his honor, Vladimir Putin has forbidden this," said Menshikov, but the problem remains.

Menshikov questioned the rationale for the proposed slashing of the unified social tax, namely the notion that Russian businessmen would use the funds they retain, to raise wages and invest in technological renovation. There is no indication this would happen, nor means of enforcement, he wrote.

In conclusion, Menshikov reported that Academician Dmitri Lvov, head of the economics division of the Russian Academy of Sciences (and close senior associate of former Presidential candidate Sergei Glazyev), has just issued a different program to fight poverty in Russia. Lvov proposes to spend a portion of Russia's gold and foreign-currency reserves, and to impose a steep tax on millionaires and billionaires. But today's "one-party system," wrote Menshikov with reference to United Russia and the new Presidential team, "brushes aside the respected Academician like a bothersome fly, making the snap judgment that any reduction in currency reserves might damage Russia's image abroad or cause a financial panic." Nonetheless, Menshikov urged careful attention to Academician Lvov's new proposals.

Russia Tells Its Civilians To Leave Iraq

On April 13, Russia joined European countries in urging its citizens to leave Iraq. Five Ukrainian and three Russian construction workers and technicians were freed that day, after having been seized April 12.

Putin Calls For Space Demilitarization, While Russia Prepares

President Vladimir Putin took the occasion of Cosmonauts Day to emphasize the importance of space for Russia's national security. The holiday is celebrated around the world every year in honor of the first manned space flight, by Yuri Gagarin on April 12, 1961. While praising cooperation with the U.S. in space, Putin stated that space activities "are essential for the very existence of our nation," and while everything must be done "to demilitarize space," he added, "we all understand very well that this situation [potential military-political confrontation] still exists now, and will continue to exist for quite a long time." Therefore, "We are taking it into account, and will continue to take that into consideration in the future." For the occasion, NASA administrator Sean O'Keefe sent the traditional congratulations, to the recently reorganized Russian Federal Space Agency, which is now under the military.

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