Security Watch: January 3, 2002

IVANOV LAUDS FOREIGN POLICY ACHIEVEMENTS. Foreign Minister Igor Ivanov said in interview with RIA-Novosti on 29 December that 2001 was "the year of Russia's return to the international arena as a key player." He noted that the year's achievements included Russia's radically improved relations with the United States and NATO, cementing ties with China and India, and its dialogue with Japan. For the first time in a decade, Ivanov said, the country's diplomacy became visible in Latin America and Africa, and above all Russia strengthened its positions and interests inside the CIS. Meanwhile, Federation Council Foreign Affairs Committee Chairman Mikhail Margelov told strana.ru on 28 December that Russia's joining of the antiterrorist coalition following the 11 September attacks on the United States, the robust growth of the Russian economy, and President Vladimir Putin's foreign policy were the key factors in changing the international environment to Russia's benefit. Valerii Manilov, the former first deputy defense minister and current representative of Primorskii Krai in the Federation Council, told the website that rapprochement between Russia and the United States "is so valuable by itself that it can well compensate for the mistaken and unilateral withdrawal by Washington from the ABM Treaty."

JAPAN PROVIDES FINANCIAL COVER FOR MODERNIZATION OF RUSSIAN ORBITAL SATELLITES GROUP. The Russian federal company Space Communication, the Central Bank, and Japanese financial group Sumitomo signed an agreement on financing for an $800 million project aimed at reviving Russian telecommunications satellites. The project calls for the Russian launch of seven advanced digital telecoms satellites between 2002 and 2005 which, with the help of Japan's NEC, will replace the aging Russian orbital fleet and provide Russian television viewers with over 100 new channels. Communications Minister Leonid Reiman said with Tokyo's assistance Moscow will not only considerably improve the technical elements of television broadcasting but also emerge on the global market for telephone and cellular services.

PUTIN INAUGURATES TWO EXPORT TERMINALS. Speaking at the opening ceremony on 27 December for the new Primorsk Russian oil terminal on the Gulf of Finland, President Putin said the new port will allow Russia to control the distribution of Caspian and west Siberian oil, "which also will be beneficial for the CIS states," Russian business wire services reported. Primorsk is the final link in the Baltic Pipeline System (BTS), and the $500 million Russia spent on that link will open a "window to the European energy market" circumventing the Baltic states, according to Putin. "The inauguration of the BTS does not mean Russia is severing economic ties with the Baltic states; Russia simply cares about its security and independence," Putin concluded. While in Primorsk, Putin also launched by remote control another newly built sea terminal, Ust-Luga, located in the southern part of Finland Gulf and designed for the export of Russian coal to world markets, "Izvestiya" reported on 27 December.

GAZPROM PLANS EXPANSION IN EUROPE AND ASIA. Gazprom's export revenues this year reached $14.5 billion, the highest figure in the company's history, RBK reported on 27 December, quoting the company's press service. Gazprom's profits also should reach a record high of $3 billion. Moreover, Gazprom already has a portfolio of contracts for the next 10-15 years worth $250 billion and covers over 25 percent of the European gas market. Gazprom has ambitious plans for Asia and will inaugurate its office in Beijing this week, RBK added.

PUTIN PRAISES REDUCTION OF RUSSIAN DEBT BY $10 BILLION. Speaking to Mikhail Kasyanov's cabinet of ministers on 29 December, President Putin said he is satisfied by the government's work in 2001, particularly regarding the economy, Interfax reported. Russia has reduced its state debt by $10 billion and "done it without external refinancing," he stressed. He called economic growth in 2001 of 5.2-5.3 percent a significant achievement, adding that GDP growth could total 5.5 once the final quarter's results are calculated." For next year, the top priorities for the Russian economy will be restructuring domestic natural monopolies and integrating into the global economic infrastructure including the World Trade Organization, Putin concluded.

KASYANOV IMPLEMENTS MOSCOW DECISION TO CUT OIL EXPORTS... Addressing a government meeting on 1 January, Prime Minister Kasyanov announced that Russia has implemented the decision, adopted a month ago, to cut oil exports by 150,000 barrels a day, strana.ru reported the same day. Kasyanov noted that the decision is a consolidation measure reflecting the interests of government, Russian oil traders, and OPEC. Russia continues to hope that oil prices will stabilize at $20-25 a barrel. "We will also...survive under a price of $18.50, but below this level problems would begin," added the prime minister.

...AND SOUNDS UPBEAT ABOUT RUSSIA'S ECONOMIC SITUATION. Addressing a cabinet session on last year's economic results on 27 December, Kasyanov said GDP growth exceeded 5 percent, which he described as a very good figure during a global economic recession, Interfax reported. One of the most important factors contributing to this growth is robust consumer demand, which grew by 6 percent. Kasyanov also said that while the government sees good mid-term prospects for economic development, it is likely that growth in that sector will be slower than in 2001.

DUMA ADOPTS LEGISLATION ON MARTIAL LAW. The Duma on 27 December adopted in its final reading constitutional legislation on the "Martial State" that was submitted by the presidential administration, RIA-Novosti reported on 27 December. The law empowers the president to declare martial law in case of aggression or the threat of aggression to part or all of the Russian Federation. It also codifies the measures for limiting civil rights in the event of a military threat. Specifically, it allows the president to ban the activities of "political parties and organizations if they undermine the defense and security of the country."

RUSSIAN GENERALS BESTOWED WITH NOBLE STATUS. The Russian Noble Assembly announced that it bestowed nobility on the chief of the Russian Army General Staff, Anatolii Kvashnin, the former commander of Russian troops in Chechnya, Gennadii Troshev, and former First Deputy Defense Minister Valerii Manilov, "Izvestiya" reported on 24 December. The three generals were granted the Imperial Order of Saint Nicholas the Miracle Maker, which provides its holder with the right to noble title. The grounds for the Noble Assembly's gesture is prosaic enough: The Ministry of Property Relations would like to evict the organization from its mansion, so the Assembly picked up Kvashnin, Troshev, and Manilov as lobbyists because all three enjoy the favor of Vladimir Putin for their roles in the Chechen war, commented "Izvestiya."

HIGH FASHION RETAILERS REPORT BIG SALES GROWTH IN MOSCOW. Leading international fashion houses increased branded sales in Russia by 50 percent in 2001, transforming Moscow into a fashion center, utro.ru reported on 28 December. Gucci's Moscow boutique was second in revenues behind its New York store, Dolce & Gabbana's presence in the Russian capital was second after its flagship shop in Milan, and Fendi's Moscow shop was third behind its shops in New York and Rome. Chanel's Moscow outlet was third after Paris and New York.

JOURNALIST SENTENCED TO FOUR YEARS FOR ESPIONAGE, TREASON... Former military journalist Grigorii Pasko was found guilty of "high treason in the form of espionage" by the military court of the Pacific Fleet in Vladivostok on 25 December and sentenced to four years' imprisonment, Russian and Western news agencies reported. The court also stripped Pasko of his military rank of captain (second class) and ruled that he should pay the cost of the trial. Pasko's lawyer, Anatolii Pushkin, said the verdict was passed under open pressure from the Federal Security Service (FSB) and was based on false evidence fabricated by that agency, NTV reported. The lawyer said his client will appeal the court decision. The trial was Pasko's second: In 1999, the same court found Pasko guilty of negligence for publishing materials on contamination of the Sea of Japan by nuclear waste from Russia's Pacific Fleet, but the Russian Supreme Court overturned the sentence. However, prosecutors appealed the verdict and the Supreme Court subsequently reversed its decision and ordered another trial.

...ELICITING PROTESTS FROM THE U.S. AND EUROPEAN UNION. A spokesman for the state prosecutor told Interfax on 25 December that it considered the Pasko verdict "too lenient" and will appeal to the Supreme Court. Meanwhile, U.S. Ambassador to Russia Alexander Vershbow told Ekho Moskvy that Washington is "very attentive to the opinion of the Russian human rights activists that Pasko's case might be politically motivated and that accusations against Pasko are unfair as, in reality, he wanted only to protect the environment." German Foreign Minister Joschka Fischer said his country shares a call by the European Union to review the Pasko case. The trial could be seen to tarnish the mass media and human rights in Russia, he told Ekho Moskvy.

RUSSIAN PRESIDENT ABOLISHES PARDONS COMMISSION. Speaking to journalists in Moscow on 25 December, President Putin announced his decision to disband the Presidential Pardons Commission, headed by writer Anatolii Pristavkin, and to delegate its functions to the governors and heads of regional administrations, polit.ru reported. Putin said he is disappointed that the commission adopted "too humane an approach toward hard-core criminals and murderers." Putin's decision is a victory for his former colleagues from the KGB, including the deputy chief of the presidential administration, Viktor Ivanov, who had advised Putin to "halt the unprofessional activities of Pristavkin's commission," the website commented. Meanwhile, several Russian human rights bodies, including Moscow Helsinki Watch and Memorial, appealed to Putin to reverse his decision, arguing that the "purpose of any punishment lies in its inevitability, not cruelty."

NAVAL COLLEGIUM BEGAN IMPLEMENTATION OF NAVAL DOCTRINE. Prime Minister Kasyanov in Saint Petersburg on 21 December opened the inauguration session of the Naval Collegium, a top new administrative board created by President Putin last summer and responsible, according to national naval doctrine, for the policies and activities of the Russian Navy, passenger and maritime fleets, Russian news services reported. Speaking to the Collegium, Kasyanov stressed that the institution was first founded by the Peter the Great, adding that its present task will be the protection of Russian military, political, and economic interests at sea. Russia is a great naval power, possessing the biggest continental shelf in the world of some 4.2 million square kilometers, and should have all the necessary tools to profit from its geopolitical location, said Kasyanov. The next day, Kasyanov was present at the ceremony founding the new Russian Navy corvette "Watchful," to be built using stealth technology and the first new surface ship ordered by the Russian Navy in a decade.

RUSSIAN SMALL ARMS PRODUCER PRESENTS NEW PISTOL. A Tula weapons maker unveiled the prototype of its new 9-millimeter pistol, which it hopes will become the standard weapon for the MVD and Russian Army, pravda.ru reported on 26 December. The pistol, the GSh-18, was crafted by arms designers Arkadii Shipunov and Vasilii Gryazev and is able to penetrate an 8-millimeter steel plate from a distance of 12 meters; meaning virtually no armored vest used among developed nations can block it. Its weight is reportedly a plus at just 580 grams.

RUSSIAN CASUALTIES IN CHECHNYA DEPEND ON WHO'S COUNTING. Speaking at the board of directors of the National Military Fund, Defense Minister Sergei Ivanov announced that since the start of the second Chechen war on 1 August 1999, some 2,355 Russian soldiers have been killed and over 6,000 wounded in military actions, strana.ru reported on 25 December. Ivanov did not elaborate on whether the figures include servicemen from the MVD, FSB, and the other agencies. Meanwhile, a spokeswoman for the anti-military organization, the Union of Soldiers' Mothers, told BBC the same day that the number of soldiers killed in Chechnya was at least three times higher than Ivanov's figure.

PUTIN CRITICIZES INTERIOR MINISTRY. Speaking to senior Interior Ministry officers on 25 December, President Putin expressed his displeasure with the agency's work, saying it has failed to stem a wave of criminality and the number of crimes committed during the first 11 months of the year exceeded 2.7 million, more than half of which were serious crimes, ITAR-TASS reported. Meanwhile, a government probe revealed that the Interior Ministry failed to include some 68,000 crimes in its criminal statistics. In the future, any officer who fails to register a crime will be immediately sacked, Putin warned. He also called on the ministry to pay more attention to its duty to protect the security of citizens and society. The ministry's other vital tasks are fighting terrorism, extremism, drug trafficking, and illegal immigration, Putin added.

PUTIN WARNS AUDIT CHAMBER AGAINST 'POLITICIZATION.' Addressing the board of the Audit Chamber on 28 December, President Putin said that body must be "politically neutral and unbiased" in its investigations and not duplicate the work of other institutions monitoring the spending of state budget funds, strana.ru reported. Hinting at several recent public statements by the Chamber's head, Sergei Stapashin, about corruption affairs, Putin said the agency "has very strong prerogatives and tools," and therefore should use them "with minimum publicity." Finally, Putin called on the Chamber for more cooperation with the Control Department within the presidential administration.

CRIMINAL WORLD SAID TO SPEND MASSIVE REVENUES BRIBING OFFICIALS. A spokesman for the Prosecutor-General's Office told Interfax on 2 January that in 2001 his agency has investigated 8,000 incidents of corruption among Russian officials, representing growth of 14 percent in comparison with the previous year. In particular, criminal cases were opened against heads or deputy heads of administrations in the Vladimir, Tver, Kurgan, Moscow, Novosibirsk, and Kemerovo oblasts and Evenk Autonomous Krug. In addition, the heads of 18 federal agencies were under investigation of corruption or other economic crimes. The spokesman remarked that, in Russia today, up to the 50 percent of criminal revenues is spent bribing corrupt officials.

'PETERSBURG TEAM' VERSUS 'THE FAMILY.' Prosecutor-General Vladimir Ustinov confirmed the FSB has arrested Vyacheslav Aminov, a Moscow businessman and unpaid adviser to Aleksandr Voloshin, the chief of the presidential staff, "Moskovskaya pravda" and "Kommersant-Daily" reported on 27 December. Aminov is accused of attempting to give a $50,000 bribe to FSB Director Nikolai Patrushev to promote an Aminov protege to a position in the government. During a search of Aminov's office, FSB agents said they discovered an enormous amount of printed and video files containing compromising material on leading Russian politicians, parliamentarians, and businessmen. Aminov is considered a close associate of the former MVD minister and present secretary of the Security Council, Vladimir Rushailo, under whose patronage he set up private security bureau Atoll in the early 1990s. Aminov also reportedly has ties to embattled magnate Boris Berezovsky, who used Atoll's services. Aminov's arrest could be another episode in the ongoing fight between the "team of Saint Petersburg 'Chekists' and the former political entourage of Boris Yeltsin, known as 'the Family,'" "Zhizn" commented on 26 December.

FORMER CHIEF WEAPONS EXPORT OFFICER UNDER INVESTIGATION... The Main Military Procurator has launched a criminal investigation into the activities of former Deputy Defense Minister Colonel General Anatolii Sitkov, who from 1994 until 2000 was in charge of the export of Russian arms, "Moskovskii komsomolets" reported on 24 December. According to investigators, Sitnov is suspected of siphoning off hundreds of millions of dollars earned from arms supplies abroad. One of Sintov's associates, Arkadii Gaidamaka, already is wanted by Interpol for illegal exports of Russian weapon to Angola.

...AS MOSCOW AND KYIV REACH ACCORD ON JOINT ARMS SALES. The Russian state arms-trading agency Rosoboroneksport signed with its Ukrainian counterpart Ukrspetseksport an agreement on the joint production and sale of weapons in third countries, "Vremya novostei" reported on 24 December. Until recently, Ukraine was the main competitor for Russian arms traders both within the CIS and in more distant markets. Moscow managed to convince Kyiv that it had more to lose from competition with Russia than cooperation, the newspaper commented.

CANADIAN DIAMOND TRADER SUES LUKOIL FOR $5 BILLION. Canadian-based Archangel Diamond Corporation (ADC) has brought a lawsuit in Denver, Colorado, against LUKoil and Arkhangelskgeoldobycha (AGD), accusing them of embezzlement, "Kompaniaya" magazine reported in issue no. 52. ADC alleges in its suit that both Russian companies failed to fulfill an agreement on handing over a license on producing diamonds in Archangel Oblast to ADC. Gennadii Chichinashvili, the lawyer representing the Russian side, said the norms of Russian legislation will not allow ADC to win its suit.

KREMLIN THINKING ABOUT 'STREAMLINING' NATIONAL TELEVISION? Kremlin experts on mass media policy believe that Russian television channels have become too similar, with all of them broadcasting the same news about the achievements of Russia under the stewardship of President Putin, "Moskovskii komsomolets" quipped on 24 December. To correct the situation, each national channel will be assigned a thematic specialization, the publication added. ORT should thus became a solely political news and features channel; RTR will be responsible for regional news, NTV will be an entertainment channel, and TV6 will broadcast sporting events, it concluded.