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The Jamestown Foundation
Thursday, July 21, 2005 -- Volume 2, Issue 141
EURASIA DAILY MONITOR
IN THIS ISSUE:
*U.S. Defense Secretary to discuss basing issue on visit to Bishkek
*Putin makes unannounced visit to Dagestan
*Unified Energy buys major section of Armenian electricity network
*Russia stages anti-terrorist exercises in the Far East
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RUMSFELD EXPECTED IN KYRGYZSTAN TO SETTLE BASE ISSUE
On July 20, Kyrgyzstan's Ministry of Defense announced that U.S. Defense
Secretary Donald Rumsfeld is expected to arrive on July 25. Rumsfeld
will discuss the future of the U.S.-led air base Manas with the new
Kyrgyz leadership, in the wake of Moscow- and Beijing-inspired demands
to set a deadline on the presence of U.S.-led coalition forces in
Central Asia. Meanwhile, French Defense Minister Michèle Aliot-Marie
is arriving in Tajikistan on July 22 hoping to firm up the arrangements
for French use of the Dushanbe and possibly also Kulob airports.
For its part, on July 20 Moscow again urged the Central Asian
governments, through Collective Security Treaty Organization
Secretary-General Nikolai Bordyuzha, to raise with the United States the
issue of a deadline to the U.S.-led coalition's presence, in line with
the Shanghai Cooperation Organization's (SCO) declaration at the July 5
summit in Kazakhstan (see EDM, July 6).
"Bullied by two big countries" [Russia and China], as General Richard
Myers, Chairman of the U.S. Joint Chiefs of Staff, remarked, Kyrgyzstan
and Tajikistan now seem to be trying to wiggle out of a Russo-Chinese
vise. In the wake of the July 5 summit, Kyrgyz President Kurmanbek
Bakiyev and Minister of Foreign Affairs Roza Otunbayeva toed Moscow's
line and repeated, on Kyrgyzstan's behalf, the demand for a deadline to
the U.S. presence. Other Kyrgyz officials, however, have begun finessing
that demand, even reinterpreting it to permit continuation of the status
quo.
Thus, Bakiyev's press spokesman, Avazbek Atakhanov, argues that the SCO
summit's declaration only referred to coalition bases in Central Asia as
a region, without naming any country. The implication is that Kyrgyzstan
is not bound by that document. The spokesman's interpretation in effect
reverses Bakiyev's acceptance of that document with a public bow to
"Vladimir Vladimirovich" [Putin]. Atakhanov stated that he was speaking
on Bakiyev's behalf. The president himself, however, has yet to adjust
his position. (Interfax, Kyrgyz Radio, July 18).
Some key members of the ruling circles seem inclined to approve the
further operation of the American air base without significant changes.
They signal such a preference as part of larger calculations to continue
Kyrgyzstan's established policy of balancing among Russia, China, and
the United States. "This is where the interests of the three great
powers intersect. We have to ensure that our security and economic
interests are protected," said Kyrgyzstan's Security Council Secretary,
Miroslav Niyazov, citing the government's intention to "do its best to
avoid spoiling relations with Washington." In a similar vein, Bakiyev's
adviser Bolotbek Shamshiyev went on record to rule out any significant
change of policy toward the United States, including on the issue of the
air base (AFP, July 16; Institute on War and Peace Reporting Report no.
396, July 15).
The prospective Kyrgyz Prime Minister, Felix Kulov, went on record early
on as favoring both the continuation of the status quo regarding the
American air base and the introduction of a Russian military "presence"
(as distinct from base) in Osh. "Kyrgyzstan should conduct a
multi-layered policy, to become a country where relations between the
great powers meet and harmonize." Along with some other officials, Kulov
cites the ongoing, worldwide terrorist attacks as an argument for the
continuing operation of Manas: "Events in London show that international
terrorism can not be defeated any time soon. The issue of a time-line
[for Manas] is closely linked with such events that are taking place not
only on our continent, but also elsewhere" (Kyrgyz TV Channel One, July
14; AFP, July 16).
Kyrgyzstan's Acting Defense Minister, General Ismail Isakov, met with
U.S. Ambassador Stephen Young on July 20 in preparation for Rumsfeld's
visit. The Ministry's press release -- and local reports based on it --
seems to contain the outline of a solution. The United States would be
expected to continue financial and security assistance to Kyrgyzstan for
an extended period, in return for open-ended American use of the Manas
air base (Kabar news agency, Interfax, July 20).
--Vladimir Socor
KREMLIN GROWS WARY OF NORTH CAUCASUS GOVERNMENTS
On July 15, Russian President Vladimir Putin made an unannounced visit
to the North Caucasus republic of Dagestan, the very place where he
began his climb to the presidency in 1999. In August 1999, Islamic
militants from neighboring Chechnya invaded two districts of Dagestan,
and Putin, the freshly minted Russian prime minister, went to the
republic to encourage the soldiers and security service officers
fighting against the invaders. Putin not only reassured the servicemen
whom he visited on the frontline, but his actions calmed the worries of
most of the Russian public as well. The Russians saw Putin as a figure
who could stop the chain of humiliating defeats in the Caucasus, who
could restore control over Chechnya, and who could erect a barrier to
separatism and Islamic extremism throughout the region. In 1999 Putin
looked confident and determined to fulfill his mission.
The atmosphere surrounding his second visit to Dagestan was quite
different. The reason for this journey was the recent upswing in attacks
by local rebels. After six years of an extremely hard-line policy based
on unlimited use of force in the North Caucasus, Putin still faces the
same problem in the region: militant separatism.
Unlike his first visit, this time Putin looked disappointed and
criticized security officials for their inability to suppress the
insurgency. The Russian president went to the republic accompanied by
his key advisors, including Sergei Ivanov, minister of defense, and
Vladimir Patrushev, director of the Federal Security Service (FSB).
Under heavy security, Putin inspected the FSB training center near
Makhachkala, the capital of Dagestan, and a frontier station in the
mountains. He did not hide his dissatisfaction with how the siloviki had
been doing their job. For example, after inspecting new winter footwear
for Russian Special Forces operating in the mountains, Putin declared
the boots unacceptable for flat land, let alone mountains. Putin noted
that the Chief of Staff had told him that the mountain units existed in
Russia, but sarcastically commented, "I do not know where they are," as
they appear to be ineffective. Addressing the servicemen, Putin said,
"When there are problems with terrorism somewhere, ordinary military
units are usually sent there, but they do not have any special training
or equipment." The Russian president wanted special mountain brigades to
be formed as fast as possible and deployed in
Dagestan and Karachaevo-Cherkessia, another restive republic in the
western part of the North Caucasus. He expressed his hope that these
brigades would also help the Russian Ministry of Interior Affairs better
control Dagestan (SMI.ru, July 18).
Interestingly, Putin paid almost no attention to the locals. He had a
brief, private meeting with Magomed Magomedov, the Dagestani leader, and
met the head of Botlikh district, but only because the mountain brigade
will be located in that area. Leaving the region, the president said,
"One can't say that we did everything [necessary] to feel calm" (SMI.ru,
July 18). Some observers in Russia regarded this phrase as a sign that
Moscow officials would strengthen their control over Dagestan. This
interpretation very quickly proved correct.
Barely 24 hours later, Dmitry Kozak, the presidential envoy to the
Southern Federal District, announced, "The influence of the federal
security agencies will be increasing in Dagestan." Kozak added,
"Operative working groups of the Ministry of Interior Affairs and FSB
have already been working in the republic" (Interfax, July 16). The
discredited local police departments were denied any information about
preparations for operations against the rebels. On July 13, a Russian
Special Forces unit surrounded a group of gunmen in Makhachkala, but the
city police department knew nothing about the ongoing operation
(Kavkazsky uzel, July 13).
At the same time, the Kremlin initiated a process of transferring
civilian administrative levers to officials from Moscow, in Dagestan and
beyond.
On July 18, Kozak declared, "The level of sovereignty of the regions
will depend on their subsidy." Specifically, he said those regions that
are at least 80% subsidized from the federal budget should cede part of
their power to Moscow. The envoy gave six examples of such regions, four
of them being Caucasian republics, including Chechnya, Dagestan,
Ingushetia, and Kabardino-Balkaria (RIA-Novosti, July 18).
However, it is also quite possible that the Kremlin is making empty
threats to goad the Caucasian leaders into taking more steps to develop
their respective economies. On July 19, Murat Zyazikov, the president of
Ingushetia, took part in the opening ceremony for a new television
communications equipment factory. He promised in his speech that up to
50 other factories would be built in the republic in near future. "The
main objective is to decrease subsidies. We want the republic to be
self-sufficient," Zyazikov declared (regnum.ru, July 19). Clearly,
Zyazikov wants to demonstrate that there is no need for the federal
authorities to control cash flows to his region. The Ingush president,
whom the local opposition has long accused of corruption, believes he
can do it himself.
The response of other Caucasian leaders to the latest Kozak statement is
not known yet, but there is no doubt that all of them will try one way
or another to persuade the Kremlin that they still can control the
situation at least in the economic sector. Nevertheless, it is unlikely
that they will be able to produce arguments strong enough to calm down
Russian authorities. Moscow is ready for radical changes. If the
situation in the Caucasus continues to deteriorate, even Moscow's
best-behaved puppet leaders will be totally removed from the
decision-making process and will be replaced by groups of Russian
officials executing orders coming directly from the center.
--Andrei Smirnov
RUSSIAN TAKEOVER OF ARMENIAN POWER GRID PROMPTS CONCERN
Armenia is under fire from the United States and other Western donors
over the legally questionable transfer of its electricity distribution
network to Russia's Unified Energy Systems (UES). The deal could have
far-reaching repercussions for the country's economic independence and
hamper continued Western assistance to its government.
UES announced on June 30 that one of its obscure subsidiaries had paid
million to buy the Electricity Networks of Armenia (ENA) from Midland
Resources Holding, a British-registered firm that privatized the utility
three years ago. The move followed months of speculation that the
state-owned Russian conglomerate was close to getting hold of ENA. ENA
denied the information, insisting that its parent company signed only a
management contract with the Russians.
UES issued a similar "retraction" on July 13, saying through a
spokeswoman that it will manage, not own, the Armenian power grids.
However, the UES website still carries a short appendix to the company's
annual financial report which states that Interenergo "acquired 100
percent of shares" in ENA last month. Under the terms of ENA's 2002
privatization, Midland Resources needs the Armenian government's
permission to transfer the ownership or management of the utility to
another foreign investor. Midland Resources, owned by a Russian-born
Canadian businessman, has not officially asked the government for such
permission. Not that it is pressed to do so by the latter.
The Armenian authorities' obvious reluctance to deal with the issue has
drawn strong criticism from the World Bank. The head of the bank's
Yerevan office, Roger Robinson, said on July 13 that the lack of
transparency in the process raises serious questions about the rule of
law in Armenia. Robinson also dismissed as a "joke" claims that UES paid
a lump sum for the right to run the Armenian utility. "When you have a
management contract you normally pay somebody to manage something," he
said. "It seems in this case there is something all the way around."
In an extraordinary statement on July 19, the U.S. government's Agency
for International Development (USAID) likewise said the Russian takeover
of ENA occurred "without following important Armenian government
regulations." USAID also said that it is "reviewing" its assistance
projects in Armenia pending official explanations from its government.
Western donors, who have heavily financed the decade-long reform of the
Armenian energy sector, have reason to be concerned about ENA's fate.
The reform not only ended Armenia's severe energy crisis of the early
and mid-1990s but also turned the tiny landlocked country into a leading
regional exporter of electricity. One of its key components has been the
separation of facilities generating, transmitting, and distributing
electricity.
UES already owns Armenia's largest thermal power plant and several
hydroelectric plants and manages the finances of the Metsamor nuclear
station as a result of controversial swap agreements that settled
Yerevan's debts to Moscow. Those facilities together account for over
80% of Armenian electricity production. ENA's takeover will give the
Russians almost 100% control over Armenia's energy sector. The West is
also clearly worried about the political implications of this
dependence.
As recently as March 3 Armenian Energy Minister Armen Movsisian publicly
spoke out against selling the power distribution network to UES, arguing
that the Russian giant should not monopolize the sector. The issue is
thought to have been high on the agenda of Russian President Vladimir
Putin's visit to Yerevan that took place three weeks later. Whether or
not Putin and his Armenian counterpart, Robert Kocharian, cut any deals
at the time is still unknown.
"Hardly anyone doubts that Midland Resources has sold the Electricity
Networks of Armenia," the Yerevan daily Haykakan Zhamanak commented on
July 9. "That they sold it with the unpublicized blessing of our
government is also beyond doubt."
Another paper, Golos Armenii, on July 16 quoted a former parliamentarian
with business interests in Russia, Taron Sahakian, as saying that the
UES management offered him last year to act as an intermediary in its
efforts to buy ENA. Sahakian claimed that the Russians expected him to
"resort to actions escalating the political situation" in Armenia in
case their bid for ENA met with serious resistance.
Dealings with Russia are one of the least transparent areas of
governance in Armenia and the exclusive domain of Kocharian and his
chief lieutenant, Defense Minister Serge Sarkisian. Decisions crucial
for Armenia, notably the equities-for-debt agreements, usually come as a
result of the two men's frequent trips to Moscow. Armenia's cabinet of
ministers and parliament have little say in Russia-related decision
making.
The ENA affair illustrates that, for all its efforts to forge closer
links with the United States and Europe, the Kocharian-Sarkisian duo
still rarely defies the Kremlin on major issues. Armenia and Russia, for
example, were the only members of the Council of Europe that accepted
the outcome of Ukraine's fraudulent presidential election in November
2004.
Such decisions put Yerevan at odds with not only Western donors.
Kocharian's regime bowed to Russian pressure to ensure that an
Iran-Armenia natural gas pipeline, which is currently under
construction, has a small diameter. This will almost certainly prevent
the pipeline's extension to Georgia and other countries dependent on
Russian gas, denying Armenia potential revenues from transit fees.
Local observers say Armenia is paying too heavy a price for its
"strategic partnership" with Russia. "There are both Armenian and
Russian fairy tales about the younger, stupid brother," Ara Galoyan of
168 Zham observed tartly. "But only in Russian fairly tales does the
stupid brother always emerge as a winner."
(Statement by USAID, July 19; Haykakan Zhamanak, July 20, July 9; Golos
Armenii, July 16; RFE/RL Armenia Report, July 13; 168 Zham, July 7-13)
--Emil Danielyan
MOSCOW BOOSTS SECURITY IN THE FAR EAST
>From July 18 to 24, Russia is holding large-scale military maneuvers
aimed at countering potential terrorist attacks in its Far East region.
However, since terrorists have not yet really targeted Russia's Far
East, the drill is understood to have other purposes as well.
The drill, code named "Vostok 2005," aims at preparing for "the fight
against international terrorism in all its aspects," according to the
Russian Ministry of Defense. The military exercise is designed to boost
security in order to confront "separatists, radical
religious-nationalist movements, and international radical groups,"
according to a Ministry statement. Furthermore, the maneuvers aim at
training "practical measures to forestall attempts to undermine Russian
territorial integrity."
The official Ministry of Defense statement fails to reveal what group
might try to undermine Russian territorial integrity in the Far East or
how they would accomplish this goal. However, the drill involves
significant numbers of troops: more than 5,000 personnel from the land
forces, air force, railway, and Interior Ministry.
The war games appear to indicate that Russian military planners still
emphasize conventional, large-scale warfare. Troops of the 5th Army,
based in Ussuriisk, Primorie region, and the 35th Army, based in
Belogorsk, Amur region, as well as the 83rd paratrooper brigade, the
14th spetsnaz special brigade, and the 55th marine brigade from
Vladivostok are participating, according to Russian media reports. The
drill also involves five Su-24 jet fighters of the 11th air force army,
as well as two Su-25.
The first Far Eastern war games were held in 2002. Two years later, in
June 2004, Russian President Vladimir Putin visited the Pacific Fleet's
Rybachy submarine base (Kamchatka oblast) to observe the "Mobility 2004"
exercises. Putin's presence at the drill indicated the Kremlin's concern
with Far Eastern security issues.
The 2005 drill, held under the command of General Yuri Baluyevsky, chief
of staff of the Russian armed forces, and General Vladimir Bulgakov,
deputy commander of the Russian land forces, is divided in two stages.
The first stage, July 18-21, involves anti-terrorist operations, while
the second stage, July 21-24, is devoted to training troops to repel
outside intervention.
However, many Russian media outlets were not really impressed by the war
games and did not accept the official "anti-terrorist" rationale for the
drill. Only Trud (July 18) described the drill as major maneuvers of
strategic importance. Other publications sounded somewhat critical.
The location of the anti-terrorism drill sparked confusion, as the
Russian Far East faces more pressing challenges and threats than
terrorism, Strana.ru commented on July 19. Drills like "Vostok 2005" may
possibly boost Russian military clout in the region, but they are
unlikely to solve other problems, such as security on the Korean
peninsula and the long-standing territorial dispute over the Kuril
Islands, Strana.ru said.
The 11th air force army would be taught to combat bandits, Lenta.ru
ironically commented on July 18. Kommersant speculated that some of
"Vostok 2005" troops could take part in joint exercises with China next
month (Kommersant, July 19).
However, the military officially confirmed a Chinese connection with the
"Vostok 2005" drill. According to General Baluyevsky, the drill aims at
improving coordination between troops of the Far Eastern military
district and forces of the Pacific Fleet. In a report released by the
Far Eastern military district press office on July 19, Baluyevsky is
quoted as saying, "I have a number of strategic issues to explore during
the maneuvers." Furthermore, "special attention" would be given to
preparations for joint maneuvers with China in mid-August," he said.
Russia is scheduled to hold unprecedented joint war-games with China on
August 12-26, 2005. The exercise was first mentioned in a memorandum of
understanding between the Vice-Chairman of the Chinese Central Military
Commission, Guo Boxiong, and Russian Defense Minister Sergei Ivanov in
July 2004. China and Russia first revealed plans for joint military
exercises in December 2004, when Ivanov visited China. The war games are
expected to involve Russia's strategic Tu-95MS bombers firing cruise
missiles, presumably to drill on how to overcome missile defense
systems.
Defense ministers from other Shanghai Cooperation Organization
member-states, namely Kazakhstan, Kyrgyzstan, Tajikistan, and
Uzbekistan, are due to observe the August drill. Strana.ru said that the
drill coincided with speculation that Beijing could hope to set up a
military base in Kyrgyzstan, which would be the first People's
Liberation Army facility outside China.
However, Russian strategists have a number of Far Eastern issues to
explore. For example, some time ago Russian media were prone to
speculate about possible Russian military involvement in Korea.
"Russia's best response to a possible nuclear conflict on the Korean
Peninsula would be a preemptive missile strike against North Korean
nuclear facilities, carried out by the Russian Pacific Fleet," the
country's leading daily, Izvestiya, claimed two years ago. The daily
also quoted anonymous Pacific Fleet sources as saying that Russia's
Varyag cruiser would be able to use its cruise missiles and destroy
North Korean launch facilities.
Yet apart from Izvestiya's odd leak, the Kremlin has repeatedly offered
to mediate in the Korean stand off. President Putin has repeatedly
argued that Pyongyang is unlikely to draft any aggressive plans and also
urged to provide North Korea with guarantees of non-aggression.
Thus the Russian war games may not involve training for preemptive
strikes against North Korea. However, "Vostok 2005" appears to indicate
Moscow's growing interest in Far Eastern security, which is not
surprising on the eve of unprecedented joint war games with China next
month.
--Sergei Blagov
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The Eurasia Daily Monitor, a publication of the Jamestown Foundation, is
edited by Ann E. Robertson. The opinions expressed in it are those of
the individual authors and do not necessarily represent those of the
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Copyright (c) 1983-2005 The Jamestown Foundation.
Thursday, July 21, 2005 -- Volume 2, Issue 141
EURASIA DAILY MONITOR
IN THIS ISSUE:
*U.S. Defense Secretary to discuss basing issue on visit to Bishkek
*Putin makes unannounced visit to Dagestan
*Unified Energy buys major section of Armenian electricity network
*Russia stages anti-terrorist exercises in the Far East
----------------------------------------------------------------------------
RUMSFELD EXPECTED IN KYRGYZSTAN TO SETTLE BASE ISSUE
On July 20, Kyrgyzstan's Ministry of Defense announced that U.S. Defense
Secretary Donald Rumsfeld is expected to arrive on July 25. Rumsfeld
will discuss the future of the U.S.-led air base Manas with the new
Kyrgyz leadership, in the wake of Moscow- and Beijing-inspired demands
to set a deadline on the presence of U.S.-led coalition forces in
Central Asia. Meanwhile, French Defense Minister Michèle Aliot-Marie
is arriving in Tajikistan on July 22 hoping to firm up the arrangements
for French use of the Dushanbe and possibly also Kulob airports.
For its part, on July 20 Moscow again urged the Central Asian
governments, through Collective Security Treaty Organization
Secretary-General Nikolai Bordyuzha, to raise with the United States the
issue of a deadline to the U.S.-led coalition's presence, in line with
the Shanghai Cooperation Organization's (SCO) declaration at the July 5
summit in Kazakhstan (see EDM, July 6).
"Bullied by two big countries" [Russia and China], as General Richard
Myers, Chairman of the U.S. Joint Chiefs of Staff, remarked, Kyrgyzstan
and Tajikistan now seem to be trying to wiggle out of a Russo-Chinese
vise. In the wake of the July 5 summit, Kyrgyz President Kurmanbek
Bakiyev and Minister of Foreign Affairs Roza Otunbayeva toed Moscow's
line and repeated, on Kyrgyzstan's behalf, the demand for a deadline to
the U.S. presence. Other Kyrgyz officials, however, have begun finessing
that demand, even reinterpreting it to permit continuation of the status
quo.
Thus, Bakiyev's press spokesman, Avazbek Atakhanov, argues that the SCO
summit's declaration only referred to coalition bases in Central Asia as
a region, without naming any country. The implication is that Kyrgyzstan
is not bound by that document. The spokesman's interpretation in effect
reverses Bakiyev's acceptance of that document with a public bow to
"Vladimir Vladimirovich" [Putin]. Atakhanov stated that he was speaking
on Bakiyev's behalf. The president himself, however, has yet to adjust
his position. (Interfax, Kyrgyz Radio, July 18).
Some key members of the ruling circles seem inclined to approve the
further operation of the American air base without significant changes.
They signal such a preference as part of larger calculations to continue
Kyrgyzstan's established policy of balancing among Russia, China, and
the United States. "This is where the interests of the three great
powers intersect. We have to ensure that our security and economic
interests are protected," said Kyrgyzstan's Security Council Secretary,
Miroslav Niyazov, citing the government's intention to "do its best to
avoid spoiling relations with Washington." In a similar vein, Bakiyev's
adviser Bolotbek Shamshiyev went on record to rule out any significant
change of policy toward the United States, including on the issue of the
air base (AFP, July 16; Institute on War and Peace Reporting Report no.
396, July 15).
The prospective Kyrgyz Prime Minister, Felix Kulov, went on record early
on as favoring both the continuation of the status quo regarding the
American air base and the introduction of a Russian military "presence"
(as distinct from base) in Osh. "Kyrgyzstan should conduct a
multi-layered policy, to become a country where relations between the
great powers meet and harmonize." Along with some other officials, Kulov
cites the ongoing, worldwide terrorist attacks as an argument for the
continuing operation of Manas: "Events in London show that international
terrorism can not be defeated any time soon. The issue of a time-line
[for Manas] is closely linked with such events that are taking place not
only on our continent, but also elsewhere" (Kyrgyz TV Channel One, July
14; AFP, July 16).
Kyrgyzstan's Acting Defense Minister, General Ismail Isakov, met with
U.S. Ambassador Stephen Young on July 20 in preparation for Rumsfeld's
visit. The Ministry's press release -- and local reports based on it --
seems to contain the outline of a solution. The United States would be
expected to continue financial and security assistance to Kyrgyzstan for
an extended period, in return for open-ended American use of the Manas
air base (Kabar news agency, Interfax, July 20).
--Vladimir Socor
KREMLIN GROWS WARY OF NORTH CAUCASUS GOVERNMENTS
On July 15, Russian President Vladimir Putin made an unannounced visit
to the North Caucasus republic of Dagestan, the very place where he
began his climb to the presidency in 1999. In August 1999, Islamic
militants from neighboring Chechnya invaded two districts of Dagestan,
and Putin, the freshly minted Russian prime minister, went to the
republic to encourage the soldiers and security service officers
fighting against the invaders. Putin not only reassured the servicemen
whom he visited on the frontline, but his actions calmed the worries of
most of the Russian public as well. The Russians saw Putin as a figure
who could stop the chain of humiliating defeats in the Caucasus, who
could restore control over Chechnya, and who could erect a barrier to
separatism and Islamic extremism throughout the region. In 1999 Putin
looked confident and determined to fulfill his mission.
The atmosphere surrounding his second visit to Dagestan was quite
different. The reason for this journey was the recent upswing in attacks
by local rebels. After six years of an extremely hard-line policy based
on unlimited use of force in the North Caucasus, Putin still faces the
same problem in the region: militant separatism.
Unlike his first visit, this time Putin looked disappointed and
criticized security officials for their inability to suppress the
insurgency. The Russian president went to the republic accompanied by
his key advisors, including Sergei Ivanov, minister of defense, and
Vladimir Patrushev, director of the Federal Security Service (FSB).
Under heavy security, Putin inspected the FSB training center near
Makhachkala, the capital of Dagestan, and a frontier station in the
mountains. He did not hide his dissatisfaction with how the siloviki had
been doing their job. For example, after inspecting new winter footwear
for Russian Special Forces operating in the mountains, Putin declared
the boots unacceptable for flat land, let alone mountains. Putin noted
that the Chief of Staff had told him that the mountain units existed in
Russia, but sarcastically commented, "I do not know where they are," as
they appear to be ineffective. Addressing the servicemen, Putin said,
"When there are problems with terrorism somewhere, ordinary military
units are usually sent there, but they do not have any special training
or equipment." The Russian president wanted special mountain brigades to
be formed as fast as possible and deployed in
Dagestan and Karachaevo-Cherkessia, another restive republic in the
western part of the North Caucasus. He expressed his hope that these
brigades would also help the Russian Ministry of Interior Affairs better
control Dagestan (SMI.ru, July 18).
Interestingly, Putin paid almost no attention to the locals. He had a
brief, private meeting with Magomed Magomedov, the Dagestani leader, and
met the head of Botlikh district, but only because the mountain brigade
will be located in that area. Leaving the region, the president said,
"One can't say that we did everything [necessary] to feel calm" (SMI.ru,
July 18). Some observers in Russia regarded this phrase as a sign that
Moscow officials would strengthen their control over Dagestan. This
interpretation very quickly proved correct.
Barely 24 hours later, Dmitry Kozak, the presidential envoy to the
Southern Federal District, announced, "The influence of the federal
security agencies will be increasing in Dagestan." Kozak added,
"Operative working groups of the Ministry of Interior Affairs and FSB
have already been working in the republic" (Interfax, July 16). The
discredited local police departments were denied any information about
preparations for operations against the rebels. On July 13, a Russian
Special Forces unit surrounded a group of gunmen in Makhachkala, but the
city police department knew nothing about the ongoing operation
(Kavkazsky uzel, July 13).
At the same time, the Kremlin initiated a process of transferring
civilian administrative levers to officials from Moscow, in Dagestan and
beyond.
On July 18, Kozak declared, "The level of sovereignty of the regions
will depend on their subsidy." Specifically, he said those regions that
are at least 80% subsidized from the federal budget should cede part of
their power to Moscow. The envoy gave six examples of such regions, four
of them being Caucasian republics, including Chechnya, Dagestan,
Ingushetia, and Kabardino-Balkaria (RIA-Novosti, July 18).
However, it is also quite possible that the Kremlin is making empty
threats to goad the Caucasian leaders into taking more steps to develop
their respective economies. On July 19, Murat Zyazikov, the president of
Ingushetia, took part in the opening ceremony for a new television
communications equipment factory. He promised in his speech that up to
50 other factories would be built in the republic in near future. "The
main objective is to decrease subsidies. We want the republic to be
self-sufficient," Zyazikov declared (regnum.ru, July 19). Clearly,
Zyazikov wants to demonstrate that there is no need for the federal
authorities to control cash flows to his region. The Ingush president,
whom the local opposition has long accused of corruption, believes he
can do it himself.
The response of other Caucasian leaders to the latest Kozak statement is
not known yet, but there is no doubt that all of them will try one way
or another to persuade the Kremlin that they still can control the
situation at least in the economic sector. Nevertheless, it is unlikely
that they will be able to produce arguments strong enough to calm down
Russian authorities. Moscow is ready for radical changes. If the
situation in the Caucasus continues to deteriorate, even Moscow's
best-behaved puppet leaders will be totally removed from the
decision-making process and will be replaced by groups of Russian
officials executing orders coming directly from the center.
--Andrei Smirnov
RUSSIAN TAKEOVER OF ARMENIAN POWER GRID PROMPTS CONCERN
Armenia is under fire from the United States and other Western donors
over the legally questionable transfer of its electricity distribution
network to Russia's Unified Energy Systems (UES). The deal could have
far-reaching repercussions for the country's economic independence and
hamper continued Western assistance to its government.
UES announced on June 30 that one of its obscure subsidiaries had paid
million to buy the Electricity Networks of Armenia (ENA) from Midland
Resources Holding, a British-registered firm that privatized the utility
three years ago. The move followed months of speculation that the
state-owned Russian conglomerate was close to getting hold of ENA. ENA
denied the information, insisting that its parent company signed only a
management contract with the Russians.
UES issued a similar "retraction" on July 13, saying through a
spokeswoman that it will manage, not own, the Armenian power grids.
However, the UES website still carries a short appendix to the company's
annual financial report which states that Interenergo "acquired 100
percent of shares" in ENA last month. Under the terms of ENA's 2002
privatization, Midland Resources needs the Armenian government's
permission to transfer the ownership or management of the utility to
another foreign investor. Midland Resources, owned by a Russian-born
Canadian businessman, has not officially asked the government for such
permission. Not that it is pressed to do so by the latter.
The Armenian authorities' obvious reluctance to deal with the issue has
drawn strong criticism from the World Bank. The head of the bank's
Yerevan office, Roger Robinson, said on July 13 that the lack of
transparency in the process raises serious questions about the rule of
law in Armenia. Robinson also dismissed as a "joke" claims that UES paid
a lump sum for the right to run the Armenian utility. "When you have a
management contract you normally pay somebody to manage something," he
said. "It seems in this case there is something all the way around."
In an extraordinary statement on July 19, the U.S. government's Agency
for International Development (USAID) likewise said the Russian takeover
of ENA occurred "without following important Armenian government
regulations." USAID also said that it is "reviewing" its assistance
projects in Armenia pending official explanations from its government.
Western donors, who have heavily financed the decade-long reform of the
Armenian energy sector, have reason to be concerned about ENA's fate.
The reform not only ended Armenia's severe energy crisis of the early
and mid-1990s but also turned the tiny landlocked country into a leading
regional exporter of electricity. One of its key components has been the
separation of facilities generating, transmitting, and distributing
electricity.
UES already owns Armenia's largest thermal power plant and several
hydroelectric plants and manages the finances of the Metsamor nuclear
station as a result of controversial swap agreements that settled
Yerevan's debts to Moscow. Those facilities together account for over
80% of Armenian electricity production. ENA's takeover will give the
Russians almost 100% control over Armenia's energy sector. The West is
also clearly worried about the political implications of this
dependence.
As recently as March 3 Armenian Energy Minister Armen Movsisian publicly
spoke out against selling the power distribution network to UES, arguing
that the Russian giant should not monopolize the sector. The issue is
thought to have been high on the agenda of Russian President Vladimir
Putin's visit to Yerevan that took place three weeks later. Whether or
not Putin and his Armenian counterpart, Robert Kocharian, cut any deals
at the time is still unknown.
"Hardly anyone doubts that Midland Resources has sold the Electricity
Networks of Armenia," the Yerevan daily Haykakan Zhamanak commented on
July 9. "That they sold it with the unpublicized blessing of our
government is also beyond doubt."
Another paper, Golos Armenii, on July 16 quoted a former parliamentarian
with business interests in Russia, Taron Sahakian, as saying that the
UES management offered him last year to act as an intermediary in its
efforts to buy ENA. Sahakian claimed that the Russians expected him to
"resort to actions escalating the political situation" in Armenia in
case their bid for ENA met with serious resistance.
Dealings with Russia are one of the least transparent areas of
governance in Armenia and the exclusive domain of Kocharian and his
chief lieutenant, Defense Minister Serge Sarkisian. Decisions crucial
for Armenia, notably the equities-for-debt agreements, usually come as a
result of the two men's frequent trips to Moscow. Armenia's cabinet of
ministers and parliament have little say in Russia-related decision
making.
The ENA affair illustrates that, for all its efforts to forge closer
links with the United States and Europe, the Kocharian-Sarkisian duo
still rarely defies the Kremlin on major issues. Armenia and Russia, for
example, were the only members of the Council of Europe that accepted
the outcome of Ukraine's fraudulent presidential election in November
2004.
Such decisions put Yerevan at odds with not only Western donors.
Kocharian's regime bowed to Russian pressure to ensure that an
Iran-Armenia natural gas pipeline, which is currently under
construction, has a small diameter. This will almost certainly prevent
the pipeline's extension to Georgia and other countries dependent on
Russian gas, denying Armenia potential revenues from transit fees.
Local observers say Armenia is paying too heavy a price for its
"strategic partnership" with Russia. "There are both Armenian and
Russian fairy tales about the younger, stupid brother," Ara Galoyan of
168 Zham observed tartly. "But only in Russian fairly tales does the
stupid brother always emerge as a winner."
(Statement by USAID, July 19; Haykakan Zhamanak, July 20, July 9; Golos
Armenii, July 16; RFE/RL Armenia Report, July 13; 168 Zham, July 7-13)
--Emil Danielyan
MOSCOW BOOSTS SECURITY IN THE FAR EAST
>From July 18 to 24, Russia is holding large-scale military maneuvers
aimed at countering potential terrorist attacks in its Far East region.
However, since terrorists have not yet really targeted Russia's Far
East, the drill is understood to have other purposes as well.
The drill, code named "Vostok 2005," aims at preparing for "the fight
against international terrorism in all its aspects," according to the
Russian Ministry of Defense. The military exercise is designed to boost
security in order to confront "separatists, radical
religious-nationalist movements, and international radical groups,"
according to a Ministry statement. Furthermore, the maneuvers aim at
training "practical measures to forestall attempts to undermine Russian
territorial integrity."
The official Ministry of Defense statement fails to reveal what group
might try to undermine Russian territorial integrity in the Far East or
how they would accomplish this goal. However, the drill involves
significant numbers of troops: more than 5,000 personnel from the land
forces, air force, railway, and Interior Ministry.
The war games appear to indicate that Russian military planners still
emphasize conventional, large-scale warfare. Troops of the 5th Army,
based in Ussuriisk, Primorie region, and the 35th Army, based in
Belogorsk, Amur region, as well as the 83rd paratrooper brigade, the
14th spetsnaz special brigade, and the 55th marine brigade from
Vladivostok are participating, according to Russian media reports. The
drill also involves five Su-24 jet fighters of the 11th air force army,
as well as two Su-25.
The first Far Eastern war games were held in 2002. Two years later, in
June 2004, Russian President Vladimir Putin visited the Pacific Fleet's
Rybachy submarine base (Kamchatka oblast) to observe the "Mobility 2004"
exercises. Putin's presence at the drill indicated the Kremlin's concern
with Far Eastern security issues.
The 2005 drill, held under the command of General Yuri Baluyevsky, chief
of staff of the Russian armed forces, and General Vladimir Bulgakov,
deputy commander of the Russian land forces, is divided in two stages.
The first stage, July 18-21, involves anti-terrorist operations, while
the second stage, July 21-24, is devoted to training troops to repel
outside intervention.
However, many Russian media outlets were not really impressed by the war
games and did not accept the official "anti-terrorist" rationale for the
drill. Only Trud (July 18) described the drill as major maneuvers of
strategic importance. Other publications sounded somewhat critical.
The location of the anti-terrorism drill sparked confusion, as the
Russian Far East faces more pressing challenges and threats than
terrorism, Strana.ru commented on July 19. Drills like "Vostok 2005" may
possibly boost Russian military clout in the region, but they are
unlikely to solve other problems, such as security on the Korean
peninsula and the long-standing territorial dispute over the Kuril
Islands, Strana.ru said.
The 11th air force army would be taught to combat bandits, Lenta.ru
ironically commented on July 18. Kommersant speculated that some of
"Vostok 2005" troops could take part in joint exercises with China next
month (Kommersant, July 19).
However, the military officially confirmed a Chinese connection with the
"Vostok 2005" drill. According to General Baluyevsky, the drill aims at
improving coordination between troops of the Far Eastern military
district and forces of the Pacific Fleet. In a report released by the
Far Eastern military district press office on July 19, Baluyevsky is
quoted as saying, "I have a number of strategic issues to explore during
the maneuvers." Furthermore, "special attention" would be given to
preparations for joint maneuvers with China in mid-August," he said.
Russia is scheduled to hold unprecedented joint war-games with China on
August 12-26, 2005. The exercise was first mentioned in a memorandum of
understanding between the Vice-Chairman of the Chinese Central Military
Commission, Guo Boxiong, and Russian Defense Minister Sergei Ivanov in
July 2004. China and Russia first revealed plans for joint military
exercises in December 2004, when Ivanov visited China. The war games are
expected to involve Russia's strategic Tu-95MS bombers firing cruise
missiles, presumably to drill on how to overcome missile defense
systems.
Defense ministers from other Shanghai Cooperation Organization
member-states, namely Kazakhstan, Kyrgyzstan, Tajikistan, and
Uzbekistan, are due to observe the August drill. Strana.ru said that the
drill coincided with speculation that Beijing could hope to set up a
military base in Kyrgyzstan, which would be the first People's
Liberation Army facility outside China.
However, Russian strategists have a number of Far Eastern issues to
explore. For example, some time ago Russian media were prone to
speculate about possible Russian military involvement in Korea.
"Russia's best response to a possible nuclear conflict on the Korean
Peninsula would be a preemptive missile strike against North Korean
nuclear facilities, carried out by the Russian Pacific Fleet," the
country's leading daily, Izvestiya, claimed two years ago. The daily
also quoted anonymous Pacific Fleet sources as saying that Russia's
Varyag cruiser would be able to use its cruise missiles and destroy
North Korean launch facilities.
Yet apart from Izvestiya's odd leak, the Kremlin has repeatedly offered
to mediate in the Korean stand off. President Putin has repeatedly
argued that Pyongyang is unlikely to draft any aggressive plans and also
urged to provide North Korea with guarantees of non-aggression.
Thus the Russian war games may not involve training for preemptive
strikes against North Korea. However, "Vostok 2005" appears to indicate
Moscow's growing interest in Far Eastern security, which is not
surprising on the eve of unprecedented joint war games with China next
month.
--Sergei Blagov
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