Moscow’s Mayor Exports Russia’s New Nationalism
October, 2008
On a clearing in this disputed city, where enemy homes were bulldozed after the conflict in August, Mayor Yuri M. Luzhkov promised this month to build a new neighborhood for the South Ossetian separatists here. Grinning widely before a boisterous crowd, which hailed him as a liberator, Mayor Luzhkov said he would spend more than $100 million on houses, schools and shopping centers. “We are celebrating a great victory — a victory for freedom and independence,” he declared. The pledge was notable for its cost — a sizable sum in this impoverished breakaway enclave of 70,000 — but also because Mr. Luzhkov is the mayor of Moscow, not Tskhinvali. The money is to come from Moscow’s city budget. Yuri M. Luzhkov is a mayor with a foreign policy. A former Soviet apparatchik who yearns to restore Russia’s regional hegemony, he has supported ethnic Russians and stoked separatism in nations along the country’s borders. He has championed a new Russian nationalism that the Kremlin effectively backed with force when it wrested South Ossetia from neighboring Georgia this summer. Over the past decade, Mr. Luzhkov, 72, has spent hundreds of millions of dollars from Moscow’s well-padded city budget in Russia’s “near abroad,” several city officials said. He has supported pro-Russian separatists in Moldova, built highways in rebellious Georgian enclaves and constructed housing for the Russian military on the Crimean peninsula in Ukraine.
His enigmatic role unnerves Russia’s pro-Western neighbors because he flouts diplomatic rules that prohibit aid to separatists. When foreign governments protest that he is violating their sovereignty and destabilizing their countries, he says he is merely expanding Moscow’s sister-city relationships. The Kremlin says he is acting as a local official or a philanthropist. But the ambiguity seems purposeful. Russia’s paramount leader, Prime Minister Vladimir V. Putin, has sought to undermine new pro-Western governments that took power in the so-called color revolutions. Mr. Luzhkov is, in a sense, spearheading Mr. Putin’s counterrevolution. “In this type of foreign policy, someone has to carry the aggressive message, and Luzhkov is very suitable for this because he thinks it and really believes it,” said Konstantin Remchukov, owner of Nezavisimaya Gazeta, a Moscow newspaper. “So they use him deliberately.” Mr. Luzhkov offered typically pointed remarks at the groundbreaking this month in Tskhinvali, the South Ossetian capital, for the neighborhood, to be called the Moscow district. It is to rise on land that had been Georgian but was essentially ethnically cleansed after being overrun by Russian troops.
“What the heck is Bush thinking?” Mr. Luzhkov told the crowd. “He boasts that America supports the aspirations of people for freedom and independence. But the president of America should come to Tskhinvali, wrecked but alive, wrecked but with people who are experiencing joy and freedom.”
Short and stocky, a Soviet-style proletariat’s cap covering his bald head, Mr. Luzhkov is often shown on state-controlled television journeying abroad. A few days before he arrived in South Ossetia, he went to Abkhazia, the other breakaway enclave in Georgia, where he was also greeted as a hero. He has been the primary Russian patron of the two enclaves, whose ambitions spurred the conflict in August, and he has long required his city to conduct relations with their separatist governments as if they were independent nations. Only after the crisis did the Kremlin follow suit. He is so popular in South Ossetia that a street was named after him here in Tskhinvali. South Ossetia’s president, Eduard Kokoity, referred to him as “a dear friend who is one of us.” But he is the bête noire of leaders who took power in popular “color revolutions” that swept Eastern and Central Europe over the past six years, especially the Rose and Orange Revolutions in Georgia and Ukraine.
The Georgian president, Mikheil Saakashvili, professes to loathe Mr. Luzhkov, and the feeling is mutual. (During his speech here, Mr. Luzhkov called Mr. Saakashvili “subhuman.”) Mr. Luzhkov, who declined to be interviewed for this article, has also called for Russia to reclaim Crimea from Ukraine. Many Russians consider Crimea, which has an ethnic Russian majority and a Russian naval base on the Black Sea, an integral part of Russia. If it becomes the next flash point between Russia and the West, Mr. Luzhkov will in no small part be responsible. He has nurtured separatist groups in Crimea that since the Georgia conflict have a new battle cry: we will be next. In May, when Mr. Luzhkov got off a plane in Crimea, he was greeted by Ukrainian security service agents who warned him to stop fomenting separatism. He instead proclaimed in a speech that Sevastopol, the site of the Russian naval base, belongs to Russia. “Is it right for us to keep silent?” he said. “We are speaking the truth.” The next day, Ukrainian officials barred him from Ukraine and began investigating his activities in Crimea, including his support for a cultural center, Moscow House, he set up in Sevastopol.
Ukraine said it was also looking into the affairs of his wife, Yelena Baturina, a billionaire who is Russia’s richest woman. The Ukrainians contend that she has assisted him by investing money in areas where he is active. The Georgians have their own inquiry into Mr. Luzhkov. To the South Ossetians, though, any attempts to go after him only underscore the importance of his support. “If someone comes to your house to kill you, the person who helps you first, the person who extends his rescuing hand to you, how would you feel about him?” said Zalina Abayeva, 38, a government worker who was in the crowd welcoming Mr. Luzhkov to Tskhinvali. “That is how we feel about Luzhkov.”
A Nationalist Streak
Mr. Luzhkov’s nationalism sprang from the Soviet Union’s collapse in 1991, which deeply pained Mr. Luzhkov and many other Russian leaders who came of age at the height of Soviet power. They were embittered by Russia’s economic plight in the 1990s and said that the West was taking advantage of Russia’s weakness by encroaching upon its zone of influence. Those feelings hardened when NATO admitted former Soviet satellites and republics. Mr. Luzhkov also focused on the plight of millions of ethnic Russians who after the breakup found themselves living in other former Soviet republics. He said he believed that these people had been abandoned by the Kremlin under President Boris N. Yeltsin, so he sent tens of millions of dollars in aid to them. When Mr. Yeltsin negotiated a friendship treaty with Ukraine in the late 1990s, Mr. Luzhkov said it amounted to the “surrender of Crimea.” Mr. Luzhkov used nationalism — twinned with a reverence for the revived Russian Orthodox Church — to position himself to run for president in 2000. He offered a more establishment-friendly alternative to the virulent nationalism of another contender, the hard-liner Vladimir V. Zhirinovsky.
“At a certain point, this became part of his political image,” Konstantin Zatulin, a member of Parliament and Luzhkov ally, said of Mr. Luzhkov. “In the 1990s, he was seen as probably the only defender of Russian speakers in the former Soviet Union.” When it became clear that Mr. Putin would win the presidency in 2000, Mr. Luzhkov stepped aside. But he continued to raise his profile. Since he became mayor in 1992, Moscow has been transformed from a dysfunctional and shabby city into a flashy, traffic-choked metropolis. Mr. Luzhkov has overseen a building bonanza, including a financial complex on the Moscow River that will include the tallest skyscraper in Europe. He even has his own architectural style — buildings topped with triangular turrets, popularly called Luzhkov towers.
On Saturdays he tours neighborhoods to inspect projects and berate bureaucrats, television cameras in tow. He is mentioned more in the Russian media than any politician but Mr. Putin and President Dmitri A. Medvedev. Still, like Russia as a whole, Moscow has been plagued by corruption. Mr. Luzhkov’s second wife, Ms. Baturina, 45, whom he married in 1991, became a billionaire through her real estate and manufacturing company, Inteko. The mayor’s opponents have attributed her success to cronyism. He denies that. As a leader of the ruling party, he has shown little tolerance for dissent, filing lawsuits against politicians, journalists and others who criticize him. In May, after Mr. Remchukov’s newspaper ran an editorial criticizing Mr. Luzhkov for his provocative comments on Crimea, city officials sought to evict the newspaper from its building. Only after an uproar ensued did the officials back down, Mr. Remchukov said.
While Mr. Luzhkov is not a member of Mr. Putin’s inner circle, Mr. Putin has kept him in power. Moscow’s mayor used to be popularly elected but is now appointed by the president. Mr. Putin, who moved from president to prime minister this year, selected Mr. Luzhkov to be Moscow’s mayor last year. Mr. Putin has not publicly objected to Mr. Luzhkov’s grandiose vision of the mayor’s role or reined in Mr. Luzhkov’s spendthrift foreign commitments. City officials would not specify how much Mr. Luzhkov had spent abroad, and government budgets in Russia are opaque. Aleksandr Pogorelov, a spokesman for the city’s department of international relations, would say only, “We are engaged in offering aid to those considered Russian compatriots.” Sergei Mitrokhin, an opposition lawmaker in Moscow’s city council, said the amount over the past decade was hundreds of millions of dollars.
Aid for an Enclave
In June 2005, Mr. Luzhkov invited South Ossetian separatist leaders to a Moscow railroad station, where a train had been loaded with millions of dollars in aid — food, medical equipment, dump trucks, tents and cranes. Mr. Luzhkov said the shipment was humanitarian. The Georgians labeled it military. And the South Ossetians suggested that Mr. Luzhkov was helping them gird for a coming conflict. “We say to those who today are trying to foist a dirty political fight upon us: We are Ossetians, and we are a steadfast people!” said the South Ossetian president, Mr. Kokoity. Later in 2005, as if to drive home the point, Mr. Luzhkov paid for major repairs to a strategic highway in South Ossetia to ease the movement of separatist troops, Georgian officials said. The city of Moscow has also become one of largest owners of resorts and other property in Abkhazia, which has Black Sea beaches and was a popular vacation area in Soviet times, Georgian officials said.
The Russian government has assisted the enclaves as well, giving weapons to their soldiers and Russian passports to their residents, but Mr. Luzhkov often seems to take the lead. “He has been very notorious in his hectic activities in these conflict areas,” said Temuri Yakobashvili, Georgia’s reintegration minister. “His role is both political and financial, and that is a dangerous mixture because the political talk also comes with a lot of money.” Mr. Luzhkov has also worked to cement Russia’s gains in the war. Even before it ended, he dispatched officials to prepare to resettle South Ossetians on what was once an ethnic Georgian village called Tamarasheni. Before the conflict, South Ossetia was a patchwork of ethnic areas overseen by peacekeepers, and its separatist government had no control over Tamarasheni. The village, which has now been absorbed by the capital, Tskhinvali, is in ruins, filled with the carcasses of looted homes and stores. In his speech here, Mr. Luzhkov did not mention the Georgians who lost their land. He talked about the neighborhood he was building in Tamarasheni, with homes, schools, a sports complex, stores and playgrounds, as a symbol of Russian strength. “Russia needs nothing,” he said. “It has everything. It is the wealthiest country. But when we see injustice toward South Ossetia, toward the people of Abkhazia, it rises up to their defense.”
Deepening Russia’s Presence
Mr. Luzhkov has devoted even greater attention to Crimea, which many Russians consider a nearly sacred, if disputed, part of their patrimony. This peninsula on the Black Sea was part of Russia until 1954, when the Soviet leader Khrushchev transferred it to Ukraine. It mattered little then because both were part of the Soviet Union. But after Communism’s fall, Crimea’s ethnic Russians, who make up 60 percent of the population of two million, had to answer to Kiev, Ukraine’s capital, not Moscow. Then came the Orange Revolution of 2004, led by Ukrainian nationalists who are hostile to the Kremlin and want to join NATO. Much of the friction revolves around Russia’s Black Sea fleet, which has a base in Sevastopol. The Ukrainian leadership has announced that the fleet must leave when its lease ends in 2017. It has also begun requiring the use of the Ukrainian language in public life. “Ukraine’s leadership is showing an absolutely clear tendency toward the suppression of all things Russian — the Russian language, Russian culture, Russian literature, Russians on their territory,” Mr. Luzhkov said in August. In Sevastopol, a city of 350,000, Mr. Luzhkov has deepened the Russian presence. He has constructed a branch of Moscow State University, Russian Orthodox cathedrals, schools, a sports complex and other facilities. Military personnel with the Black Sea fleet refer to their housing as Luzhki because Mr. Luzhkov built thousands of apartments for them. He has proposed spending another $2 billion on real estate development in Crimea.
Mr. Putin has said that Russia respects Ukraine’s territorial integrity, but he has not disavowed the separatists or Mr. Luzhkov. In fact, after Mr. Luzhkov was barred from Ukraine in May, the Kremlin lashed back. “Luzhkov only expressed a view that, incidentally, coincides with the point of view of most Russians who responded painfully to the disintegration of the U.S.S.R.,” the Foreign Ministry said. The fervor that Mr. Luzhkov has helped whip up was evident last month at a rally in Sevastopol on a hill lined with graves of Russian soldiers who had died defending the city when it belonged to Russia. Waving Russian flags and singing Soviet anthems, residents praised Russia’s victory in Georgia and spoke of Mr. Luzhkov as a brother in arms. They said he was helping to free them from Ukrainian tyranny. The city’s chief Russian Orthodox priest, the Rev. Sergei M. Khaluta, blessed the rally. “Truth is with our country!” he said, and it was clear that he did not mean Ukraine.
His enigmatic role unnerves Russia’s pro-Western neighbors because he flouts diplomatic rules that prohibit aid to separatists. When foreign governments protest that he is violating their sovereignty and destabilizing their countries, he says he is merely expanding Moscow’s sister-city relationships. The Kremlin says he is acting as a local official or a philanthropist. But the ambiguity seems purposeful. Russia’s paramount leader, Prime Minister Vladimir V. Putin, has sought to undermine new pro-Western governments that took power in the so-called color revolutions. Mr. Luzhkov is, in a sense, spearheading Mr. Putin’s counterrevolution. “In this type of foreign policy, someone has to carry the aggressive message, and Luzhkov is very suitable for this because he thinks it and really believes it,” said Konstantin Remchukov, owner of Nezavisimaya Gazeta, a Moscow newspaper. “So they use him deliberately.” Mr. Luzhkov offered typically pointed remarks at the groundbreaking this month in Tskhinvali, the South Ossetian capital, for the neighborhood, to be called the Moscow district. It is to rise on land that had been Georgian but was essentially ethnically cleansed after being overrun by Russian troops.
“What the heck is Bush thinking?” Mr. Luzhkov told the crowd. “He boasts that America supports the aspirations of people for freedom and independence. But the president of America should come to Tskhinvali, wrecked but alive, wrecked but with people who are experiencing joy and freedom.”
Short and stocky, a Soviet-style proletariat’s cap covering his bald head, Mr. Luzhkov is often shown on state-controlled television journeying abroad. A few days before he arrived in South Ossetia, he went to Abkhazia, the other breakaway enclave in Georgia, where he was also greeted as a hero. He has been the primary Russian patron of the two enclaves, whose ambitions spurred the conflict in August, and he has long required his city to conduct relations with their separatist governments as if they were independent nations. Only after the crisis did the Kremlin follow suit. He is so popular in South Ossetia that a street was named after him here in Tskhinvali. South Ossetia’s president, Eduard Kokoity, referred to him as “a dear friend who is one of us.” But he is the bête noire of leaders who took power in popular “color revolutions” that swept Eastern and Central Europe over the past six years, especially the Rose and Orange Revolutions in Georgia and Ukraine.
The Georgian president, Mikheil Saakashvili, professes to loathe Mr. Luzhkov, and the feeling is mutual. (During his speech here, Mr. Luzhkov called Mr. Saakashvili “subhuman.”) Mr. Luzhkov, who declined to be interviewed for this article, has also called for Russia to reclaim Crimea from Ukraine. Many Russians consider Crimea, which has an ethnic Russian majority and a Russian naval base on the Black Sea, an integral part of Russia. If it becomes the next flash point between Russia and the West, Mr. Luzhkov will in no small part be responsible. He has nurtured separatist groups in Crimea that since the Georgia conflict have a new battle cry: we will be next. In May, when Mr. Luzhkov got off a plane in Crimea, he was greeted by Ukrainian security service agents who warned him to stop fomenting separatism. He instead proclaimed in a speech that Sevastopol, the site of the Russian naval base, belongs to Russia. “Is it right for us to keep silent?” he said. “We are speaking the truth.” The next day, Ukrainian officials barred him from Ukraine and began investigating his activities in Crimea, including his support for a cultural center, Moscow House, he set up in Sevastopol.
Ukraine said it was also looking into the affairs of his wife, Yelena Baturina, a billionaire who is Russia’s richest woman. The Ukrainians contend that she has assisted him by investing money in areas where he is active. The Georgians have their own inquiry into Mr. Luzhkov. To the South Ossetians, though, any attempts to go after him only underscore the importance of his support. “If someone comes to your house to kill you, the person who helps you first, the person who extends his rescuing hand to you, how would you feel about him?” said Zalina Abayeva, 38, a government worker who was in the crowd welcoming Mr. Luzhkov to Tskhinvali. “That is how we feel about Luzhkov.”
A Nationalist Streak
Mr. Luzhkov’s nationalism sprang from the Soviet Union’s collapse in 1991, which deeply pained Mr. Luzhkov and many other Russian leaders who came of age at the height of Soviet power. They were embittered by Russia’s economic plight in the 1990s and said that the West was taking advantage of Russia’s weakness by encroaching upon its zone of influence. Those feelings hardened when NATO admitted former Soviet satellites and republics. Mr. Luzhkov also focused on the plight of millions of ethnic Russians who after the breakup found themselves living in other former Soviet republics. He said he believed that these people had been abandoned by the Kremlin under President Boris N. Yeltsin, so he sent tens of millions of dollars in aid to them. When Mr. Yeltsin negotiated a friendship treaty with Ukraine in the late 1990s, Mr. Luzhkov said it amounted to the “surrender of Crimea.” Mr. Luzhkov used nationalism — twinned with a reverence for the revived Russian Orthodox Church — to position himself to run for president in 2000. He offered a more establishment-friendly alternative to the virulent nationalism of another contender, the hard-liner Vladimir V. Zhirinovsky.
“At a certain point, this became part of his political image,” Konstantin Zatulin, a member of Parliament and Luzhkov ally, said of Mr. Luzhkov. “In the 1990s, he was seen as probably the only defender of Russian speakers in the former Soviet Union.” When it became clear that Mr. Putin would win the presidency in 2000, Mr. Luzhkov stepped aside. But he continued to raise his profile. Since he became mayor in 1992, Moscow has been transformed from a dysfunctional and shabby city into a flashy, traffic-choked metropolis. Mr. Luzhkov has overseen a building bonanza, including a financial complex on the Moscow River that will include the tallest skyscraper in Europe. He even has his own architectural style — buildings topped with triangular turrets, popularly called Luzhkov towers.
On Saturdays he tours neighborhoods to inspect projects and berate bureaucrats, television cameras in tow. He is mentioned more in the Russian media than any politician but Mr. Putin and President Dmitri A. Medvedev. Still, like Russia as a whole, Moscow has been plagued by corruption. Mr. Luzhkov’s second wife, Ms. Baturina, 45, whom he married in 1991, became a billionaire through her real estate and manufacturing company, Inteko. The mayor’s opponents have attributed her success to cronyism. He denies that. As a leader of the ruling party, he has shown little tolerance for dissent, filing lawsuits against politicians, journalists and others who criticize him. In May, after Mr. Remchukov’s newspaper ran an editorial criticizing Mr. Luzhkov for his provocative comments on Crimea, city officials sought to evict the newspaper from its building. Only after an uproar ensued did the officials back down, Mr. Remchukov said.
While Mr. Luzhkov is not a member of Mr. Putin’s inner circle, Mr. Putin has kept him in power. Moscow’s mayor used to be popularly elected but is now appointed by the president. Mr. Putin, who moved from president to prime minister this year, selected Mr. Luzhkov to be Moscow’s mayor last year. Mr. Putin has not publicly objected to Mr. Luzhkov’s grandiose vision of the mayor’s role or reined in Mr. Luzhkov’s spendthrift foreign commitments. City officials would not specify how much Mr. Luzhkov had spent abroad, and government budgets in Russia are opaque. Aleksandr Pogorelov, a spokesman for the city’s department of international relations, would say only, “We are engaged in offering aid to those considered Russian compatriots.” Sergei Mitrokhin, an opposition lawmaker in Moscow’s city council, said the amount over the past decade was hundreds of millions of dollars.
Aid for an Enclave
In June 2005, Mr. Luzhkov invited South Ossetian separatist leaders to a Moscow railroad station, where a train had been loaded with millions of dollars in aid — food, medical equipment, dump trucks, tents and cranes. Mr. Luzhkov said the shipment was humanitarian. The Georgians labeled it military. And the South Ossetians suggested that Mr. Luzhkov was helping them gird for a coming conflict. “We say to those who today are trying to foist a dirty political fight upon us: We are Ossetians, and we are a steadfast people!” said the South Ossetian president, Mr. Kokoity. Later in 2005, as if to drive home the point, Mr. Luzhkov paid for major repairs to a strategic highway in South Ossetia to ease the movement of separatist troops, Georgian officials said. The city of Moscow has also become one of largest owners of resorts and other property in Abkhazia, which has Black Sea beaches and was a popular vacation area in Soviet times, Georgian officials said.
The Russian government has assisted the enclaves as well, giving weapons to their soldiers and Russian passports to their residents, but Mr. Luzhkov often seems to take the lead. “He has been very notorious in his hectic activities in these conflict areas,” said Temuri Yakobashvili, Georgia’s reintegration minister. “His role is both political and financial, and that is a dangerous mixture because the political talk also comes with a lot of money.” Mr. Luzhkov has also worked to cement Russia’s gains in the war. Even before it ended, he dispatched officials to prepare to resettle South Ossetians on what was once an ethnic Georgian village called Tamarasheni. Before the conflict, South Ossetia was a patchwork of ethnic areas overseen by peacekeepers, and its separatist government had no control over Tamarasheni. The village, which has now been absorbed by the capital, Tskhinvali, is in ruins, filled with the carcasses of looted homes and stores. In his speech here, Mr. Luzhkov did not mention the Georgians who lost their land. He talked about the neighborhood he was building in Tamarasheni, with homes, schools, a sports complex, stores and playgrounds, as a symbol of Russian strength. “Russia needs nothing,” he said. “It has everything. It is the wealthiest country. But when we see injustice toward South Ossetia, toward the people of Abkhazia, it rises up to their defense.”
Deepening Russia’s Presence
Mr. Luzhkov has devoted even greater attention to Crimea, which many Russians consider a nearly sacred, if disputed, part of their patrimony. This peninsula on the Black Sea was part of Russia until 1954, when the Soviet leader Khrushchev transferred it to Ukraine. It mattered little then because both were part of the Soviet Union. But after Communism’s fall, Crimea’s ethnic Russians, who make up 60 percent of the population of two million, had to answer to Kiev, Ukraine’s capital, not Moscow. Then came the Orange Revolution of 2004, led by Ukrainian nationalists who are hostile to the Kremlin and want to join NATO. Much of the friction revolves around Russia’s Black Sea fleet, which has a base in Sevastopol. The Ukrainian leadership has announced that the fleet must leave when its lease ends in 2017. It has also begun requiring the use of the Ukrainian language in public life. “Ukraine’s leadership is showing an absolutely clear tendency toward the suppression of all things Russian — the Russian language, Russian culture, Russian literature, Russians on their territory,” Mr. Luzhkov said in August. In Sevastopol, a city of 350,000, Mr. Luzhkov has deepened the Russian presence. He has constructed a branch of Moscow State University, Russian Orthodox cathedrals, schools, a sports complex and other facilities. Military personnel with the Black Sea fleet refer to their housing as Luzhki because Mr. Luzhkov built thousands of apartments for them. He has proposed spending another $2 billion on real estate development in Crimea.
Mr. Putin has said that Russia respects Ukraine’s territorial integrity, but he has not disavowed the separatists or Mr. Luzhkov. In fact, after Mr. Luzhkov was barred from Ukraine in May, the Kremlin lashed back. “Luzhkov only expressed a view that, incidentally, coincides with the point of view of most Russians who responded painfully to the disintegration of the U.S.S.R.,” the Foreign Ministry said. The fervor that Mr. Luzhkov has helped whip up was evident last month at a rally in Sevastopol on a hill lined with graves of Russian soldiers who had died defending the city when it belonged to Russia. Waving Russian flags and singing Soviet anthems, residents praised Russia’s victory in Georgia and spoke of Mr. Luzhkov as a brother in arms. They said he was helping to free them from Ukrainian tyranny. The city’s chief Russian Orthodox priest, the Rev. Sergei M. Khaluta, blessed the rally. “Truth is with our country!” he said, and it was clear that he did not mean Ukraine.
Source: http://www.nytimes.com/2008/10/26/wo...6mayor.html?em
In other news:
Armenia Is The Place To Invest With Confidence
The Prime Minister of Armenia, Tigran Sargsyan, received the representatives of Gazprombank OJSC, one of the largest banks in Russia, headed by Executive Vice-President Alexander Kaznacheev. The President of the Board of Areksimbank Karen Karapetyan and Executive Director Armen Khandikyan were present at the meeting. The Prime Minister extended congratulations on the occasion of the 10th anniversary of Areksimbank, wished success and soon implementation of joint programs with Gazprombank. Armenia has declared the goal of becoming a regional financial center as an economic priority and the government works very closely with the banks helping them with logistical support. Armenia intends to be the second Dubai in the region by becoming a financial bridge between East and West. During the meeting the Prime Minister was introduced to the future programs of the Areksimbank and the perspectives of development expected as a result of cooperation with Gazprombank. Tigran Sargsyan suggested to pay a great attention to the financing of small and medium-sized enterprises. According to the Armenian PM, if Gazprombank is striving to gain a leading position in the competitive banking market of Armenia, it should act quickly and make efficient use of the existing opportunities. Tigran Sargsyan stressed that Armenia is the place where one can invest confidently.
Source: http://www.huliq.com/1/71848/armenia...-confidence-pm
China, Russia Renounce The dollar?
The recent meeting between Russian Prime Minister Vladimir Putin and his Chinese counterpart, Wen Jiabao, created a financial sensation. Wen said that the two nations could withstand the global financial crisis if they joined forces; Putin urged him to go farther and stop using U.S. dollars in Russian-Chinese settlements. This idea is nothing new. Russia and China reached a "framework" agreement in November 2007, which was followed by China's similar agreement with Belarus. Earlier this year, Iranian President Mahmoud Ahmadinejad and Venezuelan leader Hugo Chavez turned against the dollar as well when they asked their OPEC partners to stop using the dollar for oil settlements. They argued that the "green" currency was no longer reliable and it was high time they look for a more stable and predictable alternative. Curiously, unlike the Ahmadinejad and Chavez appeal, Putin's proposal came as the dollar was on the rebound and even began pushing the euro. Economists even started talking in terms of a reversal of the global currency trends, rather than the temporary appreciation of the dollar. Analysts predict that the dollar will regain its value in the next few months. They do not see anything which could hinder its steady growth.
Yet, Putin proposed that Russia and China stop using it as a settlement instrument. What is it - lack of confidence in the dollar's prospects or a political move? Experts differ on this count. Igor Nikolayev, chief strategic analyst at FBK private auditing firm, sounded skeptical: "I think it was a political statement rather than an economic decision. There is a dominant public sentiment that the United States is the source of all evil, so let's stop using the dollar," he explained. One has to bear in mind, though, that some other currency will need to be found to replace the dollar for international settlements. China is unlikely to use the ruble, and Russia would be equally reluctant to accept the yuan. "They could opt for the euro, but its future is uncertain, especially considering current developments on global financial markets. It is also unclear whether China would be happy to start using the euro while most of its international reserves are held in dollars," he added. There are more questions than answers here, Nikolayev concluded. To be objective, one has to admit that other analysts are not as skeptical about the possibility of using other currency units between Russian and Chinese companies.
Andrei Marinchenko, director general of the Kalita-Finance company, said the idea was quite realistic. Moreover, he thinks that the ruble stands a good chance of being selected as a reserve currency, primarily because the Chinese are disappointed in the dollar but aren't yet accustomed to the euro. Only time will show who is right. But to stop using the dollar in Russian-Chinese settlements is too important a decision to make for purely political reasons - that much is obvious. Suppose we do it; what will be the implications for Russian businesses, how will the new financial and political reality affect their incomes and savings? Marinchenko is convinced of a beneficial impact. According to Marinchenko, once the ruble is recognized as a settlement unit, it will enjoy growing demand with Chinese companies and individuals. The Russian currency will consequently grow stronger and more influential globally. Russia will also become immune to many shocks from stock market meltdowns and won't have to fear future devaluation or revaluation of the ruble. It will happen because the role of the U.S. dollar, which has earned a reputation as an unstable and unreliable currency lately, will be much less important.
Source: http://en.rian.ru/analysis/20081030/118047851.html
Russia Seeks to Trade Oil For Loans From China
As credit streams from troubled Western banks dry up in the financial crisis, Russian oil companies are negotiating multibillion-dollar loans from a more reliable source: the cash-rich Chinese government. Under a proposed loans-for-oil deal, reported by Reuters on Monday, Russian oil companies would borrow $20 billion to $30 billion from Beijing. In return, they would export about two billion barrels of oil to China over the next 20 years. The Chinese prime minister, Wen Jiabao, was in Moscow on Tuesday for talks with Prime Minister Vladimir V. Putin, but there was no indication that the deal had been signed. The agreement would commit Russian companies to redirect some of their energy exports to the East at a time when Russian and Chinese leaders have been saying they would like to see greater integration of their economies, and Russia’s relations with the West are at a low point. It would also offer a prime example of the way the financial crisis is realigning global commerce, directing it away from reliance on Wall Street lending and toward China and Japan, with their enormous cash reserves. It was unclear how close Russia and China were to an agreement. A planned pipeline to China, a spur of a trans-Siberian pipeline that is under construction, would be capable of carrying about 300,000 barrels of oil a day. On Tuesday, the countries agreed only to build the spur, from the Russian town of Skovorodino to the Chinese border, at a cost of about $800 million. How much oil will flow through the pipeline, and at what cost per barrel, have been matters of contention for some time and have yet to be resolved. There is little doubt that the crushing cash needs of the Russian oil companies helped narrow the differences. Much of the companies’ revenue during the recent spike in oil prices went to taxes. As a result, the state oil company Rosneft owes about $21 billion to Western banks and has already been confronted with demands from creditors for early repayment. China, after years of piling up trade surpluses with the United States, is awash in cash, with currency reserves of $1.9 trillion, the largest in the world. The Russian government, which also has a healthy cash reserve, has pledged $9 billion in loans to its country’s oil companies, but that does not begin to cover their cash needs, which include the enormous sums needed to expand into the more expensive and remote fields in Siberia. Mr. Wen and Mr. Putin also discussed relying on rubles and yuan in bilateral trade, rather than on dollars. Mr. Putin is an advocate of reducing the dollar’s role in international commerce. “At the moment the world, which is based on the dollar, is suffering serious problems,” he said.
Source: http://www.nytimes.com/2008/10/29/wo...=worldbusiness
That jew york times article was nauseatingly self-righteous and examplified why never to rely on mainstream media, at least not without reading between the lines as you say.
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