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Hmm?

March 15, 2008 1631 GMT
Russian security forces foiled a sniper’s March 2 attempt to assassinate President Vladimir Putin, Reuters reported March 15, citing Moscow tabloid Tvoi Den. An unnamed source told Tvoi Den a sniper was arrested before Putin entered the Kremlin gates to attend a concert next to the Red Square. The Kremlin declined to comment on the report, and a security source quoted by Itar-Tass denied the report.
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MOSCOW, January 31 (RIA Novosti) – Russia’s Finance Ministry said on Thursday it had divided the Stabilization Fund, set up to accrue surplus revenue from high world oil prices, into the Reserve Fund and the National Prosperity Fund.

The Stabilization Fund held 3.852 trillion rubles ($157 billion) as of January 30.

Pyotr Kazakevich, deputy director of the ministry’s department for international financial relations, government debt and government finances, said the Stabilization Fund was transformed on January 30, when its assets were credited to the accounts of the new funds.

The Reserve Fund, designed to cushion the federal budget in the event of an oil price plunge, totaled 3.069 trillion rubles ($125 billion) just after its formation, while the National Prosperity Fund, expected to help Russia carry through pension reforms, held 783 billion rubles ($32 billion), Kazakevich said.

The ministry official said that 80% of resources in the newly created funds will be invested in government bonds of countries approved by the Russian government, 15% in the bonds of foreign government agencies and central banks, and 5% in international financial institutions.

From not too long ago:

… Some analysts have speculated that the Kremlin-friendly oligarch Oleg Deripaska was roped in by the state to buy the country’s seventh-largest oil producer, Russneft, which is struggling under the weight of hundreds of millions of dollars in tax claims. Its former president, Mikhail Gutseriyev, was recently placed on an Interpol wanted list after fleeing the country to escape what he has called politically motivated charges against him.

The campaign against Gutseriyev and Russneft has prompted comparisons with Yukos, which was felled by more than $30 billion in back tax claims and the jailing of its founder, Mikhail Khodorkovsky. Khodorkovsky accused Igor Sechin, Putin’s deputy chief of staff and chairman of Rosneft’s board, of orchestrating the campaign against him.

Rosneft has now gobbled up most of Yukos’s assets, growing from a middling oil concern into the country’s largest oil company mainly through its purchase of Yukos’s largest production units, Yuganskneftegaz, Tomskneft and Samaraneftegaz. Absorbing those acquisitions will take up much of Rosneft’s attention as it prepares to go global and challenge the likes of Shell and BP.

Sechin must be pretty fat and happy right now. He has been agitating for exactly this for a while.

Rosneft has been like a python trying to digest a cow — its gobbling up of Yukos was funded by $23 billion in debt. Sechin has been mad about it ever since, and he saw the $157 billion in reserves as the solution to his problem. I guess he got what he wanted.

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Stratfor tells us that Yuri Luzhkov, Moscow’s hybrid of Bill Daley and Al Capone, is in Vladimir Putin’s sights.

Luzhkov wields unprecedented mayoral power over the Russian capital, with close ties to major bankers, media moguls and the city’s biggest businesses. When he became mayor in 1992, his wife Yelena’s small construction company, Inteco, burst onto the Moscow scene, performing 20 percent of all construction work in the capital. Now, Inteco accounts for most of the construction in Moscow and many other cities, making Yelena Russia’s only female billionaire. …

Putin has long wanted to go after Luzhkov and end his reign over Moscow and the construction business, but the president has held back because of Luzhkov’s many political backers in the Duma and supposed Mafia ties. Moreover, Luzhkov is on the board of Putin’s political party, United Russia.

The straw that broke Putin’s back was the December 2007 legislative elections; not only was voter turnout in Moscow low, but votes for United Russia also were abysmal. …

Stratfor sources say Putin has given Luzhkov until the fall to tie up loose ends in his mayoral post, and he must then resign. Moreover, Putin is already clearing out Luzhkov’s supporters in the Duma, stripping Alexander Chiligarov of the Duma vice presidency and Iosif Kobozon of his place on the Duma Commission.

It remains to be seen if Putin will just strip Luzhkov of his mayoral title or if he intends to go after the mayor and his wife’s construction and real estate empire. Many Kremlin insiders and other oligarchs have been salivating at the thought of getting their hands on Luzhkov’s assets.

But Luzhkov is not the sort to go quietly. He still has some tools — mainly his alleged ties to the largest Mafia in Russia — that he might be tempted to use against Putin and the Kremlin, though making such a move would amount to suicide.

But on the other hand, Putin could use this time to prove to the Moscow Mafia that his control over the country will not be shaken by any move that the Mafia — or anyone else — would want to make against the Kremlin. Some of Putin’s loyalists allegedly have their own ties to the Moscow Mafia, and the president could use the Mafia members who supposedly are connected to Kremlin insiders against those said to be loyal to Luzhkov, fracturing one of the most powerful mafias in the world.

I don’t know that much about Russian politics, and most of what I do know, I learn from Stratfor first. But it bears repeating, over and over again, that one sniper bullet between the eyes of Putin, Vladislav Surkov, Igor Sechin, Dmitri Medvedev, Alexei Miller, or Oleg Deripaska would probably spark another violent spiral into 1990’s-style gangland warfare.

Putin has not been making very many friends on the Russian political scene. The KGB/FSB, the institution that made him, is bridling at the material damage Putin has inflicted upon the clan of Igor Sechin, which basically comprises the Ministry of Justice, the old-line security bureaucracies, and Rosneft (the devourer of Mikhail Khodorkovsky’s Yukos).

Yuri Luzhkov is a billionaire many times over, and Moscow is his fief. If he goes, his construction and real estate empire (nominally his wife’s) will exist solely at the pleasure of Putin’s clique — which has shown itself to be ruthlessly acquisitive against “big boys” who aren’t part of the Kremlin club.

Even if Luzhkov is willing to run that risk (which is doubtful), what about Moscow mafiosi, who probably murdered central banker Andrei Kozlov, among thousands of other important people over the past eight years?

One day, somebody will refuse to yield his fief. Everyone who has seen his fief cut back or wholly confiscated during the Putin years will be thirsty for revenge.

The Kremlin has become a clearinghouse for political power, and Putin is its chief market maker. But Sechin’s entire clan (the Rosneft bloc) is restless at the growth of Surkov’s Gazprom clan. As Putin demonstrated in his liquidation of Vladimir Barsukov’s Tambov mafia, Putin is not loyal to the institutions which made him the power he is.

Putin holds substantial power and wealth himself, and through Surkov and Deripaska he has the allegiance of much more. But the Yeltsin oligarchs in exile have been fighting a war on the run with Putin for years — Boris Berezovsky, for example, has four identical limousines which take different routes to wherever he goes — and they have been out in the cold for a very long time. George Soros and Marc Rich have been fighting a different kind of battle with the Kremlin since well before Yeltsin’s day. The Sechin clique has been unhappy for its own reasons. The Tartarstan clique, a group of “Russian” Tartar and Bashkir oligarchs whose fiefdom has been functionally independent from Moscow for years, knows it is not far down Putin’s most-wanted-assets list, as well.

Putin has many committed enemies. From Putin’s track record, one doubts Putin has many reliable friends.

Luzhkov’s clique faces the choice between capitulation with uncertain results, “amiable exile” a la Roman Abramovitch, or standing for its fief, and hoping that other clans rally to it.

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The one rationalization I have gotten from the National Intelligence Estimate, a revolt by the CIA, DNI and probably the Navy which crushed America’s negotiating leverage with Iran over the future of Iraq, is that Israel cannot be a credible linchpin of American foreign policy after Hezbollah defeated them in 2006. Adding insult to injury, Israel further wrecked its credibility by allowing Ehud Olmert to keep power after the Israeli military’s biggest institutional failure since the Yom Kippur War of 1973. Basically, Olmert’s coalition partner, Labour, must put off a new election for as long as possible in the hope of turning its abysmal poll numbers around. Binyamin Netanyahu’s strategy of bolting from Ariel Sharon’s Kadima party has paid off, and Likud is poised to return to power in the coming election. Labour’s ideology of diplomacy with the Palestinians has fallen completely out of favor with the Israeli public. Their mooring to Olmert, combined with Labourite Defense Minister Amir Peretz’s shambolically politicized performance during the Lebanon war, have crippled Labour’s credibility.

Israel established a “blue-ribbon commission,” the Winograd committee, to ruthlessly analyze the what, when and why of Israel’s 2006 failures. Somehow, Olmert has apparently suppressed its findings for over a year, with the tacit support of Israel’s discredited Labour establishment. Israelis have not waited with such baited breath on one set of findings since they waited for Moses at the bottom of Mount Sinai.

Every “political analyst” thinks that the Winograd report will destroy Olmert, whenever it comes out. But everyone already knows Olmert and his clique performed disastrously. I am not sure what this changes, really. It’s analogous to publishing the number of bullets that hit somebody a year and a half after s/he was murdered. Everyone has already moved on.

Anyway, the FT thinks this will be a big deal.

Lebanon verdict puts Olmert in line of fire

By Tobias Buck

Published: January 29 2008 01:02 | Last updated: January 29 2008 01:02

They call him the “Houdini of Israeli politics”, but Ehud Olmert may well need more than the skills of the famous escape artist if he is to survive the latest challenge to his embattled tenure as prime minister.

On Wednesday, the high-profile Winograd committee will publish its findings into the government’s handling of the disastrous war in Lebanon in July and August 2006.

The report is widely expected to criticise Mr Olmert’s leadership both in the planning and execution of the war. Even before publication, it has triggered a wave of protests by the prime minister’s domestic opponents and families of soldiers who died.

The report will focus on the final two days of the conflict, when Israel threw its troops into a last-ditch battle against Hizbollah forces in southern Lebanon. The final assault was intended to inflict severe damage on the militia before a UN-sponsored ceasefire took effect on August 14. But the poorly executed attack changed little on the ground, and Hizbollah’s tough resistance killed 33 Israeli soldiers.

The episode came as a shocking blow to an Israeli public that is deeply attached to its revered armed forces and expects elected leaders to show a high degree of military competence.

Mr Olmert has declared that he will not step down in the wake of the report, and the Winograd committee is not expected to issue a direct call for the prime minister to leave office.

… But the man who may feel the pressure of the Winograd report even more intensely than Mr Olmert played no role in the war at all. Ehud Barak, the defence minister and leader of the Labour party, returned to politics only last year, joining Mr Olmert’s government more than 10 months after the last shot of the Lebanon war was fired.

In a promise that has come back to haunt him, Mr Barak at the time vowed to pull Labour out of the coalition government headed by Mr Olmert’s Kadima party after the publication of the Winograd committee’s findings.

The former prime minister now finds himself facing an unenviable choice. He can stick to his pledge, bring down the government, and force new elections.

But according to all opinion polls, a fresh vote would further reduce Labour’s seats in the Knesset, the Israeli parliament, and return his arch-rival, Benjamin Netanyahu of the right-wing Likud party, to the prime minister’s office.

To make matters worse, that outcome would almost certainly put an end to the Israeli-Palestinian peace talks – which enjoy the support of Labour voters.

Or Mr Barak can break his promise, and retain Labour’s crucial backing for the Olmert government. The defence minister knows, however, that this would deal a severe blow to his credibility and expose him to harsh attacks from both inside and outside the party.

Moreover, staying in the government may merely prolong the inevitable, with Mr Olmert’s fragile coalition already crumbling at the fringes.

Some officials and analysts point to a middle way. According to their scenario, Mr Barak could either force Mr Olmert to agree to early elections maybe a year from now, allowing the government to continue the peace talks and giving Mr Barak time to reverse Labour’s standing in the polls.

Or he could call on the Kadima party to replace Mr Olmert with another leader – most likely Tzipi Livni, the foreign minister – in return for staying in the coalition.

The ambitious Ms Livni has made no secret of her desire to replace the prime minister, and she and Mr Barak are said to have a good working relationship.

Without knowing the precise content of the report Israel’s political scene has entered a phase of fevered speculation. Mr Barak has so far refused to clarify his position, stressing that he will read the report first before deciding on a course of action.

For Mr Olmert, however, one thing is already clear. No matter how ingeniously he performs over the coming days, the fate of his government is now at least partly in the hands of Mr Barak.

The damage has already been done. Israel’s pathetically myopic execution of the war, and irresponsible aftermath, have damaged its credibility permanently. The United States’ Middle Eastern policy can now be summarized as “sustainable withdrawal.” Israel is a credible investment only insofar as it can exert vastly disproportionate leverage over Middle Eastern affairs, and it was manhandled by one arm of the Iranian state. Meanwhile, its politicians prefer throwing away the lives of Israeli soldiers to assuming responsibility.

Israel will be fine without the United States. It will always be a Jewish Switzerland, and Russia’s perpetually insecure Jewish oligarchs, e.g., Lev Leviev (diamonds), Roman Abramovitch (oil) and others, will always need a haven. (That was why Russia and Israel agreed to mutually unfettered immigration — russki have no interest in Israel, and Russian Israelis have no interest in going back, but Russian Jewish oligarchs need a place to go on very short notice.)

But the American-Israeli romance is drawing to a close.

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A massive throng of Georgians has protested Mikheil Saakashvili’s alleged victory in the most recent Georgian elections, where Saakashvili supposedly earned 53% of the vote.

Exactly three months ago, massive protests in Tbilisi, the capital of Georgia, nearly toppled the Saakashvili regime. Luckily, Saakashvili has been a favored recipient of funds from George Soros, via his friend Mark Malloch Brown at the UNDP (United Nations Development Programme). A gold-plated, foreign-funded budget has allowed Saakashvili to equip his soldiers with state of the art “nonlethal weaponry” such as acoustic cannons — ideal for crowd dispersion without spattering blood all over world television cameras.

Nonviolent crowd control only works if each side is confident that the other will not escalate to lethal force. It’s common knowledge in Georgia that massive amounts of foreign and Soros money are funding the Saakashvili regime, and that the “election monitors” who eagerly ratified Saakashvili’s alleged 53% have the same paymasters have the same paymasters as those who have bankrolled Saakashvili’s oh-so-nonviolent police army.

For many former subject peoples of Moscow, the choice is between Soros-phile oligarchs under UN auspices, and Moscow. Moscow is rapacious, but even Moscow is kinder (in the long run) than the likes of Leonid Kuchma, Anatoly Chubais, and Boris Berezovsky.

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While I don’t pay as much attention to Stratfor’s Mideast analyses as I used to, their CIS updates remain very interesting and far ahead of the mainstream media curve. Their “Russia — Struggles Within” pieces are of particular interest, and showcase the simmering instability of Russia’s elites as well as the very brittle nature of the institutions undergirding Putin’s novaya Russia.

Below are some of the most enlightening excerpts.

… Stratfor has followed Putin’s internal consolidation since he came to power in 2000. We also have tracked the power struggle under him, which seems to be just as nasty as — if not worse than — the previous power struggle among the old Kremlin clans.

The Old Clans

The former factions that fought for control of the Kremlin were fairly straightforward; most were leftovers from either the Soviet days or the Boris Yeltsin era. The three major factions within the Kremlin for most of Putin’s reign have been the siloviki, the Family (and its most prominent branch, the St. Petersburg brigade) and the oligarchs — though there were myriad smaller clans as well. …

[…]

As part of his plan to consolidate Russia politically, economically and socially, Putin has shattered most of the old clans, pulling those he trusts the most and those who are the most useful from each and placing them directly underneath him. …

However, as Putin dismantled the old factions, a new clan structure developed among those under him competing for power. … The two main clans under Putin are not of one ideology or social sphere but are instead organized under two competing power players — modern-day boyars of sorts: Vladislav Surkov and Igor Sechin. …

The first clan is under Surkov, Putin’s right-hand man and deputy chief of staff. Surkov is considered the mastermind behind quite a few crucial events in Russia, such as Putin’s victory in the 2004 election, the downfall of the Yukos oil empire and the hard-won victory in Chechnya. He also is considered the architect of the new Russian mindset, which focuses on the country’s resurgence onto the international stage. Surkov has proven his loyalty to Putin and is not seeking the top position himself, since his background — he is half Jewish and half Chechen — undoubtedly would prevent him from ever assuming that role. Instead, Surkov has enjoyed his spot as one of the top puppet masters under Putin.

The second clan falls under Sechin, Putin’s other deputy chief of staff, who is just as mysterious as his rival and achieved success by making Rosneft Russia’s top oil firm. …

When Putin named his successor, he chose a member of Surkov’s clan — Dmitri Medvedev; … [Putin] can turn the tide of the internal clan wars whenever he chooses. But those wars have become deeply entrenched within the Kremlin and are proving very dangerous, not only for Putin but also for the entire government and the rest of the country.

… Now [OAO Gazprom and OAO Rosneft] serve as platforms for their political backers’ agendas, with Russian President Vladimir Putin’s right-hand man Vladislav Surkov behind Gazprom and the Kremlin’s other major power player, Igor Sechin, behind Rosneft. …

A turf war over the prosecutor general’s office has been under way for more than a year. The office is one of the most coveted, since it is in charge of prosecuting everyone. … in 2006 Putin decided to shake up the role and replaced Ustinov with one of Surkov’s supporters, Yuri Chaika, who was justice minister at the time. The switch was considered a huge slap in the face for Sechin and his clan.

Sechin then declared war against Chaika, attacking him on multiple fronts, including making an attempt to absorb some of the prosecutor general’s power into the Justice Ministry. But Chaika struck back, not only arresting a group of alleged organized criminals attached to Sechin in St. Petersburg but also going after that clan’s most powerful branch — the Federal Security Service (FSB). Chaika arrested associates of FSB head Nikolai Patrushev on charges of illegally selling electronics from Asia.

Also, Surkov has defended Chaika, saying the prosecutor general is off limits in the war during the election season (after the elections, of course, all bets are off). So Sechin is now going after some of the Surkov clan’s other branches; he has had the FSB and the Investigating Committee arrest associates of Finance Minister Alexei Kudrin.

But now that Dmitri Medvedev is first deputy prime minister — and a candidate for president — and Surkov is defending Chaika, the prosecutor general knows he might be able to … create a super-branch of the government that would be the only branch with the ability to go after others legally.

Defense Wars

… In February 2007, presidential contender Sergei Ivanov surprisingly was replaced as defense minister by economist Anatoly Serdyukov. At the time, Serdyukov was placed in the role to begin shaping up the defense sector and military ranks financially … Though Serdyukov had long been close to Sechin and his clan, he did not politicize his role.

[…]

Serdyukov’s chief rival for power was the head of Russia’s state arms firm Rosoboronexport, Sergei Chemezov, who is in Surkov’s clan. … First, Serdyukov unsuccessfully attempted to rein in Chemezov’s spending, and in return Chemezov created a new defense entity, Rostekhnologii — a public entity which has started to pull much of the defense industry away from ministerial control. Rostekhnologii has some very key subsidiaries, including Avtovas in automobiles, VSMPO-Avisma in titanium, Russpetsstal in special steels and Oboronprom in helicopter and engine manufacturing — and Rostekhnologii plans to pull in firms from many other industries, including shipbuilding. …

Potential Ethnic Wars

Quite a few battles have yet to come to a head — such as the energy giants’ struggle — but another war that is being whispered about in the Kremlin involves controlling the militants in the Caucasus. Among the members of Surkov’s clan is the key to reining in the Caucasus: Chechen President Ramzan Kadyrov. [Kadyrov’s] forces only number around 15,000, but are made up of many former insurgents who became pro-Russian forces.

… Sechin also has influence in the Caucasus: his man Rashid Nurgaliyev, who is an ethnic Tatar but is considered an iron fist…

… Putin’s inner circle is in control of almost all of Russia … — but that inner circle is now tearing itself apart. …

… In the end, unless Putin can rein in the clan chaos, the two factions could break the foundation of Putin’s strong Russia.

From Stratfor’s interpretation of events, Sechin seems much less “Putin’s right hand” than an overt competitor whom Putin is constantly attempting to contain, yet whose power continues to grow.

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The Bush cut-and-run

The Bush brilliant strategic pivot/ unconditional surrender signing ceremony:

US President George W. Bush said on Monday he supported Russian shipments of nuclear fuel to Iran for civilian power, saying they proved that Teheran has no need to enrich uranium.

“If the Russians are willing to do that, which I support, then the Iranians do not need to learn how to enrich. If the Iranians accept that uranium for a civilian nuclear power plant, then there’s no need for them to learn how to enrich,” Bush said

Iran received the first shipment of nuclear fuel from Russia on Monday for its Bushehr reactor, the official Iranian news agency IRNA reported.

Russia has been assisting the Iranians in the construction of the nuclear power plant.

The 2005 agreement under which Russia agreed to supply nuclear fuel for Bushehr included a clause that requires Iran to return the spent fuel to prevent any possibility Teheran would extract plutonium from it to make atomic bombs.

“All fuel that will be delivered will be under the control and guarantees of the International Atomic Energy Agency for the whole time it stays on Iranian territory,” the Russian Foreign Ministry said in a statement Monday. “Moreover, the Iranian side gave additional written guarantees that the fuel will be used only for the Bushehr nuclear power plant.”

Iran contends the reactor operation in the southern Iranian town of Bushehr is strictly for civilian purposes, but some critics suspect Teheran intends to use the plant as part of an alleged effort to develop nuclear weapons.

Construction at Bushehr had been frequently delayed. Officials said the delays were due to payment disputes, but many observers suggested Russia was also unhappy with Iran’s obstinate resistance to international pressure to make its nuclear program more open and to assure the international community that it was not developing nuclear arms.

Russia announced last week that its construction disputes with Iran had been resolved and said fuel deliveries would begin about a half year before Bushehr was expected to go into service.

An Iranian official said the Bushehr plant was 95 percent complete and would begin operations “next year.” He indicated the reactor needed 80 tons of nuclear fuel during the initial phase of operation, but did not provide further details.

Bush reiterated his belief that Iran was a danger as long as it continued to enrich uranium, and pointed to the recent US National Intelligence Estimate which determined that Iran had been running a covert nuclear weapons program until 2003.

“If somebody had a weapons program, what’s to say they couldn’t start it up tomorrow? Since they tried to hide their program before, how would we know?” he said.

Bush said that Iran was heading down a path of isolation, adding that a new round of UN resolutions was approaching. “If they [suspend their enrichment programs], there is a way forward for them that is different from the path they’re headed down now,” he stated.

Either Bush effectively surrendered Iraq, or American Mideast policy is returning to its Cold War roots, with Saudi Arabia and Iran as the twin pivots of our regional power structure.

Or maybe the Iranians will decide for themselves which one it will be, whenever they feel like deciding. And in the meantime Bush can pretend he’s a diplomatic genius.

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