TECTONIC SHIFTS STARTING IN RUSSIA

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TECTONIC SHIFTS STARTING IN RUSSIA

Izvestia (Moscow), March 30, 2002, p. 2

On Friday, the Cabinet discussed prospects for the development of the Russian economy to 2005. Prime Minister Mikhail Kasyanov said at the meeting that a “systemic transformation of the economy” has taken place: it has become less dependent on world oil prices. From now on, the government’s aspirations will be focused on processing industries as another source of development of the country’s economy. Nevertheless, scenarios approved of at the meeting are still based on forecasts of oil prices.

The Economic Development Ministry has elaborated two scenarios: the conservative and optimistic ones. The conservative scenario will work if the price of Russia’s oil on the world market in 2003-05 is $18.50 a barrel and the GDP grows by 3-3.5% a year. The government thinks this scenario the most likely. The optimistic scenario envisages the world oil price as $21.50 and the growth of the GDP as 4.1% a year. The government hopes that inflation will gradually decrease down to 11-12% in 2003 and 8-10% in 2005.

Despite the situation on the world oil market that cannot be called quite favorable for Russia, it has displayed a high tempo of economic growth compared to that throughout the world. This success was gained through an increase in domestic demand.

In late December, the government got concerned about the sharp growth of imports: by 19%. That is why it has decided to shift its focus to processing industries and encourage investments in processing enterprises by rich raw materials enterprises.

The cancellation of the tax on usage of roads from January 2003 approved by the government on March 29 will deprive regional budgets of 180 billion rubles a year. To comfort regions the government has made up a new transport tax. Only owners of agricultural vehicles and vehicles of detachments of the Interior and defense Ministries will be relieves of this tax.

SEARCH OPERATIONS IN CHECHNYA ORDERED TO BE "ALMOST VELVET"

Izvestia (Moscow), March 30, 2002, p. 2

Lieutenant Vladimir Moltensky has issued a decree on considerable liberalization of the procedure for search operations. He has ordered that soldiers carrying out search operations should not wear masks “unless this is absolutely necessary.” Leaders of the search operations should give their surnames to residents of the houses they are searching. Besides, journalists should be present at search operations. Only the commander of a group is entitled to authorize for a search operation. On Friday, the decree was sent to troops, but according to our sources, the reaction among soldiers has been very negative.

The decree states, “Cases of infractions committed by federal servicemen against local residents negatively influence the process of stabilization of the situation in Chechnya… They lead to aggravation of anti-Russian feelings, and give leaders of illegal militant gangs extra opportunities for replenishing their gangs with new members and supporters.”

After every search operation, a report on its results is to be made, in which people detained and weapons, money, and documents confiscated are to be registered.

Vladimir Kalamanov, presidential envoy for human rights in Chechnya, says: “This is one of the rare cases when the federal military command responds to demands of ordinary citizens. During our meetings with representatives of the command of the Joint Group of Federal Troops in the North Caucasus, we paid special attention to cases of disappearance of people, and looting, that take place during search operations rather often. This decree answers practically all our questions. It is particularly important that from now on, lists of those detained during search operations will be kept, so their relatives will be able to know where they are. The situation in Chechnya is changing, and there is no need to conduct search operations in the same strict conditions as were necessary earlier.”

Presidential aide Sergei Yastrzhembsky believes that this decree will “make the situation in Chechnya considerably healthier.” About the ban on wearing masks without special necessity, he noted, “It is possible to be a gentleman in a mask and be a scoundrel without it.” He added that this measure does not play into the hands of the guerrillas, since masks will be used if necessary.

A senior officer of the Internal Troops of the Interior Ministry said, “This is just another folly of the command. The previous decree No. 247 cost us a lot of blood. According to that decree, we were to inform village mayors about upcoming search operations three days in advance. All guerrillas managed to hide away for this time.”

RUSSIA IS IN DEMOGRAPHIC DARKNESS

Finansovaya Rossia, No. 12, March 28, 2002, p. 3

According to the State Statistics Committee, as of January 1, 2002, the population of Russia was about 144 million. Over the past decade the population has declined by 4.4 million, or 2.9%. The majority of the population is concentrated in the Central and Southern federal districts: people are leaving the Asian part of the country, especially the Far North and the Far East. The demographic situation is unlikely to improve in the near future. According to recently published forecast of the State Statistics Committee, in the next fifteen years the population of Russia is to reduce by at least 5.3 million people, or 3.7%, but the proportion of urban and countryside residents is unlikely to change: in 2016 the urban population is still to total 73% of people in the country.

RUSSIAN DEFENSE INDUSTRY TO GROW

Finansovaya Rossia, No. 12, March 28, 2002, p. 3

In 2001, the Cabinet approved a development plan for the military-industrial sector, in accordance with which about half of the 1,700 enterprises of the sector are to be united into 40-50 holdings. Last year the restructuring was planned to take ten years; this year it has been decided to reduce the period to six years.

According to expert appraisals, consolidation is impossible without participation of large financial-crediting institutions, while at present state banks have a monopoly on serving the majority of the military industrial sector enterprises.

However, the main issue is to construct the business and to create a viable system. Unfortunately, the military industrial sector has not time for natural selection in order to firm holdings. It is unclear who is to form holdings. Azret Bakiev, the head of department for development and reforming of the military-industrial sector of the Ministry of Industry and Science, says, “Our ministry is working out legislative basis, determines priorities and makes technical-economic substantiations for establishment of defense holdings. All these documents are to be presented to the government. Each holding is to be a united technological chain, the “outcome” of which will be final product.”

WHY DOES RUSSIA NEED A NUCLEAR POWER STATION IN NORTH KOREA?

Versia, March 25, 2002, p. 6

According to Ilya Klebanov, last week North Korea asked Russia to provide aid in construction of a nuclear power station. Russia started negotiating about the possibility of a nuclear power station being built by Russian specialists, but so far no agreements have been reached. Mr. Klebanov did not report why Russia is negotiating at all with a country which is unable to pay for the construction. From the standpoint of a market economy, cooperation with China, India, and even rich but unreliable eastern counties is reasonable, while North Korea is unable to pay for this “fraternal help”. However, “economic” cooperation with this country is growing: recently regular flights resumed between North Korea and Russia. The only logical explanation for resuming relations with North Korea may be military cooperation.

RUSSIANS WILL HAVE TO BUY RUSSIAN-MADE CARS

Yezhenedelny Zhurnal, March 25, 2002, p. 20

The Russian government still cherishes hopes of turning the Russian car industry into an “economy engine”. Over 5 million people are employed in the industry and the government also has serious social reasons to keep the auto-maker giants afloat. At present, Russia’s pool of vehicles is developing twice as fast as the western market: up to 5% annual growth, and domestic producers are not reaching the limits of their capacity: KamAZ and ZIL automotive plants use less than 40% of their capacity; Izhmash and GAZ use no more than 10-20% of their capacity; Moskvich is at a halt. Even the most successful VAZ an GAZ do not believe that the suggested by the Finance Ministry, to increase of duties on used foreign cars by 15-20%, will save the Russian car industry.

Last year, slightly over a million Russian cars and almost 700,000 foreign cars were sold in Russia, 60,000 of them brand new. In accordance with the concept for development of the car industry, by 2010 the total number of cars in the nation is to grow by over 10 million and amount to 33 million cars. In order to have these plans realized, lobbyers of the auto industry suggest introduction of “protection duties” not only for new foreign cars, but also for cars five years old or more. According to appraisals of independent experts, a much more promising idea is producing well-known western brands in Russia: there are several joint ventures with General Motors, and Ford in Russia.

MORE NATURAL RESOURCES DISCOVERED IN RUSSIA

Rossia, No. 12, March 28, 2002, p. 1

According to experts of the OPEC research and marketing department, Russia has overtaken Saudi Arabia and became the largest oil producer in the world. According to them, in February Russia extracted 7.28 million barrels of crude oil a day, while Saudi Arabia got only 7.17 million barrels.

Gold deposits have been discovered on the Kuril Islands; according to preliminary assessments, the gold deposit is 45 tons. However, geologists believe there is twice as much gold on the islands. The deposit is unique, as it is possible to mine gold in open quarries. At least four million rubles are necessary for more detailed exploration of the territory. Researches also give optimistic forecasts about other territories of the Kuril Islands.

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