Europe

U.S.-Russian Security Cooperation After Beslan

10-25-2004

On September 1, 2004, the first day of school, a multiethnic group of over 30 radical Islamist terror­ists, including two female suicide bombers and some Chechens, took more than 1,000 children, teachers, and parents hostage in Beslan, North Ossetia. The ter­rorists deployed explosives around the school, hang­ing them from basketball hoops in the gym, where most of the children were held. This was the fifth mas­sive hostage-taking event in Russia since 1995, and it ended in tragedy. Shamil Basaev, leader of the radical Islamist wing of the Chechen separatist movement, has taken responsibility for the massacre.1

In the aftermath of Beslan, the U.S. should empha­size to the Russian people, President Vladimir Putin, and the Russian government that the two countries are facing the same enemy. The U.S. should increase outreach in the battle for Russia’s hearts and minds, paying particular attention to the younger genera­tions of Russian citizens.

In addition to these public diplomacy efforts, Pres­idents Putin and George W. Bush should hold an anti-terrorism summit in the near future to hammer out a joint anti-terrorism action plan. The two coun­tries should expand security cooperation in anti-ter­rorist force structure; command, control, and communications; and on techniques for dealing with hostage situations. The U.S. and Russia should expand the range of joint programs designed to pre­vent the proliferation of weapons of mass destruction (WMD) to terrorist organizations, going beyond the current Nunn–Lugar funding.

However, even though the two countries face a common threat, the U.S. does not have to agree to Russia’s policies toward its neighbors. The U.S. should support the sovereignty and territorial integrity of all post-Soviet states, and it should not remain silent if democracy in Russia is rolled back. Instead, Washington should develop programs that support growth of the nonprofit/nongovern­ment sector, promote the rule of law, and help to advance transparent, participatory, and democratic governance in Russia. The U.S. should also expand support of the independent media in all forms, including print, broadcasting, and Internet.[1]

Beslan: Russia’s 9/11

The Beslan tragedy shook Russia on a scale comparable to how September 11 affected the United States. Terrorists subjected the children and other hostages to unspeakable abuses, deny­ing them water and food, killing some at random, and forcing many children to drink urine.[2] Europe has not seen such cruelty since the Nazi atrocities during World War II and Stalin’s genocidal exile of nations to Siberia and Central Asia.

After two days, the terrorists triggered an explo­sion in the gym, and many children ran from the building. The terrorists opened fire, shooting and killing hostages. Russian special forces and the armed local population attempted a rescue, but the death and destruction of that day speaks clearly of a monumental security failure.

Heart-wrenching scenes of small bodies in tiny coffins and parents breaking down in grief at their children’s graves shocked the world. Many Rus­sians watched the crisis on television, tears pour­ing down their cheeks.

Security Failures

The systemic failures of the policy and security apparatus that failed to stop the atrocities in Beslan were immediately obvious to Russian and Western observers. The Russian intelligence networks—run by the military, internal security forces, and the Ministry of Interior police in the North Caucasus— failed to identify preparations for the attack or pro­vide timely intelligence that would have allowed the terrorists to be intercepted en route to the school.

Nor was Beslan an isolated incident: A few days prior to Beslan, two female suicide bombers destroyed two Russian airliners in flight, and a Moscow metro station and a bus stop were bombed.

The failure of the rescue operation was also obvious. The top military commander indicated that “there was no planning to rescue hostages” and disclosed that 48 hours after the school was seized, the main special forces were training 30 kilometers away.[3] Even if negotiations were under­way, a rescue force should have been on location and ready to respond at any moment. Further­more, the rescuers had only two or three armored personnel carriers to use as shields in approaching the building. As a result, the special forces were pinned down by the terrorists’ heavy fire.

The terrorists were permitted to dictate the oper­ational tempo. They imposed the rescue timing by setting off the explosives and put up a stiff resis­tance that lasted for 10 hours, from 1 p.m. to 11 p.m., when most of them were finally killed. Spo­radic fire continued until 4 a.m. of the next day.[4]

Because the building was rigged with explo­sives, the only chance to save the children if nego­tiations failed would have been to overwhelm the terrorists in a massive, precise surprise attack, which would take out most of the perpetrators in the first few minutes. Such an operation could have used advanced technology, such as night vision goggles, stun grenades, body armor, and incapacitating gas. Nothing of the kind happened.

Roaming Locals. Appallingly, the security forces failed to remove hundreds of armed locals from the scene. This failure to establish and enforce a police perimeter allowed civilians to interfere with the rescue attempt. It placed both the hostages and rescuers in their crossfire and exposed civilians to terrorists’ weapons fire, lead­ing to entirely avoidable civilian casualties. Fur­thermore, some terrorists were allowed to break out of the building, and they engaged in firefights until the next morning.

The Russian anti-terrorist forces were woefully unprepared. Beslan was Russia’s fifth massive hos­tage situation, with over 1,000 hostages; yet Rus­sian security forces demonstrated that they had learned little from the debacles of Budennovsk, Pervomaysk, and Kizlyar in the 1990s and from Dubrovka in 2002. They did not wear modern Kevlar helmets or even bulletproof vests in some cases, and the elite Alfa and Vityaz units lost 10 men—their largest losses in post-Soviet history.

Failures of Policy and Leadership

Since the collapse of the Soviet Union, both the Yeltsin and Putin administrations have failed to reform the Soviet-era security services and the Ministry of Interior police forces, which in turn failed to prevent or adequately respond to the Beslan hostage situation. These are still quasi-total­itarian political control and crime fighting organi­zations, rife with corruption, as has been acknowledged by President Putin as well as other senior Russian officials.[5] They are simply inade­quate to the task of confronting modern local and global terrorism.

Despite the recent terrorist attacks on Russia, President Putin is ambiguous about Russian coop­eration with the West in fighting terrorism. After the tragedy, Putin repeatedly bemoaned the pass­ing of the Soviet “great power,” but he also recog­nized that Soviet ideology suppressed numerous real ethnic conflicts.

Putin accuses Western intelligence services of maintaining contact with the Chechen rebels. Clearly, he believes that the U.S. and other West­ern powers support anti-Russian Chechen forces in an effort to keep Russia pinned down and “involved in its own problems.”[6] After all, Great Britain and the U.S. have granted political asylum to some Chechen leaders.

Putin could have also mentioned the fundrais­ing activities conducted in the West by radical Muslim groups to aid the “jihad” in “Chechni­stan.”[7] Such activities have been going on in Great Britain and the U.S. for years but now seem to be coming to an end (although fundraising for Chechnya is continuing in the Middle East and throughout the Muslim world without interference). In this regard, Putin’s criticism may be legitimate in view of the Beslan atrocities and Basaev’s own admission that he received money from abroad and, if offered, would have taken money from Osama bin Laden.[8]

As an intelligence professional, Putin should appreciate the difference between information gathering and operational support. Instead, he is apparently convinced that the West is preoccupied with creating an irritant for Russia. In an earlier speech to the nation, Putin went even further, say­ing that foreign powers are interested in dismem­bering Russia and neutralizing it as a nuclear power;[9] he ignored, however, the much greater issue of the global Islamist networks supporting the Chechen extremists.

Still, Putin left enough common ground to infer that continuing cooperation with the West in the war on terrorism is possible. He sent a clear mes­sage that entrenched bureaucracies on both sides of the Atlantic hamper U.S.–Russian security coopera­tion. He also said that President Bush is a “good, decent man,” “a reliable and predictable partner,” and someone he can “feel as a human being.”[10] He also stated that terrorist attacks in Iraq are aimed at achieving President Bush’s electoral defeat.[11]

Thus, despite his vocal reservations concerning the West, Putin sent a message to the Western leadership. Putin presented himself as open to anti-terrorism cooperation, indicating that security “professionals” on both sides are in contact and recognizing that Cold War sentiments still exces­sively influence the bureaucracies on both sides of the Atlantic.[12] Putin is no doubt aware of shared risks of terrorists gaining access to weapons of mass destruction.[13]

New Challenges

While President Putin appears to understand the threat of global terrorism, Russia’s security apparatus does not seem to grasp sufficiently the challenge of the jihadi menace. This is an enemy different from the Cold War threats of “Western imperialism” and internal political opposition. Externally, Soviet foreign intelligence fought the Cold War against the U.S. and its European allies while, domestically, the secret police were posi­tioned to ruthlessly suppress any political dissent among the unarmed population through intimida­tion and incarceration.

Ethnic and religious unrest, however, is endemic to the territory of the Russian empire and the Soviet Union, as prolonged guerrilla warfare during the 18th–20th centuries in the Caucasus, Central Asia, Western Ukraine, and Baltic states demonstrates. In particular, ethnic-based warfare and insurgency have hardly been new to the Caucasus—north and south—for the past two centuries.

A Missed Chance. President Putin has admit­ted that the first Chechen war, unleashed by the Yeltsin administration in the fall of 1994, in which 80,000–100,000 people were killed and over 100,000 became internally displaced, was an error.[14] After the Russian army’s defeat in Chech­nya, Moscow granted the rebel region quasi-inde­pendence in 1996.

Sadly, however, “independent” Chechnya turned into a disaster for its own people. Armed gangs and clans ran wild. Radical Sunni (called Wahhabi or Salafi) clerics imported from Saudi Arabia have established Islamic religious courts in the society, which had previously practiced a rather lax version of Sufi Islam.[15] Public hangings have become commonplace. Thousands have been kidnapped for ransom. Slave markets have appeared. Oil has been stolen from pipelines, pipelines sabotaged, transit trains from Russia shot at, and passengers robbed. Trafficking in drugs, arms, and other contraband is rampant.

The Wahhabi presence, including ties with al-Qaeda terrorists, has increased, strengthening the leadership of radical Islamists such as Shamil Basaev. Dr. Ayman al-Zawahiri, Osama bin Laden’s second in command, spent six months in Chech­nya setting up training camps and preparing for jihad. The Russian security services even arrested al-Zawahiri, but unaware of his identity eventually let him go.

The Second Chechen War. The second Chechen war began in 1999 when a radical Chechen faction commanded by Shamil Basaev invaded the neighboring republic of Daghestan. Bombings of apartment buildings in Moscow and Volgodonsk, in which over 300 people died, greatly escalated matters. Basaev and the radical faction he leads do not hide their geopolitical ambitions of establishing a caliphate from the Black Sea to the Caspian. Russia responded with a World War II– style invasion of Chechnya, which resulted in mas­sive destruction and heavy civilian casualties.

The second Chechen war bolstered Putin’s pop­ularity and facilitated his election to his first term in office in March 2000, but it also left lingering problems. Tens of thousands of Chechen civilians were displaced, killed, or wounded. After Beslan, however, Putin refused to discuss the problems. Further, he asserted that the Chechen war had nothing to do with the hostage taking in Beslan. The Russian president offered no criticism of com­mand, control, and leadership failures or of doctri­nal and organizational lapses in fighting the terrorist war in the Caucasus and Russia.

Today, political, economic, social, cultural, reli­gious, and “hearts-and-minds” issues desperately need attention throughout the Northern Caucasus. President Putin understands this, at least to some degree. However, it remains to be seen whether the newly installed nationalities minister Vladimir Yakovlev, former mayor of St. Petersburg and a political enemy of Putin,[16] and the newly appointed Governor-General of the Northern Cau­casus Dmitry Kozak, a Putin can-do confidante and former Cabinet secretary, are up to the demanding tasks involved.[17]

To address today’s threats, Russia needs to rethink and revamp its anti-terrorism approach, learn lessons from other countries and conflicts, and establish new security structures that are capa­ble of dealing with 21st century terrorism. In such a predicament, one would think that Russia would not look for adventures in the “near abroad” (the other former Soviet republics) and would leave recent democratic achievements intact.

Prisoner of the Caucasus

However, in the days before and after Beslan, Putin and his inner circle overtly questioned the sovereignty of Georgia and her post-Soviet bor­ders. Putin said, “When the Soviet Union col­lapsed, no one asked the Ossetians and the Abkhaz whether they want to stay in Georgia.”[18] Russia is also staunchly opposing the Organization for Security and Co-operation in Europe’s plan for a peaceful settlement of the crisis in Transdniester, a secessionist region in Moldova.

The message is loud and clear: Post-Soviet bor­ders are no longer sacrosanct. Furthermore, in 2001, the Duma quietly adopted a constitutional mechanism for incorporating foreign lands and countries into the Russian Federation.

In Georgia, Russian arms, Transdniester and Cossack volunteers, and Russian peacekeepers under the umbrella of the Commonwealth of Inde­pendent States have been deployed in South Osse­tia and Abkhazia. Russian gunboats have entered Georgian territorial waters without authorization. One even had ultra-nationalist Vladimir Zhirinovsky on board. Zhirinovsky was delivering the gunboat as a gift to the Abkhaz separatist lead­ership.[19] Such events do not happen without the permission of Putin’s administration.

Russian citizenship and passports, freely distrib­uted to the secessionist populations of Abkhazia and South Ossetia, undermine the national iden­tity of the Abkhaz and Ossetians as citizens of Georgia, while these separatist elites benefit from contraband trafficking and are supported with secret Moscow-based funds.[20] Plans have even been laid to reopen a railroad line from Sochi to Abkhazia without Tbilisi’s agreement.[21]

The Russian leadership seems to have a blind spot. By trying to pull South Ossetia and Abkhazia into Moscow’s orbit, the Kremlin may be inadvert­ently strengthening the case of Chechen separatism.

Border Revisions? Since 1992, Moscow has supported sundry separatists—from Transdniester to Abkhazia and South Ossetia to Nagorno–Kara­bakh—for a reason. These moves open the door to revising other borders, especially in areas heavily populated with Russian speakers, such as northern Kazakhstan, Transdniester, and eastern Ukraine.

Russia may also support border revisions in such areas as Nagorno–Karabakh, which could have unpredictable consequences for the 10-year– old Armenian–Azerbaijani cease-fire. Border revi­sions can be held over the heads of uncooperative neighbors like the sword of Damocles. Interna­tionally, this can become a powder keg. Under­mining the territorial integrity of Russia’s neighbors is unacceptable to the U.S. and the European Union, and it is dangerous to Russia itself.

The Kremlin Response After Beslan

Crying over the phantom pains of empire will not protect Russia from terrorism. Instead of revamping, retraining, and reorganizing Russia’s anti-terrorist and security services, Putin has opted for a massive re-centralization of power—despite an outcry from the Russian liberal elites.[22] In doing so, he is taking the country on a path remi­niscent of the Soviet and czarist eras.

Specifically, on September 13, 2004, Putin announced the following measures ostensibly to ensure that Russia is effectively governed:

Regional leaders will no longer be elected by a popular vote. Instead, regional legislatures will approve nominees submitted by the president.

All Duma deputies will be elected through party lists in single-seat constituencies.

A “public chamber” will be established to pro­vide public oversight of the government, par­ticularly of law enforcement and security agencies.

Voluntary people’s patrols, ubiquitous in the Soviet era, will be established and will work in tandem with police to ensure that public order is re-established.

A special federal commission will be set up to oversee the North Caucasus issues.

The government will re-establish a new Minis­try for Regional Policy and Nationalities.

The government will elaborate a system of responses to thwart terrorist threats.[23]

Putin is essentially rebuilding the Soviet state security apparatus and applying the 19th century Russian imperial model to a 21st century state that is riddled with terrorism and corruption. For example, there are also plans to the reintroduce police-issued residence permits, similar to the Soviet-era propiska, to control internal movement of the population.[24]

These measures are unlikely to provide an effec­tive antidote to expanding terrorism in the North Caucasus and Russia, and they reverse democratic achievements of the 1990s. Nostalgia for the Soviet past may beget new authoritarianism, as former Presidents Boris Yeltsin and Mikhail Gorbachev warned in interviews on September 16, 2004.[25]

Reverting to the Past? Putin’s decision to nom­inate governors, doing away with their election, will not only dilute Russia’s developing democracy. It will effectively end administrative ethnic auton­omy, which was adopted by the Bolsheviks after the 1917 coup.

The number of regions—”federation subjects” as they are called in Russia—is likely to be reduced through constitutional changes from 89 to about 30. However, in the 21st century, it is extremely dif­ficult to govern a country that spans 11 time zones from one political center. The information overload and corruption may become severe enough to slow the pace of economic growth. Putin may have to abandon his proclaimed goal of doubling Russia’s gross domestic product by 2012.[26]

It is also counterproductive to undermine the connection of voters and their elected representa­tives by abandoning the single-district system and shifting to elections by party lists.

Establishing an unelected and disempowered “public chamber” to supervise the security services will not solve Russia’s flagging anti-terrorism conundrum. There is no substitute for effective civilian control by the legislative and civilian exec­utive branches. Nor are additional bureaucratic offices, such as the new Ministry for Regional Pol­icy and Nationalities, likely to resolve the systemic problems of the Northern Caucasus.

What Should Be Done

In pursuing the global war on terrorism, the U.S. should attempt to accomplish a number of policy objectives with regard to Russia:

Keeping Russia as a friendly partner in the anti-terrorism coalition;

Cooperating with Moscow to prevent the pro­liferation of weapons of mass destruction, especially preventing terrorists from acquiring such weapons;

Shoring up Russia as a reliable supplier of oil and gas to the world market, in addition to the Persian Gulf states, and keeping the Rus­sian energy sector open to U.S. and Western investment;

Supporting the territorial integrity and inde­pendence of the post-Soviet states of Eastern Europe, South Caucasus, and Central Asia; and

Developing the forces of democracy in Russia, especially supporting civil society and free media.

To advance these policy objectives, the Bush Administration should:

Emphasize to the Russian people, President Putin, and the Russian government that Russia and the U.S. are facing the same enemy, which threatens their national survival, their peoples, and their most cherished values. Presidents Bush and Putin should hold an anti-terrorism summit in the near future to hammer out a joint anti-terrorism action plan. In view of Beslan, President Bush should order a review of U.S. policies on asylum for Chechen lead­ers, Chechen fundraising in the U.S., and the U.S. intelligence community’s contacts with Chechen rebels.

Increase U.S. outreach in the battle for Russia’s hearts and minds, paying particular attention to the younger generations of Russian citizens. Cold War paranoia still permeates the Russian elites. The U.S. Embassy in Moscow is already busy reaching out to Russia’s media, think tanks, and government offices, but more needs to be done on the public diplomacy front.

Expand security cooperation in anti-terrorist force structure, command, control, and com­munications and on techniques for dealing with hostage situations. The Trubinkov–Armit­age Group run by the U.S. Department of State and the Russian Foreign Ministry could coor­dinate cooperation. A joint project, such as neutralizing Shamil Basaev and his organiza­tion, could be undertaken cooperatively. On the U.S. side, participants might include the Departments of State, Defense, and Homeland Security and the CIA. On the Russian side, participating offices might include the Foreign Intelligence Service, Federal Security Service, Emergency Situations Ministry (Russian FEMA), and Alfa and Vityaz units.

Cooperate with Russia, if it so desires, in strengthening transparency and civilian con­trol of the Russian security services. This can be accomplished through expanded contacts between the Duma, the Council of the Federa­tion, and the U.S. Congress. Congress and the Pentagon, as well as think tanks, could con­duct a series of seminars discussing the U.S. experience in this field in Moscow.

Develop a range of joint programs that reduce WMD and terrorist threats to both countries, going beyond the current Nunn–Lugar fund­ing which focuses on storage, safety, and secu­rity. Such programs should actively prevent WMD proliferation to non-state actors. As both countries have an interest in strategic arms reduction and ballistic missile defense, such cooperation can help to transcend Cold War fears. The U.S. and Russia should inten­sify cooperation on joint ballistic missile defense and aggressive non-proliferation to help further reduce Cold War sentiments.[27]

Support the sovereignty and territorial integ­rity of all post-Soviet states. Expand coopera­tion with these countries via NATO’s Partnership for Peace and bilateral military-to-military ties, exchanges, train-and-equip pro­grams, and (where necessary) limited troop deployment. Maintain and expand dialogue with Moscow over contentious issues, such as South Ossetia and Abkhazia, as well as the U.S. presence in Central Asia.

Develop programs that support freedoms of the press and of political organizations, feder­alism and local self-governance, growth of the nonprofit/nongovernment sector, and the rule of law and promote transparent, participatory, and democratic governance in Russia. This can be accomplished through joint activities involving political parties, their institutions, and other nongovernmental organizations, such as the International Republican Institute, the National Democratic Institute, and the National Endowment for Democracy in the U.S. and the Moscow Helsinki Group, Interna­tional Memorial Society, and Glasnost Defense Foundation in Russia. The U.S. should also expanding support of the independent media in Russia in all forms, including print, broad­casting, and Internet.

Conclusion

The U.S. faces a delicate and difficult policy challenge after Beslan. President Putin is taking Russia in the direction of greater centralization, which he believes will make Russia more secure and make it into a greater power. An authoritarian Russia, lacking democratic checks and balances, is likely to pursue a regional and even global foreign policy that increases friction with the United States, its vital interests, and its allies.

The U.S. should do its best to encourage democracy, political pluralism, and media free­doms and dissuade Moscow from becoming increasingly authoritarian or expansionist. It should support Russia’s weaker neighbors, their independence, and their territorial integrity. At the same time, the U.S. should avoid an unnecessary confrontation with Russia while shoring up and expanding U.S.–Russian cooperation in the global war on terrorism.

Ariel Cohen, Ph.D., is Research Fellow in Rus­sian and Eurasian Studies in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.

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[1]Mark MacKinnon, “Beslan Hostage-Taking a Big Success, Warlord Boasts,” The Globe and Mail, September 18, 2004, at www.theglobeandmail.com/servlet/story/RTGAM.20040917.wchech18/BNStory/Front (October 6, 2004).

[2]Olga Craig, “One Little Boy Was Shouting: ‘Mama.’ She Couldn’t Hear Him. She Was Dead,” telegraph.co.uk, May 9, 2004, at www.telegraph.co.uk/news/main.jhtml?xml=/news/2004/09/05/wosse105.xml (October 6, 2004).

[3]Author’s notes on NTV (a Russian television network), 2 p.m. live broadcast from Beslan, September 3, 2004.

[4]Author’s notes on NTV, live news coverage, September 3–4, 2004.

[5]Author’s notes of meeting of Western experts and journalists with President Vladimir Putin, Moscow, September 6, 2004.

[6]Meeting with President Putin.

[7]Author’s interviews with anti-terrorism officials, Washington, D.C., and London, 2003–2004.

[8]MacKinnon, “Beslan Hostage-Taking a Big Success, Warlord Boasts.”

[9]Vladimir Putin, “Vystuplenie prezidenta RF V. Putina na rashirennom zasedanii pravitel’stva RF” (speech of the President of the Russian Federation V. Putin at the expanded meeting of the Cabinet of the Russian Federation), September 13, 2004, at www.sinfo.ru/ru/main/officially/interview/detail.shtml?id=43 (October 6, 2004).

[10]Meeting with President Putin.

[11]Jill Dougherty, “Putin Urges Voters to Support Bush,” CNN.com, October 18, 2004, at www.cnn.com/2004/WORLD/europe/ 10/18/putin.iraq/index.html (October 18, 2004).

[12]Ibid.

[13]However, he authorized a Russian nuclear technology deal to complete the nuclear reactor in Bushehr, Iran, despite Tehran’s support for international terrorism.

[14]Ibid.

[15]SunnahOnline.Com, “Chechnya Relief Fund,” at www.sunnahonline.com/news/important/asia_chechnya_index.htm (October 7, 2004). See also Thomas de Waal, “Europe’s Darkest Corner,” The Guardian, August 30, 2004, at www.guardian.co.uk/comment/ story/0,3604,1293502,00.html (October 7, 2004).

[16]ITAR–TASS, “Ministry for Regional, Nationalities Policy to Be Restored,” September 13, 2004, at www.itar-tass.com/eng/ level2.html?NewsID=1241323&PageNum=0 (October 6, 2004).

[17]“Kozak Appointed Putin’s Envoy to Terror-Hit South Russia,” MosNews.com, September 13, 2004, at www.mosnews.com/ news/2004/09/13/yakovlev.shtml (October 7, 2004).

[18]Meeting with President Putin.

[19]“Georgian Military Ship Pursues Motorboat with Russian Duma Deputies,” Pravda, August 11, 2004, at english.pravda.ru/ printed.html?news_id=13725 (October 7, 2004).

[20]Anton Krivenyuk, “Abkhazians Opt for Russian Citizenship,” The Moscow News, June 26, 2002, at english.mn.ru/english/ issue.php?2002-26-6 (October 7, 2004).

[21]Vladimir Sokor, “Moscow Breaches Sochi Agreement on Abkhazia,” Eurasia Daily Monitor, August 04, 2004, at www.jamestown.org/publications_details.php?volume_id=401&issue_id=3036&article_id=2368350 (October 7, 2004).

[22]For a typical criticism, see Andrey Piontkovsky, “Putinskaya Shinel,” Fond Liberal’naya Missiya, September 17, 2004, at www.liberal.ru/article.asp?Num=213 (October 7, 2004).

[23]Dr. Yevgeny Volk, Coordinator of The Heritage Foundation’s Moscow Office, summarized these measures.

[24]“Gosduma reanimiruyet institut propiski,” Pravda, September 21, 2004, at news.pravda.ru/politics/2004/09/21/67505.html (October 7, 2004).

[25]Steven Lee Myers, “The World—Dark Age; Putin Gambles on Raw Power,” The New York Times, September 19, 2004, Sec­tion 4, p. 1.

[26]Russian News and Information Agency, “President’s Adviser on Doubling GDP,” August 12, 2004, at en.rian.ru/rian/ index.cfm?prd_id=159&msg_id=4704450&startrow=1&date=2004-08-12&do_alert=0 (October 7, 2004).

[27]Heritage Foundation analysts James Jay Carafano, Ph.D., and Jack Spencer contributed to this recommendation.

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RUSSIA’S SOVIET NOSTALGIA POSES SECURITY THREAT

09-29-2004

Much has been reported about Russian President Vladimir Putin’s September 6 meeting with Western journalists and academics, just days after the tragedy at Beslan. What many of the reports have missed, however, was Putin’s overt questioning of post-Soviet borders.

Georgia, the Kremlin’s lead sparring partner of late, was clearly the main target of these statements. "No one asked Ossetians and the Abkhaz whether they want to stay in Georgia,” Putin declared.

This declaration is no mere policy posturing. Separatists have allegedly used Russian arms in both Abkhazia and South Ossetia, and reports have circulated of Cossack and Trans-Dniester volunteers heading off to fight in both regions. Russian ships also reportedly enter Georgia’s territorial waters without authorization. In addition, Russia has granted citizenship to large numbers of Abkhaz and Ossetians, while economic ties through investment or illicit trade have tacitly supported the leadership of these breakaway regions.

The Kremlin’s policy in Georgia could possibly establish a precedent that may be applied to other territorial/border/ethnic minority issues, such as northern Kazakhstan, a heavily Russian area, Russian-speaking eastern Ukraine, and even Nagorno-Karabakh. In those potential instances, the possibility of border revision could be held above the heads of uncooperative neighbors like a sword of Damocles. For this reason, Moscow has supported various separatist causes throughout the former Soviet Union, ranging from the Trans-Dniester enclave in Moldova to Abkhazia in Georgia and Nagorno-Karabakh in Azerbaijan.

Security officials with whom our group of experts met in Moscow pointed out that, nearly 13 years after the demise of the Soviet Union, Russia has still not secured its borders with neighboring states. “We have not even decided whether we need to protect the borders of the Russian Federation, or [the frontier] of the former Soviet Union,” one senior official said. The Beslan tragedy – which took place inside the Russian Federation – has helped focus the Russian leadership’s attention on this issue.

At present, it appears that the Kremlin wants to pull South Ossetia and Abkhazia into Moscow’s orbit. However, Putin’s administration should tread carefully: exerting greater force over the two Georgian regions could inadvertently strengthen the case for Chechen separatism. Acknowledging the right of South Ossetians and Abkhaz to determine their own affairs, while seeking to deny the Chechens the same right, would expose the Kremlin as hypocritical.

Putin’s actions and rhetoric in the aftermath of the Beslan tragedy do little to generate hope that Russia will contain the twin scourges of separatism and terrorism in the near future. For one, the Russian president has been reluctant to admit any missteps by his administration, even while recognizing mistakes made during the Soviet era. Putin acknowledged, for instance, that Soviet ideology suppressed real ethnic conflicts, and that up to 2,000 such conflicts throughout the former Soviet Union are frozen or simmer on. But the president’s own decision to nominate rather than to elect regional governors will do little to correct this legacy within the Russian Federation. It will effectively do away with the concept of ethnic autonomy, which survived czarist imperialism, and was embraced by the Bolsheviks after the 1917 revolution.

The poor performance by Russian intelligence and security forces before and during the Beslan hostage tragedy begged a question about Russia’s cooperation with the West in fighting terrorism. In response, however, Putin launched a long tirade about the roles that the Soviet Union and the United States played over the past 25 years in turning Afghanistan into a terrorist haven.

Putin places much of the blame for Russia’s misadventures in Chechnya on the West. "I have been tracking the issue for several years and have made up my mind", he said. The Western powers are interested in keeping Russia down and "involved in its own problem" by supporting Chechen separatism, Putin believes. Both the United States and Great Britain have granted political asylum to Chechen separatist leaders, he said, and Western intelligence services maintain contacts with Chechen fighters.

Putin decried the horrible conditions under which Stalin exiled the Chechens 60 years ago, and termed the first Chechen war, launched by predecessor Boris Yeltsin in 1994, as “probably a mistake.” But what about the second war which he started in 1999? There was no discussion. Nor, he maintain, did the Chechen war have anything to do with the hostage-taking in Beslan.

Today, Russia is facing its demons in Beslan, in Chechnya, in the northern and southern Caucasus. These are trying times for Russia, its neighbors, its president, and its people. The question remains: can the Kremlin shrug off its nostalgia for the Soviet past? And with it, recognize the right of neighboring states to their borders? The security of Eurasia and Russia itself depends upon it.

Going Soviet: Putin and the Beslan Response

09-24-2004

Two days after the Beslan tragedy ended in a fiery blood bath, a group of Western experts and journalists, including this author, met with Vladimir Putin for tea in his state residence in Novo-Ogarevo. It was a grim affair.

The historic significance of the location, where Mikhail Gorbachev and the leaders of nine Soviet republics made a last ditch attempt to save the USSR was obvious to most people present.

Before entering the room, the delegation watched the news on a huge plasma screen in the billiard room. Images of children buried in small coffins and harrowing scenes of screaming mothers were broadcast unfiltered, triggering difficult questions. What went wrong?

First, Russian intelligence networks in the North Caucasus failed to identify preparations for the attack or provide timely intelligence to intercept hostage takers before they entered the school.

The failure of the rescue operation was obvious for all to see. The top military commander said that "there was no planning to rescue hostages" and that the main spetsnaz [special forces] force was training 30 kilometers away – 48 hours after the hostage taking took place. Even if negotiations were underway, the rescue force had to be on location and ready to attack at any moment, especially at night.

The hostage takers dictated the operational tempo: they were able to impose the rescue timing by setting off the explosives and by putting up a resistance stiff enough to last 10 hours: from 1PM to 11PM, when most of the militants were killed.

As it was known that there were explosives in the building, the only chance to save the children if negotiations failed was to overwhelm the terrorists in a massive, targeted attack that would have eliminated most of the perpetrators of this crisis in the first five to 10 minutes. Such an operation would have made use of the advantages inherent to an attack force equipped with night vision goggles, stun grenades or knock-out gas.

Nothing of the kind happened.

Appallingly, hundreds of armed locals were not removed from the scene. They interfered with the rescue attempt, such as it was, and possibly hurt both hostages and rescuers with their gunfire. No civilian-free zone was established around the school house, allowing the terrorists to pick off civilians outside the building.

Nor was an effective secure perimeter enforced around the school. Escaping terrorists broke out of the building and engaged in sporadic fire fights until 4AM the next morning. The Russian anti-terrorist forces at the scene did not wear modern ballistics and flame-resistant Kevlar helmets or wear bullet-proof vests. The famed Alfa and Vympel units lost 10 men in the operation – the groups’ highest casualty rate since Soviet days. Local Northern Ossetian OMON [special assignment militia], who helped out with the rescue attempt, were barely trained for the demanding mission.

This was the fifth massive hostage taking in the past 10 years, yet the Russian security forces demonstrated that they had learned little from similar debacles at Budyonnovsk, Pervomaiskoye, Kizlyar, or Moscow’s Dubrovka Theater.

The question of why this latest operation had proven such a shambles overshadowed our September 6 meeting with Putin. Unfortunately, however, it was a question that went unanswered. Our host had other priorities on his mind, as we found out later.

Since the collapse of the Soviet Union, little attempt has been made to reform Russia’s security services. These are still a post-communist, quasi-totalitarian political control mechanism – aggravated by a pervasive corruption that was acknowledged by President Putin himself and other senior Russian officials with whom our group met. These units are not what Russia needs to confront modern local and global terrorism.

Jihadi terrorism may be a totally new and insufficiently understood challenge for Russia, different from the Cold War threats of "Western imperialism" or internal dissent. To address these threats, Russia’s anti-terror approach needs to be rethought and revamped. New security structures need to be put in place which will prove capable of dealing with terrorism, and adapting to the security challenges of the 21st century.

But more than this is needed. Ethnically driven insurgencies are hardly new in the Caucasus or anywhere in the former Russian and Soviet empire. Political, economic, social, cultural, religious, and "hearts-and-minds" issues are in desperate need of attention throughout the Northern Caucasus. It remains to be seen whether Vladimir Yakovlev, the newly-elected head of the Ministry for Regional Development that oversees policy on nationalities, and Dmitry Kozak, a Putin can-do confidante and former cabinet secretary, who was recently appointed President’s Plenipotentiary to the Southern Federal District, are up to this demanding task.

Instead of revamping, retraining and reorganizing Russia’s anti-terrorist and security services, Putin has opted for a massive re-centralization of power. In doing so, he is taking the country back to a future reminiscent of the Soviet and czarist eras.

In this time of crisis, the Russian president has chosen to empower himself and his inner circle, not the people of Russia. Appointing Russia’s 89 regional governors instead of submitting them to popular elections, and establishing a toothless "public chamber" to supervise the security services, instead of relying on civilian control by the legislative and executive branches of government, will not solve Russia’s terrorism problems.

As former Russian President Boris Yeltsin and Soviet President Mikhail Gorbachev warned in separate, September 16 commentaries in Moscow News, nostalgia for the Soviet past may beget new authoritarianism. And authoritarianism is an unlikely antidote for terror.

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Putin at War: Unscripted

09-20-2004

Three days after the tragedy of Beslan ended, we sat for over three and a half hours with Vladimir Putin. Between picking up the pieces of the worst Russian terror attack to date and planning a massive power consolidation, the energetic Russian leader still found time to meet with leading Western scholars and journalists, answering our questions at length, totally unscripted.

Unfiltered, Putin was a strange mix of tough pragmatism and Soviet nostalgia. He was shaken by walkie-talkie intercepts of terrorists shooting children in Beslan "for fun" and by the horrible conditions in northern Russian camps to which Stalin exiled the Chechens sixty years ago. "The first Chechen war was probably a mistake," Putin said. But what about the second war which he started in 1999?

He repeatedly bemoaned the passing of the Soviet "great power" -- thirteen years after its demise. He recognized that Soviet ideology suppressed real ethnic conflicts, and that new secure borders have not been erected. Yet he also questioned the sovereignty of neighboring countries such as Georgia. Today, Russia is slowly absorbing its constituent parts, Abkhazia and South Ossetia, while thwarting Chechen bid to secede.

Putin missed an opportunity to reach out to the U.S. after the horror of Beslan. In response to my question, he launched a long tirade about the Soviet Union and US releasing the genie of terror out of the bottle. He believes that the Western powers are interested in keeping Russia down by supporting Chechen separatism, pointing out that Great Britain and the U.S. granted political asylum to some Chechen leaders, and that Western intelligence services maintain contacts with Chechen fighters.

As an intelligence professional, Putin should appreciate the difference between information gathering and operational support. Instead, he overstated the alleged desire of the West to create an irritant for Russia. In an earlier speech to the nation, Putin went further, saying that foreign powers are interested in dismembering Russia and neutralizing it as a nuclear power. Nevertheless, he is open to anti-terrorism cooperation, and indicated that "professionals" on both sides are engaged in just that.

Putin left enough common ground to believe that cooperation with the West in the war on terror is possible. He called President Bush a "good, decent man", a reliable and predictable partner, someone he can "feel as a human being". From his remarks, it is clear that he genuinely likes George Bush and wants to see him re-elected, something the media present at the event studiously ignored. After all, isn’t it John Kerry that foreign leaders are supposed to support?

Putin mentioned three times that Russia, the U.S. and Western Europe belong to "Christian civilization and European culture," to which a prominent French writer for Le Monde commented that maybe Russia does, but not the U.S.

Putin has the global geopolitics right, especially when it comes to connections between the Chechen and other radical Islamist terrorists in the Northern Caucasus, and to global jihadi sources of funding, political-religious indoctrination, and volunteer recruitment and training.

He criticized the West for allowing fundraising for the Chechen cause from Michigan to London to Abu Dhabi, but seemed to be unaware that the U.S. Treasury recently busted Al Haramain, a Saudi global "charity" connected to Bin Laden, which was involved in supporting the Chechens.

Putin also correctly noted that the West shouldn’t want to see terrorists come to power anywhere on earth, should not demand that anyone negotiate with child killers, and that it is not in Western interests to see the Russian Federation dismembered.

It is the Russian president’s actions after Beslan, more than his rhetoric, which point to missed opportunities in the wake of Russia’s 9/11. Instead of revamping, retraining and reorganizing Russia’s anti-terrorist and security services, Putin has opted for a massive re-centralization of power. In doing so, he is taking the country back to a future reminiscent of the czarist era. Putin essentially is applying the 19th century Russian imperial model and the Soviet security state apparatus to a 21st century state rife with terror and corruption.

Nostalgia for the Soviet past may beget new authoritarianism, as Presidents Boris Yeltsin and Mikhail Gorbachev warned in their September 16, 2004 interviews. In this time of crisis, the Russian president has empowered himself and his inner circle, not the people of Russia. Presidential appointment of Russia’s 89 regional governors instead of popular elections, and the establishment of a disempowered and toothless "public chamber" to supervise the security services instead of effective civilian controls will not solve Russia’s terrorism problems.

The security services that failed to prevent or resolve the Beslan tragedy and that Putin has not reformed after five years in office are still a Soviet-style, quasi-totalitarian political control mechanism. They are not the hat Russia needs to confront modern local and global terrorism.

Islamist jihadi terrorism is a new enemy -- not the old enemy of the Cold War. In response, Russia’s anti-terror approach needs to be rethought and revamped, with new structures for the 21st century, capable of dealing with global terrorism, put in place. A new anti-terror doctrine and effective organizational structure to coordinate intelligence and operations must be created. The U.S., Great Britain and Israel can offer assistance. The time for cooperation in the face of a common enemy is now.

A real challenge for the Bush Administration, however, is Russia’s questioning the sovereignty of Georgia in the Caucasus, and playing fast and loose with her post-Soviet borders. In addition, by trying to pull South Ossetia and Abkhazia into Moscow’s orbit, the Kremlin may be strengthening the case of Chechen separatism. This policy opens the doors to revision of other borders, such as Northern Kazakhstan, Russian-speaking Eastern Ukraine, and even Nagorno-Karabakh. Undermining the territorial integrity of neighbors is unacceptable to the U.S., and dangerous for Russia.

When in crisis, countries and leaders fall back on their time-tested political instincts and patterns. Putin’s re-centralization proves that Russia after its barbaric 9/11 is no exception.

A Strategy to Democratize Belarus

03-30-2004

As the October 2004 parliamentary elections in Belarus are becoming a priority for democratic forces in the country and for Western friends of Belarussian democracy, it is the time to act.

It is time to consolidate opponents of the status quo, reach out to the people, and give them hope. This is the task, first and foremost, for the Belarussian opposition, but also for those who understand that at stake is more than just the future of Belarus, important as it is. At stake is how willing--or unwilling--the West is to fight for liberty.

If the West is ready to defend freedom, what is a better place to start than its own home base--Europe? At stake is our own future. At stake in Belarus is how we handle rogue regimes--and friends of rogue regimes. Alexander Lukashenka was elected president in 1994 and then engineered his own re-election in 2001 with major violations of the Belarussian constitution and international democratic norms. The opposition refused to recognize the legitimacy of those elections.

In 1996, Lukashenka dismissed the National Assembly and the Constitutional Court and imposed his own constitution, further alienating the Belarussian elite. He has supported every dictator from Kim Jong Il, to Yasir Arafat, to Saddam Hussein.

In the case of Belarus, it is important to recognize that hard-line elements of the Russian government were strongly supporting Mr. Lukashenka and his pro-Russian rhetoric and policy. However, many in the Russian leadership have grown exasperated with Lukashenka’s antics, and even those with lower democracy standards may finally recognize that the dictator is becoming a liability for Moscow.

The Struggle for Freedom
The struggle for freedom in Belarus is greater than Belarus itself. It is about Russia helping, tolerating, or opposing democracy next year. It is about setting a good example for Russia and Ukraine. And it is also about preventing the process of rebuilding the Soviet empire--regardless of how nostalgic some people get in Moscow.

After the collapse of the Soviet Union, Belarus has remained a Jurassic Park of authoritarianism in the heart of a democratizing Europe. However, it is also a huge lab in which retrograde forces of the old Soviet regime are attempting to develop new models of repression, which they may apply in Russia, and possibly Ukraine. It is not accidental that the rumors of extending presidential terms in violation of existing constitutions are repeatedly floated and then vehemently denied--which makes them ever more credible--in Minsk, Moscow, and Kyiv.

It is true that Belarus was one of the most Soviet among all Soviet republics. It is true that the anti-communist and nationalist movement there was among the weakest. However, I do not want to blame the people of Belarus for what happened next.

There are other examples of totalitarian and authoritarian regimes in the former Soviet camp, where the pre-reform conditions were appalling. Romania, Bulgaria, and Ukraine had all started from a point of severe disadvantage in comparison with the Czech Republic and Estonia. Nevertheless, their achievements are quite remarkable. Romania and Bulgaria are in NATO and on the way to EU membership, and in Ukraine, the democratic opposition leader Victor Yushchenko consistently remains the most popular presidential candidate.

If Russia’s main priority in Belarus--safe and secure gas transit--is assured, it certainly should be no problem for Moscow to cooperate with the West to ease Lukashenka out. Can Belarus become a test case of Russia’s policy of integration with the West based on shared democratic values? In a way, Belarus becomes a litmus test on Russia’s future relationship with the West.

Lukashenka’s Disastrous Performance
The performance of Belarus under Lukashenka, judged by objective international criteria, has been a disaster.

• Inflation is rampant.
• There has been no meaningful privatization.
• Agriculture is still collectivized.
• Seventy percent of the country’s economic output of state-owned enterprises piles up in warehouses, as no one is willing to buy Belarussian goods.
• NGOs are denied registration.
• The country’s human rights track record is so abysmal that the U.S. State Department’s human rights report uses language reserved for totalitarian states.
• The regime has been cracking down on political opposition, independent media, and civil society activists.

However, Lukashenka’s repression may be sowing the seeds of his own demise. The recent events in Georgia, some fatigue in Moscow with Lukashenka’s escapades, and--most important--his utter failure to provide Belarussians with a road to a decent future may indicate that 2004 will be the year in which he could return to the kolkhoz--or, even better, be investigated and tried for abuse of power, for the disappearances and possibly murder of his political opponents, and for other crimes. Another solution for Lukashenka would be political asylum in North Korea, Syria, or Cuba--albeit those regimes may not last very much longer either.

The historic experience of the Soviet Union shows that pro-independence forces, from Central Asia to Moldova, learned from the leadership of the Baltic States. Once the communist leadership failed to stop the surge to freedom in Vilnius, Riga, and Tallin, others followed in Kyiv and Baku.

As revolutions in Georgia and Serbia have demonstrated, political protests tied to elections--with appropriate preparation through political activities, public education, and international support--may be the magic mix that makes dictators disappear. The freedom bug is contagious indeed.

What Should Be Done?
To facilitate Lukashenka’s road from the presidency back to the farm, or from Minsk to Pyongyang, the opposition and supporters of Belarussian freedom should take several joint steps. These include:

• Unification, or at least sustained cooperation, of the three main groups comprising Belarus’s opposition. If over 200 Belarussian opposition political parties, organizations, and NGOs are working at cross-purposes, the Lukashenka regime will play one against the other, rendering them ineffective.
• Development of a joint strategy, program, and projects, nominating single viable opposition candidates in each district. The demise of the liberal parties in the Russian December 2003 Duma elections indicates that refusal to cooperate leads to premature political death. Personal and group ambitions should wait till the dictator is no longer there.
• Severe public criticism of violation of election procedures, criticized in the past by the Organization for Security and Cooperation in Europe (OSCE), which should demand that the electoral laws are amended per past OSCE recommendations and that the OSCE elections observation mission is allowed to deploy in Belarus well ahead of the October 2004 elections.
• Preparation for declaring the elections illegitimate in case of election falsification and other violations.
• Expanding a domestic and international campaign to publicly investigate the disappearance of Lukashenka’s political opponents; appointment of an international public tribunal to that end; and initiation of criminal procedures in Europe and the U.S. against those in the president’s circle who ordered and participated in the murder of opposition politicians and journalists.
• Building up a democratic opposition youth movement and not leaving the field to the pro-Lukashenka BRYU (Belarussian Republican Youth Union).
• Questioning the idea of a joint army with Russia. Belarussian boys should not be sent as cannon fodder in Chechnya, and Russian soldiers should not be posted on the Polish-NATO border. This is a prescription for more, not less, instability in Europe. The consequences of such Russian-NATO friction are hard to predict.
• Preparation of a turn-out-the-vote campaign for parliamentary elections, focused on youth and urban voters who traditionally mistrust Lukashenka.
• Reaching out by Europe and the U.S. to the voters of Belarus through significant and material support of the democratic opposition as well as using the tools of public diplomacy, such as international broadcasting from countries around Belarus on the AM band by opposition radio stations, launching opposition TV broadcasting, and expanding people-to-people and educational exchanges.
• Consultations with Russia regarding a possible change of regime that will make Belarus more predictable and will benefit Russia by eliminating the need to subsidize the Belarusian economy through below-market-price natural gas, which provides over $2 billion a year to the inefficient state sector, and by making the transit route for Russian gas to Europe more stable and less prone to interference by Minsk. Russia does not need a basket-case economy led by a basket-case dictator as an albatross around its collective neck. Russians should know that if integrated, the bacilli of Belarussian authoritarianism may exacerbate their country’s own tendency to limit freedom.

Conclusion
The business of freedom in Eastern Europe is not over. Belarus, just like Ukraine and Moldova, has not fully completed its transition from the Soviet system to democratic capitalism. It is the duty of neighbors near and far to help complete the process and to reach the safe coast of democracy, security, and prosperity.

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Putin Sacks the Cabinet

02-26-2004

On February 24, three weeks before the March 14 Presidential elections, Vladimir Putin dramatically fired his Prime Minister, Mikhail Kasyanov, as well as his entire cabinet. All the world knows who the next Russian President will be, but the real game in Moscow today is: who will Mr. Putin appoint to be the next Prime Minister? Under the law, the President will nominate the Prime Minister within two weeks after the elections.

A PR Ploy?

Firing the Kasyanov cabinet was an attempt to resuscitate public interest in an otherwise boring presidential election in which Putin is a shoo-in -- with 80 percent of popular support -- and other candidates are threatening to quit the race.

However, sacking an adequate cabinet prior to victory in the presidential election showed that Putin, a lawyer by training, may understand the letter of the Constitution, but not its spirit. Reports of Putin’s personal dislike of Kasyanov, the latter’s ties to the industrial tycoons, or the President’s desire to break ties with Yeltsin holdovers do not justify the rash move. The decorum of democracy -- the respect of the people’s will -- is as important as popularity in the polls. In a democracy, a candidate does not appoint a new cabinet before the people have returned their verdict.

Powerful position

According to the 1993 Constitution, Russia is a mixed presidential-parliamentary republic. While the President is elected, the Prime Minister is appointed by the President and approved by the Duma, the lower house of the legislature. Similar to the French Premier, this is the second most important job in the country, though, unlike in France, the Prime Minister is not the leader of the majority coalition.

Officially, the Prime Minister -- or Chairman of the Government, as it has been known since czarist times -- is the second most important job in the country. However, in reality, a strong presidential chief of staff may be politically more powerful.

The Prime Minister runs everything but the “power” ministries; those, including Defense, Foreign Affairs, and police and security services report directly to the President. The Prime Minister also has authority over economic and social policy, which includes the ability to make key decisions in the dominant energy and natural resource sectors. Prime Ministers Victor Chernomyrdin (1993-1998) and Mikhail Kasyanov (1999-2004) have left particularly strong imprints on how the Russian economy is administered.

Beyond economic management, there is another important function the Prime Minister provides. He is the second-in-command and stand-in for the president. Like the American Vice President, the Prime Minister also has a key role as a constitutional and temporary successor for the President, if the latter is incapacitated.

If the President does not return to office after a temporary absence, the Prime Minister would become acting president for up to three months, after which new elections would take place. This also means control of the “football” – a device capable of launching Russia’s mighty nuclear arsenal against her foes. The naming of the next Prime Minister will have internal, political, and economic repercussions, as well as consequences in national and global security.

So, you want to be the Prime Minister?

The key ingredient to getting the top job in Russia is gaining the trust of President Putin, who relies on former colleagues from his native St. Petersburg more than representatives of the so-called Old Moscow faction, or “Yeltsin family.” Whereas Yeltsin ran through seven Prime Ministers during his two tumultuous presidential terms, Putin has persevered with one: Kasyanov. Whoever Putin appoints will be a key player in efforts to modernize the Russian economy and double the GDP, as Putin promised to do in this 2003 State of Russia address.

The current leading candidates for Prime Minister of Russia include:

• Victor Khristenko, who until now was a Deputy Premier in charge of the oil and gas sector – the main currency earner for the Russian state. He also played a key role in Commonwealth of Independent States (CIS) policy. A competent technocrat, Khristenko was well known in Washington as Russia’s Governor at the International Monetary Fund and conducted debt negotiations with the Western. However, Khristenko is considered politically weak. He hails from the Urals, and has few St. Petersburg roots. He is not likely to be anointed as Putin’s presidential successor in 2008.
• But if the rumors are true, Sergey Ivanov is. The Defense Minister, trusted ally of Putin, and former KGB general has no significant economic experience. Lately, he has received much criticism for his performance as Defense Minister. Moreover, recent military maneuvers -- in which reportedly up to 50 percent of missiles malfunctioned at launch -- lack of success in Chechnya, and the slow pace of military reforms may still disqualify him from the position.
• Dmitry Kozak, a lawyer, is a close friend of President Putin and First Deputy Chief of his Administration. He is a tough political operator and has an excellent track record of political management.
• Igor Shuvalov, a lawyer, diplomat, and former Kasyanov Cabinet Chief of Staff, is another Deputy Chief of Presidential Staff. He is in charge of economic planning in the Kremlin.
• Alexei Kudrin, Deputy Premier and a capable Finance Minister, is considered too close to the liberal economists’ faction led by the chairman of energy monopoly RAO UES Anatoly Chubais, who was the architect of the unpopular privatizations of the 1990s. Kudrin, from St. Petersburg, is considered a poor manager and is politically weak. To quote Chernomyrdin, the Prime Minister must have “big fists and loud voice.”

What Washington Should Do?

When the new Russian Prime Minister is announced, the Bush Administration should establish good working relations with him, as it did with his predecessor. Specifically it should:

• Agree on a framework for U.S. companies’ participation in the oil and gas projects;
• Emphasize importance of sovereignty of the New Independent States; and
• Express concerns with backsliding in the rule of law and selective application of justice.

In Moscow, the selection of a Prime Minister remains the best game in town. Putin’s choice will indicate Russia’s policy direction after the presidential elections.

Facing the Russian Rhetoric in Eurasia

02-25-2004

Vladimir Putin sent shivers down the spine of CIS leaders on February 12 when he declared the demise of the Soviet Union a "national tragedy on an enormous scale." The nostalgia for the collapse of the Soviet empire was genuine and not pre-election rhetoric: "The breakup of the Soviet Union is a national tragedy on an enormous scale," from which "only the elites and nationalists of the republics gained," Putin said in a nationally televised speech. Is Russia going to operationalize this nostalgia? Will a new robust policy in the CIS go beyond traditional diplomacy? What responses CIS states will pursue? And what options Washington has to counter this rhetoric?
BACKGROUND: When Secretary of State Colin Powell landed in Moscow on Monday, January 26, after attending Mikheil Saakashvili’s inauguration, he was facing an atmosphere decisively different than the Georgian celebrations. Over the last several months, Russian leaders have sent signals indicating a less cooperative stance in the CIS. Defense Minister Sergey Ivanov has called 2004 a year to reassert Russia’s position in the CIS. In a speech to the Munich Security Conference in February, Ivanov threatened to pull Russia out of the Conventional Forces in Europe Treaty, which will increase Russian military deployment in the Caucasus. Russia deployed elements of the air force in the new base in Kant, Kyrgyzstan, and made bases in Tajikistan permanent. Russian energy monopolies such as GAZPROM and RAO UES and other Russian companies are on an acquisition spree from Lviv to Bishkek.
The brewing disagreements between Moscow and Washington over the future of the Russian military bases in Georgia and presence of U.S. military instructors there, which Powell attempted to resolve, signal what is coming. The fight for the future of Baku-Tbilisi-Ceyhan main export pipeline and for U.S. military presence in Kyrgyzstan are other issues on the horizon.
The Russian Duma December 2003 election results clearly indicate that the mood of Russian elite is shifting. Great Power rhetoric is back in vogue. Last December, the big winners were the socialist/nationalist newcomer Rodina (Motherland) and Vladimir Zhirinovsky’s Liberal Democrats. Both have an aggressive agenda of “defending” Russian-speakers, “people who belong to Russian culture”, or “feel affinity to Russia” in the words of Rodina leader Dmitry Rogozin.
Russia’s neighbors no longer write off imperialist statements as an election ploy. Implications are ominous for Northern Kazakhstan, Eastern Ukraine, Georgia, and even Azerbaijan and Turkmenistan. “Putin’s speech was a clear and unambiguous signal to all of us,” a senior Kazakhstani leader told the author. In particular, Rogozin’s message of nationalization at home and nationalism abroad, high taxes, protection of co-ethnics, and Russian tanks rolling through Lithuania to ensure an extra-territorial corridor to Kaliningrad, caused consternation in many capitals in the region. Such foreign adventures would cost a fortune, and are a prescription for derailing Putin’s goal of doubling GDP by 2010.
Zhirinovsky doubled his vote to 11.6 percent with slogans such as “We are for (ethnic) Russians, we are for the poor”. Before the elections he declared that Chechnya should be a taboo in the media. Instead, he suggested leaving it to the secret police and using death squads to kill off entire Chechen villages. He called for establishing a monarchy but would settle for an elected czar – President Putin.
Three parties represented in the Duma, the communists, LDPR and Rodina, have positions which are more nationalist than the official line of the Putin administration. However, the two liberal parties: Yabloko and Union of Right Forces were wiped out in the elections, and will not provide a political balance to the hard-liners.
Russian observers such as Dmitry Oreshkin of the Merkator Group, Alexei Makarkin of the Centre for Political Technologies, and Vyacheslav Igrunov, former deputy chairman of the State Duma Committee for CIS Affairs have expressed a mixture of support and anxiety about this nationalist tide. According to Nezavisimaya Gazeta, they consider Russian policy expensive and inefficient. Moscow keeps ignoring the former republics’ orientation towards Europe and the United States and their greater involvement in NATO and the EU. “Russia today is pursuing an inflexible policy in the post-Soviet area and this is partially destroying the fruits of what has been done. If this continues in the future, Russia will lose its position,” Igrunov said.
IMPLICATIONS: Putin’s changing rhetoric, supported by a cackle of politicians and experts, is caused by the deep unease in the Russian politico-military elite with the growing U.S. presence in Central and Eastern Europe, the Caucasus and Central Asia. However, U.S. deployment in that part of the world is not directed against Russia, but is rather a result of a changing global footprint in the war on terrorism.
Access to Afghanistan and preemption of the rise of militant Islam in Ferghana Valley is more important today than a tank division in the Fulda Gap. This is something the Pentagon needs to make clear to Moscow. Sergey Ivanov said in Munich that he is willing to expand military-to-military contacts with NATO. U.S. should take him at his word. Putin does not need neo-imperialist rhetoric to consolidate his already firm grip on power or to placate the siloviki. This deeply felt sentiment may become particularly dangerous as the U.S. is preoccupied with the conflict in Iraq and November 2004 Presidential elections. The possibility of rush Russian moves in the Caucasus and Central Asia between now and January 2005 is growing.
Russia also enjoys a massive budgetary surplus of over $70 billion, with oil prices showing no signs of declining. Politicians everywhere, but especially in oil-producing countries with weak parliamentary and civil society controls, tend to use excess funds for their favorite geopolitical and military undertakings.
The Washington policy makers in the State Department, the Pentagon and National Security Council, however, are deeply apprehensive of the specter of Russian hegemony in its former imperial domain. They are likely to stand up to Russian neo-imperialist rhetoric while attempting to maintain reasonably good U.S.-Russian relations. Russia is likely to keep in mind that its relations with Europe have soured over the EU objections to the Russian membership in WTO. Putin is exasperated with many European positions, thus risking Russia’s isolation.

CONCLUSIONS: The swing away from democracy and towards authoritarian political controls also aggravates U.S.-Russian relations. Many among champions of exporting democracy in Washington believe that the Georgian revolution may be a model to dissolve dictatorships in other parts of the former Soviet empire, where the surge of freedom, started in 1989 with the collapse of the Berlin wall, has not been completed. NSC and the State Department, including Secretary Powell, however, grapple with the fact that democratization in the CIS is only a part of the equation. There are other important U.S. strategic priorities on the agenda, such as keeping Russia in the coalition against global terrorism, and assuring access to Central Asian military bases and to energy resources of Eurasia.

The Bush Administration is likely to face a more assertive Russian policy in the Caucasus and Central Asia. An U.S.-Russian friction, such as the one over Georgia, may become a major irritant in U.S.-Russian relations, which have improved after 9/11. Putin’s good judgment and U.S. resolve will make the difference between progress and failure in the U.S.-Russian relations.

The Kremlin That Killed Kyoto

12-16-2003

MOSCOW, Russia -- Andrey Illarionov, Russian President Vladimir Putin’s libertarian economic adviser, almost single-handedly engineered the Kremlin’s commitment to kill the Kyoto Protocol -- a climate control treaty heavily promoted by the European Union and environmentalist movement. UN Secretary General Koffi Annan called upon Putin last Thursday to ratify the treaty. Without the Russian and American signatures, the Protocol is dead in the water.

The Protocol is purported to limit global warming through curbing carbon dioxide emissions at a cost deemed unacceptable for Russia. Illarionov used Putin’s stated policy goal -- to double Russia’s GDP by the year 2010 -- and the staggering cost of Kyoto’s implementation to convince his boss that the Protocol is dead meat.

Russia would need to spend up to 4.5 percent of its GDP to comply with Kyoto, Illarionov told me in the Kremlin. "When Deputy Minister of Economy said recently that Russia is still negotiating, I corrected him saying that he reflected the Russian position in August. Things are different in December."

Putin even joked in October that the global warming will "cut fur coat costs and improve wheat yields." The joke made the green lobby… well, green. Jokes aside, Russia is responsible for 17 percent of the global CO2 against the U.S.’s 35 percent based on the baseline year 1990. Today, Russia is responsible only for 8-9 percent, as many smokestack industries collapsed, allowing Russia to trade in "hot air" quotas. However, the Russian economy is only 4 percent of America’s. Russian GDP after five years of robust growth is only $400 billion against U.S.’s $11 trillion.

Deft Bureaucratic Politics

Initially, when the Protocol was initiated, Russia believed it stood to benefit from carbon dioxide emissions trading because its current CO2 production is 30 percent lower than the baseline year 1990 due to the extinction of many Soviet-era industrial dinosaurs. There is plenty of room in Russia to improve environmental performance, reducing emissions even further -- and increasing an incentive for emission trade.

However, deft bureaucratic politics by treaty opponents have reversed the initial commitment to ratify the protocol. On October 1, Illarionov gathered in Moscow the World Climate Change Conference, at which leading Russian and Western Kyoto opponents voiced their concerns.

Professor Kirill Kondratyev of the Research Center for Ecological Studies in St. Petersburg claimed that the "science behind the Kyoto Protocol is still highly uncertain, and reducing greenhouse gases will have little or no impact on climate change."

Richard Lindzen, Sloan Professor of Management at MIT added that "Climate change is inevitable as a result of natural processes and regardless of human factors… Kyoto… will have an insignificant impact on climate. This is true even if the climate change in the past century has been significantly affected by humanity, or that the model projections (of global warming) are correct."

Margo Thorning, director of International Council for Capital Formation, (Brussels) stated that "promised emission reduction targets for the second period of the Protocol (past 2010) to the range of 60-70% lower than the current level will hit the Russian economy very hard, including job losses and lower living standards. Other experts pointed out that when Europe was considerably colder -- in the eighteenth and first half of the nineteenth century, it was infested with malaria. Economic and technological progress allowed eradication of mosquito-infested swamps, while better medicine took care of the sick.

Still, supporters of Kyoto point to the warming up of harsh Russian winters: some birds stopped migrating and the areas infected with viruses of West Nile fever and the Congo-Crimean fever -- another hemorrhagic disease -- have expanded 300-400 kilometers north.

Four Reasons

Russia has rejected Kyoto for four reasons which combine business and geo-economics.

First, it did so because U.S. refused to ratify, thus hitting hard the value of emission trading quotas. Russia stands to make much less from hot air trading than initially expected.

Second, Moscow is fuming at the treaty exemptions India and China have received. The two giant states are among the world’s biggest polluters and, increasingly, Russia’s industrial competitors.

Third, Russian smokestack industries -- such as ferrous and non-ferrous metals, autos, and oil -- are all standing to lose if the Kremlin signs Kyoto. However, RAO UES, the Russian state-controlled eleven time zone electric grid monopoly, and the state-owned powerful nuclear ministry MinAtom, which also supplies nuclear reactors to the Iranian mullahs, are eager to sign Kyoto.

Last, conspiracy-minded Russians are suspecting that Kyoto has become a tool for the EU bureaucracy to limit U.S. and Russian economic growth and reduce Russia to a raw materials "appendage" for Europe, especially as a giant natural gas tank.

Kirill Yankov, the young and dynamic Deputy Natural Resources Minister, also believes that Kyoto, if ratified, would breed yet another layer of bureaucracy tasked with issuing "greenhouse gas emission permits." This will be an additional burden on business which is already suffering from high over-regulation costs. As Russian bureaucrats are notoriously underpaid -- and corrupt -- one can see that Mr. Yankov’s concerns are not without merit.

Also, Kyoto does not provide a break given Russia’s notoriously cold climate. "Lots of carbon dioxide [emissions are] generated by central heating, which Russia needs seven month a year," Mr. Yankov notes.

Russia should pursue a national program to limit carbon dioxide emissions outside of the Kyoto framework, just as the U.S. and Australia do, says Kirill Yankov. It should study the American experience, without committing to the treaty. In the meantime, Kyoto looks dead. The Kremlin is the one who killed it.

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Russian Duma Elections: How the U.S. Should Respond to "Controlled Democracy"

12-12-2003

The tectonic political shift that occurred in Sunday’s parliamentary elections will make Russia more difficult diplomatically and less hospitable to foreign investment. The biggest winner was President Vladimir Putin, whose United Russia party won 37 percent of the vote and, together with its allies, has close to the two-thirds majority necessary to change the constitution, including extending the president’s term in office beyond 2008.

United Russia capitalized on three major developments:

Putin’s popularity--up to 78 percent according to an International Republican Institute poll.

The crackdown on corruption undertaken by Interior Minister Boris Gryzlov--the party leader and rumored next speaker of the Duma or prime minister--and the jailing of billionaire Mikhail Khodorkovsky, which appealed to the vast majority of Russians who view oligarchs as corrupt and detached from the impoverished masses and the struggling middle class.

The use of "administrative resources," including government-controlled television and provincial governors’ guidance, to boost United Russia candidates.

Putin’s judgment in using his new parliamentary support and popularity will define both his relationship with the West and his place in history. His resistance to the virulent nationalism and populist socialism of his party’s hangers-on will make the difference between Russia’s progress and failure.

The Other Winners. The second and third winners were, respectively, the socialist/nationalist newcomer Rodina (Motherland) and Vladimir Zhirinovsky’s Liberal Democrats. Led by former Communist Party economic guru Sergey Glazyev and former Duma Foreign Affairs Committee Chairman Dmi-try Rogozin, Motherland won 9 percent of the vote. Its message of nationalization at home and nationalism abroad, high taxes, and foreign adventures is a prescription for derailing Putin’s goal of doubling GDP by 2010.

Motherland was a creation of Kremlin consultants who were tasked with stealing votes from the ultra-nationalist communists. They succeeded--too well. Senior government officials recognize that they do not control Glazyev and that the younger, feistier Motherland Duma team will be more of a nuisance than the predictable communists, who have not learned the game of competitive politics.

Zhirinovsky, the third winner, doubled his vote to 11.6 percent. Before the elections, he got into yet another fistfight in a television studio and declared that Chechnya should not be discussed in the media. Instead, he suggested leaving it to the secret police and using death squads to kill off entire Chechen villages. He called for establishing a monarchy but would settle for an elected czar--President Putin. Today, when suicide bombers tear apart Moscow civilians almost weekly, the tough guys finish first.

The Losers. The big losers are the communists (whose 12.7 percent was half of the vote they received in 1999), democratic forces, and the business community. The center-right Union of Right Forces (URF) and liberal-left Yabloko (apple) failed to launch viable party structures in Russia’s 89 regions. Without new ideas to address the electorate’s needs, they lost votes to Putin’s United Russia, Motherland, and voter apathy. Turnout was 54 percent--8 percent lower than in 1999 Duma elections.

As Putin embraced United Russia and, to some degree, Motherland and the government-controlled television followed suit, the bottom dropped out from under the democrats. Yabloko and URF were painted as too pro-Western. Center-right politicians appeared rich, spoiled, and detached from the ordinary Russian’s everyday problems. The emergence of Anatoly Chubais, the highly unpopular former privatization czar, as a de facto leader of the center-right did not help; nor did the extensive support of the hated tycoons.

As the statist and pro-Putin forces became stronger, the business community weakened. According to a cabinet insider, big business should forget about dictating the legislative agenda in the Duma as it did throughout the 1990s. Two days after the elections, Putin signed a new law imposing additional energy export tariffs. Raising taxes on energy exports is being discussed even as cheap Russian oil and gas for domestic consumption provide a multibillion-dollar subsidy for the Russian economy, imperiling Russian membership in the World Trade Organization.

The Appropriate U.S. Response. The Bush Administration has a strategic interest in dialogue with Russia’s president, government, and people. However, the U.S. needs to strike a balance between fighting the war on terrorism and defending Russian democracy, supporting Russian integration with the West, developing Russian energy resources, and encouraging foreign investment in Russia. To achieve these goals, the Administration should:

Express support for Russia’s democratic forces. The White House has endorsed the Organization for Security and Cooperation in Europe’s statement, which called the elections "unfair" and criticized the government’s control of the country’s television channels. More needs to be done, including expanding exchanges with Russia and providing support to democratic non-governmental organizations, independent media, and nascent forces of freedom through the National Endowment for Democracy, International Re-publican Institute, and National Democratic Institute.

Communicate directly to Putin that continued integration into Western frameworks such as the G-8 and the Organization for Economic Cooperation and Development depends on Russia’s following Western political models and boosting the rule of law.

Warn that further executive branch abuse of Russia’s legal system, leading to the destruction of major economic players, could discourage foreign investment, thus jeopardizing Putin’s stated goal of doubling GDP by 2010.

Conclusion. Russia now has a Duma that is more nationalist and less democratic. While emerging democracy is often a two-steps-forward, one-step-back proposition, it is in everyone’s interest that Russia pursue civic society, free markets, and political liberty. The U.S. and the West should not hesitate to remind Moscow of this.

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Russia’s "Controlled Democracy" Strikes Back

12-11-2003

The tectonic plate shift in Russian politics, which occurred in parliamentary elections Sunday would make Russia diplomatically more prickly and less hospitable to foreign investment.

There are three winners and two losers in the elections. The big losers are the democratic and free market forces, and the business community.

Union of Right Forces (URF), a center-right party, and Yabloko ("Apple"), a liberal-left party, failed to launch viable party structures around Russia’s 89 regions. They also had no new ideas to address the electorate’s needs. They lost votes to Putin’s United Russia, to Motherland, and to voter apathy: Turnout was 54 percent -- 8 percent less than in 1999, when Yabloko and URF last got into the Duma.

As Putin has embraced the pro-presidential United Russia party and to some degree, the nationalist-socialist Motherland party, and as the government-controlled TV -- the only one in Russia -- followed suit, the bottom dropped from under the democrats.

Both Yabloko and URF were painted as too pro-Western, and insufficiently patriotic. Center-right politicians appeared rich, spoiled, and detached from ordinary Russians’ everyday woes. It also didn’t help that highly unpopular former privatization czar Anatoly Chubais has emerged as a de-facto leader of the center right. And the hated tycoons have poured support to the liberal forces who became viewed as their puppets.

As the statist and pro-Putin forces became stronger, the business community weakened. According to a Cabinet insider, big business should forget about dictating a legislative agenda in the Duma, as they did throughout in the "roaring ’90s." The liberal parties they supported have not gotten in. Two days after the elections Putin signed a new law imposing additional energy export tariffs. And with a strong signal from the electorate that wants oligarchs’ blood, Putin may bring down additional industrial conglomerates, from Lukoil to Alpha Group.

Putin on Top

The greatest winner is President Vladimir Putin. His party, United Russia, won 37 percent of the vote, and together with its allies has come close to mustering a two-thirds majority necessary to change the constitution, including extending the president’s term in office beyond 2008. It is the first time in the post-communist Russian history that "the party of power" dominates the legislature.

It is Putin’s poise and judgment in using his newly found parliamentary support and popularity that will define his relationship with the West and his place in history. Putin’s resistance to the virulent nationalism and populist socialism of his party’s hangers-on will make a difference between Russia’s progress and failure.

United Russia capitalized on three major developments: Putin’s wild popularity -- up to 78 percent according to the International Republican Institute poll. It got a boost from a crackdown on corruption undertaken by Interior Minister Boris Gryzlov, who is the United Russia party leader, and is rumored to become Speaker of the Duma or Prime Minister. Finally, it thrived on jailing the billionaire Mikhail Khodorkovsky. The majority of Russians perceive oligarchs as corrupt, thieving, and detached from the impoverished masses and the struggling middle class.

The second and third winners, respectively, are socialist/nationalist newcomer Motherland and rabble-rouser Vladimir Zhirinovsky’s "Liberal Democrats." Motherland, led by former communist party economic guru Sergey Glazyev and former Duma’s Foreign Affairs Committee Chairman hard-liner Dmitry Rogozin, won 9 percent of the vote. Its message of nationalization at home and nationalism abroad, of high taxes and foreign adventures, are a fire-sure prescription to derail Putin’s proclaimed goal of doubling GDP by the year 2010. Economic reformers in the Kremlin are disgusted.

Motherland was a creation of the Kremlin’s cunning consultants, who were tasked with stealing votes from the geriatric (and chauvinistic) communists. They succeeded -- too well. However, just as Dr. Frankenstein, the Kremlin is horrified of its creation. Senior government officials recognize that they don’t control Glazyev, and that younger and feistier Motherland team in the Duma will be more of a nuisance than the predictable and dumb communists who never learned the game of competitive politics.

Zhirinovsky, the third winner, doubled his vote to 11.6 percent. Before the elections he got in yet another televised fist-fight, and declared that Chechnya should not be discussed in the media. Instead, he suggested using death squads to kill off entire Chechen villages. Today, when suicide bombers tear apart Moscow civilians almost weekly, tough guys finish first.

What It Means for Washington

The Bush Administration, battling its own terrorist threat, has a strategic interest in continuing a dialogue with the Russian President, the government, and the people. However, it has to strike a balance between defense of democracy, cooperation in the global war on terrorism, developing Russian energy resources, and encouraging foreign investment.

To achieve these goals, the Bush Administration should express support for the democratic forces of Russia. The White House is right to endorse the statement of the Organization for Security and Cooperation in Europe (OSCE), of which the U.S. is a member. The statement called the elections "unfair" and was highly critical of the government controlling all TV channels. More needs to be done, including expanding exchanges with Russia, providing support to democratic non-governmental organizations (NGOs), independent media, and nascent forces of freedom through the National Endowment for Democracy, International Republican Institute, and private foundations.

President Bush should communicate directly to Putin that to continue Russian integration in Western frameworks such as G-8 and Organization for Economic Cooperation and Development (OECD), Russia needs to follow Western political models and boost the rule of law.

Finally, Washington needs to warn Moscow that further abuse of the legal system by the executive branch which leads to extra-judicial destruction of major economic players in Russia may result in shrinking of foreign investment, thus jeopardizing Putin’s stated goal of doubling GDP by 2010.

Russia now has a Duma that is more nationalist and less democratic than before. It is in everyone’s interest that Russia pursues a civic society and free markets amidst political liberty. The U.S. and the West should not hesitate reminding Moscow about this.

Common Economic Space Threatens Independence of South Caucasus and Central Asian States

10-22-2003

On September 19, 2003, Russia and three of its trading partners – Belarus, Ukraine, and Kazakhstan – signed an agreement on a Common Economic Space (CES). The body is sometimes also referred as the United Economic Space (UES). This economic zone is a new attempt at integration between Russia, Belarus, Ukraine, and Kazakhstan, countries that comprise 90% of Russia’s trade with the Commonwealth of Independent States.

BACKGROUND: The CES is an ambitious project, aimed at maximizing Moscow’s political and economic power. The CES is multi-phase agreement, which proclaims that each member state will be able to control the speed of integration. However, the goal is ambitious: the free economic space should be completed in 5-7 years whereas the EU took over five decades to construct.
The first phase will coordinate customs duties and harmonize trade legislation and custom regulations. The second phase aims at lifting current trade barriers exemptions and creating a customs union. In the third phase, “internal customs boundaries will be liquidated, a common customs boundary will be formed, and a supra-national regulating institution will start functioning through member countries’ voluntary assignment of functions”, Interfax quoted the agreement.
As with the EU, the Russian-led quartet is aspiring to produce a single powerhouse economic zone that would generate growth and foreign investment. However, this agreement did not come to fruition easily. Elites in Belarus and Ukraine have reservations about re-integrating with Russia and sacrifice their national sovereignty. Similarly, their counterparts in Georgia, Armenia and Azerbaijan, as well as in Uzbekistan, who tasted the forbidden fruit of independence, would rather make often lucrative economic decisions themselves ad hoc, and not delegate them to an anonymous “supra-national body” on New Arbat.
While the leaders of the signatory nations had been meeting frequently to review the drafts, fissures had emerged even prior to the signing ceremony. A point of contention between Russian President Vladimir Putin and Presidents Leonid Kuchma of Ukraine and Aleksandr Lukashenko of Belarus was the juxtaposition of future membership in the EU and WTO vis-а-vis their membership in the CES. “The Ukrainian parliament will not vote on this agreement in its current form,” a senior Ukrainian diplomat who requested anonymity said, commenting on the agreement.
Before the Yalta conference, Ukrainian Justice Minister Alexander Lavrinovich, announced that some articles of the draft agreement were in violation of the Ukrainian constitution, which prohibits the assigning of any national powers to a supra-national entity. Similar restrictions exist in constitutions of other post-Soviet states. Moreover, parliaments in several countries, such as Georgia, are unlikely to ratify participation in such a supra-national body only 12 years after gaining independence.
Yet, according to Vyacheslav Nikonov, President of the Politika Foundation in Moscow and grandson of Stalin’s Prime Minister Vyacheslav Molotov, writing in Pravda, the general support for Ukraine joining the free economic space was considerable. Both the United Social Democratic Party and the Working Ukraine Party were in full support of joining the free economic space. These two parties shared the opinion that joining this free economic zone would not deter Ukraine’s chances for eventually entering the EU. On the other hand, Ukrainian national-democrats led by former Prime Minister Viktor Yushchenko have threatened to stymie ratification.
Kazakhstani President Nursultan Nazarbayev flatly stated that the “club” will be closed and should not accept any new members, while Putin would like to have an open admission policy – with himself as a gatekeeper. Nazarbayev understands that with the exception of Belarus, most of the “winners” in the CIS are joining the new zone, and he wants to keep the poor cousins out. Putin, on the other hand, understands the leverage Russia will receive as the “majority stakeholder” in the new economic bloc, and will be willing to wield clout vis-а-vis Central Asian and the three states of the Caucasus.

IMPLICATIONS: The accord, if implemented, will marginalize CIS countries such as Georgia, Armenia, and Kyrgyzstan, who are WTO members. Analysts are at a loss how WTO regulations can be reconciled with those of the CES. And it will be run by “supra-national regulatory bodies,” likely to be based in Moscow, which no doubt will be Russian-dominated.
Central Asian and Caucasian leaders view Putin’s new “zone” with understandable suspicion. Potential candidates for Putin’s club were all present in Yalta. Ten out of the twelve CIS presidents were present; ailing President Heydar Aliyev was represented by his son, Prime Minister Ilham Aliyev, who went on to be elected President on October 15. President Saparmurad Niyazov Turkmenbashi of Turkmenistan was noticeable in his absence.
Ilham Aliev, Georgian President Eduard Shevardnadze and Armenian president Kocharyan praised the economic union. They could not act otherwise: as in the case of Central America and the United States, over a million each of Azerbaijanis, Armenians, and Georgians are employed in Russia as guest workers and support families back home to the tune of double digits of the national GDP, allegedly up to a third in certain cases.
The further closure of borders would be a massive blow to South Caucasian economies which are dependent on Russia in terms of trade and railroad links. And a customs union, allowing the free movement of goods, will encourage foreign investment in CES – a market of 214 million consumers, and not located in small and unstable markets such as the South Caucasian states.
U.S. officials expressed concern about the new body. Reportedly, last minute maneuvers by U.S. Ambassador to Kyiv, John Herbst caused Vladimir Putin’s ire on the eve of the Camp David summit with George W. Bush. U.S. officials have grounds for concern, as they seek to prevent the emergence of a new Russian-dominated entity in Eurasia. Their policy responses were limited, however, since Washington needed Russian support on the U.N. Security Iraq peacekeeping resolution and in the war on terrorism. Thus, the U.S. is likely to acquiesce with the emergence of the new Eurasian economic bloc.

CONCLUSIONS: The four-way summit took place in Yalta, a highly symbolic venue, where in 1945 President Franklin D. Roosevelt and the British Prime Minister Winston Churchill abandoned Central Europeans to the mercies of “Uncle Joe” Stalin. If successful, the new entity may replace the historic Romanov and communist empires. The dreams of the czars and the commissars, of one empire stretching eleven time zones from Brest to Vladivostok, be it under a two-headed eagle or under the hammer-and-sickle red flag, may be dead. A new empire, however, may be in the making. Anatoly Chubais, the controversial architect of the Russian privatization, has called it a “liberal empire” and even put a timeframe on its creation: 50 years. His boss, Vladimir Putin, on the eve of Spring 2004 presidential elections, may be a man in hurry, attempting to impose a more ambitious schedule.

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Soviet legacy affects Kazak investments

08-11-2003

WASHINGTON, Aug. 11 (UPI) -- As Kazakhstan prepares to host a United Nations conference on investment in landlocked countries later this month, its own investment record is decidedly mixed.

Countries with no access to the sea need an extra boost for investment.

"These are countries paying a heavy price for their geographical isolation," said U.N. Under-Secretary-General Anwarul Karim Chowdhury, who will chair the upcoming conference.

Six of Kazakhstan’s neighbors, Afghanistan, Mongolia, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, are also suffering from lack of ocean access. But Kazakhstan’s geographic constraints are balanced by geological advantages, namely an abundance of oil and gas. As a result, landlocked position has not prevented Kazakhstan’s economic growth.

In an Aug. 7 speech, Danial Akhmetov, Kazakhstan’s Prime Minister since June 2003, a loyal ally to President Nursultan Nazarbaev, promised to continue systematic reforms. Akhmetov said he encourage competition, to support the development of the industrial sector, and to demonopolize the railways, the telecommunications sector and the electrical power grid.

In 2001, Kazakhstan has reported 13.2 percent in GDP growth, and the government estimates the overall economic growth rate for 2003 at 8.3 percent. With that, experts point out that most of investment flows to the oil and gas sectors while the energy prices are high. If oil prices drop, the rosy picture of double digit GDP growth may come tumbling down, unless the government undertakes serious policy changes.

Impediments to foreign investment remain formidable, especially as far as the rule of law, property rights, and investor protection are concerned. Many foreign companies complained that Kazakhstani government enticed them to invest, only to change rules of the game later. With the exception of the lucrative energy sector, Kazkhastan is not an investor magnet it would like to become. Cronyism and rampant corruption are part of the problem.

Scott Horton, Managing Partner for Emerging Markets at New York-based law firm Patterson Belknap, points out that Kazakhstani courts do not provide reliable dispute resolution venues for investors.

"I have observed many court proceedings, on behalf of clients and while conducting legal research. The (professional) level of Kazakhstani judges, their capacity of legal analysis and the knowledge of laws, their command of facts, are impressive," Horton said. "Unfortunately, their rulings often have nothing to do with either the law or the facts."

Moreover, he adds, local business players in large investment projects have political connections to the president. Political factors are part of the risk, and are often influencing business policy. According to Horton, if political equilibrium changes, projects are endangered, adds. This is beyond what Western companies are willing to tolerate.

Meanwhile, Aigoul Kenjebayeva, a managing partner of the law firm Salan’s Almaty office, said that Kazakh courts do not allow enforcement of arbitration awards granted by foreign arbitration tribunals -- a common practice to solve problems arising from international contacts. Many countries around the world have signed the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. And the courts are even more reluctant to recognize awards granted in local arbitration procedures.

Officially, the judges claim that the Kazakh constitution provides for the universal access to courts, therefore, anyone can appeal to a court to dispute the award. In reality, the Kazakh lawyer said, the judges and Prosecutor General’s office does not desire to give up lucrative opportunities for bribes

Meanwhile, Energy Minister Vladimir Shkolnik and Finance Minister Erbolat Dossaev, are upbeat about Kazakhstan’s investment outlook. "President Nazarbaev authorized industrial development program till 2015, and we want to radically change the Kazakh economy," Dossaev said. "Special tax tools and tax regimes in special sectors which have some real potential, will attract foreign investors."

"To develop high tech industries we need to create conditions which will make Kazakhstan competitive with Silicon Valley in terms of low risks and high profits," Energy Minister Shkolnik said. "State should assume some risk, such as Development Bank, Innovation Fund and Corporation for Export Guarantees."

These are, however, statist prescriptions -- instead of creating a hospitable investment climate and protecting the rights of investors, Shkolnik wants the government to pick winners.

Finance Minister Dossaev blamed the Soviet legacy for Kazakhstan’s glacial pace of capital market development - Kazakhstanis do not trust each other and want 100 percent control of assets. They are not comfortable sharing risk and control in privatized properties. Therefore, he says, development of capital markets is lagging behind. Maybe the 33 year old Finance Minister is right in blaming the Soviet legacy.

Evgeny Zhovtis, director of Kazakhstan International Bureau for Human Rights, said "The most difficult task is the reform to introduce real rule of law... That is when the judiciary is independent and will be governed only by the rule of law and when the executive branch of power will not use its political influence to bring about a preferred decision. This is the main challenge ahead.

The second challenge, he said, is overcoming "Soviet mentality" -- how one perceives the relations between the individual and the state. This is a big problem in this country. The people have to free themselves. This could take ten years to achieve or perhaps even two or three generations."

Instead of waiting for the current generation to exit from the scene, Kazakhstani leadership could follow the example of Asian "tigers" it claims to emulate. Job one would be making the court system transparent and professional, eradicating nepotism and corruption. President Nazarabaev, his relatives and friends, plagued by scandals due to prosecutions under Foreign Corrupt Practices Act in New York and for money laundering in Switzerland, could divest from all business ventures. These court proceedings are stemming from seeminly illicit financial dealings with Western companies.

A politically neutral government of technocrats with a mandate to attract investors and treat them uniformly and fairly, could be installed. And, a broad, across-the-board tax holidays for investors, regardless of their nationality and industry, could be introduced.

Finally, the government, working together with the private sector and the World Bank, faces the challenge of closing corporate governance loopholes, which undermine the development of capital markets. Until this happens, Kazakhstani officials will have nothing better to do but blame slow investment pace in the non-energy sector on the "legacy of the Soviet past."

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Aliev Dynasty or Azerbaijiani Democracy? Securing A Democratic Transition

08-06-2003

Azerbaijan’s ailing president Heydar Aliev’s bedside appointment of his son Ilham to the position of Prime Minister—and thus heir to the presidency—is forcing the Bush Administration to face the eventual passing of the Azeri leader.

Because the United States has been involved in Azerbaijan since the collapse of the Soviet Union and has much at stake in the leadership transition, it should protect its interests and encourage a democratic succession in Azerbaijan.

U.S. priorities in Azerbaijan include strengthening the Western orientation of Azerbaijan’s foreign and domestic policy, including the preservation of a secular state. A democratic transition, if successful and bloodless, would serve as an important example to South Caucasus and Central Asian states, which suffer from a democracy deficit.

Benefits of a Democratic Transition
Under a constitutional amendment approved during a summer 2002 referendum, Azerbaijan’s prime minister becomes the interim president in the event of that the chief executive either dies in office or is incapacitated. The father-son team is also the ruling New Azerbaijan Party’s candidates in forthcoming presidential elections, now scheduled for October 15.

A secular Azerbaijan, with a more democratic multiparty system and a free press and that is being increasingly integrated into Euro-Atlantic structures, could play a part in deterring radical Islamist takeovers in the Russian-controlled Dagestan and other Muslim areas in the North Caucasus.

If Aliev’s son, his heir-apparent, were to lose the transition struggle, there is little danger of a radical Islamic backlash. Moderate democratic nationalists, not fundamentalists, would likely come to power, with the Azerbaijani elite agreeing on a pro-Western orientation and a secular state.

Neighboring Georgia is in a political tailspin and could benefit from an example of a successful democratic transition from a political system dominated by a charismatic, Soviet-era leader. After its scandal-ridden presidential election on March 5, Armenia could also benefit from seeing a democratic process in neighboring Azerbaijan. The authoritarian states of Central Asia, particularly, need a model of a peaceful transition away from post–Soviet-era rulers. And the broader Muslim world—including many countries undergoing or contemplating a father-to-son handover of power—could benefit from a positive example in a fellow Muslim state.

U.S. Interests. The East-West transportation corridor, including access to the energy resources of the Caspian Sea, has been a top priority of the United States during its last three administrations. Today, oil and gas are flowing from the Absheron Peninsula and the Caspian offshore fields to the Black Sea. The Baku-Tbilisi-Ceyhan Pipeline will export up to 1 million barrels per year of high quality Caspian crude oil by 2005.

The United States may also consider basing elements of its air power on the Absheron Peninsula, particularly as it reduces its presence at the Incirlik military base in Turkey and with future deployments in Bulgaria and Romania. Deployment in Azerbaijan will allow the United States to project power further into Central Asia and deter Iran from the north.

Finally, the United States has invested heavily in Azerbaijan, including hundreds of millions of dollars in assistance, and has developed diplomatic and security expertise in the Caspian region. Major U.S. oil companies are investing billions of dollars in developing Azerbaijani oil and natural gas fields and export pipelines. Both the Azerbaijani people and the United States need the stability and predictability that would come from a democratic Azerbaijan.

What the Bush Administration Should Do. If President Aliev does not participate in the presidential elections scheduled for mid-October 2003, Azerbaijan could have a free and fair election process. To this end, the Bush Administration should:

• Encourage a political process—with agreement from all factions—to conduct free, fair, and transparent elections. The U.S. State Department can clarify this position through the U.S. Embassy in Baku and Azerbaijani Embassy in Washington, D.C., with a follow-up visit to Baku by Assistant Secretary of State Elizabeth Jones, Assistant Secretary of State Lorne Craner, or Deputy Assistant Secretary of State Lynn Pascoe.
• Recommend that theU.S. House International Relations Committee or the Helsinki Commission conduct hearings on democracy in Azerbaijan.
• Request thatthe International Republican Instituteand National Democratic Instituteprepare a pre-election assessment, an election observation mission, and a post-election report. Request the OSCE Office of Democratic Institutions and Human Rights to launch similar missions.
• Ensure participation of international observers in the elections in order to guarantee international recognition of the next government’s legitimacy.
• Ensure through diplomatic channels that Russia and Turkey do not intervene to support competing political factions and reassure Moscow and Ankara that their interests will be respected. Azerbaijan can clarify to Russia that its leasing rights to the Gabala radar early warning station will be maintained, while the United States can assure Turkey that it supports completion of the Baku-Ceyhan Pipeline.
• Continue the quest for a peaceful solution to the Nagorno-Karabakh conflict, including restoration of Azerbaijani territorial integrity and sovereignty, through an additional round of trilateral consultations with Azerbaijan and Armenia. The United States should also continue to support the Minsk Process, which began in the early 1990s under the auspices of the Organization for Security and Cooperation in Europe and is the only existing multilateral process on Nagorno-Karabakh.
• Deter Iran, through diplomatic channels, from interfering in the electoral process. If Iran intervenes, the United States and Turkey could send a Turkish or joint U.S.–Turkish air force squadron to Baku, as Turkey did after Iran encroached on Azerbaijani territorial waters in July 2001.

Conclusion. The post-Aliev transition will not only set a precedent for Azerbaijan, but will also have greater geopolitical and geo-economic repercussions throughout the region. A democratically elected Azerbaijani leader would likely desire to continue relations with the American superpower and improve Azerbaijan’s security by bolstering Baku’s ties with its neighbors. The country’s next leader should enjoy democratic legitimacy based on a transparent and constitutional transition.

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Confronting Kazakhstan’s ’Dutch Disease’

03-26-2003

As the United States is engaging in regime change in Iraq, the political turmoil in the Middle East is driving up the oil prices. Kazakhstan is flush with oil and gas revenues. However, without targeted government policy, the long term economic consequences of the hydrocarbon boom may lead to crowding out investment in the non-petroleum sectors and appreciation of the Kazakh currency, the tenge. If President Nazarbaev’s administration will continue to preside over increases in income disparities and underdevelopment, it eventually may face political instability due to inflated popular expectations. Kazakhstan has done little to prevent the Dutch disease, despite warnings from the World Bank.

BACKGROUND: According to government statistics, Kazakhstan is boasting an impressive 9.8 percent economic growth rate in 2002. It further expects GDP to grow at annual rates of 6.3-8.6 percent in 2004-2006, with total growth of over 27 percent in the next four years. Whether this ambitious target is achieved depends on volatile energy prices and the quality of national economic management in Astana.
According to President Nazarbaev, who spoke at the recent Kazakh-Italian business forum in Rome, Kazakhstan’s projected economic growth for the first quarter of 2003 is 9 percent. Italian investment in Kazakhstan reached $1.3 billion dollars. But this is barely a drop in the ambitious goal of $100 billion in investment funds Nazarbaev wants to attract in the next 10-12 years. Kazakhstan may be interested in working with the Italian state-owned ENI, the operator of Agip-led consortium in the Kazakh sector of Northern Caspian, and of the giant Karachanganak field, to export oil via Iran. If such investments materialize, experts say, they will flow overwhelmingly to the overheated oil and gas sector.
Oil revenues continue to remain in record territory for 2003. Kazakhstan has boosted oil production by 16.6 percent in 2002, to 42 million tons. International oil majors, such as Shell and Hurricane oil have significantly expanded their Kazakhstani holdings. Natural gas production and downstream production will also grow: Kazakhstan has increased natural gas exports by 13.2 percent, and produced 30 percent more of gas condensate. Kazakhstan will be developing Phase Three of the Karachaganak gas condensate field, which will require a $2 billion investment. The Amangeldy field in southern Kazakhstan will be expanded, and ChevronTexaco will open a polyethylene plant in April 2003. ExxonMobil is planning to develop a strategic program for Kazakhstan jointly with the Energy Ministry for years 2003-2010. The first iteration of the program will be submitted to the government in the third quarter of this year.
Kazakhstan is boosting its hard currency and gold reserves, which grew by 9.1 percent to $5.5 billion in January, and further increased the National Fund to $1.933 billion, while gold reserves grew by 14 percent to $627 million, according to the Kazakh Central Bank press release quoted in the February Interfax Central Asian Business Report. The Central Bank said that Tenge money supply tripled, foreign deposits rose by 32.8 percent, and bank deposits increased by 46.2 percent, while lending rose 37 percent in 2002.
Using growing demand for energy, Kazakhstan announced plans to become the world’s largest uranium producer by the year 2027. Its national nuclear corporation, Kazatomprom, has increased the ore production from 794,000 tons in 1998 to 2.4 million tons in 2002. As it currently produces only five percent of the global output, the goal to become number one seems excessively ambitious. Kazakhstan has increased uranium production by 34 percent in 2002, and is planning to expand export to China, Japan and Russia.
Astana is also interested in boosting its coal production from 70 million tons in 2002 to 74 million tons in 2003. The January 2003 figures are higher than January 2002 by 21 percent.
IMPLICATIONS: This natural resources windfall is the strategic window of opportunity for Astana to address four structural defects of its energy-driven economy: corruption; capital flight; a dysfunctional social safety net; and the money-losing nature of the non-extracting sectors of the economy.
High-level corruption and capital flight may be the most difficult to resolve. Most often perpetrated, or aided and abetted, by top government officials, it is a net loss to the people of Kazakhstan. Police measures are in themselves not effective, as law enforcement is corrupt and controlled by the perpetrators. The fish is rotting from its head. The government is unlikely to crack down on organized crime and corruption which plague the economy. As long as the government is not prosecuting the most odious “exporters” of capital, even if they are politically connected insiders, the local economy will remain too inhospitable – and bureaucracies too corrupt – to make investment in non-energy sector attractive.
Second, it is the time for the Kazakhstani government to bring internal energy prices, including natural gas and coal, to world levels. Today’s high oil prices will allow to provide subsidies to retired or laid off workers, while closing down inefficient, energy-guzzling enterprises and hiking railroad tariffs. Energy can be exported to increase revenue. Some of the workers in remote “company towns” can be relocated to more livable venues.
Third, social sector reform is long overdue. While salaries are higher in the energy sector by a factor of at least two in Kazakhstan, most of the gigantic profits are not invested back home to create jobs outside of the oil and gas sector, nor are tax proceeds efficiently distributed to support the elderly, sick and poor.

CONCLUSION: The Kazakh government can battle the Dutch disease by stimulating non-energy business development and job creation, by simplifying registration for new business and reducing corporate taxes and employment payments for these newly created entities. As USAID and a number of NGOs repeatedly demonstrated around the world, micro-lending to boost entrepreneurship is yet another way to decrease unemployment and poverty.
In addition, some of the structural unemployment – 20 percent in Kazakhstan, even higher in energy-poor Kyrgyzstan and Tajikistan – can be alleviated by opening the doors of the oil and gas sectors to workers from the areas hit with particularly high unemployment. This can be achieved by loosening severe interior ministry residence registration rules, which are a hick-up of the old Soviet era “propiska” system, and by providing better living conditions in the company towns owned by the extracting industries. As World Bank Vice President Johannes F. Linn has suggested recently, regional cooperation is likely to alleviate some of the structural asymmetries and stimulate growth. Clearly, cooperation on water utilization, pipelines, transport, and commerce is the most logical.
Unequal income distribution in Kazakhstan, where average salary is barely over $1,000 a year, (and even more so in Kyrgyzstan and Tajikistan with only $200-$300 per capita incomes), may lead to economic dislocation, social conflict, and uncontrolled migration. Kazakhstani leaders were forewarned. Both Astana and international financial institutions should address these disparities while the energy bonanza lasts.

Eurasian States Grapple With Difficult Choices Over Looming Iraq Offensive

02-15-2003

Continued European Union resistance to US plans for a quick blitz of Iraq is forcing the countries of the Caucasus and Central Asia to choose sides. Caucasus nations have so far tended to side with the United States. Central Asian countries, meanwhile, appear divided with Uzbekistan generally backing Washington’s position, and Kazakhstan and Kyrgyzstan drifting toward the European viewpoint.

EU leaders, meeting at an emergency summit February 17, issued a statement demanding Iraq’s immediate and unconditional disarmament. At the same time, the EU insisted that an attack against Iraq should be the option of "last resort." Russia has come out in support of the European position, which contrasts sharply with Washington’s. The Bush administration seems intent on launching military operations possibly within weeks.

In staking out positions on the Iraq question, the countries of Central Asia and the Caucasus are influenced heavily by their own individual relationships with the United States, EU and Russia. The rise of radical Islam in both regions, Central Asia in particular, is also a major factor.

Georgia and Azerbaijan consider Washington as their main benefactor, especially following the September 11 terrorist attacks. The same holds for Uzbekistan. All three countries have prickly relationships with Russia and are wary that Moscow desires to reestablish a sphere of influence in the old Soviet space.

Uzbek Foreign Minister Abdulaziz Kamilov stated after Secretary of State Colin Powell’s February 5 speech to the United Nations Security Council that there was sufficient evidence to justify Washington’s stance. "Powell’s address + reinforced the US call for more decisive and dramatic steps to exclude any possibility of Iraq having weapons of mass destruction or resources and technologies for their production," the Interfax news agency quoted Kamilov as saying.

In Georgia, internal politics have exerted influence on the government’s Iraq position. President Eduard Shevardnadze, whose domestic popularity is at or near its nadir, is reluctant to alienate the United States, which has emerged over the last 18 months as Tbilisi’s key strategic partner. [For additional information see the Eurasia Insight archives]. Another influence on Shevardnadze is the fact that during his tenure as Soviet foreign minister he worked closely with Washington during the first Iraq war. In explaining his Iraq position, the Georgian president openly admits that his administration considers itself obligated to support Washington.

"The totalitarian regime [in Iraq], which produced weapons of mass destruction, poses an enormous threat to the region and to the whole world. This is why it must be punished," Shevardnadze said recently. "Another reason for Georgia assuming this stand on the Iraqi problem is that the United States has rendered enormous assistance to Georgia since 1992. This is why our duty is to support the friendly country [the United States]."

Azerbaijan has also expressed support for the United States on the Iraq question, but in a somewhat more equivocal fashion. A recent foreign ministry statement, for example, lauded US efforts to eliminate weapons of mass destruction in Iraq, while calling for a settlement to be resolved in full compliance with the UN charter.

Armenia has traditionally excellent ties with the Arab countries and a thriving Diaspora in Lebanon and Syria. Armenian foreign policy is also viewed as pro-Russian. Nevertheless, some statements issued by the Armenian foreign ministry are cautiously supportive of the US position. Jyunik Agadjanian, a foreign ministry official, stated earlier in February that "Iraq’s disarmament is inevitable, otherwise the situation could lead to undesirable consequences," the Arminfo news agency reported. "Official Yerevan supports the complete and unconditional disarmament of Iraq."

"Colin Powell’s data submitted to the Security Council deepened Armenia’s concern over the Iraqi issue," Agadjanian continued.

Support for the United States is far from universal. Kazakhstan and Kyrgyzstan are the Central Asian nations most leery of the Bush administration’s rush to war in Iraq. Their chief concern appears to be that the looming campaign to oust Saddam will subtract from Washington’s commitment to stabilization efforts in Central Asia, including countering the expansion of radical Islamic activity in the region. [For additional information see the Eurasia Insight archives]. Such concerns are pushing Astana and Bishkek to support the EU’s preferred course of action.

"The UN Security Council must issue authorization to handle such questions," the Itar-Tass news agency quoted Kazakhstani President Nursultan Nazarbayev as saying in late January. "A one-sided war in Iraq would be a great mistake. In their hearts and souls the peoples of Islamic states are absolutely against this war that can only bring about integration of the world extremist forces."

Some of Nazarbayev’s domestic political opponents suggest the president’s Iraq stance in part is influenced by ongoing investigations in both the United States and Switzerland into bribe-taking by top Kazakhstani government officials. [For additional information see the Eurasia Insight archives]. They add that Nazarbayev is keen to score points with both Russia and the EU, seeking to cultivate additional sources of political support as a hedge against the bribery scandal, known as Kazakhgate. [For additional information see the Eurasia Insight archives].

Kyrgyzstan, bolstered by the recent deployment of Russian aircraft at the Kant military base, also echoed a Russian position. [For background see the Eurasia Insight archive]. Kyrgyz officials have expressed opposition to Washington’s use of Manas Air Base in potential military operations against Iraq.

New Russian Deployment Marks Changed Strategy

12-17-2002

The Bush Administration is reacting calmly to the Russian Air Force’s deployment of planes at the Kant air base in Kyrgyzstan, which Russia announced in early December. The deployment is relatively small and temporary, but the muted American response to it indicates broader trends in American strategic policy toward Russia.

Scholars and observers say the placid American response to the December 5 announcement may indicate that China has emerged as a more important variable in Central Asia. Dmitri Gorenburg, Director of Russian and East European programs at a think tank called the Center for Naval Analyses, believes that Washington no longer views Russian military maneuvers through a competitive lens. (Gorenburg’s group advises the Pentagon.) A National Security Council official who covers Central Asia supported this assessment. "We are beyond seeing Russian troop deployment in Central Asia through the prism of US-Russian rivalry," said this person, on condition of anonymity. "This is no longer a zero-sum game. We hope the Russians know this."

Washington and Moscow, Gorenburg says, are emerging as a twinned alternative to Chinese hegemony. Russia and Central Asian states, however, do not want China to deploy troops in the region. Concerns about China are dovetailing with longstanding interest among Russia and its Collective Security Treaty allies in the development of a rapid reaction force in the region.

"President Putin is doing what Moscow experts were recommending throughout the 1990s," says Irina Kobrinskaya, director of the international cooperation program at Moscow’s National Project Institute-Social Contract. "It was obvious as early as 1995 that Russia has not economic capacity to deploy adequate forces in Central Asia and the Caucasus." Therefore, Russia had to ‘internationalize’ the peacekeeping there. The force did not come together after a series of car bombs in Tashkent, Uzbekistan nearly killed President Islam Karimov on February 16, 1999. Nor did it develop after the United States struck alliances with Uzbekistan and Kyrgyzstan prior to the forays Americans led into Afghanistan in autumn 2001. According to some analysts, though, it was these alliances that spurred Russia’s deployment in Kyrgyzstan.

Moscow security sources believe that the military lobbied for Kant deployment to balance out US presence in Central Asia. President Putin agreed to these requests to placate generals and citizens who treat Western deployment in Central Asia as a long-term threat to Russia. If this analysis is correct, the deployment’s modesty is telling. American officials contend that Putin knows Russia’s limited budget reserves and military hardware cannot support adequate force structure along its periphery. That weakens Russian bases in Georgia, Armenia and Tajikistan and leaves soldiers at these bases poorly trained. If American troops pulled out of Central Asia, the thinking in the Pentagon goes, the Russians could not adequately protect the region on their own or within a CIS framework.

This traditional Russian military defensiveness, though, seems to coexist with a new emphasis on partnership with the United States. On the "old thinking," say sources from a Center for Naval Analyses seminar that convened in late November, Moscow tries to match Washington’s military reach and spending. On the new thinking, Moscow recalls its alliance with Washington in Balkan peacekeeping efforts – and welcomes the possibility of similar partnership in Central Asia.

Washington military analysts point out that the new Russian-led aircraft contingent in Kyrgyzstan seems weak in comparison with the American deployment at the Manas air base nearby. On December 16, according to Russian news agency Itar-Tass, US Ambassador John O’Keefe marked that base’s first anniversary by praising its "high standard." Russia’s group, which includes Russian, Kazakh and Kyrgyz aircraft, would provide cover for 5,000 CIS rapid deployment soldiers. By December 16, however, only two SU-25 ground attack jets and two SU-27 fighters were deployed, and the SU-27 will be returning soon to their permanent bases. These planes do not seem combat-ready. Russian presidential and defense staff and accompanying journalists from the base made an emergency landing in Kazakhstan; some sources knowledgeable about the episode blamed poor Kyrgyz jet fuel.

The American-led force in Kyrgyzstan includes 20 F-16 fighters and over 2,000 troops, deployed primarily to support the peacekeeping force in Afghanistan. The Russian-CIS deployment can complement this force, and provide the basis for Russia-NATO cooperation envisaged in the NATO-Russian Treaty signed in May. As Russian and US military experts point out, conventional deployments do not necessarily harness the intelligence and special-forces capability that countries need to fight stateless foes such as al Qaeda. To truly battle terrorism, American and Russian leaders must support broad extra-military strategies designed to promote political participation, civil society and the rule of law. On this score, both the American-led deployment and the new Russian-CIS outpost in Kyrgyzstan seem unlikely to provide fresh answers any time soon.

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CIS Remains Top Priority in Russian Foreign Policy

04-24-2002

President Putin’s recent State of the Federation address clearly indicates that Russia puts increased emphasis on the CIS in its foreign policy. Moreover, it indicates an understanding that security and economic imperatives dictate that countries in the region pursue pluralistic and "multi-polar" policies. Moscow will emphasize its military ties, security cooperation, infrastructure projects, and cultural and educational cooperation to boost its influence in the region. Yet the military may not be satisfied with the official line, and the FSB is for the first time officially working outside Russia’s borders.

BACKGROUND: In his state-of-the-Federation address on April 18, Vladimir Putin made one thing perfectly clear: the Commonwealth of Independent States will remain the top priority of the Russian foreign policy. Putin’s speech contained altogether nine paragraphs dealing with foreign affairs, and seven of them were dedicated to the so-called "near abroad." Putin put Russian interests in the context of Russian security, claiming that the problem of whether or not to support the anti-terrorist coalition "did not even exist" for Russia. But taking into account the two tense weeks between the September 11 attack and the clear statement by Putin that Russia will cooperate with the U.S. in full, it stands to reason that there was a debate behind the Kremlin walls over what the right course of action should be. Furthermore, Defense Minister Sergei B. Ivanov first stated that the NATO troops will not have basing rights in Central Asia, only to be overruled by Putin later, when resistance would in any case have been largely futile.
In his speech, Putin took credit for the "liquidation of the most dangerous center of international terrorism in Afghanistan" by "common efforts." He stated that on September 11 "many in the world realized the Cold War is over" and that the new war is going on - against international terrorism. Putin claims that Russian foreign policy will be entirely pragmatic. He called CIS, the post-Soviet half-house, a "real factor of stability on the vast territory…an influential association of states."
The key paragraph in the speech proclaimed that "work with the CIS states is the main foreign policy priority of Russia, a priority linked to achieving competitive advantages in global markets." He stressed implementation of large infrastructure projects in transportation and energy to boost regional integration. He also mentioned integration through "humanitarian" and educational projects, calling to boost the number of students from the CIS countries in Russian colleges financed by the Russian government up to 1 percent of the total, recalling the USSR’s similar attempt to attract students from Third World countries to develop a cadre of sympathetic elites. Putin’s speech was, on the whole, peaceful. He stated that the only way Russia will challenge foreign countries was through economic competition. However, the Russian military put a different spin on recent developments in the region. Spokesmen for the Russian Defense Ministry have repeatedly warned against the long-term U.S. domination of Central Asia after September 11.

IMPLICATIONS: On April 15, The Russian military launched a large-scale anti-terrorism exercise called South Anti-terror, under the umbrella of the CIS Antiterrorist Center in Bishkek, and the Collective Rapid Reaction forces - a rather small structure built around a reinforced battalion from the 201st Infantry Division located in Tajikistan.
Participants in the exercise included forces from Russia, Kyrgyzstan, Kazakhstan, and Tajikistan. Repellling a mock terrorist attack, the allied states would provide support to border guards and army units of the Collective Rapid Reaction Force, augmented by heavy military hardware, and the air force. Unlike previous maneuvers, this exercise was supervised by Nikolai Patrushev, the head of the Federal Security Service (FSB), which until now had jurisdiction in the Russian Federation only. Part of the exercise was to share with the Central Asian allies what it ’learned’ in the Chechen campaign.
Other powers are also active in the region. The U.S. is trying to protect the Afghan interim administration of Hamid Karzai, and supports the upcoming Loya Jirga (a tribal conclave to decide the next Afghan government) in June. Li Peng, the former Prime Minister and the head of the National People’s Congress of China, and Artur Chilingarov, a deputy speaker of the Russian Duma, have recently discussed concerns in Central Asia at the third annual session of the Association of Asian Parliaments for Peace; and Mohammad Khatami, the President of Iran, has begun a nine day visit to Central Asia on April 22, while analysts and experts attach special importance to the Caspian summit in Ashghabat, where the Caspian Sea and its legal regime are to be discussed.
Challenges to Russian interests also come from inside the region. On the eve of the Caspian summit, Turkmenistan’s President Saparmurad Turkmenbashi Niyazov once again tried to revive the Turkmenistan-Afghanistan-Pakistan gas pipeline. Turkmenbashi suggested that the construction a 1,500 kilometer power line and a highway parallel to the pipeline will serve as guarantees of stability in Afghanistan.
In view of this complicated regional picture, Putin’s speech reflects Russia’s recognition of the limits to its power - something the Russian military has a hard time coming to grips with. While Russia may plan to boost its military presence and conduct exercises in the near term, a multi-polar security environment is gradually emerging in the region. Russia will try to protect what it perceives as its vital interests, especially in the energy sector. Opposition to alternative pipeline routes from the region that would decrease local states’ dependence on Russia is likely to be a major cornerstone of this policy. For example, Gazprom, the Russia natural gas monopoly, is anxious to maintain control over the export of gas, and is likely to fight Turkmenbashi tooth and nail on the trans-Afghanistan gas pipeline. Russia is also likely to carefully prepare for power transitions in Azerbaijan, Georgia, and eventually in Turkmenistan and Kazakhstan, and work behind the scenes for pro-Russian candidates to come out on top in the succession struggles.

CONCLUSIONS: In the long term, Russia will not be able to dominate a Central Asia that already witnesses deployment of U.S. military power. China-Russia cooperation along the horizontal axis, and an India-Russia coordination along the vertical axis are in the cards. With American presence and a new security environment in the region, Russia will take the CIS in general and Central Asia in particular more seriously than before. The weakness of the Russian bureaucracy and decision-making process, as well as the lack of reform in the military and security services, represent, however, serious impediments to Russia’s power projection in the region. Putin is focused on defending Russian economic, especially energy, interests first and foremost, and on promoting integration in the military, security, business, and cultural spheres. However, pursuing their own national agendas, the countries of Central Asia are likely to pursue "multi-vector" foreign policies and will attempt to maximize their benefits by playing regional powers - and the U.S. - against each other.

Radio Liberty Launches Controversial Chechen Service

03-27-2002

The Bush Administration has allowed the North Caucasus broadcasts of Radio Liberty-Radio Free Europe to go ahead on April 3. These 15-minute broadcasts from Prague will include programming in Chechen, to which the Russian government strongly objects. The Bush Administration’s decision to take action may be interpreted as support for the Chechens, and may complicate its relationship with Putin at the time the U.S. troops are poised to take on terrorist elements in the Pankisi Gorge. However, the reasons for this action may be distant from the Caucasus and have roots in domestic policy and electoral politics.
BACKGROUND: Radio Free Europe-Radio Liberty is planning to launch its North Caucasus service, including controversial broadcasting in the Chechen language, on April 3. The newest radio service was scheduled to go on the air in the Chechen, Avar, Circassian and Russian languages on February 28 of this year, but at the last moment Richard Armitage, Deputy Secretary of State, the second highest ranking U.S. Department of State official, had pulled the plug.
Armitage intervened with the Broadcasting Board of Governors (BBG), which ordered the Radios to postpone the broadcasts, and to cover the region through its Russian service. BBG is a body appointed by the President of the United States, which supervises the U.S. international radio broadcasters, such as Radio Free Asia and the Voice of America. Radio Liberty is funded by the U.S. Congress and is nominally independent from the executive branch of the U.S. Government.
The North Caucasus service was mandated by the U.S. Congress, the Radios’ funder, in 2000, and then-Chairman of the powerful Senate Foreign Relations Committee Jesse Helms (Republican of North Carolina) led the charge for its creation.
Russian officials viewed the genesis of the service in conspiratorial terms. They suggested that Helms’s staff member for Russia Ian Brzezinski, spearheaded the effort together with Paul Goble, then-Director of Public Affairs at Radio Liberty. The two are supporters of the Chechen independence, the Russian officials alleged. Mr. Goble is currently a senior executive with The Voice of America.
The North Caucasus broadcasts will be conducted from the Radios HQ in Prague, and will last 15 minutes in each of the four languages. According to Andrey Sharyi, the Moscow bureau chief of Radio Liberty, the Chechen and other broadcasts for North Caucasus will be separate and independent from the Russian service, which uses AM and FM frequencies in Russia.
Mr. Sharyi refuted accusations that Radio Liberty supports the separatists: "The position of the Russian service on the Chechnya war has always been the same: calls for a peaceful resolution of the conflict, defense of human rights and [coverage of] humanitarian issues. There will be no changes in our position," Sharyi said.
IMPLICATIONS: Russia has long seen Radio Liberty broadcasts in Chechen as a direct affront. Foreign Minister Igor Ivanov reportedly spent half an hour complaining to Colin Powell about the pending broadcasts in January. The Kremlin Administration reportedly threatened to pull Radio Liberty AM/FM broadcasts off the air and shut down the Moscow bureau.
While Yastrezhembsky later denied media reports and limited himself to a promise to monitor the broadcasts "in accordance with the law," Minister of the Press Mikhail Lesin warned that the U.S. radios’ actions are "improper." Lesin said that his ministry will "address the situation from the position of information security" and added that Russian legislation on incitement to ethnic conflict "should be observed, and that measures will be taken if laws are broken."
Vremya Novostei, a Moscow weekly with ties to the Kremlin, compared the Chechen broadcasting to Radio Liberty’s Radio Free Iraq and the Farsi Service, which broadcasts to Iran. The weekly pointed out that the broadcasts are calling for regime change in these countries.
Radio Liberty Russian broadcasters, speaking on the condition of anonymity, expressed concern that the Government of Russia may actually shut down their large Moscow bureau and deny access to the coveted AM and FM frequencies. "No one listens to short wave any longer," they said, referring to the World War Two technology which was is still used to beam U.S. international
broadcasting around the world. "And it is not clear how the station management will monitor broadcasts in rare languages, such as the Chechen, which very few Americans know." The issue of editorial control will be crucial to keep the broadcasts from becoming a major friction point in the U.S.-Russian relations.
CONCLUSION: At the time of the delay, the U.S. State Department spokesman Richard Boucher stated on the record that broadcasting would be counterproductive in the campaign against terrorism and because of the talks between the Russians and Chechens. What has changed?
A Radio Liberty memo and State Department sources agree that factors as diverse as the Republican Party strategy to win 2004 presidential elections, and the lobbying power of the U.S. poultry industry had played a role in changing the mind of Mr. Armitage.
To win the crucial, mostly blue-collar states of West Virginia and Pennsylvania in 2002 Congressional and 2004 presidential elections, Republicans needed to protect the shaky steel industry there. Thus the imposition of steel import tariffs earlier this month, that would hit Russian exports of steel to the U.S. In retaliation, on March 10, the Russians limited imports of American chicken legs, since the late 1980s colloquially referred to as "Bush’s legs," after the current president’s father, George H.W. Bush. And Tyson’s Chicken, the U.S. poultry giant, weighed in with its considerable Washington lobbying power, to send a message to the Russians on the necessity of chicken imports.
Last but not least, the Congress, protective of its prerogatives to fund foreign policy priorities, insisted that the Radios’ North Caucasus service must go ahead, thus rejecting the earlier State Department position postponing the broadcasts indefinitely. In February, the U.S. Senate launched a bipartisan initiative spearheaded by Senator Paul Wellstone (D-Minnesota), and Sen. Sam Brownback (R-Missouri), seeking the adoption of a resolution on Chechnya which would require President Bush to pressure Russia for a negotiated settlement. In the end, all these factors led to the U.S. reversal on Chechen broadcasting.

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Central Asians Launch Another Regional Association

01-16-2002

The transformation of the Central Asian Economic Commonwealth into the Central Asian Cooperation (CAC) comes as regional cooperation is desperately needed in the broad array of issues, from national security to environmental protection. However, past performance, petty rivalries, and the lack of economic and trade expertise make the prognosis cautious for the newly created body at best. Lacking adequate budget and trained staff, the new organization may face a mountain of mandates and lack of resources - a well-known prescription for failure.

BACKGROUND: The last days of December 2001 witnessed the creation of yet another regional association in the territory of the former Soviet Union: the Central Asian Cooperation (CAC). It was born after a number of bilateral and multilateral meetings in Tashkent on December 27-28 between the host, President Islam Karimov, and Presidents Nursultan Nazarbaev of Kazakhstan, Askar Akaev of Kyrgyzstan, and Imomali Rakhmonov of Tajikistan. The "permanently neutral" Turkmenbashi was absent. The new organization replaces the Central Asian Economic Commonwealth, and joins the Moscow-dominated Eurasian Economic Cooperation Commonwealth (EEC); the GUUAM (Georgia, Uzbekistan, Ukraine, Azerbaijan, Moldova); and the Shanghai Cooperation Organization as yet another attempt at searching jointly for regional political and economic cooperation solutions.
This time, the regional powers, such as Russia and China, the godfathers of SCO, were absent from the scene and none of the aspirants for regional influence, Pakistan, India, Iran or Turkey, were present either. Presumably, New Delhi and Islamabad had other fish to fry at the moment, or trying to avoid frying each other. Speaking at the press conference on December 28, President Karimov declared that CAC would have in its purview issues of military policy, economy, and humanitarian cooperation. This is understandable in the aftermath of the war in Afghanistan. Moreover, the four founding members declared that they will work together to create joint electricity, gas, transportation and irrigation networks.
The Tashkent Declaration, adopted by participants, proclaims an increase in political, economic and humanitarian cooperation; joint fight against international terrorism; drug smuggling; and religious and political extremism. The leaders patted themselves on the back for maintaining "stability" for 10 years after the Soviet collapse, and "maturity" in dealing with divisive and complex issues, such as water and road building. In the negotiations preceding the quadrilateral summit, Presidents Karimov and Imomali Rakhmonov covered issues of mutual trade ($80 million in the first three-quarters of 2001); border delineation; and security and law enforcement cooperation. To boost trade, Uzbekistan promised to loosen restrictions and open its borders to Tajik transit trade. Tajikistan will receive $12 million debt forgiveness (10 percent of the total debt), and Uzbekistan promised to restructure the rest of the debt ($108 million). Dushanbe is also hoping to receive more Uzbek oil and gas for hydroelectric power it generates. There were also promises of reduced tariffs on goods imported to Uzbekistan from Tajikistan and talk about cutting the price of the Uzbek natural gas flowing to Tajikistan.

IMPLICATIONS: Central Asia desperately needs joint efforts to solve a number of problems, from trans-border terrorism and border delineation, to environmental threats, to trade and foreign investment and refugees. In this sense, efforts to improve regional cooperation are needed. However, the prognosis must remain guarded - for four reasons.
First, Uzbek landmines have killed dozens of civilians since Tashkent buried thousands of mines along its borders, fearing radical Islamic incursions. This breeds resentment and suspicion between Uzbekistan and its neighbors. Uzbekistan behaved in a heavy-handed way, throwing its weight around in order to receive water from Kyrgyzstan for free. Persistent refusal of Tashkent and Astana to pay for water - the vital resource of the arid region, left a bitter taste in the mouths of many in Kyrgyzstan. According to sources in Bishkek, Tashkent also violated the gas-for-water agreement with Kyrgyzstan, starting in August 2001. However, the Uzbeks are fond of reminding that they are selling gas at about half price comparing to the prevailing global prices: In 2002, Tashkent would like to raise the price from $42 to $45for a thousand cubic feet.
Second, the true trading bloc is not likely to emerge, as there is almost melodramatic obsession with honor and prestige, little bureaucratic culture of compromise, and squabbles and suspicions between the top leaders. These suspicions, and fear of alien domination, have also hampered the development of closer economic ties with Moscow and Beijing within the SCO and the Eurasian Economic Commonwealth. Despite the common and equal roots in the Soviet nomenklatura hierarchy, some leaders see themselves as more equal than others.
Third, the scarcity of trade and market economic expertise is a major impediment. After all, the Western Europeans managed to launch the European Economic Community (EEC), and later the European Union, only after prior experience with customs unions, such as the pre-unification Germany and the Austro-Hungarian Empire in the nineteenth century. Furthermore, the Western European domestic economic models were more or less defined after World War Two, which is not the case in Central Asia.
Today, Uzbekistan is still struggling to make its currency convertible; there are serious problems with privatization and capitalization of state-owned enterprises in all countries of the region; and the rule of law facing serious challenges. In such conditions, developing a workable economic association is a truly Herculean task.

CONCLUSIONS: Despite the need for regional cooperation, the chances for success for the CAC remain tenuous. After all, nothing changed fundamentally since the launch of its predecessor, the Central Asian Commonwealth, and GUUAM has so far failed to create a trading organization. An equitable free trade association or a customs union is still far away, despite the positive historical experience with such formations. This is because the region consists of two larger and resource-rich countries (Kazakhstan and Uzbekistan) which are vying for local domination, and two small, poor and weak states: Kyrgyzstan and Tajikistan.
Russia is not likely to let the former dependencies to go their own merry way. Moscow controls practically all oil and gas pipelines out of the region, and is likely to frown at the gas pipeline to be constructed via Afghanistan, to take Turkmen and Uzbek gas to the Pakistani and Indian markets. Moreover, Moscow is likely to attempt to revitalize the Eurasian Economic Commonwealth, which also includes Russia, and Belarus in addition to Kazakhstan, Kyrgyzstan and Tajikistan. With the former KGB general Grigory Rapota at the helm of EEC, and the Kremlin controlling 40 percent of the EEC voting rights, Moscow is likely to keep the Central Asian falcons under its gimlet eye.

Over three years after Russia invaded Ukraine, some European countries were still reliant on Russian gas. While the war in Ukraine compelled most of the European Union to diversify its energy imports and avoid buying gas from Moscow, certain countries, whether motivated by domestic politics or geography, such as Slovakia, Austria, and Hungary, continued buying. In January 2025, Ukraine stopped allowing the transit of Russian gas to the EU via the Urengoy–Pomary–Uzhgorod pipeline (also known as the Brotherhood pipeline) after its contract expired. This has pushed Europe to continue decoupling from Gazprom.

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A major Russian military buildup on the border with Ukraine has recently sparked fears of a potentially dramatic escalation in the simmering seven-year conflict between the two countries. Although tensions have eased somewhat following Moscow’s April 22 announcement of troop withdrawals, the threat of a new Russian offensive remains.

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