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


To: Urlman who wrote (751)10/14/1998 11:37:00 PM
From: CIMA  Respond to of 1301
 
Kosovo Crisis Sets Template for New Russian Politics

Though it continues to suffer from economic collapse and domestic
political turmoil, Russia has rallied behind one issue, the
Kosovo crisis, setting the mold for both internal and external
Russian politics for some time to come. The United States is
crediting the threat of NATO action with forcing Yugoslav
President Slobodan Milosevic into accepting a diplomatic
resolution to the Kosovo crisis, claiming that the threat of
military action made use of military force unnecessary. However,
it remains to be seen whether anything was really achieved in
Kosovo -- as the fox was thrown out of the coop after it already
killed the hen -- and Milosevic has already begun to make good on
his threat to take vengeance against the intervening foreigners
by targeting their allies in Belgrade, the independent press and
rights groups. Much more important than the outcome in
Yugoslavia, however, is how NATO's standoff with Milosevic has
played in Moscow.

Divided over every other policy issue, Russian politicians have
come together to challenge NATO intervention in Serbia. Even the
most Western oriented have insisted that only the UN Security
Council has the right to authorize military intervention in
Yugoslavia, while the Communists have warned of the resumption of
the Cold War and radical firebrand Viktor Ilyukhin has gone so
far as to threaten the lives of Western diplomats in Moscow.
Leonid Ivashov, the head of the Russian Defense Ministry's main
directorate for international military cooperation, told Russian
Public TV on October 13 that "the operation which is being
prepared against the Federal Republic of Yugoslavia is a
provocation by the alliance's military forces against Russia,
too. Yes, this will only create a precedent. Other countries in
Europe, the CIS and Russia included, could find themselves the
next targets of NATO action." Ivashov said that, if NATO
launched strikes against Yugoslavia, Russia would resume full
military cooperation with Belgrade, including violating the arms
sale embargo against Yugoslavia. In addition, Ivashov claimed
that Russia would respond to any attack on Yugoslavia with "a
change in partnership with NATO" and a search for "possible new
military allies to maintain the necessary military balance."
Prime Minister Yevgeny Primakov announced that Russia's relations
with NATO may have to be reevaluated, and Russia already recalled
its representatives to NATO on October 12.

The factions in the Russian Duma have also united over the Kosovo
issue. Duma Chairman Gennady Seleznev said that NATO should
reconsider its actions in Kosovo because a military attack would
give "an impetus for the start of a cold war." Seleznev
announced that the Duma has decided to send a four-member
parliamentary delegation to Yugoslavia, which will stay in the
country until the termination of NATO ultimatum. Duma Deputy
Speaker Vladimir Ryzhkov announced that the DUMA is planning to
pass a resolution calling any NATO strike on Yugoslavia an
"unmitigated threat to the Russian Federation."

Seleznev also issued a pan-Slavic appeal to Russia's "friends and
allies", including Belarus and Ukraine, to also send delegations
to Yugoslavia. As usual, Belarus is way ahead of Moscow on this.
On October 12, the Belarusian news agency "Belapan" reported that
200 Belarusian citizens stand ready to go to Yugoslavia as
volunteers to combat NATO intervention in Kosovo. Ukraine has
been more restrained, with Foreign Minister Tarasyuk claiming "it
is only the UN Security Council which has the right to take a
decision on the use of force." Ukraine also offered to
participate in OSCE monitoring of the situation in Kosovo.

Russian Communist Party leader Gennady Zyuganov declared that "an
attack on Yugoslavia with would be equivalent to a declaration of
war against Russia." He reinforced the Russia military's
warning, saying "in the event of an attack we would support
Yugoslavia with all our forces." Zyuganov echoed Seleznev's
assertion that, if NATO carries out an attack on Yugoslavia, the
Russian Parliament will revoke all cooperation agreements with
NATO and withdraw from the weapons embargo against Yugoslavia.

The radical Viktor Ilyukhin, Chairman of the Duma's Security
Committee and leader of the Movement for Support of the Army,
Defense Industry and Military Science, said on October 13 that
the Movement was "ready at the first call to send military
specialists to Yugoslavia to organize resistance in the event of
NATO strikes against Serbia." Moreover, Ilyukhin threatened the
West by saying that "in view of growing anti-NATO and anti-
American moods in Russia, it is impossible to guarantee that no
hostile acts will be carried out against diplomats and other
representatives of NATO member states working in Moscow. NATO's
terrorist methods in relation to Yugoslavia may boomerang and hit
those who initiate them."

Russian Foreign Minister Igor Ivanov on October 14 praised
Russian unity over Kosovo. He said that "It is the first time
that I observe such a situation where on such an important
international problem Russia has spoken with a single voice.
Ivanov credited Russian unity with averting a NATO strike on
Yugoslavia. Kosovo has given Russia's political factions a
source of unity, something they will remember even if the
situation in Yugoslavia calms down. Pan-Slavism works.
Assertive foreign policy works. Confrontation with NATO works.
These themes unite Russia internally, help rebuild ties within
its former empire, and help reestablish Russia as a great power.

But talk, as they say, is cheap. More alarming than this
rhetoric, however, have been reports suggesting that Russia has
already violated the arms embargo against Yugoslavia, and has
provided the Serbs with military aid. On October 7, the Times of
London reported that Russia has supplied the Yugoslav army with
new warheads, fuses, and sensors for its SA-6 surface-to-air
missiles, a charge that Russian state arms export company
Rosovooruzheniye has denied. According to the International
Institute for Strategic Studies, Yugoslavia has eight surface-to-
air missile batteries at eight sites, as well as 100 other
missiles. According to Jane's, the Yugoslav army has an unknown
number of SA-2, SA-3, SA-6, SA-8, SA-9, SA-11, and SA-13 towed or
mobile surface-to-air missile systems, as well as a variety of
man-portable missiles.

However, according to an unconfirmed report we have received from
a source in St. Petersburg, Yugoslavia may have acquired far more
than just an upgrade for its SA-6 missiles. According to our
source, a few weeks ago Russia shipped 50 2S6M "Tunguska" self-
propelled air-defense systems to the Serbs. The Tunguska is one
of Russia's newest weapons systems, mounting two 30mm
antiaircraft guns and up to eight 9M311 (SA-19) two-stage,
hypersonic, low to medium altitude surface-to-air missiles. The
Tunguska is reportedly in service only with the CIS and India.

If this report of deployment to Yugoslavia is true, it would
indicate a serious threat to either air-strikes or reconnaissance
against the Serbs. It would also demonstrate that Russia has
crossed the line, putting its missiles where its mouth is.
Interestingly, on October 9, ITAR-TASS cited an anonymous senior
Defense Ministry official as saying Yugoslavia now has both
passive and active defense mechanisms to either destroy or
misdirect Tomahawk cruise missiles. Finally, if the Tunguskas
were not flown into Belgrade, then this report would indicate
that Russia now has the tacit backing of either Romania or
Bulgaria, as the weapons would have had to come in by rail. On
October 12, the state secretary of the Russian-backed breakaway
Dnestr region of Moldova denied reports that Russian troops and
equipment were being shipped to Yugoslavia via the Dnestr region.
Valeriy Litsky claimed that, such activity could not be occurring
because it would have to cross the territory of Ukraine, Moldova,
and Romania.

Regardless of the veracity of the various arms transfer reports,
interesting though they may be, the real story is the fact that
Russia's response to the Kosovo crisis has set the pattern for
Russian foreign and domestic politics for the forseeable future.
Russia has united to reaffirm its claim to its traditional sphere
of influence. Pan-Slavism and opposition to NATO and the West
can serve as a unifying force to stabilize Russia's internal
disputes, to attract Russia's CIS allies into closer ties, and to
begin the process of reestablishing Russia as a regional, if not
a great power.

One voice that has been relatively weak has been that of
embattled Russian President Boris Yeltsin. Though he declared
his firm opposition to NATO strikes on October 9, Russia's
nationalists and communists have claimed that weak Yeltsin
leadership allowed the U.S. and the West to assert hegemony.
Yeltsin is even losing control of national policy regarding
Kosovo. Kremlin spokesman Dmitry Yakushkin was forced to rebut
Defense Ministry statements on the issue, claiming only Yeltsin
and the Foreign Ministry could make official policy. Kosovo may
be Yeltsin's undoing, as it has united and revitalized his
opponents. However, Yeltsin has always been an opportunist, and
he may yet see his salvation in seizing this issue and being more
nationalistic and aggressive than his opponents. What that would
look like is frightening to contemplate.

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To: Urlman who wrote (751)10/15/1998 3:53:00 AM
From: Real Man  Read Replies (1) | Respond to of 1301
 

Looks like an explosion of buying in
Russia tonight without any obvious reason. Very bullish.