Security Watch: November 12, 2003

PUTIN SAYS YUKOS AFFAIR IS PART OF ANTICORRUPTION EFFORT... At the same 6 November press conference in Rome, President Vladimir Putin said that the investigation into oil giant Yukos stems from the government's desire "to bring order to the country and to fight corruption," RTR and other Russian media reported. Putin said the state will "steadily and earnestly combat corruption, despite the efforts of certain individuals to blackmail the administration," according to a transcript of the press conference posted on the government website http://www.kremlin.ru. Putin seemed visibly irritated when a French journalist asked about the fate of jailed former Yukos CEO Mikhail Khodorkovskii and about indications of growing authoritarianism in Russia. "We know that people who made billions over the last five to six years are spending hundreds of millions on lawyers, politicians, public-relations campaigns, and [on journalists who ask] questions like that," Putin retorted.

...AND HINTS THAT MORE CASES COULD BE IMMINENT. President Putin at the same 6 November press conference repeated earlier assertions that there will be no renationalization in Russia, but he said that law enforcement organs will continue to review privatization cases for possible violations of the law. TV-Tsentr on 6 November noted that this was the third time that Putin was asked about the Yukos case during his current trip to Rome and that each time his response was more assertive and forceful.

PUTIN SUPPORTS PROSECUTORS... In response to a question about whether the actions of the law enforcement authorities against Yukos are justified, President Putin said during a 5 November press conference in Rome that "the Prosecutor's Office and the courts are not places where rewards, medals, premiums, or monetary prizes are granted," ITAR-TASS reported. "These are places where it is considered that you already won a prize, and now is the time to check whether you got it legitimately," Putin added. He said it is crucial that everyone live according to the law and that people who do not like particular laws seek to change them through the legislature. "It is very important not to allow out-of-court resolutions of criminal cases, as that would be a repetition of the Soviet experience," Putin said. According to sem40.ru and jewish.ru, Putin told Israeli Prime Minister Ariel Sharon in Moscow on 4 November that Khodorkovskii is not only being punished for economic crimes but for violating a tacit understanding between the Kremlin and the oligarchs.

...AND SEEKS TO MAINTAIN AN IMAGE OF FAIRNESS... At the same 5 November press conference in Rome, President Putin said that he does not approve of a recent decision by the Natural Resources Ministry to revoke the license of two Yukos subsidiaries to develop oil fields in the Sakha (Yakutia) Republic (see "RFE/RL Newsline," 4 November 2003), ORT and RTR reported. This move, in conjunction with the Prosecutor-General's Office's decision to freeze a large block of Yukos shares, could create the impression that both agencies are acting in unison to stop Yukos from functioning as a company. "The state does not and cannot have such a goal," Putin said. He added that the Natural Resources Ministry should monitor the activities of license holders on a permanent basis and not time its moves in coordination with those of other agencies. As for the freezing of the Yukos shares, Putin noted that some specialists have criticized the move, but said "there is logic in what prosecutors are doing."

...AS FOREIGN MINISTER SAYS RUSSIA WON'T TOLERATE INTERFERENCE IN YUKOS AFFAIR. Igor Ivanov said on TV-Tsentr on 8 November that the Yukos investigation is a matter for the Russian justice system and that the Russian government will not intervene. "We do not intend to intervene into their jurisdiction and, furthermore, we will not allow anyone from abroad to intervene," Ivanov said. He said that there have been no official contacts between Moscow and Washington regarding Yukos. Ivanov agreed with TV-Tsentr moderator Aleksei Pushkov, who said that "U.S. political and financial elites have been severely critical of Russia over Yukos." But Ivanov attributed this criticism to vestiges of Cold War mentalities. "Both in the United States and in Russia there remain officials who live by the old mentality and who don't understand how rapidly international relations are developing," Ivanov said.

EU WARNS OF FALLOUT FROM YUKOS CASE. The European Commission on 5 November, the eve of the EU-Russia summit in Rome, issued a statement saying that alleged violations of basic principles of justice in the investigations into oil giant Yukos could hamper the process of Russia's integration into the European economic space, gazeta.ru and other Russian media reported. "Although the EU considers the Yukos case an internal matter for Russia, it is concerned that the reaction it produces on international and Russian markets might jeopardize the creation of an economic zone uniting Russia and the EU," EU Commissioner for External Relations Chris Patten was quoted as saying by gazeta.ru on 5 November. The Russian government must ensure that the law is not applied selectively or disproportionately, he said.

BEIJING WATCHING YUKOS CASE CLOSELY... Sergei Tsyplakov, head of the Russian trade mission in China, has said that the Chinese government is concerned about the Yukos affair and is following developments carefully, "Finansovye izvestiya" reported on 6 November. Yukos was the initiator of a proposal to build an oil pipeline with an annual throughput capacity of 30 million tons from Angarsk to the Chinese city of Datsin, Tsyplakov said. The Russian government has been postponing a decision on this project, which the Chinese government has noted with concern because it seeks to secure Russia as a long-term and stable source of energy. The Yukos events have exacerbated this situation further, and now an intergovernmental agreement might be required on this and other projects in order to ensure Chinese access to Russian energy, Tsyplakov said.

...AS DEMOCRATIC ACTIVISTS AGAIN SAY FORMER YUKOS CEO IS A POLITICAL PRISONER. In Moscow, a group of well-known human-rights activists appealed to Amnesty International asking it to declare jailed former Yukos head Mikhail Khodorkovskii a political prisoner, lenta.ru reported on 5 November. The appeal was signed by former Soviet-era political prisoners Yelena Bonner, Vladimir Bukovskii, Sergei Kovalev, Nataliya Gorbanevskaya, and Eduard Kuznetsov. It argued that the criminal cases against Khodorkovskii and his colleagues clearly were politically commissioned.

LITTLE PROGRESS AT EU-RUSSIA SUMMIT... At a one-day EU-Russia summit held in Rome on 6 November, President Putin's main goal was to begin resolving economic problems for Russia arising from the EU's plans to welcome eight new members next May, Russian and international media reported. This EU-Russia summit is expected to be the last before those countries -- Cyprus and seven Central and European countries, including the three Baltic states -- begin introducing EU-standard trade regulations that will substantially reduce or eliminate the economic privileges Russia has enjoyed in the region since the Soviet era. Russia is particularly concerned because those changes are expected to end Russia's current status as the exclusive supplier of energy resources to this region. Moreover, EU-standard import duties will be levied on Russian goods, new restrictions will be introduced on the transit of Russian cargo, and new visa requirements will be introduced for Russian citizens. At a press conference following the summit, Putin reported only modest progress. "For us it is important that our partners understand these problems and take measures to moderate them before the actual expansion of the EU," Putin said.

...AS PUTIN READY TO BARGAIN ON SWITCH TO EURO... At the same press conference in Rome on 6 November, Putin hinted that Russia might be ready to begin denominating its energy exports in euros, but said doing so "requires bilateral efforts," strana.ru reported. "We are not against switching to trading oil and gas in euros, but [these transactions] pass through the commodities exchange where all calculations are made in [U.S.] dollars," Putin said. "If our European partners manage to change this, we will switch to the euro, but it will be difficult since not everybody in the world economy is interested in this happening."

...AND DUMA LEADER EXPLAINS RUSSIA'S BALANCING ACT. Duma Foreign Affairs Committee Chairman Dmitrii Rogozin (People's Deputy) said on 5 November that the expected EU expansion next May is very important for Russia in the context of its efforts to balance its relations with, on the one hand, Europe and, on the other, the United States, RTR reported. After the expansion, about 55 percent of Russia's foreign trade will be conducted with EU members, making the EU by far Russia's largest trading partner, Rogozin said. In comparison, the United States accounts for only about 5 percent of Russia's trade volume, Rogozin said. However, he confessed, with the exception of energy, the EU does not seem very interested in trading with Russia. In contrast, the United States is Russia's main partner in the areas of global security and stability, combating weapons proliferation, and regulating regional conflicts. As the only superpower, the United States is the world's leading military and political force, Rogozin said.

PUTIN MEETS WITH POPE. President Putin on 5 November met with Roman Catholic Pope John Paul II in the Vatican, Russian and international media reported. During the meeting, Putin expressed the hope that "relations between the Russian Orthodox Church and the Vatican will develop positively," RTR reported. The meeting was the second between the two men in the last three years. During their first meeting, Putin invited the pontiff to visit Russia as a head of state, but said that a full-fledged clerical visit would only be possible with the consent of the Russian Orthodox Church. To date, the Russian Patriarchate has objected to a papal visit to Russia. After the 5 November meeting, presidential press spokesman Aleksei Gromov said Putin apparently received some important information from the pope because immediately after the audience, he telephoned Patriarch of Moscow and All Russia Aleksii II. Putin will meet with the patriarch in Moscow in the near future, Gromov said.

RUSSIA, ITALY AGREE TO TALKS ON EASING TRAVEL RESTRICTIONS. During talks in Rome on 5 November with Italian President Carlo Campi and Prime Minister Silvio Berlusconi, President Putin signed a memorandum of understanding about beginning bilateral talks on easing travel restrictions on certain groups of citizens, including businesspeople, students, and scholars, RTR and ITAR-TASS reported. Moscow hopes that such a visa agreement with Italy would make it easier eventually to reach agreement with the European Union on visa-free travel. Putin and Berlusconi also signed several trade agreements, including one allowing Italy to re-export Russian natural gas. "Putin has befriended an oligarch [Berlusconi]," commented NTV on 5 November.

PUTIN CRITICIZES WESTERN FAILURE TO SUPPORT RUSSIAN POLICY IN CHECHNYA. Speaking on 5 November at a joint press conference in Rome with Italian Prime Minister Berlusconi, President Putin assailed the West for its imputed reluctance to help Moscow combat "terrorism" in Chechnya, Reuters reported. Putin complained that while the international community acted in unison to combat Al-Qaeda in Afghanistan, "no one notices the activities of Al-Qaeda in the North Caucasus, especially in Chechnya." Aslan Maskhadov, who was elected Chechen president in 1997, has repeatedly denied any connection between Al-Qaeda and the Chechen resistance, most recently in an interview with chechenpress.com on 6 October.

PUTIN, CHIRAC CONFIRM COMMON STAND ON IRAQ. Putin wound up his recent trip to Europe with a five-hour stopover in Paris on 7 November, during which he briefed French President Jacques Chirac on the 6 November EU-Russia summit in Rome, Russian and Western news agencies reported. After the meeting, the two presidents announced that their mutual position on events in Iraq "has not changed." The presidents expressed concern about the overall situation in the Middle East, especially about increasing tension in U.S.-Syrian relations, RIA-Novosti reported on 7 November. Although the EU issued a statement on 7 November saying that the organization is concerned that the Yukos investigations could harm economic relations between the EU and Russia, Chirac seemed to express support for Putin by -- in violation of normal protocol -- accompanying Putin to the airport in the latter's limousine.

U.S., RUSSIA SIGN ACCORD ON SAFEGUARDING ENRICHED URANIUM. Atomic Energy Minister Aleksandr Rumyantsev and U.S. Energy Secretary Spencer Abraham met in Washington on 8 November to sign a memorandum on transferring highly enriched uranium from former Soviet republics and Soviet-bloc countries to Russia, RIA-Novosti reported. According to the memorandum, the two countries will soon sign an agreement, according to which the United States will assist Russia in transferring the enriched uranium that has accumulated at 20 Soviet-made research reactors in 17 CIS and Central and Eastern European countries. Rumyantsev noted that such uranium could be used for major terrorist acts and the goal of the present agreement is to forestall this threat. In Russia, the uranium will be reprocessed into fuel for domestic nuclear-power plants. The radioactive waste from this reprocessing will be stored at special sites in Russia.

MILITARY INTELLIGENCE TOUTS ROLE IN COMBATING TERRORISM... In an interview with ITAR-TASS on 5 November in conjunction with the 85th anniversary of Russian Military Intelligence (GRU), GRU head Army General Valentin Korabelnikov said the agency "was and is an important tool of Russian military policy that reliably protects Russia's military-political and economic interests." He said the effectiveness of Soviet and later Russian military intelligence was convincingly demonstrated during various crisis situations in the Middle East, Ethiopia, Angola, Afghanistan, Yugoslavia, and Chechnya. Now, the GRU's role has become more important because of the threats of international terrorism and the proliferation of weapons of mass destruction. The agency is cooperating with the United States and NATO to meet these threats, he said, especially Iraq and other high-threat areas such as Yemen, Somalia, Afghanistan, and Pakistan.

...AND LOOKS BACK ON ITS HISTORY. "Vremya novostei" on 5 November reported that Korabelnikov, his predecessor, Colonel General Fedor Lodynin, and other GRU veterans attended the unveiling at a Moscow cemetery of a monument to General Petr Ivashutin, who headed the agency from 1963 until 1988, turning the GRU into a focal point of the Cold War. Although Russian military intelligence has been a permanent service since 1810, the GRU still formally dates its founding from 5 November 1918, when the agency was established by Soviet War Commissar Leon Trotsky.