Trud, November 2, 2002, p. 1

A 10th trainload of spent nuclear fuel is to be delivered from the Murmansk Region to the Mayak enterprise in the Chelyabinsk Region. Over the past few years, more than 15,000 fuel rod arrays and over 60 nuclear reactors have been delivered there.

There are only two such special trains in Russia. Each car has three containers. The walls made of stainless steel are 30 centimeters thick. Thus, these cars are secure against explosions, fires, and falls from a ten-meter height.

By the way, this year, the Kola Peninsula has been busily liberating itself from radioactive waste materials. The floating technical base Lepse has been repaired and examined. Now it is able to store fuel rod arrays from nuclear submarines for several years.


Rossiiskaya Gazeta, November 2, 2002, p. 7

Official Representative of the Russian Foreign Ministry Alexander Yakovenko announced that Russia is annoyed by Georgia’s reluctance to extradite international bandits detained on its territory to Russia. Besides, Georgia is proposing more and more absurd conditions for their extradition. Yakovenko also noted that the Russian Foreign Ministry has come to know that Georgia has extradited several guerrillas linked with al Qaeda to the US. The Foreign Ministry demands that the agreements between the presidents of Russia and Georgia on urgent extradition of international terrorists should be observed.


Rossiiskaya Gazeta, November 2, 2002, pp. 1, 2

From now on, there will be a real shield against terrorism in Russia. On October 30, the president signed a bill amending the law on combating money laundering.

From now on, “terrorist money” will not be able to move around Russia freely. According to the amendments, banks will be entitled to freeze accounts for two days of those clients who have been suspected of links with terrorists. The bank should report its suspicions to the “financial intelligence” – the Financial Monitoring Committee (FMC). This agency has been tracing shadow funds for over a year. So far, the FMC has not been entitled to perform any operations independently: it has had to give all its data to law enforcement agencies. However, the activation of terrorism has made the government think of extension of its powers.

From now on, the FMC may freeze accounts for another five days. Overall, it gives a week. According to Chairman of the FMC Viktor Zubkov, this term is enough for law enforcement agencies to take the necessary steps. Discussion of these amendments in the Duma was passionate. Many deputies feared that bankers and officials would use powers of the FMC for their selfish goals as an instrument in unfair competition. Freezing of accounts for a week, and even for two days, may mean serious damages for a firm. However, Zubkov is sure that there will be no abuses of powers of the financial intelligence. He has noted that such organizations work in most European countries already.

Besides, the new law extends the territory, on which flows of criminal money may be traced. The FMC has been gathering information mostly in banks by now. Now it may gain control over activities of investment foundations and non-state pension funds and sales of precious metals and jewelry. According to Zubkov, a lot of illegal money is circulating in this sphere.


Kommersant, November 2, 2002, p. 5

The Russian Finance Ministry has announced that it has paid to the IMF $25.6 million in addition to the $1.3 billion allocated to the IMF at the start of the year. The IMF needs money now because it has promised to lend $30 billion to Brazil.

As is known, since the financial crisis of 1998, Russia has owed $20 billion to the IMF. However, it has received only $640 million from the IMF since then. At the start of the year, Russia’s debt to the IMF was $7.5 billion.

Now the IMF does not intend to give Russia any credits or advice. According to its forecasts, economic growth in Russia in 2002 will total 4.4%, whereas forecasts of the Russian government say that this figure will be 3.9-4%.


Kommersant, November 2, 2002, p. 4

On November 1, the law on the legal status of foreign citizens in the Russian Federation came into effect. From now on, any Russian citizen, if he/she wishes to invite a foreigner, will have to fix an invitation not in the Foreign Ministry but in the police. The government believes that this measure will help reduce the influx of illegal immigrants to Russia and make a contribution to the international cause of combating terrorism.

The Foreign Ministry will register invitations only for federal government agencies. It will also handle diplomatic representations and consular agencies of foreign countries in Russia, international organizations and their representations, and representations of foreign countries in international organizations stationed on Russia’s territory.


Kommersant, November 2, 2002, p. 3

On November 1, at a meeting with journalists, Russian human rights advocates led by Ombudsman of the Russian Federation Oleg Mironov announced that it is necessary to start negotiations with Chechen separatists from Maskhadov’s circle. They ruled out the possibility of negotiations with those who are waging war against peaceful civilians and the federal troops. According to Mironov, the difference between these people is that “Maskhadov’s supporters don’t cut people’s heads.”

Mironov said, “We see that it is impossible to solve the Chechen problem by military methods. After the tragic events in Moscow, the conciliatory process in Chechnya should be intensified.” The ombudsman believes that it is necessary to conduct negotiation with those representatives of the Maskhadov crew who are inclined to start contacts with the Russian government. He also noted, “It is necessary to involve in the negotiations not only elders and prominent Muslim activists but also representatives of other confessions represented in Chechnya, e.g. rabbis.” In the opinion of Oleg Mironov, Chechen youths are not born terrorists: they are just not employed by the local police. “Even if they want to joint the police, they are not employed, and then they join the guerrillas.” In the end, Mironov said, “When Maskhadov’s supporters are killed, we are as sorry for them as for federal soldiers.”


Zavtra, October 31, 2002, p. 1

According to our sources in New York, the American political elite is viewing the Moscow hostage-taking as “something that was bound to happen”. The New York Post, known for being close to Republican hard-liners like Cheney and Rumsfeld, commented: “Moscow got what it deserved for its wavering over Iraq. Who will be next? Probably France.” According to our sources, such covert threats from the hawks indicate that the terrorist acts in recent weeks have not only been in the strategic interests of the Bush administration, but might have been inspired by it to some extent – including via “friendly intelligence agencies” of other countries, primarily Britain and Turkey.

Prime Minister Mikhail Kasianov attended the Asia-Pacific leaders’ forum in President Putin’s place. Sources in Mexico report that G-7 leaders, including President Bush, took a positive view of the replacement. It was noted that the Russian prime minister fully explained all issues related to Russia’s position on a number of current political topics, as well as the immediate and mid-term prospects, and even “impressed people with his mastery of the English language”.

According to a number of confidential sources, plans for a visit to Moscow by a representative delegation from Saudi Arabia – led by two “princes of the blood”, including Turki, a former head of the Saudi intelligence service – were a consequence of the government in Al Riyadh realizing the high probability of aggression against Baghdad being paralleled by “American-style democratization” of the political regime in the Arab world’s richest nation. Due to this, the Saudi royal family has withdrawn around $300 billion from the United States over the past three months, redirecting the money to the European Union and Switzerland. According to the same reports, during the talks in Moscow it was planned to discuss the possibility of granting Russia an interest-free 25-year loan of around $200 billion, to pay off its foreign debts, in exchange for “blocking US aggression” at the UN Security Council – which would mean a sudden, total foreign policy turnaround for the Kremlin. However, the Nord-Ost hostage crisis intervened.


Konservator, November 1, 2002, p. 1

Over the past few years, since the crisis of August 1998, Russia’s largest companies have increasingly been purchasing various assets abroad (not always in their core business areas). Understandably, the main focus of their efforts and resources have been former Soviet nations – but not those alone. There are already some oil refineries, gasoline stations, ceramic factories, and aviation plants in Europe and the United States which are owned by Russian businesspeople or about to be purchased by them. These purchases are often meant to fill gaps in production networks split by the collapse of the USSR; adding processing facilities to the extraction part of the business which remained in Russia, or adding to Russian designs the capacity to manufacture products and sell them on global markets. But by no means all acquisitions abroad can be thus explained.

It would be natural to assume that our businesspeople are simply taking their capital out of Russia; and since money is meant to work, rather than gathering dust in offshore zones, it is being invested in more or less liquid assets. But that is only one side of the coin. After all, money is taken out of Russia not because the situation is so good abroad, but because it is so bad here. Indeed, the Russian government is now placed in a position of being forced to compete with other nations for the money of its own companies. And frankly, the executive branch is losing the battle so far. The tax reforms have practically ground to a halt (moreover, they led to exemptions from profit tax being cancelled); the foreign currency deregulation process is taking too long; and the Russian securities maket is still too nebulous to be a realistic instrument for attracting investment. Neither should it be forgotten that Russian enterprises are too spoiled by various systems of tax breaks and concessions; but cancelling these leads to immediate capital flight to offshore zones.

Still, there is a positive aspect to this story. By investing in enterprises abroad, Russian companies are attempting to become transnational companies. And that means Russian business will become much more attractive for foreign investment. Thus, somewhat paradoxically, so-called “capital flight” could have the effect of increasing the flow of foreign investment into Russia. That is, if Russian business can indeed become international.