Izvestia (Moscow), June 15, 2002, p. 2

On Friday, a scheduled meeting of the Council of CIS Defense Ministers took place in the town of Cholpon-Ata, Kyrgyzstan. The main result of the meeting was the decision to set up a uniform system of air defense within the CIS.

Over the decade of military cooperation in the CIS, an effective mechanism of joint decision-making has been created, as well as a system of agencies for coordination and development of military and military-technical cooperation. Some practical steps aimed at integration between CIS nations have been taken in this field.

CIS defense ministers decided to set up a joint database of air defense systems and a list of airfields that may be used by CIS military aircraft if necessary.

Russian Defense Minister Sergei Ivanov, who chaired the meeting, stressed that at the next meeting mechanisms of a uniform military communications system will be worked out. This will be another stage in the unification of the mechanism of administration of military detachments of the CIS armed forces.

This decision proves that Russia’s role in the security system of Central Asian CIS members is becoming even more important, and these countries are ready to develop military and military-technical cooperation. The practical evidence of the need for this work will be seen in the exercises of the Collective Rapid Response Forces, due to start on Saturday at a testing area near Bishkek.


Kommersant, June 15, 2002, p. 4

Russia and the US marked the demise of the ABM treaty in different ways. On June 14, Washington carried out the first test of sea-based elements of its missile defense system over the Pacific Ocean, and started the construction of interceptor facilities in Alaska.

Washington withdrew from the ABM treaty on Thursday. Next year, Washington plans to spend $8 billion on the construction of its missile defense system. Overall, this system will cost Washington $60 billion.

Moscow just withdrew from the non-existent START II. This document was ratified by the Duma back in 2000, but the United States never ratified it. In December 2001, President George W. Bush announced the intention to withdraw from the ABM treaty of 1972, and six months later Moscow has the legal grounds to officially declare START II invalid.

According to our senior source in the General Staff, in the future the US missile defense system will be able to intercept no more than a hundred warheads. Therefore, even if Russia retains only 1,500 warheads ten years from now, damage to the US in case of a nuclear war would be extensive. However, our source believes that this scenario is a relic of the Cold War. These days, everyone understands that nuclear weapons are a means of political containment rather than a means of winning wars. Defense Minister Sergei Ivanov has said: “There is no strategic or tactical architecture for the proposed US missile defense system. As long as this system is merely virtual, it is too early to talk about any specific moves that may be made by Russia.”


Kommersant, June 15, 2002, pp. 1, 4

On June 14, Uzbekistan withdrew from a union of five post-Soviet states: Georgia, Ukraine, Uzbekistan, Azerbaijan, and Moldova (GUUAM). The reason it gave for its withdrawal was that this organization has not lived up to expectations. From now on, Uzbekistan will rely solely on the United States in solving its problems.

Ukraine’s Foreign Minister Anatoly Zlenko was the first to respond to this event. He said that from now on, GUUAM will be more united, “relieved of the passivity of some members.”

To counter GUUAM, Russia has set up the Euro-Asian Economic Community (EAEC) including Russia, Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan. Armenia also cooperates with the EAEC, although it is not a member officially. Another step aimed at shattering GUUAM was Russia’s initiative to include Uzbekistan in the Shanghai Cooperation Organization (SCO).

However, there is no reason for Moscow to rejoice, since Uzbekistan has not quit GUUAM in order to draw closer to Russia. Uzbekistan has decided to rely on the US, and simultaneously make some money.

Uzbekistan’s drift toward America became evident right after the US started to set up military bases in Central Asia in autumn 2001. By January, Moscow sensed that Tashkent’s attitude to it had changed. The Russian prime minister was received coldly there, and when he proposed friendship and cooperation to Uzbekistan, he was told that “eternal friendship cannot be deposited in a bank account that does not yield any interest.”

In March, during Uzbekistan President Islam Karimov’s visit to the US, the two countries signed a declaration on strategic partnership, in which Uzbekistan was called the key strategic partner of the US in Central Asia. After that, Karimov announced that the US has managed to do for Uzbekistan what its CIS partners have failed to do. He said, “For five years Uzbekistan was constantly threatened with a military attack from the Taliban – and the US has played the decisive role in eliminating the tension along Uzbekistan’s southern borders, thanks to its determination and splendidly trained armed forces; whereas members of the CIS Collective Security Treaty did not do this.”

However, the sharp turn of the Uzbek government toward the US may have some unexpected outcomes. A high-ranking official in the US State Department has said that despite Uzbekistan’s active participation in the anti-terror operation, Washington would not close its eyes to human rights abuses there.


Rossiyskaya Gazeta, June 15, 2002, p.1

Nuclear Energy Minister Alexander Rumyantsev, a fellow of the Russian Academy of Sciences, made the following comment on the US withdrawal from the ABM treaty of 1972, the day before the US tested a new interceptor: “This is the right of any independent state.”

“The withdrawal from the ABM treaty of 1972 had been planned by the US and Russia,” Rumyantsev stressed. “The Americans were the first to do it. Their creation of a national missile defense system does not infringe on our security. That is the primary point. Secondly, this can revive US industry, advance high technology. The creation of this extensive system will inevitably lead to more activity of in high-tech industries. It is very difficult to assess this issue from the political point of view. Is the US withdrawal from the treaty a mistake or not? I think the Americans should not have done it in view of the consolidation of our countries’ positions on various issues…”


Vremya MN, June 15, 2002, p.2

The State Council working group on banking sector development considers that the main problem lies in the sector’s poor structure.

At yesterday’s meeting, the working group approved the first draft of a plan entitled “Principles of state policy on developing the Russian banking system” (the final draft is expected to be ready by June 28). The plan notes that Russian banks do not provide investment funds for industry, nor do they take part in providing the economy with long-term resources. There is also the low capitalization of Russian banks, the uneven development of the banking system, the geographic concentration of capital and the concentration on a certain class of clients. The working group also paid attention to the rising value of bank assets, since the number of individual savings accounts has increased, while enterprises’ capital growth in bank loans has slowed.

At the working group meeting, Sberbank CEO Andrei Kazmin expressed support for starting to adapt the national economy, including the bank sector, for joining the World Trade Organization. During this transition some restrictions could be imposed on the number of foreign participants in the Russian banking industry. “I think it is premature to let foreign banks provide cross-border services (when banks borrow in Russia and invest this capital abroad – Editor’s note) although this is already happening,” Kazmin said. According to Kazmin, the matter concerns not only operation on the private deposits market but also direct lending to Russian enterprises by foreign banks. “I support competition on equal terms, but it does not exist today. Foreign banks outclass us,” he said. According to him, nations with developed market economies have lifted restrictions on cross-border services cautiously. “Russia is eager to catch up with them, after the crisis of 1998.” As for the transition, the head of Sberbank thinks there can be various methods of doing it: for example, in the case of a syndicated loan, it would be possible to make participation bu Russian banks an essential requirement.


Izvestia, June 15, 2002, p.1

Yesterday there were two sensations at once in the Federation Council. First the senators accepted the resignation of Chief Military Prosecutor Mikhail Kislitsyn – who, according to Prosecutor General Vladimir Ustinov, resigned “due to poor health”.

Then the members of the upper house postponed approval of the nomination of former deputy finance minister Andrei Vavilov as a senator. Ustinov also took part in this case – he announced that the Prosecutor General’s Office has started an investigation into the validity of Vavilov’s selection to represent the Penza regional legislature in the Federation Council.

Mikhail Kislitsyn on law and order in the Armed Forces: “Desertion is only the tip of the iceberg, a corollary of the overall rise in law-breaking within the military, primarily among the officer corps. In 2001, the Prosecutor General’s Office recorded 1.1% more crimes within the military than in 2000. Half of crimes committed by military personnel fall into the category of major crimes. Many of them are committed under the influence of alcohol; the number of such cases increased by 26% over the year, and the number of crimes involving the use of weapons increased by 25%. The number of murders rose by 7%, the number of serious assaults rose by 4.2%. The cause of this is criminal negligence and the abuse of power by officers of various ranks. Over half of them are linked to physical violence by officers against soldiers. In 2001, this figure rose by 15%. A rise in the incidence of hazing and cruelty against new recruits was also recorded.”

Mikhail Kislitsyn on the reasons for law-breaking in the Armed Forces: “Considering it in a down-to-earth manner, the cause can be traced to the low salaries of officers, especially among the junior ranks. In order to provide their families with money, these people have to do extra work part-time; and, of course, this has a negative impact on their service duties. It’s like a vicious circle. Although they see the gravity of the situation, the senior commanders have no moral right to demand that junior officers carry out their duties, since the Armed Forces cannot provide them with a decent standard of living. As a result, there is no good management; that is why standards in the Armed Forces are set by the older soldiers. The most terrible aspect is that this suits most of the commanding officers. In the barracks there is a semblance of discipline. In reality, it is not so. Hence the rise in crime, assaults, humiliation, and consequently the desertion of conscripts who have no one to turn to for protection.”


Versia, June 10, 2002, p. 11

A torrent of Chinese migrants has flooded the Russian Far East. No one knows even approximately how many of them live there now. According to Moscow Carnegie Center, five years ago there were about 250,000 Chinese in the Far East. The Interior Ministry stated that there are only 2 million Chinese in Russia. According to other assessments, there are five million Chinese in Russia. The majority of them live in Russia illegally. In these terms, the Federal Migration Service of the Interior Ministry of Russia is seriously concerned that in 20-30 years Chinese will become a dominant ethnic group in the Russian Far East. What can be the consequences of this? The Majority of Far Eastern boundary territory was given to the Manchur Tsyn Empire in accordance with Nerchin Agreement as of 1689. It was a forces measure, necessary for settling trade and diplomatic relations between the states. Fortunately, in 19th century Russia managed to return its lands, as the Nerchin Agreement was canceled in accordance with the Aigun agreement, 1856, and the Beijing Treaty, 1860. However, the Chinese government never acknowledged these agreements officially.

This territory is the only Russian outlet to the Pacific Ocean. Both largest ports of Vladivostok and Nikolaevsk are situated on former Chinese territory. There are oil, gas, and woods on the Far East – rapidly growing and developing China urgently needs such resources. While fewer and fewer Russians want to live here: 380,000 Chinese live on a square kilometer of adjusting territories against one Russian per a square kilometer on the Russian Far East. In these terms, local authorities regularly start panicking that Chinese have already captured the whole region. However, so far not a single representative of local authorities in Khabarovsk, Vladivostok, or Ussuriysk presented any exact data on buying up agricultural lands by the Chinese. No one is able to name a village or a region, where Chinese would live compactly. Perhaps, analysts who convince that China is not trying to capture the Russian Far East and will not claim for it in the future. China is interested in stability of both its own part of the Central Asia and its part in the CIS. This means that China is principally unable to restrict the threat of Islamic extremism and international terrorism without Russia’s aid. In short, China is uninterested in complication of the situation on the Far East. On the contrary, it finds cooperation with Russia very profitable. According to supporters of this territory, a real threat of extinction of a most precious Russian region is much more vital that the “yellow threat”.


Kommersant-Dengi, June 12, 2002, pp. 8, 10

Last week the Supreme Court declared that fines for polluting the environment are unlawful. Given the poor development of Russian legal system, this is likely to lead to a real environmental disaster. The decision of the Supreme Court also seriously affects the federal budget – last year Russian enterprises paid 8.48 billion rubles for their “harmful activities”. However, this is far from being the most negative consequence of the decision. The point is that in the West the main constraining factor for enterprises polluting environment is not fines, but lawsuits by individuals – it is possible to get substantial compensation payments for potential harm to health, the need to change homes and jobs because of the environmental situation, and so on. Such legal action has led several large enterprises to bankruptcy. However, there is nothing of the kind in Russia. This means that cancellation of state fines, the last obstacle that prevented Russian enterprises from throwing harmful waste anywhere, has disappeared.


Argumenty i Fakty, June 12, 2002, p. 26

Over 397,000 military personnel have fought in Chechnya, 61,000 of them have been wounded. In total, at present there are over 750,000 Russians, who participated in fifty local wars and armed conflicts; 80,000 of them became invalids; 43,000 people are members of families of deceased servicemen. However, only 10% of former soldiers who need aid receive real aid from the state. Mostly, they are soldiers from the Afghan war. The state lacked about 2 billion rubles to pay for benefits for the rest. However, recently, the Duma unanimously (381 votes) passed in the first reading a bill on giving soldiers who fought in Chechnya the status of “veterans of operations”. President Putin supported the initiative of the Duma and made some suggestions. According to the military, the support of the president guarantees passage of the new law, perhaps in the next Duma session, in autumn.


Vek, No. 18, June 14, 2002, p. 2

Participants of the first meeting of the State Council of Russia working group for state politics issues concluded that the situation in the coal industry is still very tense. Production volumes continue falling, bill payable is growing. At the same time large quantities of unsold coal have accumulated at storehouses of coal companies. The situation is also complicated by high rates for railroad transportation and considerable amounts of coal imports. Head of the group, Governor of the Kemerovo region Aman Tuliev told to our journalist, “Our working group was formed by an order of the president of Russia. We have very tough terms for working out a decision. In mid-July we are to present the results of our work to the State Council, and in August we are to present to the president a report on the basis of state politics.” According to Aman Tuliev, the draft of the presidential report, which the working group is preparing, in particular stipulates increasing gas prices, as currently the blue fuel is much cheaper than the “black gold”, hence energy companies prefer gas to coal. Tuliev stressed that coal is cheaper than gas all over the world.