Security Watch: August 26, 2003

ANTITERRORISM EXERCISES IN FAR EAST... Defense Minister Sergei Ivanov arrived in Vladivostok on 24 August aboard a Tu-160 strategic bomber to oversee the final stage of a major military exercise being held in the Bering and Okhotsk seas and the Sea of Japan, Russian media reported. Ivanov observed special-forces antiterrorism drills in Primorskii Krai and visited other military units on 24 and 25 August. Navy commander and Fleet Admiral Vladimir Kuroedov told journalists that "foreign submarines" are observing the exercises, newsru.com reported on 25 August. He did not say to which countries those vessels might belong, but did say that they are not submarines of any countries participating in or officially observing the exercises. He said that China, South Korea, and Canada have sent observers, while the United States, Japan, and South Korea declined invitations to do so.

...AND IN NORTH CAUCASUS. Federal Security Service (FSB) Director Nikolai Patrushev participated in exercises of the elite Alfa antiterrorism force on 21-23 August on Mount Elbrus in the Republic of Kabardino-Balkaria, "Rossiiskaya gazeta" reported on 24 August. In the course of the exercises, FSB units liquidated a group of "terrorists" that had set up a hidden base on the slope of the mountain. With a group of Alfa officers, Patrushev climbed the 5,642-meter mountain, which is the highest peak in Europe.

NAVY COMMANDER LAYS OUT FORCE'S DEVELOPMENT STRATEGY... Navy commander and Fleet Admiral Vladimir Kuroedov said on 25 August that Russia will not build any more huge Typhoon class strategic nuclear submarines such as the "Kursk," which sank in August 2000 during a military exercise, ITAR-TASS and other Russian media reported. Instead, the navy will focus on the new Borei class nuclear submarine, which is about one-quarter the displacement of the Typhoons. Although the new vessels will be smaller, they will be better armed and more difficult to detect, both in the ocean and from space, Kuroedov said. Such submarines are best suited for the new role of the Russian Navy and for the country's economic capabilities. In all, the navy should have 12-15 strategic nuclear submarines and about 50 conventionally armed, multifunctional nuclear submarines, Kuroedov said. For the same reasons, he added, Russia does not plan to build any new aircraft carriers.

...AS ANALYSTS OFFER MIXED REACTION. Fleet Admiral Kuroedov's statements seem to be at odds with the essential provisions of the Naval Doctrine that Russia adopted in 2001 (see "RFE/RL Newsline," 30 July 2001), Center for Strategy and Technology Analysis Deputy Director Konstantin Makienko told Ekho Moskvy on 25 August. Makienko noted that Indian, Chinese, and U.S. admirals continue to view aircraft carriers and huge strategic nuclear submarines as the heart of their navies. TV-Tsentr on 25 August commented that Kuroedov's decision, which must have been approved by President Vladimir Putin, was likely considered an "unpatriotic act" by many navy officers. However, this view is too simplistic, the station continued. The decision means that Russia is developing its own strategy and does not view the world's major navies as its adversaries, as it did in Soviet times. The navy that results will nevertheless be sufficient to protect the country's coastlines and to protect its interests overseas, TV-Tsentr concluded.

DEFENSE MINISTER TO OBSERVE FAR EAST MILITARY EXERCISES. Sergei Ivanov on 22 August flew to Primorskii Krai to observe the final stage of a major military exercise under way in the region (see "RFE/RL Newsline," 18 August 2003), strana.ru reported. Ivanov told journalists that, in addition to Russian Army and Navy units, personnel from 10 other security agencies are participating in the maneuvers, as are vessels and personnel from South Korea, Japan, and the United States. He repeated earlier official statements that the disappearance of a helicopter carrying Sakhalin Oblast Governor Igor Farkhutdinov and several senior oblast officials was not connected with the exercises and has not affected them.

U.S. FIGHTERS TAKE TO THE SKIES OVER MOSCOW. The Moscow International Air Show (MAKS) opened at the Zhukovskii airfield near Moscow on 19 August, Russian and Western media reported. The government hopes to turn the annual event into one of the world's largest air shows, comparable to France's Paris Air Show and Britain's Farnborough International Air Show, and MAKS-2003 is the largest in the event's six-year history with 800 companies from 38 companies participating. More than 200 civilian and military aircraft will be on display, including U.S.-made F-15 and F-16 jet fighters. These planes will be making demonstration flights over Moscow for the first time. Show visitors will also be able to see a U.S. B-52 strategic bomber, widely held as one of the most potent symbols of the Cold War, ORT reported on 18 August.

GOVERNMENT TAPS SECURITY OFFICIAL TO HEAD LEADING DEFENSE CONTRACTOR... Prime Minister Mikhail Kasyanov has asked the Property Relations Ministry and the Russian Agency for Control Systems (RASU) to select Major General Vladislav Menshikov as the new general director of the major defense holding Almaz-Antei, gazeta.ru and other Russian media reported on 18 August. Menshikov is currently a senior official with the highly secretive State Reserve Agency. The previous acting general director of Almaz-Antei, which is the country's leading producer of air-defense systems, was Igor Klimov, a former Foreign Intelligence Service (SVR) officer who was murdered in Moscow on 6 June (see "RFE/RL Newsline," 9 June 2003). Media reports have linked Klimov's killing with infighting over control of the lucrative export of air-defense systems between two competing groups within Almaz-Antei's management.

...AS MEDIA DISCUSSES HIS BIOGRAPHY. Menshikov, who is from St. Petersburg, graduated from the Leningrad Mechanical Institute in 1982 with a specialization in aircraft systems. In his official biography, there is a gap from 1983-95, a sure indication that he worked as a state security officer, "Nezavisimaya gazeta" reported on 12 August. Before joining the State Reserve Agency, where he worked when he was promoted to general, Menshikov worked as a senior specialist at the Central Bank's office in St. Petersburg.

LEADING AEROSPACE COMPANY INCLUDED IN STATE PRIVATIZATION PLAN. The government has included aircraft producer MiG in its privatization plan for 2004, which was signed on 21 August by Prime Minister Mikhail Kasyanov, "Vremya novostei" reported on 22 August. MiG General Director Nikolai Nikitin told the daily that he has no information about the terms of the impending privatization. However, the newspaper reported that the enterprise will not be turned over to private hands and that a controlling packet of shares in the company will remain under the state's control. A total of 1,000 companies are included in the state's 2004 privatization plan.

RUSSIA ANNOUNCES PLAN TO LAUNCH WESTERN MILITARY SATELLITES. Russian Space Forces spokesman Vyacheslav Davidenko announced at the Moscow International Air Show (see "RFE/RL Newsline," 19 August 2003) on 21 August that the state arms exporter Rosoboroneksport and the German firm OHB-System have signed a contract to launch Western military satellites from the Russian cosmodrome at Plesetsk in 2005-07, Russian media reported. Davidenko did not reveal for which countries the satellites would be launched, how many satellites are involved, or the value of the contract.

SAKHALIN GOVERNOR AND HIS ASSOCIATES DIED IN HELICOPTER CRASH. An M-8 helicopter carrying Sakhalin Oblast Governor Igor Farkhutdinov went missing on 20 August around 3:40 p.m. local time, Russian media reported. In addition to the governor, many members of the senior leadership of the oblast were on board, according to "Kommersant-Daily" on 21 August. On 23 August, the bodies of all 17 passengers and three crew members were found, Russian media reported (see "RFE/RL Newsline," 21 and 22 August 2003). Among the dead were Farkhutdinov's press secretary; the oblast's chief financial specialist; its chief doctor; the head of the oblast's construction department; the head of the oblast's health, housing, and communal-services department; the heads of the oblast's transportation department; and the head of its fuel and energy department; as well as the directors of three private companies, "Kommersant-Daily" reported on 25 August.

CRASH SIMILAR TO CATASTROPHE IN WHICH GOVERNOR LEBED DIED. Emergency Situations Minister Sergei Shoigu announced on 25 August that the main cause for the crash five days earlier of a Mi-8 helicopter that was carrying Farkhutdinov and much of his staff was caused by the helicopter deviating from its planned route by as much as 40 kilometers, "Izvestiya" reported the same day. Shoigu added that the helicopter accident was identical to the one in which Krasnoyarsk Krai Governor Aleksandr Lebed was killed in April 2002 (see "RFE/RL Russian Political Weekly," 29 April 2002).

TELEVISION CHANNEL ASKS TOUGH QUESTIONS. In recent years, a number of politicians and officials -- including some governors -- have died from "unnatural causes," TV-Tsentr commented on 20 August. On 28 April 2002, Krasnoyarsk Krai Governor Aleksandr Lebed was killed when his helicopter hit a high-voltage electricity mast in fair weather (see "RFE/RL Newsline," 29 April 2002). On 18 October 2002, Magadan Oblast Governor Valentin Tsvetkov was shot dead on a Moscow street (see "RFE/RL Newsline," 18 October 2002). On 3 June 2000, Duma deputy and well-known eye surgeon Svyatoslav Fedorov, who also headed the Party of Workers' Self-Rule, died in a helicopter accident in Moscow (see "RFE/RL Newsline," 4 June 2002). The station conceded that Russian aircraft are in a poor state of repair, but noted that politicians have access to much safer and more reliable transportation than ordinary citizens and that they employ the best pilots and security personnel and have the best communications equipment, including satellite telephones. If security agencies are not able to prevent so many from dying under such favorable conditions, then what can be said about the safety of ordinary people, the station asked.

GOVERNMENT CONCERNED ABOUT TRAFFIC FATALITIES. Deputy Prime Minister Vladimir Yakovlev, who oversees the housing and public-services sectors, said on 21 August during a teleconference with regional administrators on the topic of transportation safety that traffic accidents have become a "national disaster" in Russia on a par with alcoholism and fires, regions.ru reported. In 2002, 33,000 Russians died in traffic accidents, 20,000 died from alcohol poisoning, and 12,000 died in fires. Over the last decade, more than 350,000 people were killed in traffic accidents and more than 2 million were injured. Yakovlev said the government has asked the judiciary to adopt a more severe attitude toward drivers convicted of violating traffic-safety rules. It is also working on a set of measure to encourage safer driving, he said.

FORMER NTV OWNER ARRESTED IN GREECE... Vladimir Gusinskii, the self-exiled former oligarch and former owner of Media-MOST, was arrested on 21 August in the Athens airport by local police acting on an international arrest warrant issued by Russia and on a bilateral law enforcement agreement, Western and Russian news agencies reported. On 25 August, the Athens Appeals Court ruled that Gusinskii will be held in jail until a decision regarding possible extradition is made, which will be not sooner than in 45 days. The Russian Prosecutor-General's Office has accused Gusinskii of massive fraud and of illegally transferring $263 million out of Russia. Gusinskii has denied all the accusations and maintains that all Moscow's legal actions against him, including his latest arrest, are politically motivated, RFE/RL's Russian Service, gazeta.ru, and pravda.ru reported on 24 August.

...AS RUSSIA SEEKS HIS EXTRADITION... Gusinskii, who has both Russian and Israeli citizenship, arrived in Athens to spend his vacation with his family, which was awaiting him aboard a yacht in the Athens port. The Prosecutor-General's Office and the Russian Embassy in Athens declined to comment on the arrest. Pravda.ru on 24 August speculated that the Russian government's extradition request might be based on testimony from former Media-MOST chief financial officer Anton Titov, who might have testified that Gusinskii directed him to develop a scheme to move a $263 million loan from the state-owned natural-gas company Gazprom out of Russia. In 2001, Titov was arrested, and in 2002 he was sentenced to three years' imprisonment for fraud. However, he was released the same day under the terms of an amnesty (see "RFE/RL Newsline," 27 December 2002).

...IN LATEST TWIST IN LONG-RUNNING FEUD. In 2000-01, Gusinskii was caught up in a political confrontation with the Kremlin administration of President Vladimir Putin, in the course of which the Prosecutor-General's Office accused him of fraud and money laundering. Analysts believe the Kremlin targeted Gusinskii because his media outlets sharply criticized the government's campaign in Chechnya and other Kremlin policies. He was briefly arrested in Moscow in 2000, and soon after he was released he left the country. In 2001, he was arrested at Russia's request at his villa in Spain, but a Spanish court later that year declined to extradite him. The same year, Interpol refused Russia's demand to issue an arrest warrant for Gusinskii, saying the request was politically motivated. Meanwhile, the Media-MOST holding was systematically dismantled, as the daily newspaper "Segodnya" was closed, and Gazprom took control of the NTV television station and the weekly news magazine "Itogi."

PROSECUTORS WIND UP INVESTIGATION OF MENATEP CHAIRMAN. The Prosecutor-General's Office announced on 22 August that it has completed its investigation into the embezzlement charges against Menatep Chairman and Yukos shareholder Platon Lebedev and has handed its findings over to his lawyers, "Izvestiya" and other Russian media reported on 22 August. Lebedev was arrested in July on suspicion of having embezzled nearly $300 million in a 1994 privatization deal (see "RFE/RL Newsline," 3 July 2003). Later, the state added additional charges of tax evasion to bring a four-count indictment. Lebedev's lawyers maintain their client's innocence and say the charges are politically motivated. One unidentified defense lawyer told "Izvestiya" that Lebedev's case comprises 146 volumes, meaning that the investigating team produced an unprecedented 2 1/2 300-page volumes per day during the probe. Defense lawyers also expressed the hope that now that the investigation is complete, Lebedev can be released on bail pending his trial.

SPAIN EXTRADITES ALLEGED MOSCOW CRIME BOSS. Interior Minister Boris Gryzlov announced on 23 August that Spain has extradited to Russia the accused leader of the so-called Orekhovo criminal group in Moscow, RTR and ORT reported. Marat Polyanskii is accused of being involved in more than 30 murders. He was arrested in Spain together with his bodyguard in 2001 and sentenced there to 8 1/2 years in prison for a number of crimes. Gryzlov said that with Polyanskii's extradition, the Orekhovo group will virtually cease to exist. Interior Ministry official Vladimir Pronin announced on 23 August that Moscow expects that Spain will soon extradite another alleged Orekhovo group leader, Andrei Pylev. Pylev was arrested in Barcelona on 7 August and is accused of organizing 35 murders, Pronin said.

TAX POLICE CASE HEADS TO COURT. The Moscow Municipal Court on 18 August began hearing the case of Major General Sergei Platonov, a former senior official with the Federal Tax Police Service, RIA-Novosti reported. Platonov was arrested in March after reportedly being caught red-handed accepting a $25,000 bribe in his office. According to investigators, the bribe came to Platonov through a middleman -- a Tax Police civilian specialist named Mikhail Petrovskii -- from a television company in exchange for Platonov's agreement to end a tax probe against it. Petrovskii, who was also arrested in connection with the case, allegedly received $5,000 for his role. Both men maintain their innocence and say that the money was a debt that was being repaid.

MORE POLICE ARRESTED IN CORRUPTION CRACKDOWN... Interior Minister Boris Gryzlov announced in Moscow on 21 August that officials have arrested 11 people, including six former and current Interior Ministry officers, who are accused of corruption and extorting money from small businesses, Russian media reported. The names of the suspects are being withheld pending the investigation into the case. "We are continuing our work to uproot corruption within the Interior Ministry," Gryzlov said. "Our measures might be unpopular with some officers, but those who are involved in corruption are more dangerous than the criminals against whom they are supposed to be fighting." Lieutenant General Konstantin Romadanovskii, head of the ministry's Internal Affairs Department, said that the arrested officers face indictments involving the alleged fabrication of cases against businessmen in order to extort money from them. He also said that they are suspected of involvement in about 20 other types of crime, including organizing paid murders, RTR reported. ORT on 21 August commented that although this case is apparently not connected with the high-profile arrests of senior law enforcement officials on similar charges in June (see "RFE/RL Newsline," 24 and 25 June 2003), it promises to be even more scandalous, and additional arrests are expected.

...AND YET ANOTHER ARREST. Interior Ministry Lieutenant Colonel Vasilii Skripka, a department head in the ministry's Moscow Economic Crimes Directorate, was arrested on 20 August, RIA-Novosti and RTR reported on 21 August. Skripka was reportedly caught red-handed accepting a $20,000 bribe from a businessman whom he was allegedly blackmailing. Skripka's department is responsible for combating illegal activities at Moscow's markets and, according to an unidentified police source, he allegedly attempted to extort money from the businessman in exchange for closing a criminal case against him.

MOSCOW CONDEMNS BOMBING OF UN MISSION IN BAGHDAD. Deputy Foreign Minister Yurii Fedotov called the 19 August truck bombing of the UN mission in Baghdad "a barbaric act intended to undermine the already-complicated processes of postwar normalization in Iraq," Russian media reported on 20 August. "The fact that the terrorists targeted UN personnel arouses particular indignation, since [that organization] has directed its efforts to help the Iraqi people overcome the consequences of the recent military conflict," Fedotov said. President Vladimir Putin sent his condolences to UN Secretary-General Kofi Annan in connection with the deaths and injuries suffered by UN personnel in the attack.

CHINA OR JAPAN? Moscow faces a difficult choice in deciding whether China or Japan is Russia's most important trading partner in the Far East, "Argumenty i fakty," No. 34, wrote. Russia has already promised Beijing that it will construct an oil pipeline from eastern Siberia to China's Datsin, although financing for that project is still being discussed. However, there exists an alternative proposal for a pipeline to the Russian port of Nakhodka, which would be used to export the oil to Japan, and Tokyo has said that it is prepared to invest $20 billion in that project. To help resolve the situation, Prime Minister Mikhail Kasyanov will visit Beijing in September, and President Vladimir Putin will meet with Japanese leaders in October. While Moscow is concerned not to offend China, which is one of the biggest purchasers of Russian industrial goods, it would certainly be a shame to lose the deal that Japan seems to be offering, the weekly concluded.

WORKING GROUP ON DOUBLING GDP GETS DOWN TO BUSINESS. A working group tasked with devising a plan to achieve the goals of doubling Russia's GDP and reducing poverty as laid out in President Vladimir Putin's 16 May state-of-the-nation address held its first meeting in Moscow on 19 August, Russian media reported (see "RFE/RL Newsline," 16 May 2003). The group is headed by presidential aide Igor Shuvalov (see "RFE/RL Newsline," 14 July 2003) and is charged with elaborating a national economic-development agenda that will be presented to the new president who is elected in March 2004. It comprises representatives of 22 organizations including parliamentary factions, business and public organizations, and the federal and regional governments. The Union of Industrialists and Entrepreneurs (RSPP) and the Chamber of Commerce and Industry are represented. Duma Budget Committee Deputy Chairman Dmitrii Galchenko (People's Deputy) said that the group should first establish the priorities on the basis of which the GDP can be doubled, strana.ru reported. He said that either the country will decide to achieve this growth by continuing to rely on energy exports, or it will emphasize the development of small and medium-sized business, which will increase the country's wealth by making its citizens richer.

GOVERNMENT CONSIDERS EXTERNAL MANAGEMENT FOR INSOLVENT REGIONS. At a 21 August meeting, the cabinet discussed a Finance Ministry proposal to introduce external financial administration for insolvent regions, RTR reported. Under the proposal, the government would be able to introduce such administration in any region with debts exceeding 30 percent of its annual revenues. The decision to do so, however, could only be authorized by an arbitration court and would be limited to one year. The proposal includes a provision establishing federal financial commissioners who in such cases would submit to the legislature of the region a plan to resolve the budgetary problem. If the legislature fails to endorse that plan, the commissioners would submit it to the State Duma, which would be authorized to impose it on the region. The Finance Ministry has also proposed corresponding amendments to the tax and budget codes.

ANTIMONOPOLY MINISTRY LIBERALIZES CAPITAL-CONCENTRATION RESTRICTIONS. The Antimonopoly Ministry has announced that it will raise its restrictions on capital concentration during mergers and acquisitions to 20 million minimum monthly salaries ($30 million) "Nezavisimaya gazeta" reported on 18 August, citing Deputy Antimonopoly Minister Sergei Dudkin. The current minimum monthly salary is 450 rubles ($14.85). The measure is designed to reduce the number of situations requiring ministry approval and to free up ministry resources for monitoring major deals that could really affect fair competition and lead to the formation of monopolies. The ministry will also drop the requirement that it register all companies that control more than 35 percent of their particular markets. Dudkin said that this function is unnecessary and that, moreover, it is impossible to determine accurately what a particular company's market share is because of market dynamics.

PRO-KREMLIN PARTY SAYS PRIVATE-PROPERTY CONCEPT UNPOPULAR AND SHOULD BE REPLACED... In an interview with "Komsomolskaya pravda" on 19 August, People's Party leader and State Duma Deputy Gennadii Raikov said that the public is rejecting the version of private ownership that has taken shape in Russia. He proposed instead the development of "public ownership," which would be different from state ownership and is sometimes also called municipal ownership. According to Raikov, under the principles of municipal ownership, property and land do not belong to individuals or private companies. Instead, ownership rights are exercised on behalf of the municipal entity by the organs of local self-government. Meanwhile, a poll conducted by ROMIR of 1,500 Russians in early August found that only 14 percent of respondents approve of the government's intention to allow private businesses to participate in the communal-housing and public-utilities sectors, according to "Vedomosti" on 15 August. Forty-one percent want the government to increase state control over enterprises in these sectors, while 73 percent oppose allowing foreign companies to administer municipal infrastructure.

...AS RUSSIAN CAPITALISTS HEAD POSTCOMMUNIST EUROPE. Russian tycoons dominate the list of the 50 richest people of Central and Eastern Europe, according to the Polish news weekly "Wprost," lenta.ru and newsru.com reported on 4 and 6 August. Thirty-one of the people on the list and all of the top eight are Russians. The list is headed by embattled oil giant Yukos head Khodorkovskii, whose net worth is estimated at $8.3 billion. "Wprost" also calculated that the total wealth of all 50 people on the list -- which includes six Ukrainians, five Romanians, four Poles, and two Czechs -- is $73 billion. That is twice the size of the Polish budget, lenta.ru reported.

1991 COUP PLOT REMAINS A MYSTERY. Although 19 August marked the 12th anniversary of the 1991 coup attempt by senior KGB and Communist Party leaders against Soviet President Mikhail Gorbachev, many materials generated by state and parliamentary commissions probing the plot have never been published, "Trud" wrote on 18 August. Former KGB officer Igor Naumenko, who has worked with some of the documents in state archives, told the daily that the materials show that the KGB was the primary force behind the plot. Naumenko said the KGB began working on the putsch in December 1990 and that it authored the famous "Word to the Soviet People" declaration that was issued by the coup plotters. He said the KGB had issued clear orders to destroy the leaders of Russia's democratic forces "in the event of resistance." However, the plot unraveled because the middle echelons of KGB officers, especially those commanding the elite Alfa antiterrorism force, refused to obey orders. These officers came to distrust the Soviet leadership -- and, in particular, Gorbachev -- after it sent them to Vilnius to crack down on Lithuanian independence demonstrators and then later refused to take responsibility for the violence that occurred.