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Home , Anatoly Serdyukov, Andrey Kozlov, Boris Gryzlov, Magas, Mikhail Fradkov, Mikhail Margelov

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N°61 - September 13 2007 Published every two weeks / International Edition CONTENTS c P. 1-4 Politics & Government : the Petersburg KREMLIN c Viktor Zubkov : the « hard core » takes over Petersburg « hard core » takes over The serious business in anticipation of the succession of to the Kremlin has just FOCUS begun in . September 12, the head of government, , submitted his resig- c Yuri Chayka, a public nation to the Russian president, who accepted it after having given a strong (and apparently sin- prosecutor on a tight-rope cere) homage. A few minutes later, the president of the , , declared that DIPLOMACY the Kremlin had retained the candidature of the head of the Federal financial monitoring agency c The new Russian priorities (), Viktor Zubkov, 65, to succeed Mikhail Fradkov. An announcement which in Asia was all the more surprising since the entire corps of Moscow observers took it for granted that in ALERT case of such a reshuffle, Sergey Ivanov would be the next Prime minister. c Mikhail Margelov to head Viktor Zubkov is not an unknown quantity for the readers of Intelligence. In our edition the Council of of last March 2, we revealed his rise in Russian power circles. As a matter of fact, the future Prime parliamentary assembly? minister (his candidature will be confirmed by the parliament September 14) is a part of the Pu- INTERVIEW tinist first circle. Born in 1941 in the Urals, he is a 1965 graduate of the Institute of agriculture in c Alain Blum (EHESS) Leningrad. His rise began truly beginning in 1985 : he then found himself assigned responsibility within the Communist party. Viktor Zubkov in 1991 is the first secretary of the executive commit- tee for the district of Priozersky of the Leningrad region. This is the time when became acquainted P. 4-6 Business & Networks with Vladimir Putin and Boris Gryzlov. According to information gathered by Russia Intelligence, ENERGY Viktor Zubkov would have facilitated the transfer of plots of land for construction by the well-known c Europe : a new challenge cooperative “”. Located in Solovyovka on the banks of lake Komsolmoskoe, the latter visible for included, it should be recalled, among its founding members Vladimir Putin (a the time in charge ALERT of external relations for the municipality), (head of the RZhD, c Lukoil and Gazprom soon in Somalia ? the Russian railways), Vladimir Smirnov, (TENEX – read also articles page 2 and 6), Nikolay Shamalov and Viktor Myachin, joint shareholders of the Rossia bank of Yuri Kovalchuk. From FOCUS c Nuclear : the first steps January 1992 to November 1993, Viktor Zubkov presented himself for the post of governor of the toward reform Leningrad region, but he collected only 8.5% of the votes (Boris Gryzlov was then his campaign man- BEHIND THE SCENE ager). Vice minister of finance from 2001 to 2004, he assumed the leadership in 2004 of Rosfinmon- c Shtokman : Gazprom itoring, the financial investigation squad, which he headed until his surprise nomination. Viktor waits hand and foot Zubkov is therefore, as can be seen, a trusted associate of Vladimir Putin. He is in addition the fa- on Yuri Kovalchuk’s friends ther-in-law of the Defence minister, , whose surprise nomination last February also follows the same pattern. Viktor Zubkov is also very close to , the presidential assistant who has a controlling hand on nominations and who we had previously indicated had P. 7-8 Regions & CIS strengthened his position in the Kremlin (Russia Intelligence n°49 of February 16 2007). FOCUS The main question is certainly to know if the promotion of Viktor Zubkov makes of latter the c Why Kamchatka is again long awaited successor to Vladimir Putin. His profile and also his age lead most Moscow sources becoming strategic for Russia Intelligence to doubt this scenario. Viktor Zubkov could remain Prime minister after CAUCASUS March 2008, reproducing the trajectory of Mikhail Fradkov, who also “came out of nowhere” and c , the weak link was installed before the presidential vote of 2004. The other question concerns the reason that led Vladimir Putin to delay, or even to abandon, the Sergey Ivanov option. The first vice Prime min- SUBSCRIPTION ister, very much in view in the media at the side of the president since the beginning of summer, Print Edition seemed well on the way. A veteran, like Vladimir Putin, of the KGB external intelligence services, (23 issues, airmailed overseas) he shares with him the same weltanschauung. But we also know that Sergey Ivanov arouses con- €770 TTC siderable fears within the numerous Kremlin clans, whom he is not obligated to and to whom he The Web Pack had given no guarantees for after 2008 (Igor Sechin – who Sergey Ivanov, rightly or wrongly, sus- (Print Edition pects of having “set a trap” for him in the media during the Sychev affair, which involved this ter- + PDF + archives acess) ribly mutilated draftee in a Ural barrack in late 2005 – felt particularly targeted according to in- € 880 TTC formation we have gathered. The Premium The elevation of Viktor Zubkov also leaves open the scenario, long considered as emerging from Subscription science fiction but which could be unwise to exclude in view of the essentially Byzantine nature of (Print Edition + PDF + access the Russian political game : a “faked departure” for Vladimir Putin. The latter could leave the Krem- to all the website contents) lin in March 2008, as the constitution obliges…to better return on the scene in place of a Viktor € 1200 TTC Zubkov who would have then fulfilled his ultimate mission in the service of his friend. d www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 2

RUSSIA INTELLIGENCE Politics & Government

FOCUS c Yuri Chayka, a public prosecutor on a tight-rope

August 27 may seem in retrospect as the finest hour for Rus- against Sergey Vasilev, a businessman who unofficially control- sia’s General prosecutor. In announcing to Vladimir Putin in led the oil terminal for the “northern capital”, an assets sought the Kremlin that the investigation of the murder of journalist by Barsukov. Anna Politkovskaya was concluded and that the godfather of the Tambov group - Saint Petersburg’s principal mafia organi- This case must be followed with the utmost attention be- sation had been locked up, Yuri Chayka thought he had esta- cause it is likely to spill over against the core of the Putin net- blished himself as the hero against all the dangers of this post- works in Saint Petersburg. Several close associates of the pre- vacation season, (Russia Intelligence n°60 of August 30 2007). sident had at one time or another business But the cards changed completely in the space of a few days. dealings with Barsukov. First of all, Vladi- mir Smirnov, the boss of TENEX, the state The Politkovskaya case : an accusation that evaporates. firm specialised in uranium enrichment It was with obvious satisfaction that Yuri Chaika had told of the (read page 6). In the mid-1990s Barsukov interrogation of ten suspects in the Politkovskaya case. Among contolled, with Smirnov, the private secu- those was found an FSB lieutenant-colonel, Pavel Ryaguzov, two rity agency Rif Security, which was nota- agents of the Interior ministry research service, Dmitry Lebe- bly charged with the surveillances of the dev and Oleg Alimov, as well as an anti-gang squad member, Ser- Ozero cooperative . As a reminder, gey Khadzhikurbanov, which seemed to indicate that the inves- Vladimir Barsukov this very exclusive village hosted Smirnov tigation had been thorough. Yuri Chayka had also established a himself, Andrey Fursenko, the Science link between the assassination of Anna Politkovskaya and the minister, Vladimir Yakunin, the boss of the railways, and a cer- one of Khlebnikoff, the editor in chief of the Russian edi- tain Vladimir Putin. Smirnov and Barsukov, would find them- tion of Forbes shot to death in 2004, and the former vice presi- selves a few years later at the Saint Petersburg Hydrocarbon dent of the Russian central bank, (Russia Intel- company (PTK) : Smirnov was the president of the administra- ligence n°41 of October 13 2006). The latter point was all the tive council, while Barsukov occupied from 1998 to 2000 the more surprising since the Kozlov case had been said to have been post of assistant director general. solved in the spring and the presumed killers jailed. Vladimir Barsukov also controlled a number of affiliates of Yuri Chayka in any case thought he had two winners. The sol- Surgutneftegaz, including Kirishinefteorgsintez, specialised ving of the Politkovskaya case, a few days from the first anni- in refined products. And, readers of Russia Intelligence know versary of the death of the Novaya gazeta journalist, was made since operation Baikal and the purchase of Yuganskneftegaz, to order to bolster the image of the Russian president in the of the importance and influence of the networks linked to Sur- West. It was also meant, for the public prosecutor, to underline gutneftegaz (n°6 of February 11 2005 and n°43 of November 10 the efficiency of his services on the eve of the creation of a Com- 2006). We need mention only Yuri Kovalchuk, the head of the mittee for investigation, a quasi-autonomous structure of the Rossia bank, and Alexey Mordashov of Severstal. Prosecutor’s office whose presidency Vladimir Putin had assi- gned to Alexandre Bastyrkin, one of his former university class- Finally, Vladimir Barsukov testified in 2004 before German mates (Russia Intelligence n°58 of June 28 2007). investigators in the case of SPAG, a firm based in Hessen that invested in property in Saint Petersburg and which the German But by August 28, it seemed that Yuri Chayka had proclai- authorities suspected of for the Tambov group. med victory prematurely. It was learned first of all that a first Barsukov was the co-manager of one of the SPAG affiliates, “Zna- detainee had been cleared by the investigators and released. menskaya” whose director was none other than Vladimir Smir- Lawyers for Sergey Khadzhiburbanov had themselves let it be nov. Markus Rese, at the time boss of SPAG, declared in 2001 known that their client had a solid alibi since he had been in to the weekly Newsweek that Vladimir Putin had been a consul- detention on October 7 2006. The actions Pavel Ryaguzov was tant to his group, a function that according to him was unpaid charged with dated back to 2004 and had no connection with and essentially honorary. the murder of Anna Politkovskaya. In the end, this case smacks so much of amateurism that one is left to wonder whether Yuri The main question that arises is to know if those who reques- Chayka wasn’t manipulated and sent into oblivion. ted the arrest of Barsukov want him to talk or remain silent. In the first instance, he should not leave the VIP cell of the famous The strange Barsukov affair. Virtually unnoticed in the Kresty prison in Saint Petersburg where he was taken after his West, the arrest of Vladimir Barkusov (alias Kumarin) is howe- arrest. Perhaps Barsukov will never be heard from again, but ver even as politically sensitive as the Politkovskaya case. The his presence behind bars by itself constitutes a sword of Damo- one presented as the godfather of the Tambov group was arres- clese over the head of persons – numerous and influential as ted on August 22 by units of the Interior ministry and Prosecu- we have seen – who had been in contact with him. The second tor’s office who had come from Moscow without the outposts in possibility leads to the recollection of the fate of another note- Saint Petersburg getting any advance warning of the operation. worthy figure of the Petersburg “mob”, Roman Tsepov (Russia An apparently useful precaution since, according to Yuri Chayka, Intelligence n°33 of May 18 2006. Close to certain Putin circles many well-placed persons had tried to derail the investigators. (in particular that of General Viktor Zolotov, the boss of the Vladimir Barsukov was wanted; among other reasons, for mo- Federal protection service) and knowledgable (too) about the ney laundering, extortion of funds, attempted murder and mur- underside of the Yukos affair, he was mysteriously poisoned in 2 der. He is notably accused of the attack in the spring of 2005 the autumn of 2004. d Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 3

RUSSIA INTELLIGENCE Politics & Government

DIPLOMACY c The new Russian priorities in Asia

In the decade of the collapse of the , Russian signing of an intergovernmental nuclear accord. Australia, policy toward Asia rested essentially on “strategic partner- which holds 40% of world uranium reserves, will export a part ships” with and the People’s Republic of China. Vla- to Russia. The amounts will be the subject of new discussions dimir Putin’s recent tour of the region on the occasion of the between Rosatom/AtomEnergoProm and the Australian autho- 15th APEC summit in Sidney illustrated the new geographic rities. The intergovernmental accord of September 7 in any priorities of the Kremlin and confirmed the dominance of eco- case will facilitate the negotiations underway between TE- nomic factors in Russian diplomacy. NEX and BHP Billiton concerning a participation in the de- velopment of the giant Olympic Dum reserves. It especially The first stopover of the Russian president, Indonesia is constitutes a major assurance of the long-term supplies of the one of the new strong points of the Kremlin policy in southeast Russian nuclear industry in uranium, while the cooperation Asia. It was well known that for several months Moscow and with Kazakh and Ukrainian source is full of uncertainties. (UI Jakarta were discussing the details of new arms contracts. n°39 of August 30 2007 and CACI n°15 of August 30 2007). During the recent Moscow air show, Rosoboronexport and the Indian Defence minister had signed an accord on delivery, Virtually unnoticed in the West, the visit of Vladimir Putin between 2008 and 2010, of 6 new Sukhoi fighter-bombers (3 in the United Arab Emirates was nevertheless more than a Su-30SKM and 3 Su-30 MK2, for an amount evaluated at 335 simple courtesy visit. In inauguring in Abu-Dhabi an exposi- million dollars). Another, more ambitious, accord was comple- tion on Arab, Persian and Turkish military trophies in the ted in Jakarta September 6. Russia and will in fact deliver to Kremlin museum, the Russian president hoped to symboli- Indonesia ten Mi-17 and Mi-35 transport and attack helicop- cally recall the role and the historic influence of Russia in the ters, twenty BMP-3F armoured troop carriers, as well as two Middle East. If we can believe certain elements filtering in “Kilo” class conventional submarines. This transaction will be Moscow, the main theme of the discussion between Vladimir financed by a credit of a billion dollars from the Russian go- Putin and Cheikh Khalifa ben Zayed al-Nahyane was Iran. vernment, an arrangement that illustrates Moscow’s new fi- The Emirates sought notably to obtain the mediation of Mos- nancial flexibility, which had already been inaugurated du- cow on the coastal limit dispute involving the Abu-Musa and ring the summer of 2005 in the framework of a contract with Tunb islands annexed by Tehran in 1971. Moscow again made Jordan. According to certain information, Indonesia would Abu-Dhabi aware of the possible risks of an American mili- also be interested by the “Kornet” anti-tank systems from KBP tary intervention in Iran and would like to see it play a role Tula, unspecified anti-air arms, and also in civilian aircraft as moderator with Washington. It should be noted in passing (the Sukhoi SuperJet-100 and the Be-200 and Be-103 amphi- that the issue of the Bushehr nuclear power station remains bious aircraft. subject of differing evaluations in Tehran and Moscow. The secretary of the Iranian security council, Ali Larijani, decla- The successes of Russian industrialists in Indonesia were red September 6 that a “good accord” has been found with not limited to the armaments and aerospace sectors. Lukoil Russia and that the calendar of deliveries of fuel has been and the national company Petramina signed a cooperation ac- adopted. An announcement quickly denied by Sergey Novo- cord concerning several off-shore deposits. Rusal and Antam kov, the Rosatom spokesman. d also signed an accord on the construction by 2001, of a com- plex of a capacity of 5 Mt/yr that will be supplied by bauxite deposits from Munggu Pasir and Pantas. Oleg Deripaska’s ALERT group – represented in Jakarta by the former Finance minis- ter Alexandr Livshits – will hold 51% of a joint venture that 3 A Russian to head the Council of Europe will soon be created. Lastly, Altimo – telecoms subsidiary of parliamentary assembly ? Alfa-Group – is said to be prepared to buy, for 2 billion dol- Mikhail Margelov, the president of the Federation council lars, the share of ST Telemedia (Singapore) in the Indone- Foreign relations commission, confirmed on October 10, that he sian mobile telephone operator Indosat. We should also point would present his candidacy for the presidency of the Council of out that the president of Alpha-Bank, Pyotr Aven, accompa- Europe Parliamentary assembly in the name of the European nied Vladimir Putin on his Asian travels, as well as Sergey Ki- democrats group (EDG). rienko (Rosatom), Vagit Alekperov (Lukoil), Vladimir Ev- Born in 1964 in , Mikhail Margelov is an Arab expert tushenkov (AFK Systema), Vladimir Dmitriev graduated from the Institute of African and Asian countries of the (VneshEkonomBank), Leonid Reyman, the Communications University of Moscow. He taught Arabic at the KGB school of minister, Sergey Stepashin, the president of the Court of ac- advanced studies at the end of the 1980s before assuming the counts, and also the chief representative of Vladimir Putin in leadership of the Arab editorial team at the ITAR-TASS news the Far-east federal district, the Tatar Kamil Iskhakov. agency. Charged with relations with the foreign press on the campaign staff of Vladimir Putin in 2000, he was appointed to the The Australian phase for Vladimir Putin was also as fruit- Senate a few months later. ful. True, the discussions with George Bush led only to an in- His grandfather – a general decorated with the title of “hero of vitation to a fishing date in Siberia, with no progress seen on the USSR” – was one of the founders of the Soviet airborne troops. the thorny problem of the WTO or the anti-missile defence. His father, Vitaly Vasilevich made his career in the external But Vladimir Putin obtained from his APEC partners that the intelligence service and was the aide to at the organisation’s summit planned for 2012 take place in Russia. SVR in the early 1990s. d On the economic front, the major event was incontestably the 3 Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 4

RUSSIA INTELLIGENCE Politics & Government

DEMOGRAPHY c Alain Blum : « Demographic policies are at the heart of Vladimir Putin’s public communication »

An interview with Alain Blum, director of child, while the oldest had already brought a child into the the Studies centre of the Russian world, world. In general in Russia, we are passing, slowly, from the the Caucasus and Central Europe (School of model of very precocious “first coupling – first marriage – advanced social science studies and first birth”, to a more European model where a succession of the CNRS national scientific research centre) co-habitations precedes a couple giving birth to a child, and and director of research at the National where, a couple waits to be integrated into the working world institute of demographic studies (INED) before giving birth to children. In effect, for several years, this Alain Blum Author specifically of Birth, living and dying effect led to an apparent decline in the birth rate higher than in Russia, , Payot, 2004, and Bureaucratic anarchy – statis- it was in reality. tics and power under Stalin, La Découverte, 2003, (with Mar- tine Mespoulet). What are the most realistic projections concerning the evolution of the Russian population for the medium and long-term?

The demographic situation was recently described by It’s impossible to furnish numbers since evolution is diffi- Vladimir Putin as one of the principal threats to natio- cult to forecast, especially migratory terms. A realistic projec- nal security for Russia. What are the profound causes? tion supposes, however, that mortality will begin to decline and that fertility will rise slightly (strongly for a while, and The demographic situation and the demographic policies then return to an average level) and that immigration flows followed in Russia today, are the object of very extensive me- will develop, whatever policy is put in place. On this basis, we dia attention, fostered by the entourage of Vladimir Putin. This can probably foresee a population of 135 million inhabitants is part of the general rhetoric concerning the promotion of the by a timeframe of 2015, a relatively high variant, rather than greatness and power of Russia, which translates here in terms the 145 million imagined by Medvedev. Reaching such levels of population, as well as the argument that an increase in births would presuppose very important migratory flows, which are would be the direct expression of a hope and rediscovered not to be excluded but which remain unrealistic (while Med- confidence. vedev counts only on a strong increase in births).

The reform of the 1990s have been put forward as the cau- Demography is one of the “national projects” to the ses of this demographic situation, inasmuch as the decline in same extent as housing or education – under the res- population as well as the decline in fertility date back about to ponsibility of vice Prime minister . What the collapse of the USSR. The growth rate turned negative in public policies have been put in effect by the govern- the early 1990s. Certain political or media figures had even ac- ment? Can they have a real impact, in your view? cused of being responsible for genocide of the Rus- sian population and nationalist and conservative speeches Policies in demographic matters are at the heart of Vladi- adopted this accusing tone. But, when we examine closely the mir Putin’s public communication. Two national projects, one demographic trends, we can see that the reality is completely on demography, the other on health, are developing. The first different. The most preoccupying, the extremely high level of made considerable noise and consists primarily of a premium mortality, (the male life expectancy at birth, the most preoccu- of 8500 euros (250 000 rubles)for the second birth, a conside- pying, reached 58.9 years in 2005, compared to 76.8 in France rable sum when compared with the average salary. This pay- the same year. Russian men live on average close to 20 years ment is placed in a pension fund, then available after a few less than French men!) is linked to a gradual, quasi-linear, de- years to finance housing or studies for the child. It represents gradation, that began in at the start of the 1970s decade. No- a short-sighted policy, very much in line with certain Soviet thing to do with the Yeltsin reforms. The cyclical, and very tem- policies : the impact will be rapid, without a doubt, since cou- porary, effect of the war on alcoholism in 1986 gave the impression ples will anticipate the birth of their 2d child. But the effect of a counter-action of these reforms. If the latter existed at all, will probably be temporary and will mark more the moment it was very limited compared to the long-term trends. when couples have their 2d child. As a result, we risk having violent upheavals in the age pyramid, a difficult management The causes are complex, and closely linked to the lack of for child care, education, follow-up health care. The age of adaptation of the health-care system to the new health condi- maternity will again decline, which is hardly desirable. Fer- tions, alcoholism which remains very preoccupying, important tility will probably rise slightly in the end but much less than violent mortality, affecting in particular young men closely lin- it will seem in the years to come. At a high price, in terms of ked to alcoholism. In terms of fertility, there was certainly the public child management. On the other hand, the health sys- effect of uncertainty about the future, leading many couples tem is significantly below what it should be, even if we can to delay the arrival of children. But that situation was only par- hope that mortality will decline considerably in the years to tially linked to the reforms. The current fertility rate corres- come, given the incredibly high level of today. The govern- ponds to European levels, and, what’s more, it has suffered ment, apparently, is not developing a “demographic policy”, from the delay of the age of the first birth, which had been ex- but a “political fact”, essentially to put forward successes 4 tremely precocious in Russia. Young women delayed their first which are in large part illusory. d Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 5

RUSSIA INTELLIGENCE Business & Networks

ENERGY c Europe : a new challenge visible for Gazprom If the discussions with Total, BP or E.On are proceeding and Stream reveals a climate that is increasingly hostile toward all indicate some new and very promising cooperation (Russia In- energy projects originating in Russia . telligence n°60 of August 2007), Gazprom also nevertheless risks being confronted by new political obstacles from certain Euro- In this context, the attention of the Kremlin (and of its in- pean governments and the European commission in . telligence services) is more than always focused on Brussels. The are anticipating notably new proposals from the Euro- Like in previous autumns, Gazprom is readying to launch dis- pean commission, expected September 19, on the “demonopoli- cussions with its clients on the price of gas for the coming year. sation of the en- Since world hydrocarbon prices remain particularly high (more c ergy sector. than 70$ a barrel on average in August), a new re-evaluation re- Like in previous autumns, Gunter Ver- mains the order of the day. The first to get excited were the Gazprom is readying to launch heugen let it be Lithuanians. On August 29, the daily Lietvos rytas published discussions with its clients on the known during a an article reporting on a notification addressed by Gazprom to visit to Moscow the two Lithuanian gas importers, Lietvos dujos and Dujotekana, price of gas for the coming year. in mid-July that warning of an increase of 40% beginning on January 1 2008 (or certain provi- 280$/1000 m3 against 195 currently). The Lithuanian Prime min- sions could affect Gazprom. It involves possible restrictions on ister, Gediminas Kirkilas, had for his part spoken of an even the ownership of gas and electricity distribution networks, sec- larger spread (312-320$/1000 m3) during an interview with tors we know to be precisely the new “targets” of the Russian Reuters news agency a few days earlier. Comparable increases group in Europe (Russia Intelligence n° 54 of April 24 2007). are also awaited in and Latvia. After having demon- strated a policy of relative restraint for three consecutive years Another reason for Gazprom and the Russian government to on prices upon entry of the Baltic states into the worry concern the preparation of a series of directives under – a moderation which had found a counterpart in its entry into the direction of Alejo Vidal-Quadras. In the aftermath of a vote the capital of the national gas distributing companies Eesti in the Euopean parliament in early August, its vice president Gaas (37.02%), Latvijas gaze (34%) and Lietuvos dujos (37.1%) was charged with formulating a certain number of proposals – Gazprom will now charge the “normal European prices” to re- aimed at encouraging respect for the principle of reciprocity peat the expression of one of its managers. The Russian com- concerning investments of third countries in the European en- pany is even less inclined to make concessions in the case of ergy sector. The aim is to limit access of public companies from Lithuania since the parliament of that country this spring adopted countries where the local energy markets are subjected to re- a law forbidding Lietvos dujos to apply a margin higher than 8% strictions. This measure is not specifically directed against Rus- of the price of Russian gas bought at the border. The discussions sia (Algeria, Saudi Arabia or Iran are potentially concerned), could continue until October 31, the date set by the Russian and but we can imagine that they would seriously contradict the Lithuanian parties. In order to avoid a head-to-head confronta- Gazprom ambitions if they were to be applied. d tion with Gazprom that promises to be dangerous, an- nounced that it hoped to associate other European union coun- tries in the discussions. This is an initiative that has few chances ALERT of succeeding in the absence of a common European policy but which confirms the extreme politisation of energy questions in 3 Lukoil and Gazprom soon in Somalia ? the new member states in the Baltic region. The ambassador of Somalia to Moscow, Mohamed Handule, has become quite active in recent weeks to persuade Russian Gazprom is equally confronted with significant political re- groups to invest his country. August 22, he declared during a press sistance in the case of , the underwater gas pipeline conference that his government is ready to cooperate with Russia linking the region of Vyborg to . Poland has let it be in the uranium extraction sector (Somalia holds a bit more than known that it would ask to conduct new environmen- 6000 tonnes of the mineral). If we believe certain information tal studies since the new path of the future pipeline was modi- circulating in the Russian capital, he is ready to meet on fied to the limits of Swedish and Danish territorial waters. This September 19, Igor Gavrilov, the director general of change had the object of distancing Nord Stream from zones Zarubezhgeoligia. This public organisation had conducted where shells from the second world war lie, but all pretexts are important exploration campaigns in Somalia before the split valid as seen from to try to delay the Gazprom project. between the government in Mogadischio and the USSR in 1977. The Russian group could also find some other difficulties coming Somalian authorities would like to have access to the results of the from Estonia. If certain information drifting out of are research and invite Zarubezhgeoligia to undertake some new confirmed, the Reform party plans to submit to the parliament a drilling. The Russian side remains discreet on this question, but it draft law “on maritime frontiers” that foresees extension of ter- would seem that some very promising finds were made by the ritorial waters of 3 nautical miles. We recall that and Es- Soviet engineers in 1976. Certain generally well-informed tonia left a neutral corridor of 6 nautical miles between their consultants in Moscow even believe that the Somalian reserves respective waters, to permit Russia to have a free access to rest could be in the same range as those in neighbouring Sudan. of the to the north of which a segment of the Nord Mohamed Handule has in any case approached Lukoil and Stream should pass. There again, the prospects of such an ap- Gazprom in the past weeks. It remains to be seen if the evolution proach would seem, to say the least doubtful, so long as it is hard of the political and security situation of this country ravaged by 15 to see headed toward a clash with Moscow in this mat- years of civil war will permit the fulfilment of these projects. d ter. But the strategy of harassment by the opponents of Nord 5 Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 6

RUSSIA INTELLIGENCE Business & Networks

cc FOCUS BEHIND THE SCENE

Nuclear : the first steps toward reform Shtokman : Gazprom For several months, Russia Intelligence has regularly informed its readers of waits hand and foot on the reforms underway in the Russian civil nuclear sector. Carried out by former Prime minister Sergey Kirienko, named to head the Federal Rosatom agency Yuri Kovalchuk’s friends at the end of 2005 by Vladimir Putin, they have as their objective the establish- In one of its previous editions, (n°50 of ment of a national champion uniting the complex of the protagonists in the sec- March 2 2007), Russia Intelligence had tor along the lines of the model recently put in place for the aeronautic (OAK) analysed the reforms underway in the and naval construction (OSK) industries. In the end, it means competing with Russian naval construction and maritime Areva and Westinghouse on the world market thanks to an integrated organi- transport sectors by underlining the sation present from the extraction of uranium up to the construction of turnkey interaction with large groups in the energy nuclear reactors. sector, called on to be a more important The signal for the launch of this reform was given, we recall, at the end of April silent partner – and even more affluent – with the publication of a presidential decree for the creation of AtomEnergoProm. than the Defence ministry. Gazprom has just Since, several important announcements have been made by the government. July provided proof, twice within a few weeks, by 7, the Prime minister Mikhail Fradkov, adopted its bylaws, as well as its admin- taking important decisions on the Shtokman istrative council, to be headed by Sergey Kirienko. Vladimir Travin will occupy and Sakhalin-II projects. the post of director of AtomEnergoProm. It is not strictly speaking a surprise to In mid-August, Valery Golubev, one of the extent that the latter is a confident of Sergey Kirienko. Born in 1960, educated Alexey Miller’s assistants, revealed that the as an engineer, Vladimiur Travin began his career at the prestigious Sarov nuclear call for tender for the construction of two research centre (formerly Arzamas-16). He converted to finance during the 1990s drilling platforms concerning the Shtokman before becoming vice president of Norsi-Oil, Sergey Kirienko’s company based in project had been won by the Vyborg (VSZ) Nizhny-Novgorod, then vice president (in charge of finance) of the public opera- shipyards, preferred over Sevmash and an tor Transneft. As soon as he was nominated to the head of Rosatom, Sergey Kirienko unspecified Korean firm. The choice was had summoned him to his side as counsellor. He then named him associate direc- surprising at first glance since VSZ was tor, again charged with finance, January 26 2007. moribund and had not won a contract since The pattern of integration and, especially, the allocation of spheres of influ- 1997, the date when it built the launch ence within AtomEnergoProm between the four pillars of the Russia civil nuclear platform for a US-Russo-Ukrainian Sea sector (TENEX – uranium enrichment services — , RosEnergoAtom — oper- launch space programme. Looking at it ator of some of the 31 reactors in service in Russia – and AtomStroyExport – more closely, the VSZ victory owes nothing to construction of power stations abroad), are far from being settled. At this stage, chance. In September 2006, Ako Barss had it is only known that Sergey Kirienko wants to create UGRK, an entity that will in fact sold his (75.6%) stake in VSZ to unite the mining assets of TVEL and TENEX. Its direction will be confided to the several private investors linked to Yuri team of Alexandr Shkarovsky/Vadim Zhikov, respectively n°2 of Priangarskoe Kovalchuk, the major Saint Petersburg banker Mining and Chemical Production Association (a complex located in the Chita who is well-known to readers of Russia region which extracts some 3300 tonnes of uranium mineral per year) and n°2 Intelligence. Included were, among others, of TENEX. Vasily Gorelov (son of Dmitry Gorelov, The other major uncertainty concerns the role of the large private industrial shareholder of up to 12.6% in the Rossia groups in the civilian nuclear sector. Currently, several oligarchs have positioned bank), or Sergey Kolesnikov, member of the themselves. Oleg Deripaska, the boss of United Rusal, concluded last April an board of Sogaz, an insurance company accord on the construction in the Far east of an aluminium foundry and a nuclear formerly affiliated to Gazprom which was power station of 2000 megawatts. Since Russian law prohibits private parties from bought by Yuri Kovalchuk’s bank in the being operators of nuclear power stations, the most likely outcome is that United summer of 2006. The entry of the Kovalchuk Rusal would participate in the financing of the project in exchange for a long- network into Gazprom (also illustrated by the term accord guaranteeing electricity supplies under privileged conditions. Inter- presence of Boris Kovalchuk, Yuri’s son, near ros, Vladimir Potanin’s holding company, signed on June 18 a cooperation frame- Dimiti Medvedev) has begun to bear its fruit. work agreement with Rosatom in the uranium extraction sector. Joint projects The call for tender won by VSZ is worth the are under study, especially in Uzhbekistan. But the most active is undoubtedly handsome sum of 59 million rubles (2.3 Viktor Vekselberg. After having concluded a framework agreement with TENEX billion dollars). to cooperate in southern Africa (Russia Intelligence n°50 of March 2 2007), the We should also mention that Sakhalin boss of Renova took over at the end of may a 25%+1 share in EMAlliance-Atom, Energy, the operator of the Sakhalin-II project a joint venture created between TVEL and EMAlliance, the partner of Alstom in which Gazprom is now the majority holder, and parent company of JSC Machine-building Plant ZIO Podolsk, ZIOMAR (en- has announced that the Prigorodnoe terminal gineering),and Krasny-Kotelshchik (turbines). would be operated in partnership with Lastly, . In June 2006, the group sold 4% of the 53.8% it held in Sovkomflot, the new Russian national AtomStroyExport to TVEL, thus allowing Rosatom to reclaim majority. But since champion in maritime transport matter led by then relations have become tense between Andrey Akimov and Sergey Kirienko. , the sherpa for Vladimir Putin, The latter has sought since the summer of 2006 to convince the boss of Gazprom- (Russia Intelligence n° 39 of September 2006 bank to sell him the activities of OMZ linked to the nuclear, especially Izhorskie and n°52 of March 30 2997). d zavody, the only Russian producer of nuclear reactor vats. Matters are apparently reaching a scale where Rosatom announced in early August that it was suspend- The updated biographic profile of Yuri ing orders from Izhorskie zavody. d Kovalchuk is now available on our Internet 6 site. Reserved for our Premium subscribers. Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 7

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FOCUS c Why Kamchatka is again becoming strategic The brief visit undertaken by Vladimir Putin on the way to Masorin, no less than 9 billion rubles (about 300 million dol- Indonesia and then Australia (read article page 3) was once lars) will be invested by 2010. The new base will host the first again the occasion for the president to demonstrate his prox- units of the Borey class nuclear missile launcher submarine imity – even a certain complicity – with Sergey Ivanov, whose (MLSM) – the Yuri Dolgoruky (launched last April), the bowling prowess the Russian television viewer could admire Alexandr Nevsky and Vladimir Monomakh (under construc- (and learn at the same time that the new leisure centre built tion in the Sevmash shipyards in Severodvinsk). We also re- at Vilyuchinsk for the families of the crews from the Russian mind readers that up to now, most of the Russian MLSMs have pacific fleet’s submarine force was financed by Surgutneftegaz). been deployed with the Northern fleet and stationed on the The third to date since 2000, it primarily served to confirm the Kola peninsula. According to naval experts consulted by Rus- priority afforded by the Russian state to the peninsula, which sia Intelligence, the choice by military authorities can be ex- has been called on to play a new economic and military role in plained by configuration of the bay of Vilyuchinsk, that allows the coming years. submarines to rapidly reach depths to enable them to avoid detection by American satellites. Forbidden to foreigners during the Soviet era, Kamchatka, during the 1990s, experienced an economic collapse aggravated Last, Kamchatka has a vocation to become and import hy- by its twin distinctions – isolation and the strong military pres- drocarbon production centre in the coming decade. The head ence – the major victims during the Yeltsin presidency. In or- of Rosneft, Sergey Bogdanchikov, created a stir by announc- der to boost the region, the Kremlin ing, September 5, that no less than for a while imagined duplicating the 24 billion dollars would be invested model tested with a certain success in exploration/production projects in neighbouring Chukotka with Ro- in the Okhotsk continental shelf. It man Abramovich (Russia Intelli- should be recalled that Rosneft had gence n°53 of April 13 2007). In other signed in September 2004 a cooper- terms, assign the province to an oli- ation memorandum with the Korean garch ready to invest his personal National Oil Company (KNOC) resources as a means of redeeming then in February 2005 an interme- himself. Long considered, Viktor diate financial accord. The two par- Vekselberg managed to escape the ties then created a joint-venture honour. As a result, the administra- (West Kamchatka Holding BV), in tion privileged another scenario. which Rosneft holds a 60% interest. A first series of tests should be com- The re-establishment of manage- pleted in 2008, but if the informa- ment over the peninsula came in three tion revealed by Sergey Bogdanovich phases. The Kremlin first of all dis- is borne out, the Kamchatka off-shore missed in March 2005 Vladimir Logi- deposits would be larger than those mov, the governor of the autonomous of Sakhalin (3.8 billion TOE, with- district of the Koryaks. It then initi- out at this stage being able to detail ated the merger between this area the proportion of oil and gas). The subject to Federation control with cooperation accord negotiated with the Kamchatka region, actually ap- the Koreans is especially interest- proved by a referendum October 23 ing since it foresees that KNOC fi- 2005 and officially completed on July nances the totality of the prospect- 1 2007. This administrative remodel- ing phase (300 million dollars for the ling also had as a byproduct the re- year 2008 alone), but that Rosneft moval of the governor of Kamchatka, would begin to receive profits from Mikhail Mashkovtsev, elected in 2000 the development of these deposits under the communist label. He was replaced last May by one of without waiting for its partner to reimburse its costs. his assistants, Alexey Kuzmitsky, the governor of the autonomous district of the Koryaks. The latter studied and passed most of his We also underline that, like with the Sakhalin-III project, career in Saint Petersburg. A graduate of the Electro-technical Rosneft risks finding Gazprom in the way. Valery Golubev, one institute (1992) and the administration academy (2003), he was, of Alexey Miller’s most visible associates in recent weeks, de- among other posts, counsellor of the director of the institute of clared during the meeting on the socio-economic development radio-navigation and then financial director of a firm linked to of Kamchatka that Vladimir Putin presided on September 5 the national fisheries committee. It was his connections with this that his group was prepared to substitute for the RAO EES of sector of activities – highly important to Kamchatka – that ex- in the construction of the 300-kilometre gas plains the rise of Alexey Kuzmitksy in the peninsula in May 2005. pipeline between Sobolevo and the regional capital, Petropavlovsk-Kamchatksy. Under certain conditions. One of The other illustration of the renewed interest by the Krem- them being that the Ministry of natural resources grant it an lin for Kamchatka was the announcement in early July 2007 exploration permit for certain zones of the continental shelf of a new submarine base in Vilyuchinsk. According the com- near the Rosneft-KNOC deposits. d mander in chief of the Russian combat navy, Admiral Vladimir 7 Russia Intelligence N°61 j September 13 2007 www.russia-intelligence.fr RIA61 13/09/07 1:26 Page 8

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CAUCASUS c Ingushetia, the weak link As in the autumn of 1999, the has invited itself truly influential clans in Ingushetia are led by two of Moscow’s hate into the heart of the Russian news on the eve of Russian legisla- figures : Ruslan Aushev, the ex-president (1993-2001) of the north tive and presidential elections. This time, however, it’s Ingushetia Caucasus republic, and the Gutseriev brothers (Russia Intelli- and not in the spotlight, and the federal power struc- gence n° 56 of May 31 2007 and n°60 of August 30 2007). ture could have done without such attention. Attacks, “special op- erations”, and clashes are in fact virtually daily events, arousing Ramzan Kadyrov as a white knight? While the Kremlin is in fears of increasingly wider destabilisation. search of a strategy to avoid Ingushetia plunging into chaos, the Chechen president, Ramzan Kadyrov, has declared his readiness Murat Zyazikov looses his footing. Elected in 2002 and ex- to lend assistance. “We will re-establish order, as two and two make tended in his post by the Kremlin in 2006, Murat Zyazykov – an ex- four. The republic (of Ingushetia) isn’t large”, he declared on Sep- FSB general – is far from “controlling with assurance the situation tember 10, adding that he would act only on the request of the in the Republic”, as recently affirmed with confidence Karim-Sul- “supreme commander in chief”, Vladimir Putin. These statements tan Kokurkhaev, a senior Ingush official in charge of human rights. which are not made lightly and illustrate “the state of grace” that Since the beginning of summer, no less than 40 armed incidents the Chechen president has enjoyed since his victorious showdown have in fact taken place. June 26 the facilities of the presidential with his predecessor Alu Alkhanov (Russia Intelligence Special administration and the general direction of the FSB in Magas, the edition of February 16 2007). Ramzan Kadyrov has especially un- new capital, were the targets. June 16, a Russian teacher, Ludmilla derlined the decline in armed incidents in Chechenya and the Terekhina, was assassinated with her two children. Two days later, progress – undeniable after all – in the reconstruction of . an explosion took place during her burial at the Ordzhonikidjevkaya He also undertook in August a new tour of the Middle east (Jor- village cemetery, making 11 victims. We should note in passing that dan and Saudi Arabia) supposedly aimed at reinforcing his reli- the – small – Slavic minority seems to be systematically the target gious and international legitimacy. of terrorists: August 30; another teacher, Vera Draganchuk, was assassinated in Karabulak; September 7, Natalya Mudarova – The objective of the Chechen president is to reconstitute the doctor in charge of the blood transfusion service in , who Chechnya-Ingush republic in its pre-1992 borders. At this stage, was married to a Chechen, met the same tragic end. the federal authorities do not seem to be too enthusiastic at the idea of confiding the reins over Ingushetia to Ramzan Kadyrov, This multiplication of attacks led the federal authorities to re- whom many – especially in the military and within the FSB – al- inforce the deployment of the Interior ministry in Ingushetia. No ready find too powerful (the headquarters in fact currently sup- less than 2500 additional men were dispatched on August 10 to con- port the military leader of the only pro-Russian unit – the “Za- duct a “special prophylactic operation”. With, up to now, mixed re- pad” battalion – still outside Kadyrov’s control, Said Kakiev. We sults. The battalion of Interior troops stationed in , for should note in passing that the test of strength between the lat- example, was attacked on the night of September 9, leaving one ter and the Chechen president also includes a religious dimen- dead and three wounded among the federal forces. The Russian sion since Kakiev is a representative of a Suffist brotherhood press has in addition begun to give voice to the increasing disquiet Naqshbandiya, while Kadyrov himself is a member of the Qadiriya of the Ingush population in the face of the often blind repression brotherhood). It goes without saying that Murat Zyazykov and of the FSB. more generally, the Ingush elites have no desire to place their fate in the hand of the Chechen “big brother”. In Moscow, several top specialists of north Caucasus affairs con- tacted by Russia Intelligence fear a repetition of events on a scale The events in Ingushetia pose the question of Vladimir Putin’s similar to the raid on Nazran in the summer of 2004, or on Caucasian political balance sheet. Certainly, the Kremlin has suc- in October 2005. It should be recalled that combat in the region in ceeded in finely tuning the thorny question of the successions (all the capital of Kabardino-Balkaria which had opposed members the president of the north Caucasus republics have been replaced of the Yarmuk Jamaat and state security forces lasted more than in recent years: in addition to Kadyrov and Zyazikov, Moscow has three days and claimed more than one hundred lives. As a sign of also installed Taymuraz Mamsurov in North Ossetia, Arsene increasing anxiety – but also of a certain defiance vis-à-vis Murat Kanokov in Kabardino-Balkaria, Mukha Aliev in Dagestan, Aslan Zyazikov – the Duma commission on security affairs just announced Tkhakushinov in the Adygea republic). also mo- that it would take up the matter. But the Kremlin does not seem bilised the Russian oligarchs to invest in the region (Russia Intel- inclined to “drop” soldier Zyazikov. Dmitry Kozak, the special rep- ligence n°41 of October 13 2006), and not only in . But if the resentative of Vladimir Putin in the federal south district; has ex- spectre of Chechen separatism is receding, the principal socio-eco- cluded any change at the head of the republic. It must be said that nomic challenges which the north Caucasus is confronting remain those in the Centre have no alternative solution. The two other on the agenda. d

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