THE FORTNIGHT IN REVIEW

The Fortnight in Review

An initiative by Boris Yeltsin over the past fortnight to rein in Russia’s most powerful financial groups suggested that the country may be at yet another fork in the road on its long and still uncertain journey from the Soviet past. Ambiguities abounded likewise in the course of several high-level diplomatic encounters between representatives of Moscow and its former Cold War adversaries. But a series of military exercises conducted in other of the newly independent states demonstrated that power has shifted fundamentally on the Eurasian land mass, however unclear the contours and consequences of that shift may be at present.

Russia: A Choice of Capitalisms

First Deputy Prime Minister Anatoly Chubais was in Paris on September 17 to sign an agreement on Russia’s admission to the Paris Club, the 18-member group of creditor nations. Chubais said membership would resolve outstanding issues of Russia’s inherited debt owed both by and to the USSR, and enable claims previously dealt with on a bilateral basis to be resolved within the formal structure of the Club. He also said that Russia’s membership in the Paris Club would strengthen its international position. Russia would, accordingly, be asking ratings agencies to reassess its debt rating, he said, making it easier for the country to raise money on the international market.

When Boris Yeltsin was reelected president last year, Chubais said, "My country crossed a watershed between communism and capitalism." But, he went on, it still remains to be decided what kind of capitalism Russia will have. "Will it be a society in which political decision-making is in the hands of two, three, five or ten giant financial institutions which inform the authorities of their decisions after the event? Or do we want to tackle the task of forming a middle class and act according to a single body of legislation that applies equally to everyone from the largest company down to the smallest family firm?"

Yeltsin Shows Who’s Boss

Yeltsin gave his own answer to this question on September 24 when he addressed the upper house of the Russian parliament. The president said the state will play a stronger role in the economy to counter "bandit capitalism" and to guarantee a level playing field for all participants. He told his audience that there is no intention of returning to Soviet-style central planning and that the state will not interfere in legitimate business activities, but made clear that the government will act to enforce common rules of the game. This, he said, means clipping the wings of big business and corrupt officials, who grew accustomed during the early period of transition to making up the rules to suit themselves. "The state will not," Yeltsin said, "tolerate any attempt at pressure from businesses or banks. We are determined to stop efforts by officials at any level to set their own rules for the market game."

Yeltsin’s speech capped a fortnight of intense infighting within the Russian financial and political elite. The battle between Russia’s biggest banks and their government patrons, which burst into the open after July’s auction of shares in the Svyazinvest telecoms giant, climaxed on September 19 with the publication in Nezavisimaya gazeta of an all-out attack on Chubais. The newspaper is part-owned by Boris Berezovsky, one of those who lost out in the Svyazinvest auction, and the article bore the hallmarks of chief editor Vitaly Tretyakov. It depicted Chubais as Svengali, plotting to assume control over all aspects of Russian political and economic activity, building a "super-oligarchy" centered on Russia’s largest private bank, Oneksimbank, and manipulating Yeltsin like a puppet. The article alleged that Chubais’ determination to pursue economic reform in a hostile political environment had forced him to use undemocratic methods that had, in turn, produced an oligarchic system of government completely opposed to the liberal democracy Chubais professes to support.

Stung by allegations that Chubais, not the president, was in charge, Yeltsin summoned six of Russia’s leading financiers to the Kremlin on September 15 and told them to bury the hatchet. Yeltsin said he had no intention of replacing Chubais and called on the bankers to accept the new rules of the game when the government’s program for privatizing state property resumes in the autumn. The meeting was attended by most of the members of the original "Davos Seven" whose financial support helped Yeltsin win reelection last year. Conspicuously absent was Berezovsky, a member of the original group. His non-attendance was officially explained by the fact the he is now deputy secretary of Russia’s Security Council, although it was the attack on Chubais in the Berezovsky-controlled Nezavisimaya gazeta that prompted Yeltsin to summon the banking community in the first place.

Tsar Boris the Great?

Yeltsin repeated his message on September 18, when he used a visit to Orel Oblast to reaffirm his support for the "young reformers" and to demonstrate exactly who is in control. Comparing himself to Peter the Great, Yeltsin surprised everyone by referring to himself as Tsar Boris. Yeltsin also praised his government for negotiating Russia’s entry into the Paris Club and said the country would no longer need International Monetary Fund loans after 1999. "By then, we shall be carrying out reforms on our own." Yeltsin’s remarks were an indication of the government’s growing confidence that Russia has reached the end of its decade-long economic decline. On September 16, Yeltsin backed up his promise to tighten state control over financial markets by signing a decree creating a national depositary system for the shares of private companies. The depositary will be under the control of the Federal Securities Commission, not the Central Bank. Yeltsin also signed a decree curtailing the power so far enjoyed by Oneksimbank to handle federal budget revenues. Both decrees were interpreted by observers as minor setbacks for Oneksimbank and Chubais, who is said to have argued in favor of Central Bank control of the depositary. The slap on the wrist exemplified Yeltsin’s fabled ability to maintain overall control by playing his subordinates off one against the other.

Pro-Army Opposition Group Founded

For all Yeltsin’s bravado, the Kremlin reacted nervously to the emergence of a new opposition "Movement in Support of the Army, Defense Industry, and Military Science." The movement is led by retired Gen. Lev Rokhlin. Its founding congress, held in Moscow on September 20, was attended by the leaders of most of Russia’s main opposition parties: Communist Party leader Gennady Zyuganov and nationalist parliamentarians Sergei Baburin and Vladimir Zhirinovsky. Until that point, observers had been inclined to dismiss Rokhlin’s movement as a toothless assembly of disgruntled retirees. But Yeltsin himself reacted with fury when Zyuganov followed Rokhlin onto the platform to call for Yeltsin’s impeachment and told the delegates Russia was being ruled by a "criminal gang." One-time presidential aide Vyacheslav Nikonov, who played a key role in Yeltsin’s reelection campaign, said the situation is "very serious, because for the first time the army is attempting to play an independent political role, with a program aimed against its commander-in- chief."

NATO-Russian Discord

Two weeks of extensive diplomatic interaction between Russia and the West — and particularly the U.S. — have highlighted once again the ambiguity in Moscow’s current relation’s with its Western partners. Dissonance on a key issue was evident on September 11, for example, during an ambassadorial level meeting in Brussels of the recently created Russia-NATO Permanent Joint Council. Although both sides later put the best face on the proceedings, Western officials revealed that the Russian ambassador to NATO, Vitaly Churkin, had used the occasion to accuse the Western alliance of failing to consult properly with Russia on NATO peacekeeping operations in Bosnia and, more broadly, of pursuing an anti-Serb policy in the region. The Russian accusations came amid a worsening confrontation between leading Bosnian Serb political groups and only days before the holding of key local elections there.

The September 11 meeting, only the second of its kind, had been convened largely to prepare the agenda for the new council’s first meeting at the ministerial level, scheduled for September 26 in New York. A senior NATO diplomat described the meeting as "very disagreeable," and suggested that it was "not a good omen for the future work of the NATO-Russia council."

A Non-Starter?

The U.S. and Russia seemed, meanwhile, to find themselves at odds still over the Russian parliament’s reluctance to ratify the START II Treaty. Hopes that the approval might be forthcoming were dealt a blow on September 16 when Russia’s defense and foreign ministers met with parliamentary leaders at the General Staff headquarters. The meeting followed by one day a conference between Yeltsin and Defense Minister Igor Sergeev at which the president ordered Sergeev and Foreign Minister Yevgeny Primakov to lobby legislators for ratification of the treaty.

Although several of the parliament’s more moderate figures indicated afterward their support for ratification, leaders of the main opposition factions remained unswayed. Vladimir Zhirinovsky, leader of the ultra-nationalist Liberal Democratic Party, proposed putting off ratification until some unspecified "favorable moment" in the future, and intimated vaguely that Russia should use its "powerful missile complex" as a bargaining chip to exact more concessions from the U.S. Communist leader Gennady Zyuganov was similarly unsympathetic. A vocal critic of the Kremlin’s emerging defense reform program and of its military policies in general, Zyuganov said it makes little sense to argue for START II ratification at a time when the future of Russia’s general forces remains so indeterminate. He also cited NATO’s enlargement as a justification for opposition to START II. During a visit to Russia on September 22-23, U.S. vice president Al Gore said he had received a glimmer of hope from Russian government officials that ratification might nevertheless be in the cards, but the basis for this optimism in the Kremlin remained unclear.

No Easy Issues

Gore’s talks in Russia were paralleled by Russian foreign minister Primakov’s visit to the UN in New York, where he held consultations with U.S. leaders. The results on both sides of the Atlantic were mixed. Gore apparently highlighted Washington’s concern over reports that Russian specialists are aiding Iran in a project to develop nuclear missiles, and claimed to have made some progress in the effort to control Russia’s technological exports to Iran. The Russian side, moreover, proposed that the U.S. exercise joint oversight with Moscow of the controversial Bushehr nuclear power plant that Russia is constructing in Iran. But Gore made clear that the U.S. had little interest in that proposal, and the broader implication of the talks in Moscow and New York was that the two sides remain at loggerheads on most issues related to Russian-Iranian relations.

Gore was similarly unsuccessful in deflecting approval of a Russian bill on religion that has been sharply criticized by human rights groups and religious and political leaders around the world. Although he conveyed the U.S. administration’s hope that Yeltsin would veto the bill, the Kremlin made clear that Yeltsin intends to sign it into law. On September 24 Russia’s upper house of parliament approved the religion law in a unanimous vote. The U.S. and Russia clashed as well during Gore’s visit over Russia’s request to be reclassified as a "transitional market economy" rather than a "non-market economy." The question is important because reclassification would make it more difficult for U.S. producers to file anti-dumping suits against Russian exporters. Although Gore publicly expressed sympathy for the Russian position, he also noted that the issue is up to the U.S. Congress, and a Russian government spokesman complained that the U.S. had taken "a rather tough position" on the issue.

The U.S. and Russia did manage during Gore’s visit to sign several accords aimed at halting Russian production of weapons-grade plutonium by the end of the year 2000. The U.S. agreed to provide up to $80 million — in a project estimated at $150 billion — to convert the reactor cores of Russia’s three plants producing weapons-grade plutonium. But, while the agreements were undoubtedly a positive development, they cover but a small fraction of Russia’s weapons-grade capability.

Military Exercises Highlight Power Shift in Eurasia

September is typically a peak month for military exercises, but there was nothing routine about the exercises organized this September by Western powers in the ex-Soviet space of Eurasia — the World Heartland in Halford Mackinder’s definition. Early in this century, before the Soviet system had ever emerged, Mackinder had predicted that control of the heartland would ultimately enable imperial Russia to make a strong bid for world hegemony. The USSR’s international conduct enhanced retroactively the authority of Mackinder’s analysis and of subsequent accretions to it. However, that analysis had not been conditioned by the Soviet interlude in Russian history. Rather, it identified a set of constant or recurring factors that made the ability to control the heartland — or, conversely, to permanently deny that control to any Eurasian seat of power — the key to the world balance of power.

From the Black Sea and to Central Asia, independent countries formerly controlled by the Russian Empire and the USSR hosted Western troops for joint military exercises this month. Although they involved relatively small forces and were confined to tactical tasks, these exercises were unprecedented in their complexity, logistics, scenarios, and political message.

Cossack Steppe

Ukraine, having hosted in August the Sea Breeze naval exercise with U.S. and NATO partners, harbored in September the Cossack Steppe airborne exercise with British and Polish troops. Held from September 13-18 at Shiroky Lan training range in Mikolayiv region, the exercise involved three airborne companies, one from each country, which formed a joint battalion. The operation, practicing creation and enforcement of a buffer zone between antagonists in an ethnic conflict, tested tactical coordination and interoperability of equipment. In the culminating phase, the tripartite paratroop battalion performed a landing operation, while a Ukrainian mechanized regiment supported by fighter-bombers was assaulting a hypothetical common enemy.

Defense ministers Oleksandr Kuzmuk, George Robertson, and Stanislaw Dobrzansky watched that culminating phase. Robertson termed the exercise "historic," and Dobrzansky asserted Poland’s own interest in Ukraine’s security. Poland and Ukraine are well along in forming a joint battalion with British assistance. Kuzmuk described Ukraine as a neutral nation that has made a "clear-cut choice to integrate into Europe." Kyiv interprets its "non-bloc status" and its cooperation with NATO as fully compatible with each other. The three ministers had previously conferred aboard the Ukrainian navy’s flagship Hetman Sahaydachny in Sevastopol, and then aboard the British frigate Campbelltown anchored in Odessa. Aboard the Campbelltown, Rear Adm. Peter Franklin was cited as stating British interest in holding joint exercises in the Black Sea with the Ukrainian navy.

Georgia Wishes to Follow Suit

Across the Black Sea from Ukraine, Georgia expressed a desire to become the next host of a joint exercise. Defense Minister Vardiko Nadibaidze announced that Tbilisi is discussing with Washington and NATO the possible holding of an exercise in Georgia. To develop national armed forces, Georgia needs to cooperate both with NATO and with Russia, Nadibaidze remarked; but cooperation with Russia’s Defense Ministry "stagnates." Moscow also rejects Tbilisi’s claim to some coastal guard vessels of the ex-Soviet Black Sea Fleet. Nadibaidze aired his proposal after having attended the U.S.-led CentrasBat-97 exercise (see below), which he praised as "exemplary" and in which a Georgian platoon also participated.

Turkey meanwhile announced its intention to give Georgia two Griffon-type coastal guard cutters as a gift and to train the Georgian crews in Turkey. The announcement was made when two Turkish coastal guard ships paid a "friendly visit" to Poti, which Georgia hopes to develop into a naval base. More coastal guard ships are soon to be donated to Georgia by the U.S., following last week’s ratification of the bilateral agreement on military cooperation by the Georgian parliament. Earlier this year Georgia acquired its first coastal guard ship as a gift from Ukraine, which also trained the Georgian crew. In August, a Georgian ship participated in the Sea Breeze exercise in Ukraine.

U.S. Troops Parachute Into Central Asia

Elements of the U.S. Army’s 82nd Airborne Division exercised with the Kazakh-Uzbek-Kyrgyz joint battalion, CentrasBat, from September 15-20 in Kazakhstan and Uzbekistan. Russia, Turkey, Latvia, and Georgia each participated in various phases of the exercise with one platoon or less. The Russian presence was limited to 40 soldiers out of the 1,400 who took part. Just prior to the exercise, elements of CentrasBat underwent two weeks of training in the U.S.

The exercise, dubbed CentrasBat-97, opened with the longest-distance airborne operation in military history. Six U.S. C-17 transport planes flew 12,500 kilometers (7,600 miles), 19 hours non-stop, with two mid-air refuelings, from the 82nd Division’s base at Fort Bragg, North Carolina, to Sairam airport near the city of Chimkent in Kazakhstan. The planes carried 500 U.S. soldiers and 40 CentrasBat soldiers, who parachuted jointly to secure the Kazakh airport against a hypothetical adversary. Kazakh planes escorted the incoming U.S. planes and provided air cover for the paratroopers’ landing. The 500-strong CentrasBat for its part advanced from a base camp to join forces with the paratroopers as they were landing at the airport. The second stage of the exercise was held in Uzbekistan, using the Chirchik training range outside Tashkent to practice combat and noncombat tasks in a joint peacekeeping operation.

The exercise was organized directly by the U.S. Atlantic Command. It drew in part on the experience of NATO’s Partnership for Peace program, but was conducted independently of it. The commander of U.S. Atlantic Forces, four-star Gen. John Sheehan, was the first to parachute into Sairam. The scenario envisaged a UN-authorized peacekeeping operation in Central Asia under NATO command, comparable to the arrangements in Bosnia, adapted to Central Asian conditions. Under the scenario, the authority of a national government was challenged by an ethnic group residing compactly in a border region, whose ethnic kin form the majority of a neighboring nation. The hypothetical local conflict thus threatens to develop into a confrontation among the two neighboring countries. In real life, a situation approximating that scenario could conceivably arise on the Kazakh-Russian border.

The goals of the exercise included: enhancing CentrasBat’s rapid-response capability and improving its interoperability with NATO member and partner countries; testing coordination of command, control, and logistics of national units involved in a joint operation; asserting U.S. support for the independence of Central Asian countries, and demonstrating that support to those "neighboring countries." According to Sheehan, the exercise highlighted "the U.S. interest that the Central Asian states live in stability" and the fact that "there is no nation on the face of the earth where we can’t go." In the only political protest on record, a small number of mainly Russian Communists picketed the U.S. embassy in Almaty.

Historic Opportunity

Although little noticed by the international public, these exercises highlight the overwhelming shift in the world balance of power to the West’s advantage. As one senior participating officer remarked, landings of U.S. or British forces in the former USSR just a few years ago were only conceivable in the context of a world war. Today’s Russia continues to regard the ex-Soviet space as a sphere of its special interests, yet it possesses only limited means to stop its former dependencies from seeking international security arrangements. It probably also lacks the political will for a confrontational response. Nevertheless, Russia aims for predominant control over access to the vast mineral resources, which Moscow itself was unable to tap while it administered the region.

For the first time in history, Western powers are in a position today to operate on the Eurasian heartland securely, unimpeded by any hegemonial center, and with the active cooperation of newly independent countries. Seen cumulatively, the recent military exercises highlight two processes: the opening created by the contraction of Russian power, and the quest of newly independent countries for international security guarantees. These two processes represent the West’s historic opportunity to seal the recent shift in Eurasia and to establish security arrangements that would prevent the heartland’s return under the control of a continental great power. Some recent political signals from official Washington, including deference to Russian "peacekeeping" in Georgia, Tajikistan, and Moldova, seem out of step with the processes underway on the ground and may end up inadvertently turning a historic opportunity into a fleeting one.

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"The Fortnight in Review" is prepared by Senior Analysts Elizabeth Teague (Russia), Stephen Foye (Security and Foreign Policy), Vladimir Socor (Non-Russian republics), and Analyst Igor Rotar.

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