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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (1103)	8/2/2000 3:52:29 PM
From: CIMA	Respond to of 1301

Thanks Paul. It has been a bit lonely over here but I think this thread is important and will continue to post relevant info.

To: Paul Berliner who wrote (1103)	8/11/2000 1:24:49 AM
From: CIMA	Respond to of 1301

Blackjacks and Bears: Ukraine Sends Bombers to Russia Summary Washington has threatened to halt aid for nuclear disarmament in Ukraine. The government of President Leonid Kuchma reportedly continues to ship nuclear capable bombers - including the supersonic Tu-160 Blackjack - to Russia, while accepting Washington's money. The Clinton administration will find it hard to bring sufficient pressure to bear on Kiev. Analysis The United States will stop financing Ukraine's nuclear dismantling if Kiev trades any more strategic bombers to Russia, Steven Pifer, the U.S. ambassador to Ukraine said on Aug. 7, according to the Interfax news agency. Ukraine, however, stands to make much more money by continuing to give the bombers to Russia. Although Washington does intend to withhold the funds, it will not likely do anything more. By calling Washington's bluff and ignoring its warning, Ukraine may stress relations with its Western sponsor. But Washington is unlikely to get its way. With the collapse of the Soviet Union in 1991, Ukraine inherited the third largest nuclear arsenal in the world. It included 25 Tu-95 Bear and 19 Tu-160 Blackjack heavy bombers. The Bear is an aging intercontinental bomber with a range of about 13,000 kilometers; the Blackjack is a supersonic multi-mission bomber, similar to the U.S. B-1 bomber, capable of carrying cruise missiles, short-range guided missiles, as well as nuclear and conventional gravity bombs. Under the 1991 Cooperative Threat Reduction Program, Ukraine is obligated to physically destroy 44 Soviet-era bombers by the first quarter of 2002. ________________________________________________________________ Would you like to see full text? stratfor.com ___________________________________________________________________ Instead, Ukraine last year traded 11 bombers - eight Tu-160s and three Tu-95s - and almost 700 cruise missiles to Russia in exchange for $285 million worth of debt forgiveness. Ukraine owes Russia for natural gas shipments. In July, Ukraine offered Russia another 10 bombers in exchange for more debt relief; Russia has not yet formally responded. Pifer pointed out that Washington pays for the decommissioning of the aircraft, because they were built specifically to target the United States with nuclear weapons, reported Interfax. Although the United States cannot prevent Ukraine from giving the planes to Russia, it can cease payments meant to cover the cost of the planes' destruction. The United States has promised approximately $500 million for the Cooperative Threat Reduction Program to be carried out in Ukraine. Of that, $13 million is allocated for heavy bomber elimination, and of that $6 million has already been spent. But from the Ukrainian standpoint, working with Washington doesn't make sense. Financially, forfeiting $7 million from the United States in order to wipe out hundreds of millions of dollars worth of debt to Russia is a bargain. But is it politically affordable? _______________________________________________________________ For more on Ukraine, see: stratfor.com __________________________________________________________________ Ukraine is the third largest recipient of U.S. financial aid, behind Israel and Egypt; U.S. Secretary of State Madeleine Albright has said that Ukraine is one of Washington's top four international priorities. Since independence in 1991, the United States has given the country almost $2 billion. In March, Ukraine was promised $170 million for this year; while in Kiev in June U.S. President Bill Clinton pledged another $80 million for the safe closure of Chernobyl. In return, Ukraine - which is geographically strategic and challenged with diplomatically juggling Washington and Moscow - has increased its military and political cooperation with the United States, often at the risk of Russian reprisal. It is a member of NATO's Partnership for Peace program, and this May the country promised to bring its military into line with NATO standards by 2005, reported Agence France Presse. Kiev and Washington have been, however, unreliable allies. Ukraine has witnessed Washington's hesitation to protect some of its other allies in the region, such as Georgia and Azerbaijan. The Kuchma government will not count on the United States to protect it from Russia, for example. Ukraine will not bow to the tune of a mere $7 million. Unless the United States is willing to withdraw additional aid -not specifically tied to nuclear disarmament - Ukraine will likely keep right on calling Washington's bluff - and shipping nuclear-capable bombers to Russia. _______________________________________________________________ For more on the CIS & Russia, see: stratfor.com _______________________________________________________________ (c) 2000 Stratfor, Inc. _______________________________________________ SUBSCRIBE to the free, daily Global Intelligence Update. Click on stratfor.com UNSUBSCRIBE by clicking on stratfor.com _______________________________________________ Stratfor.com 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: stratfor.com Email: info@stratfor.com

To: Paul Berliner who wrote (1103)	8/24/2000 5:10:24 AM
From: CIMA	Respond to of 1301

Gridlock: All Trains Lead to Moscow Summary The Russian Railways Ministry banned Russian freight trains from carrying cargo to or from former Soviet republics that owe the ministry money. Since most of these states depend upon Russian transportation for their exports, the Railways Ministry decision could deliver a crushing blow to their fragile economies. It also highlights just how dependent on Russia these countries remain - and who is ultimately in charge. Analysis The Russian Railways Ministry temporarily banned Russian freight trains from carrying cargo to or from former Soviet republics that owe the ministry money, according to the Moscow Times on Aug. 19. Since most of these states depend upon Russian transportation for their exports, the Railways Ministry decision could deliver a crushing blow to their fragile economies. It also highlights just how dependent on Russia these countries remain. The ban covers Azerbaijan, Georgia, Moldova, Tajikistan, Turkmenistan and Uzbekistan - all states that count Russia as their largest trading partner. While the states could dispatch their own trains to shuttle goods across the breadth of Russia, they would then be unavailable to service local needs. For the Central Asian states the ban is a double blow. Any exports destined for Europe or the United States must first transit Russian territory. Until the debts are paid, that transit is impossible. Shifting their trade to other states is not an option. There simply isn't infrastructure to support other trade relationships. Of the states targeted, only Georgia has a seaport. Azerbaijan, Kazakstan and Turkmenistan each has only a single rail line that leads away from the former Soviet Union. Uzbekistan is doubly landlocked. ________________________________________________________________ Would you like to see full text? stratfor.com ___________________________________________________________________ While replacing rail transport with truck shipping is an option, it is not an attractive one from a cost point of view. Almost all of the exports of the states on the blacklist are bulk commodities: cotton, coal, grain and various ores. Fuel costs alone make trucks unfeasible. For example, once a shipment of cotton from Tashkent bound for Europe crosses 1,000 kilometers of Kazak territory, it still must traverse 2,000 kilometers of Russian territory and 1,000 kilometers of Ukrainian territory before even reaching Central Europe. That's quite a gasoline bill. This is not to say that the railways of the former Soviet Union are in good shape. Russian Railways Minister Nikolai Aksyonenko estimates that $22 billion in repairs are needed to restore full productivity. Yet they are still the most efficient transportation option - or at least they were until the Railways Ministry decision. As it stands, only petroleum exports shipped via pipelines will be unaffected. With a single ban, the Railways Ministry effectively gutted the export economies of six states. They will have no choice but to pay their debts in full, and in hard currency. _____________________________________________________________ For more on Sri Lanka, see: stratfor.com _______________________________________________________________ Options for retaliation are few and ineffective. Georgia could push for closer NATO ties and Uzbekistan could again withdraw from Russian led security pacts. But in the end, Russia holds too many hammers over the states on the blacklist to brook any serious resistance. There is a political component to the ban as well. Aside from Tajikistan, all of the blacklisted states have rocky relations with Russia. Yet since they have no economic alternatives to Russian predominance, cutting off rail access is a simple - and excruciatingly painful - way for Moscow to drive home just who really is in control. _______________________________________________________________ For more on Asia, see: stratfor.com _______________________________________________________________ (c) 2000 Stratfor, Inc. _______________________________________________ SUBSCRIBE to the free, daily Global Intelligence Update. Click on stratfor.com UNSUBSCRIBE by clicking on stratfor.com _______________________________________________ Stratfor.com 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: stratfor.com Email: info@stratfor.com