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July 2004 Country Archive

PUBLISHERS OVERVIEW July '04


Spotlight on the Slavs

RUSSIA is taking centre stage both for international investors and for supporters of democracy, focusing on the trial of the oil billionaires Mikhail Khordorkovsky and Platon Lebedev. There is little or no confidence within or without Russia in the judicial system with the widely held belief that the courts are no more than an arm of the executive, just as in soviet days. All the judicial decisions up to and including the beginning of the trial in Moscow support that view and now that their oil company Yukos itself, is under massive attack from the state for back taxes, the clear outlines of back door re-nationalisation can be discerned. Yukos as another Gazprom, the giant gas company, is now on the cards, meaning that two of the worlds largest energy companies, even though including portfolio investors and possibly industry partners, would actually be controlled by the Kremlin.

In the process, Russian justice itself is on trial and the world will form a view based on the fairness of the proceedings, to compare with what can already be seen to be the very partial decision of the State Prosecutor to single out these two defendants from the ruck of Russian businessmen of the immediate post -soviet generation. Like all the others, their acquisition of former state owned assets, was not just enabled, but initiated by Yeltsin's Kremlin as a matter of high government policy to create an 'instant' business class, capable of resisting the return of communism. Nowhere was the scramble for wealth more evident than in the Kremlin itself. The Kremlin insider Pavel Borodin, nicknamed "The Minister of Privileges," was Putin's first boss when he arrived from St Petersburg to become his deputy. This former favourite of Yeltsin was the central figure in a massive scandal when arrested by the Swiss police for being a party to a giant fraud and was only released by them after a three million dollar bail bond, provided by the Russian government, was posted against his return to stand trial in Switzerland. But now comfortably re-ensconced in the Kremlin, indeed promoted to be General Secretary of the Russia-Belarus Union, it is understood that he has no plans to revisit the Alps any time soon! 

Russia is a deeply corrupt country and if the Khordokovsky trial was about punishing malefactors, as in any established democracy the interest would only be in whether the evidence stacks up against the defendants- or not! In Russia it is fair to ask if this is to be the first blow in a massive continuing campaign to clean up all the many corrupt acts in the process that characterised the rapid adoption of capitalism? Indeed, will Putin in his second term clean out these Augean stables and outlaw corruption? Having been deputy to the "Minister of Privileges," he must know a thing or two about it. What a brave and admirable and historic policy that would be…dream on, but don't hold your breath!

Apart from justice and its critical independence in any real democracy, international investors are forming a view based on the outcomes of the action against the defendants and Yukos itself, as to whether Russia after all remains the 'wild-east' and if the risks of portfolio investment can still be justified, as was beginning to be the view before Khordokovsky's spectacular arrest.

Parallel with Russia's own exposure under the international spotlight, there are their nearest ex-soviet neighbours, the only other slav states of the FSU; UKRAINE and BELARUS, both of which on available evidence appear to be run by tyrannical, murderous Presidents, with what prospects for change? Our reports tell more. 

IMPERIAL HUBRIS 
It is not our remit to specifically report on the United States, but given its unique superpower status it impinges on almost everything we cover. So in observing a new book, the well named "Imperial Hubris," by a genuine expert, the former head of the CIA's Osama bin Laden unit, it is reassuring to us that he sustains our assessment that the war against terrorism was seriously retarded by the invasion of Iraq. This he describes as "an avaricious, premeditated, unprovoked war against a foe that posed no immediate threat," and even more tellingly, "there is nothing Bin Laden could have hoped for more than the American invasion and occupation of Iraq." The rationale is that this and the "failed half-war against Afghanistan," has created prime fertile ground for the expansion of al Qaeda and kindred groups. Supporting evidence for these views comes in this months reports from the relevant nations.

UZBEKISTAN tells of the copycat 'alleged' al Qaeda linked movement, Hib-ut-Tahrir and their violent assaults against the infamous police of dictator Islam Karimov beyond whom one need look no further for their provenance - it was not Osama bin Laden. Human Rights Watch observes that the regime itself is fabricating enemies of the state. 

ANOTHER MISSION ACCOMPLISHED
AFGHANISTAN reports in some detail the wreckage of the high hopes vested in that unfortunate country whose economic mainstay is now narcotics, the country now supplies three quarters of the world's heroin. Immediate problems where President Karzai has to trade power for support from the warlords, the main beneficiaries of the drugs trade, are largely due to the November elections in the USA. President George W Bush is insisting the Afghans hold a September election for which the country is clearly not ready, in order to demonstrate to the US electorate some species of democracy - as another "mission accomplished" - before he has to face the US electors in November. 

IRAQ itself is of course is updated and we find that at the time of the hand-over to the Iraqi civil authority, coalition forces have now abandoned to the rebel militias large urban areas, including districts of Baghdad. Presumably, the American commanders have concluded that at this stage of the game, it does not justify the bodybag count that regular patrols and the firefights would inevitably bring. The new authority is fast recruiting both civil and military former officials of the Saddam regime, the latter of whom will have to find ways of subduing these anarchic districts and no doubt will do so in the Saddam tradition. Déjà vu is painfully apparent. 

NORTH KOREA is exhibiting dramatic movement from the US negotiators, not unrelated to the same US Presidential elections. Now there is an offer reportedly having a 'choose or lose' deadline of three months, so as not to be outflanked by Senator Kerry's campaign, heavily critical of President Bush's negativity in the face of the North Korean threat. This months report brings any interested reader entirely up to speed on the history, origins, recent developments and the meaning of current events in the north of the Korean Peninsula.

Apart from these seven newnations reports there are a further thirty three monthly updates, including INDIA shaking down under its new government; SERBIA, Europe's bad boy on the block, where at last there are hopeful political developments; the continuing and tortuous stories of the Southern Caucasus - GEORGIA, ARMENIA & AZERBAIJAN; all eight of the central European new entrants to the European Union, now typically facing a reaction in the form of the European election upsets; post-election PHILIPPINES where prospects are really looking up; LIBYA now with diplomatic relations re-established with the USA, despite this curious and unresolved allegation that Qadhafi was behind a plot to kill the Crown Prince of Saudi Arabia. Maybe with the Saudi-Arabians looking politically more and more flaky, the oil of the Maghreb has become just that much more important.

Clive Lindley - Publisher 

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